Olaplex Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 8, 2025
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Operator

Greetings, and welcome to the Olaplex Holdings First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Alison Malkin, Investor Relations.

Operator

Alison, please go ahead.

Allison Malkin
Partner at ICR

Good morning, everyone. Welcome to our first quarter fiscal twenty twenty five earnings call. Joining me today are Amanda Baldwin, Chief Executive Officer and Catherine Dunleavy, Chief Operating Officer and Chief Financial Officer. Before we start, I would like to remind you that management will make certain statements today, which are forward looking, including statements about the outlook for the Olaplex business and other matters referenced in the company's earnings release issued today. Each forward looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied by such statements.

Allison Malkin
Partner at ICR

Additional information regarding these factors appears under the heading Cautionary Note Regarding Forward Looking Statements in the company's earnings release and the filings the company makes with the Securities and Exchange Commission that are available at www.sec.gov and on the Investor Relations section of the company's website at ir.olaplex.com. The forward looking statements on this call speak only as of the original date of this call, and we undertake no obligation to update or revise any of these statements. Also, during this call, management will discuss certain non GAAP financial measures, which management believes can be useful in evaluating the company's performance. The presentation of non GAAP financial measures should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. You will find additional information regarding these non GAAP financial measures and a reconciliation of these non GAAP financial measures to the most directly comparable GAAP measures in the company's earnings release.

Allison Malkin
Partner at ICR

A live broadcast of this call is also available on the Investor Relations section of the company's website at ir.olaplex.com. Additionally, during this call, management will refer to certain data points, estimates and forecasts that are based on industry publications or other publicly available information as well as our internal sources. The company has not independently verified the accuracy or completeness of the data contained in these industry publications and other publicly available information. Furthermore, this information involves assumptions and limitations and you are cautioned not to give undue weight to these estimates. For today's call, Amanda will start by providing highlights of our first quarter performance and discussing the progress we have made on our strategic areas of focus.

Allison Malkin
Partner at ICR

Then Catherine will discuss our financial results and outlook. Following this, we will turn the call over to the operator to conduct the question and answer session. With that, I'll now turn the call over to Amanda.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Thank you, Allison. Good morning, everyone, and thank you for joining us today. We're pleased to share a solid start to the year with first quarter results that included net sales ahead of our expectations. We are encouraged by these early signs of progress and also recognize that there remains more work ahead. We believe that our performance this quarter reflects the early response to our Bonds and Beyond strategy introduced at our year end call as the next chapter in our transformation.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

As a reminder, our Bonds and Beyond vision for Olaplex begins with our original breakthrough science and professional channel heritage to position Olaplex as a foundational health and beauty company powered by breakthrough innovation that starts with and is inspired by the professional hairstylist. We believe that we participate in a category that is poised for continued growth and that overall consumer trends indicate that hair, beauty, health and wellness are converging. As such, we believe our technology and original positioning allow us to focus on a uniquely important white space of highly efficacious hair care that is not just about band aiding and is more than extreme damage repair, but about actually improving the overall health of the hair. With this in mind, we developed a strategic vision that is based on three pillars. First, move beyond damage repair and the bond building category we created to grow our addressable market and position Olaplex as a solution for everyday foundational hair health.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Second, honor and empower the Pro as the start of the flywheel of our business. The Pro is both a powerful distribution channel as well as a source of authenticity and authority to our end consumer, which, if integrated and nurtured properly, can separate us from the competition. Third, while our products have always created fans based on their efficacy, we know we must move beyond our prior solely clinical positioning to generate the emotional connection that drives lasting brand relevance, resilience and love. As I have noted from the beginning, transformation doesn't happen overnight. It requires consistent execution, the ability to adapt and a long term mindset.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

But we're confident that the foundational work underway today will drive more sustainable results over time and that in the first quarter, we began to see early validation of our approach. We believe that first quarter provided indicators that we're moving in the right direction. Before diving into our strategic progress, here's a summary of our first quarter results. Net sales of $97,000,000 down 1.9% year over year, with adjusted EBITDA of $25,700,000 a margin of 26.5%. We over delivered sales compared to Target, which we believe reflects our retailer partners' support of our refreshed brand positioning and marketing plan.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

This drove higher than expected shipments during the quarter. In North America, where we focused our brand transformation efforts, we saw modest growth. International sales declined year over year, but came in ahead of expectations with a more moderate decline compared to fourth quarter. We're taking a phased disciplined approach to our international realignment that reflects both market potential and operational readiness while we focus on our transformation efforts in North America. Turning to performance by channel.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Specialty retail led the way with shipments ahead of plan, which as I noted, reflected our partners' support of our Bond and Beyond strategy. Professional also exceeded expectations, driven by improving execution across key distributors. The channel, however, declined versus prior year, driven by international performance. Direct to consumer declined versus last year as we shifted from a more promotional strategy to driving brand storytelling and loyalty through our new site and accelerated full funnel digital marketing efforts. We believe that there continues to be an opportunity to provide a unique and specialized approach on our branded website as we progress in our transformation.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Let's now turn to discuss our 03/2025 strategic priorities outlined on our last call: generate brand demand, harness innovation and execute with excellence. First, generate brand demand. At Olaplex, brand demand is about more than increasing awareness. It's about creating emotional connections, deepening consumer engagement and reinforcing our brand and product relevance in a competitive and evolving market. We're doing so by staying grounded in our roots in professional hair care while changing how we show up digitally, digitally, in store and across every touch point with our stylists and our customers.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

