Oddity Tech .(ODD) - 2025 Q1 - Quarterly Report

Executive Summary & Highlights CEO & CFO Commentary ODDITY's CEO and CFO expressed strong satisfaction with Q1 2025 results, which exceeded expectations across all metrics, leading to a raised full-year outlook. They highlighted the ongoing industry transformation towards online and high-performance products, ODDITY's early investments, and a powerful financial model - Q1 2025 results exceeded expectations across all metrics, allowing ODDITY to raise its full-year outlook[4][5] - The beauty industry is transforming with consumers moving online and towards high-performance products, which strengthens ODDITY's market opportunity[4] - Early and aggressive investments in industry transformation enable a powerful financial model, allowing ODDITY to beat guidance and consistently raise its outlook[4] Q1 2025 Financial Highlights ODDITY reported robust financial performance for Q1 2025, with significant year-over-year growth in net revenue, gross profit, and net income, alongside strong cash flow generation and a healthy balance sheet with no outstanding debt Q1 2025 Key Financial Highlights | Metric | Q1 2025 | Q1 2024 | YoY Change | | :--------------------- | :---------- | :---------- | :--------- | | Net Revenue | $268 million | $212 million | +27% | | Gross Profit | $201 million | $156 million | +29% | | Gross Margin | 74.9% | 73.8% | +116 bps | | Adjusted EBITDA | $52 million | $48 million | +9% | | Net Income | $38 million | $33 million | +15.2% | | Adjusted Net Income | $42 million | $38 million | +10.5% | | Operating Cash Flow | $88 million | $79.6 million | +10.5% | | Free Cash Flow | $87 million | $79 million | +10.1% | | Diluted EPS | $0.63 | $0.53 | +18.9% | | Adjusted Diluted EPS | $0.69 | $0.61 | +13.1% | | Cash & Investments (as of Mar 31, 2025) | $257 million | N/A | N/A | | Outstanding Debt (as of Mar 31, 2025) | $0 | N/A | N/A | Q1 2025 Operational Highlights ODDITY achieved several operational milestones in Q1 2025, including double-digit revenue growth for both IL MAKIAGE and SpoiledChild, accelerated international expansion, progress on Brand 3, and ongoing development of its molecule discovery platform - Achieved double-digit revenue growth for both IL MAKIAGE and SpoiledChild brands[7] - Accelerated international expansion efforts[7] - Progressed Brand 3 towards a planned soft launch in Q3 2025 and formal launch in Q4 2025[7] - Continued development and expansion of the ODDITY LABS molecule discovery platform[7] Q1 2025 Actual Results vs. Guidance ODDITY's actual financial results for Q1 2025 surpassed its own guidance across all key metrics, including net revenue, gross margin, adjusted EBITDA, and adjusted diluted EPS Q1 2025 Actual Results vs. Guidance | Metric | Actual Results | Guidance Low End | Guidance High End | | :----------------- | :------------- | :--------------- | :---------------- | | Net Revenue | $268 million | $258 million | $262 million | | Gross Margin | 74.9% | 72.0% | 72.0% | | Adjusted EBITDA | $52 million | $49 million | $50 million | | Adjusted Diluted EPS | $0.69 | $0.61 | $0.63 | Financial Outlook Full Year 2025 Outlook ODDITY raised its full-year 2025 financial outlook across all metrics, now expecting revenue growth ahead of its 20% long-term algorithm, despite anticipating manageable tariff and trade-related headwinds - ODDITY raised its 2025 financial outlook across all metrics, expecting revenue growth to exceed its 20% long-term algorithm[11][13] - Tariff and trade-related headwinds are expected to be manageable and largely offset by cost efficiencies in 2025 and 2026[12] Current vs. Prior Full Year 2025 Outlook | Metric | Current FY2025 Outlook | Prior FY2025 Outlook | | :----------------- | :--------------------- | :------------------- | | Net Revenue | $790-798 million (22-23% YoY growth) | $776-785 million | | Gross Margin | 71% | 70% | | Adjusted EBITDA | $157-161 million | $155-158 million | | Adjusted Diluted EPS | $1.99-2.04 | $1.94-1.98 | Second Quarter 2025 Guidance ODDITY provided guidance for the second quarter ending June 30, 2025, projecting strong year-over-year revenue growth and healthy profitability metrics Q2 2025 Guidance | Metric | Q2 2025 Outlook | | :----------------- | :---------------- | | Net Revenue | $235-239 million (22-24% YoY growth) | | Gross Margin | 70.5% | | Adjusted EBITDA | $65-68 million | | Adjusted Diluted EPS | $0.85-0.89 | Additional Information Conference Call Details ODDITY scheduled a conference call for April 30, 2025, to discuss Q1 2025 financial and business results and outlook, with details provided for participation and webcast access - A conference call is scheduled for April 30, 2025, at 8:30 a.m. ET to discuss Q1 2025 financial and business results and outlook[19] - Dial-in numbers and webcast access details are provided for participation and replay[19] Non-GAAP Financial Measures ODDITY utilizes several non-GAAP financial measures, including