ODDITY Tech Q4 Earnings Call Highlights

Key Points

• Record 2025: Revenue rose 25% to $810 million with adjusted EBITDA of $163 million (20.2% margin), about 70% of revenue from repeat purchases, and $776 million in cash on hand.
• Advertising "dislocation" creates near-term uncertainty: Management blamed algorithm changes at its largest ad partner for sharply higher CPAs, is withholding full-year 2026 guidance, and expects Q1 sales to fall roughly 30% with first-order economics unprofitable at current acquisition costs.
• Balance-sheet flexibility and continued investment: ODDITY generated $84 million of free cash flow in 2025, has an undrawn $350 million credit facility, intends opportunistic buybacks (about $103 million remaining), and will keep investing in brands and tech including METHODIQ, ODDITY Labs, and Brand 4.

ODDITY Tech NASDAQ: ODD management used its fourth-quarter 2025 earnings call to highlight a record year of growth and profitability, while warning that a sharp, unusual increase in digital advertising acquisition costs is expected to pressure results in early 2026 and prompted the company to withhold full-year guidance.

Record 2025 results and repeat-driven model

Co-founder and CEO Oran Holtzman said 2025 was a “strong year” as the company delivered record revenue, adjusted EBITDA, and adjusted EPS, with management raising its outlook each quarter despite “challenging user acquisition costs” in the second half that drove higher advertising spend.

For the full year, revenue rose 25% to a record $810 million, with adjusted EBITDA of $163 million, representing a 20.2% adjusted EBITDA margin. Holtzman emphasized that ODDITY’s repeat purchase performance remained a key indicator of brand health: approximately 70% of 2025 revenue came from repeat sales. He added that 12-month net revenue repeat rates for the 2024 cohort of first purchasers increased versus the 2023 cohort and “remained over 100%,” and that more recent 2025 cohorts were tracking better on a six-month basis than prior-year cohorts.

ODDITY ended the year with a strong liquidity position, reporting $776 million in cash and cash equivalents.

Brand performance: IL MAKIAGE, SpoiledChild, and METHODIQ

Holtzman broke out performance across ODDITY’s brands:

• IL MAKIAGE grew low double digits in 2025 to approximately $560 million in revenue. IL MAKIAGE SKIN expanded to about 40% of IL MAKIAGE revenue, up from roughly 30% in 2024.
• SpoiledChild increased revenue double digits to approximately $250 million. Management said it remained excited about the brand’s long-term potential and future product expansion in beauty and wellness.
• METHODIQ, launched in 2025 as ODDITY’s third brand, was described as a medical telehealth platform starting in dermatology, targeting conditions such as acne, hyperpigmentation, and eczema. Holtzman said the brand is “off to a great start,” citing traction in early focus areas and improving KPIs as cohorts scale, along with positive app engagement indicators such as downloads, onboarding completion, weekly check-ins, and care team engagement.

International markets also contributed to growth. Management said international revenue, the majority of which is from IL MAKIAGE, grew 42% in 2025 and represented 17.5% of overall net revenue.

Q4 details: growth ahead of guidance, margin pressure from investments

Global CFO Lindsay Drucker Mann said the company “delivered an outstanding quarter” to close the year. Net revenue rose 24% in Q4 to $153 million, above the company’s guidance range for 21% to 23% growth. Growth was driven primarily by increased orders, while average order value declined slightly year over year.

Gross margin was 70.5% in the quarter, compressing 220 basis points year over year but exceeding guidance for 69%, which Mann said was helped in part by product mix. Adjusted EBITDA was $13 million, implying an 8.2% margin and above guidance for $10 million to $12 million. The adjusted EBITDA margin declined 410 basis points year over year due to planned investments in growth initiatives—including the METHODIQ launch, ODDITY Labs, and “Brand 4”—as well as higher media costs.

Adjusted diluted EPS was $0.20, ahead of guidance of $0.11 to $0.13. Mann noted adjusted results excluded approximately $8 million of share-based compensation.

Advertising “dislocation” and 2026 outlook uncertainty

The dominant theme in Q&A was a significant shift in user acquisition economics tied to changes at ODDITY’s “largest advertising partner,” which management did not name on the call. Holtzman described an “unprecedented dislocation” he attributed to algorithm changes that diverted campaigns into less desirable auctions and traffic at “abnormally high costs.” He said both IL MAKIAGE and SpoiledChild appeared impacted, with a more severe effect at IL MAKIAGE due to its larger scale.

Management said it first observed something different in the second half of 2025 and called it out on the company’s November earnings call, with conditions worsening as the company entered 2026 and began scaling acquisition activity. Holtzman said the company believes the issue is tied to how the ad platform interprets signals connected to its “try before you buy” offering, which carries inherently higher return rates. He framed the model as “pro-consumer” and said it is not a dependency, adding the company can rebalance toward standard “buy” offers if needed. However, management said it believes the problem is solvable without abandoning the differentiated model.

Holtzman said remediation actions are underway, including changes “primarily around the model infrastructure,” and he expressed hope for significant progress in Q2 and normalization in Q3 or Q4, with a broader view that normalization could occur in the second half of the year. He compared the situation to prior platform shifts, including iOS 14-era changes, and characterized the current issue as technical rather than structural.

Mann added that, because the timing of recovery is uncertain, the company is not issuing full-year 2026 guidance. She provided several early indicators for investors’ models:

• Q1 sales are expected to decline approximately 30% due to reduced acquisition revenue.
• At current cost-per-acquisition levels, the company is not profitable on the first order, which she said will materially pressure near-term EBITDA.
• ODDITY is still spending acquisition dollars despite higher CPAs to “feed the algorithms” signals needed to reset and normalize.
• Q2 sales are also likely to decline, though the magnitude is uncertain.
• Reduced acquisition in Q1 and Q2 is expected to result in lower repeat sales later in the year, even if acquisition costs normalize.

In response to analyst questions about diversification, Mann said that for the company’s largest ad partner, “pure platform orders” attributable directly to that partner represent just under a quarter of revenue based on ODDITY’s internal attribution system, while noting that repeat revenue creates additional downstream impact. Holtzman said the issue is “global and across brands,” making it difficult to offset without overspending at current CPAs.

Cash position, buybacks, and continued investment plans

ODDITY reported $84 million of free cash flow for 2025, while fourth-quarter free cash flow was negatively impacted by about $19 million of increased inventory, driven partly by METHODIQ inventory investments and seasonal build ahead of the Q1 selling period. The company also amended its credit facilities in January 2026 to expand borrowing capacity to $350 million, with the facilities remaining undrawn.

Mann said management views repurchasing stock as attractive at recent prices and intends to opportunistically return cash to shareholders through buybacks, noting $103 million remained on the company’s previously announced authorization.

Despite the near-term acquisition headwinds, Holtzman repeatedly stressed there is “no change” to the company’s long-term strategy or its direct-to-consumer, online-first distribution approach, and said ODDITY will continue investing in ODDITY Labs, new products, new brands, technology infrastructure, and Brand 4 while prioritizing efforts to correct the acquisition-cost issue.

About ODDITY Tech NASDAQ: ODD

Oddity Tech Ltd. operates as a consumer tech company that builds digital-first brands for the beauty and wellness industries in the United States and internationally. It serves consumers worldwide through its AI-driven online platform, which uses data science, machine learning, and computer vision capabilities to identify consumer needs, and develop solutions in the form of beauty and wellness products. The company sells beauty, hair, and skin products under the IL MAKIAGE and SpoiledChild brands.

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