Q3 2023 ODDITY Tech Ltd Earnings Call

November 8, 2023

Operator: At this time I'd like to turn the conference over to Maria Lycouris, Investor Relations for oddity, thank you, you may begin.

To Maria Lee Corey.

Investor Relations for oddity.

You may begin.

Maria Lycouris: Thank you operator, I am joined by Oran Holtzman, Oddity co founder and CEO and Lindsay Drucker Mann Oddity'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 our new business strategy, market opportunities future financial performance and potential long term success. 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 earnings press release issued yesterday and in our prospectus filed with the Securities and Exchange Commission on July 18 2023. 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-GAAP financial measures, including their definitions are included in our earnings press release, which we issued yesterday I will now hand, the call over to Iran.

Lindsay Drucker Mann Oddities global CFO.

As a reminder, management's remarks on this call that do not concern past events are forward looking statements. These include predictions expectations or estimates, including statements about our new business strategy market opportunities future financial performance and potential long term success.

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 earnings press release issued yesterday and in our prospectus filed with the Securities and Exchange Commission on July 18 2023. 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-GAAP financial measures, including their definitions are included in our earnings press release, which we issued yesterday I will now hand, the call over to Iran.

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 earnings press release issued yesterday and in our prospectus filed with the Securities and Exchange Commission on July 18 2023.

Maria Lycouris: 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-GAAP financial measures, including their definitions are included in our earnings press release, which we issued yesterday I will now hand, the call over to Iran.

Maria Lycouris: We do not undertake any obligation to update forward looking statements, which speak only as of today.

Do not undertake any obligation to update forward looking statements, which speak only as of today.

Maria Lycouris: 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-GAAP financial measures, including their definitions are included in our earnings press release, which we issued yesterday I will now hand, the call over to Oran.

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-GAAP financial measures, including their definitions are included in our earnings press release, which we issued yesterday I will now hand, the call over to Iran.

Oran Holtzman: Thank you everyone for joining us today, we are glad to report our third quarter results today, which beat our guidance issued back in August on every (inaudible) and also exceeded the preliminary results we recently communicated in October, revenue is growing faster, gross margins are higher and adjusted EBITDA was better than we expected. This is despite our real effort to pace our growth slowdown. Historically has done an H score. We just record breaking quarter, we will deliver net revenue growth of six 2% and adjusted EBITDA of $90 $1 million for the first nine months of this year. We are scaling of discrete the legacy incumbents, but also the majority of the recurrent consumer companies. And with brokerage margins and cash flows that IRA and other growth companies. This outstanding performance reflects the strength of our platform the health of our brands our strong discipline teams and their massive runway we have in front of us. Our large investment in technology and data capabilities over the past five years, while enabling us to continue to grow without damaging our high margins and profitability. Our tech team is still the largest giving the company represents approximately 40% of total head count. At the center of our success is our powerful financial model. From the beginning we designed to deliver a real combination of scale growth and profitability.

Oran Holtzman: Thank you everyone for joining us today, we are glad to report our third quarter results today, which beat our guidance issued back in August on every outlook and also exceeded the preliminary results we recently communicated in October, revenue is growing faster, gross margins are higher and adjusted EBITDA is better than we expected.

Patrick and also exceeded the preliminary results, we recently communicated that the October.

Revenue is growing faster gross margins are higher and adjusted EBITDA was better than we expected. This is despite our real effort to pace our growth slowdown.

Oran Holtzman: This is despite our real effort to pace our growth and slowdown as we historically have done in H2, with this record breaking quarter, we will deliver net revenue growth of 60% and adjusted EBITDA of $91 million dollars for the first nine months of this year. We are scaling of discrete the legacy incumbents, but also the majority of the recurrent consumer companies. And with brokerage margins and cash flows that IRA and other growth companies. This outstanding performance reflects the strength of our platform the health of our brands our strong discipline teams and their massive runway we have in front of us. Our large investment in technology and data capabilities over the past five years, while enabling us to continue to grow without damaging our high margins and profitability. Our tech team is still the largest giving the company represents approximately 40% of total head count. At the center of our success is our powerful financial model. From the beginning we designed to deliver a real combination of scale growth and profitability.

Historically has done an H score.

We just record breaking quarter, we will deliver net revenue growth of six 2% and adjusted EBITDA of $90 $1 million for the first nine months of this year.

We are scaling of discrete the legacy incumbents, but also the majority of the recurrent consumer companies.

Oran Holtzman: We are scaling at a speed that beats legacy incumbents, but also the majority of internet consumer companies and with brokerage margins and cash flows that (inaudible) in other growth companies, this outstanding performance reflects the strength of our platform, the health of our brands, our strong discipline teams and their massive runway we have in front of us. Our large investment in technology and data capabilities over the past five years, while enabling us to continue to grow without damaging our high margins and profitability. Our tech team is still the largest giving the company represents approximately 40% of total head count. At the center of our success is our powerful financial model. From the beginning we designed to deliver a real combination of scale growth and profitability.

Oran Holtzman: We are scaling at a speed that beats legacy incumbents, but also the majority of internet consumer companies and with profit margins and cash flows that are rare in other growth companies, this outstanding financial performance reflects the strength of our platform, the health of our brands, our strong disciplined teams and the massive runway we have in front of us

And with brokerage margins and cash flows that IRA and other growth companies.

This outstanding performance reflects the strength of our platform the health of our brands our strong discipline teams and their massive runway we have in front of us.

Oran Holtzman: Our large investment in technology and data capabilities over the past five years are enabling us to continue to grow further without damaging our high margins and profitability, our tech team is still the largest team in the company, represents approximately 40% of total head count. At the center of our success is our powerful financial model. From the beginning we designed to deliver a real combination of scale growth and profitability.

Our large investment in technology and data capabilities over the past five years, while enabling us to continue to grow without damaging our high margins and profitability.

Our tech team is still the largest giving the company represents approximately 40% of total head count.

At the center of our success is our powerful financial model.

