UPDATE: ELF Beauty’s second-quarter earnings call revealed a staggering enthusiasm for Hailey Bieber’s makeup brand, Rhode, which is projected to generate $300 million this fiscal year. This report marks the first earnings announcement since ELF’s acquisition of Rhode in August, a deal that could reach up to $1 billion if performance targets are met.
During the call, Rhode was mentioned 52 times, underscoring its significance to the beauty giant’s future. Rhode’s impressive net sales of $110 million in the recent quarter demonstrate a dramatic increase, surpassing the $103 million recorded in the entire first half of the year. The surge is attributed partly to Rhode’s successful launch in Sephora’s North American stores, which marked the retailer’s largest release in history.
ELF Beauty’s CEO, Tarang Amin, expressed his admiration for Rhode, stating, “I’ve been in the consumer space 34 years and continue to be blown away by what Hailey and her team are building.” This sentiment reflects the excitement surrounding Rhode’s potential trajectory and its expected 40% growth this fiscal year.
However, despite the enthusiasm, analysts are voicing concerns. Following ELF’s earnings call, the company’s stock plunged 35% as its full-year guidance fell short of analyst expectations. Peter Grom, a UBS analyst, questioned the lack of substantial benefits from Rhode in light of the weaker profit outlook.
UBS analysts noted that “investors were particularly perplexed” by ELF’s guidance. Rhode’s EBITDA margin, which exceeded 30% before the acquisition, stands out against ELF’s fiscal EBITDA margin of 23% for 2025. Yet, Mandy Fields, ELF’s financial chief, emphasized that Rhode still requires significant investments in marketing and personnel to reach its full potential.
Regardless of the challenges, Rhode’s allure remains strong. Fields concluded the call with optimism, stating, “Rhode is really a fantastic brand. We’re so happy to have them as part of the e.l.f. family and look forward to continuing to drive that growth on the road ahead.”
As ELF Beauty navigates this pivotal moment, all eyes are on how Rhode will influence the company’s future performance and market position.
