Q3 2023 ODDITY Tech Ltd Preliminary Earnings Call
Speaker 1: and Q&A.
At this time I'd like to turn the call over to Murray is of course Investor Relations for Oddity thinking you may begin.
and Q&A.
Speaker 1: At this time, I'd like to turn the call over to Maria Licorrias in Vasten Relations for Audity. Maria Licorrias, Vasten Relations, Vasten Relations, Vasten Relations, Vasten Relations,
Thank you operator, I'm joined by Iran, Haltzman Oddity, co founder and CEO and Lindsay Drucker Mann Oddities Global CFO.
Maria Lycouris: At this time, I'd like to turn the call over to Maria Lycouris, Investur Relations for ODDITY. Thank you. You may begin. Thank you, operator. I'm joined by Oran Holtzman, ODDI Co-Founder and CEO, and Lindsay Druckerman, ODDI's Global CFO. As a reminder, management's remarks on this call that do not concern past events are forward-looking statements. These may include predictions, expectations, or estimates, including statements about ODDI's business strategy, market opportunity, future financial performance, and potential long-term success.
Speaker 2: Thank you, operator. I'm joined by Iran Holtzman, Audity co-founder and CEO , and Lindsey Drucker-Mann, Audity's global CFO .
As a reminder, management's remarks on this call that do not concern past events are forward looking statements. These may include predictions expectations or estimates, including statements about oddities business strategy market opportunity future financial performance and potential long term success.
Speaker 2: As a reminder, management's remarks on this call that do not concern past events are forward-looking.
Maria Lycouris: Forward-looking statements involve risks and uncertainties, and actual results could differ materially due to a variety of factors. These factors are described under forward-looking statements in our preliminary earnings press release issued yesterday, and in our prospective filed with the Securities and Exchange Commission on July 18, 2023. We do not undertake any obligations to update forward-looking statements, which speak only as of today. Finally, during this call, we will discuss certain non-GAF financial measures, which we believe are useful supplemental measures for understanding our business.
Speaker 2: These may include predictions, expectations, or estimates, including statements about auditors business strategy, market opportunity, future financial performance, and potential long-term
Forward looking statements involve risks and uncertainties and actual results could differ materially due to a variety of factors. These factors are described under forward looking statements in our preliminary earnings press release issued yesterday and in our prospectus filed with the Securities and Exchange Commission on July 18th 2023.
Speaker 2: Forward-looking statements involve risks and uncertainties, and actual results could differ materially due to a variety of factors.
Speaker 2: These factors are described under forward-looking statements in our preliminary earnings press release issued yesterday and in our prospectus filed with the Securities and Exchange Commission on July 18, 2012.
We do not undertake any obligation to update forward looking statements, which speak only as of today.
Speaker 2: We do not undertake any obligation to update forward-looking statements, which speak only as of today.
Finally during this call we will discuss certain non-GAAP financial measures, which we believe are useful supplemental measures for understanding our business.
Additional information about these non-GAF financial measures, including their definitions, are included in our preliminary earnings press release, which we issued yesterday.
Speaker 2: Finally, during this call, we will discuss certain non-GAAP financial measures, which we believe are useful supplemental measures for understanding our financial system.
Additional information about these non-GAAP financial measures, including their definitions are included in our preliminary earnings press release, which we issued yesterday I will now hand, the call over to Iran.
Speaker 2: Additional information about these non-GAAP financial measures, including their definitions, are included in our preliminary earnings press release which we issued yesterday. I will now hand the call to the next speaker.
Oran Holtzman: I will now hand the call over to Iran. Thank you, everyone, for joining us today. We are excited to share seven preliminary third quarter results today, which we expect to beat our guidance issued in August, on net revenues in gross margin, and be the midpoint of our guidance on adjusted EBDA margin. Based on this preliminary estimates, revenue is growing faster, gross margins are higher, and adjusted EBDA is better than we expected. This is despite our real effort to pace our growth and slow down as we have totally done in age 2.
Thank you everyone for joining us today.
Speaker 3: Thank you everyone for joining us today. We are excited to share certain preliminary third quarter results today, which we expect to beat our guidance issued in August on net revenues and gross margin and be the midpoint of our guidance on adjusted EBITDAProduct. address that we've all been
We are excited to share some preliminary third quarter results, which we expect to break out the guidance issued in August on net revenues and gross margin.
We'll follow our guidance on adjusted EBITDA margin.
Based on this preliminary estimates revenues growing faster gross margins are higher and adjusted EBITDA is better than we expected. This is despite a real effort to pace the growth slowed down as we've told you have done in <unk>.
Speaker 3: Based on this preliminary estimate, revenue is growing faster, gross margins are higher, and adjusted EVA is better than we expected. This is despite our real effort to pace our growth and slow down as we totally have done in ages.
We just work with great quarter, we expect to deliver net revenue growth of at least 58% and adjusted EBITDA of $89 million.
Oran Holtzman: With this record-brain quarter, we expect to deliver net revenue growth of at least 58% and adjusted EBDA of $89 million for the first nine months of the year. We are scaling in the speed that beats legacy in comments, but also the majority of internet in consumer companies, and we profit margins and cash lows that we have not seen in other direct consumer companies. Our expected outstanding financial performance reflects the strength of our model, the power of our technology-based platform, the health of our brands, and the massive runway we enter for the first. Our business continues to fire on all cylinders, our large investment in technology and data capabilities over the past five years are enabling us to continue to grow fast without damaging our high margin and rare profitability.
Speaker 3: With this record-breaking quota, we expect to deliver net revenue growth of at least 58% and an adjusted EBITDA of $89 million for the first nine months of the year.
For the first nine months would be yes.
We are scaling a dispute the legacy incumbents, but also the majority of.
Speaker 3: We are scaling at a speed that beats legacy incumbents, but also the majority of Internet and consumer companies, and with profit margins and cash flows that we have not seen in other direct-to-consumer companies.
Consumer companies and with the drop in margins and cash flows that we have not seen it in other direct to consumer companies.
The expected outstanding financial performance reflect the strength of our model the powering forward technology based platform the health of our brands and the massive runway we aimed to fortify our business continues to fire on all cylinders.
Speaker 3: Our expected outstanding financial performance reflects the strength of our model, the power of our technology-based platform, the health of our brands, and the massive runway we enter for the fast. Our business continues to fire on all cylinders. Our large investment in technology and data capabilities over the past five years are enabling us to continue to grow fast without damaging our high margin and rare profitability.
The large investments in technology and data capabilities over the past five years, while enabling us to continue to grow fast without damaging our high margin and profitability.
My company, we don't just sit and the whole bit growth would happen, we make it happen and we do it every single day with strong planning strict discipline hard work innovation and by taking big swings to enable long term growth, which we are fully committed to do.
Oran Holtzman: At my company, we don't just sit and hope that growth will happen, we make it happen, and we do it every single day with strong planning, strict discipline, hard work, innovation, and by taking big swings to enable long-term growth, which we are fully committed to. This mindset and discipline have led to our record-breaking success so far, and it is what we believe positioned us for compounding success in 2024 and beyond. As we speak, our teams are hard at work building the growth engines that we expect will power us for many years to come.
Speaker 3: At my company, we don't just sit and hope that growth will happen. We make it happen. And we do it every single day with strong planning, strict discipline, hard work, innovation, and by taking big swings to enable long-term growth, which we are fully committed.
This mindset of discipline have led to a record breaking success so far.
Speaker 3: This mindset and discipline have led to our record-breaking success so far, and it is what we believe positioned us for compounding success in 2024 and beyond.
And it is what we believe position us for compounding success in 2024 and beyond.
As we speak our teams are hard at work building the growth engine that we expect will power us for many years to come.
Speaker 3: As we speak, our teams are hard at work building the growth engines that we expect will power us for many years to come. Driving our current brand Ilmak Yajin Spoilt Child, both with what we think are enormous runways ahead of them, both are still very young with a ton of growth potential to unlock, but we also spend our time on building our future brand.
We got about corn, Brent he hasn't spoiled child, both with what we think of enormous runway ahead of them. Both are still very young we don't have growth potential to unlock but we also spend over time on building our future brands.
Oran Holtzman: Driving our current brand, Ilma Keijenspoil Child, both with what we think are in almost one way ahead of them. Both are still very young with ton of growth potential to unlock, but we also spend our time on building our future brand. We believe our business is very well positioned for such a growth with multiple powerful drivers. First, we operate in a massive and growing global term with a wide range of product categories and pain points for us to go after.
We believe our business is very well positioned to grow with multiple powerful drivers.
Speaker 3: We believe our business is very well positioned for such a growth with multiple powerful drivers. First, we operate in a massive and growing global term, with a wide range of product categories and paint points for us to go up.
First we operate in a massive and growing global them with a wide range of product categories and pinpoint for us to go after.
We focus on areas that I'll go over 40 million users.
Speaker 3: We focus on areas that are over 40 million users crave and where our data shows huge potential demand, where there is a consumer pain point that we believe is not solved today, but other brands, and between the economics that can work online.
Dave and where our data shows the huge potential demand.
There is a consumer pain point that we believe is not solved today, but other brands and we trimmed economics that can work online.
Second we are the market leader in the online channel, which is still super underdeveloped relative to its potential onto their represents around 25% of the total market, but we expect it to be 50% in the next coming years, we don't need to convince anyone on this call that the Internet and online is the future of our industry.
Oran Holtzman: Second, we are the market leader in the online channel, which is still super underdeveloped relative to its potential. Only to their represents around 25% of the total market, but we expect it to be 50% in the next coming years. We don't need to convince anyone on this call that internet and online is the future of our industry. But if some of you want a similar proof point, take a look at China where online is already huge.
Speaker 3: Second, we are the market leader in the online channel, which is still super underdeveloped relative to its potential. Only to there represents around 25% of the total market, but we expect it to be 50% in the next coming years. We don't need to convince anyone on this call that internet and online is the future of our industry. But if some of you want a similar proof point, take a look at China, where online is already used.
But if some of you wanted to similar proof point, they can look at China, where online is already huge.
But although it is crystal clear for me that this is where we go as an industry I believe that my competitors are still behind and Underinvested in technology.
Oran Holtzman: But although it is crystal clear for me that this is where we go as an industry, I believe that my competitors are still behind and under invested in technology. In my view, we are five to 10 years ahead of them with a wide open playing field to press our advantage and continue to lead the market. Third, the ODDITY platform is a proven brand scaling machine and we believe there is a massive runway ahead.
Speaker 3: But although it is crystal clear for me that this is where we go as an industry, I believe that my competitors are still behind and under-invested in technology. In my view, we are five to ten years ahead of them with a wide open playing field to press our advantage and continue to lay them out.
My view, we are five to 10 years ahead of them with a wide open playing field to press our advantage and continue to lead the market.
Third the OTT platform is a proven brand scaling machine and we believe there is a massive runway ahead, our platform capabilities allow us to grow faster and more profitably than other direct to consumer businesses.
Speaker 3: Third, the Audi K-plus foam is a proven brand scaling machine and we believe there is a massive runway ahead. Our platform capabilities have allowed us to grow faster and more profitably than other direct customer business.
Oran Holtzman: Our platform capabilities allow us to grow faster and more profitably than other direct customer businesses. It's why spoil child is to the best of our knowledge, the most successful B2C brand launch in its combined scale and profitability. We proved with spoil child that we have the ability to do it again. And it's a matter of time until we have more brands in our portfolio and platform. We have the user base or 40 million users, their data of over one billion data points.
Why is boy child is to the best of all knowledge. The most successful DTC bring lunch and its combined scale and profitability.
Speaker 3: It's why spoil child is to the best of our knowledge the most successful B2C brain launch in its combined scale and profitability.
With sports in China that we have the ability to do it again and it's the middle of time until we have more brands in our portfolio and platform.
Speaker 3: We proved with spoiled child that we have the ability to do it again. And it's a matter of time until we have more brands in our portfolio and platform.