Oran Holtzman: At the center of our success is our powerful financial model which from the beginning we designed to deliver a road combination of scale, growth and profitability, on scale, we expect to break new records again in 2023, growing revenue more than 50% and with over 50% coming from repeat customers, which is really rare in our industry. We believe we are already the largest DPC platform in our industry. And have a massive user base with over 40 million users, while our design partners. It's a product category and brand launches. On growth, we expect to deliver monitor 2% growth. This year after having delivered around 50% last year and 100% the year before that but. But although other high growth, we could have done way more. We believe we have massive runway ahead and have built so many engines to allow us to continue to grow we believe both in school child will be $1 billion plus brands and we are building a recruiter brands to have meaningful addition to our company. On profitability, we continue to deliver margin and cash flow well ahead of other growth businesses. We expect to deliver over $100 million of adjusted EBITDA. This year alone, which is a 21% margin. Before diving into the quarter I want to discuss our industry and why I'm. So bullish about the opportunity ahead of us. First we operate in what we believe is one of the most lucrative Tom's in the world. Global beauty and wellness market is over $600 billion in size and dominated by offline legacy incumbents. They're all a huge number of beauty and wellness categories for us to go after which our largest size and are waiting for a broker or light boxes.

Oran Holtzman: At the center of our success is our powerful financial model which from the beginning we designed to deliver a real combination of scale, growth and profitability, on scale, we expect to break new records again in 2023, growing revenue more than 50% and with over 50% coming from repeat customers, which is really rare in our industry.

From the beginning we designed to deliver a real combination of scale growth and profitability.

On a scale, we expect to break New records again in 2023 growing revenue more than 50% and with over 50% coming from repeat customers, which is very low in our industry.

Oran Holtzman: We believe we are already the largest D to C platform in our industry and have a massive user base with over 40 million users, who are our design partners for future products, categories and brand launches, on growth, we expect to deliver more than 50% growth this year after having delivered around 50% last year and 100% the year before that but although our high growth, we could have done way more. We believe we have massive runway ahead and have built so many engines to allow us to continue to grow we believe both in school child will be $1 billion plus brands and we are building a recruiter brands to have meaningful addition to our company. On profitability, we continue to deliver margin and cash flow well ahead of other growth businesses. We expect to deliver over $100 million of adjusted EBITDA. This year alone, which is a 21% margin. Before diving into the quarter I want to discuss our industry and why I'm. So bullish about the opportunity ahead of us. First we operate in what we believe is one of the most lucrative Tom's in the world. Global beauty and wellness market is over $600 billion in size and dominated by offline legacy incumbents. They're all a huge number of beauty and wellness categories for us to go after which our largest size and are waiting for a broker or light boxes.

We believe we are already the largest DPC platform in our industry.

And have a massive user base with over 40 million users, while our design partners.

It's a product category and brand launches.

On growth, we expect to deliver monitor 2% growth. This year after having delivered around 50% last year and 100% the year before that but.

But although other high growth, we could have done way more.

Oran Holtzman: We believe we have massive runway ahead and have built so many engines to allow us to continue to grow, we believe both IL MAGIAGE and SpoiledChild will be $1 billion dollars plus brands and we are building our future brands to have meaningful addition to our company. On profitability, we continue to deliver margin and cash flow well ahead of other growth businesses. We expect to deliver over $100 million of adjusted EBITDA. This year alone, which is a 21% margin. Before diving into the quarter I want to discuss our industry and why I'm. So bullish about the opportunity ahead of us. First we operate in what we believe is one of the most lucrative Tom's in the world. Global beauty and wellness market is over $600 billion in size and dominated by offline legacy incumbents. They're all a huge number of beauty and wellness categories for us to go after which our largest size and are waiting for a broker or light boxes.

Oran Holtzman: We believe we have massive runway ahead and have built so many engines to allow us to continue to grow, we believe both IL MAKIAGE and SpoiledChild will be $1 billion dollars plus brands and we are building our future brands to have meaningful addition to our company.

We believe we have massive runway ahead and have built so many engines to allow us to continue to grow we believe both in school child will be $1 billion plus brands and we are building a recruiter brands to have meaningful addition to our company.

Oran Holtzman: On profitability, we continue to deliver margin and cash flows well ahead of other growth businesses, we expect to deliver over $100 million dollars of adjusted EBITDA this year alone, which is a 21% margin, before diving into the quarter I want to discuss our industry and why I'm so bullish about the opportunity ahead of us. First we operate in what we believe is one of the most lucrative Tom's in the world. Global beauty and wellness market is over $600 billion in size and dominated by offline legacy incumbents. They're all a huge number of beauty and wellness categories for us to go after which our largest size and are waiting for a broker or light boxes.

On profitability, we continue to deliver margin and cash flow well ahead of other growth businesses.

We expect to deliver over $100 million of adjusted EBITDA. This year alone, which is a 21% margin.

Before diving into the quarter I want to discuss our industry and why I'm. So bullish about the opportunity ahead of us.

Oran Holtzman: First we operate in what we believe is one of the most lucrative TAMs in the world the global beauty and wellness market is over $600 billion dollars in size and dominated by offline legacy incumbents, there are a huge number of beauty and wellness top categories for us to go after which are larger size and are waiting for a proper online access. Second consumers are shifting online and it is always strengths. All in is around 25% of the industry sales and we believe it will do at least 50% into next year. But in order to win online you'll need to deliver experience. Even better than a store and therefore data and technology capabilities are critical. With all due respect to my competitors, we're simply playing different games. And as it relates to technology today, though not to mention intelligent operating structure. We believe we are simply as it had. Running like a startup to ensure we preserve our with it. Third we've built amazing brands and amazing products and we have proved the oddities of Brent scaling machine. Our track record speaks for itself. <unk> is the largest online beauty brand in the U S and either number one or number two in almost every international market. It has launched spoil charges is expected to achieve $100 million net revenue Bcf after only just launching in 2022 multiple categories and. And success across a very wide demographic. All of this week very high customer satisfaction, and best in class repeat rates and consistent and healthy growing cohorts. Brent <unk> Brent four are already in the making with dozens of talented folks dedicated to developing both brands will be launched in 2025 and are responsible for at least 40% of my time and focus as CEO.

