elf Beauty Aug 6

Rating Company Date 6 August 2026 Hold e.l.f. Beauty North America Reuters Bloomberg Rating Hold ELF.N ELF US Price target (USD) 78.00 United States Price at 5 Aug 26 86.37 52-week range 146.67 – 49.57 Consumer Cosmetics, Household & Valuation & Risks Personal Care

Rhode Continues to Shine, Core Recovery Emerging? Steve Powers Research Analyst Key takeaways from ELF's 1Q27 results Christopher Barnes, CFA ELF delivered a strong 1Q27 beat, with net sales of $479M (vs. DBe/Street: Research Analyst $419M/$431M) and adjusted EBITDA of $168M (vs. DBe/Street: $81M/$84M). The upside was driven by a combination of exceptionally strong rhode performance (~$160M vs. DBe: $95M) and the recognition of ~$50M of IEEPA Nikhil Jain, CFA Research Associate tariff refunds in gross profit, offsetting a high-single-digit decline in organic sales. Excluding tariff refunds, gross margin still expanded ~350bps on pricing and lower tariff rates; however, we do not view the underlying margin performance as Angeline Goh overly compelling relative to the substantial top-line leverage and positive mix Research Associate generated during the quarter, particularly given management's expectation that

essentially all of the refund benefit will be reinvested over the balance of FY27. Management also raised FY27 sales growth guidance to +18-20% (from +12- 14%)1, supported by stronger rhode expectations (~13pts of growth contribution Key changes vs. ~9pts previously) and greater confidence in the balance of the portfolio as Price target (USD) 64 78 22% rhode anniversaries into the base and core e.l.f. trends improve. Contributing Source: Deutsche Bank factors include targeted pricing actions, encouraging early reads on fall innovation, a better-than-expected haircare launch, international expansion initiatives, and continued Naturium momentum.

Investors are likely to remain divided on the ultimate ROI of incremental marketing investment relative to broader pricing actions. Management noted that a broad pricing test across most of the assortment found only ~10% of SKUs generated sufficient unit acceleration to justify lower price points, with the remaining SKUs returning to prior pricing by mid-August. Looking ahead, 2Q sales are expected to grow in the mid-30% range, aided by pipeline shipments associated with rhode's European rollout, while adjusted EBITDA margins are expected to remain in the mid-teens through 2Q-4Q as marketing, innovation, international expansion, haircare, and other growth investments absorb much of the tariff-related benefit.

Following the quarter, we are increasing our FY27 estimates to levels slightly above management's updated outlook, reflecting stronger rhode momentum, improving core e.l.f. trends, and encouraging early innovation reads. We are also raising our price target to $78 (from $64), driven by higher outer-year margin

1 Combined with adjusted EBITDA guidance increasing to $401M-$407M (from $379M-$385M) and adjusted EPS to $3.50-$3.55 (from $3.27-$3.32)

Deutsche Bank Securities Inc. IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

assumptions as rhode scales, international mix expands, and recent marketing and infrastructure investments begin to leverage. We remain Hold rated, however, still uncertain as to whether management can sustain the anticipated momentum in rhode and acceleration in core e.l.f. while converting elevated reinvestment spending into durable, profitable growth longer-term.

Estimate changes and valuation Following 1Q27 results, our estimates now embed FY27 revenue growth of +20.6% (up from +15.1%), including +6.7% organic growth (vs. +6.5% prior) and an approximately 14-point contribution from rhode (vs. ~9 points previously). We now forecast adjusted EBITDA of $412M (up from $384M) and EPS of $3.58 (up from $3.29). For 2Q27, we model sales growth of +36% and…