ODDITY Tech Ltd.

Q2 2026 Earnings Call — September 9, 2026

Dara Mosian (Morgan Stanley): Hi, good morning. So, Oran, it sounds like you feel comfortable we're moving towards solving the dislocation issue here in 2026. Just if we assume the problems are resolved by year end, any thoughts around ability to grow the Eau Maquillage 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 Spoiled Child continues to grow at a strong pace. You mentioned you're ramping up spending for the brand. Can you just touch on international plans for that brand over time?

Management: We believe that once we solve the problem, we plan to continue to go back to growth with El Makiage. We have amazing products in the pipeline. We are not there yet. We didn't 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's behind us, we are back to growth. As I mentioned, we have an amazing plan that we didn't execute because of this problem, and they are ready to play. As for Spoiled Child, Spoiled Child showed great demand, and as you can see by the numbers, we'll continue to expand it internationally. We have amazing modern aid products and categories for next year for Spoiled Child, so we are very bullish.

Brian Tranquillit (Jefferies): Hey, good morning, guys, and congrats on the inflection here in the business. So maybe, Lindsay, as I think about the EBITDA guidance and revenue guidance, how do we think about your assumptions on, number one, the seasonality? Because typically, I think Q4 is up sequentially in revenue versus Q3. So curious what's driving that. And then when we think about repeat revenue rates versus...

Management: Thanks for that question, Brian. As we think about the sequential dynamic and the seasonality of the business, there's 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 repeat to flow through in the second half. Obviously, this is a unique year because so much of our acquisition activity was, you know, that moment of time was spent towards testing, so the seasonality for this year will be a little bit different, and it's 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 as a company level. We remain well in excess of 100% net revenue repeat rate over 12 months. And despite some of the challenges with ill maquillage, we do continue to see strong repeat flow through, which is part of why we're 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 Spoiled Child.

Anna Lazul (Bank of America): Hi, good morning. Thank you so much for the question. 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 know, you've learned about your business model a bit more, about much more resilient, flexible, anything that might need to change going forward now that you went through this process?

Management: Yes. First of all, we learned a lot. The past few months was 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. The key of the business is data, and in order to continue to have that ability, we need to remain a big portion of the business must remain D2C. That's 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, it's unbelievable. We are very happy for that, and we trust their team to help us and navigate and solve this problem. And that's it. So we continue to work on both fixing the problem and expanding our distribution and channels. You can see the resiliency of our model today and the fact that we have a lot of great things to talk about with respect to Spoiled Child and Methodic, even though we do navigate these challenges with ill maquillage.

Yusef Squally (Truist Securities): Great. Thank you. Good morning. 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're 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's 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's small, but what were the drivers for that, and how sustainable is it?

Management: Thanks, Yusuf. So on revenue, we are for Q3 guiding to a 20-point sequential improvement. Some room for the Q4 pace to slow to Q3. I would note this is a real outlook for us. There's a lot of unknowns still as opposed to a sandbagging story, but that's 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.

Scott Schoenhals (KeyBank Capital Markets): Hey, guys. Thanks for taking my question. Traditionally, I thought of your business model as ill maquillage, funneling in new customers to support growth in Spoiled Child, but clearly you're 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 Spoiled Child? And then on Methodique, could you talk more about the investments needed here and maybe what you're 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're targeting.

Management: Sure, I'll start with Spoiled Child. We saw great demand, despite the fact that we believe that this location is having some impact, but lesser degree than Il Makiage. Even so, we're still generating nice returns on the spend and have been able to scale materially. As for Methodic, we launched it less than a year, we are very happy from the beginning of the brand, from how it started. We expect the brand to deliver higher revenue than Spoiled Child did in its first year, although Spoiled Child was unbelievably strong in its first year. We launched Methodic 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, Methodix ER product is hyperpigmentation with series of prescription and non-prescription products. And the non-prescription product is Ority Lab, 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 first step, we plan to deliver legally available prescription injectable and peptide therapies, and we are very bullish about that. That's it. We spent more than three years on building that growth engine, and we are very bullish about its potential.

Andrew Boone (Citizens): Hi, guys. Thanks so much for taking the question. It sounds like you have Spoiled Child and Methodic 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 Audity 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's related to the business?

