Oddity Tech Ltd. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Performance: Delivered strong third quarter with 24% revenue growth and 24% growth in adjusted diluted earnings per share year-over-year despite industry challenges. Raising full-year guidance.
• METHODIQ Launch: Achieved official launch this week, with a major media campaign including NYC out-of-home takeover and biggest TikTok activation in ODDITY's history. Developed with 2 acquisitions and 20,000 real user trials, using a 1 million+ image dataset for vision tools to analyze skin conditions.
• IL MAKIAGE and SpoiledChild: IL MAKIAGE on track for $1 billion revenue by 2028, with international revenue up 40% Y/Y in first 9 months of 2025. SpoiledChild expected to cross $225M in 2025, with innovation lineup for 2026.
• ODDITY LABS: Significant improvement in systems, infrastructure, and teams, with plan to have 8 products with labs molecules on the market in 2026.
• Tech Innovation: AI initiatives, including commerce agents and integrating generative AI into advertising and customer-facing initiatives, leveraging large proprietary data sets.

Segment Performance

• IL MAKIAGE: Q3 revenue grew double digit online, remains on track to achieve $1 billion revenue by 2028. Skin is projected to be around 40% of its revenue this year. International revenue for ODDITY increased ~40% year-over-year in the first 9 months of 2025, with scaling in existing markets like U.K. and Australia and tests in new markets like France, Italy, and Spain.
• SpoiledChild: Expected to cross $225 million of revenue in 2025, with an exciting innovation lineup for 2026 including new product tests.
• METHODIQ: Officially launched this week. It features a large portfolio of 28 prescription and nonprescription products with over 100 unique treatment combinations. Soft launched in Q3, with a major media campaign including NYC out-of-home and TikTok activation. Developed with 2 acquisitions and 20,000 real user trials, using a 1 million+ image dataset for vision tools.
• ODDITY LABS: Near-term commercial impact increasing, with a plan to have at least 8 products with labs molecules on the market in 2026 for existing brands, including 4 for METHODIQ and 4 for IL MAKIAGE and SpoiledChild.

Guidance

• Raised full-year 2025 guidance: Net revenue expected to be between $806 million and $809 million (24%-25% Y/Y growth), gross margin approximately 72.5%, adjusted EBITDA between $161 million and $163 million, and adjusted diluted earnings per share between $2.10 and $2.12. Q4 revenue expected to increase 21%-23% Y/Y.
• Continues to invest in long-term growth engines like METHODIQ launch, ODDITY LABS, and tech platform.

Risks

• Tariff headwinds remain manageable but could impact gross margins.
• Dependence on repeat customers and effective user acquisition to offset higher media costs.
• Uncertainties around market adoption and scaling of new brands like METHODIQ.

Q: On the base business, can you just help us unpack the 40% year-to-date growth you mentioned in international markets?

A: Sure. So the first 9 months, still 83% of revenue came from the U.S. Although international grew 40%, it is still tiny comparing to the U.S. Our plan is to continue to responsibly grow across the board in international markets. But as we said in our remarks, it's a huge revenue and profit opportunity for us, and we see that it's strategically important for us. We scale international when we think it makes sense. We don't run and spend in user acquisition just because we want to grow international or because we see softness in the U.S. The opposite. Where we see opportunity, this is where we push and we get more revenue. This year, we grew 40%, but like the objective is not just to grow the international market. And in terms of countries today, existing countries, Canada, U.K., Germany, Australia, Israel and France. New geographies are Italy, Spain, Netherlands, Ireland and Sweden and Denmark. Markets that we are adding as testing are Japan, Mexico, Korea, Belgium and a few others. But this year, only 2% of revenue came from new countries and the 15% came from existing countries. So basically, the majority of the growth came from countries that we already were active in.

Q: On METHODIQ, any thoughts after you've done some testing there on how much ability the platform has to bring in new customers to the ODDITY franchise and perhaps over time, indirectly drive beauty sales and cross-sell? And just as you see initial interest in the platform, how much of that is coming from your existing consumer base versus a new consumer base?

A: Every new country is completely new because we don't have users there. So that's why it's -- in terms of cost, it costs more because like we don't have any existing users. In terms of METHODIQ, yes, of course, like SpoiledChild, when we started, the majority of revenue came from IL MAKIAGE, and we expect that a decent percentage will come from IL MAKIAGE and SpoiledChild for METHODIQ. Of course, we are also doing user acquisition because we want to expand our user base. So it will be mixed. Over time, of course, when the brand grows, then we will have more acquisition, but we are doing both.