ODD

Image source: The Motley Fool. Wednesday, Sept. 9, 2026 at 8:30 a.m. ET Investor Relations - Maria Lycouris Co-founder and CEO - Oran Holtzman Global CFO - Lindsay Drucker Mann CTO - Niv Price Operator: Good morning, and welcome to ODDITY's Second Quarter 2026 Earnings Conference Call. Today's call is being recorded, and we have allotted time for prepared remarks and Q&A. At this time, I would like to turn the conference over to Maria Lycouris, Investor Relations for ODDITY. Thank you. You may begin. Maria Lycouris: Thank you, Operator. I am joined by Oran Holtzman, ODDITY's Co-founder and CEO, and Lindsay Drucker Mann, ODDITY's Global CFO. Niv Price, ODDITY's CTO, will also be available for the question-and-answer session. As a reminder, management's remarks on this call that do not concern past events are forward-looking statements. These may include predictions, expectations, or estimates, including statements about ODDITY's business strategy, market opportunity, future financial performance, customer acquisition costs, and potential long-term success. Forward-looking statements involve risks and uncertainties, and actual results could differ materially due to a variety of factors. These factors are described under forward-looking statements in our earnings press release issued earlier today and in our most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 17, 2026. We do not undertake any obligation to update forward-looking statements that speak only as of today. Finally, during this call, we will discuss certain non-GAAP financial measures, which we believe are useful supplemental measures for understanding our business. Additional information about these non-GAAP financial measures, including their definitions, are included in our earnings press release, which we issued today. I will now hand the call over to Oran. Oran Holtzman: Thank you, everyone, for joining our call today. While we continue to work through the ad account dislocation at IL MAKIAGE, I am pleased to report progress in our business that hopefully positions us for recovery in 2027 and beyond. SpoiledChild had a good quarter and a strong YTD 2026 overall, and is on track to grow at least 35% this year and approach $350 million of net revenue in 2026. METHODIQ is showing great promise after launching only several months ago. We expect the brand to deliver first-year revenue ahead of SpoiledChild's first year, and with huge potential for the future. Both SpoiledChild and METHODIQ are building ambitious plans for 2027, and we will update you in coming months. For IL MAKIAGE, we continue to work extremely hard with our main ad partner to solve the algorithm dislocation and remain hopeful that we are on a path to normalization. We work day and night to solve the algorithm dislocation, and we continue to believe, based on data that we see, that it is technical in nature, solvable, and has nothing to do with brand runway. Big picture, we remain bullish on ODDITY's future despite our recent customer acquisition cost challenges. We are working tirelessly to strengthen our business, move past the dislocation, and return to playing offense in what we see as one of the most attractive markets in the world. Beauty and wellness has long been a large, resilient, and highly profitable growth market. We see the category in an exciting period of transformation today, with consumer demand for channel and product creating major shifts. Putting the current technical problem we face aside, we believe we are positioning our business to win in this moment and lead the next phase of growth. With over 70 million users on our direct-to-consumer platform, we believe we have a clearer view than others on where the demand is and how to best serve the customer. Consumers are smarter than ever before. They have more information ready at their fingertips, and they demand more from their products, more efficacy, more personalization. The appetite for beauty and medicine is converging as a result. Consumers want real solutions to their pain points from the inside out. They are taking control into their own hands. A lot of that is happening online outside of traditional channels like a store or a medical office. ODDITY's portfolio of trusted brands today is built to serve consumers across a full range of needs, spanning categories and product types. From beauty to wellness to medical grade, from cosmetics to OTC to prescription products, the goal is to reduce friction and deliver an unmatched experience, best-in-class products, and precise treatment protocols that truly solve consumer pain points. Let's look at hyperpigmentation as an example of how our integrated platform works and how we are building a moat with vision technology, personalized treatment regimens, and ODDITY Labs. Hyperpigmentation is a big success story for METHODIQ, showing high customer satisfaction and retention signals, which is the best indicator for us that we are onto something great. Our plans for this market began with ODDITY's user data, which showed us how much demand our users had for addressing dark spots and uneven skin tone, and also how unhappy they were with the current solutions. With this insight, we made a deliberate push into hyperpigmentation and delivered something better. We built a one-of-a-kind user experience at METHODIQ, which includes a computer vision assessment that identifies dark spots on the skin. The relevant data and analysis are then passed to a METHODIQ provider who issues a personalized treatment plan aimed at maximizing efficacy and minimizing side effects. It might be prescription or non-prescription or both, and can involve sequencing different products across several months to optimize for the best outcome. The entire experience is designed to mimic and improve upon a high-touch experience at a doctor's office, but with incredible convenience. One of METHODIQ's hyperpigmentation hero products is Melanex 509, powered by ODDL1007, ODDITY Labs' patented molecule combination. It targets visible discoloration of the skin with reduced side effects. This is just the beginning of what we think ODDITY Labs can do in hyperpigmentation. We have additional molecules in development, and we are making good progress finding new pathways that we believe will help us tackle hyperpigmentation from multiple angles at once. This is just one example of how ODDITY's integrated platform is meeting unmet demand, and we are just at the beginning. The strong start for METHODIQ has increased our conviction in the medical-grade space. We are acquiring a more determined customer with attractive LTVs and good cross-sell characteristics. Acquisition costs are higher as compared to makeup, but we believe the AOV, retention, and as a result, the expected paybacks justify the cost. Consumers are increasingly comfortable getting medical care online and looking to brands like METHODIQ for innovation and upgraded offerings to meet their needs. We are positioning METHODIQ to be a leader in this backdrop and launching new categories and products across 2027. This will build on our infrastructure of prescription and pharmacy fulfillment to better serve existing customers and also reach new audiences. The opportunity set is large, and we are moving quickly. We plan to have more updates on this expansion in the coming months. Turning to SpoiledChild, we launched SpoiledChild around 4.5 years ago as a multi-category wellness brand. It has scaled faster than our expectations and on track to approach $350 million of net revenue in 2026, which will put it more than a year ahead of the time it took IL MAKIAGE to hit that milestone. SpoiledChild continues to deliver very strong customer cohort metrics like AOV and repeat at scale. 