First we operate in what we believe is one of the most lucrative Tom's in the world.

Global beauty and wellness market is over $600 billion in size and dominated by offline legacy incumbents.

They're all a huge number of beauty and wellness categories for us to go after which our largest size and are waiting for a broker or light boxes.

Second consumers are shifting online and it is always strengths.

Oran Holtzman: Second consumers are shifting online, and it is our strength, today online is around 25% of the industry sales and we believe it will increase 50% in the next years, but in order to win online you need to deliver experience that is even better than a store and therefore data and technology capabilities are critical. With all due respect to my competitors, we're simply playing different games. And as it relates to technology today, though not to mention intelligent operating structure. We believe we are simply as it had. Running like a startup to ensure we preserve our with it. Third we've built amazing brands and amazing products and we have proved the oddities of Brent scaling machine. Our track record speaks for itself. <unk> is the largest online beauty brand in the U S and either number one or number two in almost every international market. It has launched spoil charges is expected to achieve $100 million net revenue Bcf after only just launching in 2022 multiple categories and. And success across a very wide demographic. All of this week very high customer satisfaction, and best in class repeat rates and consistent and healthy growing cohorts. Brent <unk> Brent four are already in the making with dozens of talented folks dedicated to developing both brands will be launched in 2025 and are responsible for at least 40% of my time and focus as CEO.

All in is around 25% of the industry sales and we believe it will do at least 50% into next year.

But in order to win online you'll need to deliver experience.

Even better than a store and therefore data and technology capabilities are critical.

With all due respect to my competitors, we're simply playing different games.

Oran Holtzman: With all due respect to my competitors, we're simply playing different games, and as it relates technology, to data not to mention intelligent operating structure, we believe we are simply years ahead but still running like a startup to ensure we preserve our link. Third we've built amazing brands and amazing products and we have proved the oddities of Brent scaling machine. Our track record speaks for itself. <unk> is the largest online beauty brand in the U S and either number one or number two in almost every international market. It has launched spoil charges is expected to achieve $100 million net revenue Bcf after only just launching in 2022 multiple categories and. And success across a very wide demographic. All of this week very high customer satisfaction, and best in class repeat rates and consistent and healthy growing cohorts. Brent <unk> Brent four are already in the making with dozens of talented folks dedicated to developing both brands will be launched in 2025 and are responsible for at least 40% of my time and focus as CEO.

And as it relates to technology today, though not to mention intelligent operating structure. We believe we are simply as it had.

Running like a startup to ensure we preserve our with it.

Third we've built amazing brands and amazing products and we have proved the oddities of Brent scaling machine.

Oran Holtzman: Third we've built amazing brands and amazing products and we have proved that Oddity is a brand scaling machine, our track record speaks for itself IL MAKIAGE is the largest online beauty brand in the US and either number one or number two in almost every international market it has launched. spoil charges is expected to achieve $100 million net revenue Bcf after only just launching in 2022 multiple categories and. And success across a very wide demographic. All of this week very high customer satisfaction, and best in class repeat rates and consistent and healthy growing cohorts. Brent <unk> Brent four are already in the making with dozens of talented folks dedicated to developing both brands will be launched in 2025 and are responsible for at least 40% of my time and focus as CEO.

Our track record speaks for itself.

<unk> is the largest online beauty brand in the U S and either number one or number two in almost every international market. It has launched spoil charges is expected to achieve $100 million net revenue Bcf after only just launching in 2022 multiple categories and.

Oran Holtzman: SpoiledChild is expected to achieve $100 million dollars of net revenue this year, after only just launching in 2022, multiple categories earned and success across a very wide demographic, all of this with very high customer satisfaction, best in class repeat rates and consistent and healthy growing cohorts. B are already in the making with dozens of talented folks dedicated to developing both brands will be launched in 2025 and are responsible for at least 40% of my time and focus as CEO.

Oran Holtzman: SpoiledChild is expected to achieve $100 million dollars of net revenue this year, after only just launching in 2022, multiple categories earned and success across a very wide demographic, all of this with very high customer satisfaction, best in class repeat rates and consistent and healthy growing cohorts. Brand 3 and brand 4 are already in the making with dozens of talented folks dedicated to develop it, both brands will be launched in 2025 and are responsible for at least 40% of my time and focus as CEO.

And success across a very wide demographic.

All of this week very high customer satisfaction, and best in class repeat rates and consistent and healthy growing cohorts.

Brent <unk> Brent four are already in the making with dozens of talented folks dedicated to developing both brands will be launched in 2025 and are responsible for at least 40% of my time and focus as CEO.

Oran Holtzman: Brand 3 and brand 4 are already in the making with dozens of talented folks dedicated to develop it, both brands will be launched in 2025 and are responsible for at least 40% of my time and focus as CEO, the next stage of our evolution is with Oddity labs, an unleashing biotech industry to create the next generation of high efficacy products. Consumers today are smarter than ever they started them in real high efficacy signs back to solve their pain points. High performing products are not new to us the OLED central global model and a huge part of why we are so profitable no quality means, but we paid no repeat no profitability and base of my knowledge. We are the best group at rates in the industry. We operate a world class Athena was product development engine. <unk>. Most of the brands in the industry does because we launched products based on data we are not like other brands that launch based on what <unk> said, all based on what the score or suppliers. Data drives us no exception no compromises. But as interpret noticed when luckily found themselves in beauty, we never stop and we never satisfied oddity labs take us to the next level in terms of physical product and innovation.

The next stage of our evolution is with OTT labs, and unleashing biotech industry to create the next generation of high efficacy products.

Oran Holtzman: The next stage of our evolution is with Oddity labs, an unleashing biotech powered industry to create the next generation of high efficacy products, consumers today are smarter than ever, they start to demand real high-efficacy styles back to solve their pain points. High performing products are not new to us the OLED central global model and a huge part of why we are so profitable no quality means, but we paid no repeat no profitability and base of my knowledge. We are the best group at rates in the industry. We operate a world class Athena was product development engine. <unk>. Most of the brands in the industry does because we launched products based on data we are not like other brands that launch based on what <unk> said, all based on what the score or suppliers. Data drives us no exception no compromises. But as interpret noticed when luckily found themselves in beauty, we never stop and we never satisfied oddity labs take us to the next level in terms of physical product and innovation.