The driving forces behind our brand evolution are to provide: first, a visual identity that is elevated, dynamic and relatable. During the quarter, we introduced refreshed brand visuals that aim to reflect who we are today, a brand rooted in science, guided by professionals and built for foundational hair health. Our new aesthetic highlights our innovation, at the same time as color and warmth and shows a special bond between the client and the stylist that has always been a part of our heritage. Next, product storytelling that educates our community about our unique product benefits, emphasizing a more holistic view of foundational hair health. For example, our new website now serves as both a storytelling and a conversion platform.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

It guides consumers through product routines, offers science and usage education and help customers build personalized regimen. Across retail, we introduced updated in store merchandising designed to educate consumers and assist them in clearly navigating our product offering. Across touch points, we're making our value proposition more clear, compelling and shoppable. And

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

for the

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

professional channel, we enhanced our presence at trade shows with updated booth design, signage and sampling to support education and trial and are now moving towards best in class education materials. And finally, an emotional connection that allows us to drive lasting brand relevance, resilience and love. Based on learnings from our research last year, we saw a clear opportunity to elevate our brand storytelling to support the science and efficacy of our products from an additional angle. This goes even further than our new visual identity to capture what we call the unapologetic confidence, which comes with a truly great hair day powered by innovation and the passion of our pros. To this end, in April, we launched our brand platform Designed to Defy.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

As a guide for our future brand building efforts, this platform and its tagline, A Healthy Foundation for Endless Possibilities, captures our history and looks forward towards our future with a philosophy of innovation, creativity and confidence. This effort launched via an advertising campaign and film featuring actress and Bridgerton star, Nicola Coughlin, creative entrepreneur and media personality, Jenna Lyons and Olympian sprinter and hurdler, Sydney McLaughlin LeBron, along with their personal hairstylist, each of whom is an Olaplex ambassador. This platform is a longer term investment for which early indicators are encouraging. We drove nearly 1,000,000,000 press impressions on its launch, increased share of voice by five points and increased our Google search volume, positive brand mentions and social engagement. In the first quarter, we invested $18,100,000 in non payroll sales and marketing, an increase of $4,800,000 over the same period last year.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

As our strategy continues to progress, we intend to further invest behind this platform and the three driving forces of our brand evolution. In summary, our renewed focus on authenticity, science backed innovation and emotional storytelling is beginning to show its impact and we're excited about the momentum that we are working to build in our community across channels. Moving to our second priority, harness innovation. Innovation is the heartbeat of Olaplex. It's about building a scalable, science backed engine to create new products that drive category leadership, reinforce our brand promise and deliver meaningful results for both professionals and consumers.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Our approach centers on foundational hair health, starting at the scalp and extending from root to tip. Based on an R and D model anchored in a deep understanding of hair biology, we believe we are well positioned to be a leader in this space. Over the past year, we've made improvements in how we develop, evaluate and scale new product concepts. We have built a cross functional innovation team, integrating science, product development, consumer insights and professional feedback. We established clear innovation principles rooted in our brand DNA and our scientific capabilities, and we streamlined our cross functional processes, enhancing the speed of decision making and sharpness in execution in our go to market.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

We believe these improvements set the stage for a robust, forward looking pipeline. Our 2025 innovation journey began with the launch of our scalp longevity treatment in late February. This product is an intentional extension into scalp health, a critical foundation for long term hair vitality and the fastest growing category in premium hair care and Persarcona growing at twice the rate of the overall prestige hair care category. We designed this formula to provide superior results with an ultralight scalp serum that strengthens the scalp barrier via our original BisAmino technology and promotes healthy hair from the start. Later this year, we plan to expand this platform with a professional scalp service treatment designed to address the specific needs of the scalp during an in salon visit, further developing our strategy to support the Pro through new salon only services.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

In addition, just last week, we launched four and five Fine, a wash care system tailored to the needs of fine hair. Our existing numbers four and five were the top selling prestige shampoo and conditioner in The U. S. In 2024 according to Sercana data. And we had heard feedback from our pros in our community that there was an opportunity to develop a second formula specifically designed for fine hair.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

