Hailey Bieber’s Rhode is closing in on its full $1 billion payout. Rhode’s sales keep beating the targets e.l.f. Beauty set for it when it first bought the brand.
e.l.f. paid $800 million when the Rhode deal closed on Aug. 5, 2025 ($600 million in cash and about $200 million in e.l.f. stock). Rhode owners, including Mrs. Bieber, could receive up to $200 million more from e.l.f. Beauty, depending on how much the celebrity brand grows over the next three years.
That extra money is called an earnout. Rhode’s owners and founder Hailey Bieber can’t collect more than $1 billion in total.
On Nov. 4, e.l.f. reported results for the three months ended Sept. 30. Sales rose 51% to $520.8 million. That topped Wall Street’s forecast of about $469 million. It was e.l.f.’s 31st quarter in a row of sales growth.
Rhode is growing faster than the deal’s targets. So e.l.f. now expects to pay more of that extra $200 million. In the latest quarter alone, e.l.f. added $17.7 million to what it expects to owe Rhode’s owners. After the quarter ended, e.l.f. made its first earnout payment.
How Rhode Sales Have Lifted e.l.f. Since the Deal
Rhode has been a big part of e.l.f.’s growth all year. During e.l.f.’s first quarter (April to June), Rhode brought in about $160 million. That was about a third of e.l.f.’s sales, according to the company’s summer earnings call.
e.l.f. Beauty SVP and CFO Mandy Fields acknowledged that Rhode contributed to the company’s growth.
“Rhode contributed approximately 16 percentage points to net sales growth in the one-month period prior to annualizing the acquisition on August 5th.”
– Mandy Fields, SVP and CFO, e.l.f. Beauty
e.l.f. owned Rhode for only about two of the three months in the same quarter last year. So Rhode’s sales from July 1 to Aug. 4 this year were all new growth. In that one month, Rhode was responsible for nearly a third of e.l.f.’s 51% sales growth.
Without that extra month, e.l.f.’s sales still would have grown by about 35%. That’s called “organic” growth (growth from brands e.l.f. already owned a year earlier). Rhode helped there too, partly with shipments to stock Sephora’s shelves in Europe.
Every e.l.f. brand grew. Sales outside the U.S. jumped 165%, while U.S. sales grew 25%. At Sephora, Rhode ranks No. 1 or No. 2 in 12 of the 13 categories where it competes.
Why e.l.f. Is Spending More to Grow Rhode Sales
e.l.f. Beauty Chairman and CEO Tarang Amin explained the company’s plan for Rhode during the Nov. 4 earnings call.
“We are investing more in the brand, and still having the brand be accretive on an adjusted EBITDA margin basis.”
– Tarang Amin, Chairman and CEO, e.l.f. Beauty
Accretive means Rhode lifts e.l.f.’s overall profit margin, even with the extra spending. (Adjusted EBITDA is a profit measure that leaves out costs like interest, taxes, and one-time charges.)
The reasons to spend are piling up. Rhode’s launch with Sephora in 19 European countries was the biggest in Sephora’s history. A limited-edition collab with influencer Alexandra Leclerc drew a 200,000-person wait list, and most items sold out within the first hour. Rhode also has some of the highest repeat-purchase rates in beauty.
There’s plenty of room to grow. Rhode is in only about 40% of Sephora’s stores worldwide, and 75% of its social media followers live outside the U.S. November is Hailey’s birthday month, when Rhode leans on limited-time exclusives.
Rhode’s gross margin (the share of each sale left after product costs) will likely shrink as it moves into more stores. Still, e.l.f. expects strong profit margins on the brand.
e.l.f. is also more confident about the rest of its year. Last quarter, the company expected total sales for the year ending March 31, 2027, to grow around 18% to 20%. Now it expects 22% to 24% growth, or about $2 billion. That forecast covers all of e.l.f.’s brands, Rhode included. A higher forecast means e.l.f. thinks shoppers will keep buying through the holidays and into spring. Rhode’s growth is a big part of that bet.
Sources: e.l.f. Beauty, e.l.f. Beauty earnings call transcript (StockAnalysis)
Money Lesson
Rhode’s repeat buyers are a big reason e.l.f. is betting on the brand. Repeat buys are where your beauty budget quietly adds up. List the products you rebuy every month, add up what they cost, and treat that total like a bill. Pay rent, bills, and debt first, then refill only what’s actually empty. Do the math: a $20 lip product and a $30 serum bought every month add up to $600 a year.
Think of us as your money-savvy best friend, not your financial adviser. This story is for information and fun, not personal advice, so talk to a licensed professional before you make any big money moves.