We have to use the baseball with 40 million users that data of over 1 billion data points, we have the technology algorithms and tech team that truly drive the future and we have unmatched product development engine with them about the club in Boston.
Speaker 3: We have the user base of 40 million users, their data of over 1 billion data points. We have the technology, algorithms, and tech team that truly drive the future. And we have the unmatched product development engine with our biotech lab in Boston. It is easier for us today than it was three years ago. I want to spend
Oran Holtzman: We have the technology algorithms and tech team that truly drive the future and we have the unmatched product development engine with our biotech lab in Boston. It is easier for us today than it was three years ago.
It is easier for us today than it was three years ago.
I want to spend a few minutes talking about our technology muscle.
Oran Holtzman: I want to spend few minutes talking about our technology muscle. We have invested early and aggressive in technology since our inception. Our tech team represents over 40% of our talent and we expect it to remain 40% for the foreseeable future as we continue to invest in new capabilities to drive us forward.
We have invested early and aggressively in technology since our inception.
Speaker 3: We have invested early and aggressively in the technology since our inception. Our tech team represents over 40% of our talent, and we expect it to remain 40% for the foreseeable future as we continue to invest in new capabilities to drive us forward. It's important to remember that the Tordaim is rallying. Technology was never the goal. It was the means to win in an under penetrated category, to give the best online experience to our user while with hyper growth, a healthy business with strong profitability.
Protecting represents over 40% of our talent and we expect it to remain 40 per cent for the foreseeable future as we continue to invest in new capabilities to drive us forward.
Important to remember that all doing Israeli technology was never to go it was the mean two wins in an under penetrated category.
It's important to remember that our time is rarely technology was never the goal. It was the means to rinse in an under penetrated category to give the best online experience to our user while the hyper growth a healthy business with strong profitability.
To give the best online experience to overuse, though while we hyper growth and healthy business with strong profitability.
When we say technology internally really fit the three primary areas.
Speaker 3: When we say technology in Dunnoly, we refer to through primary areas.
Oran Holtzman: When we say technology internally, we refer to three primary areas, our decision intelligence computer vision and biotech. Starting with AI, we use machine learning models across a wide range of field cases that support the user. This model is integrated into everything for our marketing engines to our product recommendation engine that give the user a precise match to the user experience itself with hundreds of online funnel. AI was our breakthrough indeed to see for beauty instead of forcing the customer to decide on a product our machine learning model decide for the consumer.
Phishing intelligence computer vision, and Baltics, starting with AI, we use machine learning models across a wide range of fuels cases.
Speaker 3: our decision intelligence, computer vision, and biotech. Starting with AI, we use machine learning models across a wide range of field cases that support the user. This model is integrated into everything for our marketing engines, to our product recommendation engine that give the user a precise match to the user experience itself with hundreds of online farmers.
The user this model is integrated into everything so our marketing engines total political commendation engine did give to us on the size and much to the user experience itself with hundreds of all life on them.
Hey, I was a breakthrough in D C for beauty instead of forcing the customer to decide on the product all the machine learning model. Besides for the consumer instead of relying on rule based algorithms to determine the user experience. We use machine learning models to deliver an optimal outcome that we have achieved with Tyco division and heightened inspection.
Speaker 3: AI was our breakthrough in D2C for beauty. Instead of forcing the customer to decide on a product, our machine learning model decides for the consumer. Instead of relying on rule-based algorithms to determine the user experience, we use machine learning models to deliver an optimal outcome that we have achieved with high conversion and high speed extraction.
Oran Holtzman: Instead of relying on rule based algorithms to determine the user experience, we use machine learning models to deliver an optimal outcome that we have achieved with high conversion and high satisfaction. We have machine learning models in almost every part of the user journey. Those machines are responsible for high user selection, which leads to high repeat rates that drive our strong profitability and high growth. Without it, we would never be able to print these results. Without it, we are just in another unprofitability to see company.
We have a machine learning models in almost every part of it was a journey those machines are responsible for how you've looked at exception, which leads to high repeat rates that drive our strong profitability and high growth without it we would never be able to bring these results without it we are just in another unprofitability to see company.
Speaker 3: We have machine learning models in almost every part of the user journey. Those machines are responsible for high user satisfaction, which leads to high repeat rates that drive our strong profitability and high growth. Without it, we would never be able to print these results. Without it, we are just in another unprofitability to seek out.
Moving onto our computer vision technology and capability with stumpage with acquisitions, but it actually didn't want in 2021.
Speaker 3: Moving on to our computer vision technology, a capability we establish with acquisition of Voyage 81 in 2021. Our vision team includes some of the world's most talented vision scientists, mostly coming from the easily-fanned forces, including the Voyage 81 team, the joint audit team, to build out our vision capabilities.
Oran Holtzman: Moving on to our computer vision technology, a capability we establish with acquisition of Voyage 81 in 2021. Our vision team includes some of the world's most talented vision scientists, mostly coming from the easily fun forces, including the Voyage 81 team, the joint audit team, to build out our vision capabilities. When we originally developed our product matching technology, we decided to start with basing our algorithm on data we collect from users, massive data.
We envisioned to include some of the worlds most talented vision scientist, mostly coming from the easily put in forces, including J D. One team that joined audit team to build out all the vision capabilities.
When we originally developed our product matching technology, we decided to stop with the basic algorithm on data, we collect from users massive data and.
Oran Holtzman: And after basing our AI on over a ton of data points, we then added computer vision technology to provide another dimension of information, which allow us to rapidly expand our capabilities with lower amount of data needed for machine learning models. We believe we are just correcting the surface of how vision can drive our business forward with an expensive roadmap plan for the next few years. For the best 18 months, we invested a lot in using our vision technology for our third brand, which is a medical great skin and body brand planned to be launched in 2025.
Speaker 3: When we originally developed our product matching technology, we decided to start with basing our algorithm on data we collect from users, massive data. And after basing our AI on over ton of data points, we then added computer vision technology to provide another dimension of information, which allow us to rapidly expand our capabilities with lower amount of data needed for machine learning models.
And after basing our AI on a ton of data points. We then added computer vision technology to provide another dimension of information, which allow us to rapidly expand our capabilities, which lower the amount of data needed for machine learning models.
We believe we're just scratching the surface of how vision can drive our business forward with an expensive roadmap plan for the next few years for the past 18 months, we invested a lot in using our vision technologies forward that brand, which is a medical grade skiing, and Buddy brand planned to be launched in 2025.
Speaker 3: We believe we are just scratching the surface of how vision can drive our business forward with an expensive roadmap plan for the next few years. For the best 18 months we invested a lot in using our vision technology for our third brand, which is a medical-grade skin and body brand planned to be launched in 2025.
That's technology area is their own science backed products, using AI and biotech to simply develop better physical products. It has always been my dream to leverage the power of technology to really deliver a proprietary insights products for our users.
Speaker 3: Less technology area is around science-backed products, using AI and biotech to simply develop better physical products. It has always been my dream to leverage the power of technology to really deliver proprietary science-backed products for our users. I've been hunting it for years, and with the rebella acquisition, the team and the technology, we are finally unleashing this power.
Oran Holtzman: The technology area is around science back products using AI and biotech to simply develop better physical products. It has always been my dream to leverage the power of technology to really deliver proprietary insights back products for our users. I've been hunting it for years, and with the rebel acquisition, the team and the technology we are finally unleashing this power. Revellers founding team pioneered advanced biotechnology methods, including artificial intelligence-based molecular discovery to develop ingredients that can transform the beauty and wellness market.
Been hunting it for years and with the rebel acquisition the team and the technology. We are finally unleashing Gustavo.
Well as founding team pioneered the advance biotechnology methods, including artificial intelligence.
Speaker 3: Revellers founding team pioneered advanced biotechnology methods, including artificial intelligence, made molecular discovery to develop ingredients that can transform the beauty and wellness market. The team is taking the same technique that are widely used today in the former industry and unleashing them in our category to deliver groundbreaking ingredients to solve real consumer pain.
You can discovery to develop ingredients that could transform the beauty and women's market. The team is taking the same techniques that are widely used to date and the pharma industry and unleashing them in our category to deliver groundbreaking ingredients to solve real consumer pain points, we plan to launch that product under its cultural brands in 2020.
Oran Holtzman: The team is taking the same technique that are widely used today in the farmer industry and unleashing them in our category to deliver ground-breaking ingredients to solve real consumer pain points. We plan to launch 10 products under Ilma Kiasz's potential brand in 2024, with ODC Labs molecules. And we believe ODC Labs molecule will account for at least 30% of our business in five years. The rebel integration and expansion of ODC Labs is progressing even faster than with what I expected.
Speaker 3: We plan to launch 10 products under Ilma Qiyaj's Policial Brand in 2024 with ODC Labs molecules. And we believe ODC Labs molecule will account for at least 30% of our business in five years. The reveling integration and expansion of ODC Labs is progressing even faster than with what I expected. We are attracting an incredible level of talent, scientific and the panor as we are moving to transform the industry.
We articulate some molecules and we believe what did he loves the molecule will account for at least 30% of all business in five years.
They were gonna integration and expansion of OTT labs is progressing even faster than with what I expected.
We are attracting an incredible level of talented scientists and to the north as we are moving to transform the industry.
Oran Holtzman: We are attracting an incredible level of talent, scientific, and to the north, as we are moving to a trance from the industry. ODC Labs will be one of our main growth engines for all brands. We firmly believe the roadmap and pipeline is strong, and we are truly building something that has never done before. You don't see its contribution in our current earnings today, just expensive, but I'm more bullied than ever about its future. It's the same feeling I had when we started developing the early technology team in Tel Aviv.
What did he lives will be one of our main growth engines for all brands. We firmly believe the roadmap and pipeline is strong and we are truly building something that has never done before.
Speaker 3: Auditilabs will be one of our main growth engines for all brands. We firmly believe the roadmap and pipeline is strong and we are truly building something that has never done before. You don't see it, contribution in our current earnings today, just expensive, but I'm more bulletin' ever about its future. It's the same feeling I had when we started developed the early technology team in Tel Aviv.
You don't see its contribution in our current earnings today, just expenses, but I'm more bullish than ever about its future.
At the same feeling I had when we started to develop the early technology team in Tel Aviv.
So this is a quick overview of the technology moving to the brands our commitment to building brand equity powerhouses that consumer love is core to our business because there's not enough at the end of the day, we shipped product with Brent story and the numbers don't lie in the success and scale of both.
Oran Holtzman: So this is a quick overview of the technology. Moving to the brand, our commitment to building brand equity powerhouses that consumer love is core to our business. The technology is not enough at the end of the day we ship products with brand stories. And the numbers don't lie. The success and scale of both Ilma Kiyaj and Sporty Child in such a short period of time, we believe is unprecedented and reflects their brand Let's start from Ilma Kiyash, a brand that grew online from view to over $300 million in revenue in less than five years and we are building it to be a $1 billion plus brand within the next five years.
Speaker 3: So this is a quick overview of the technology. Moving to the brand, our commitment to building brand equity powerhouses that consumer love is core to our business. Technology is not enough at the end of the day where she products with brand stories. And the numbers don't lie. The success and scale of both Ilma Kiyaj and Sporty Child in such a short period of time, we believe is unprecedented and reflects their brand strength.
And split it in such a short period of time, we believe is unprecedented and reflects the brand strength.
Let's talk from Illinois, Kiyash branded grow online from zero to over $300 million in revenue and less than five years and we are building it to be a $1 billion plus brand within the next five years, even maquillage is already baked to our knowledge is especially growing online do they bring to us yet we haven't grown anywhere near as much as we can.
Speaker 3: Let's start from Ilma Kiyash, a brand that grew online from view to over $300 million in revenue in less than five years. And we are building it to be a $1 billion plus brand within the next five years. Ilma Kiyash is already based to our knowledge is expressing growing online beauty brand in the US. Yet we haven't grown anywhere near as much as we think we could have. We believe the $1 billion mark is very achievable for the brand and I'll share why.