12-month net revenue repeat rates for the brand are well in excess of 100% today. As we said in prior calls, we believe SpoiledChild is being impacted by the algorithm dislocation issues IL MAKIAGE is facing, but to a lesser degree, and this has allowed us to continue scaling the brand. We are hopeful that as we work through the acquisition cost challenges with IL MAKIAGE, we will then be able to deliver efficiencies also for SpoiledChild. The strong consumer metrics we see in SpoiledChild give us confidence in the brand's future potential. We plan to continue to invest in the base direct-to-consumer business while adding new growth levers in 2027. Moving to IL MAKIAGE, where we continue to work on resolving our account dislocation with our largest advertising partner and returning to normalized audience and CPA. We continue to work very closely with this ad partner to fix the problem, and while we are not there yet, every day that passes is helping us get to fixing the issue. We and the ad partner are in intensive testing mode, and those tests are very important for solving the algorithm dislocation. Looking ahead on an ODDITY level, we are hopeful the worst is behind us. As our guidance indicates, we have seen sequential improvement in the rate of the year-over-year revenue decline at ODDITY, and we expect third quarter net revenue will decline approximately 5% year-over-year. While ODDITY's revenue decline was severely impacted by the algorithm dislocation, we are seeing relatively stable trends in other parts of the business that are less correlated to the acquisition spend. We continue to work hard on other advertising channels as well. Our goal for 2027 is for IL MAKIAGE to return to growth. We have an amazing pipeline of new products ready to support the brand once acquisition costs recover. We continue to work 24/7 until this technical problem is fixed. We remain hopeful that the amount of resources and time we spend on it will lead to a resolution like any other big problem we faced since I started the business 14 years ago. Full power, non-stop hard work until fixing the problem, no other way. With that, I will hand it over to Lindsay. Thank you. Lindsay Mann: Thanks, Oran. Let's turn to our Q2 results, which I will refer to on an adjusted basis. You can find the full reconciliation to GAAP in our press release. Net revenue declined 25% versus the prior year to $181 million, at the favorable end of our guidance for net revenue to decline between 25% and 30%. The decline was driven by a year-over-year reduction in sales of IL MAKIAGE, which continues to be adversely impacted by a dislocation in its ad account with its largest advertising partner. This dislocation continues to impact IL MAKIAGE's ability to reach the right audience and is driving sharply higher CPA. It is impacting acquisition revenue, most notably in first orders, but also in the portion of repeat orders that are sensitive to acquisition spend. For example, existing customers that see an ad and are motivated to buy again. We are also now seeing the compounding impact of lost repeat sales that would have naturally flowed through from customers making first order purchases early in the year. Specifically, ODDITY net revenue from first orders declined approximately 40% in the second quarter versus the prior year, driven by IL MAKIAGE. Net revenue from repeat orders declined approximately 20% in the quarter from the prior year period. AOV declined by approximately 8% in the second quarter versus the prior year, largely driven by a decline in IL MAKIAGE AOV. The decline in IL MAKIAGE AOV was driven by the above-mentioned reduction in first orders, which carry higher AOV than repeat. It was additionally impacted by product mix shift away from IL MAKIAGE SKIN. Gross margin was 68.7% in the quarter compared to 72.3% in the prior year. Gross margin compressed approximately 360 bps year-over-year, driven in part by the decline in AOV. We delivered adjusted EBITDA of $13 million, ahead of our outlook for adjusted EBITDA of $8 million to $10 million. The year-over-year decline versus the prior year was largely driven by the IL MAKIAGE algorithm dislocation, which has 2 primary impacts on our P&L. First, significantly higher CPA versus the prior year. Second, the decline in revenue and resulting deleverage on our fixed costs. EBITDA was also negatively impacted by our decision to ramp acquisition spend for SpoiledChild in support of faster revenue growth, where our upfront investments support attractive 12-month contribution margins. On operating expense, as discussed on prior calls, our approach is to balance sustained growth investments with finding cost efficiencies to support the bottom-line. This has translated into continued investments in areas like ODDITY Labs and our technology infrastructure, with some greater filtering and prioritization around projects where we see nearer-term payback potential. We remain bullish about the potential for ODDITY Labs to provide real differentiation in product efficacy and experience with many applications in our portfolio, and the hyperpigmentation example from Oran is just one area. We also continue to invest in areas like aging, where our molecules have shown early in-vitro promise in increasing collagen synthesis and reducing aging markers. Moving down the P&L, adjusted diluted earnings per share was $0.20 for the quarter. Free cash flow increased by $14 million in the quarter and decreased by $8 million in the first half of the year. Our inventory investments year-to-date include purchase commitments made last year in anticipation of much stronger revenue results for IL MAKIAGE, as well as inventory purchased to support growth in SpoiledChild and METHODIQ. IL MAKIAGE today continues to work through excess inventory, and we plan to be in better balance in 2027. We exited the quarter in a strong liquidity position with $561 million of cash, cash equivalents, and investments on our balance sheet. Our $350 million in credit facilities remain undrawn. During the quarter, we continued to act on what we believe is an attractive price for our shares. We repurchased 5.6 million shares in the period for $80 million. This brings our total year-to-date repurchase amount to 11.7 million shares for $163 million, which reduced our ordinary shares outstanding by approximately 20%. Approximately $87 million remains outstanding on our $200 million buyback authorization. Separately, in March, 857,000 shares were removed from our public float through Oran Holtzman's open market purchases. In June, we repurchased $50 million face value of our zero coupon June 2030 exchangeable notes at a discounted price of $35 million. We will continue to be opportunistic in managing our capital structure in order to drive shareholder value. Turning to our outlook, for the third quarter, we expect net revenue to decline approximately 5% year-over-year, a meaningful sequential improvement versus the first half as we believe the worst of the acquisition-driven revenue pressure is behind us. We expect adjusted EBITDA to be between $18 million and $20 million. For the full year, we expect net revenue to decline approximately 19% year-over-year, driven by the decline in net revenue in the first half, and we expect adjusted EBITDA will be between $30 million and $32 million. And with that, I will turn the call back to the Operator for questions. Operator: [Operator Instructions] Our first question is from Dara Mohsenian with Morgan Stanley. Dara Mohsenian: Oran, it sounds like you feel comfortable we are moving towards solving the ad dislocation issue here in 2026. Just if we assume the problems are resolved by year-end, any thoughts around ability to grow the IL MAKIAGE brand in 2027? Should we anticipate a more typical revenue growth year based on the normalized factors behind the brand, or does some of this issue potentially linger, compound in 2027? And then second, just SpoiledChild continues to grow at a strong pace. You mentioned you are ramping up spending for the brand. Can you just touch on international plans for that brand over time, line of sight to making a broader international push in your decision process there now that the brand has scaled so nicely? Oran Holtzman: Yes, good morning. We believe that once we solve the problem, we plan to continue to go back to growth with IL MAKIAGE. We have amazing products in the pipeline. We are not there yet. We did not solve it yet. But we believe that we are closer than before because from all the data that we see so far in terms of the root cause of what happened, it looks like there is an audience drift from the algorithm, and we are trying to retrain it. Once it is behind us, we are back to growth. As I mentioned, we have an amazing plan that we did not execute because of this problem, and they are ready to play. As for SpoiledChild, SpoiledChild showed great demand, and as you can see by the numbers, we continue to expand it internationally. And that is it. We have amazing, more than 8 products and categories for next year for SpoiledChild, so we are