Consumers today are smarter than ever they started them in real high efficacy signs back to solve their pain points.

Oran Holtzman: High performing products are not new to us, they are already central to our model and a huge part of why we are so profitable, no quality means no repeat, no repeat means no profitability and base of my knowledge, we are the best group at rates in the industry. We operate a world class Athena was product development engine. <unk>. Most of the brands in the industry does because we launched products based on data we are not like other brands that launch based on what <unk> said, all based on what the score or suppliers. Data drives us no exception no compromises. But as interpret noticed when luckily found themselves in beauty, we never stop and we never satisfied oddity labs take us to the next level in terms of physical product and innovation.

High performing products are not new to us the OLED central global model and a huge part of why we are so profitable no quality means, but we paid no repeat no profitability and base of my knowledge. We are the best group at rates in the industry.

We operate a world class Athena was product development engine.

Oran Holtzman: We operate a world class in house product development engine that I believe beats most of the brands in the industry that's because we launch products based on data, we are not like other brands that launch based on what Head stylists said, or based on what Sephora or suppliers say Data drives us, no exception, no compromises. But as interpret noticed when luckily found themselves in beauty, we never stop and we never satisfied oddity labs take us to the next level in terms of physical product and innovation.

<unk>.

Most of the brands in the industry does because we launched products based on data we are not like other brands that launch based on what <unk> said, all based on what the score or suppliers.

Data drives us no exception no compromises.

But as interpret noticed when luckily found themselves in beauty, we never stop and we never satisfied oddity labs take us to the next level in terms of physical product and innovation.

Oran Holtzman: But as enterpreneurs who luckily found themselves in beauty, we never stop and we're never satisfied, Oddity Labs takes us to the next level in terms of physical product and innovation, it was always my dream to use technology to develop high efficacy products with stronger new ingredients. Always hunting for this opportunity for years and recruit Bella we found the perfect match since closing the acquisition in May we have made so much progress in building, obviously love to beat the AI based ingredient development platform, although industry, attracting amazing talent and moving fast across the neutral base. Or do you see labs will be one of our main growth engine for all brands. We are truly building something that was never done before you don't see its contribution in our core earnings today, just expensive, but I'm more bullish than ever. It is the same feeling that they had when we started to build our R&D center in Tel Aviv. Before I hand, the call over to Lindsay, Let me touch on Israel, where we have R&D center, but most importantly, well my hearts and thoughts are in those days. First the unwavering support they get daily from teammates and took the north Ceos and friends is unbelievable and I deeply appreciate it. So many people stand with Israel, and we did try to defend itself makes it a bit more bearable and decent same situation. We at <unk> are doing everything we can to support our people and the country. At this time. This is our duty and we'll continue to do so. As for the business. No meaningful disruption of course, we are monitoring the situation very closely and we don't expect any material impact on Q4 or for 2024 results. Our teams in Tel Aviv are operating remotely since the beginning of the war and we have had a limited number of employees called for reserves. And now I'll hand over to Lindsay.

It was always my dream to use technology to develop high efficacy product with stronger new ingredients.

Oran Holtzman: I was hunting for this opportunity for years and with Revela we found the perfect match, since closing the acquisition in May we have made so much progress in building Oddity Labs love to be the AI based ingredient development platform of our industry, attracting amazing talent and moving fast across the neutral base. Or do you see labs will be one of our main growth engine for all brands. We are truly building something that was never done before you don't see its contribution in our core earnings today, just expensive, but I'm more bullish than ever. It is the same feeling that they had when we started to build our R&D center in Tel Aviv. Before I hand, the call over to Lindsay, Let me touch on Israel, where we have R&D center, but most importantly, well my hearts and thoughts are in those days. First the unwavering support they get daily from teammates and took the north Ceos and friends is unbelievable and I deeply appreciate it. So many people stand with Israel, and we did try to defend itself makes it a bit more bearable and decent same situation. We at <unk> are doing everything we can to support our people and the country. At this time. This is our duty and we'll continue to do so. As for the business. No meaningful disruption of course, we are monitoring the situation very closely and we don't expect any material impact on Q4 or for 2024 results. Our teams in Tel Aviv are operating remotely since the beginning of the war and we have had a limited number of employees called for reserves. And now I'll hand over to Lindsay.

Always hunting for this opportunity for years and recruit Bella we found the perfect match since closing the acquisition in May we have made so much progress in building, obviously love to beat the AI based ingredient development platform, although industry, attracting amazing talent and moving fast across the neutral base.

Oran Holtzman: Oddity Labs will be one of our main growth engines for all brands, we are truly building something that was never done before you don't see it's contribution in our call in earnings today, just it's expenses, but I'm more bullish than ever, it is the same feeling that I had when we started to build our R&D center in Tel Aviv. Before I hand, the call over to Lindsay, Let me touch on Israel, where we have R&D center, but most importantly, well my hearts and thoughts are in those days. First the unwavering support they get daily from teammates and took the north Ceos and friends is unbelievable and I deeply appreciate it. So many people stand with Israel, and we did try to defend itself makes it a bit more bearable and decent same situation. We at <unk> are doing everything we can to support our people and the country. At this time. This is our duty and we'll continue to do so. As for the business. No meaningful disruption of course, we are monitoring the situation very closely and we don't expect any material impact on Q4 or for 2024 results. Our teams in Tel Aviv are operating remotely since the beginning of the war and we have had a limited number of employees called for reserves. And now I'll hand over to Lindsay.

Or do you see labs will be one of our main growth engine for all brands. We are truly building something that was never done before you don't see its contribution in our core earnings today, just expensive, but I'm more bullish than ever.

It is the same feeling that they had when we started to build our R&D center in Tel Aviv.