Management: The first one was on the evolution of our brands. We continue to grow both Spoiled Child and Methodic. Spoiled Child, 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 Audity Labs, we continue to have great progress there. It's also an area that we invested a lot in the past three 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.

Ryan McDonald (Needham and Company): Thanks for taking my questions. Oran, I think in the past, if I recall correctly, when you went from year one to year two on Spoiled Child, 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. As we're getting in towards the end of year one with Methodic here and heading into year two, I guess, what did you learn from Spoiled Child's ramping and how is that informing your view for Methodic and the strategy there? And I guess, is it too early to see trends in repeat rates for Methodic or what are you seeing there and how is that kind of building into informing that view for year two?

Management: 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's what we did with Spoiled Child and that's what we are planning to do with Methodic. Basically, there are less constraints from growth angle in the first two years. I can remind you that in Spoiled Child in year three, we decided to spend less and to have constraints on revenue. We are not planning to have constraint for Methodic 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 budget and that's what we are planning to do.

Georgia Anderson (Evercore ISI): All right, thanks for the question. 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 Q1. Wondering kind of where that mixes today and if the kind of gross margin compression we saw in Q2, you know, is that kind of structural or recoverable? Yeah, so any color there would be great.

Management: Sure. As you know, a focus area for us has been remediating some of the signal distortion from try before you buy. 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've always talked about our long-term gross margin expectations to be in sort of the high 60s. Without 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've 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'll be able to go back to optimizing for AOV. Remember, we've removed all of those efforts. And so we'll be able to optimize better for AOV, which support our gross margin on a like-for-like basis. And we didn't optimize yet Methodic gross margin since it's early. So we expect to have meaningful improvement also there.

Management: This will now conclude our question and answer session. I would like to turn the floor back over to Mr. Holtzman for closing remarks.

Management: Thank you very much, guys. See you next quarter. Thank you. This will conclude today's conference. You may disconnect

at this time, and thank you for your participation.

Q1 2026 Earnings Call — June 2, 2026

Analyst: Brian Tanklett (Jefferies): Hey, good morning. Lindsay, maybe just on the earnings trajectory, you said positive EBITDA for the year and 8 to 10 million positive EBITDA in Q2. If you don't mind just talking about the cadence of unit margins that you expect throughout the year, and do you still plan to have most of the acquired customer reps to come in the first half, or is there a shift happening to the back half?

Executive: Management: So, unfortunately, based on the technical issue we had, first orders were down, as I mentioned in my script, around 50%. And it will be very, very difficult for us to make this up in the back half just based on seasonality. That being said, the leading indicator we look for is the improvement in CPA, which should allow us to drive some improvement, at least in the sequential trend of declines across the year. And once we get first orders going, that's when we can start to drive the repeat, and that's where the profitability flows through. We didn't give EBITDA guidance by quarter for the back half by design. We just don't have enough visibility right now. But we do have confidence that we will be profitable for the full year based on everything that we see today, the exact specifics of it, we just don't have enough visibility to yet.

Analyst: Brian Tanklett (Jefferies): Totally understand. And in follow-up, can you go back just to the comments about maintaining a reduced level of acquisition spend? So we're thinking, how much have you reduced your run rate by compared to last year? And then was this evenly spread across Q1, or was there something you did in May which helped bring CPAs down?

Executive: Management: Yeah, so we are still spending. And so media spend for the quarter was down a little bit relative to the prior year. It's just that our efficiency on that media is a lot worse. We talked about, you know, you can see in the table that we provided the 80-plus percent increase year over year in the first half. And that, you know, rate of increase did get worse Jan, Feb, March to April. And May was our first month of sequential improvements. So we are still spending. And the reason that we're still spending is to fix the problem. Without spending, we will not be able to identify the problem, and we will not be able to test all the things that we have done in the past quarter. And without that, we will not see any recovery. So we need to continue to spend, but we obviously cannot increase spend because of the efficiency of that spend. But we are hopeful after what we saw in May.

