Oddity Tech Ltd. Q2 FY2025 earnings call

• ODDITY's momentum continued in 2025 with strong Q2 results, growing net revenue 25% to $241 million in Q2, exceeding guidance. Gross margin was 72.3% in Q2, expanding 10 basis points year-over-year. Adjusted EBITDA was $70 million in Q2, above guidance. - Key growth drivers include existing brands (IL MAKIAGE on track for $1B revenue by 2028, SpoiledChild on track to cross $200M in 2025), new brand launches (Brand 3 launching in Q4 2025, Brand 4 in 2026), and ODDITY Labs focused on creating high-efficacy products. - Brand 3 is set for formal launch in Q4 2025, starting in dermatology with plans to address acne, eczema, etc., using technology and direct-to-consumer model.

For the first half of 2025, ODDITY grew revenue 26% to $509 million. Key segments: IL MAKIAGE is on track to reach $1 billion revenue in 2028, with international representing 15% of business in 2024 and IL MAKIAGE SKIN expected to approach 40% of IL MAKIAGE revenue in 2025. SpoiledChild is on track to cross $200 million of revenue in 2025, having launched in 2022. Brand 3 is set to launch in Q4 2025, marking the entrance into the medical grade space, starting with dermatology.

• Full year 2025 net revenue expected between $799 million and $804 million, representing 23%-24% year-over-year growth. Gross margin expected to be 71%. Adjusted EBITDA expected to be between $160 million and $162 million. Adjusted diluted EPS expected between $2.06 and $2.09. - Q3 net revenue growth expected to be between 21% and 23%. - 2026 expected to be in line with long-term algorithm of 20% revenue growth and 20% adjusted EBITDA margin, with front-loaded investments in H1 2026 impacting margins in the first quarter but neutralizing overall in 2026.

No specific risks discussed in detail during the call. Forward-looking statements involve risks and uncertainties, but no detailed risk factors were elaborated upon in the provided transcript.

Q: Congrats on a solid quarter. Maybe on the gross margin for Q3, and confirmation on Brand 3 contribution.

A: On gross margin, it has seasonality in the back half, with lower leverage on fixed COGS. Brand 3 is not baked into 2025 or 2026 outlooks as existing brands have ample growth.

Q: Follow up on constraining growth and Brand 3 launch.

A: We constrain growth to maintain 20% revenue growth and 20% adjusted EBITDA margin long-term. Brand 3 will have soft launches in Q3 with official launch in Q4, involving testing and real spend in Q4 and H1 2026.

Q: Elaboration on investment in Brand 3 and returns.

A: Invest in new brands, ODDITY Labs, and technology. SpoiledChild's success shows investments can lead to growth.

Q: International growth drivers and repeat rates.

A: International sales grew over 40% in H1, with new markets showing potential. Repeat rates remain very strong, increasing as a percentage of business.

Q: Brand 3 go-to-market strategy.

A: Uses existing user base and technology, with focus on personalization through developed customer cohorts and tech products.

Q: Brand 3 consumer standpoint and revenue streams.

A: Brand 3 is a telehealth platform with medical-grade products, starting in dermatology. Revenue initially from products, with plans for other categories and potential for additional revenue streams.

Q: Brand 3 trajectory and opportunities with acute conditions.

A: Initial focus on acne and hyperpigmentation, with plans for eczema and other body products, aiming to diversify user base.