Observed Signal · Oct 16, 2026 · Partnership · Source: Retail-News · Impact: 2/5 · Sentiment: Positive
e.l.f. Cosmetics Expands to ZEPETO with Virtual Styling World
e.l.f. Cosmetics, a brand of e.l.f. Beauty, has launched its first virtual styling experience on the social platform ZEPETO, named 'Express your e.l.f.'. Users can customize avatars with digital beauty products and accessories inspired by the Power Grip product line. The initiative targets Generation Z, aiming to merge virtual identity with social interaction. ZEPETO claims over 400 million registered accounts and 15-20 million monthly active users, with around 70% belonging to Gen Z. Users can create and share photos and videos with e.l.f.-themed backgrounds, leveraging high avatar customization frequency. This move extends e.l.f.'s gaming strategy, complementing its presence on Roblox with 'Glow Up!' and Twitch. Financial details were not disclosed.
This news highlights a brand's expansion into the metaverse via a gaming platform, relevant for advertisers exploring new engagement channels, but it's a single brand partnership with limited industry-wide impact.
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Key Takeaways & Evidence Grounding
- e.l.f. Cosmetics launched 'Express your e.l.f.', a virtual styling world on ZEPETO.
- ZEPETO has over 400 million registered accounts and 15-20 million monthly active users.
- Around 70% of ZEPETO users are Generation Z.
- ZEPETO users change their avatar appearance more than 14 times per week on average.
- e.l.f. is already active on Roblox with 'Glow Up!' and on Twitch.
Connected Companies & Entities
2 Entities mapped“The brand e.l.f. Cosmetics, which belongs to the publicly traded corporation e.l.f. Beauty...”
“e.l.f. is already represented with the beauty game 'Glow Up!' on Roblox.”
Ontology Mapping & Concepts
Related Market Signals & Shifts
Recent verified developments and strategic activity across this market segment.
E.l.f. Beauty Uses AI to Reduce Workforce Workload
E.l.f. Beauty is adopting AI to increase employee productivity while keeping humans firmly in the loop, according to Chief Digital Officer Ekta Chopra. The company has defined four AI pillars: boosting human productivity, reimagining processes, establishing brand authority in LLMs (agentic commerce), and pursuing operational autonomy in finance. E.l.f. selected Google as its LLM partner, ran a creative listening tour that produced about 100 use cases, and automated retailer product-detail-page refreshes using AI agents with human refinement. The company also trained AI to draft community responses—raising AI-provided draft answers from ~40% to ~90%—and is rolling out employee training via its E.l.f. U learning platform in partnership with Section AI, plus an internal AI policy and governance council.
E.l.f. Reverses Price Hikes After Unit Decline
E.l.f. Beauty said it is reversing some prior price increases after a pronounced decline in unit sales, CEO Tarang Amin told analysts on the company’s fiscal 2026 earnings call. The company reported $1.6 billion in net sales for fiscal 2026 (up 25% year over year) and a 35% year-over-year increase in Q4. E.l.f. is testing targeted price reductions—citing a rapid unit recovery when skin tint pricing was cut from $18 to $14—and saw strong uplift on Amazon, across retailers and on TikTok Shop. The company also discussed tariff-related costs, its $1 billion acquisition of Rhode (which contributed materially to sales), a Q4 net loss of $49.4 million, and expectations for 12%–14% net sales growth in fiscal 2027.
e.l.f. Beauty Reports Strong Q1 Growth, Raises Guidance
e.l.f. Beauty reported a strong first quarter of fiscal 2027 with revenue up 36% to $479.4 million, significant margin improvement and a net income of $66.6 million. The company cited retail and e‑commerce strength across the US and international markets, margin benefits from duty refunds, pricing and lower import costs, and a one‑time effect tied to the acquisition and revaluation of brand rhode. Management raised full‑year revenue growth guidance from 12–14% to 18–20% and expects higher levels for EBITDA and profit, while investing more in marketing, logistics and personnel.
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