ODDITY Tech Ltd. Q4 FY2024 earnings call

• 2024 was a strong year with 27% revenue growth, $150 million adjusted EBITDA at 23.3% margin, and $134 million free cash flow. Both brands, Il Makiage and Spoiled Child, grew double digits in 2024.
• Repeat sales strengthened in 2024 with a twelve-month revenue repeat rate over 100%, best in class for D2C. Focus on attractive growth areas like online shift and high-performance products.
• Product innovation is key, with Il Makiage Skin and Spoiled Child growing rapidly. Oddity Labs, a biotech lab in Boston, is a major investment with over sixty scientists working on new molecules.
• New brands in development: Brand three is a telehealth platform launching in second half 2025, focusing on skin and body issues; Brand four in development with more details to come. Tech investments, including acquisition of Fionix IP, to enhance AI-based commercial engine.

In 2024, Oddity Tech Ltd. grew revenue 27% to $647 million. Adjusted EBITDA was $150 million at a 23.3% margin, growing 40% year over year. Free cash flow was $134 million. Il Makiage crossed the $500 million revenue mark in 2024, and Spoiled Child crossed the $150 million mark. Il Makiage represented around 30% of brand revenue from its Skin product launched in 2022, and Spoiled Child made up almost 25% of Oddity Tech Ltd.'s revenue in 2024 and is growing double digits.

• 2025 outlook: Target 20% revenue growth and 20% adjusted EBITDA margin. Q1 2025 off to a strong start. Brand three to launch in second half 2025 with no material revenue contribution in 2025. Brand four moved to early 2026 to focus on brand three. Gross margin expected to be around 70% as product mix normalizes. Adjusted EBITDA margin targeted at 20%, with EBITDA dollar upside reinvested into the business. Adjusted EPS expected $1.94 to $1.98.
• Q1 2025 outlook: Year-over-year net revenue growth expected between 22% and 24%.

• Policy uncertainty: TikTok is one of many acquisition platforms, and expected impact if TikTok ceases operating in the US is not material. No overreliance on TikTok.

Q: Corey Carpenter asked about international strategy and Q1 customer acquisition.

A: Oran Holtzman said teams are accelerating international, and Lindsay Drucker Mann discussed Q1 customer acquisition and ROAS.

Q: Joseph asked about consumer weakness and TikTok impact.

A: Oran Holtzman said no impact from TikTok shutdown, and consumer is moving online with no softness in repeat sales.

Q: Javier Escalante asked about repeat purchases and Il Makiage growth.

A: Oran Holtzman discussed strong repeat sales, over 100% twelve-month net revenue repeat rate, and growth from same product, new products, and cross-selling.

Q: Andrew Boone asked about brand three milestones and P&L investments.

A: Oran Holtzman talked about brand three launch plans and Lindsay Drucker Mann discussed profitability of underlying business and investment magnitude.

Q: Dara Mohsenian asked about brand three consumer need states.

A: Oran Holtzman discussed targeting acne, eczema, hyperpigmentation, and strong testing results.

Q: Scott Schoenhaus asked about brand three gross margins and Oddity Labs M&A.

A: Lindsay Drucker Mann explained gross margin compression related to prescription products and Oran Holtzman discussed balancing organic growth and M&A at Oddity Labs.

Q: Lorraine Hutchinson asked about product milestones.

A: Oran Holtzman talked about new products launched in Q1 2025 and pipeline products.

Q: Lauren Lieberman asked about consumer environment and cross-selling.

A: Lindsay Drucker Mann discussed broad consumer demo and cross-selling between brands, with half of Spoiled Child revenues coming from Il Makiage users.