e.l.f. Beauty, Inc.

What does it do?

e.l.f. Beauty makes affordable makeup and skincare — think $12 mascaras and $14 moisturizers that compete with products costing three times as much. Their main brand, e.l.f. Cosmetics, is sold in places like Target, Walmart, and Ulta, as well as directly through their website. They also own smaller brands like Naturium (budget-friendly skincare) and recently acquired Rhode, the viral beauty brand founded by Hailey Bieber. The whole pitch is simple: high-quality products at drugstore prices.

How does it make money?

e.l.f. makes money by selling cosmetics and skincare through two main channels: retail (about 80% of revenue) and its own website (direct-to-consumer). Revenue grew from $1.3B to $1.6B in the latest year, a roughly 23% jump, which is unusually fast for a consumer goods company. They keep costs low by manufacturing primarily in China and investing heavily in social media marketing instead of expensive TV ads. Gross profit data is incomplete here, but historically e.l.f. has run gross margins around 70%, meaning they keep roughly $0.70 of every dollar before operating costs.

Why do investors care?

The growth story is built on three things: gaining shelf space in more stores globally, expanding into skincare (faster-growing than color cosmetics), and acquiring brands with built-in audiences like Rhode. For the thesis to work, e.l.f. needs to keep winning younger shoppers away from legacy brands, successfully integrate Rhode without overpaying, and expand internationally — currently most revenue is still US-based. The risk is that rapid growth masks rising costs, and net income near zero suggests margins are being squeezed even as the top line climbs.