ODDITY Tech Reports Record First Quarter Results, Raises Outlook

Source: GlobeNewswire
ODDITY Tech Reports Record First Quarter Results, Raises Outlook
  • Record first quarter net revenue of $212 million, up 28% year-over-year
  • Record first quarter net income of $33 million, up 68% year-over-year, and record first quarter adjusted net income of $38 million, up 82% year-over-year
  • Record first quarter adjusted EBITDA of $48 million, up 69% year-over-year
  • Record first quarter free cash flow of $79 million

NEW YORK, May 07, 2024 (GLOBE NEWSWIRE) -- ODDITY Tech Ltd. (NASDAQ: ODD) today announced its financial results for the first quarter ended March 31, 2024.

“We delivered our most important quarter of the year with outstanding revenue growth and profitability,” said Oran Holtzman, ODDITY co-founder and CEO. “We delivered across all metrics and grew rapidly against the huge and profitable 83% revenue growth we delivered in the first quarter of 2023. Despite market speculation about an industry slowdown, we haven’t seen any slowdown in our platform, not in new users and not in existing users behavior.”

“Our platform enables our brands to sustain high and profitable growth at large scale across categories, with strong repeat rates and customer satisfaction,” Holtzman continued. “These results allow us to raise our full year outlook and also to continue to invest aggressively in our future. Based on what we see out there, we believe we will remain years ahead of our competitors, and take significant market share of online.”

ODDITY achieved a number of objectives during the first quarter, which include:

  • Exceeding financial guidance for the first quarter ended March 31, 2024 across every metric.
  • Excellent, profitable growth at both IL MAKIAGE and SpoiledChild brands across markets and products.
  • Continued development of brands 3 and 4 to disrupt additional large beauty and wellness categories.
  • Growing massively ODDITY LABS molecule discovery platform, roadmap and teams.
  • Very strong balance sheet position including $252 million of cash, cash equivalents, and investments, with zero outstanding debt, as of March 31, 2024. This cash position was supported by $79 million of free cash flow year-to-date.
  • Massively growing our adjusted EBITDA by 69% to $48 million compared to $28 million in the first quarter of 2023, and our adjusted diluted EPS by 64% to $0.61 compared to $0.37 in the first quarter of 2023.

We are pleased with our financial results for the first quarter, which beat our guidance across revenue, gross margin, adjusted EBITDA, and adjusted EPS,” said Lindsay Drucker Mann, ODDITY Global CFO. “Our excellent Q124 results, combined with a strong start to Q2 and our continued high repeat rates, allow us to continue our investments in future growth initiatives and raise our full year outlook.”

First Quarter Fiscal 2024 Financial Highlights1:

Results for the first quarter ended March 31, 2024 are presented below in comparison to the same period in the prior year:

  • Net revenue was $212 million compared to $166 million in the first quarter of 2023, representing a 28% year-over-year increase.
  • Gross profit was $156 million compared to $117 million in the first quarter of 2023, representing a 33% year-over-year increase. Gross margin was 73.8%, increasing by 284 bps compared to gross margin of 70.9% in the first quarter of 2023.
  • Net income was $33 million compared to $20 million in the first quarter of 2023. Net income margin was 15.6% compared to 11.8% in the first quarter of 2023.
  • Adjusted net income was $38 million compared to $21 million in the first quarter of 2023, representing an 82% year-over-year increase. Adjusted net income margin was 18.1% compared to 12.7% in the first quarter of 2023.
  • Adjusted EBITDA was $48 million compared to $28 million in the first quarter of 2023, representing a 69% increase. Adjusted EBITDA margin was 22.7%, increasing by 559 bps compared to adjusted EBITDA margin of 17.2% in the first quarter of 2023.
  • The weighted average number of outstanding shares used in computing our basic earnings per share (“EPS”) was 57.4 million and 53.4 million for the first quarter of 2024 and 2023, respectively. The weighted average number of outstanding shares used in computing our diluted EPS and adjusted diluted EPS was 62.7 million and 56.5 million for the first quarter of 2024 and 2023, respectively.
  • Diluted EPS were $0.53 for the first quarter of 2024 compared to $0.35 in the first quarter of 2023. Adjusted diluted EPS were $0.61 for the first quarter of 2024 compared to $0.37 in the first quarter of 2023.
  • Cash and cash equivalents, restricted cash, short-term deposits and marketable securities were $252 million, with no outstanding debt as of March 31, 2024.

