High street beauty brand e.l.f's booming sales are making it more optimistic about the future

The optimism is fueled by outsize sales. The company’s revenue was up 76% year-over-over, to $438 million, in the six-months that ended Sept. 30. The number far outpaced Wall Street’s expectations of around $197 million. E.l.f. stock soared 10% in extended trading on the news.

The brand, which sells skincare and makeup at lower prices than most competitors, has become a Gen Z favorite on the back of viral TikTok campaigns—from its own account and via influencers. It also was one of the first brands to get on the social media app BeReal and it runs a private Facebook $META page for loyalists.

But it’s more than just marketing, according to CEO Tarang Amin. It’s also “the ability to make prestige quality at these extraordinary prices, our holy grail innovation, taking inspiration from both prestige and our community, and having products consumers can’t seem to get enough of,” Tarang told CNBC.

However, in the months before the most recent earnings, its stock had taken a tumble. Its share price is down significantly from its all-time high of $138 on Aug. 30, hovering just above the $90-mark. Analysts are split, with some anticipating a slowdown and others cheering the brand’s sustained momentum, especially in an economy with rising cost of living.

Charted: e.l.f’s stock sinks from its all-time high

One big number: e.l.f’s expectations

55% to 57%: How much e.l.f now projects full-year net sales will increase, estimating a range of $896 million to $906 million. That’s a jump from the 37-39% it had predicted in the last quarter. This includes the windfall from the August Naturium acquisition, which is expected to contribute approximately $48 million in net sales to e.l.f’s skincare arm.

Person of interest: Luvorboy

The makeup artist and influencer who goes by the moniker “Luvorboy” is the most impactful influencer for the brand, according to Launch Metrics. With over 2 million followers, Luvorboy generates an impressive $692,000 in Media Impact Value (MIV)—a measure the impact of all media placements and mentions across various voices during a selected period—from a single TikTok video placement.

Place of interest: China

The bulk of e.l.f.’s sales take place in the US, where it is sold at tens of thousands of locations, including Target $TGT and Old Navy. But the company has been focused on international expansion.

One of the biggest economies, though, is off the table. E.l.f is steering clear of China, the market it “temporarily” exited in February, shuttering its flagship stores on the e-commerce platform Tmall and short video platform Douyin. After four years of operations in the mainland, “global strategy adjustments and objective factors” led to the brand’s departure, according to the company.