These fine hair formulas address the top two concerns of these consumers, strength and volume, with a customized formulation that calibrates cleansing and conditioning ratios to deliver best in class results for those with this hair type. Overall, we believe science led innovation is a sustainable growth lever that enables us to strengthen our authority, expand our portfolio and build deeper, more lasting connections with both consumers and professionals. With fewer than 30 SKUs in our current lineup, we see substantial white space for expansion. Looking ahead, we're focused on delivering two to three strategic product launches annually, each supported by strong consumer education, stylist engagement and omnichannel activation. Turning to our third strategic priority, execute with excellence.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

This priority is about developing operational rigor while building a future ready organization and team disciplined, efficient, agile and aligned to support our strategy across markets, channels and customer touch points. As we continue to evolve as both a brand and a business, we remain focused on two core areas under this pillar. First, streamlining and modernizing our business processes and second, executing a globally aligned go to market strategy. Let me provide an update on each. First, improving business processes.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Improving business processes requires a strong team. As noted on our last call, we now have a strong leadership team in place across marketing, innovation, sales, operations and finance. In 2025, we're expanding key capabilities across the organization in an effort to fuel sustainable growth and scale execution. One such example is the addition of a new leader of our education department, a critical addition as we continue to enhance our training and education programs for both professional and retail partners. As stated when I first joined the business, we have important work to do to more effectively deliver product knowledge, deepen brand advocacy and empower our partners to succeed with Olaplex, which we are now in a better position to accelerate.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

As we transform our company, we've been implementing changes that evolve our core business processes to streamline operations, embed accountability and enable faster data driven decision making and cross functional effectiveness. These efforts are starting to pay off. We've now delivered two consecutive quarters of financial outperformance, which we believe is the result of more efficient and thorough planning, inventory management and demand forecasting. We're enhancing cross functional coordination, fostering better alignment between innovation, marketing, supply chain and sales to drive a stronger go to market process. And lastly, we are simplifying systems and implementing tools that give us earlier insight into data, which is improving execution across everything from digital marketing to financial reporting.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

While there is still significant work underway, improved process discipline is a key enabler and we're pleased with our progress to date. Our second focus under this strategic priority is about international execution. Over the past several months, we've been conducting a comprehensive evaluation of our international business and our partners within each region. The result is a more targeted and strategic go to market strategy, one that is intended to allow us to scale efficiently with the right partners while preserving local relevance. Rather than build a one size fits all model, we're applying a tiered approach that balances direct investment with strong local partnerships.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

We believe this will better enable us to align resources where they will have the most impact while still delivering a consistent brand experience worldwide. In focus markets, which includes some we manage firsthand and others that are operated through a single distributor, we're making direct investments across marketing, education and sales to drive long term growth. In other regions, we intend to collaborate with trusted distribution partners to build the brand with tailored support, clear guidelines and consistent storytelling. Our objective over time is to scale across geographies with a streamlined process and communication tools that provide better partnership, guidance and execution for all of our partners. We believe this approach will allow us to maintain global consistency, support high potential regions and scale with intention, all without losing sight of the unique dynamics of each market.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Overall, while we do recognize that it will take time to get to full capacity, we expect this effort to give us a sustainable international model that leverages our successes and learnings in North America to deliver long term growth. Across all of our strategic priorities, execution remains a critical enabler of our growth. We believe this improved execution will allow us to facilitate financial performance and create the operational stability and flexibility needed to deliver on our bonds and beyond strategy. We'll continue to report on our progress and believe we're now moving in the right direction. In summary, first quarter marked a solid start to the year and reflected what we believe are early positive signs behind our renewed strategy.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

We're realistic about the challenges ahead, particularly in a dynamic macro environment, but confident in our long term vision, the strength of our brand, the resilience of the premium hair care category and the capabilities we are building. We're reaffirming our 2025 guidance, as Taffin will discuss in more detail, and remain focused on disciplined execution across our 03/2025 strategic priorities. And with that, I'll turn it over to Catherine to walk through our financials.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

Thank you, Amanda, and good morning, everyone. Our first quarter financial results reflect what we believe is early traction in our transformation efforts as well as the ongoing complexity of operating through change. While we are encouraged by the signs of progress, we remain clear that we are still in the early stages of executing our strategy and that much of the work to unlock long term growth is still ahead of us. That said, our net sales performance came in ahead of internal expectations, which we believe is a sign that the foundational actions we've taken across brand, innovation and operational execution are beginning to show up in our financials. First quarter net sales were $97,000,000 a 1.9% decline year over year, but ahead of where we expected to land.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

Growth in specialty retail and better than expected results in our professional channel helped offset expected declines in our direct to consumer channel. Modest growth in North America, where we are further along in our transformation, helped offset continued softness in our international markets as we began to realign our global go to market strategy. By channel, specialty retail was a bright spot, growing 12% year over year to $38,600,000 fueled by a strong retailer response to our brand refresh and updated merchandising. Professional channel sales declined 10.9% to $34,500,000 largely driven by continued softness in international markets. However, we saw encouraging signs in North America where we are further along in our transformation.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

