e.l.f. Beauty posts 51% sales jump as TikTok Shop drives growth

E.l.f. Beauty posted a 51% increase in net sales to $520.8 million in its second fiscal quarter, blowing past Wall Street estimates of $470.3 million, CNBC reported.

The beauty company marked its 31st consecutive quarter of net sales growth, with every brand in its portfolio contributing. Adjusted earnings per share came in at $1.21, double the 60 cents analysts expected. The company raised its full-year guidance across net sales, adjusted EBITDA, adjusted net income, and adjusted EPS.

The results confirm that e.l.f. is outgning the beauty industry by a wide margin. While legacy cosmetics brands are struggling with declining sales and shifting consumer preferences, e.l.f. is gaining share through a combination of social commerce, affordable pricing, and strategic acquisitions.

The TikTok Shop engine

CEO Tarang Amin told CNBC that e.l.f. is the most-searched brand on TikTok Shop and the No. 2 brand in cosmetics on the platform. The TikTok Shop channel is driving discovery and conversion among younger consumers who do not shop at traditional beauty counters. The platform’s algorithm favors video content that demonstrates product use, and e.l.f.’s affordable price points make impulse purchases frictionless.

The TikTok Shop engine is the structural advantage that separates e.l.f. from legacy beauty brands. Traditional cosmetics companies are built on department store counters, specialty retail, and drugstore shelves. Those channels are still important, but they are not where the growth is. The growth is on social platforms, where a viral video can drive thousands of orders in hours. e.l.f. has positioned itself to capture that growth by being the most visible and most affordable brand on the platform.

The 31 consecutive quarters of growth is the evidence that the strategy is working. That is nearly eight years of uninterrupted growth, spanning multiple economic cycles, a pandemic, and an inflation surge. The consistency is striking and suggests the growth is structural, not cyclical.

The Rhode acquisition

E.l.f. acquired Rhode, the skincare brand founded by Hailey Bieber, last year in a $1 billion deal. The acquisition is paying off. Amin cited strong results for Rhode in the quarter, and the brand is contributing to the portfolio’s broad-based growth.

The Rhode acquisition is a test of e.l.f.’s portfolio strategy. The company has grown by acquiring brands that complement its core cosmetics business and bringing them into its distribution and marketing infrastructure. Rhode gives e.l.f. a foothold in skincare, which is a faster-growing category than cosmetics. The early results suggest the integration is working, and Rhode is benefiting from e.l.f.’s TikTok Shop expertise and retail relationships.

The portfolio approach is the other structural advantage. Single-brand beauty companies are vulnerable to shifts in consumer taste. A portfolio of brands across categories provides diversification and cross-selling opportunities. e.l.f.’s portfolio now spans cosmetics, skincare, and wellness, which gives it multiple growth engines.

International expansion

International sales grew 165% in the quarter, off a small base. Amin noted that only 25% of the company’s business is outside the U.S., and he sees “tremendous opportunity” to build on the momentum.

The international growth is the next frontier. e.l.f. has proven its model in the U.S. market, and the 165% growth suggests the model travels. The TikTok Shop channel is global, and the affordable price points are attractive in international markets where disposable income may be lower than in the U.S. The company’s international expansion is still in early stages, which means the growth rate is inflated by the small base, but the direction is clear.

The tariff benefit

E.l.f. received tariff refunds that boosted its gross margin by 0.3% during the quarter. The company expects to receive a yearly total of around $55 million in refunds. Amin said the company lowered the price of about 10% of its units by $1 because of the tariff benefits, and the price cuts are driving unit momentum.

The decision to pass tariff refunds to consumers through price cuts is a strategic choice. Most companies would keep the refunds as margin, especially in an inflationary environment. e.l.f. is using the refunds to drive volume, which is consistent with its value positioning. The $1 price cuts make the brand even more affordable, which attracts new consumers and increases units per transaction. The strategy trades margin for volume, and the 51% sales growth suggests the trade is working.

The raised guidance

E.l.f. raised its full-year guidance following the quarter. The company now expects net sales of $2 billion to $2.03 billion, up from $1.94 billion to $1.97 billion. Adjusted EPS guidance moved to $3.82 to $3.86, up from $3.50 to $3.55.

The raised guidance is the third time this year e.l.f. has lifted its outlook. Repeated guidance raises are a signal of conservative management and strong underlying momentum. The company is consistently outperforming its own expectations, which means either the business is accelerating faster than management models, or management is deliberately setting conservative guidance. Both are positive signals for investors.

Amin said the company is “very bullish” on the holiday season, expecting high sales through the end of the year. The holiday season is the biggest quarter for beauty, and e.l.f.’s value positioning should resonate with consumers who are trading down from premium brands.

What I think

e.l.f. is the rare consumer company that is growing at 51% without sacrificing profitability. The combination of TikTok Shop, affordable pricing, and portfolio acquisitions is working, and the 31 consecutive quarters of growth is the proof. The company is not riding a fad; it is executing a strategy that is structurally advantaged.

The TikTok Shop channel is the most important part of the story. Social commerce is reshaping the beauty industry, and e.l.f. is the brand that has positioned itself most effectively on the platform. The risk is that TikTok Shop’s algorithm could change, or the platform could lose relevance, which would remove the growth engine. But TikTok’s hold on younger consumers is strong, and the shopping features are embedded in the app, which makes the channel durable.

The international expansion is the growth story that has not been fully priced. 165% growth off a 25% base means the international business is still small relative to the U.S., but the trajectory is steep. If e.l.f. can replicate its U.S. model in international markets, the growth runway extends for years. The affordable price points and TikTok’s global reach give the company a natural advantage in emerging markets.

The $1 price cuts from tariff refunds are the kind of move that builds long-term loyalty. Most companies would keep the money. e.l.f. is giving it back to consumers, which reinforces the value brand positioning and drives trial. The strategy is working: unit momentum is strong, and the 51% sales growth includes both price and volume gains. The company is winning on both dimensions, which is the healthiest kind of growth.