I think we could have we believe the $1 billion Mark is very achievable for the brand and I'll show why.
Yes.
Our color cosmetic business, we have a very small fraction of the overall market side, where there's significant runway to take further show.
Speaker 3: First, in our color cosmetic business, we have very small fraction of the overall market side. We have a significant runway to take further share.
Oran Holtzman: We have very small fraction of the overall market size with a significant runway to take further share. We have considered done this since we launched five years ago and think there is much more room to run, especially at a consumer continuous to ship online. Back in its category extension for Ilma Kiyash, we already started with skin and proved we can do it. We spend the last two years building a selling base for Ilma Kiyashkin to scale quietly in market testing skin in response to the strong demand from our users and product.
They've done this since we launched five years ago and think there is much more room to run, especially at the consumer continues to shift online.
Speaker 3: We've considered done this since we launched five years ago and think there is much more room to run, especially at the consumer continues to ship online. Second is category extension.
Category extension fully Macchiato, we already started with skin improved we couldn't do it we spent the last two years building a solid base for them with your skin to scale quietly in market testing scheme in response to the strong demand from other users and product and we have built a profitable windows across product, including most arises.
Speaker 3: We already started with skin and proved we can do it. We spent the last two years building a selling base for Ilma Kya's skin to scale quietly in market testing skin in response to the strong demand from our users and product. And we have built a profitable winner's across product, including most arises, serums and exfoliators. Ilma Kya's skin is already bigger than 80% or 90% of all 92-year skin brands in the US in terms of revenue. And we've just started.
Oran Holtzman: And we have built a profitable winners across product, including most arises, serums and exfoliators. Ilma Kiyashkin is already bigger than 80 or 90% of all 90 to 50 skin brands in the years in terms of revenue and we've just started. Third, international is an enormous opportunity where we already have a lot of success in geography expansion. As you know, our competitors generate to third of all more of the business outside of the US.
And X 48, or even with your skin is already bigger than 80 or 90% of all 92 skin brand in the U S. In terms of revenue and we've just started.
The international is an enormous opportunity, where we already have a lot of success in geography expansion.
Speaker 3: Third, international is an enormous opportunity where we already have a lot of success in geography expense.
As you know other competitor will generate two thirds of the.
Speaker 3: As you know, our competitors generate two-third of all more of the business outside of the US. For us, in Ilma Kiyash, internationalism is less than 30%. We have already proven our model work well overseas. We believe we are number one or number two largest online-glaed brand. In many countries, we have launched, including the UK, Germany, Canada, and Australia, with growing and profitable business in each of these markets. But we believe have a lot of food to continue growing.
Or more of their business outside of the U S for us.
International is doesn't 30% we've already proven our model works well overseas. We believe we are number one or number two largest online beauty brands in many countries, we have launching including the U K, Germany, Canada, and Australia with growing and profitable business in each of these markets that we believe have been low.
Oran Holtzman: For us, in Ilma Kiyash, international is less than 30%. We have already proven our model work well overseas. We believe we are number one or number two largest online game brands in many countries we have launching, including the UK, Germany, Canada and Australia. With growing and profitable business in each of these markets that we believe have a lot of food to continue growing. In the medium term, based on our extensive testing and infrastructure build out, we think we have a good line of sight to expand profitably into new markets.
Move to continue growing.
In the medium term based on extensive testing and infrastructure build out we think we have a good line of sight to expand profitably into new markets.
Speaker 3: In the medium term, beta-wide extensive testing and infrastructure build out, we think we have a good line of side to extend profitably into new marks.
Our second brand spoiled child has been an amazing success. We believe it's the most successful brand launch across any vertical of all time in revenue and it's already profitable this year in year two.
Oran Holtzman: Our second branch, Paul Child, has been an amazing success. We believe the most successful people see brand launch across any vertical of all time in revenue and it's already profitable this year in year two. We built Paul Child to address the strong demands from our users for next generation wellness brand that truly solve their pain points. Paul Child is scaling in this even tougher than Ilma Kiyash did, beating again and again all my internal projections with success in both her and skin, huge category.
Speaker 3: Our second branch, Paul Child, has been an amazing success. We believe it's the most successful people see brand launch across any vertical of all time in revenue and it's already profitable this year in year two. We built Paul Child to address the strong demands from our users for next generation wellness brand that truly solve their pain points.
We've been spoiled child to address the strong demand from our users for next generation Windows brand that truly solve their pain points spiritually scaling even faster than anybody else did beating again and again all my internal projections with success in both her and skin huge category. We are billing engines, we believe will drive spoil chart toward.
Speaker 3: Spolchery is scaling in with even Tassad and Ilma Kiaj did, beating again and again all my internal projections with success in both her and skin. Huge category. We are building engines, we believe will drive Spolchery toward 1 billion dollar of revenue and beyond and I will spend how.
Oran Holtzman: We are building engines. We believe will drive Paul Child toward $1 billion of revenue and beyond and I will spend how. One, similar to Ilma Kiyash, we have thoughtfully held back growth in this brand, which you can see based on more than 50% of itself coming from repeat despite being only a year old brand. New categories are in development. We are already waiting in both skin and hair, which set us up well for additional extensions.
Oran Holtzman: And lastly, international for Paul Child is zero. We are still 100% US and although my team is begging me to expand to other countries we didn't. There is still so much growth available for us for Paul Child in the US before even considering moving forward to near good geography. Again, discipline is everything for me.
$1 billion.
Both revenue and beyond and I'll spend home.
One female mosquitoes, we've thoughtfully held back growth in this brand, which you can see based on more than 50% of sales coming from repeat despite being only a year old brand with hyper growth new categories or in development. We are already winning in both skin and hair, which set us up well for additional extensions.
Speaker 3: One, similar to ilmakiage, we have thoughtfully held back growth in this brand, which you can see based on more than 50% of itself coming from repeat despite being only a year old brand with hyper growth. New categories are in development. We are already winning in both skin and hair, which set us up well for additional extension.
Leslie International Sports Chalet zero, we are still 100% U S and although my team is begging me to expand to other countries with isn't there is still so much growth available for us for small child in the U S before even considering moving forward to new geographies.
Speaker 3: And lastly, international force policy is zero. We are still 100% US. And although my team is begging me to expand to other countries we didn't, there is still so much growth available for us for spoils charging the US before even considering moving forward to near good geography. Again, discipline is everything for me.
Discipline is everything for me.
I recently hired a seal for the brand I was waiting to get to $100 million gross revenue run rate and once we hit it we felt confident to hand it to strong hands.
Speaker 3: I recently hired a CEO for the brand. I was waiting to get to a $100 million gross revenue run rate. And once we hit it, we felt confidence to hand it to strong hands. Gilles Pratt is one of the most talented leaders out there for online businesses. And it's already building new capabilities to add to sports sets from base.
Oran Holtzman: I recently hired a CEO for the brand. I was waiting to get to $100 million gross revenue, run weight. And once we hit it, we felt confidence to hand it to strong hands. Gilles Pratt is one of the most talented leaders out there for online businesses. It's already building in your capability to add to small sets from base. In both brands, we invest heavily in product development in marketing and consumer experience to drive strong affinity and repeat.
He is one of the most talented leaders older for online businesses and it's already building new capabilities to add to suppose that strong base.
In both brands, we invest heavily in product development, and marketing and consumer experience to drive strong affinity and a repeat.
Speaker 3: In both brands, we invest heavily in product development in marketing and consumer experience to drive strong affinity and repeat. And it shows both and half of our revenue come from repeat customers. And this is true for both Ilma Kiyash and Spoil Chiles. There is nothing that better reflects product efficacy and brand love than repeat rate. The rest is diet presentations and basis data.
And it shows more than half of our revenue come from repeat customers and this is true for both.
Oran Holtzman: And it shows more than half of our revenue come from repeat customers, and this is true for both Ilma Kiyash and Spoil Child. There is nothing that better reflects product efficacy and brand love than repeat rate. The rest is diet presentations and basis data. Beyond reflecting brand affinity, the large repeat rate is an outcome of us holding our growth back. In any given year, we could have grown 50 to 100 percent more than what we did.
And spoiled child.
Nothing that better reflects product efficacy and brand love the repeat rate the rest is diapers in patients and basically data.
Beyond reflecting brand affinity the large repeat rate is an outcome of us holding our gross back in any given year, we could have grown 50% to 100% more.
Speaker 3: Beyond reflecting the brand of Trinity, the large repeat rate is an outcome of us holding our growth back. In any given year, we could have grown 50 to 100% more than what we did. But we are disciplined about growth. We live a lot of growth on the table for the future. And we are building a machine that we believe will compound sustainably and glorably over a long time.
But we are disciplined about growth we leave a lot of growth on the table for the future and we are building a machine that we believe will compound sustainably do.
Oran Holtzman: But we are disciplined about growth. We live in a lot of growth on the table for the future. And we are building a machine that we believe will compound sustainably and glorably over a long time. In all my years as CEO of the company, I didn't have one month that I felt that we saw our limit, not even close. My strategy is to always have the ability to double and never push our limits.
Globally over the long term.
In all my years as CEO of the company I didn't have one month that they felt that we saw Willamette not even close my strategy is to always have the ability to double and never push over limits in this way I feel good sitting with my teams and investors and telling them. The future is bright we feel concerned.
Speaker 3: In all my years as CEO of the company, I didn't have one month that I felt that we saw our limit, not even close. My strategy is to always have the ability to double and never push our limits. In this way, I feel good sitting with my teams and investors and telling them the future is bright with GeoclSan.
Oran Holtzman: In this way, I feel good sitting with my team and investors and telling them the future is bright with your concern. Some people sound crazy, grow as much as you can, Oran. But this is my way to be able to flip few hours at night.
Some people some crazy grow as much as you can order them, but this is my way to be able to sleep few hours at night.
Speaker 3: Some people say I'm crazy, Roy is much as you can or I'm, but this is my way to be able to flip through everything.
Looking to the future we will continue to add brands to our platform, where we see large them huge pinpoint coming from our user base and where you are in the economics can support strong profitability and returns on capital.
Looking to the future, we will continue to add brands to our platform where we see large-time, huge pain point coming from a user base and where your economics can support strong profitability and returns on capital. We have two future brands already developed and that we plan to launch in 2025. And we are incredibly bullish on our opportunity. I touched briefly earlier on brand three, a medical grade skin and body brand that will include a mix of OTC and prescription products.
Speaker 3: Looking to the future, we will continue to add brands to our platform, where we feel large-time, huge pain point coming from a user base, and where your end economics can support strong profitability and returns on Capitan. We have two future brands already developed them that we plan to launch in 2025, and we are incredibly bullish on their approach.
We have two future brands already in development that we plan to launch in 2025, and we are incredibly bullish on the opportunity.
I touched briefly earlier on inventory of medical grade skin and body brand that will include a mix of OTC and prescription product I believe brand tree will transform the dermatology and skim market with revolutionary skin diagnostic powered by computer vision tools with you I did dry far superior experience than what he spoke.
I believe brand three will fast form the dermatology and skin market with revolutionary skin diagnostic powered by computer vision tool. With the UI that drives a faster peer experience than what is possible in a doctor's office or any physical store environment. And with high-performing, scientific products launch out of OTC that solves a wide range of skin and body customers. As it went for stay tuned, we'll have more to say in the future, but it's heavily under development.
Speaker 3: I touched briefly earlier on Brentree, a medical-grade skin and body brand that will include a mix of OTC and prescription products. I believe Brentree will transform the dermatology and skin market with revolutionary skin diagnostic powered by computer vision tool.
Speaker 3: Whether you are the drive a faster pure experience than what is possible in a doctor office or any physical store environment and with high performing Signed that product lounge out of what it is like that solves a wide range of skin and body posture
The bill in a doctors office or any physical store environment and with high performing science backed product launch out what it allowed so a wide range of skin and body goes to them.
And so Brent for stay tuned we'll have more to say in the future, but it's heavily under development.