very bullish. Operator: Our next question is from Brian Tanquilut with Jefferies. Brian Tanquilut: Lindsay, as I think about the EBITDA guidance, revenue guidance, how do we think about your assumptions on number 1, the seasonality? Because typically I think fourth quarter is up sequentially in revenue versus third quarter. So curious what is driving that. And then when we think about repeat revenue rates versus historical trend, I mean, what is that assumption? Or maybe even versus what we saw in the first half of the year, what is that assumption embedded in the back half guidance? Lindsay Mann: Thanks for that question, Brian. As we think about the sequential dynamic and the seasonality of the business, there is really no broad strokes change to how we think about the business. The first half of the year tends to be stronger for us for acquisition, and then we allow revenue to flow through in the second half. Obviously, this is a unique year because so much of our acquisition activity was -- that moment of time was spent towards testing. So the seasonality for this year will be a little bit different, and it is too soon for us to tell you what seasonality will look like on a go-forward basis. As it relates to repeat trends, continue to be very strong at a company level. We remain well in excess of 100% net revenue repeat rate over 12 months. And despite some of the challenges with IL MAKIAGE, we do continue to see strong repeat flow through, which is, you know, part of why we are expecting the sequential improvement in the second half of the year relative to the first half of the year. And in addition, we get very strong repeat from SpoiledChild. Operator: Our next question is from Anna Lizzul with Bank of America. Please proceed. Anna Lizzul: I was wondering if you could elaborate a little bit more on any learnings that you had from this process as you went through the remediation and anything where you have learned about your business model a bit more, about what's more resilient, flexible, anything that might need to change going forward now that you went through this process. Oran Holtzman: Yes, first of all, we learned a lot. The past few months were very intense in terms of media buying world. I must say that we thought that we know a lot, but now after those months, we are very deep in the details and learning every day better how those algorithms work. We increased our efforts both to fix the problem, but to make the business more resilient moving forward, it's including more distribution and more channels. We have nothing yet to announce, but once we have, we will. We believe that the key of the business is data, and in order to continue to have that ability, we need to remain focused. A big portion of the business must remain D2C. That is our strength, and we need to continue to work with those ad partners. By the way, the way that we work now with the ad partner and their commitment and like it is unbelievable. We are very happy for that, and we trust their team to help us navigate and solve this problem. And that is it. So we continue to work on both fixing the problem and distribution and channels. Lindsay Mann: I will just add 1 more thing. You can see the resiliency of our model today in the fact that we have a lot of great things to talk about with respect to SpoiledChild and METHODIQ, even though we do navigate these challenges with IL MAKIAGE. So relative to when we first came public or even started building the business, we have way more brands, categories, and products for the business to rely on than in the past, and that will continue to grow. Operator: Our next question is from Youssef Squali with Truist Securities. Youssef Squali: Lindsay, your annual revenue growth guide for negative 19% implies Q4 growth, I think, of negative 10% to 11%, which is quite a deterioration from the negative 5% you are guiding to for Q3. So what accounts for that deterioration? Is it just conservatism and lack of visibility, or are you seeing something in Q3 that is not sustainable necessarily in Q4? And then on the other revenue line, it was up 8%. That was a bit of a surprise. I know it is small, but what were the drivers for that and how sustainable is it? Lindsay Mann: Thanks, Youssef. So on revenue, we are for Q3 guiding to a 20-point sequential improvement relative to where we were in Q2 in the first half of the year, and that is because we believe the worst of the acquisition-driven dislocation is behind us. We are seeing the benefit of more repeat in our base business in the first half of the year, and also SpoiledChild has been strong. As it relates to the fourth quarter, we want to be conservative since we do not know yet how we want to allocate our spending budget, how much goes towards testing, for example, which is inefficient for revenue generation, so we are leaving some room for the Q4 pace to slow to Q3. I would note this is a real outlook for us. There is a lot of unknowns still, as opposed to a sandbagging story, but that is generally the approach here. Other is Israel, and that market has been volatile, as you know, given some of the dynamics with the war there and our store base there. Operator: Our next question is from Scott Schoenhaus with KeyBanc Capital Markets. Scott Schoenhaus: Traditionally, I thought of your business model as IL MAKIAGE funneling in new customers to support growth in SpoiledChild. But clearly, you are seeing a lot of growth without that. Can you talk to us about your marketing strategy here in customer acquisitions? How that's changed since the disruption with SpoiledChild. And then on METHODIQ, could you talk more about the investments needed here and maybe what you are planning on for the 2027 selling season here with these new products you talked about, pigmentation, hyperpigmentation, but also clearly going into more acute areas. Maybe talk to us what kind of investments you need and what kind of growth you are targeting. Oran Holtzman: Sure, I will start with SpoiledChild. We see -- we saw great demand, despite the fact that we believe that this dislocation is having some impact but to a lesser degree than IL MAKIAGE. Even so, we are still generating nice returns on the spend and have been able to scale materially. As for METHODIQ, we launched it less than a year ago. We are very happy from the beginning of the brand, from how it started. We expect the brand to deliver higher revenue than SpoiledChild did in its first year, although SpoiledChild was unbelievably strong in its first year. We launched with 30 products with a great range of products for medical-grade makeup to specialized prescription protocols. One thing that surprised us out of the gate is our ability to drive demand for both personalized prescription and non-prescription products and treatment plans. For example, METHODIQ's hero product is hyperpigmentation with a series of prescription and non-prescription products. And the non-prescription product is ODDITY Labs, which is very encouraging for us. Looking forward, we have a consistent framework for the category expansion, big markets where we see meaningful demand, and where we can see that we can win. One category we are particularly excited about for next year is longevity and metabolic health. As a first step, we plan to deliver legally available prescription injectable and peptide therapies, and we are very bullish about that. That is it. We spent more than 3 years on building that growth engine, and we are very bullish about its potential. Operator: Our next question is from Andrew Boone with Citizens. Andrew Boone: It sounds like you have SpoiledChild and METHODIQ that are both doing well. Can we just step back and think about the progression of the business beyond this near-term marketing hiccup? How do we think about what you guys are doing for BRAND 4? And then can you just talk about AI's progress within ODDITY Labs? Understood that is a step function change in terms of molecule development. What are you guys seeing there and how do we think about the benefits of just new technology and the evolution of molecules and how that is related to the business? Lindsay Mann: The first one was on the evolution of our growth trajectory post, as we go forward, now that SpoiledChild and the... Oran Holtzman: No, BRAND 4 BRAND 4 So we continue to grow both SpoiledChild and METHODIQ. SpoiledChild, as I mentioned, has an amazing pipeline