Direct to consumer sales declined 7.2% to 23,900,000.0 in line with our strategy to reduce promotional intensity. Adjusted gross margin for the quarter was 71.9%, down two forty basis points from the prior year. This was anticipated and largely reflects our new innovation, products introduced in late twenty twenty four and early twenty twenty five that have not yet reached full production scale or margin efficiency. SG and A was $48,000,000 an increase of $7,600,000 year over year. This increase is aligned with our strategic priorities and primarily reflects investment in brand marketing and the rollout of our new identity and building capability across the organization.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

We believe these investments are necessary to support our transformation, and we remain committed to managing spend with discipline and a clear focus on ROI. Adjusted EBITDA was $25,700,000 representing a 26.5% margin. This compares to 35.9% a year ago. While lower year over year, our adjusted EBITDA margin remains healthy, particularly given the strategic investments we are making to position our business for sustainable long term growth. Turning to a review of the balance sheet.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

We continue to operate from a position of strength supported by an asset light business model. At quarter end, cash and cash equivalents were $580,900,000 up from $507,500,000 in Q1 of fiscal twenty twenty four. Inventory was $79,200,000 down $15,500,000 from $94,600,000 in Q1 of fiscal twenty twenty four and an increase of $4,000,000 from Q4 of twenty twenty four. We feel good about the composition and content of our inventory and continue to carefully manage stock levels in support of new product launches and refreshed merchandising. In recognition of our strong cash position, following quarter end, we utilized $300,000,000 in cash to reduce outstanding debt, lowering our gross leverage ratio to around four times from around seven times and unlocking an estimated $20,000,000 in annual interest savings.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

This reinforces our commitment to capital discipline and balance sheet optimization. Let me shift to the topic of tariffs. We are a North America focused organization. As we understand the situation today, we expect tariffs to have a relatively modest impact. Put this in perspective, 95% of our finished goods sold in The U.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

S. Are manufactured in The U. S. We have European manufacturing capabilities, which currently produce about 5% of our U. S.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

Sold finished goods. In the first quarter, the U. S. Represented 51% of our total net sales with international sales representing 49% of net sales. The EU represents the largest portion of our international sales with no country outside The U.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

S. Representing more than 10% of total net sales. In addition, we have limited direct tariff exposure in raw materials and components with less than 1% of our product sourcing costs imported to The U. From China. Additionally, we source packaging into The U.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

S. From Taiwan, Korea and The EU, all of which are less than 3% of our COGS. Although no tariffs have been announced on EU nor UK imports, I will note that the majority of EU product is produced in The U. S. We have been proactively working to address potential impacts that may occur due to tariffs.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

These include sourcing adjustments. We are exploring alternative suppliers outside of effective regions with particular focus on domestic partners for certain components. Operational flexibility. We are working closely with our manufacturing partners to ensure they have adequate access to raw materials and to build contingency plans to limit our supply chain disruption and pricing levers. We are evaluating selective pricing adjustments where elasticity and brand positioning allow.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

While it's too early to quantify the exact impact of potential tariff change given the details remain fluid, we are modeling a range of outcomes and will strive to mitigate the cost impact through these levers. We entered 2025 with a clear vision and a strategic plan and our first quarter results reflect that we are executing with intention, investing with purpose and building momentum. We remain focused on value creation and are confident in the steps we're taking to position Olaplex as a leader in foundational hair health. As Amanda noted, we are maintaining our full year 2025 guidance, which reflects the confidence we have in our strategy and early traction we're seeing across priorities. In addition, our guidance incorporates the current consumer spending environment and at this point assumes no material impact from tariffs given the situation remains fluid and we can't reasonably estimate the downstream effects on consumer behavior that may arise.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

With this in mind for fiscal year twenty twenty five, we continue to expect net sales in the range of minus 3% to plus 2% versus fiscal twenty twenty four, adjusted gross margin between 70.571.5% and adjusted EBITDA margin of 20% to 22%. And while we plan our business annually and give guidance accordingly, we would like to provide a that our marketing spend began ramping in the latter part of the first quarter and we expect this to continue into the second quarter as we fully launch our Design to Defy campaign and support the launch of April. In summary, we have made a lot of progress in just a year's time and we believe we are well positioned to achieve our 2025 expectations. Olaplex remains a powerful brand backed by science and is loved for its ability to promote hair and scalp health. With a large global consumer base and professional community and strong support from our partners around the world, we are positioned to deliver on our bonds and beyond strategy and to achieve our ambition to establish Olapax as a foundational health and beauty company.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

That concludes our prepared remarks. Operator, we're now ready to take questions.

Operator

Thank you. We'll now be conducting a question and answer session. Our first question is from Jonah Kim with TD Cowen.

Jonna Kim
Director at TD Cowen

Thank you for taking my question. Would love additional color just based on your data in the DTC channel. Are you seeing any increase in the new customer acquisition front? And what are you seeing in terms of the retention and just engagement from the existing consumers? And then just one another question.