Speaker 3: SOB-04 stay tuned, we'll have more to say in the future, but it's heavily under development.
Now, let me hand, it over to Linda.
Lindsay Druckerman: Now let me hand it over to Linda. Thanks, Oran. We're thrilled with the strong business performance in the third quarter. Which is expected to exceed the guidance we provided back in August on net revenues and growth margin and is expected to deliver at the top end of adjusted EPSOM margin guidance. We're entering the fourth quarter with great momentum and our points to deliver a strong finish to the year. We now expect third quarter net revenue to grow between 29 and 31 percent year over year ahead of the 18 to 23 percent initial guidance.
Thanks, Ron we're thrilled with the strong business performance in the third quarter, which is expected to exceed the guidance. We provided back in August net revenues gross margin and is expected to deliver at the top end of adjusted EBITDA margin guidance, we're entering the fourth quarter with great momentum and are poised to deliver a strong.
Speaker 4: Thanks, Aron. We're thrilled with the strong business performance in the third quarter, which is expected to exceed the guidance we've provided back in August on net revenues and growth margin, and is expected to deliver at the top end of adjusted EPSOM margin guidance. We're entering the fourth quarter with great momentum and our poise to deliver a strong finish to the year.
Finish to the year.
We now expect third quarter net revenue to grow between 29, and 31% year over year ahead of the 18% to 23% initial guidance.
Speaker 4: We now expect third quarter net revenue to grow between 29 and 31% year over year, ahead of the 18 to 23% initial guidance. The upside is driven by better growth across both brands and importantly came with good quality and profitability.
Upside is driven by better growth across both brands and importantly came with good quality and profitability.
Lindsay Druckerman: The upside is driven by better growth across those brands and importantly came with good quality and profitability. Ultimately, it proved harder to slow the business down than we originally model based on strong repeat revenue. We expect third quarter growth margin to be 68.5 percent, which is approximately 100 basis points better than the 67.5 percent initial guidance we gave for the quarter. The growth margin upside was driven by better cost efficiency at both brands, which has benefited from specific cost optimization efforts relative to the prior year.
We have proved harder to slow the business down than we originally modeled based on strong repeat revenue.
Speaker 4: Ultimately, it proved harder to slow the business down than we originally modeled based on strong repeat remedy.
We expect third quarter gross margin to be 68, 5%, which is approximately 100 basis points better than the 67, 5% initial guidance you gave for the quarter.
Speaker 4: We expect third quarter growth margin to be 68.5%, which is approximately 100 basis points better than the 67.5% initial guidance we gave for the quarter. The growth margin upside was driven by better cost efficiency at both brands, which has benefited from specific cost optimization efforts relative to the prior year.
The gross margin upside was driven by better cost efficiency at both brands, which have benefited from specific cost optimization effort relative to the prior year.
68, 5% gross margins represents a 40 basis point improvement from the third quarter of the prior year driven by gross margin expansion at both El Monkey eyes, and spoiled child offset by negative margin mix from higher spoiled child contribution to sales.
Speaker 4: 68.5% growth margins represents a 40 basis point improvement from the third quarter of the prior year, driven by growth margin expansion at both Ilmaqiyage and Spoil Child, offset by negative margin mix from higher spoil child contribution to sales. While spoil child has made good progress in narrowing the growth margin gap relative to Ilmaqiyage, we will see some negative growth margin shift as it becomes a larger proportion of overall sales.
Lindsay Druckerman: 68.5% growth margins represent a 40 basis point improvement from the third quarter of the prior year, driven by growth margin expansion at both Ilmakiage and spoil child, offset by negative margin mix from higher spoil child contribution to sales. While spoil child has made good progress in narrowing the growth margin gap relative to Ilmakiage, we will see some negative growth margin shift as it becomes a larger proportion of overall sales. We expect third quarter adjusted EBITDA margin will be in a range of 21 to 21.5% at the top end of the initial 20 to 21.5% guidance we gave for the quarter.
While spoiled child has made good progress in narrowing the gross margin gap relative to El Nokia is we will see some negative gross margin shift as it becomes a larger proportion of overall sales.
We expect third quarter adjusted EBITDA margin will be in a range of 21 to 21, 5% at the top end of the initial 20 to 21, 5% guidance, we gave for the quarter.
Speaker 4: We expect third quarter adjusted EBITDA margin will be in a range of 21 to 21.5% at the top end of the initial 20 to 21.5% guidance we gave for the quarter.
The EBITA margin upside was driven by a stronger gross margin performance and we continue to deliver great efficiency on our marketing and other opex spending.
Lindsay Druckerman: The EBITDA margin upside was driven by our stronger growth margin performance and we continue to deliver great efficiency on our marketing and other OpEx Sunday. This preliminary range represents around a 1200 basis point improvement year over year for the quarter, despite a higher contribution from spoil child which carries a lower EBITDA margin than Ilmakiage today. This year over year improvement is driven largely by better efficiency in our marketing spending as we throttle back acquisition spend and benefit it from very strong repeat sales.
Speaker 4: The EBITDA margin upside was driven by our stronger growth margin performance and we continue to deliver great efficiency on our marketing and other op-ex sending.
It's preliminary range represents around a 1200 basis point improvement year over year for the quarter. Despite a higher contribution from spoiled child, which carries a lower EBITDA margin than Yamaki asked today.
Speaker 4: This preliminary range represents around a 1200 basis point improvement year over year for the quarter, despite a higher contribution from spoiled child, which carries a lower eagidum margin than Ilmakiage today.
This year over year improvement, it's driven largely by better efficiency in our marketing spending as a throttle back acquisition spend and benefited from very strong repeat sales.
Speaker 4: This year over your improvement is driven largely by better efficient data marketing spending as we've swaddled back acquisition spend and benefited from very strong repeat sales. This is offset by increased investment to drive future brands and products as well as investment in auditing labs.
This was offset by increased investment to drive future brands and products as well as investment in R&D labs.
Lindsay Druckerman: This is offset by increased investment to drive future brands and products as well as investment in out of elabs. We exited the quarter with approximately 160 million of cash and zero debt. Our balance sheet strength is a function of our robust profitability and excellent returns on capital which yield attractive cash flows as high cash conversions.
We exited the quarter with approximately $160 million of cash and zero debt our balance sheet strength is a function of a robust profitability and excellent returns on capital, which yield attractive cash flows a high cash conversion.
Speaker 4: We exited the quarter with approximately 160 million of cash and zero debt. Our balance sheet strength is a function of our robust profitability and excellent returns on capital, which yield attractive cash flows as high cash conversions.
Not providing any updated guidance on the fourth quarter, our full year at this time, we do plan to update our outlook in November when we formally report third quarter results.
Lindsay Druckerman: We are not providing any updated guidance on the fourth quarter or full year at this time but we do plant a data outlook in November when we formally report a third quarter result. Turning to the macro backdrop as it relates to the consumer broadly there is no indication in our business of a shift or a softening whether as a result of constrained credit higher energy prices or other factors. We're just not seeing it.
Speaker 4: We're not providing any updated guidance on the fourth quarter or full year at this time. We do plan to update our outlook in November when we formally report a third quarter result.
Turning to the macro backdrop as it relates to consumer broadly there is no indication that our business of a shift or a softening whether as a result of constrained credit higher energy prices or other factors. We're just not seeing it. We also believe our model is relatively insulated from the macro because of our idiosyncratic growth drivers and the inherent.
Speaker 4: Turning to the macro backdrop as it relates to the consumer broadly, there is no indication in our business of a shift or a softening, whether as a result of constrained credit, higher energy prices, or other factors. We're just not seeing it. We also believe our model is relatively insulated for the macro because of our idiosyncratic growth drivers and the inherent agility in our go-to-market, as well as our attractive category exposure and broad demographic appeal. Although we are,
Lindsay Druckerman: We also believe our model is relatively insulated for the macro because of our idiosyncratic growth drivers and the inherent agility in our go-to-market as well as our attractive category exposure and broad demographic appeal although we are of course watching closely.
Agility in our go to market as well as our attractive category exposure and broad demographic appeal. Although we are of course watching closely.
One note about the complexion of our P&L. We believe we are delivering growth and profitability at a level that outstrips the majority of Internet and PDP businesses out there and we're delivering this even as we're actively restraining outgrowth, which Ron said, if the right discipline to ensure sustained durability and compounding in our <unk>.
Speaker 4: One note about the complexion of our P&L, we believe we are delivering growth and profitability at a level that outstrips the majority of internet and DDSU businesses out there. And we're delivering this even as we're actively restraining our growth, which as Iran said, is the right discipline to ensure sustained durability and compounding in our model for many years.
Lindsay Druckerman: One note about the complexion of our P&L. We believe we are delivering growth and profitability at a level that outstrips the majority of internet and deed-as-you-business out there and we are delivering this even as we're actively restraining our growth which as Iran said is the right discipline to ensure sustained durability and compounding in our model for many years. Not only are we actively holding back on the top line but we're also restraining profitability.
Model for many years.
Not only are we actively holding back on the top line, but we're also restraining profitability and we're doing this by investing today's margin upside against the business opportunities we see for tomorrow.
Speaker 4: Not only are we actively holding back on the top line, but we're also restraining profitability. And we're doing this by investing today's margin upside against the business opportunities we see for tomorrow. Our base business wants to be more profitable than we're letting it, a function of our high repeat rate. Ilma Kiyaj is excellent margin profile and spoiled child's fast ramp up the profitability curve in only a second near post-long.
Lindsay Druckerman: And we're doing this by investing today's margin upside against the business opportunities we see for tomorrow. Our base business wants to be more profitable than we're letting it. A function of our high repeat rate, Bill Maquillage is excellent margin profile and spoiled child's fast ramp up the profitability curve in only a second near post launch. But with the size of our cam and the sheer scope of opportunity in front of us we believe these investments in new brands, products and capabilities create a virtuous cycle of profitable growth at high returns that will compound value for us for many years to come.
Base business wants to be more profitable than we're letting it assumption of our high repeat rates. So I'm Lucky I, just excellent margin profile and spoiled child fast ramp up the profitability curve in only its second year post launch.
With the size of our Tam and the sheer scope of opportunity in front of US. We believe these investments in new brands products and capabilities create a virtuous cycle of profitable growth at high returns.
Speaker 4: But with the size of our cam and the sheer scope of opportunity in front of us, we believe these investments in new brands, products and capabilities create a virtuous cycle of profitable growth at high returns that will compound value for us for many years to come.
Compound value for us for many years to come.
With that said looking to the future we remain committed to our long term plan for sustained revenue growth of at least 20% and EBITDA margins of at least 20%. This is an algorithm we have strong confidence in our ability to consistently achieve and one that we will strive to exceed.
Lindsay Druckerman: With that said looking to the future we remain committed to our long-term plan to sustain revenue growth at least 20% and e-digit on margins of at least 20%. This is an algorithm we have strong confidence in our ability to consistently achieve and one that we will strive to achieve.
Speaker 4: With that said, looking to the future, we remain committed to our long-term plan to sustain revenue growth at least 20% and e-to-dome margins of at least 20%. This is an algorithm we have strong confidence in our ability to consistently achieve and one that we will strive to exceed. With that, I'll hand the call back to our Ron. Operator, we are now ready to take your question.
That I'll hand, the call back to Iran.
With that I'll hand the call back to our line.
Operator, we are now ready to take your questions.
Operator: Operator, we are now ready to take your question. Thank you.
Thank you at this time, we'll be conducting a question and answer session.
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Our first question comes from the line of.
Speaker 1: The first question comes from the line of Andrew Boone with James.
Andrew Boone: Our first question comes from the line of Andrew Boone with JMP Securities. Please proceed with your question. Good morning and thanks so much for taking my questions.
Andrew Boone with JMP Securities. Please proceed with your question.
Good morning, and thanks, so much for taking my questions.
Speaker 5: good morning and thanks so much for taking my questions. Ron, I want to start with a big picture question that we frequently get from investors, which is, I hope, to understand the operational benefits of flowing down the business, understood that they improved the revenue visibility.
