Oddity Tech, the parent company of Il Makiage and Spoiled Child, announced on Monday that it expects to report record revenue growth and profitability for the third quarter of 2023, beating its previous guidance and analysts’ estimates.
Oddity Tech is a beauty and wellness retailer that uses artificial intelligence (AI) to develop and personalize products for its customers. The company operates two brands: Il Makiage, a makeup brand that offers a “try before you buy” model and a “power match” algorithm to find the perfect foundation shade; and Spoiled Child, a wellness brand that offers customized supplements based on DNA, blood, and microbiome tests.
The company also has a research and development arm called Oddity Labs, which integrates biotechnology and machine learning to discover new molecules and ingredients for its products. The company claims that its AI platform enables it to deliver high customer satisfaction, repeat purchase rates, profitability, and growth.
Strong performance across both brands
According to its preliminary unaudited financial results, Oddity Tech expects to report net revenue of between $81 million and $85 million for the third quarter of 2023, representing a year-over-year growth of 29% to 31%. This is higher than its initial guidance of 18% to 23%, and also beats the consensus estimate of $79.6 million by analysts surveyed by Refinitiv.
The company also expects to report a gross margin of 68.5%, which is one percentage point higher than its initial guidance of 67.5%, and an adjusted EBITDA margin of between 21% to 21.5%, which is at the high end of its initial guidance of 20% to 21.5%.
The company attributed its strong performance to the strength of both Il Makiage and Spoiled Child brands, which saw higher than expected repeat revenues and profitability. The company said that its machine learning models at every part of the user journey are responsible for its outstanding results.
Confidence in future growth
Oddity Tech co-founder and CEO Oran Holtzman said that the third quarter is expected to be the company’s strongest third quarter ever, allowing it to deliver net revenue growth of at least 58% and adjusted EBITDA of at least $89 million in the first three quarters of 2023.
He also said that the company is building massive engines to further scale in 2024 and beyond, with Oddity Labs expanding its molecule discovery platform faster than expected, and delivering game-changing ingredient innovation for its existing and new brands in development.
Oddity Tech Global CFO Lindsay Drucker Mann said that the company’s excellent third quarter performance and its momentum entering the fourth quarter give it confidence in its ability to deliver a strong finish to the year. She added that the company plans to provide a full update to its full year earnings outlook when it reports its third quarter results in November.
The company’s shares rose by more than 10% in after-hours trading on Monday, following the announcement of its preliminary results. The company went public on the Nasdaq in July, raising $1.4 billion in its initial public offering. However, since reaching a high of $56 in August, the stock has fallen by about 50%, amid concerns over its valuation and competition.