Jonna Kim
Director at TD Cowen

Has your outlook for the remainder of the year changed at all just given the current macro trends? How would you sort of think about the remainder of the year now versus your outlook when you gave in the last quarter? Thank you so much.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

I'll start with those. Good to hear your voice. And good morning. So first and foremost, I think as we give a little bit of perspective about the DTC channel and what we saw in that happen in the first quarter, it was a very deliberate change to our strategy. And as we thought about our assortment and kind of how we're using promotional activity in that channel.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

And as we thought about the transformation overall in our business, we felt like we could do the things that we've really talked about from the very beginning, which is to use promotions during key moments, key tempo moments and to use them surgically. And so that's really what you see in that direct to consumer business. That's the strategy that we really believe is the right thing for us going forward as we think about that channel in particular and the broader ecosystem. So that's really how I would position our thinking, what we've seen in those results. And now that we really have a brand new site, which is a very important thing that we needed, our digital media efforts are up and running.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

We're very optimistic about the role that, that channel plays in our go forward strategy. With respect to our broader take on the macro environment right now, which is, I think, what you're alluding to, I'd say a few things. First and foremost, beauty is a resilient category. This is a category that time and again has proven that it can withstand a lot of change in the consumer macro environment. We need to keep our eyes on it, obviously, but we remain optimistic about what the category as a whole is.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

I'd also say that prestige hair care, as we've talked about in terms of our broader strategy and why we believe so strongly in Old Flex's position going forward, is at an early stage of its growth. So there is some good momentum that we want to take advantage of as the consumer shifts in that category. The third thing I would say is that we're in the middle of a transformation, and we're really focused on our long term goals. We have the flexibility to do that. We now have the vision to be able to do that.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

And so that's why we are reiterating our guidance today. And the things that I'll let Catherine allude to and speak about are kind of where we would see being within that range. But we really, again, remain focused on executing, focused on making sure that our brand is out there in the healthiest way and that we're really representing our products for the incredible strength that they have.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

Yes. Just to add a couple of things. First, on the .com part, as Amanda discussed, this was a deliberate strategy and the results were expected. And then as we are thinking about our guidance for the total year, we are encouraged by our first quarter results and the early signs of progress that we believe they represent. And

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

as we

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

think about the rest of the year, our ability to hit the top end of the range is directly tied to the speed with which we execute on the three priorities: generate brand demand, harness innovation and execute with excellence. We feel confident in the new brand positioning and expect it along with innovation that Amanda talked about to drive demand. And we've made a lot of progress on our metrics. As I talked about in the past, we're monitoring closely and reacting to what's working. And so we're confident in the range for the rest of the year.

Jonna Kim
Director at TD Cowen

All Thank you so much.

Operator

Our next question is from Ashley Helgans with Jefferies.

Sydney Wagner
Sydney Wagner
Equity Research Senior Associate - Beauty & Personal Care at Jefferies

Hi, this is Sydney on for Ashley. Thank you for taking our question. Can you talk about what you're seeing from marketing initiatives in terms of KPIs? And then how do you see these marketing efforts translating differently maybe between The U. S.

Sydney Wagner
Sydney Wagner
Equity Research Senior Associate - Beauty & Personal Care at Jefferies

Or internationally or between the pro versus retail channels? Thank you.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Great question. Good morning, Sydney. So with respect to making sure that we all understand where we are in that marketing journey, when we were on our last call, that was right after we had relaunched the brand and we had updated our visual identity. We had just relaunched the website here and across the globe, and we were in the midst of what the global rollout of the brand upgrade. What's happened since then is an additional program that we talked about today, which is really what I would characterize as our upper funnel brand positioning and work that we needed to do to really drive the emotional connection that we've been speaking about from the beginning that was really missing in our brand.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

And that's the Design to Defy platform. And I would characterize that again as an upper funnel longer term investment. That began in April. So we're still in early stages of that. As I talked about earlier this morning, we've seen some really nice KPIs out of the gate in terms of the impression, the Google search, the social engagement around that campaign.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

But as I'm sure, funnel brand building marketing is not an overnight thing and we're in the midst of a transformation that we do expect to take time. So but again, early signs we're optimistic about what we've seen thus far. With respect to international, that's a business that as we've articulated, we're in a realignment phase. So there are certain areas in the where we'll actually have the new visual identity in the next few months roll out across the globe. The marketing engine will take our time as we really realign those markets, that we have the right infrastructure, that we have the right partners to really engage in what I would characterize as a more aggressive marketing effort.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

But that is a work in progress. I'm pleased with the pace that we're moving at there. I think we have clarity around what the right partners are. We've spent a lot of time making sure that we have the right abilities internally to be able to execute on that so that whatever we're coming up with here in our domestic market, we're able to translate effectively across the globe. And that has to do with really making sure we have the right handoff points, the right communication, the right partner at the other end, things that are what I would call sort of the wiring from our U.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

S.-based business into our international business. So as we've spoken about that, that is something that's coming up to full capacity. We haven't put a timeline on that, but I think we're moving at a good pace, and we know what the end game looks like there.