Adjusted EBITDA, Adjusted net income, and free cash flow, to provide supplemental information for evaluating business performance and trends, with clear definitions for each measure and its purpose - ODDITY uses non-GAAP financial measures (Adjusted EBITDA, Adjusted net income, free cash flow) to provide useful supplemental information for evaluating its business, performance, and trends[20] - Adjusted EBITDA is defined as net income before financial income, taxes, depreciation, amortization, share-based compensation expense, and non-recurring items[21] - Adjusted net income is defined as net income adjusted for share-based compensation, non-recurring items, one-time tax gains/losses, and the tax effect of non-GAAP adjustments; Adjusted diluted EPS is Adjusted net income divided by diluted shares outstanding[22] - Free cash flow is defined as net cash provided by operating activities less purchase of property and equipment[23] Forward-Looking Statements & Risk Factors The report contains forward-looking statements regarding ODDITY's future performance and outlook, which are inherently subject to various risks and uncertainties, including market trends, competition, supply chain disruptions, regulatory changes, and geopolitical factors - The press release includes forward-looking statements concerning ODDITY's business strategy, market opportunity, product delivery, long-term success, and financial outlook for Q2 and FY2025[24] - These statements are subject to risks and uncertainties such as maintaining brand value, responding to market trends, customer acquisition/retention, supply chain issues, demand forecasting, competition, raw material costs, counterfeiting, shipping disruptions, growth management, economic downturns, new product introduction, currency fluctuations, regulatory compliance, product liability, trade restrictions, tariffs, data breaches, intellectual property, and geopolitical conflicts[24] About ODDITY ODDITY is a consumer tech company that builds and scales digital-first beauty and wellness brands, leveraging an AI-driven online platform to identify consumer needs and develop solutions, serving approximately 60 million users through brands like IL MAKIAGE and SpoiledChild - ODDITY is a consumer tech company focused on building and scaling digital-first brands in the beauty and wellness industries[25] - The company utilizes an AI-driven online platform and data science to identify consumer needs, serving approximately 60 million users[25] - ODDITY owns IL MAKIAGE and SpoiledChild, with business headquarters in New York City, an R&D center in Tel Aviv, and a biotechnology lab in Boston[25] Contacts Contact information for press and investor inquiries is provided - Contact details for press (Michael Braun) and investor relations are provided[26] Consolidated Financial Statements Consolidated Statements of Income The consolidated statements of income detail ODDITY's financial performance for the three months ended March 31, 2025, compared to the same period in 2024, outlining net revenue, cost of revenue, gross profit, operating expenses, and net income Consolidated Statements of Income (Three months ended March 31, USD in thousands) | Metric | 2025 | 2024 | | :------------------------ | :----- | :----- | | Net revenue | $268,076 | $211,628 | | Cost of revenue | $67,228 | $55,522 | | Gross profit | $200,848 | $156,106 | | Selling, general and administrative | $158,183 | $117,125 | | Operating income | $42,665 | $38,981 | | Financial income, net | $(2,647) | $(2,955) | | Income before taxes on income | $45,312 | $41,936 | | Taxes on income | $7,481 | $8,953 | | Net income | $37,831 | $32,983 | | Basic earnings per share | $0.68 | $0.57 | | Diluted earnings per share | $0.63 | $0.53 | Consolidated Balance Sheets The consolidated balance sheets present ODDITY's financial position as of March 31, 2025, compared to December 31, 2024, providing a detailed breakdown of current and long-term assets, liabilities, and shareholders' equity Consolidated Balance Sheets (USD in thousands) | ASSETS | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :--------------- | :------------------ | | CURRENT ASSETS: | | | | Cash and cash equivalents | $136,860 | $50,340 | | Short-term deposits | $48,000 | $48,000 | | Marketable securities | $1,799 | $1,880 | | Trade receivables | $13,477 | $9,188 | | Inventories | $96,256 | $99,810 | | Prepaid expenses and other current assets | $18,852 | $14,151 | | Total current assets | $315,244 | $223,369 | | LONG-TERM ASSETS: | | | | Marketable securities | $70,034 | $68,831 | | Property, plant and equipment, net | $10,114 | $9,817 | | Deferred tax asset, net | $9,279 | $8,786 | | Intangible assets, net | $36,636 | $36,458 | | Goodwill | $64,904 | $64,904 | | Operating lease right-of-use assets | $24,762 | $23,567 | | Other assets | $3,268 | $3,150 | | Total long-term assets | $218,997 | $215,513 | | Total assets | $534,241 | $438,882 