Oddity Tech Ltd. Q1 FY2025 earnings call

• Q1 2025 results exceeded expectations with revenue growth, adjusted EBITDA, and free cash flow. - Business momentum continued into April, with confidence in Q2. - Beauty industry transformation with consumer shift to online and high efficacy products is benefiting Oddity. - Strategic priorities include driving existing brands, new brand launches (Brand 3 and 4), investing in Oddity Labs for innovation, and enhancing tech capabilities. - International expansion is a key focus, with plans to scale existing markets and test new ones, showing strong unit economics.

In Q1 2025, Oddity's revenue grew 27% to $268 million, with adjusted EBITDA of $52 million (19.5% margin) and free cash flow of $87 million. Il Makiage is on track to meet $1 billion revenue by 2028, with Skin approaching 40% of brand revenue. SpoiledChild is on track to cross $200 million revenue this year. Brand 3 is set for soft launch in Q3 2025 and formal launch in Q4, being a telehealth platform for skin and body issues. Brand 4 is planned for launch in 2026. Oddity Labs is seeing increased investment in R&D. Tech capabilities are being invested in to enhance customer experience and profitability.

• Expect full year 2025 revenue to be between $790 million and $798 million, a 22%-23% growth. - Gross margin outlook raised to 71% from 70% prior. - Adjusted EBITDA outlook raised to $157 million to $161 million. - Adjusted EPS outlook raised to $1.99 to $2.04, assuming a 20% tax rate and no share buyback. - Confidence in achieving long-term algorithm of 20% revenue growth at 20% adjusted EBITDA margin.

• Tariffs and trade policies pose a risk, with expected impact on gross margin in the range of 50-100 basis points in 2025, but manageable with internal efficiencies and mitigation efforts.

Q: How much did international contribute to Q1 and about SpoiledChild's international expansion?

A: Both US and international grew double-digits in Q1. International is still less than 20% of the business. SpoiledChild has international testing with strong results in some markets.

Q: Thoughts on the FCC click-to-cancel rule?

A: Teams have already done work, no major impact expected as everything is opt-in, self-serve cancellation is straightforward.

Q: Details on gross margins and future outlook?

A: Gross margin was supported by cost efficiencies and product mix. Long-term, gross margin expected to be in high-60s range, but focus is on adjusted EBITDA margins of 20% or more.

Q: Expansion details on Brand 3 and tariffs?

A: Brand 3 has been in development for over 4 years, testing went well with strong demand. Tariffs expected to impact gross margin 50-100 basis points, but exposure is limited with high starting gross margin.

Q: International emphasis and acquisitions?

A: International focus is on scaling existing and testing new markets, with SpoiledChild having strong potential. Acquisitions are prioritized for missing capabilities, focusing on biotech and AI areas to add value.