Operator

Our

Operator

next question is from Susan Anderson with Canaccord Genuity.

Susan Anderson
Managing Director & Senior Analyst at Canaccord Genuity - Global Capital Markets

Hi, good morning. Thanks for taking my question. Nice job on the quarter. I guess I wanted to ask about the spec retail channel. Definitely saw some better growth than we were expecting.

Susan Anderson
Managing Director & Senior Analyst at Canaccord Genuity - Global Capital Markets

I was curious, was there a lot of restocking there? How did your sell ins perform versus the sell outs? And then also how are you feeling about inventory at retail? We have heard some destocking from other players out there. Just curious what you're seeing.

Susan Anderson
Managing Director & Senior Analyst at Canaccord Genuity - Global Capital Markets

Thanks.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Great, great question as well. Good morning, Susan. So I would say our inventory is in a healthy position in our retail partners. That's important to say right out of the gate. What you've seen in that upside in specialty retail is really related to we spent a lot of time, and I believe I was talking about this probably even in my first call last year about how important it was to spend time with our retailer partners to really make sure that they understood that our future vision, that they understood what we were doing in our innovation pipeline, that we had the right team in place to be able to execute properly with them.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

And we've made a lot of progress on that. So that's really what you're seeing in those numbers is their belief and their enthusiasm for what the road ahead looks like in Olaplex. So that as we've said before, we're really in the early phase of that. So there's a lot to come as we've just launched April, that's a very large initiative for us and as we look to the rest of the year.

Susan Anderson
Managing Director & Senior Analyst at Canaccord Genuity - Global Capital Markets

Okay. Great. And then maybe if I could just ask about the new brand refresh. Curious how it's been received by consumers, I guess, both in store. We've noticed definitely a lot more pop in the brand, but then also online and if there's any if you're seeing any better conversion as a result or social media buzz?

Susan Anderson
Managing Director & Senior Analyst at Canaccord Genuity - Global Capital Markets

Thanks.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Yes. It's been we're very pleased with how it's been received both by consumers as well as by professional community. And the best way I can articulate it is that the response has been, this is Olaplex that I've always thought it could be. And because it was very important to us to make sure that we were harnessing our original brand story, that we were harnessing the place that we came from, the Born in the Lab brought to the chair. I think we're really bringing that to life.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Again, that's a starting point. It's not the ending point. And we're right now, we're in a place where we can I feel confident that we can really turn on a marketing engine much more effectively than we could before because it's not just about how the money that you spend, it's also about how you're spending it, the visuals that you're using? We operate in a very visually driven category. And now we have the right toolkit to be able to go and really invest behind our marketing going forward.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

So this is to put us in the game, so to speak, and we're excited to be there.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

And I would just add to your comment or question on sell through is that Q1 twenty twenty five sell through improved compared to Q1 twenty twenty four, and we expect to deliver continued improvement in that sell through trend as we go throughout the year, particularly as our marketing that Amanda just described ramps in the second quarter and beyond.

Susan Anderson
Managing Director & Senior Analyst at Canaccord Genuity - Global Capital Markets

Okay, great. Thanks so much. Good luck for the rest of the year.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Thank you.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

Thanks.

Operator

Our next question is from Kate Grafston with Barclays.

Kate Grafstein
Kate Grafstein
VP - Equity Research at Barclays

Hi, thanks. So you talked about the plan to reduce promotional intensity in the DTC channel. Is this also the plan across the other channels as well? And then if you can also talk about the promotional environment in general, what you're seeing in both The U. S.

Kate Grafstein
Kate Grafstein
VP - Equity Research at Barclays

And in international? Thank you.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Yes. So it's always been our intention to promotionality and leveraging promotions is certainly a part of a toolkit to building a brand in the beauty space. We believe that we want to use those during tense moments that are critical for our retailer partners. We've done that again last year. We'll continue to do that going forward.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

And then we want to have the same sort of approach on our DTC channel. That's really about what are those critical moments? How am I using it surgically? It is an important tool. And so it's really about just being more strategic and how we're using it at the right time versus having something that's more every day.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

So that's really been the shift that we saw in the DTC. And that was kind of in the master plan of as we think about what we're doing as a business and what we're doing as a brand is that we're really building a brand and building a marketing engine while you're also making sure that you're using promotions in a strategic way. So getting both of those working at the same time coherently across omnichannel. We have an incredible new Chief Revenue Officer, Michelle Brett, who joined us in December. And she's really helping us a lot to think about how we're using different channels and how we're really thinking about things omnichannel and each piece of the puzzle working to support the other.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

So that's really something that we're excited to see come to fruition at this point.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

And as we think about the full year guidance, we've left room within our range to do just as Amanda just said. We are going to use the lever as a leadership team reacting to those metrics that I talked about earlier to increase or pull back on functionality depending on what we see in the market.