Analyst: Lyne Yusef Squally (TruSecurity): Excellent. Thanks so much, guys. Maybe a quick question for Oran and one for Lindsay. So Oran, can you delve a little deeper into the drivers of decline in the CPA for LMA-PI? I think you talked about the 28% sequential between April and May. And just like practically what has been working and how much of that is like sustainable and can actually compound on itself over time. And Lindsay, just as I look at, you know, that improvement in CPA and I look at the guide you're providing for Q2, there seems to be a bit of a disconnect because look at the overall revenue growth. You're still talking about negative 25 to 30. You put up 26%. negative in Q1. Maybe just talk to us about the assumptions that are baked into that revenue decline, maybe from a CPA trend and anything else you want to share on that guy. Thank you.

Executive: Management: So needless to say that we do many, many tests in order to fix it. On the other side, it's an algorithm and those things most of the time very hard to move the needle and exit those type of spirals. By the way, we navigated, as I mentioned, many algorithm changes in the past, and we always were able to solve it. The fixes that we are doing are primarily structural and technical, auditing signals, adjusting our infrastructure, shifting audience strategies, and of course campaign setup, but that's only on our end, of course. In parallel, our ad partner is doing analysis on their end, and we work with them closely for the past few months. We have also made some budget allocation, reducing the overall spend for ill maquillage, giving the elevated spend, but continue to spend just to make sure that we can continue to have tests running. And again, for many months, we saw only negative trend. Almost every month was worse than the previous months, other than May. May, we had lower spend, but still, we had also very low spend in other months, and the trend was opposite. That's for that question. Lindsay?

Executive: Management: Sure. Hey, Yusuf, so our guidance for the second quarter is for revenue to be down between 25% and 30%. The challenge for us, in part, is that, A, acquisition is still very difficult. We talked about the sequential improvement in May versus April, but remember that Feb was worse than Jan, March was worse than Feb, and April was worse than March. So on balance, the overall CPA in May versus Q1 is not materially different yet, but the encouraging thing for us is the positive inflection that we saw in May overall. We did lose a lot of first orders in the first quarter that would have translated into repeat orders in the second quarter. And so that's a continued overhang for us. So again, like where we hope to see more sequential improvement is in the second half of the year. And like I said, and what we said in our outlook, we do expect for full year adjusted EBITDA to be profitable.

Analyst: Andrew Boone (Citizens): Thanks so much for taking the question. You guys have historically run your marketing in-house. Can you guys talk about the changes that have either taken place within that organization or maybe the thought about using third parties? Basically, what's changed in terms of the marketing strategy given this speed bump?

Executive: Management: Historically, we've done everything in-house very successfully for many, many years. For the first time, we shared with the market how stable our results are, despite the fact that we were growing massively. But that's just for acquisition. Of course, a repeat and other metrics and compounding repeat continue to grow. That's why, despite the small change every year, we were able to continue to present such strong results. What we have now is something that we never saw before. We are evaluating it with the ad partner and we also brought in another team recently to take a look. But again, we don't believe that the problem sits on our end, but we continue to do everything in our power to exit this spiral as soon as possible.

Executive: Management: I would just add on to that, Andrew, that it's been very encouraging as we've worked very closely with this advertising partner to hear their view that all other things equal, and as we said in our prepared remarks, not related to other things like market dynamics, just in their systems alone, they estimate that we can recover 40% to 60% of CPA. And if we get to those levels, we'll be back in a position to resume healthy, profitable growth.

Analyst: Ryan McDonald (Needham & Company): Thanks for taking my question. Maybe one for Oren and one for Lindsay. Oren, I'm curious to think about, as you're thinking about product development and understand, obviously, I think that probably the algo change is taking most of your time, but as you think about product development throughout the remainder of this year, We're obviously getting some updates or should get some updates in July from the FDA around peptides and potentially some moving from certain peptides from Category 2 to Category 1 with applications in skincare like, you know, GHK, CU, copper peptides, BPC-157. Just curious what sort of opportunity and maybe what research or investments you're doing in this area and what sort of opportunity this could open up for your brands over time. And Lindsey, for you, just on the guidance, if we think about the adjusted EBITDA guidance of eight to 10 million, are you assuming, is that based on assumptions that the improvements in CPA you saw may continue, or do they revert back to April levels, first quarter levels? Thanks.

