Investors do not like Fairy Beauty (ELEVEN -15.63%) While the fast-growing cosmetics brand beat estimates in its first-quarter earnings report, the market was unhappy with its second-quarter forecast, which predicts significantly lower profit margins as a result of increased marketing spending.

At 10:13 a.m. ET, the stock was down 14.5% following the news.

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Elf achieved strong growth

For the period ended June 30, Elf, which stands for “Eyes, Lips, Face,” reported a 50% jump in revenue to $324.5 million, with strong growth in both retail and e-commerce, well above the consensus of $304.7 million.

Gross margin improved 80 basis points to 71%, reflecting price increases, lower transportation costs and better foreign exchange rates. Marketing and digital spending and other overhead costs also rose sharply, leading to a 104% increase in selling, general and administrative expenses to $164.4 million.

As a result, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose only 4% to $77.4 million. On the bottom line, adjusted earnings per share were flat at $1.10, but beat the consensus of $0.84.

CEO Tarang Amin called the performance a “strong start” to the year and said the company gained 260 basis points of market share in the quarter.

But investors want less spending

Elf has raised its forecast for the full year: The company now expects sales of $1.28 billion to $1.3 billion, which represents an increase of 25 to 27 percent over the previous year (previously $1.23 billion to $1.25 billion). In addition, the forecast for adjusted earnings per share was raised from $3.20 to $3.25 to $3.36 to $3.41.

However, consensus estimates are at the higher end of those numbers, meaning investors were more likely to expect an increase in guidance. The company also forecast that adjusted EBITDA margin in the second quarter will decline significantly to low double digits from 28% a year ago.

Today’s sell-off appears to be a re-rating after the recovery rather than a reflection of the company’s weakness. With the planned expansion into Germany, there is also plenty of room for growth. Buying Elf shares on a dip could pay off in the long run.