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | CURRENT LIABILITIES: | | | | Trade payables | $120,772 | $79,130 | | Other accounts payable and accrued expenses | $41,422 | $38,566 | | Operating lease liabilities, current | $7,322 | $7,106 | | Total current liabilities | $169,516 | $124,802 | | LONG-TERM LIABILITIES: | | | | Operating lease liabilities, non-current | $16,352 | $15,604 | | Other long-term liabilities | $18,637 | $16,172 | | Total liabilities | $204,505 | $156,578 | | SHAREHOLDERS' EQUITY: | | | | Class A Ordinary shares | $14 | $14 | | Class B Ordinary shares | $3 | $3 | | Additional paid-in capital | $86,315 | $76,912 | | Accumulated other comprehensive income | $2,304 | $2,106 | | Retained earnings | $241,100 | $203,269 | | Total shareholders' equity | $329,736 | $282,304 | | Total liabilities and shareholders' equity | $534,241 | $438,882 | Consolidated Statements of Cash Flows The consolidated statements of cash flows detail ODDITY's cash movements from operating, investing, and financing activities for the three months ended March 31, 2025, compared to the same period in 2024, showing a significant net increase in cash and equivalents Consolidated Statements of Cash Flows (Three months ended March 31, USD in thousands) | Cash Flows From | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net cash provided by operating activities | $88,336 | $79,647 | | Net cash used in investing activities | $(3,961) | $(47,099) | | Net cash provided by financing activities | $1,931 | $6,431 | | Effect of exchange rate fluctuations on cash | $284 | $(127) | | Net increase in cash, cash equivalents and restricted cash | $86,590 | $38,852 | | Cash, cash equivalents and restricted cash at beginning of period | $50,347 | $38,766 | | Cash, cash equivalents and restricted cash at end of period | $136,937 | $77,618 | Reconciliations & Supplemental Data Reconciliation of GAAP to Non-GAAP Financial Information This section provides detailed reconciliations of GAAP net income to Adjusted EBITDA and Adjusted net income, outlining the specific adjustments made for non-GAAP reporting, such as share-based compensation and tax adjustments Reconciliation of Net Income and Adjusted EBITDA (Three months ended March 31, USD in thousands) | Metric | 2025 | 2024 | | :------------------------ | :----- | :----- | | Net Income | $37,831 | $32,983 | | Financial income, net | $(2,647) | $(2,955) | | Taxes on Income | $7,481 | $8,953 | | Depreciation and amortization | $2,655 | $2,301 | | Share-based compensation | $7,084 | $6,862 | | Adjusted EBITDA | $52,404 | $48,144 | Reconciliation of Net Income and Adjusted Net Income (Three months ended March 31, USD in thousands) | Metric | 2025 | 2024 | | :------------------------ | :----- | :----- | | Net Income | $37,831 | $32,983 | | Share-based compensation | $7,084 | $6,862 | | Tax adjustments | $(3,106) | $(1,465) | | Adjusted Net Income | $41,809 | $38,380 | | Diluted earnings per share | $0.63 | $0.53 | | Adjusted diluted earnings per share | $0.69 | $0.61 | Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow This section reconciles net cash provided by operating activities to free cash flow for the three months ended March 31, 2025 and 2024, by deducting purchases of property and equipment Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (Three Months Ended March 31, USD in thousands) | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Net operating cash flow | $88,336 | $79,647 | | Purchase of property and equipment | $(1,002) | $(655) | | Free cash flow | $87,334 | $78,992 | Cash, Cash Equivalents, and Investments This section provides a breakdown of ODDITY's cash, cash equivalents, and investments as of March 31, 2025, and December 31, 2024, showing a significant increase in total cash and investments Cash, Cash Equivalents, and Investments (USD in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :--------------- | :------------------ | | Cash and cash equivalents | $136,860 | $50,340 | | Short-term deposits and restricted cash | $48,077 | $48,007 | | Marketable securities | $71,833 | $70,711 | | Total cash and investments | $256,770 | $169,058 | Net Revenue by Sales Channel This section details ODDITY's net revenue breakdown by sales channel for the three months ended March 31, 2025, and 2024, highlighting the continued dominance of online direct-to-consumer sales Net Revenue by Sales Channel (Three Months Ended March 31, USD in thousands) | Sales Channel | 2025 | Percent of Net Revenue (2025) | 2024 | Percent of Net Revenue (2024) | | :------------------------------ | :----- | :---------------------------- | :----- | :---------------------------- | | Online direct-to-consumer | $261,053 | 97% | $203,575 | 96% | | Other (Israel retail, marketing affiliates) | $7,023 | 3% | $8,053 | 4% | | Net Revenue | $268,076 | 100% | $211,628 | 100% | - Online direct-to-consumer sales constitute the vast majority of net revenue, accounting for 97% in Q1 2025[34]