Operator

Our next question is from Dana Telsey with Telsey Advisory Group.

Dana Telsey
CEO and Chief Research Officer at Telsey Advisory Group

Hi, good morning. It was funny around a month ago, I was walking in SoHo on a Saturday, very early Saturday morning and I saw a line outside where you were having an event or an activation. And so I see what's happening with your marketing. As you think of marketing spend dollars, Amanda, how are you thinking of cadence throughout the year? How are you thinking of what marketing should be over the long term given what you're building now with the more new effective category launches too?

Dana Telsey
CEO and Chief Research Officer at Telsey Advisory Group

And then, Catherine, when you think about the margins, the puts and takes of the drivers, whether expense dollars or how you're thinking of the buckets of gross margin as we move forward, especially in an environment that's certainly more fragile? And lastly, just on inventory, how you're planning inventory go forward? Thank you.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Thanks, Dana. Those who are not on a in a SOHO of one Saturday that think Dana is referring to our Bond House, which was a really our first large consumer engagement effort. We had had something called the leave in, if you recall back in September of last year, which was focused on our leave in conditioner, and that was very successful. Also had its own line around the block. And then we did something called the Bond House, which was supporting the launch of our Design to Defy campaign.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

It was a three day event that started with something for influencers, our pro community, and then was open to the public all weekend in which people could really experience the full range of what the new brand looks like from a foundational hair health wall to really explain the science. You could get a scalp scan and understand the state of your own hair, have a hair touch up from our pro community and of course, the photo moment because it's not a IRL activation without a photo moment. So that was, I think, definitely something that's an example of how we're thinking about the creation of what we call rolling thunder in terms of the conversation about Olaplex. And that, as I talked about this morning, that it's more than awareness, but it's about creating brand love, brand engagement, the right energy in the right room. Those are certainly physical places where you can see it, and then that needs to translate across our digital channels, which is really where we spend the majority of our media money.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

And how do we really take that story and expand it across those who maybe aren't in a SoHo store. So that's a great perspective on how we're thinking about marketing. We certainly have now, as I mentioned, that we have our brand in the right place, we can start to do things like that, and you'll continue to see that from us.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

And then on your EBITDA questions, I think what's most important for us and for you to know is that we are very focused in 2025 on executing our strategy, generating brand demand, harness innovation, execute with excellence. And with a strong balance sheet, and this is going to allow us to invest straight through in turbulence for whatever reason that may be caused. This actually might be a competitive advantage for us because we're not going to have to pull back when others might. Of course, we'll always be watching what's happening and we'll make smart investments driven by ROI, but our plan is to stay on strategy. And in regards to inventory, we carefully manage our inventory.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

As I've mentioned in the past, we've gotten even better with our processes and our metrics to allow us to have inventory in the right place. Given what's happening in the world, we're looking at maybe building inventory in right places to make sure that we manage through the tariff situation. And again, our balance sheet allows us to do that. And we'll look back to you with what we've done as we go through the year.

Dana Telsey
CEO and Chief Research Officer at Telsey Advisory Group

Thank you.

Operator

Our next question is from Shavana Chowdhury with JPMorgan.

Shovana Chowdhury
Shovana Chowdhury
Analyst at JP Morgan

Hi, thanks for taking our question. You commented that your sell through has been improving year over year and the inventory at Trade is healthy. However, global beauty category consumption has been decelerating and that's also embedded in your guidance. But can you specifically speak to the latest underlying prestige hair care category consumption trends, both here in The U. S.

Shovana Chowdhury
Shovana Chowdhury
Analyst at JP Morgan

And what you're seeing in the international markets? And have your consumption rates exiting the quarter held up in the several weeks in Q2 thus far? Thank you.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Thanks for the question. Really, what I would go back to is for where we are in our overall transformation, we're really thinking about the long term. And that we really are focused on what the overall potential is in prestige hair, which continues to be a growing category, and really how can we participate in that. For us, the midst of a transformation, I think it's critical to stay focused on the long term game. As Kathryn alluded to, we'll make sure that we maintain our flexibility, we're being smart about our investments at this time, and that we continue to sort of focus on the road ahead.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

And we'll certainly keep focused and keep everyone updated as we see what unfolds within the consumer macro environment, which obviously is dynamic, we need to keep our eyes on it.

Shovana Chowdhury
Shovana Chowdhury
Analyst at JP Morgan

May I tack on another question, if I can? So you had provided a lot of good details around tariffs and everything and you're expecting like, but can you give us a sense of the magnitude of any incremental gross tariff headwinds just so that we can get an understanding of what it looks like? I mean, I understand it's relatively smaller than most others out there.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

I'm sorry, I'm not quite picking up. They're a little bit hard to hear. Do you mind repeating the question?