ready to launch for next year in new categories. And BRAND 4 we plan to launch in 2027, also next year. As for ODDITY Labs, we continue to have great progress there. It is also an area that we invested a lot in the past 3 years. And as you mentioned, as you think about AI, of course, we can leverage it materially. It can speed up our processes and our molecule discovery there. We have a team that this is what they do in labs, and we are very bullish about the potential and the speed that it can bring to the business. Operator: Our next question is from Ryan MacDonald with Needham and Company. Ryan MacDonald: Oran, I think in the past, if I recall correctly, when you went from year 1 to year 2 on SpoiledChild, there was quite the large revenue jump in the business. And I think you talked about that it was a little bit faster of a pace than what you wanted initially when you were thinking about the scaling of that. And we are getting in towards the end of year 1 with METHODIQ here and heading into year 2. I guess, what did you learn from SpoiledChild's ramping and how is that informing your view for METHODIQ and the strategy there? And I guess, is it too early to see how you see trends in repeat rates for METHODIQ and, or what are you seeing there and how is that kind of building into informing that view for year 2? Oran Holtzman: For us, always the first few months is testing and trying to find the right audience and then fixing unit economics and then scaling. That is what we did with SpoiledChild, and that is what we are planning to do with METHODIQ. Basically, there are less constraints from a growth angle in the first 2 years. I can remind you that in SpoiledChild in year 3, we decided to spend less and to have constraint on revenue. We are not planning to have constraint for METHODIQ in next year. But keep in mind that the first few years of any brand, there is a cost, and we need to take it into consideration while we are building a budget, and that is what we are planning to do. Operator: Our next question is from Georgia Anderson with Evercore ISI. Georgia Anderson: I guess thinking about the business model of Try Before You Buy, I think you shifted kind of around 40% of acquisition revenue out of Try Before You Buy in first quarter. Wondering kind of where that mix is today. And if the kind of gross margin compression we saw in Q2, is that kind of a structural or recoverable, yes, so any clarity that would be great. Lindsay Mann: Sure. As you know, a focus area for us has been remediating some of the signal distortion. And as part of that, we have shifted part of our acquisition away from Try and towards Buy. And we were able to do this without any notable impact on our unit economics. We believe in our current state we can move 50% or more of our acquisition to Buy from Try at a minimum. That said, we love the model. We have no plans to eliminate it. We think it offers a great value to consumers. So our focus is really on remediation and rebalancing as needed. On the gross margin question, we have always talked about our long-term gross margin expectations to be in sort of the high 60s. With all gross margin being a real target KPI for us. The target KPI for us is DC margin, contribution margin, gross margin after media spend. But just based on the range of products and brands, high 60s is kind of how we have pointed everyone to. That said, this year we did get a lot of deleverage based on the lower AOV, and we do not see that as structural. Once we have improvement in our acquisition dislocation, we will be able to go back to optimizing for AOV, remember, we have removed all of those efforts and so we will be able to optimize better for AOV which supports our gross margin on a like-for-like basis. Oran Holtzman: And we didn't optimize yet METHODIQ's gross margin since it is early, so we expect to have meaningful improvement also there. Operator: Thank you. This will now conclude our question-and-answer session. I would like to turn the floor back over to Mr. Holtzman for closing remarks. Oran Holtzman: Thank you very much, guys. See you next quarter. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributes the 25% revenue decline primarily to a technical 'algorithm dislocation' with its largest advertising partner, causing an audience drift that sharply increased customer acquisition costs (CPA) for IL MAKIAGE. The company is prioritizing technical remediation over immediate growth for IL MAKIAGE, shifting resources toward intensive testing to retrain the ad algorithm rather than executing its planned product pipeline. SpoiledChild is demonstrating operational resilience, on track for $350 million in 2026 revenue by maintaining strong unit economics and 12-month net revenue repeat rates exceeding 100% despite broader platform headwinds. The launch of METHODIQ signals a strategic pivot toward the 'beauty and medicine' convergence, leveraging computer vision and ODDITY Labs' patented molecules to capture higher-intent medical-grade customers. Management believes the current technical challenges are isolated to acquisition channels and do not reflect a lack of brand runway, citing stable trends in non-correlated business segments. Strategic positioning is shifting toward a multi-brand platform to reduce dependency on any single brand or acquisition channel, The company is working to increase its distribution and channels to make the business more resilient, though it has no specific announcements to make yet, and aims for IL MAKIAGE to return to growth by 2027. The 2027 strategy for IL MAKIAGE focuses on a return to growth supported by a deferred pipeline of new products, Management targets a return to growth for IL MAKIAGE in 2027, supported by a pipeline of new products ready to launch once acquisition costs recover. METHODIQ is expected to exceed SpoiledChild's first-year revenue performance, with 2027 expansion plans targeting high-demand categories like longevity, metabolic health, and injectable peptide therapies. Management plans to launch 'BRAND 4' in 2027, further diversifying the portfolio and leveraging the company's existing prescription and pharmacy fulfillment infrastructure. Guidance for the remainder of 2026 assumes sequential improvement in revenue trends as the compounding impact of lost repeat sales from early-year acquisition gaps begins to stabilize. Future gross margin targets remain in the high 60s, with management expecting recovery as they resume AOV optimization efforts that were paused during the current dislocation period. The company aggressively managed its capital structure by repurchasing 11.7 million shares year-to-date, reducing ordinary shares outstanding by approximately 20%. A $50 million face value of zero-coupon exchangeable notes was repurchased at a discounted price of $35 million to optimize the balance sheet. Inventory levels are currently elevated due to purchase commitments made prior to the IL MAKIAGE dislocation; management expects to reach a 'better balance' by 2027. The 'Try Before You Buy' model is being strategically rebalanced, with over 50% of acquisition shifting to immediate 'Buy' to help remediate signal distortion in advertising data. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management believes they are closer to a solution as data indicates the root cause is an 'audience drift' in the algorithm that requires retraining. Once resolved, the brand will immediately deploy a ready pipeline of products and marketing plans that were sidelined during the dislocation. The projected Q4 slowdown relative to Q3 reflects management's decision to leave budget flexibility for inefficient 'testing' spend versus revenue-generating spend. Management characterized the outlook as a realistic assessment of 'unknowns' rather than intentional sandbagging. Unlike SpoiledChild's recent focus on efficiency, management does not plan to place growth constraints on METHODIQ during its second year. Early signals show high satisfaction in hyperpigmentation treatments, particularly for ODDITY Labs' non-prescription molecules, which justifies higher initial acquisition costs. The crisis has accelerated efforts to diversify distribution and channels to make the business model more resilient to single-partner technical failures. Management noted that the current multi-brand scale (SpoiledChild and METHODIQ) provides a buffer that did not exist during the company's IPO.