The table below sets forth our actual results for the three months ended March 31, 2024 and the low and high end of our guidance range regarding our results for the first quarter of 2024 as issued on March 5, 2024.

 Three months ended March 31, 2024
 ActualGuidanceGuidance
ResultsLow EndHigh End
Net Revenue$212 million$204 million$207 million
Gross Margin73.8%71.0%71.0%
Adjusted EBITDA$48 million$43 million$45 million
Adjusted Diluted EPS$0.61$0.47$0.50
    

Financial Outlook

ODDITY expects to deliver 2024 financials ahead of its long-term growth algorithm of 20%-plus revenue growth and 20%-plus adjusted EBITDA margin. ODDITY’s 2024 outlook incorporates accelerated investments in future growth initiatives, which are expected to have a disproportionate negative impact on adjusted EBITDA margin in the second half of 2024.

ODDITY is revising its guidance for the full year ending December 31, 2024:

  • Net revenue between $626 million and $635 million, representing year-over-year growth between 23% and 25%.
  • Gross margins of approximately 71.0%.
  • Adjusted EBITDA between $139 million and $143 million.
  • Adjusted diluted EPS between $1.57 and $1.62. This assumes a tax rate of approximately 25.0% and average fully diluted shares of approximately 64.0 million.

 Current FY2024 OutlookPrior FY2024 Outlook
Net Revenue$626-635 million$620-630 million
Gross Margin71.0%70.5%
Adjusted EBITDA$139-143 million$136-140 million
Adjusted Diluted EPS$1.57-1.62$1.49-1.54
   

ODDITY is providing the following guidance for the second quarter ending June 30, 2024:

  • Net revenue between $185 million and $189 million, representing year-over-year growth between 22% and 25%.
  • Gross margin of approximately 71.0%.
  • Adjusted EBITDA between $53 million and $56 million.
  • Adjusted diluted EPS between $0.61 and $0.64. This assumes a tax rate of approximately 25.0% and average fully diluted shares of approximately 63.0 million.

 Q2 2024 Outlook
Net Revenue$185-189 million
Gross Margin71.0%
Adjusted EBITDA$53-56 million
Adjusted Diluted EPS $0.61-0.64
  

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, Adjusted net income margin and Adjusted diluted EPS are non-GAAP financial measures. Please see the sections titled “Non GAAP Financial Measures” and “Reconciliations of GAAP to Non-GAAP Measures” below for more information regarding ODDITY’s use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures. ODDITY has not provided a quantitative reconciliation of its Adjusted EBITDA and Adjusted diluted EPS outlook to the corresponding net income and diluted EPS GAAP measures, because the quantification of certain items included in the calculation of GAAP net income and GAAP diluted EPS cannot be calculated or predicted at this time without unreasonable efforts. ODDITY is unable to address the probable significance of the unavailable reconciling items, which could have a potentially unpredictable, and potentially significant, impact on its future GAAP financial results.

The financial outlook figures presented above are forward-looking statements that are subject to a variety of assumptions and estimates. Actual results may differ materially from ODDITY’s financial outlook as a result of, among other things, the factors described under “Forward-Looking Statements” below.