Before I hand, the call over to Lindsay, Let me touch on Israel, where we have R&D center, but most importantly, well my hearts and thoughts are in those days.

Oran Holtzman: Before I hand, the call over to Lindsay, let me touch on Israel, where we have our R&D center, but most importantly, where my heart and thoughts are in those days, first the unwavering support they get daily from teammates, entrepreneurs, CEOs and friends is unbelievable and I deeply appreciate it, so many people stand with Israel, and when it tries to defend itself makes it a bit more bearable in this insane situation. We at Oddity are doing everything we can to support our people and the country at this time, this is our duty and we'll continue to do so. As for the business. No meaningful disruption of course, we are monitoring the situation very closely and we don't expect any material impact on Q4 or for 2024 results. Our teams in Tel Aviv are operating remotely since the beginning of the war and we have had a limited number of employees called for reserves. And now I'll hand over to Lindsay.

First the unwavering support they get daily from teammates and took the north Ceos and friends is unbelievable and I deeply appreciate it.

So many people stand with Israel, and we did try to defend itself makes it a bit more bearable and decent same situation.

We at <unk> are doing everything we can to support our people and the country. At this time. This is our duty and we'll continue to do so.

As for the business.

Oran Holtzman: As for the business, there's been no meaningful disruption, of course, we are monitoring the situation very closely and we don't expect any material impact on Q4 or for 2024 results, our teams in Tel Aviv are operating remotely since the beginning of the war and we have had a limited number of employees called for reserves. And now I'll hand over to Lindsay.

No meaningful disruption of course, we are monitoring the situation very closely and we don't expect any material impact on Q4 or for 2024 results.

Our teams in Tel Aviv are operating remotely since the beginning of the war and we have had a limited number of employees called for reserves.

And now I'll hand over to Lindsay.

Lindsay Drucker Mann: Thanks Oran, we're pleased with our third quarter financial results and the momentum that continued into the fourth quarter, our business is firing on all cylinders and we're in excellent shape for 2024, our team's achieved a number of unlocks through hard work, planning, testing and Iterating that are now in our arsenal for execution next year, starting with the successful first quarter. We will issue 2024 guidance. When we report Q4 results next year and we're confident in our ability to continue to deliver strong growth across brands and product. Categories at attractive margins and with healthy user cohorts fortify our overall model. Turning to the quarter net revenue grew 37% year over year to $94 $5 million above the 18% to 22% guidance. We communicated in August drivers of growth in the quarter are consistent with what we discussed on our October call, both El <unk> and spoiled child brands exceeded our expectations. Repeat growth was stronger than we had originally modeled which drove the upside versus our original guidance importantly, our revenue growth with a high quality and profitability and generated across a range of products and categories. The successful expansion of new products and categories, including in skin and hair, our seeds that we planted less than two years ago and have grown today into powerful foundation off of which we're building large and dominant franchises. Are incremental to our existing products expand our overall tam and create deeper relationships with our users. Moving down the P&L, we generated gross profit of $66 4, million% to 41% increase versus the prior year. This represents a 73% gross margin in the quarter, which is 280 basis points better than the 67, 5% guidance, we issued at gross margin expanded 200 <unk>.

Our teams achieved a number of unlocks through hard work planning testing and Iterating that are now in our Arsenal for execution next year, starting with the successful first quarter. We will issue 2024 guidance. When we report Q4 results next year and we're confident in our ability to continue to deliver strong growth across brands and product.

Lindsay Drucker Mann: We will issue 2024 guidance when we report Q4 results next year and we're confident in our ability to continue to deliver strong growth across brands and product categories at attractive margins and with healthy user cohorts that fortify our overall model. Turning to the quarter net revenue grew 37% year over year to $94 $5 million above the 18% to 22% guidance. We communicated in August drivers of growth in the quarter are consistent with what we discussed on our October call, both El <unk> and spoiled child brands exceeded our expectations. Repeat growth was stronger than we had originally modeled which drove the upside versus our original guidance importantly, our revenue growth with a high quality and profitability and generated across a range of products and categories. The successful expansion of new products and categories, including in skin and hair, our seeds that we planted less than two years ago and have grown today into powerful foundation off of which we're building large and dominant franchises. Are incremental to our existing products expand our overall tam and create deeper relationships with our users. Moving down the P&L, we generated gross profit of $66 4, million% to 41% increase versus the prior year. This represents a 73% gross margin in the quarter, which is 280 basis points better than the 67, 5% guidance, we issued at gross margin expanded 200 <unk>.

Categories at attractive margins and with healthy user cohorts fortify our overall model.

Turning to the quarter net revenue grew 37% year over year to $94 $5 million above the 18% to 22% guidance. We communicated in August drivers of growth in the quarter are consistent with what we discussed on our October call, both El <unk> and spoiled child brands exceeded our expectations.

Lindsay Drucker Mann: Turning to the quarter net revenue grew 37% year over year to $94.5 million dollars, above the 18% to 22% guidance we communicated in August,drivers of growth in the quarter are consistent with what we discussed on our October call, both IL MAKIAGE and SpoiledChild brands exceeded our expectations. Repeat growth was stronger than we had originally modeled which drove the upside versus our original guidance importantly, our revenue growth with a high quality and profitability and generated across a range of products and categories. The successful expansion of new products and categories, including in skin and hair, our seeds that we planted less than two years ago and have grown today into powerful foundation off of which we're building large and dominant franchises. Are incremental to our existing products expand our overall tam and create deeper relationships with our users. Moving down the P&L, we generated gross profit of $66 4, million% to 41% increase versus the prior year. This represents a 73% gross margin in the quarter, which is 280 basis points better than the 67, 5% guidance, we issued at gross margin expanded 200 <unk>.

Repeat growth was stronger than we had originally modeled which drove the upside versus our original guidance importantly, our revenue growth with a high quality and profitability and generated across a range of products and categories.

