E.l.f. Beauty posted its first billion-dollar fiscal year on Wednesday as sales surged 77%, but the retailer anticipates a slower growth rate in the current fiscal year. The company, known for its eyes, lips, face products and its viral marketing strategies targeting younger consumers, issued guidance that fell short of analysts' expectations.

Initially, shares of E.l.f. dropped following the report, but later rebounded after the company suggested that its conservative guidance could be exceeded. “Last year, we started our guidance at a 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.” Following this, shares rose over 20% in morning trading on Thursday.

Here's how E.l.f. Beauty performed in its fourth fiscal quarter compared to Wall Street expectations, 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

For the three-month period ending March 31, the company reported net income of $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 adjusted earnings of 53 cents per share. Sales climbed to $321.1 million, marking a 71% increase from $187.4 million the previous year.

For the full year, E.l.f. Beauty's sales grew to $1.02 billion, a 77% increase from the previous year.

E.l.f. Beauty has experienced substantial growth over the past year, consistently posting high double-digit sales gains as consumers gravitate towards its affordable beauty products, available through its website and retailers like Walmart and Target.

In a statement, E.l.f. CEO Tarang Amin expressed optimism about the company’s future, stating that he believes E.l.f. is still in the “early innings” of its growth story, with more expansion expected in cosmetics, skin care, and international markets. Despite this optimism, the company’s guidance projects a slower growth rate than Wall Street had anticipated.

E.l.f. forecasts net sales between $1.23 billion and $1.25 billion for the upcoming year, representing a 20% to 22% increase. This is below analysts' expectations of $1.27 billion, or a 27.4% increase. The company projects adjusted net income to be between $187 million and $191 million, with adjusted earnings per share ranging from $3.20 to $3.25, lower than the $3.51 expected by analysts.

Last month, Ulta Beauty CEO Dave Kimbell noted a cooling demand in the beauty category, which impacted the stocks of E.l.f., Estée Lauder, and Coty. Kimbell mentioned that the overall beauty market had experienced several years of strong growth, but he anticipated a moderation. “We have seen a slowdown in the total category,” Kimbell said at a JPMorgan Chase investor conference. “We did not anticipate it would continue at the rate that it’s been growing.”

The extent of Ulta’s sales slowdown remains to be seen, but E.l.f. products have performed strongly. During a call with analysts, Amin highlighted that E.l.f. grew its business with Ulta by 80% in fiscal 2024, significantly outpacing overall growth rates.