Ron I wanted to start with a big picture question, we frequently get from investors, but just help us understand the operational benefits of slowing down the business understood that improved revenue visibility.
Ron, I want to start with a big picture question that we frequently get from investors, but just help us understand the operational benefits of slowing down the business, understood the improved revenue visibility. But what do you guys gain from an operating standpoint by slowing down the business? And then for my second question, Lindsay, it sounded like you guys are choosing to invest more back into the business. Can you guys talk about whether there's any acceleration that we should expect from brand 3 and brand 4 or oddity land as you guys are choosing to reinvest back in the business for the 2025 timetable?
But what do you guys gain from an operating standpoint by slowing down the business.
Speaker 5: But what do you guys gain from an operating standpoint by slowing down?
And then my second question Lindsay It sounded like you guys are choosing to invest more in it back into the business.
Speaker 5: And then for my second question, Lindsey, it sounded like you guys are choosing to invest more and back into the business.
Can you guys talk about whether there was any acceleration that we should expect from brand three and branch store or oddity labs. As you guys are choosing to reinvest back in the business for 2025 timetable. Thanks, so much.
Speaker 5: Can you guys talk about whether there's any acceleration that we should expect from brand 3 and brand 4 or Audity Lab as you guys are choosing to reinvest back in the business for the 2025 PIM table?
Thank you Andrew Lu guys I know you're not used to this from other companies, but at the same that I spoke to that did also in 'twenty three I was facing oddities revenue growth in H. Two this is the right thing to do to create a healthy long term business.
Thanks so much. Thank you Andrew. Look guys, I know you are not used to this from other companies, but the same that I strongly did also in 23 I was facing all these revenue growth in age 2. This is the right thing to do to create a healthy long term business. Having said that no one can tell me that growing 58% in the first 9 months of this year is slow, especially why we are generating over 20% of adjusted EBITDA margin.
Speaker 3: Thank you, Andrew. Look guys, I know you are not used to this from other companies, but the same that I strictly did. Also in 23, I was facing all these revenue growth in age two. This is the right thing to do to create a healthy, long term business.
Having said that no one can tell me that growing 58% in the first nine months of this really slow, especially while generating over 20% adjusted EBITDA margin.
Speaker 3: Having said that, no one can tell me that growing 58% in the first nine months of this year is slow, especially while we are generating over 20% of adjusted EBITDA magic.
2023.
Speaker 3: 2023 is our best year ever between 2022 in all parameters. In terms of revenue, we grew 58% in the first nine months compared to 52% in the first nine months of 2022. And we are willing to grow by a more than 50% in 2023 compared to 46% growth in 2022 with much higher revenue base.
The best you've ever built into 'twenty when he taught in all parameters.
2023 is our best year ever between 2022 in all parameters. In terms of revenue, we grew 58% in the first 9 months compared to 52% in the first 9 months of 2022. And we are trying to grow by more than 50% in 2023 compared to 46% growth in 2022 with much higher revenue base. Just to put in perspective in the first 9 months of 2023 as the louder expect to decline 6% and lower real expect to grow only 9%.
In terms of revenue we grew 58% in the first nine months compared to 52% in first nine months of 2022.
Turning to grow by more than 50% in 2023 compared to 46% growth in 2022 with much higher revenue base just to put in perspective in the first nine months of 2023, Este Lauder and expect to decline, 6% and l'oreal and expect to grow only 9% second is the repeat rate 2020.
Speaker 3: Just to put in perspective in the first nine months of 2023, that's the louder expect to decline 6% and lower real, expect to grow only 9%. Second is the repeat rate. 2023 net repeat rate revenue is threatening to be our highest ever. And we didn't have any like expectation growth such a strong number in this year.
Second is the repeat rate. 2023 net repeat rate revenue and is threatening to be our highest ever and we didn't have any like expectation to have such strong number in this year. New years of acquisition efficiency is failing to be our best ever in 2023 beating 2022 while we are growing like raised this year again 58%. And as a profitability in adjusted EBITDA margin 20% plus almost double in 2022 EBITDA margin of 12%.
Green metric be tricked revenue and struggling to be able to highest ever and we didn't have any like expectation to have such a strong number in this year.
New user acquisition efficiency is trending to be able to best ever in 'twenty, three and three <unk> 2022, while we're growing like Crazy D. C again, 58% and that's what profitability and adjusted EBITDA margin of 20% plus almost doubling 2022 EBITDA margin of 12%. So yes, we are growing and we slowdown in H two like we always.
Speaker 3: New years of acquisition efficiency is spreading to be our best ever in 2020 3 beating 2022 while we are growing like raised this year again 58%
Speaker 3: And SO profitability, I just said EBITDA margin 20%, plus almost doubling 20, 22, EBITDA margin of 12%. So yes, we are growing and we slow down in H2, like we always did. I just said it on the call. Like for me, I want to feel in every moment that we have the runway. I want to feel in every moment that I can double. That's my way to see which you're now into 15 vessels and feel very confident about what we are building. If I grew 20% or 15%, I could say that it's slow, but 58%.
So yes, we are growing and we slowed down in age 2 like we always did. I just said it on the call. Like for me, I want to feel in every moment that we have the runway. I want to feel in every moment that I can double. That's my way to see which you're now into 15% sales and feel very confident about what we are building. If I grew 20% or 15% I could say that it's slow but 58%. It's a very strong growth rate with a very strong runway. If we could have done 100% probably as but why?
I just don't it on the call. Thanks for me I want to filling every moment that we have the runway I want to say in every moment that they can double that's my way to Citrix and now anticipate in vessels and feel very confident about what we're building, it's like 20% or 15% I could say that it's slow, but 58%. It's a very good it's a very strong growth rate.
Speaker 3: It's a very strong growth rate with a very strong one way. If we could have done 100% probably it, but why?
The very strong runway, if we could we could have done 100% probably is but one.
Great and Andrew on your second question. So there's.
Lindsay Druckerman: Great and Andrew on your second question. So there's a couple. So as we talked about, we exceeded our revenue forecast for the quarter. The upside was a really high quality. It was across both brands. It was a function of the better repeat performance. In part, as you know, ultimately we got stronger repeat than we expected and as a result that has attracted flow through to profitability. This has a couple benefits for us and supports our ability to drive long term growth.
Speaker 4: And you're on your second question. So there's a couple. So as we talked about, we exceeded our revenue forecast for the quarter. The upside was a really high quality. It was across both brands. It was a function of the better repeat performance.
Theres a couple so as we talked about we exceeded our revenue forecast for the quarter. The upside was a really high quality it was across both brands.
It was a function of the better repeat performance.
In part as you know ultimately, we got strong or weak than we expected and as a result that has attractive flow through to profitability.
Speaker 4: In part, as ultimately we got stronger repeat than we expected, and as a result that has attracted flow through to profit.
Just had a couple of benefits for us and supports our ability to drive long term growth number one is it gives us the opportunity to as you mentioned redeploy that revenue upside against the many.
Speaker 4: This has a couple benefits for us and supports our ability to drive long-term growth. Number one is it gives us the opportunity to, as you mentioned, redeploy that revenue upside against the many.
Lindsay Druckerman: Number one is it gives us the opportunity to, as you mentioned, redeploy that revenue upside against the many initiatives we see that will allow us to drive growth for the long term. So we have a ton of areas that we can invest given the large TAM and an expansive opportunity that we see in the future. So that's new products, new brands, new capabilities again to allow us to support long term growth.
Initiatives, we see that will allow us to drive growth for the long term so we have tons.
Speaker 4: Initiatives we see that will allow us to drive growth for the long term. So we have tons of areas that we can invest given the large tam and and and expansive opportunity that we see in the future. So that
Tons of areas that we can invest given the the large tam and an expansive opportunity that we see in the future so that new products, new brands, new capabilities again to allow us to support long term growth.
Speaker 4: new products, new brands, new capabilities, again, to allow support long-term growth.
In terms of acceleration Fran three is still on track for 2025 brands for is still on track for 2025, but we had the benefit of incremental investment.
Speaker 4: In terms of acceleration, brand three is still on track for 2025. Brand four is still on track for 2025, but we have the benefit of incremental investment to ensure our success.
Lindsay Druckerman: In terms of acceleration, brand three is still on track for 2025, brand four is still on track for 2025. So we have the benefit of incremental investment to ensure our success. And you know, as Ron said, as we've been flowing the business down at this part of the year, the team has been very hard at work stacking a number of growth engines for 2024. 2025 is beyond and that includes things that we're working on for our new brand. Thank you.
To ensure our success.
And you know as <unk> said as we think slowing the business down at this part of the year. The teams have been very hard at work stacking a number of growth engines for 2020 for 2025 and beyond and that includes things that we're working on trying new brands.
Speaker 4: And as Aron said, as we've been flowing the business down at this part of the year, the team has been very hard at work stacking a number of growth engines for 2024, 2025 is beyond. And that includes things that we're working on for our new brand.
Thank you.
Thank you.
Our next question comes from the line of Youssef Squali with true Securities. Please proceed with your question.
Youssef Squali: Our next question comes from the line of Youssef Squali, which are your securities. Please proceed with your question. Great.
Speaker 1: Our next question comes in line of UCF's Gwally, which is security.
Great. Thank you very much and congrats guys on a strong quarter out of the IPO gate. So.
Speaker 5: Great, thank you very much and congrats guys on a strong quarter out of the, I feel great. So can you talk a little bit about the momentum in the business as you exited Q3 and Entune Q4? Obviously you're tracking at a higher kind of cadence than we had expected that you had expected. How sustainable is that cadence going into year M? Considering that Q4 is typically your slowest.
Thank you very much and congrats, guys, on a strong quarter out of the IPO gate. So, can you talk a little bit about the momentum into business as you exited Q3 and Entune Q4? Obviously you're tracking at a higher kind of cadence than we had expected that you had expected. How sustainable is that cadence going into your end considering that Q4 is typically your slowest? And then, Lindsay, maybe, can you talk about the cross-efficiencies and just how much more can you take out just as you ramp up through revenues and maybe how much higher could gross margins get over time?
Can you talk a little bit about the momentum into business.
You exited Q3.
Entering Q4, obviously, you're tracking at a higher kind of cadence than we had expected and that you had expected how sustainable is that cadence going into year end considering that Q4 is typically our slowest and then Lindsay maybe you can can you talk about the cost efficiencies and just how much more.
Speaker 5: And then Lindsay, maybe can you talk about the cost efficiencies and just how much more can you take out just as you ramp up the revenues and maybe how much higher could gross margins get over time? Thank you.
And can you take out just as you kind of ramp up the revenues and maybe how much higher could gross margins getting overtime. Thank you.
Great. Thank you. So so so yeah exiting the third quarter, our business when entering the fourth quarter, we're very pleased.
Speaker 4: Great, thanks you, so yeah, exiting the third quarter, our business and entering the fourth quarter were very pleased.
Thank you. Great. Thanks, Youssef. So, yeah, exiting the third quarter, our business and entering the fourth quarter were very pleased by what we're seeing in our business really across the board, across brands, across product categories, across market. You know, we weren't initially planning when we spoke with you guys in mid-August and we gave our updates following the second quarter. Obviously, since then, we've exceeded our guidance, so we're pleased to see the tone of the business.
By what we're seeing in our business really across the board across brands across <unk>.
Speaker 4: by what we're seeing in our business really across the board, across brands, across product categories, across
Categories across market, we Werent initially planning when we felt like you guys are in mid August and we gave our update following the second quarter. Obviously since then we've exceeded our guidance of where we're pleased to see that the tone of the business as you mentioned, we're not updating <unk>.
Speaker 4: We weren't initially planning when we spoke with you guys in mid-August and we gave our updates following the second quarter. Obviously since then we've exceeded our guidance so we're pleased to see the tone of the business. As we mentioned we're not updating 4Q or full your guidance at this time but we'll talk in about a month and we'll give you an update then.
