e.l.f. Beauty Inc. (ELF) saw its shares plummet over 20% in after-hours trading on Thursday, following the company's disappointing fiscal 2025 outlook. This came despite the cosmetics maker reporting better-than-expected revenue for the third quarter ended December 31, 2024.

For the fiscal third quarter, e.l.f. Beauty reported earnings of $0.74 per share, in line with analysts' estimates. Revenue came in at $355.3 million, surpassing expectations of $329.7 million and representing a 31% year-over-year increase.

However, the company significantly lowered its full-year 2025 guidance, citing softer-than-expected sales trends in January and weakening demand in the mass beauty retail channels. e.l.f. Beauty now expects fiscal 2025 revenue in the range of $1.30 billion to $1.31 billion, down from its previous forecast of $1.315 billion to $1.335 billion. Additionally, the company cut its adjusted earnings per share guidance to $3.27 to $3.32, below the prior range of $3.47 to $3.53.

The reduced outlook reflects mounting challenges faced by the cosmetics industry, including inflationary pressures and shifting consumer spending patterns amidst economic uncertainties. Rival beauty giant Estee Lauder (EL) also recently announced job cuts and warned of weakness in travel retail demand, particularly in Asia.

e.l.f. Beauty's CEO Tarang Amin acknowledged the company's cautious approach, stating, "Given softer-than-expected trends in January, we are taking a prudent approach and lowering our outlook for the final quarter of our fiscal year." The company's CFO, Mandy Fields, cited the weaker-than-anticipated mass beauty channel sales as a key factor behind the revised guidance.