Executive: Management: Yeah, on your first question, you used to say that the majority, the vast majority of our time is handling the problem that we currently have with media. For both me and Shiran, that's what we do 24-7. I will say that despite what we have in media, we continue to heavily invest in product across Ilmakia, Spoiled Child, Methodic, but more importantly, OIT Labs. We continue to see massive opportunity there. And once we have what to inform regarding the peptides and the new changes, we'll update the market. Thanks.

Executive: Management: And as it relates to our assumptions, we, our assumptions assume that CPA remains similarly difficult.

Analyst: Dara (Morgan Stanley): Hey, good morning. So, first, just a clarification. You highlighted CPA moved back down sequentially versus recently. You remain hopeful you're on track for normalization in the second half of the year. Is that normalization more around CPA itself or is there some hope perhaps you could get back to revenue growth at some point by the end of the calendar year? And just any thoughts on how much of this 2026 revenue pressure might extend longer term as you look out to 2027? I understand 2026 is still a moving target this year. But just looking for your conceptual thoughts on what this means to the business longer term, the issues around CPA here in 2026. Thanks.

Executive: Management: I'll start just once we fix this problem. Of course, the most important part of our end is to fix it, but then to go back to growth. So my plan, as soon as we fix it, is to go full power and back to growth. As for the implication of 26, obviously we lost a big chunk of new users that we were not able to acquire in 26, which will impact 27. But again, all depends when we fix it. If we are able to fix it, as soon as we are able to fix it, we'll go back to growth to compensate some of these new users' loss.

Executive: Management: Yeah, the leading indicator for us is the CPA. We have this overhang on revenue that will continue across the year, but the sequencing is better CPA allows us to drive first orders. We do see that our repeat rates remain very strong, and so when you pull those pieces together, once the CPA is at an improved level, we can drive first orders, which will drive repeat and healthy profitability, and that's kind of the sequencing of how you'll see the business improve.

Analyst: Scott Schoenhaus (KeyBank Capital Markets): Thanks for taking my question. I wanted to focus on Methodique. You said it was performing in line and expectations. Do you see any ability to drive that revenue growth algorithm faster or by investing more in the business? Are you pulling resources away from the other two brands, especially Il Makiage, in order to divert more attention to Methodique? And then on the hiring front, you know, the biotech environment has strengthened here over the last 12 months. Are you seeing any issues with retention or hiring in that department? Thanks.

Executive: Management: Thanks. First of all, we don't see an issue with hiring in Boston Energy Labs. Second question, as we believe the problem within maquillage is technical and we believe we'll be able to solve it. We continue to invest in maquillage and we are not shifting or allocating resources from that brand to other brands. Lastly, for Methodic, very excited and bullish about what it can be. Seeing strong initial demand and still early days, but we believe that it will be a great brand. We spent many years on building it. As for your question to accelerate it, it's a new brand. Many things that you want to test, you don't want to accelerate it before you optimize the exact funnels and products. And therefore, it's already extremely substantial for a new brand. And we think that's the right pace.

Analyst: Lauren Lieberman (Barclays): Great. Thanks. Good morning. Two questions. First was just around, you know, you've emphasized a couple times, you know, this is an issue with one particular advertising partner. I was just curious about, you know, efforts or thoughts around diversifying your partners, right? There's more than one platform out there. So, wanted to just get some understanding of how you're thinking about the range of opportunities on other platforms and other ad partners. And then secondly was just to clarify whether or not Spoiled Child is sort of undisturbed. We've been very focused on El Maquillage, and it may just be my memory, but I wasn't sure if Spoiled was seeing the same issues or not. And if it's not, why not? And is there anything you can do or are doing to future-proof it to avoid the same kind of signal breakage that's happened with El Maquillage? Thanks.

Executive: Management: Sure. As to other platforms, of course, we advertise also on other platforms, but based on the data that we have just in 2025, our largest ad partner was by far the largest ad partner in beauty in the U.S., way more than 50% of the market. So there is a limit of how much we can revenue or acquisition we can drive in the other platform. This platform is by far the biggest one and more the majority of the spend in beauty in the US for new user acquisition.

