Oddity Tech .(US:ODD)2024-03-06 16:17Financial Data and Key Metrics Changes - The company achieved a record-breaking year in 2023, with net revenue growing 57% to $509 million and adjusted EBITDA increasing 173% to $107 million, resulting in a 21% adjusted EBITDA margin [12][35][19] - The adjusted operating expense grew 42% for the full year, slower than the sales growth of 57%, allowing for effective leverage of operating expenses [58] - The company ended the year with $168 million in cash and short-term investments and zero debt, alongside delivering $85 million of free cash flow in 2023 [20][60] Business Line Data and Key Metrics Changes - IL MAKIAGE saw strong growth, with skin products now accounting for around 20% of its sales, indicating a high rate of category expansion [18][86] - SpoiledChild experienced rapid growth of 325% year-over-year, reaching $110 million in net revenue, with over 50% of sales coming from repeat customers [36][57] - The company is focused on launching new brands, specifically Brand 3 and Brand 4, with Brand 3 targeting medical-grade skin and body issues [40][38] Market Data and Key Metrics Changes - International growth was reported at 13% year-over-year, which is below IL MAKIAGE's total growth of 33%, indicating potential for future expansion in international markets [112] - The company is building strong localized experiences for each market, which is expected to enhance performance upon launching new markets [113] Company Strategy and Development Direction - The company aims to grow both IL MAKIAGE and SpoiledChild to $1 billion in revenue, leveraging a strong leadership team and a growing online demand [22][19] - ODDITY LABS is positioned as a key growth engine, focusing on science-backed products and digital biology to innovate in the beauty and wellness industry [24][45] - The company is committed to a long-term strategy of maintaining a 20% adjusted EBITDA margin while investing excess profits into growth initiatives [61][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve robust growth in 2024, expecting net revenue to increase between 22% to 24% [62][19] - The management highlighted the importance of pacing growth to ensure sustainable long-term performance, with a focus on repeat sales and customer satisfaction [70][141] - The company is optimistic about the future, citing the beauty and wellness market as attractive and growing, with significant opportunities for innovation [43][45] Other Important Information - The company has established ODDITY LABS as an industry-leading molecule discovery platform, which is expected to drive future growth [20][37] - The company is leveraging generative AI to improve business efficiency across various consumer touchpoints, which is still in early implementation stages [88] Q&A Session Summary Question: What is the status of new products and molecules being developed? - Management indicated that multiple projects are underway at ODDITY LABS, with over 20 projects currently in development, although not all will be successful [74][75] Question: How does the company plan to manage growth and marketing expenses in 2024? - The company plans to ramp up user acquisition spending in line with sales growth, with expectations for improved marketing efficiency in Q1 2024 compared to the previous year [127][101] Question: Can SpoiledChild continue its rapid growth trajectory? - Management believes SpoiledChild can maintain a faster growth rate than IL MAKIAGE due to the lessons learned from its launch and the current market conditions [131][130]