On Wednesday, e.l.f. Beauty reported its fourth-quarter and full-year fiscal 2026 earnings. On the surface, it was the usual dense buffet of corporate earnings jargon: net sales, gross margin, adjusted EBITDA, diluted EPS, guidance, tariffs, oil prices, supply chain exposure, price elasticity, currency fluctuations, SG&A expenses, and all the other thrilling phrases that make normal people's eyes glaze over.
The headline numbers were solid. For the fourth quarter, e.l.f. reported net sales of $449.3 million, a 35% increase from the same quarter a year earlier. For the full fiscal year, net sales hit $1.64 billion, up 25%. Adjusted EBITDA for the year came in at $360.5 million. Adjusted diluted earnings per share were $3.13. The company also issued fiscal 2027 guidance calling for net sales between $1.835 billion and $1.865 billion.
There were some less glamorous details, too. e.l.f. is dealing with tariff issues. It is rolling back some price increases after realizing consumers were extremely sensitive to even small price hikes. It is watching oil prices. It is trying to balance growth against margin pressure. It posted a GAAP net loss for the quarter, partly because expenses jumped.
But buried inside all of that corporate blandness was this seemingly bland line:
"The Company recorded a fair value adjustment of $57.6 million for the fiscal year ended March 31, 2026."
That may sound very boring. It is not. At least, not if you're rhode founder Hailey Bieber…
(Photo by Raymond Hall/GC Images)
Rhode To Riches
Before she became a billion-dollar beauty founder, Hailey Bieber was Hailey Baldwin, the daughter of actor Stephen Baldwin and the niece of Alec, Billy, and Daniel Baldwin. She grew up adjacent to fame, entered the modeling world as a teenager, and eventually built a career that included magazine covers, fashion campaigns, runway work, and brand partnerships.
But let's be honest, for a long time, Hailey was best known to the broader public for one thing: being the extremely hot wife of Justin Bieber. That is not exactly a bad place to be in life. Pretty much every girl born in the 1990s would kill to be married to Justin Bieber, spending her days spending his money.
But that's not the life Hailey chose.
In June 2022, Hailey launched rhode (the first letter is intentionally not capitalized), a skincare brand named after her middle name. The company debuted with just three products: Peptide Glazing Fluid, Barrier Restore Cream, and Peptide Lip Treatment. The concept was simple, clean, and perfectly timed for TikTok: affordable skincare wrapped around Hailey's already viral "glazed donut skin" aesthetic.
It worked almost immediately. rhode sold out products, built long waitlists, and became one of the most talked-about celebrity beauty brands in the world. Unlike many celebrity vanity projects, rhode had actual traction. It was not just a famous person slapping her name on a moisturizer. It was a focused, tightly merchandised brand with a clear identity, a loyal customer base, and very real revenue.
By 2025, rhode had gone from buzzy direct-to-consumer startup to acquisition target. On May 28, 2025, e.l.f. Beauty announced that it had struck a deal to acquire rhode for up to $1 billion.
The structure of the deal is crucial.
e.l.f. agreed to pay $800 million upfront, consisting of $600 million in cash and $200 million in e.l.f. stock. That alone was an extraordinary outcome for a brand that had existed for less than three years. But the deal also included another $200 million in potential milestone payments, commonly known as an earnout.
Hailey's exact ownership stake in rhode has never been publicly confirmed, but industry estimates have generally placed her stake somewhere between 50% and 70%. Using that range, her share of the $600 million cash portion would be roughly $300 million to $420 million. Her share of the $200 million e.l.f. stock portion would be another $100 million to $140 million. In other words, before taxes, Hailey's share of the $800 million upfront portion likely landed somewhere between $400 million and $560 million.
Then there is the $200 million earnout.
If rhode unlocks the full $200 million in milestone payments, Hailey's share would likely be worth another $100 million to $140 million before taxes.
That brings us back to the company's recent quarterly earnings report, which included the following disclosure:
"Change in fair value of contingent consideration related to the acquisition of rhode (the "rhode Acquisition"). The Company recorded a fair value adjustment of $57.6 million for the fiscal year ended March 31, 2026, driven by the outperformance of rhode's revenue results relative to the earnout thresholds set forth in the merger agreement entered into in connection with the rhode Acquisition."
In plain English: e.l.f. promised a $200 million backend bonus if rhode hit aggressive growth targets over three years. Because rhode is performing so phenomenally well, e.l.f. had to adjust its books to show they are now highly likely to owe $57.6 million of that pool. The checks haven't been written yet, but the milestones are officially being locked in.
To be clear, Hailey will not personally receive that entire $57.6 million. But if Hailey owned 50% to 70% of Rhode, her implied share of that milestone-related amount would be roughly $28.8 million to $40.3 million before taxes.
How Much Could Hailey Ultimately Earn Altogether?
- $600 million cash upfront: If Hailey owned 50%, her share would be $300 million. If she owned 70%, her share would be $420 million.
- $200 million in e.l.f. stock: If Hailey owned 50%, her share would be $100 million. If she owned 70%, her share would be $140 million.
- $200 million potential earnout: If rhode unlocks the full milestone pool, Hailey's share would be $100 million at 50% ownership or $140 million at 70% ownership.
Put it all together, and Hailey's total potential pre-tax payday from the full rhode deal would be:
- At 50% ownership: $500 million
- At 70% ownership: $700 million
And to top it all off, she also gets to be Justin Bieber's extremely hot wife. Hailey Bieber is in the running for living the greatest life of any woman ever.
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