Lindsay Druckerman: As we mentioned, we're not updating for Q or for your guidance at this time, but we'll talk to you in about a month and we'll give you an update then. And then in terms of cross-efficiency, look, we're always, as an organization, and in particular, it relates to new product initiatives, new brand initiatives. We really don't focus on the cost side at first, on the cost of good side at first, who want to make sure we've got the right product, the right consumer proposition, the right acquisition engines, the right price points, all of those things have lined up appropriately.
Our full year guidance at this time, but we'll talk to you.
In about a month.
And we'll give you an update then.
And then in terms of cost efficiency look where we're always.
Speaker 4: And then in terms of cross-efficiency look, we're always...
As an organization and in particular as it relates to new product initiatives, New brand initiatives, we really don't focus on the cost side at first on the on the cost of goods side at first we want to make sure we've got the right products.
Speaker 4: As an organization, and in particular, it relates to new product initiatives, new brand initiatives, we really don't focus on the cost side at first, on the cost of good side, at first, we want to make sure we've got the right product.
Consumer proposition the right acquisition engines are the.
Speaker 4: the right consumer proposition, the right acquisition engines, the right price points, all those things have lined up appropriately. And then from there we can back solve and deliver more cost efficiencies. In the case of spoiled child in its first year, last year, we were not efficient at all on the cost side. We were, for example, air frating a ton of products to make the right inventory and we were really getting our legs underneath us.
The right price points all of those things have lined up appropriately and then from there we can back solve and deliver more cost efficiencies in the case of spoiled child.
Lindsay Druckerman: And then from there, we can back solve and deliver more cost efficiencies. In the case of spoiled child, in its first year, last year, you know, we were not efficient at all on the cost side. We were, for example, air frating a ton of product to make sure that we had the right inventory, and we were really getting our legs underneath us. This year, we made some progress, shipping away to improve the cost efficiency of that brand.
First year last year, you know we were not efficient at all on the cost side. We were for example air Freighting a ton of product to make sure that we had the right inventory and we were really getting our legs underneath us.
This year, we made some progress chipping away to improve the cost efficiency of that brand more.
Speaker 4: This year we made some progress, shipping away to improve the cost efficiency of that brand. More than we expected, Canada, when we delivered our initial outlook.
More than we had expected candidate when we deliver our initial our initial outlook.
Lindsay Druckerman: More than we expected, Canada, when we delivered our initial outlook. And I would say for Ilmakiage, also, you know, we haven't been extraordinarily focused on cost of good efficiency there. That's something over time that we believe we can get better at. We have some initiatives that we've put in the place. This year around, really blocking and tackling type of stuff that we're just, that we're just doing better from a supply chain, from a logistics standpoint.
And I would say first for marquee is also you know we haven't been extraordinarily focused on cost of goods deficiency. There that's something over time that we believe we can get better at we had some initiatives that we put into place this year around really blocking and tackling type of stuff that we're just we're just doing better from a supply chain from a logistics stands.
Speaker 4: And I would say for Ilmaqiage, also, we haven't been extraordinarily focused on cost-of-good deficiency there. That's something over time that we believe we can get better at. We have some initiatives that we put in the place.
Speaker 4: This year around really blocking and tackling type of stuff that we're just doing better from a supply chain from a logistics standpoint.
Point, and so those things came into play to benefit us.
Lindsay Druckerman: And so those things came into play to benefit us. I think, you know, we're not, we're not looking for any material gross margin improvement as we, as we think about what's in store for us next year. In fact, you know, spoiled child still operates at a lower gross margin versus Ilmakiage. So is that becomes a bigger portion of our mix? That's a, that's something that we'll need to offset. But we feel very good about the level of our gross margins today and how that translates.
Speaker 4: And so those things came into play to benefit us. I think we're not looking for any material gross margin improvement as we think about what's in store for us next year in fact.
Yeah, we're not we're not looking for any material gross margin improvement.
As we think about what's in store for US next year in fact spoiled child still operates at a lower gross margin versus El Maquillage, though as that becomes a bigger portion of our mix. That's a that's something that we'll need to offset but we feel very good about the level of our gross margins today and how that translates.
Speaker 4: you know, spoiled child still operates at a lower gross margin versus Ilmakiage. So is that becomes a bigger portion of our mix? That's something that we'll need to offset, but we feel very good about the level of our gross margins today and how that translates.
Most importantly, we really think about this on a total unit economics perspective, so we're working towards EBITDA margins and were feeling really great about how both yamaki ashes spoiled child are set up for that for the long term.
Speaker 4: Ultimately, most importantly, we really think about this on a total unit economics perspective. So we're working towards ebis on March.
Lindsay Druckerman: Ultimately, most importantly, we really think about this on a total unit economics perspective. So we're working towards EBITDA margins. And we're feeling really great about how both Ilmakiage's boil child are set up for that for the long run, term.
Speaker 4: And we're feeling really great about how both Ilmaki-Ajus' Boyle Childers set up for that for the long term. Great. Thanks, Lindsay.
Great. Thanks Lindsay.
Great, thanks Lindsay.
Thank you. Our next question comes from the line of Scott Schonhaus with Keybanc capital markets. Please proceed with your question.
Thank you.
Steve Decadon: Our next question comes from Ryan, us Scott Schoenhaus. With Cuban capital markets, please proceed with your question. Hi, this is Steve Decadon for Scott.
Hi, This is Steve dechert on for Scott.
Speaker 6: Hi, this is Steve Deckard on Per Scott. How should we think about the product and technology stack? You mentioned in your release the drive growth in the next year and in the, sorry, in beyond. On.
How should we think about the product and technology stack you mentioned in your release to drive growth in the next year and beyond.
Oran Holtzman: How should we think about the product and technology stack? You mentioned in your release, the drive growth in the next year and then sorry, in beyond. Can you do the question please? Sorry. How should we think about the product and technology stack? You mentioned in your release, the drive growth in the next year and beyond. Yeah, so look, we are as far as possible, we start with OLED labs. We are truly with the integration of our fellow and the progress at OLED labs, which is coming together even faster than I hope.
Can you repeat the question please.
Sure.
How should we think about the product and technology stack you mentioned in your at least to drive growth into next year and beyond.
Speaker 6: How should we think about the product and technology stack? You mentioned in your release to drive growth into next year and beyond.
Yeah. So look we are as for physical stores with OTT labs, we are thrilled with the integration of propeller and the progress that's already loves which is b.
Speaker 3: Yes, so look, we are as for possible results with OliT labs, we are truly with the integration of our VELA, and the progress at OliT labs, which is coming together even faster than...
Coming together, even faster than I hope you did not easy integration is not easy to read so many scientist to a consumer company, but we did it in a very short period of time, what do you do labs is a core part of 42 and <unk>.
Speaker 3: It is not easy integration, it's not easy to add so many scientists to a consumer company, but we did it in a very short period of time. ODD labs is a core part of ODD and future. And the progress is outperforming our expectations based on treatments. Number one, the political world, one of the third is bigger and stronger than what we believe can be done.
Oran Holtzman: It is not easy integration, it's not easy to add so many scientists to a consumer company, but we did it in a very short period of time, OLED labs is a core part of OLED and in the future and the progress is outperforming our expectation based on three things. Number one, the political world map itself is bigger and stronger than what we believe can be done. Number two, the speed at which the team is progressing is even faster.
<unk> future and the.
This M is outperforming all expectations based on three things number one the millican roadmap utilities bigger and stronger than what we believe can be done number two the speed at which the team is progressing even faster and number three to tell them that we are able to attract unprecedented global industry very strong throughout southern already close.
Speaker 3: Number two, the speed at which the team is progressing is even faster.
Speaker 3: And number three, the talent that we are able to attract is 1% than the travel industry. Very strong talent already close to 20 people in our loving boss and mostly PhDs coming from Best Love.
Oran Holtzman: And number three, the talent that we are able to attract is unprecedented to our industry, very strong talent, already close to 20 people in our loving bottom mostly. PhD is coming from best love as it relates to the road map itself, like the areas that we are hunting have like the following criteria, always use some big pain points we see coming from our users and where science, like that we see the titles allow the success.
20 people in our loving Boston, mostly bids coming from best loved as it relates to the roadmap itself like the areas that we are hunting like the following criteria always huge dumb big pain points, we see coming from other users and where science and like we said it does allow the success.
Speaker 3: as it relates to the road map itself, like the areas that we are hunting have like the following criteria, always use them. Big paint points we see coming from our users and we're science, like that we see the tiles allow the success.
And for example in Brent pre we are working on new and proprietary ingredients. It so number of skin issues and budget issues for a population that is going to be other stuff isn't just one example, other than that we have.
Speaker 3: For example in brand 3 we are working on new and and proprietary ingredients that solve number of skin issues and body issues for a population that is currently under serve. This is just one example. Other than that we have
Oran Holtzman: For example, in brand three, we are working on new and proprietary ingredients that solve the number of skin issues and body issues for a population that is currently under serve. This is just one example. Other than that, we are in the physical product size, we have two very strong departments in Ilma Kiyagin's small child. If in the past we were working on first developing product and then trying to find the audience today, we won't vice versa.
In the physical product side, we have two very strong departments and judging spoiled child, you think the best we're working on on on.
Speaker 3: in the physical product side, we have two very strong departments in elementary agents, Paul Child. You think the past we were working on, you know, on
First developing product and venture trying to find the audience today, we won't and vice versa. We have deals on base. We're listening to them. We are billing segments on those user base. Then we go back to the team as they develop the product and then we launch it back to deal with it that's why Stuart's vision, that's why and where the D to C model. It allows us to test and test before launching we tie success rate.
Speaker 3: First developing product and then trying to find the audience today, we won't fight versa. We have the user base, we are listening to them, we are building segments on those user base. Then we go back to the teams, they develop the products and then we launch it back to the user. That's why it's so efficient and that's why and we did it to see models. It allows us to test and test before launching with high success rate.
Oran Holtzman: We have the user base, we are listening to them, we are building segments on those user base, then we go back to the teams, they develop the products and then we launch it back to the user. That's why it's so efficient and that's why and we're ready to see models. It allows us to test and test before launching with high success rate and tech product size, again, that's like that's what we do and we need to make sure that we like the technology can allow us first of all to match new products and new categories that we're so machine learning is a big part of that.
Tech product side again, that's been like that's what we do and we need to make sure that we liked the technology can allow us festival to match new products and new categories that we're launching so machine learning is a big part of that in addition in every.
Speaker 3: And tech products are, again, that's what we do. And we need to make sure that we, like the technology, can allow us, first of all, to match new products and new categories that we're all outing. So, Michelin is a big part of that. In addition, in every part of the journey, we are trying to improve the product, the tech product, and that's why it's the largest team in the company.
Oran Holtzman: In addition, in every part of the journey, we are trying to improve the product, the tech product and that's why it's the largest team in the company. Overall, both tech and end size product, that's the core of the business and that's the core of them. That should be the main value for the future in terms of big growth with very decent margins. That's great, thank you. Thank you.
Part of the journey, we are trying to improve the product the tech product and that's why it's the largest staying with the company and overall, both decks and science product. That's like that's the core of the business and that's the core of them like that should be the main driver for and for the future in terms of their growth.
Speaker 3: and overall both tech and size product that's like that the core of the business and that's the core of them like that should be the main driver for the future in terms of their growth with very decent margins that's great thank you
Very decent margins.
That's great. Thank you.
Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad. Our next question comes from the line of Lauren Lieberman with Barclays. Please proceed with your question.
Ladies and gentlemen, as a reminder, if you'd like to join the question to please press star one under telephone keypad, our next question comes from the line of Lauren Lee, with Barclays. Please proceed with your question. Thanks, good morning.
Thanks, Good morning.
First thing I wanted to ask about was just as you work through plans to launch 10, new products <unk> products and in 2024 with the new molecules from already labs.
