E.l.f. Beauty announced it will acquire Hailey Bieber's skincare brand, rhode, for $1 billion. This deal, between two brands that dominate the coveted Gen Z and millennial audiences, proves that founder-led brands can be the next unicorn, and it cements e.l.f. Beauty’s place as the next-generation beauty conglomerate.
The high-profile deal is the fastest $1 billion sale in beauty history and e.l.f. Beauty’s largest acquisition to date. As the first e.l.f. Beauty brand to be sold in Sephora, rhode gives e.l.f. gravitas and consumer buzz while e.l.f. gives rhode a global playbook.
In an industry full of listless, white-labeled celebrity brands, rhode stood out as an exception. Bieber founded rhode in 2022 with Michael and Lauren Ratner. She was hands-on from the start. Before Bieber developed the line, she consulted with skincare experts, dermatologists, and cosmetic chemists to ensure the products would be efficacious. On the rhode website, you see Bieber whiteboarding the brand ethos–she is also rhode’s Creative Director, the driving force behind rhode’s signature sultry, food-fetish campaigns.
The rhode deal injects much-needed buzz into e.l.f. Beauty. The Oakland-based company cut its annual net sales and profit forecast earlier this year, citing weakening consumer demand. On their most recent earnings call, due to tariffs and market uncertainty, the company could not provide a financial outlook for the fiscal year.
As part of the agreement, rhode shareholders will receive $800 million in cash and stock upon closing. E.l.f. Beauty will then potentially pay rhode an additional $200 million, contingent on the brand’s performance over the next three years.
“Having been in the consumer space 34 years, I’m blown away by the success rhode has achieved,” e.l.f. Chairman and CEO Tarang Amin told BeautyMatter in an email. “Hailey and her team have quickly established rhode as a bold disruptor with skin-focused, science-backed formulations that offer high performance without compromise. I am so impressed by the level of scale, aesthetic, and incredibly loyal community they have cultivated.”
Bieber will continue her role as founder and additionally serve as rhode’s Chief Creative Officer and Head of Innovation, overseeing creative, product innovation, and marketing. Additionally, she will act as a strategic advisor to e.l.f. Beauty and its subsidiaries.
The acquisition brings both Bieber's expertise as both a founder and influencer under the e.l.f. umbrella. Bieber has a significant social media presence with 54.9 million Instagram followers and 15.4 million TikTok followers. She often posts about beauty products she uses, which recently included Naturium’s Glow Getter Multi-Oil Body Butter. “I’ve been using this since I was pregnant, and I’ve probably gone through 15 jars of it at this point,” Bieber wrote on her Instagram Story. Could it have been an easter egg, or just a coincidence? Either way, the mention generated press in multiple media outlets, fueling Naturium's sales. While $1 billion is a significant sum to pay for a beauty brand, e.l.f. seems to recognize the added value Bieber brings beyond rhode's product line.
Rhode is the latest to join e.l.f. Beauty’s growing portfolio of brands, which includes e.l.f. Cosmetics, e.l.f. SKIN, Keys Soulcare, Well People, and Naturium. The brand will continue to be led by its founders and CEO, Nick Vlahos, from its headquarters in Los Angeles, California.
“We can’t wait to bring rhode to more faces, places, and spaces,” said Bieber in the press release. “Just three years into this journey, our partnership with e.l.f. Beauty marks an incredible opportunity to elevate and accelerate our ability to reach more of our community with even more innovative products and widen our distribution globally.”
E.l.f. Beauty’s Fourth Quarter and Full Fiscal 2025 Results
E.l.f. Beauty announced its acquisition alongside its fourth quarter and full fiscal year 2025 financial results. For the fiscal year 2025, the company's net sales increased by 28% compared to fiscal year 2024. Q4 marked the company’s 25th consecutive quarter of net sales growth and market share gains.
“E.l.f. Beauty is on fire, and we're further fueling that fire with the acquisition of rhode,” said Amin in the recent earnings call.
Overall, the company demonstrated considerable growth, increasing its market share within key retailers. Notably, e.l.f. Beauty holds the top position in Target, capturing 21% of the retailer’s entire cosmetics category. The brand's popularity at Walmart has significantly increased, moving from the fourth to the second most popular position among brands carried by the retail giant. Naturium also experienced significant success following its launch in Ulta Beauty last summer. The brand quickly climbed to the top-selling position for body wash internationally. In Dollar General, e.l.f. Beauty continues to perform above expectations.
E.l.f. Beauty experienced international growth by increasing its market share in the UK and Canada, its primary international markets. The company also executed its largest international launch with Rossmann in Germany. Furthermore, e.l.f. Beauty achieved a top-three brand ranking with new retailers in the Netherlands, Italy, and Mexico.
Tariff Troubles Ahead
E.l.f. Beauty touched on the effects of tariffs and outlined their planned mitigation strategies, which are crucial considering that about 75% of the company's global production comes from China. Tariffs have increased from 25% to 55% as of May 14, with an additional 30% incremental tariff through mid-August.
The company estimates the gross impact on its cost of goods sold to be approximately $50 million annually if tariffs remain at the current level. Mitigation efforts include pricing adjustments, supply chain optimization, and business diversification. The company recently announced a $1 price increase on its entire product assortment globally, effective August 1. This is only the third price increase that the brand has taken in its 21-year history. E.l.f. Beauty’s customers expressed support after the company announced the price increase on social media earlier this month. E.l.f. Beauty noted that the impact of tariffs will start to hit in Q1.