Conference Call Details:

A conference call to discuss ODDITY’s Q1 2024 financial and business results and outlook is scheduled for tomorrow, May 8, 2024, at 8:30 a.m. ET. To participate, please dial 1-877-407-9208 (US) or 1-201-493-6784 (international) and the conference ID is 13745430. A webcast of the call will be accessible on the Investors section of ODDITY’s website at https://investors.oddity.com. A recording will be available shortly after the conclusion of the call. To access the replay, please dial 1-844-512-2921 or 1-412-317-6671 (international). An archive of the webcast will be available on the Investors section of ODDITY’s website.

Non-GAAP Financial Measures:

In addition to the GAAP financial measures set forth in this press release, ODDITY has included the following non-GAAP financial measures: Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, Adjusted net income margin and Adjusted diluted EPS. ODDITY believes these non-GAAP financial measures provide useful supplemental information to management and investors to help evaluate ODDITY’s business, measure its performance, identify trends, prepare financial projections and make business decisions.

ODDITY defines “Adjusted EBITDA” as net income before financial expenses (income), net, taxes on income, and depreciation and amortization as further adjusted to exclude share-based compensation expense and non-recurring items. “Adjusted EBITDA margin” is defined as Adjusted EBITDA divided by net revenue. ODDITY believes Adjusted EBITDA and Adjusted EBITDA margin are useful for financial and operational decision-making and as a means to evaluate period-to-period comparisons. By excluding certain items that may not be indicative of its recurring core operating results, ODDITY believes that Adjusted EBITDA and Adjusted EBITDA margin provide meaningful supplemental information regarding its performance. In addition, Adjusted EBITDA and Adjusted EBITDA margin are widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as depreciation and amortization, interest expense, and interest income, which can vary substantially from company to company depending on their financing and capital structures and the method by which their assets were acquired.

ODDITY defines “Adjusted net income” as net income adjusted for the impact of share-based compensation, non-recurring items and the tax effect of non-GAAP adjustments and “Adjusted net income margin” as Adjusted net income divided by net revenue. In addition, ODDITY defines “Adjusted diluted earnings per share” as Adjusted net income divided by diluted shares outstanding. ODDITY believes the presentations of Adjusted net income, Adjusted net income margin, and Adjusted diluted earnings per share are useful because they are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Further, ODDITY believes these measures are helpful in highlighting trends in our operating results, because they exclude the impact of items that are outside the control of management or not reflective of our ongoing operations and performance.

ODDITY’s non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, its financial results prepared in accordance with U.S. GAAP. Other companies, including companies in our industry, may calculate these measures differently or not at all, which reduces their usefulness as comparative measures.

Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included with the financial tables at the end of this release under the heading “Reconciliations of GAAP to Non-GAAP Measures.” 

Forward-Looking Statements:

Certain statements in this press release may constitute “forward-looking” statements and information, within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events. In some cases, these forward-looking statements can be identified by words or phrases such as “aim,” “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “project,” “shall,” “should,” “target,” “will,” “seek,” or similar words. The absence of these words does not mean that a statement is not forward-looking.  These forward-looking statements address various matters, including ODDITY’s business strategy, market opportunity, ability to deliver superior products and experiences, potential long-term success and ODDITY’s outlook for the second quarter 2024 and the full year ending December 31, 2024.These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the following: our ability to maintain the value of our brands; our ability to anticipate and respond to market trends and changes in consumer preferences; our ability to attract new customers, retain existing customers and maintain or increase sales to those customers; our ability to maintain a strong base of engaged customers and content creators; the loss of suppliers or shortages or disruptions in the supply of raw materials or finished products; our ability to accurately forecast customer demand, manage our inventory, and plan for future expenses; our future rate of growth; competition; the fluctuating cost of raw materials; the illegal distribution and sale by third parties of counterfeit versions of our products or the unauthorized diversion by third parties of our products; changes in, or disruptions to, our shipping arrangements; our ability to manage our growth effectively; a general economic downturn or sudden disruption in business conditions; our ability to successfully introduce and effectively market new brands, or develop and introduce new, innovative, and updated products; foreign currency fluctuations; product returns; our ability to execute on our business strategy; our ability to maintain a high level of customer satisfaction; our ability to comply with and adapt to changes in laws and regulatory requirements applicable to our business, including with respect to regulation of the internet and e-commerce, evolving AI-technology related laws, tax laws, the anti-corruption, trade compliance, anti-money laundering, and terror finance and economic sanctions laws and regulations, consumer protection laws, and data privacy and security laws; failure of our products to comply with quality standards and risks related to product liability claims; trade restrictions; existing and potential tariffs; any data breach or other security incident of our information technology systems, or those of our third-party service providers or cyberattacks; risks related to online transactions and payment methods; any failure to obtain, maintain, protect, defend, or enforce our intellectual property rights; conditions in Israel and the Middle East generally, including as a result of geopolitical conflict; the concentration of our voting power as a result of our dual class structure; our status as a foreign private issuer; and other risk factors set forth in the section titled “Risk Factors” in our Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 6, 2024, and other documents filed with or furnished to the SEC. These statements reflect management’s current expectations regarding future events and operating performance and speak only as of the date of this press release. You should not put undue reliance on any forward-looking statements. Except as required by applicable law, we undertake no obligation to update or revise publicly any forward-looking statements.