Second quarter net revenue of $181 million, down approximately 25% year-over-year Second quarter adjusted EBITDA of $13 million Second quarter net income of $13 million and second quarter adjusted net income of $11 million Strong liquidity position including cash, cash equivalents and investments of $561 million, and aggregate credit facilities of $350 million which remain undrawn NEW YORK, Sept. 09, 2026 (GLOBE NEWSWIRE) -- ODDITY Tech Ltd. (NASDAQ: ODD) today announced its financial results for the second quarter ended June 30, 2026. “We made progress during the quarter, including strong results for both SpoiledChild and METHODIQ,” said Oran Holtzman, ODDITY co-founder and CEO. “We remain hopeful that IL MAKIAGE is on track to achieve normalization and we continue to work in close partnership with our largest advertising partner to solve the technical issue.” ODDITY achieved key objectives during the second quarter, including: Double-digit revenue growth for SpoiledChild during the second quarter. SpoiledChild is on track to grow at least 35% compared to 2025 and approach $350 million of net revenue in 2026. Strong early results for METHODIQ, which we now expect to deliver first-year net revenue ahead of SpoiledChild’s first year. Ongoing development and expansion of the ODDITY Labs molecule discovery platform. Enhancing our capital structure, including repurchasing $80 million of our Class A ordinary shares and retiring $50 million of our zero coupon 2030 exchangeable notes, while maintaining a strong liquidity position. “So far in the third quarter, we are seeing an improved year-over-year net revenue trend, driven by growth at SpoiledChild and METHODIQ and a moderating impact from the IL MAKIAGE account dislocation,” said Lindsay Drucker Mann, ODDITY Global CFO. “As a result, we now expect third quarter net revenue to decline approximately 5% year-over-year, a meaningful sequential improvement from the first half.” Update on IL MAKIAGE Account Dislocation ODDITY continues to work closely with its largest advertising partner to solve the advertising algorithm dislocation at IL MAKIAGE. Since its last earnings call, ODDITY has implemented various tests and strategies to address signal distortion and retrain the algorithm. ODDITY continues to believe the dislocation is technical in nature and solvable, and is encouraged by the progress it is making toward normalization. Share Buybacks ODDITY repurchased approximately 5.6 million Class A ordinary shares during the second quarter for approximately $80 million under the $200 million share buyback plan authorized in March 2026 (the “2026 Buyback Plan”). On a year-to-date basis, ODDITY has repurchased approximately 11.7 million Class A ordinary shares for approximately $163 million, including approximately $50 million of repurchases completed before the adoption of the 2026 Buyback Plan under ODDITY’s prior share buyback authorization, reducing total ordinary shares outstanding by approximately 20%. Approximately $87 million remains under the 2026 Buyback Plan, subject to market conditions and legal and regulatory constraints. Exchangeable Note Repurchase In June 2026, ODDITY repurchased and retired $50 million aggregate principal amount of its 0% exchangeable notes due 2030 for approximately $35 million, leaving approximately $550 million aggregate principal amount outstanding. Second Quarter Fiscal 2026 Financial Highlights: Results for the second quarter ended June 30, 2026 are presented below in comparison to the second quarter ended June 30, 2025. Net revenue was $181 million compared to $241 million in the second quarter of 2025, a decrease of 25%. Gross profit was $124 million compared to $174 million in the second quarter of 2025; gross margin was 68.7% compared to 72.3%. Net income was $13 million compared to $49 million in the second quarter of 2025. Adjusted net income was $11 million compared to $57 million in the second quarter of 2025. Adjusted EBITDA was $13 million compared to $70 million in the second quarter of 2025. Diluted earnings per share was $0.24 compared to $0.79 in the second quarter of 2025. Adjusted diluted earnings per share was $0.20 compared to $0.92 in the second quarter of 2025. Cash, cash equivalents, and investments were $561 million as of June 30, 2026. The table below sets forth our actual results for the three months ended June 30, 2026 and the low and high end of our guidance range regarding our results for the second quarter of 2026 as issued on June 2, 2026. Financial Outlook: ODDITY is providing the following guidance for the third quarter ending September 30, 2026: Net revenue to decline by approximately 5% year-over-year Adjusted EBITDA between $18 million and $20 million ODDITY is providing the following guidance for the full year ending December 31, 2026: Net revenue to decline by approximately 19% year-over-year Adjusted EBITDA between $30 million and $32 million Adjusted EBITDA, Adjusted net income, and Adjusted diluted earnings per share are non-GAAP financial measures. Please see the sections titled “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Measures” below for more information regarding ODDITY’s use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures. ODDITY has not provided a quantitative reconciliation of its Adjusted EBITDA outlook to the corresponding net income measure because the quantification of certain items included in the calculation of GAAP net income cannot be calculated or predicted at this time without unreasonable efforts. ODDITY is unable to address the probable significance of the unavailable reconciling items, which could have a potentially unpredictable, and potentially significant, impact on its future GAAP financial results. The financial outlook figures presented above are forward-looking statements that are subject to a variety of assumptions and estimates. Actual results may differ materially from ODDITY’s financial outlook as a result of, among other things, the factors described under “Forward-Looking Statements” below. Conference Call Details: A conference call to discuss ODDITY’s Q2 2026 financial and business results and outlook is scheduled for today, September 9, 2026, at 8:30 a.m. ET. To participate, please dial 1-877-407-9208 (US) or 1-201-493-6784 (international). To access the call, please reference the company name and call title: ODDITY Second Quarter 2026 Earnings Call. A webcast of the call will be accessible on the Investors section of ODDITY’s website at https://investors.oddity.com. A recording will be available shortly after the conclusion of the call. To access the replay, please dial 1-844-512-2921 (US) or 1-412-317-6671 (international). The access code for the replay is 13761986. An archive of the webcast will be available on the Investors section of ODDITY’s website for seven days following the call. Non-GAAP Financial Measures: In addition to the GAAP financial measures set forth in this press release, ODDITY has included the following non-GAAP financial measures: Adjusted EBITDA, Adjusted net income, Adjusted diluted earnings per share, and free cash flow. ODDITY believes these non-GAAP financial measures provide useful supplemental information to management and investors to help evaluate ODDITY’s business, measure its performance, identify trends, prepare financial projections, and make business decisions. ODDITY defines “Adjusted EBITDA” as net income (loss) before financial income, net, taxes on income, and depreciation and amortization as further adjusted to exclude share-based compensation expense and certain unusual or non-recurring items. ODDITY believes Adjusted EBITDA is useful for financial and operational decision-making and as a means to evaluate period-to-period comparisons. By excluding certain items that may not be indicative of its recurring core operating results, ODDITY believes that Adjusted EBITDA provides meaningful supplemental information regarding its performance. In addition, Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as depreciation and amortization, interest expense, and interest income, which can vary substantially from company to company depending on their financing and capital structures and the method by which their assets were acquired. ODDITY defines “Adjusted net income” as net income (loss) adjusted for the impact of share-based compensation, certain unusual or non-recurring items, one-time tax gains/losses and the tax effect of non-GAAP adjustments. In addition, ODDITY defines “Adjusted diluted earnings per share” as Adjusted net income divided by diluted shares outstanding. ODDITY believes the presentations of Adjusted net income and Adjusted diluted earnings per share are useful because they are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Further, ODDITY believes these measures are helpful in highlighting trends in our operating results, because they exclude the impact of items that are outside the control of management or not reflective of our ongoing operations and performance. ODDITY defines “free cash flow” as net cash (used in) provided by operating activities less purchase of property and equipment. ODDITY’s non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, its financial results prepared in accordance with U.S. GAAP. Other companies, including companies in our industry, may calculate these measures differently or not at all, which reduces their usefulness as comparative measures. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included with the financial tables at the end of this release under the heading “Reconciliation of GAAP to Non-GAAP Measures.” Forward-Looking Statements: Certain statements in this press release may constitute “forward-looking” statements and information, within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events. In some cases, these forward-looking statements can be identified by words or phrases such as “aim,” “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “goal,” “hope,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “project,” “shall,” “should,” “target,” “will,” “seek,” or similar words. The absence of these words does not mean that a statement is not forward-looking. These forward-looking statements address various matters, including ODDITY’s business strategy, market opportunity, ability to deliver superior products and experiences, ability to remedy the dislocation in our customer acquisition costs, potential long-term success and ODDITY’s outlook for the third quarter of 2026 and the full year ending December 31, 2026. These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the following: our ability to maintain the value of our brands; our ability to anticipate and respond to market trends and changes in consumer preferences; our ability to cost-effectively attract new customers (including by responding effectively to changes to algorithm-based bidding systems on key advertising platforms), retain existing customers and maintain or increase sales to those customers; our ability to maintain a strong base of engaged customers and content creators; the loss of suppliers or shortages or disruptions in the supply of raw materials or finished products; our ability to accurately forecast customer demand, manage our inventory, and plan for future expenses; our future rate of growth; competition; the fluctuating cost of raw materials; the illegal distribution and sale by third parties of counterfeit versions of our products or the unauthorized diversion by third parties of our products; changes in, or disruptions to, our shipping arrangements; our ability to manage our growth effectively; a general economic downturn or sudden disruption in business conditions; our ability to successfully introduce and effectively market new brands, or develop and introduce new, innovative, and updated products; foreign currency fluctuations; product returns; our ability to execute on our business strategy; our ability to maintain a high level of customer satisfaction; our ability to comply with and adapt to changes in laws and regulatory requirements applicable to our business, including with respect to regulation of the internet and e-commerce, evolving AI-technology related laws, tax laws, the anti-corruption, trade compliance, anti-money laundering, and terror finance and economic sanctions laws and regulations, consumer protection laws, and data privacy and security laws; failure of our products to comply with quality standards and risks related to product liability claims; trade restrictions; existing and potential tariffs; any data breach or other security incident of our information technology systems, or those of our third-party service providers or cyberattacks; risks related to online transactions and payment methods; any failure to obtain, maintain, protect, defend, or enforce our intellectual property rights; conditions in Israel and the Middle East generally, including as a result of geopolitical conflict; the concentration of our voting power as a result of our dual class structure; our status as a foreign private issuer; and other risk factors set forth in the section titled “Risk Factors” in our Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 17, 2026, and other documents filed with or furnished to the SEC. These statements reflect management’s current expectations regarding future events and operating performance and speak only as of the date of this press release. You should not put undue reliance on any forward-looking statements. Except as required by applicable law, we undertake no obligation to update or revise publicly any forward-looking statements. About ODDITY: ODDITY is a consumer tech company that builds and scales digital-first brands to disrupt the offline-dominated beauty and wellness industries. The company serves over 70 million users with its AI-driven online platform, deploying data science to identify consumer needs, and developing solutions in the form of beauty and wellness products. ODDITY owns IL MAKIAGE, SpoiledChild, and METHODIQ. The company operates with business headquarters in New York City, an R&D center in Tel Aviv, Israel, and a biotechnology lab in Boston. Contacts: Press: [email protected] Investor: [email protected] Note: ODDITY does not sell to resellers or distributors. Online direct-to-consumer revenues are generated directly by ODDITY through its online platform only (i.e., ILMAKIAGE.com, SpoiledChild.com, and METHODIQ.com). All revenue in Israel, including revenue generated in stores, online, and from beauty academies, is included in Other.

This article first appeared on GuruFocus. Net Revenue: Declined 25% year over year to $181 million in Q2 2026, at the favorable end of guidance. First Order Revenue: Declined approximately 40% year over year in Q2, driven by IL MAKIAGE. Repeat Order Revenue: Declined approximately 20% year over year in Q2. Average Order Value (AOV): Declined approximately 8% year over year in Q2, largely due to IL MAKIAGE. Gross Margin: 68.7% in Q2, down from 72.3% in the prior year, a compression of approximately 360 basis points. Adjusted EBITDA: $13 million in Q2, ahead of the $8 million to $10 million outlook. Adjusted Diluted EPS: $0.20 for the quarter. Free Cash Flow: Increased by $14 million in Q2 but decreased by $8 million in the first half of the year. Cash Position: $561 million in cash, cash equivalents, and investments at quarter end; $350 million credit facilities remain undrawn. Share Repurchases: Repurchased 5.6 million shares for $80 million in Q2; 11.7 million shares for $163 million year-to-date, reducing ordinary shares outstanding by approximately 20%. Q3 2026 Outlook: Net revenue expected to decline approximately 5% year over year; adjusted EBITDA expected between $18 million and $20 million. Full-Year 2026 Outlook: Net revenue expected to decline approximately 19% year over year; adjusted EBITDA expected between $30 million and $32 million. SpoiledChild Revenue: On track to grow at least 35% in 2026 and approach $350 million in net revenue. Warning! GuruFocus has detected 8 Warning Signs with ODD. Is ODD fairly valued? Test your thesis with our free DCF calculator. Release Date: September 09, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. SpoiledChild delivered a strong quarter and is on track to grow at least 35% in 2026, approaching $350 million in net revenue. METHODIQ, launched only months ago, is showing promising early results and is expected to exceed SpoiledChild's first-year revenue. ODDITY's integrated platform, including ODDITY LABS and computer vision technology, is driving innovation in hyperpigmentation and other categories. The company maintains a strong liquidity position with $561 million in cash and investments, and continues to repurchase shares opportunistically. Management expects sequential improvement in revenue decline, with Q3 net revenue projected to decline only 5% year-over-year, indicating the worst may be behind. IL MAKIAGE continues to suffer from an ad account dislocation with its largest advertising partner, leading to sharply higher customer acquisition costs. ODDITY's Q2 net revenue declined 25% year-over-year, driven by a significant drop in IL MAKIAGE sales. Gross margin compressed by 360 basis points year-over-year due to lower AOV and product mix shift. The company faces compounding effects from lost repeat sales, with repeat order revenue declining 20% in Q2. Full-year 2026 revenue is expected to decline approximately 19%, and Q4 guidance implies a potential slowdown from Q3, reflecting ongoing uncertainty. Q: Assuming the ad dislocation issue is resolved by year-end, should we anticipate a more typical revenue growth year for IL MAKIAGE in 2027, or could the issue linger or compound? Additionally, can you discuss international plans for SpoiledChild now that the brand has scaled nicely? A: Oran Holtzman (Co-Founder and CEO): We believe that once we solve the problem, we plan to go back to