Executive: Management: Second question about spoiled child. Spoiled child we see also increasing CPA less severe than ill maquillage. The main difference is spoiled child continue to grow and despite the fact it continue to grow the CPA is way less severe than what we see in ill maquillage so it's a good indication. But we are still like once we identify the right solution for ill maquillage we'll implement the same in spoiled child we believe that we'll have a tailwind for that brand also.

Analyst: Mark Mahaney (Evercore ISI): Okay, thank you. I'm going to get back to the question somebody asked earlier about Methodic. It looks like this product is ramping reasonably well in line with what Spoiled Child did earlier on. That sounds promising. Talk about the customers that you've gotten for the product so far. Are these customers that are brand new to Oddity as a whole? Are they customers that have come from other areas? Can you give us some sense about the sustainability of growth of those customers and how much they expand your market or is it largely just a resale to existing customers? Anything on that and the type of customers coming in for Methodic would be helpful. Thank you.

Executive: Management: Yeah, I'll start and maybe continue. With any new brand that we launch, we try to see the strength and the potential by itself, meaning it starts by its own with less marketing to our existing user base. Otherwise, we would never see or understand the potential of that brand. So to do your question, it's an addition to our customer base in Il Makiage. Of course, when those brands operate by themselves, some of the customer base is going after the same audiences just because Il Makiage and Spoiled customer base is huge. But it's a completely separate brand with its own efforts to acquire new users just to understand the scale and the potential and to optimize the funnels in the hard way and not with quick wins just due to our major customer base. Thank you.

Analyst: Corey Carpenter (JP Morgan): Oh, good morning. I had two questions. Building on an earlier question, could you talk about the CPA trends that you are seeing at your other advertisers? That's the first question. The second question, last time we talked, I think you were hopeful that you could maintain the Try Before You Buy program. I think on this call, you said about 40% have shifted away from that. Maybe just could you give us your latest thoughts on the role that you think Try Before You Buy can play based on your learnings with the technical changes thus far? Thank you.

Executive: Management: Yeah, Try Before You Buy remains part of our model. We have no plan to eliminate it as we strongly believe it's great for consumer and it's the closest way of bringing physical store experience to the online world. Toward the end of Q1, we successfully shifted 40% of our acquisition revenue from Try Before You Buy to standard buy. This process was expensive in terms of margin as it required many, many tests until we successfully landed on a solution with no impact on unit economics, which is very encouraging, at least in my view. There is no – by today, based on the last numbers that I saw, we came to be a tiny number, a tiny percentage out of our total revenue or total orders, but we intend to continue to use this program as we really believe it's great for consumers, but more balanced with standard buy. The question was on CPA and other platforms. Listen, other platforms, obviously the CPA of other platforms is taking their overall CPA of ill maquillage materially down, but since this is our largest platform, we work really hard to solve it so we can go back to growth and go back to full power spend also with the largest platform in the U.S. Thank you.

Analyst: Anna Lizu (Bank of America): Hi, good morning. Thank you so much for the question. I wanted to follow up on Lauren's question here. Now that we've heard from several beauty companies and watch the trends over the past few months. I guess we haven't really heard of the algorithm adjustment as much impacting other beauty companies. They are less exposed to the channels, but, you know, they say maybe see 20% of sales on e-commerce channels. So I was wondering if, you know, this will make you reconsider in a broader way your marketing and user acquisition, just given the impact to what seems to be to your brand specifically. And then how do you ensure this doesn't happen with any other platforms in the future? Thank you.

Executive: Management: I can't refer to other brands, but I don't know anyone that is on our scale, and most of them are omnichannel and are less sensitive to algorithm changes. By the way, as I mentioned, we had many of them in the past year, the most notable one is iOS 14, and I think that also then it was harder for us than others just due to the fact that we are 100% D2C. If we think about diversifying our channels, yes, we think about it, and when we have what to tell the market, we will. Thank you.

Executive: Management: Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Holtzman for final comments.

Executive: Management: Thank you very much, guys, for joining. We'll see you next quarter. Thank you. This concludes today's conference call. You may disconnect your lines

at this time.

Thank you for your participation.