ODDITY Tech Ltd. Class A ((ODD)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for ODDITY Tech Ltd. Class A was marked by a strong positive sentiment, highlighting significant revenue and EBITDA growth, strategic brand expansion, and successful international market penetration. While challenges such as potential tariff impacts and lower average order value in newer international markets were acknowledged, they were described as manageable, reflecting the company’s confidence in navigating these hurdles.
Record Revenue Growth
ODDITY Tech Ltd. reported a remarkable 27% increase in revenue, reaching $268 million, which exceeded both expectations and previous guidance. This impressive growth underscores the company’s robust performance and strategic execution in expanding its market presence.
Strong Adjusted EBITDA Performance
The company achieved $52 million in adjusted EBITDA, representing a 19.5% margin. This performance exceeded guidance, showcasing the company’s operational efficiency and ability to generate substantial earnings from its revenue streams.
High Free Cash Flow
ODDITY generated $87 million in free cash flow, reflecting the strong quality of its business model. This high cash flow provides the company with the flexibility to invest in future growth opportunities and maintain financial stability.
Growth in International Markets
International markets played a significant role in the company’s growth, with both US and international markets experiencing double-digit growth. This expansion highlights ODDITY’s successful penetration into new markets and its ability to capture a global audience.
Successful Brand Expansion
The company’s brand SpoiledChild is on track to cross the $200 million revenue mark, and a new brand, Brand 3, is set for launch in 2025. This expansion demonstrates ODDITY’s commitment to diversifying its brand portfolio and enhancing its market reach.
Strong Gross Margin
ODDITY’s gross margin expanded by 116 basis points year-over-year to 74.9%, driven by cost efficiencies and a favorable product mix. This improvement highlights the company’s effective cost management strategies and product optimization.
Tariff Impact on Gross Margin
While tariffs are expected to impact the gross margin by 50 to 100 basis points in 2025, the company considers this impact manageable. This outlook reflects ODDITY’s proactive approach to mitigating potential external challenges.
Lower Average Order Value in International Markets
Despite the growth in international markets, the average order value remains lower due to their earlier development stages. However, this is seen as a natural progression in the company’s international expansion strategy.
Forward-Looking Guidance
ODDITY has revised its full-year outlook upward, aiming for approximately $800 million in revenue for the year, up from $500 million in 2023. The company continues to leverage its direct-to-consumer model, with repeat revenue forming over 60% of total revenue. Strategic priorities include international expansion and the development of new brands and technologies, such as a telehealth platform offering personalized skincare solutions. With a robust balance sheet and no debt, ODDITY is well-positioned to seize opportunities for acquisitions and further growth initiatives.
In summary, the earnings call for ODDITY Tech Ltd. Class A conveyed a strong positive sentiment, driven by record revenue growth, robust EBITDA performance, and strategic brand expansion. The company’s forward-looking guidance reflects its confidence in achieving substantial revenue growth and leveraging its direct-to-consumer model for sustained success. While challenges such as tariffs and lower average order values in international markets exist, ODDITY remains well-prepared to navigate these issues and capitalize on future growth opportunities.