About ODDITY:

ODDITY is a consumer tech company that builds and scales digital-first brands to disrupt the offline-dominated beauty and wellness industries. The company serves approximately 50 million users with its AI-driven online platform, deploying data science to identify consumer needs, and developing solutions in the form of beauty and wellness products. ODDITY owns IL MAKIAGE and SpoiledChild. The company operates with business headquarters in New York City, an R&D center in Tel Aviv, Israel, and a biotechnology lab in Boston.

Contacts:

Press:
Michael Braun
michaelb@oddity.com

Investor:
investors@oddity.com

 
ODDITY TECH LTD.
CONSOLIDATED STATEMENTS OF INCOME
U.S. dollar in thousands (except per share data)
   
  Three months ended
 March 31,
  2024
 2023
  (Unaudited)
     
Net revenue $211,628  $165,654 
     
Cost of revenue  55,522   48,169 
     
Gross profit  156,106   117,485 
     
Selling, general and administrative  117,125   92,764 
     
Operating income  38,981   24,721 
     
Financial (income) expenses, net  (2,955)  157 
     
Income before taxes on income  41,936   24,564 
     
Taxes on income  8,953   4,974 
     
Net income $32,983  $19,590 
     
Basic earnings per share $0.57  $0.37 
     
Diluted earnings per share $0.53  $0.35 
         


 
ODDITY TECH LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollar in thousands
     
  March 31, December 31,
  2024
 2023
ASSETS (Unaudited) (Audited)
     
CURRENT ASSETS:    
Cash and cash equivalents $77,484  $36,538 
Short-term deposits  78,000   78,000 
Marketable securities  1,771   1,108 
Trade receivables  11,452   9,916 
Inventories  87,375   84,106 
Prepaid expenses and other current assets  17,388   14,144 
     
Total current assets  273,470   223,812 
     
LONG-TERM ASSETS:    
Marketable securities  94,849   50,507 
Property, plant and equipment, net  9,271   9,245 
Deferred tax asset, net  5,583   3,924 
Intangible assets, net  36,049   36,001 
Goodwill  64,904   64,904 
Operating lease right-of-use assets  17,885   13,557 
Other assets  3,079   2,956 
     
Total long-term assets  231,620   181,094 
     
Total assets $505,090  $404,906 
         


 
ODDITY TECH LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollar in thousands
     
  March 31, December 31,
  2024
 2023
LIABILITIES AND SHAREHOLDERS' EQUITY (Unaudited) (Audited)
     
CURRENT LIABILITIES:    
Trade payables $85,643  $56,185 
Other accounts payable and accrued expenses  69,068   49,325 
Operating lease liabilities, current  3,603   3,802 
     
Total current liabilities  158,314   109,312 
     
LONG-TERM LIABILITIES:    
Operating lease liabilities, non-current  13,255   8,712 
Other long-term liabilities  3,884   3,775 
     