Lindsay Drucker Mann: Repeat growth was stronger than we had originally modeled, which drove the upside versus our original guidance, importantly our revenue growth was of high quality and profitability and generated across a range of products and categories, the successful expansion of new products and categories, including in skin and hair, are seeds that we planted less than two years ago and have grown today into powerful foundation off of which we're building large and dominant franchises. Are incremental to our existing products expand our overall tam and create deeper relationships with our users. Moving down the P&L, we generated gross profit of $66 4, million% to 41% increase versus the prior year. This represents a 73% gross margin in the quarter, which is 280 basis points better than the 67, 5% guidance, we issued at gross margin expanded 200 <unk>.

The successful expansion of new products and categories, including in skin and hair, our seeds that we planted less than two years ago and have grown today into powerful foundation off of which we're building large and dominant franchises.

Are incremental to our existing products expand our overall tam and create deeper relationships with our users.

Lindsay Drucker Mann: These are incremental to our existing products, they expand our overall TAM and create deeper relationships with our users, moving down the P&L, we generated gross profit of $66.4, million dollars, a 41% increase versus the prior year, this represents a 70.3% gross margin in the quarter, which is 280 basis points better than the 67.5% guidance we issued, gross margin expanded 200 <unk>.

Moving down the P&L, we generated gross profit of $66 4, million% to 41% increase versus the prior year. This represents a 73% gross margin in the quarter, which is 280 basis points better than the 67, 5% guidance, we issued at gross margin expanded 200 <unk>.

Lindsay Drucker Mann: Gross margin expanded 217 basis points year over year, the increase was driven by cost efficiencies at both brands, which had benefited from specific cost optimization efforts relative to the prior year, while SpoiledChild has continued to make good progress in narrowing the gross margin gap with IL MAKIAGE it's still operate at a lower gross margin and will drive some negative gross margin next year, as it becomes a larger portion of overall sales. Adjusted EBITDA increased 227% to $28 million in the quarter. This represents a 22% adjusted EBITDA margin above the $20 to 21, 5% initial guidance we delivered back in August. Adjusted EBITDA margin in the quarter expanded 280 basis points versus the prior year driven by our gross margin expansion as well as improved opex efficiency, including improved efficiency on our marketing spend as we throttled back new user acquisition costs and generated the majority of our revenues from repeat customers. We reinvested a portion of these EBITDA tailwind into future growth, including investment in future brands and products as well as the oddity labs. It's also worth noting that we deliver this robust EBITDA margin expansion, despite higher revenue contribution from spoiled child, which today carries lower EBITDA margins than <unk>. Adjusted pre tax income increased 304% to $20 $7 million driven by the adjusted EBITDA growth. Our adjusted tax rate was 37, 1% in the quarter a bit more favorable than the 43, 5% rate we guided to. This elevated tax rate was driven by non deductible expenses associated with our IPO. We delivered adjusted net income of $13 million and adjusted diluted EPS of <unk> 21.

19 basis points year over year.

The increase was driven by cost efficiencies at both brands, which had benefited from specific cost optimization efforts relative to the prior year.

While spoiled child has continued to make good progress in narrowing the gross margin gap Maquillage, it's still operate at a lower gross margin and will drive some negative gross margin mix shift as it becomes a larger portion of overall sales.

Adjusted EBITDA increased 227% to $28 million in the quarter. This represents a 22% adjusted EBITDA margin above the $20 to 21, 5% initial guidance we delivered back in August.

Lindsay Drucker Mann: Adjusted EBITDA increased 227% to $20.8 million dollars in the quarter, this represents a 22% adjusted EBITDA margin above the $20 to 21.5% initial guidance we delivered back in August, adjusted EBITDA margin in the quarter expanded 280 basis points versus the prior year, driven by our gross margin expansion as well as improved opex efficiency, including improved defficiency on our marketing spend as we throttled back new user acquisition costs and generated the majority of our revenues from repeat customers. We reinvested a portion of these EBITDA tailwind into future growth, including investment in future brands and products as well as the oddity labs. It's also worth noting that we deliver this robust EBITDA margin expansion, despite higher revenue contribution from spoiled child, which today carries lower EBITDA margins than <unk>. Adjusted pre tax income increased 304% to $20 $7 million driven by the adjusted EBITDA growth. Our adjusted tax rate was 37, 1% in the quarter a bit more favorable than the 43, 5% rate we guided to. This elevated tax rate was driven by non deductible expenses associated with our IPO. We delivered adjusted net income of $13 million and adjusted diluted EPS of <unk> 21.

Adjusted EBITDA margin in the quarter expanded 280 basis points versus the prior year driven by our gross margin expansion as well as improved opex efficiency, including improved efficiency on our marketing spend as we throttled back new user acquisition costs and generated the majority of our revenues from repeat customers.

Lindsay Drucker Mann: We reinvested a portion of these EBITDA tailwinds into future growth, including investment in future brands and products as well as the Oddity Labs, it's also worth noting that we deliver this robust EBITDA margin expansion, despite higher revenue contribution from SpoiledChild, which today carries lower EBITDA margins than IL MAKIAGE. Adjusted pre tax income increased 304% to $20 $7 million driven by the adjusted EBITDA growth. Our adjusted tax rate was 37, 1% in the quarter a bit more favorable than the 43, 5% rate we guided to. This elevated tax rate was driven by non deductible expenses associated with our IPO. We delivered adjusted net income of $13 million and adjusted diluted EPS of <unk> 21.

We reinvested a portion of these EBITDA tailwind into future growth, including investment in future brands and products as well as the oddity labs. It's also worth noting that we deliver this robust EBITDA margin expansion, despite higher revenue contribution from spoiled child, which today carries lower EBITDA margins than <unk>.

Adjusted pre tax income increased 304% to $20 $7 million driven by the adjusted EBITDA growth.

Lindsay Drucker Mann: Adjusted pre-tax income increased 304% to $20.7 million dollars driven by the adjusted EBITDA growth, our adjusted tax rate was 37.1% in the quarter, a bit more favorable than the 43.5% rate we guided to, this elevated tax rate was driven by non deductible expenses associated with our IPO. We delivered adjusted net income of $13 million and adjusted diluted EPS of <unk> 21.

Our adjusted tax rate was 37, 1% in the quarter a bit more favorable than the 43, 5% rate we guided to.

