ODD — Oddity Tech Ltd.

ODDITY Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: Increased by 24% year-over-year to $153 million for Q4 and 25% to $810 million for the full year.
• Adjusted EBITDA: $13 million for Q4 (8.2% margin) and $163 million for the full year (20.2% margin).
• Adjusted EPS: $0.20 for Q4, exceeding guidance; $2.21 for the full year.
• Gross Margin: 70.5% for Q4 (down 220 basis points year-over-year) and 72.7% for the full year (up 30 basis points).
• Cash Position: Ended the year with $776 million in cash and equivalents.

2. Strategic Updates and Business Highlights

• Brand Performance:
  • IL MAKIAGE generated approximately $560 million, with IL MAKIAGE Skin contributing 40% of brand revenue.
  • SpoiledChild grew revenue to about $250 million.
• New Brand Launch: METHODIQ, a medical telehealth platform, was successfully launched, focusing on dermatological treatments.
• International Growth: ODDITY International revenue grew 42%, representing 17.5% of overall net revenue.
• Investment in Innovation: Continued investment in ODDITY LABS for product development and technology infrastructure.

3. Forward Guidance and Outlook

• 2026 Outlook: No full-year guidance provided due to uncertainty from elevated user acquisition costs. Q1 sales expected to decline by approximately 30%.
• User Acquisition Strategy: Focus on correcting acquisition cost issues, with hopes for normalization in H2 2026.

4. Bad News, Challenges, or Points of Concern

• User Acquisition Costs: Significant increase in costs due to algorithm changes from a major advertising partner, leading to inefficient user acquisition and pressure on profitability.
• Impact on Growth: Anticipated decline in repeat sales due to reduced user acquisition activity in Q1 and Q2, which are typically strong periods for new customer acquisition.
• Operational Challenges: Difficulty in adapting to recent algorithm changes, which have resulted in higher costs and lower quality traffic.

5. Notable Q&A Insights

• Algorithm Changes: Management confirmed that the issues began in H2 2025 and worsened in early 2026, attributing them to changes in advertising algorithms affecting user acquisition.
• Try-Before-You-Buy Model: While management believes in the model's consumer benefits, they are considering adjustments to mitigate its impact on acquisition costs.
• Retention Rates: Strong repeat sales metrics, with approximately 70% of revenue coming from repeat customers and improved net revenue repeat rates.
• Investment Strategy: Despite current challenges, ODDITY remains committed to investing in growth initiatives and product development, including the launch of Brand 4.

Overall, ODDITY reported strong financial results for 2025 but faces significant challenges in user acquisition costs that could impact growth in 2026. Management is focused on addressing these issues while continuing to invest in long-term growth strategies.