E.l.f. Beauty reported its fiscal first-quarter numbers on Wednesday, Aug. 5, 2026, and profit jumped 100%.
The quarter, which ended June 30, included a roughly $50 million refund from the federal government, plus interest tied to tariffs the Supreme Court voided.
With that refund added, net income rose to $66.6 million, or $1.12 a share, versus $33.3 million, or 58 cents a share, in the same quarter last year.
Sales came to $479.4 million, roughly 36% higher than the $353.7 million posted a year earlier and well ahead of the $430 million that analysts had forecast.
Adjusted earnings, which strip out one-time tax and stock-compensation charges, came to $1.75 per share. Wall Street had been looking for 71 cents.
Gross margin, the share of each dollar of sales left after paying to make the products, expanded by 14 percentage points versus last year.
E.l.f. called that gain a one-time event because refunds won't keep coming. The company is still waiting on about $8 million in extra refunds.
E.l.f. also raised its outlook for the full year.
It now expects revenue of $1.94 billion to $1.97 billion, above the $1.86 billion analysts expected and above its old range of $1.84 billion to $1.87 billion.
It also lifted its adjusted earnings forecast to $3.50 to $3.55 per share, above the $3.33 analysts expected and the prior $3.27 to $3.32 range.
CEO Tarang Amin said the refund will go right back into the business.
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"Our plan is to fully reinvest that money in both pricing, to have a superior value proposition, as well as increased marketing across our entire portfolio of brands," he said.
Amin added, "We feel we never should have had the tariffs to begin with, so let's invest in our brands to drive the strength that we see."
Amin also said shoppers are "suffering" from high gas prices and other financial pressures.
That's part of the reason E.l.f. is rolling back some of last year's price increases and cutting prices on roughly 10% of its lineup.
The higher prices will begin to fade this quarter as those rollbacks happen.
Before making those moves, E.l.f. tested how much a lower price actually matters.
It cut prices by $1 on average across 80% of its products and watched what happened.
For roughly 90% of the tested items, the lower price did not change unit volume, or the number of products sold.
Only about 10% of the lineup showed enough new demand to make the price cut worthwhile.
The test also turned up two clear examples.
The Power Grip Primer saw no real change in sales volume after a price cut, while the Cream Glide Lip Liner responded when E.l.f. lowered it from $3 to $2.
Amin said the study let shoppers vote with their wallets.
The company learned which items were priced right before the test, and which ones could gain momentum with a lower tag.
The refund is also not the whole story.
Even without it, gross margin would have risen about 3.5 percentage points, helped by last year's price increases and lower tariffs.
The next few quarters will show whether lower prices and extra marketing can fill that gap.
For shoppers, the clearest result may be lower prices on some makeup favorites.
For investors, the question is whether that $50 million becomes a one-time boost or something the company builds on.
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