This elevated tax rate was driven by non deductible expenses associated with our IPO.

Lindsay Drucker Mann: We delivered adjusted net income of $13 million dollars and adjusted diluted EPS of 21 cents, diluted average shares were 61.4 million, reported net income was $3.8 million dollars and reported diluted earnings per share were 6 cents in the quarter, adjustments to GAAP this quarter include $12.2 million of stock based compensation expense, as we mentioned on our Q2 call. Our <unk> stock based comp was elevated this quarter due to accelerated vesting related to our IPO, we continue to expect. A step down in stock based comp expense in the fourth quarter to $8 million. We exited the quarter with $164 million of cash short term deposits and restricted cash on our balance sheet and zero debt our balance sheet strength as a function of our robust profitability and excellent returns on capital would yield attractive cash flows high cash conversion. Year to date, we generated $78 million of free cash flow driven by roughly 79 $5 million of cash from operations and $1 5 million of Capex. Before I turn to our outlook I want to touch on three big picture drivers first as it relates to the consumer broadly there is no change to what we discussed in early October we have not seen signs of macro softening in our business again, we do believe our model is relatively insulated based upon our idiosyncratic growth drivers and our model's inherent agility.

We delivered adjusted net income of $13 million and adjusted diluted EPS of <unk> 21.

Diluted average shares were 61 4 million.

Reported net income was $3 $8 million and reported diluted earnings per share were six cents in the quarter adjustments to GAAP. This quarter include $12 2 million of stock based compensation expense as we mentioned on our Q2 call. Our <unk> stock based comp was elevated this quarter due to accelerated vesting related to our IPO, we continue to expect.

A step down in stock based comp expense in the fourth quarter to $8 million.

Lindsay Drucker Mann: We exited the quarter with $164 million of cash short term deposits and restricted cash on our balance sheet and zero debt, our balance sheet strength is a function of our robust profitability and excellent returns on capital, which yield attractive cash flows and high cash conversion. Year to date, we generated $78 million of free cash flow driven by roughly 79 $5 million of cash from operations and $1 5 million of Capex. Before I turn to our outlook I want to touch on three big picture drivers first as it relates to the consumer broadly there is no change to what we discussed in early October we have not seen signs of macro softening in our business again, we do believe our model is relatively insulated based upon our idiosyncratic growth drivers and our model's inherent agility.

We exited the quarter with $164 million of cash short term deposits and restricted cash on our balance sheet and zero debt our balance sheet strength as a function of our robust profitability and excellent returns on capital would yield attractive cash flows high cash conversion.

Lindsay Drucker Mann: Year to date, we generated $78 million of free cash flow, driven by roughly 79.5 million of cash from operations and $1.5 million of Capex, before I turn to our outlook I want to touch on three big picture drivers, first, as it relates to the consumer broadly there is no change to what we discussed in early October, we have not seen signs of macro softening in our business, again we do believe our model is relatively insulated based on our idiosyncratic growth drivers and our model's inherent agility. And also because of the beauty categories resilience and our broad demographic appeal, although we are of course watching closely.

Year to date, we generated $78 million of free cash flow driven by roughly 79 $5 million of cash from operations and $1 5 million of Capex.

Before I turn to our outlook I want to touch on three big picture drivers first as it relates to the consumer broadly there is no change to what we discussed in early October we have not seen signs of macro softening in our business again, we do believe our model is relatively insulated based upon our idiosyncratic growth drivers and our model's inherent agility.

And also because of the beauty categories resilience and our broad demographic appeal, although we are of course watching closely.

Lindsay Drucker Mann: And also because of the beauty categories resilience and our broad demographic appeal, although we are of course watching closely, second as Oran mentioned, our business continues to be very strong and we're seeing significant near term and long term runway for growth and profitability. Third we continue to find attractive high return reinvestment opportunities to support the expansion of new brands and product categories across our platform and our discipline and success in building a high margin cash generative business today puts us in a position of strength to make these investments we will continue to reinvest for the future while maintaining <unk>. Revenue growth of at least 20% and EBITDA margins of at least 20% over the long term. Now turning to our outlook for the full year 2023, we expect net revenue growth between 52, and 53% representing net revenue dollars between 493 and $497 million. Our revenue growth outlook is an increase from our previous expectation of revenue growth between 46% to 48% we. We expect gross margins of approximately 70% an increase from our prior expectation of 69, 5%. We expect adjusted EBITDA will be between $104 $105 million and we expect adjusted EBITDA margin of 21%, which is at the high end of our prior expectation for adjusted EBITDA margin in a range of <unk>. 21%, we expect adjusted diluted EPS between $1 21, and $1 23, an increase from our prior expectation of $1 11 to $1 17. This assumes a tax rate of approximately 25, 5% and average fully diluted shares of approximately $60 million. We also issued a detailed outlook for the fourth quarter and you can find that in our press release with that I'll hand, the call back to Iran. Operator, we are now ready to take your questions.

As Ron mentioned, our business continues to be very strong and we're seeing significant near term and long term runway for growth and profitability.

Lindsay Drucker Mann: Third we continue to find attractive high return reinvestment opportunities to support the expansion of new brands and product categories across our platform and our discipline and success in building a high margin cash generative business today puts us in a position of strength to make these investments, we will continue to reinvest for the future while maintaining <unk>. Revenue growth of at least 20% and EBITDA margins of at least 20% over the long term. Now turning to our outlook for the full year 2023, we expect net revenue growth between 52, and 53% representing net revenue dollars between 493 and $497 million. Our revenue growth outlook is an increase from our previous expectation of revenue growth between 46% to 48% we. We expect gross margins of approximately 70% an increase from our prior expectation of 69, 5%. We expect adjusted EBITDA will be between $104 $105 million and we expect adjusted EBITDA margin of 21%, which is at the high end of our prior expectation for adjusted EBITDA margin in a range of <unk>. 21%, we expect adjusted diluted EPS between $1 21, and $1 23, an increase from our prior expectation of $1 11 to $1 17. This assumes a tax rate of approximately 25, 5% and average fully diluted shares of approximately $60 million. We also issued a detailed outlook for the fourth quarter and you can find that in our press release with that I'll hand, the call back to Iran. Operator, we are now ready to take your questions.

