v3.26.1
Acquisition
 3 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisition Acquisition
On August 5, 2025 (the “acquisition date”), the Company consummated the acquisition of rhode, the fast-growing, multi-category lifestyle beauty brand founded by Hailey Bieber known for its collection of high-performance, skin-focused products (the “rhode Acquisition”). The rhode Acquisition is built upon both brands' shared focus on disruption, community connection and product innovation, and furthers the Company’s penetration within skin care. The rhode Acquisition was completed pursuant to the Agreement and Plan of Merger, by and among the Company, e.l.f. Cosmetics, Inc., Glaze Merger Sub, LLC (“Merger Sub”), HRBeauty LLC (“rhode”), the sellers identified therein, and David Levin (as the sellers’ representative), dated May 28, 2025 (the “Merger Agreement”). Pursuant to the terms of, and subject to the conditions specified in, the Merger Agreement, Merger Sub merged with and into rhode (the “Merger”), and upon consummation of the Merger, Merger Sub ceased to exist and rhode became a wholly owned subsidiary of e.l.f. Cosmetics, Inc. Upon the consummation of the Merger and the other transactions contemplated by the Merger Agreement, all outstanding limited liability company interests of rhode were cancelled and converted into the right to receive the consideration. The rhode Acquisition was accounted for as a business combination using the acquisition method of accounting, which requires certain assets acquired and liabilities assumed to be recognized at the estimated fair values as of the date of the rhode Acquisition. The total purchase price of $897.5 million consisted of cash, shares of the Company’s common stock, and a potential earnout. The following table summarizes the preliminary allocation of purchase price to the assets acquired and liabilities assumed (in thousands):

Cash consideration
$590,149 
Equity consideration (common stock issued)(1)
300,278 
Valuation of potential earnout7,100 
Total consideration897,527 
Net assets acquired, excluding liability assumed for acquisition-related seller expenses
$431,734 
Liability assumed for acquisition-related seller expenses(2)
(47,100)
Less: Net assets acquired(384,634)
Goodwill
$512,893 
(1) The fair market value of the $300.3 million common stock issued (equivalent to 2,582,371 shares of common stock) was determined on the basis of the opening market price of the Company’s stock of $116.28 per share on the acquisition date.
(2) In connection with the rhode Acquisition, the Company paid rhode’s acquisition-related expenses of $47.1 million recognized as an assumed liability at the acquisition date. The Company determined these amounts represented assumed liabilities of the sellers at the acquisition date, as the Company bore no legal obligation to the related vendors prior to closing.

The Company incurred and expensed acquisition transaction costs of $0.2 million and $3.6 million during the three months ended June 30, 2026 and June 30, 2025, respectively. These costs are included as a component of selling, general and administrative expenses in the condensed consolidated statements of operations.
The purchase price allocation, deferred tax calculations and residual goodwill were finalized during the quarter ended June 30, 2026. rhode’s results of operations have been included in the Company's condensed consolidated financial statements from the acquisition date.
The following table presents the purchase price allocation recorded in the Company's condensed consolidated balance sheet on the acquisition date and upon finalization during the quarter ended June 30, 2026. The adjustment reflects finalization of purchase accounting for facts and circumstances that existed upon the acquisition date as follows (in thousands):
Cash$8,467 
Accounts receivable30,036
Inventory39,568
Prepaid expenses and other current assets2,392
Property and equipment2,098
Intangible assets380,900
Goodwill(1)
512,893
Total assets acquired
976,354 
Accounts payable(17,898)
Accrued expenses and other current liabilities(60,861)
Other obligations(68)
Total liabilities assumed(78,827)
Total purchase price
$897,527 
(1) The goodwill represents the excess value over both tangible and intangible assets acquired and liabilities assumed. The goodwill recognized in the transaction is primarily attributable to the Company’s expectation that rhode can continue to expand distribution and deliver new skin care products. A substantial amount of the goodwill is expected to be deductible for tax purposes.
Intangible assets
The estimated fair values (all considered level 3 measurements) of the identifiable intangible assets acquired as of the acquisition date, their estimated useful lives and fair value methodology are as follows:
Fair ValueEstimated Useful Life
(in thousands)(in years)
Fair Value Methodology
Customer relationships – retailers$104,600 12Excess earnings method
Trademarks276,300 15Relief from Royalty method
Total identified intangible assets$380,900 
Valuation of potential earnout
In connection with the rhode Acquisition, the Company initially recorded a liability for contingent consideration of $7.1 million, payable upon achievement of certain earnout milestones by 2028, with a maximum cash payment of $200 million. As of June 30, 2026, the contingent consideration was remeasured to $80.8 million, driven by the outperformance of rhode's revenue results since the acquisition date, and a revised upward forecast for the remainder of the performance periods. The Company considered the time value of money in evaluating the fair value of the contingent consideration. The fair value of the liability is calculated using Monte Carlo simulation based on corresponding projected revenue. In accordance, the volatility and discount rate was adjusted to reflect the risk profile of recurring revenue. This amount is reflected as "Contingent consideration" on the condensed consolidated balance sheets. The fair value adjustments of $16.1 million and $57.6 million were recognized in “Change in fair value of contingent consideration” within the consolidated statement of operations during the first quarter of fiscal 2027 and fourth quarter of fiscal 2026, respectively. If the earnout milestones are not met, no payment will be made.
The measurement includes significant inputs not observable in the market and thus represents a level 3 measurement as defined in ASC 820, “Fair Value Measurement”.