growth with IL MAKIAGE. We have amazing products in the pipeline that are ready to play. We are not there yet, but we are closer than before based on data suggesting an audience drift from the algorithm that we are trying to retrain. For SpoiledChild, we will continue to expand it internationally, with more than eight products and categories planned for next year. Q: Can you elaborate on the assumptions behind the EBITDA and revenue guidance, specifically regarding seasonality and repeat revenue rates versus historical trends? A: Lindsay Drucker Mann (Global CFO): There is no broad-stroke change to how we think about the business seasonality. The first half of the year tends to be stronger for acquisition, with repeat flowing through in the second half. This year is unique because much of our acquisition activity was spent towards testing. Repeat trends remain very strong, with company-level net revenue repeat rates well in excess of 100% over 12 months, which supports the sequential improvement expected in the second half. Q: What learnings have you had from the remediation process, and what changes might be needed to make the business more resilient going forward? A: Oran Holtzman (Co-Founder and CEO): We have learned a lot and are now very deep in the details of how the algorithms work. We are increasing efforts to fix the problem and make the business more resilient by expanding distribution and channels. The key to the business is data, and a big portion must remain D2C. We are happy with the ad partner's commitment to helping us solve this. Lindsay Drucker Mann (Global CFO): The resiliency of our model is evident, as we have many great things to discuss regarding SpoiledChild and METHODIQ despite the IL MAKIAGE challenges. We have more brands, categories, and products to rely on than in the past. Q: The annual revenue growth guide of negative 19% implies a Q4 deterioration to negative 10% to 11% from negative 5% in Q3. What accounts for that, and what drove the 8% increase in the "other" revenue line? A: Lindsay Drucker Mann (Global CFO): For Q3, we are guiding to a 20-point sequential improvement because we believe the worst of the acquisition-driven dislocation is behind us, with more repeat in the base business and strong SpoiledChild performance. For Q4, we are being conservative due to unknowns around budget allocation towards testing, which is inefficient for revenue generation. The "other" revenue line is Israel, which has been volatile due to the war dynamics and our store base there. Q: How has your marketing and customer acquisition strategy changed for SpoiledChild since the disruption, and what are the investment needs and growth targets for METHODIQ in 2027? A: Oran Holtzman (Co-Founder and CEO): SpoiledChild is seeing great demand despite the dislocation's lesser impact, and we are generating nice returns on spend. METHODIQ, launched less than a year ago, is expected to deliver higher first-year revenue than SpoiledChild. We launched with 30 products and have been surprised by our ability to drive demand for both prescription and non-prescription products. For 2027, we are excited about longevity and metabolic health, planning to deliver legally available prescription injectable and peptide therapies. Q: Beyond the near-term marketing hiccup, how should we think about the progression of the business, including Brand 4 and the progress of AI within ODDITY Labs? A: Oran Holtzman (Co-Founder and CEO): We continue to grow SpoiledChild and METHODIQ, with SpoiledChild having an amazing pipeline for new categories next year. Brand 4 is planned to launch in 2027. ODDITY Labs has made great progress, and we are leveraging AI to speed up molecular discovery. We are very bullish on the potential and speed it can bring to the business. Q: What did you learn from SpoiledChild's ramping that informs your view for METHODIQ's year two, and is it too early to see repeat rate trends for METHODIQ? A: Oran Holtzman (Co-Founder and CEO): For us, the first few months are always about testing, finding the right audience, fixing unit economics, and then scaling. We did this with SpoiledChild and plan to do the same with METHODIQ. We are not planning to have constraints on METHODIQ's growth next year, but we must account for the costs associated with the first few years of any brand. Q: What is the current mix of try-before-you-buy versus buy, and is the Q2 gross margin compression structural or recoverable? A: Lindsay Drucker Mann (Global CFO): We have shifted part of our acquisition away from try and towards buy without notable impact on unit economics, and we believe we can move 50% or more of acquisition to buy. We have no plans to eliminate the try-before-you-buy model. The gross margin compression is not structural; it was driven by lower AOV. Once the acquisition dislocation improves, we will optimize for AOV again, which should support gross margin. Oran Holtzman (Co-Founder and CEO): We haven't optimized METHODIQ's gross margin yet, so we expect meaningful improvement there as well. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Oddity Tech (ODD) came out with quarterly earnings of $0.2 per share, beating the Zacks Consensus Estimate of $0.12 per share. This compares to earnings of $0.92 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +66.67%. A quarter ago, it was expected that this online retailer of cosmetics and beauty products would post a loss of $0.04 per share when it actually produced a loss of $0.17, delivering a surprise of -325%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Oddity Tech, which belongs to the Zacks Internet - Software industry, posted revenues of $180.52 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 3.27%. This compares to year-ago revenues of $241.14 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Oddity Tech shares have lost about 67.6% since the beginning of the year versus the S&P 500's gain of 12.1%. While Oddity Tech has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Oddity Tech was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.10 on $118.35 million in revenues for the coming quarter and $0.06 on $619.4 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 35% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Penguin Solutions, Inc. (PENG), has yet to report results for the quarter ended August 2026. This company is expected to post quarterly earnings of $0.75 per share in its upcoming report, which represents a year-over-year change of +74.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Penguin Solutions, Inc.'s revenues are expected to be $512.5 million, up 51.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ODDITY Tech Ltd. (ODD) : Free Stock Analysis Report Penguin Solutions, Inc. (PENG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in ODDITY Tech Ltd.? Here are five stocks we like better. Q2 revenue fell 25% to $181 million as an advertising-account disruption increased customer-acquisition costs for IL MAKIAGE. Adjusted EBITDA of $13 million exceeded guidance, but gross margin declined to 68.7% from 72.3%. Management believes the advertising issue is technical and expects growth to resume once it is resolved. Meanwhile, SpoiledChild is projected to grow at least 35% in 2026, while newer brand METHODIQ is showing early traction. ODDITY expects sequential improvement, forecasting a roughly 5% year-over-year revenue decline in Q3 versus a 19% decline for the full year. The company ended the quarter with $561 million in cash and investments and repurchased $80 million of shares during the quarter. It's Not Too Late to Jump on These Under-the-Radar Momentum Plays ODDITY Tech (NASDAQ:ODD) reported second-quarter 2026 net revenue of $181 million, down 25% from a year earlier, as its IL MAKIAGE brand continued to face higher customer-acquisition costs tied to an advertising-account dislocation with its largest ad partner. Management said the quarterly revenue result came in at the favorable end of its prior guidance range for a 25% to 30% decline. Adjusted EBITDA was $13 million, above the company’s outlook of $8 million to $10 million, while adjusted diluted earnings per share totaled $0.20. → 3 Under-the-Radar Defense Stocks With Record Backlogs Oddity Tech's AI-Powered Debut Sparks Optimism For '23 IPO Market Co-founder and CEO Oran Holtzman said the company remains focused on resolving the issue affecting IL MAKIAGE’s ability to reach intended audiences through its main advertising partner. He said ODDITY and the advertising partner are conducting intensive testing and that the company believes the issue is technical and related to “audience drift” in the partner’s algorithm rather than underlying brand demand. “Once it’s behind us, we are back to growth,” Holtzman said, adding that IL MAKIAGE has a pipeline of products that the company intends to support once customer-acquisition costs normalize. → Ride-Share Reckoning: Tesla Drives Into Uber's Lane Global CFO