Cosmetics company e.l.f. Beauty (NYSE: ELF) announced better-than-expected revenue in Q1 CY2025, with sales up 3.6% year on year to $332.6 million. Its non-GAAP profit of $0.78 per share was 8.3% above analysts’ consensus estimates.

Is now the time to buy e.l.f. Beauty? Find out by accessing our full research report, it’s free.

Company Overview

Short for "eyes, lips, face", e.l.f. Beauty (NYSE: ELF) is a developer of high-quality beauty products at accessible price points.

Sales Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $1.31 billion in revenue over the past 12 months, e.l.f. Beauty is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers. On the bright side, it can grow faster because it has a longer list of untapped store chains to sell into.

As you can see below, e.l.f. Beauty grew its sales at an incredible 49.6% compounded annual growth rate over the last three years. This is an encouraging starting point for our analysis because it shows e.l.f. Beauty’s demand was higher than many consumer staples companies.

This quarter, e.l.f. Beauty reported modest year-on-year revenue growth of 3.6% but beat Wall Street’s estimates by 2%.

Looking ahead, sell-side analysts expect revenue to grow 9.5% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is noteworthy and indicates the market sees success for its products.

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Cash Is King

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

e.l.f. Beauty has shown impressive cash profitability, driven by its attractive business model that gives it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 7.2% over the last two years, better than the broader consumer staples sector.

Taking a step back, we can see that e.l.f. Beauty’s margin expanded by 1.9 percentage points over the last year. This shows the company is heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability fell.

e.l.f. Beauty’s free cash flow clocked in at $115.3 million in Q1, equivalent to a 34.7% margin. This result was good as its margin was 24 percentage points higher than in the same quarter last year, building on its favorable historical trend.

Key Takeaways from e.l.f. Beauty’s Q1 Results

We were impressed by how significantly e.l.f. Beauty blew past analysts’ revenue, EPS, and EBITDA expectations this quarter. On the other hand, it pulled its full-year guidance due to tariff uncertainty. Overall, we think this was a good quarter, but the tariff commentary likely spooked investors. Shares traded down 13.5% to $78.25 immediately after reporting.

Big picture, is e.l.f. Beauty a buy here and now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.