Total liabilities  175,453   121,799 
     
SHAREHOLDERS' EQUITY:    
Class A Ordinary shares  15   14 
Class B Ordinary shares  3   3 
Additional paid-in capital  192,685   178,910 
Accumulated other comprehensive income  2,173   2,402 
Retained earnings  134,761   101,778 
     
Total shareholders' equity  329,637   283,107 
     
Total liabilities and shareholders' equity $505,090  $404,906 
         


 
ODDITY TECH LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollar in thousands
   
  Three months ended
 March 31,
  2024 2023
Cash flows from operating activities: (Unaudited)
Net income $32,983  $19,590 
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization  2,301   1,900 
Share-based compensation  6,862   1,811 
Accretion of discount of marketable securities  (768)  - 
Deferred income taxes  (1,298)  (250)
Increase in trade receivables  (1,536)  (960)
Increase in prepaid expenses and other receivables  (5,085)  (4,239)
(Increase) decrease in inventories  (3,269)  379 
Increase in trade payables  29,505   27,450 
Increase in other accounts payable and accrued expenses  19,622   7,502 
Change in operating lease right-of-use assets  1,159   1,154 
Change in operating lease liability  (1,143)  (1,366)
Other  314   228 
     
Net cash provided by operating activities  79,647   53,199 
     
Cash flows from investing activities:    
Purchase of property, plant and equipment  (655)  (328)
Capitalization of software development costs  (1,106)  (749)
Investment in marketable securities  (45,009)  - 
Proceeds from short-term deposits  -   10,000 
Other investing activities  (329)  (250)
     
Net cash (used in) provided by investing activities  (47,099)  8,673 
     
Cash flows from financing activities:    
Proceeds from exercise of options  6,431   - 
Repayment of loans and borrowings  -   (2,662)
Other financing activities  -   (151)
     
Net cash provided by (used in) financing activities  6,431   (2,813)
     
Effect of exchange rate fluctuations on cash and cash equivalents  (127)  (74)
     
Net increase in cash, cash equivalents and restricted cash  38,852   58,985 
Cash, cash equivalents and restricted cash at the beginning of the period  38,766   43,114 
     
Cash, cash equivalents and restricted cash at the end of the period $77,618  $102,099 
         


 
ODDITY TECH LTD.
Reconciliation of GAAP to Non-GAAP Financial Information
U.S. dollar in thousands (except per share data)
 
  Three months ended
  March 31,
  2024
 2023
  (Unaudited)
Reconciliation of Net Income and Adjusted EBITDA  
Net Income $32,983  $19,590 
Financial (income) expenses, net  (2,955)  157 
Taxes on Income  8,953   4,974 
Depreciation and amortization  2,301   1,900 
Share-based compensation  6,862   1,811 
Adjusted EBITDA $48,144  $28,432 
 
     
Reconciliation of Net Income and Adjusted Net Income 
Net Income $32,983  $19,590 
Share-based compensation  6,862   1,811 
Tax impact  (1,465)  (367)
Adjusted NetIncome $38,380  $21,034 
 
     
Diluted earnings per share $0.53  $0.35 
Adjusted diluted earnings per share $0.61  $0.37 
     


Reconciliation of net cash provided by operating activities to free cash flow

  Three Months Ended
  March 31,
  2024 2023
  (Unaudited)
Net operating cash flow $79,647  $53,199 
Purchase of property and equipment  (655)  (328)
Free cash flow $78,992  $52,871 
         


Cash, cash equivalents, and investments

  March 31, December 31,
  2024
 2023
  (Unaudited) (Audited)
     
Cash and cash equivalents $77,484  $36,538 
Restricted cash  134   2,228 
Short-term deposits  78,000   78,000 
Marketable securities  96,620   51,615 
Total cash and investments $252,238  $168,381 
         

______________________________

1 Results greater than $10 million have been rounded to the nearest million.