Lindsay Drucker Mann said IL MAKIAGE’s advertising disruption affected first-order revenue most heavily, while also reducing repeat purchases tied to advertising activity. Companywide net revenue from first orders declined about 40% year over year in the second quarter, driven by IL MAKIAGE, while repeat-order revenue fell about 20%. Average order value declined approximately 8% from the prior-year period. Drucker Mann attributed the decline largely to lower IL MAKIAGE average order values, reflecting fewer first orders, which typically carry higher order values than repeat purchases, as well as a product-mix shift away from IL MAKIAGE skin products. → High Gas Prices Aren't Budging—Here Are 3 Stocks That Benefit Gross margin fell to 68.7% from 72.3% a year earlier, a decline of approximately 360 basis points. The company cited lower average order values as a factor. Drucker Mann said ODDITY does not view the margin pressure as structural, noting that its longer-term gross-margin expectation remains in the high-60% range and that improved acquisition conditions should allow the company to resume optimizing for average order value. Holtzman said the company is also expanding its efforts across distribution and advertising channels to make the business more resilient, though he did not announce specific initiatives. He said maintaining a substantial direct-to-consumer business remains important because of the customer data it provides. While IL MAKIAGE faced pressure, management highlighted continued momentum at SpoiledChild and early progress from the recently launched METHODIQ brand. SpoiledChild is expected to grow at least 35% in 2026 and approach $350 million in net revenue, according to Holtzman. He said the wellness brand continued to generate strong customer cohort metrics, including average order value and repeat purchasing. Twelve-month net-revenue repeat rates at SpoiledChild are above 100%, management said. The company said SpoiledChild has been affected by the same advertising-algorithm issue, but to a lesser degree than IL MAKIAGE. ODDITY increased acquisition spending behind SpoiledChild during the quarter, citing attractive expected 12-month contribution margins. Holtzman said the company plans to continue international expansion for the brand and has more than eight products and categories planned for next year. METHODIQ, which launched several months ago, is expected to generate more first-year revenue than SpoiledChild did in its first year, according to management. The medical-grade brand launched with 30 products spanning non-prescription offerings, prescription products and personalized treatment protocols. Holtzman pointed to hyperpigmentation as an early area of traction for METHODIQ. The brand uses computer vision to assess dark spots and uneven skin tone, with the resulting data provided to a healthcare provider that can issue a personalized treatment plan. He said one of METHODIQ’s products, Melanex 509, uses ODDITY LABS’ patented molecule combination called ODDL1007. The company also plans to expand METHODIQ into additional categories in 2027. Holtzman said a category of particular interest is longevity and metabolic health, where the company intends to offer legally available prescription injectable and peptide therapies. For the third quarter, ODDITY expects net revenue to decline approximately 5% year over year, representing a meaningful improvement from the first half of 2026. The company expects adjusted EBITDA of $18 million to $20 million. For the full year, ODDITY forecast a net-revenue decline of approximately 19% and adjusted EBITDA between $30 million and $32 million. Drucker Mann said the company expects stronger repeat revenue in the second half but is maintaining a conservative fourth-quarter outlook because it has not yet determined how much advertising spending will be directed toward testing versus revenue generation. The company ended the quarter with $561 million in cash equivalents and investments, while its $350 million in credit facilities remained undrawn. During the quarter, ODDITY repurchased 5.6 million shares for $80 million, bringing year-to-date repurchases to 11.7 million shares for $163 million. The company said those repurchases reduced ordinary shares outstanding by approximately 20%, with about $87 million remaining under its $200 million repurchase authorization. ODDITY also repurchased $50 million face value of its zero-coupon June 2030 exchangeable notes for $35 million during June. Management said it plans to remain opportunistic in managing its capital structure. Oddity Tech Ltd. operates as a consumer tech company that builds digital-first brands for the beauty and wellness industries in the United States and internationally. It serves consumers worldwide through its AI-driven online platform, which uses data science, machine learning, and computer vision capabilities to identify consumer needs, and develop solutions in the form of beauty and wellness products. The company sells beauty, hair, and skin products under the IL MAKIAGE and SpoiledChild brands. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "ODDITY Tech Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for September 2026.

Oddity Tech Ltd. reported first-quarter 2026 results showing sales of US$197.94 million versus US$268.08 million a year earlier, swinging from net income of US$37.83 million to a net loss of US$21.36 million with basic and diluted loss per share of US$0.38. The company also guided for a 25%–30% year-over-year net revenue decline in the second quarter of 2026, raising questions about how its growth and profitability ambitions align with the current reset in demand. With management now expecting a sharp second-quarter revenue decline, we’ll examine how this guidance shift reshapes Oddity Tech’s investment narrative. The latest GPUs need a type of rare earth metal called Neodymium and there are only 32 companies in the world exploring or producing it. Find the list for free. To own Oddity Tech here, you need to believe its AI driven, digital first model and new verticals like telehealth can translate into durable, profitable demand once current pressures ease. The sharp first quarter 2026 revenue drop and swing to a US$21.36 million loss, together with guidance for a 25% to 30% second quarter revenue decline, bring the near term catalyst into focus: whether Oddity can stabilize customer acquisition efficiency. The biggest risk now is prolonged margin pressure from higher digital marketing costs. Against this backdrop, the recent class action lawsuit filed in March 2026 is particularly relevant. It centers on alleged misleading statements about advertising costs and the impact of an algorithm change at a major ad partner, directly tying into Oddity’s dependence on paid digital channels for growth. For a business whose core catalyst is restoring efficient online acquisition and scaling new brands, any legal overhang on its communication and marketing practices could compound execution risk. Yet behind the promise of AI personalization and new brands, there is an underappreciated risk investors should be aware of if customer acquisition costs remain elevated and... Read the full narrative on Oddity Tech (it's free!) Oddity Tech's narrative projects $906.6 million revenue and $82.7 million earnings by 2029. This requires 3.8% yearly revenue growth and a $28.0 million earnings decrease from $110.7 million today. Uncover how Oddity Tech's forecasts yield a $17.33 fair value, a 76% upside to its current price. Before this reset, the most optimistic analysts were assuming around US$1.3 billion of revenue and US$182.1 million of earnings by 2028, which is a very different story to today’s guidance and highlights how views on Oddity’s advertising dependence and growth potential can diverge sharply, so it is worth comparing these bullish expectations with how you see the business after this quarter. Explore 6 other fair value estimates on Oddity Tech - why the stock might be worth just $16.94! Don't just follow the ticker - dig into the data and build a conviction that's truly your own. A great starting point for your Oddity Tech research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision. Our free Oddity Tech research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Oddity Tech's overall financial health at a glance. The market won't wait. These fast-moving stocks are hot now. Grab the list before they run: The future of work is here. Discover the 33 top robotics and automation stocks leading the charge in AI-driven automation and industrial transformation. Capitalize on the AI infrastructure supercycle with our selection of the 47 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow. We've uncovered the 11 dividend fortresses yielding 5%+ that don't just survive market storms, but thrive in them. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ODD. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]