What ODDITY Tech (ODD) Said on Its Q3 Earnings Call

Key Points

• ODDITY raised its 2026 revenue and adjusted EBITDA outlook after Q3 results beat guidance. Revenue fell 2% year over year to $145 million, while adjusted EBITDA was $22 million.
• IL MAKIAGE continues to struggle with an unresolved advertising algorithm disruption that has made customer acquisition costs volatile. Repeat orders stabilized and generated over 80% of revenue, but lower order values contributed to a gross margin decline to 67.4% from 71.6%.
• SpoiledChild and METHODIQ are growth bright spots: SpoiledChild is on track for at least 35% full-year growth, and METHODIQ is expected to exceed SpoiledChild’s first-year revenue. ODDITY plans to expand METHODIQ into prescription therapies in 2027.

ODDITY Tech NASDAQ: ODD raised its full-year revenue and adjusted EBITDA outlook after third-quarter results exceeded its guidance, as growth at SpoiledChild and METHODIQ helped offset continuing advertising problems at its largest brand, IL MAKIAGE.

Third-quarter net revenue fell 2% from a year earlier to $145 million, an improvement from the 25% decline reported in the second quarter. Adjusted EBITDA was $22 million, above the company’s forecast of $18 million to $20 million.

Co-founder and CEO Oran Holtzman said ODDITY is working to return to growth in 2027, including at IL MAKIAGE, where an unresolved advertising algorithm disruption has weighed on customer acquisition. The company did not provide financial guidance for 2027.

Repeat Sales Stabilize as Margins Narrow

Global CFO Lindsay Drucker Mann said repeat orders stabilized year over year in the third quarter and accounted for more than 80% of net revenue. First-order revenue declined by approximately the high teens, with a sharp drop at IL MAKIAGE partly offset by gains at SpoiledChild and METHODIQ.

Average order value fell by approximately the mid-single digits, contributing to a decline in gross margin to 67.4% from 71.6% a year earlier. Drucker Mann said first orders generally carry a higher average value than repeat orders, and their reduced share weighed on margin.

Adjusted diluted earnings per share fell to $0.37 from $0.40 a year earlier. The diluted share count was approximately 23% lower following repurchases.

ODDITY generated $10 million in free cash flow during the quarter, bringing the total for the first nine months of 2026 to approximately $3 million. Inventory stood at $158 million, including excess IL MAKIAGE stock from purchase commitments made in anticipation of stronger revenue. Drucker Mann said the company expects to reach a better inventory balance in 2027.

IL MAKIAGE Advertising Issue Remains Unresolved

Holtzman said ODDITY continues to work closely with its largest advertising partner to address the algorithm disruption affecting IL MAKIAGE. He attributed the brand’s weakness to a technical problem rather than damage to the brand or softness in its category.

Customer acquisition costs remain volatile as the company tests changes, Holtzman said. September produced its best acquisition cost since 2025, but October was not as strong. ODDITY is also working on other channels and new products that could help redirect the algorithm, he said.

Drucker Mann said the fourth quarter was tracking as planned, with the company focused on fixing the advertising account rather than normal selling activity. She said investment in first orders will be needed to support growth next year.

SpoiledChild Growth and METHODIQ Expansion

SpoiledChild grew by a strong double-digit percentage in the third quarter and is on track to grow at least 35% for the full year, approaching $350 million in revenue, Holtzman said. The brand’s momentum continued into the fourth quarter.

METHODIQ, launched in 2026, is on track to exceed SpoiledChild’s first-year revenue, according to management. Holtzman said the company plans to expand METHODIQ into longevity and metabolic health in 2027, initially offering prescription injectable therapies including NAD+ and semaglutide through licensed providers and U.S.-based licensed pharmacy partners.

The company also plans to launch six additional peptide therapies covered by an HHS enforcement discretion policy referenced on the call. Holtzman said ODDITY has already built telehealth and pharmacy infrastructure for its existing prescription skin-care business.

Customer acquisition costs and order values could be higher for peptides, Holtzman said, but the company would assess repeat purchases and cohort economics before committing spending. He said it was too early to know how the category would perform because ODDITY had not yet begun selling the therapies.

Raised Outlook and Capital Returns

For 2026, ODDITY now expects net revenue to decline approximately 18.5% and adjusted EBITDA of $32 million to $34 million. Both forecasts were raised, though the company did not specify the previous full-year figures on the call.

ODDITY ended the third quarter with $561 million in cash equivalents and investments, while its $350 million in credit facilities remained undrawn. During the first nine months of 2026, it repurchased 11.7 million shares for $163 million, reducing ordinary shares outstanding by approximately 20% year to date. Approximately $86 million remained under its $200 million buyback authorization.

Looking ahead, Holtzman said a fourth brand is planned for launch in 2027, with timing details to come. ODDITY is also exploring additional distribution opportunities, although he said the business remains entirely direct-to-consumer.

About ODDITY Tech (NASDAQ:ODD)

ODDITY Tech Ltd. is a technology-driven consumer company that develops and operates digital-first beauty and wellness brands. Its portfolio includes IL MAKIAGE, which offers makeup and skincare products, and SpoiledChild, which focuses on beauty and wellness products. The company uses data analytics, artificial intelligence and other technology to support product development, personalized recommendations and online shopping. Its brands primarily sell directly to consumers through e-commerce platforms.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.