Shovana Chowdhury
Shovana Chowdhury
Analyst at JP Morgan

Sure. I was just saying that you've provided a lot of details, but then if you can give us a sense of the magnitude of the gross tariff number headwind actually that you may be seeing that needs to be mitigated just to get a sense of what it's like?

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

Right. Okay. Thank you. Thank you for repeating it. We're a North America focused business.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

And as such, we expect any impact to be relatively small. We're not providing an exact number, but it's not something that is going to change our strategy or process to do anything that we haven't already discussed.

Operator

Our next question is from Corinne Wolfmeyer with Piper Sandler.

Korinne Wolfmeyer
Korinne Wolfmeyer
Vice President & Senior Equity Research Analyst - Beauty and Wellness at Piper Sandler Companies

Hey, good morning team.

Korinne Wolfmeyer
Korinne Wolfmeyer
Vice President & Senior Equity Research Analyst - Beauty and Wellness at Piper Sandler Companies

Thank you for taking the question. I'd like to touch a little bit more on the marketing spend cadence for the remainder of the year. So it sounds like there was a bit of a pickup toward the end of the quarter heading into Q2. How should we be thinking about the cadence of the spend then over the next several quarters? And should we anticipate any additional pickups as we get through the back half of the year?

Korinne Wolfmeyer
Korinne Wolfmeyer
Vice President & Senior Equity Research Analyst - Beauty and Wellness at Piper Sandler Companies

Thank you.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

Sure. I'll take that one. So the marketing spend, as Amanda just mentioned, really started in the back half of the first quarter. We expect that spend to pick up in the second quarter. And then through the rest of the year, I'll just reiterate what we are expecting for our guidance range.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

That's about what I can tell you because we don't provide specific quarterly guidance, but we did want share that the second quarter will be a full quarter of impact compared to the first.

Korinne Wolfmeyer
Korinne Wolfmeyer
Vice President & Senior Equity Research Analyst - Beauty and Wellness at Piper Sandler Companies

Okay. Thank you. And then if I could just ask quickly on cash plans. So you sound pretty confident in your current cash position. Obviously, it sets you up well with the current tariff situation and inventory planning and you have paid down some debt.

Korinne Wolfmeyer
Korinne Wolfmeyer
Vice President & Senior Equity Research Analyst - Beauty and Wellness at Piper Sandler Companies

But any additional plans regarding the cash usage that we could be thinking about in terms of driving greater shareholder returns? Thank you.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

Yes. Thanks for the question. We were pleased to be able to pay down $300,000,000 of debt right after the first quarter. And we thought that, that was a really good use of funds for the shareholders, saves $20,000,000 or maybe even a little bit more depending on rates in the future of cash payments that we don't have to make to the bank. And so we're pleased with that.

Catherine Dunleavy
Catherine Dunleavy
COO & CFO at Olaplex

And just reiterating our guidance, we don't provide specific cash forecasting, but reiterating our guidance. And so we paid down the debt, we feel pretty comfortable about the health of the business.

Korinne Wolfmeyer
Korinne Wolfmeyer
Vice President & Senior Equity Research Analyst - Beauty and Wellness at Piper Sandler Companies

Great. Thank you.

Operator

Thank you. There are no further questions at this time. I would like to hand the floor back over to Amanda Baldwin for any closing comments.

Amanda Baldwin
Amanda Baldwin
CEO & Director at Olaplex

Thank you, everyone, for joining us this morning. We really appreciate your interest in Olplex, and we look forward to seeing many of you at any upcoming conferences and when we report our second quarter results later this year. Have a great day.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Executives
    • Amanda Baldwin
      Amanda Baldwin
      CEO & Director
    • Catherine Dunleavy
      Catherine Dunleavy
      COO & CFO
Analysts
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Key Takeaways

  • Net sales ahead of expectations: Q1 net sales of $97 M (down 1.9% YoY) surpassed internal targets, driving adjusted EBITDA of $25.7 M (26.5% margin).
  • Bonds and Beyond strategy: New vision built on three pillars—expanding beyond damage repair, empowering professional stylists as a growth flywheel, and creating emotional brand connections around foundational hair health.
  • Brand refresh & “Design to Defy” campaign: Rolled out a revamped visual identity and global ad platform featuring celebrity ambassadors, generating over 1 billion press impressions, a 5-point share of voice gain, and stronger digital engagement.
  • Innovation pipeline accelerating: Launched a scalp longevity treatment and fine-hair wash system, with a plan for two to three major annual product launches—including salon-only scalp services—to expand beyond the existing 30 SKU lineup.
  • Balance sheet strengthening: Ended the quarter with $580.9 M in cash and reduced debt by $300 M post-quarter to cut leverage and save ~$20 M in annual interest, positioning the company to invest amid macro uncertainty and potential tariffs.
AI Generated. May Contain Errors.
Earnings Conference Call
Olaplex Q1 2025
00:00 / 00:00

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