Despite other beauty companies focusing on nearshoring, e.l.f. Beauty reiterated its dedication to its team and suppliers in China. Amin highlighted the company's unique China-based supply chain as a competitive advantage, delivering quality, cost, and speed. However, the company intends to diversify its supply chain and will continue collaborating with its primary suppliers to establish supplementary operations outside of China. The specific locations for this expansion were not disclosed.
International sales, which are not currently subject to tariffs, are the fastest-growing part of e.l.f. Beauty’s business, growing from $28 million in 2016 to $250 million today. The company plans to launch e.l.f. Beauty in over 1,200 Kruidvat stores in the Netherlands and Belgium, and in 1,000 stores with Rossman in Poland.
Innovation and Marketing Strategies
E.l.f. Beauty shared that it plans to maintain its focus on affordability, with an average product price of $6.50. This is lower than legacy mass cosmetics brands, which average $9.50, and prestige brands, where prices exceed $20.
The company highlighted the success of its latest product launch, the Glow Reviver Melting Lip Balms, which is often compared to and considered a dupe for Summer Fridays Lip Balm. E.l.f Beauty also emphasized its ability to entertain and engage consumers with its recent mini trick pony campaign, which fueled the Halo Glow franchise momentum. The campaign delivered an 80% boost in organic traffic and a double-digit lift in sales of Halo Glow products on elfcosmetics.com.
Financial Performance and Future Outlook
Mandy Fields, Chief Financial Officer at e.l.f Beauty, reported a 4% year-over-year net sales growth in Q4, with a 1% increase in the US and a 19% increase in international sales. The company’s gross margin increased to 71%, driven by favorable foreign exchange impacts and lower transportation costs.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased to $81 million, and adjusted net income was $45 million, driven by net sales growth, gross margin expansion, and leverage in marketing and digital spend.
E.l.f. Beauty demonstrates a robust liquidity position, finishing the fiscal year with $149 million in cash, an increase from the previous year's $108 million. The company also saw a substantial rise in free cash flow, generating approximately $115 million in fiscal year 2025, up from $62 million in the prior year. In the month of April, e.l.f. was the only top-five cosmetics brand to post growth, with the company gaining an additional 130 basis points of market share in the US.
Due to the uncertainty surrounding tariffs, the company stated that it would not be offering a fiscal year 2026 outlook at this time.
“We don't believe it's prudent to provide an outlook and then have to adjust it if tariffs were to move from where they are today,” said Fields. “As we look ahead, we remain focused on share gains in the US and expanding our business internationally, and we continue to make progress in each. Looking at Q1 to date, we are seeing our consumption trends better than what we saw in Q4, and continuing to trend well ahead of the category.”
E.l.f. Beauty’s Acquisitions
In 2023, e.l.f. Beauty acquired Naturium for $355 million, doubling down on the white space that the company saw in skincare. Naturium leveraged e.l.f. Beauty capabilities to expand into Ulta Beauty in the US, Shoppers Drug Mart in Canada, and Boots in the UK. In turn, e.l.f. Beauty benefited from the expanded expertise in skin care to further accelerate its in-house skincare brand, e.l.f. Skin. Fiscal year 2025 was one of the strongest growth years ever for both Naturium and e.l.f. Skin, underscoring the considerable positive impact and strategic advantages stemming from the acquisition.
The strong performance of Naturium following its acquisition by e.l.f. Beauty provides reassurance that the recent $1 billion acquisition of rhode is unlikely to cannibalize existing e.l.f. Beauty sales. The two brands are at different price points, which suggests that they cater to different consumer segments within the beauty market. E.l.f. Beauty and rhode share a similar brand ethos: both are known for their strong digital community engagement and as trend-setters in both the physical (see rhode’s viral phone case) and digital realm.
Amin referenced the acquisition of Naturium to set the stage for the discussion of the company’s agreement to acquire rhode.
“We believe the acquisition of rhode is a unique opportunity to bring together two like-minded disruptors who are best in class at delivering high-quality innovation to highly engaged communities,” he said. “The unique partnership accelerates our collective potential to transform the beauty industry. Founder Hailey Rhode Bieber, a fellow bold disruptor, saw a clear white space opportunity to bring a lifestyle approach to beauty.”
Rhode generated $212 million in net sales over the past year through a direct-to-consumer model and a concise offering of only 10 products. The investment will fuel rhode’s disruptive marketing engine to further build its community of loyalists. The acquisition is expected to enhance the company's relationship and presence with Sephora globally, with rhode launching in all Sephora stores in the US, in Canada this fall, and in the UK by the end of 2025.
“Sephora sees [Bieber] well beyond her celebrity status,” said Amin. “They view her as a thoughtful founder with a unique vision, incredible instinct, and desirable aesthetic. Our time getting to know Haley affirms this. As we look ahead, we see a massive runway for growth, and are excited to partner together with rhode to bring the brand to more faces, places, and spaces.”
Amin added that he sees potential to provide rhode with opportunities to broaden its product assortment and innovation in the skincare and makeup categories, as well as expand into new adjacent categories in the future. “[Bieber’s] instincts have proven to break through the most crowded categories … [she] is a visionary and her unique perspective, tenacity, and passion to reinvent beauty come through in every aspect of the business. She surrounded herself with an exceptional team to bring the vision of rhode to life for millions of consumers, further fueling fandom.”
The acquisition of rhode is projected to increase e.l.f.'s revenue growth, adjusted EBITDA margins, and overall earnings. The transaction is expected to close in the second quarter of fiscal 2026, with rhode contributing to ELF's results starting in fiscal Q2.