Speaker 4: Thanks, good morning. First thing I wanted to ask about, which is as you walk through plans to launch 10 new products in 2024 with the new molecules from Audity Lab.
Lauren Lieberman: First thing I wanted to ask about, which is as you walk through plans to launch 10 new products in 2024 with the new molecules from Oddity Labs, anything you can share with us on how you are planning on marketing these products, any kind of new or different approach, something that might go broader than your typical targeting online, because I think it's a very interesting inflection point where the quality, dare I say it, the differentiation of the products that seems like it's about to change, so it's curious if your marketing approach will change at all along with that. Thanks.
Anything you can share with us on how you are planning on marketing. These products you know any kind of new or different approach something that Michael broker than your typical targeting online because I think it's a very interesting inflection point where the.
Speaker 4: Anything you can share with us on how you are planning on marketing these products. Any kind of new or different approach, something that you know, might go broader than your typical targeting online, because I think it's a very interesting inflection point where the quality, there I say it, the differentiation of the product that seems like it's about to change. So it's curious if your marketing approach will change at all along with that. Thanks.
Quality Dare I say it so you know that.
The differentiation of the products that seems like it's about to change I was curious if your marketing approach will that change at all along with that thanks.
Thank you Lauren.
And you know it was always my dream and before like before.
Lauren Lieberman: Thank you, Lorraine. Look, you know, it was always my dream before, like before the query revealed, and before launching Oddity Labs, we were working like the rest of the industry, very strong product teams in both, again, spoil child, massive testing before launching, but in the end of the day, we use the same ingredients like the rest of the industry. My dream was to add technology around statistical products, I think, that we met dozens of startups in Tel Aviv and in Boston before closing the data retrieval.
Speaker 3: Look, it was always my dream and before acquiring the Reveille and before launching Audit Labs, we are working like the rest of the industry, very strong product teams in both, and again, spoil child, massive testing before launching. But in the end of the day, we use the same ingredients like the rest of the industry.
However in the developed before launching Auditor labs, we are working like the rest of the industry very strong product teams in both of them I guess for the child massive testing before launching but can you handle today, we use the same ingredients and like the rest of the industry. My Dream was to epic's geology around specific products I think that we met dozens of startups and in Tel Aviv.
Speaker 3: My dream was to add technology around statistical products. I think that we met dozens of startups in Tel Aviv and in Boston before closing the deal with Revella. And like the idea was that today we have so much data around users and about their pain points and what works and doesn't work. But.
And in Boston before closing the deal with rubella and and like the idea was that you know today, we have so much data around users involved a pinpoint on what works and doesn't work and but you know at the end of the day. When you use the same molecules at the same ingredients. It makes it very tough to create something better, but what we are doing with them now.
Lauren Lieberman: And like the idea was that, you know, today we have so much data around users, about their pain points and what works and doesn't work. But you know, in the end of the day, when you use the same molecules and the same ingredients, it makes it very tough to create something better. So, what we are doing with them now, you know, all three founders came from drug discovery and cancer, and decided to use their background and knowledge of an AI based molecule discovery in beauty.
Speaker 3: You know, in the end of the day, when you use the same molecules and the same ingredients, it makes it very tough to create something better. So what we are doing with them now, you know, all three founders came from drug discovery and cancer and decided to use their background and knowledge of an AI based molecular discovery and in beauty. And it was my missing part of the puzzle. We built a machine that has the ability to collect the data for millions of users, we built a technology that makes...
Ultra responders and came from drug discovery in cancer and decided to use their background and knowledge of an AI based clinical discovery in beauty.
And it was my missing part of the puzzle we built a machine that has the ability to collect the data from millions of them. We believe technology that makes beauty walk on line. We just ended a strong engine for seismic product based on data we collect and this is already labs in terms of how we marketed them like did the magic like since it's coming from a user base with the data.
Lauren Lieberman: And it was my missing part of the puzzle. We built a machine that has the ability to collect the data for millions of users, we built a technology that makes beauty walk online. We just needed a strong engine for science, but product based on data we collect, and this is Oddity Labs. In terms of how we market it, that's the magic. Since it's coming from user based with the data, we just need to go back to this segment and marketing the product, that makes this model so strong.
Speaker 3: beautiful online, we just needed a strong engine, a size with product based on data we collect, and this is Auditilabs. In terms of how we market it.
Speaker 3: That's the magic. Like since it's coming from user base with the data, we just need to go back to this segment and marketing the product. That's what makes this model so strong. We just need to, and most scientists and extend our detail apps, like we are already doing today. And that's why it's a massive part of our future. As for next year, 10 new molecules coming from our detail apps, again, after so much testing.
We just need to go back to the Sigma and marketing the product. That's what makes this model so strong.
Just maybe just think like most scientists and extended it a lot like we already do today, and and and and and that's why that's why I believe it's a massive part of our future Expo next year 10, new molecules coming from OTT labs again after so much dusting and you know when you work with scientists and loved we wanted us also and with.
Lauren Lieberman: We just need to add more scientists and extend Oddity Labs, like we already do today. And that's why I believe it's a massive part of our future. As for next year, 10 new molecules coming from Oddity Labs. Again, after so much testing, you know, when you work with scientists, they want to test in love, we want to test also, and with consumer, and we are running very extensive testing and it looks very promising.
Speaker 3: And you know, when you work with scientists, they want to test in love. We want to test also with consumer and we are running very extensive testing and it looks very promising.
Consumer and we are running a very extensive testing and it looks very promising.
I mean, I guess that the root of the question is that while for sure you are not in need of gross to Tuesday, only gets right you've talked several times that you intentionally slow down the business.
I mean, I guess the root of the question is that, well, for sure, you are not in need of growth to say, well, it's right, you've caught several times, how you intentionally slow down the business. But I think what's interesting also is to think about expanding the user base or expanding your reach when the product quality changes as it's set to. So that's kind of what I'm getting at, or maybe that's something you don't need to think about for a long time.
Speaker 4: I mean, I guess the root of the question is that while for sure you are not in need of growth to say, the least right, you have caught several times how you intentionally slow down the business.
But I think what's interesting also is to think about it and expanding the user base or expanding your reach with the product quality changes as it's set to so that's kind of what I'm getting out or maybe that's something you don't.
Speaker 4: But I think what's interesting also is to think about expanding the user base or expanding your reach when the product quality changes as it's set to. So that's kind of what I'm getting at or maybe that's something you don't need to think about for a long time. But it feels like there's an even bigger market out there when the product quality steps up as it's about to.
We need to think about for a long time.
But it feels like there's an even bigger market out there when the quad.
But it feels like there's an even bigger market out there when the product quality steps up as it's about to. Yeah, it's a great question. You have two ways to expand and to grow. Number one is to extend your user base. And number two is to just to offer and to extend your product line to the same user base. We are going both. That's just a concept development. So we do both.
Quite a product quality steps up as its about too.
Yeah.
It's a great question, we like you have two ways to win and to expand and to grow number one is to extend your user base and number two is to just to offer and to extend your product lines to the same user base. We are doing both in age too by the way, we acquire like it's likely quite less than that.
Speaker 3: Yeah, it's a great question. Like you have two ways to expand and to grow. Number one is to extend your user base. And number two is to just to offer and to extend your product line to the same user base. We are going both. And in H2, by the way, we acquire like
And if we need to grow more, we'll continue to acquire more users and specifically primarily for those pain points, but if not, we'll continue to work hard just launching new products to the same user base like two ways to grow basically. Yeah, okay.
Speaker 3: like we quite a less user than that we ever had before because we didn't need more growth but it doesn't mean that I don't want to use the user base to launch more products for them just because it doesn't like there is no cost for that just because of development so we do both and if we need to grow more, we'll continue to acquire more users specifically and primarily for those pain points
If we ever had before because we didn't need more growth, but it doesn't mean that they don't want to use their user base to launch more products for them. You just just because he doesn't like there was no cost for that just because of development. So we do both.
If we need to grow more will continue to acquire more users and specifically in primarily for for those pain points, but if not we'll continue to work hard just launching new products to the same database like two ways to grow basically.
Speaker 3: If not, it's continued to work hard just mounting new products to the same user base. Like two ways to grow a base.
Yep, Okay, and do you think about at what point you start adding more.
Speaker 4: Yeah, okay. And do you think about at what point you start adding more infrastructure, whether it's probably people, but be able to, you're managing the growth very well that you have obviously, but yeah, I mean, to get to the point where let's say word of mouth on these products is stronger than you anticipate.
Oran Holtzman: And do you think about at what point you start adding more infrastructure, whether it's, you know, probably people, you know, but be able to, you're managing the growth very well that you have, obviously, but yeah, I mean, it gets a point where let's say word of mouth on these products is stronger than you anticipate. You need to add resources internally to manage that even higher level of sales growth, rather than you controlling, if you will, the level of sales growth that it kind of accelerates beyond intention.
Infrastructure, whether it's you know.
Probably people, but be able to dirty managing the growth very well that you have obviously, but.
Yeah, I mean does it get to a point, where it's let's say word of mouth on these products is stronger than you anticipate.
Do you need to add resources internally to manage that even higher level of sales growth right rather than you're controlling if you will the level of sales growth that it kind of accelerates beyond intention.
Speaker 4: Do you need to add resources internally to manage that even higher level of sales growth, right? Rather than you controlling, if you will, the level of sales growth, that it kind of accelerates beyond intention. You have, you know, the infrastructure you need to handle that.
Do you have the infrastructure you need to handle that.
Oran Holtzman: You have the infrastructure you need to handle that. So first of all, it's a good problem to have. And I hope that we will have this problem for a long time. Look, the way that we are under business, each brand has its own CEO on leadership team. By the way, brand three already has its own CEO that work with developing, for example, on new molecules for brand three. So, and we try, like to run it very independently in terms of brand, just to ensure that we have strong infrastructure for growth for each and every brand.
So first of all it's a good problem to have.
Speaker 3: So first of all, it's a good problem to have. And I hope that we will have this problem for a long time.
Hum.
And I hope it will have this problem for a long time look the way that we had on the business each brand has its own CEO.
Speaker 3: Look, the way that we are around the business, each brand has its own CEO , its own leadership team. By the way, Brentree already has its own CEO that work with Revelecting, for example, on new molecules for Brentree. So we try like... Like...
Our leadership team by the way it Brent we already has its own feel that work with <unk>. For example on the on your multi cultural brand tree, So and we try to run it very independently in terms of brands just to ensure that we have a strong infrastructure for growth for each and every brand and that's what what is the lab M life.
Speaker 3: to run it very independently in terms of brands, just to ensure that we have strong infrastructure for growth for each and every brand. And as for Auditilab, like I'm over-sing, personally with them, our chief science officer, the founder of Revella, I talk to them almost every day, I'm very involved in what they do. And we built it to allow high scale and I think that we know today.
Oran Holtzman: And as for all these labs, like I'm over things, personally with them, our chief signs officer, the founder of Revella, I talked to them almost every day, I'm very involved in what they do. And we built it to around like to allow like high scale and and like, I think that we know to do it.
What we're saying personally with them, our Chief Science officer, the founder for Villa I talked to them almost every day I'm very involved in what they do and we built it to around like two to allow like high scale and and I think that we know to do it well.
Laura and I will just jump in the model I think is what youre alluding to has built in a lot of leverage.
Speaker 7: Lauren, I'll just jump in the model I think is what you're alluding to has built in a lot of leverage.
Lauren, I'll just jump in. The model, I think, is what you're alluding to, has built in a lot of leverage. And number one, that's one of the beauties about being a technology based company is that it gives us the opportunity to scale without a lot of incremental cost, for say, you know, one of the ways that you can see that actually play out as a soil child itself. It achieves profitability in about a year.
And and number one that's one of the beauties about being a technology based company is that it gives us the opportunity to scale without a lot of incremental cost per se.
Speaker 7: And number one, that's one of the beauties about being a technology-based company is that it gives us the opportunity to scale without a lot of incremental costs.
