• E.l.f. Beauty posted its first $1 billion fiscal year, growing sales by 77%.
• The company blew past Wall Street's estimates, and its sales guidance for the current fiscal year was less than analysts had expected.
• Shares of E.l.f. initially fell after the company's release, but later rose when the company suggested its guidance was conservative.

E.l.f. Beauty posted its first billion-dollar fiscal year on Wednesday as sales spiked 77%, but the retailer is expecting its growth to slow down in the current fiscal year.

The eyes, lip, face company, known for its viral marketing and prowess in winning over younger consumers, issued guidance that came in lower than analysts had forecast.

Shares of E.l.f. fell after its report was initially released, but later jumped after the company suggested that its guidance was conservative.

"Last year, we started our guidance at 22% to 24% range, ended the year at 77%," finance chief Mandy Fields told analysts. "I'm not saying that we're promising 77% this year for sure. But what I will say is that gives you a little bit of insight into our guidance philosophy and what has worked well for us over these last five years, taking it one quarter at a time."

Shares closed about 19% higher on Thursday.

Here is how E.l.f. Beauty did in its fourth fiscal quarter compared to what Wall Street was expecting, based on a survey of analysts by LSEG:

• Earnings per share: 53 cents adjusted vs. 32 cents expected
• Revenue: $321.1 million vs. $292.6 million expected

The company reported net income for the three-month period that ended March 31 was $14.53 million, or 25 cents per share, compared to $16.25 million, or 29 cents per share, a year earlier. Excluding one-time items, E.l.f. posted earnings of 53 cents per share. 

Sales rose to $321.1 million, up about 71% from $187.4 million a year earlier.

For the full year, the company's sales grew to $1.02 billion, an increase of 77% from the year-ago period.

E.l.f. Beauty has been on a tear over the past year, posting sales gains in the high double-digit percentages quarter after quarter as consumers flock to its low-priced beauty products either through its own website or at retailers such as Walmart and Target. 

In a statement, E.l.f. CEO Tarang Amin said he believes the company is still in the "early innings" of its growth story and expects more to come in cosmetics, skin care and in international markets. Its guidance reflects that sentiment, but even so, the company expects to grow at a slower pace than Wall Street anticipated. 

E.l.f. expects net sales to be between $1.23 billion and $1.25 billion, which would be an increase of 20% to 22%. That is below the $1.27 billion, or 27.4% uptick, that analysts had expected.

The company is forecasting adjusted net income to be between $187 million and $191 million, and adjusted earnings to be between $3.20 and $3.25 per share. That is below the $3.51 that analysts had expected, according to LSEG. 

Last month, Ulta Beauty CEO Dave Kimbell threw cold water on the red-hot beauty category when he warned that demand for cosmetics was cooling, sending its stock down 15% that day and hitting shares of E.l.f, Estée Lauder and Coty.

"We have seen a slowdown in the total category," Kimbell said at an investor conference hosted by JPMorgan Chase. "We came into the year — and we talked about this on our [earnings] call a few weeks ago — expecting the category to moderate. It has [had], as I said, several years of strong growth. We did not anticipate it would continue at the rate that it's been growing."

He added that the slowdown has been "a bit earlier" and a "bit bigger than we thought." 

Just how much Ulta's sales have slowed remains to be seen, but the beauty giant has seen strong sales of E.l.f. products. During a call with analysts, Amin said that it grew its business with Ulta by 80% in fiscal 2024 — "well above where the overall growth rates were."

Read E.l.f.'s full earnings release here.