You know one of the ways that you can see that actually play out in a spoiled child itself right it achieved profitability.
Speaker 7: You know, one of the ways that you can see that actually play out is in soil child itself, right?
Speaker 7: It achieved profitability in about a year. It's going to be a nice profit contributor to us.
A year.
Going to be a nice profit contributor to us this year and I think if you look across like typically to see any new brand launch that has scaled up materially and profitably.
It's going to be a nice profit contributor to us this year. And I think as you look across, like typically to see any new brand launch that has scaled this materially and this properly, it doesn't exist. And as you look at some of the large sort of legacy analog CPG platforms, every time you launch a new brand, well, first of all, they struggle to launch or grow anything organically. But you have to spend the same amount to re-acquire the same customer every single time versus us.
Speaker 7: This year, and I think as you look across, like typically to see any new brand launch.
Speaker 7: that has scaled this materially and this properly. It doesn't exist.
It doesn't exist and as you look at some of the large sort of legacy analog.
Speaker 7: And as you look at some of the large sort of legacy analog CPG.
CPG platforms every time, you're watching your brand well first of all they struggled to launch our grow anything organically, but you have to spend the same amount to reacquire. The same customer every single time versus us. We have this user base have already over 40 million, where we're just going deeper and deeper with low incremental costs, which delivers high.
Speaker 7: Every time you launch a new brand, well, for as long as they struggle to launch or grow anything organically, but you have to spend the same amount to re-acquire the same customer every single time versus us. We have this user base of over 40 million where we're just going deeper and deeper with low incremental costs which delivers high margin.
We have this user base of over 40 million, where we're just going deeper and deeper with low incremental cost, which delivers high margins. And that being said, as we've talked about, you know, the model that we've committed to sustaining over the foreseeable future at this 20% plus revenue, 20% plus EBITDA margins that has indebted in it a lot of reinvestments for the future. But you could see our individual brands operating at the level that's far more profitable, just based on the inherent leverage in the model.
Margin that being said as we've talked about you know the model that we've committed to sustaining over the.
Speaker 7: That being said was we've talked about the model that we've committed to sustaining over.
For the foreseeable future at the 20% plus rather than your 20% plus EBITDA margins that has embedded in it a lot of reinvestment for the future, but you could see our individual brands operating at a level that's far more profitable just based on the inherent leverage in the model.
Speaker 7: The foreseeable future at this 20% plus revenue 20% plus even on margins that has embedded in it a lot of reimbursed
Speaker 7: for the future, but you could see our individual brands operating at the level that's far more profitable just based on the inherent leverage in the model. Okay, that's great. Thanks.
Okay. That's great. Thank you guys. So much I appreciate it.
Lindsay Druckerman: Okay, that's great. Thank you guys so much. I appreciate it. Thank you.
Thank you. Our next question is a follow up from the line of Youssef Squali with true Securities. Please proceed with your question.
Speaker 1: Thank you. Our next question is a follow from the line of UCF Squally.
Youssef Squali: Our next question is a follow-up from the line of Youssef Squali with Truis Securities. Please proceed with your questions. Oh, thanks. Great. Thanks for taking the follow-up on the question. So one question we've been getting from clients is around Billings and some customer reviews. I guess on certain sites like Better Business Bureau, et cetera, they're a number of kind of unhappy customers. But it seems like it has more to do with Billings and people may be charged wrongly than the quality of the product. That's something that's clearly very important that we haven't seen. So, which is great.
Oh, great. Thanks for taking the follow on question. So one question, we've been getting from clients is around billings and some customer reviews I guess.
Speaker 5: Oh, thanks. Great. Thanks for taking the phone one call the question. So one question we've been getting from clients is around Billings and some customer reviews.
Certain sites like better business Bureau, et cetera, there are number of kind of unhappy customers, but it seems like it has more to do with billings and people may be charged wrongly then you know the quality of the product that's something that's clearly very important that we haven't seen so which is great but can you maybe just.
Speaker 5: on certain sites like Better Business Bureau, et cetera. There are a number of kind of unhappy customers, but it seems like it has more to do with buildings and people may be charged wrongly than the quality of the product. That's something that's clearly very important that we haven't seen, so which is great. But can you maybe just address what the issues there are if there are any issues at scale? Maybe there aren't. If you can just address this topic it would be really helpful. Thank you.
Addressed what the issues there are if there any issues that at scale, maybe there arent that if you can just address this this this topic it would be really helpful. Thank you.
Oran Holtzman: But can you maybe just address what the issues there are? If there are any issues at scale, maybe there aren't. But if you can just address this topic, it would be really helpful. Thank you. Yeah, thank you. It's just, first and foremost, it's important to understand the magnitude of the claim. And we're talking about the friction of a percent. We are running online only at a youth scale. Millions of orders every month, 100% due to see.
Yeah. Thanks, It was just supposed and foremost it's important to understand the magnitude of the claim and we were talking about the friction of a percent.
Speaker 3: First and foremost, it's important to understand the magnitude of the claim and we are talking about the restriction of a percent.
Running online only.
Speaker 3: We are running online only at a huge scale. Millions of orders every month, 100% due to say.
Huge scale millions of oldest every month 100 per cent people see this means our millions of customers to whom we are shipping physical products globally, even if it's 0.01% of all customers say 10 out of 100000 customers have an issue because you know the same volume the absolute number.
Oran Holtzman: This means millions of customers to whom we are shipping physical products globally, even if it's 0.01% of all customers say 10 out of 100,000 customers have an issue because, you know, of our insane volume, the absolute number and like of complaint, we can see like it's very low. Any online company that operate even close to ourselves will experience this, like there will always be a certain percentage who are unhappy and an issues with their adverse shipping or just got confused with for some reason.
Speaker 3: This means millions of customers to whom we are shipping physical products globally, even if it's 0.01% of all customers say 10 out of 100,000 customers have an issue because of our insane volume, the absolute number, like of complaint, we can see, like it's very low.
Like of complaint we can see like like its very low any online company that operate even close to over sell it really wasn't experienced dislikes there will always be a certain percentage on appian and issues with their address shipping or just got confused with for some reason, but our customers are happy we track. It every day.
Speaker 3: Any online company that operate even close to ourselves will experience this. Like there will always be a certain percentage who are unhappy and and issues with their adverse shipping or just got confused with for some reason.
Oran Holtzman: But our customers are happy with track it every day. Like this is my job to make sure that our customers are happy because if they're not happy, you don't have repeat rate. If you don't have repeat, you don't have a profit of business. So I stand by it by 100% and we have very strong customer reviews, not only that if you look at like other third party review like them, trust pilot or Google reviews.
Speaker 3: But our customers are happy with track it every day. Like this is my job to make sure that our customers are happy because if they're not happy, you don't have repeat rate. And if you don't have repeat, you don't have a profit of business. So I stand by 100.
Like this is my job to make sure that our customers are happy because it does not have to you don't have repeat rate.
Oran Holtzman: Or even BBB itself, you would see tens of thousands of reviews at average of 4.5 stars. And again, with this scale is very tough. There are two areas where we see a bit more issues. Obviously we work hard. And we technology because everything that we build around auto replenishment and about payments we built like internally. But specific to auto replenishment. I'm not aware of any other large online company who is more transparent than us and requires like every single customer to actively opt in again, I like most auto replenishment models.
You don't have a profitable business. So I stand by my 100% and we have very strong customer for us not only that if you look at like other third party review like them for pilot or Google reviews, or even BBB itself, you would see tens of thousands of reviews. It.
Speaker 3: And we have very strong customer views, not only that if you look at like other third party review like them Plus pilot or Google reviews and or even BBB itself You will see tens of thousands or reviews that average of 4.5 stars and and and again
A full 0.5 start and end and again with this game. It's very tough there are two areas, where we see a bit more issues. Obviously, we work hard and with technology, because everything that we built around auto replenishment and about payments, we built like internally and but specific to auto replenishment.
Speaker 3: scale is very tough. There are two areas where we see a bit more issues. Obviously we work hard with technology because everything that we build around, auto-repanishment and about payments we built internally. And but.
Speaker 3: I see the total replenishment. I'm not aware of any other large online company who is more transparent than us. And we cross every single customer to actively obtain. Again, I like most auto replenishment models.
Well any other large holding company.
He's more transparent than us and then request like every single customer too.
And again I like most auto replenishment models.
Although in both.
All told the default he's a onetime purchase and not all those sorts of blips subscription of auto replenishment, rather opt out during the one time purchase. This is a huge difference and if I killed less about your the satisfaction and happiness I would've changed it and made a business, even even more profitable way more profitable, but of course I'm not going to do it.
Oran Holtzman: Outer in both, in my case, in small child, the default is a one time purchase and not all those subscription auto replenishment rather opt out during a one time purchase. This is a huge difference. And if I care less about your satisfaction and happiness, I would have changed it and made a business even even more profitable way more profitable, but of course I'm not planning to do it. And specific to billing and for a small portion of our customers, there can be a confusing with prioritization on their cards, which is the same thing that you can get when you order Uber.
Speaker 3: out there in both in Makias and Spolchal, the default is a one-time purchase and not all those subscription or auto replenishment, rather opt out during a one-time purchase. This is a huge difference. And if I care less about you as a distraction and happiness I would have changed it and made a business even more profitable, way more profitable, but of course, I'm not planning to do it. And specific to billing for a small portion of our customers.
Back to billings.
A small portion of our customers.
There can be a confusing with pre authorization on the cards, which is the same thing that you can get when you order Uber, it's mostly really stellar try before you buy program, which again, we do for the better shopping experience and it's cost us in the margin but.
Speaker 3: There can be a confusing with prioritization on their cards, which is the same thing that you can get when you order over. It mostly relates to a drive before you buy a program, which again, we do for the better shopping experience, and it costs us in margin.
Oran Holtzman: It mostly relates to our drive before you buy a program, which again, we do for the better shopping experience and it costs us in margin. But we believe that in some beauty product, it is essential. Now, you know, I don't think that it makes sense to cancel this massive customer benefit because a super small fraction of users who didn't fully read up like how it works and were confused will continue to work out to educate those users and we invested a lot in technology around it.
But we believe that.
Speaker 3: But we believe that in some beauty product it is essential. Now, you know, I don't think that it makes sense to cancel this massive customer benefit because a super small fraction of users who didn't fully read up like how it works.
And some beauty products. It is essential now you know I don't think that it makes sense to cancel this massive customer benefit because it's super small friction of users who didnt fully redox like how it works and we're confused will continue to work hard to educate those users and we have invested a lot in technology around it and again.
Speaker 3: and work on fuse will continue to work out to educate those users and we invested a lot.
Speaker 3: it around it and again we built funnels and we built like machine models to try to you know to like better predict who is going to to get more confused and we are trying to change the messages for them again we walk out around it but I say it and I feel 100% sure about it our customers are happy otherwise we never have this it's really great make sure
He built funnels and we built like M machine models to try to do it like better predict who is going to be to get more confused and we're trying to do to change the messaging for them again, we won't cows around it but I'd say, it and I feel 100% sure about it our customers are happy otherwise would never have this repeat rate.
Oran Holtzman: And again, we built funnels and we built like machine models to try to, you know, to like to better predict who is going to get more confused and we are trying to change the messages for them. Again, we walk out around it, but I say it and I feel 100% sure about it. Our customers are happy. Otherwise, we never have this repeat train, makes sense.
Yeah.
That makes sense, thanks, a lot around.
Thank you.
Next slide, Lauren. Thank you.
Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Hoffman for any final comments.
Speaker 1: I'll turn this floor back to MrZ thing 2011
Oran Holtzman: Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Holtzman for any final comments. No, thank you very much, guys, for joining us today and looking forward to speak to you soon in our Q3 reports. Thank you.
Oh, Thank you very much guys for joining us today and looking forward to speak to you soon in our extra three airports.
Speaker 3: Thank you very much for joining us today, looking forward to speak to you soon in our Q3 reports.
Yeah.
Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.
This concludes today's conference call. You may discuss