Third we continue to find attractive high return reinvestment opportunities to support the expansion of new brands and product categories across our platform and our discipline and success in building a high margin cash generative business today puts us in a position of strength to make these investments we will continue to reinvest for the future while maintaining <unk>.

Revenue growth of at least 20% and EBITDA margins of at least 20% over the long term.

Now turning to our outlook for the full year 2023, we expect net revenue growth between 52, and 53% representing net revenue dollars between 493 and $497 million. Our revenue growth outlook is an increase from our previous expectation of revenue growth between 46% to 48% we.

Lindsay Drucker Mann: Now turning to our outlook, for the full year 2023, we expect net revenue growth between 52, and 53%, representing net revenue dollars between 493 and $497 million, our revenue growth outlook is an increase from our previous expectation of revenue growth between 46% to 48% we. We expect gross margins of approximately 70% an increase from our prior expectation of 69, 5%. We expect adjusted EBITDA will be between $104 $105 million and we expect adjusted EBITDA margin of 21%, which is at the high end of our prior expectation for adjusted EBITDA margin in a range of <unk>. 21%, we expect adjusted diluted EPS between $1 21, and $1 23, an increase from our prior expectation of $1 11 to $1 17. This assumes a tax rate of approximately 25, 5% and average fully diluted shares of approximately $60 million. We also issued a detailed outlook for the fourth quarter and you can find that in our press release with that I'll hand, the call back to Iran. Operator, we are now ready to take your questions.

We expect gross margins of approximately 70% an increase from our prior expectation of 69, 5%. We expect adjusted EBITDA will be between $104 $105 million and we expect adjusted EBITDA margin of 21%, which is at the high end of our prior expectation for adjusted EBITDA margin in a range of <unk>.

Lindsay Drucker Mann: We expect gross margins of approximately 70%, an increase from our prior expectation of 69.5%, we expect adjusted EBITDA will be between $104 and $105 million dollars and we expect adjusted EBITDA margin of 21%, which is at the high end of our prior expectation for adjusted EBITDA margin in a range of 20 21%, we expect adjusted diluted EPS between $1.21, and $1.23, an increase from our prior expectation of $1.11 to $1.17. This assumes a tax rate of approximately 25, 5% and average fully diluted shares of approximately $60 million. We also issued a detailed outlook for the fourth quarter and you can find that in our press release with that I'll hand, the call back to Iran. Operator, we are now ready to take your questions.

21%, we expect adjusted diluted EPS between $1 21, and $1 23, an increase from our prior expectation of $1 11 to $1 17. This assumes a tax rate of approximately 25, 5% and average fully diluted shares of approximately $60 million.

Lindsay Drucker Mann: This assumes a tax rate of approximately 25.5% and average fully diluted shares of approximately $60 million, we also issued a detailed outlook for the fourth quarter and you can find that in our press release with that I'll hand, the call back to Oran. Operator, we are now ready to take your questions.

We also issued a detailed outlook for the fourth quarter and you can find that in our press release with that I'll hand, the call back to Iran.

Operator, we are now ready to take your questions.

Oran Holtzman: Operator, we are now ready to take your questions.

Operator: Thank you, We will now begin the question and answer session, to ask a question you may press Star, then one on your Touchtone phone, if youre using a speakerphone please pick up your handset before pressing the keys, if at any time. Your question has been addressed and you would like to withdraw your question, please press Star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Dara <unk> with Morgan Stanley. Please go ahead.

Operator: Thank you, We will now begin the question and answer session, to ask a question you may press Star, then one on your Touchtone phone, if youre using a speakerphone please pick up your handset before pressing the keys, if at any time. Your question has been addressed and you would like to withdraw your question, please press Star then two, at this time, we will pause momentarily to assemble our roster.

We will now begin the question and answer session.

I'll ask a question you May press Star then one on your Touchtone phone.

If youre using a speakerphone please pick up your handset before pressing the keys.

If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

Operator: The first question comes from Dara Mohsenian with Morgan Stanley. Please go ahead.

The first question comes from Dara <unk> with Morgan Stanley. Please go ahead.

Dara Mohsenian: Hey guys, First our thoughts are with you guys with the situation in Israel, best of luck, and secondly, maybe if we could just focus on the molecule side of things and discovery there over time, can you just give us an update on your plans, if they've changed at all and sort of the commercialization of that molecule discovery with Oddity Labs and how you think about the pace of potential revenue pay off from that over the next couple of years here and then second just in terms of the higher repeat rates in the quarter and that driving upside as. As you look beyond this year on the higher revenue base. Does that impact maybe the way you think about the underlying growth of this business beyond this year. Hi.

First our thoughts are with you guys with the situation in Israel.

Best of luck.

And secondly.

Maybe if we could just focus on.

The molecule side of things and discovery there over time can you just give us an update on your plans if they've changed at all and sort of the commercialization of that molecule discovery with <unk> labs.

How you think about the pace of potential revenue pay off from that.

Over the next couple of years here and then second just in terms of the higher repeat rates in the quarter and that driving upside as.

Dara Mohsenian: And then second, just in terms of the higher repeat rates in the quarter and that driving upside, as you look beyond this year on the higher revenue base, how does that impact, maybe the way you think about the underlying growth of this business beyond this year.

As you look beyond this year on the higher revenue base.

Does that impact maybe the way you think about the underlying growth of this business beyond this year.

Hi.

Oran Holtzman: Hi Dara, thank you for that, I'll start with Oddity Labs (inaudible) look it, as I mentioned before it was my dream to use technology to develop better ingredients, our industry still looks the same as when I started the company, same ingredients, same manufacturers serving the same companies. And we taught it loves Youre doing something. Something different and we are about to change it and OLED labs. The same technology being developed in pharma to develop higher efficacy molecules and this opportunity is endless and this is why I spend so much time of my time in the field around this topic. As I mentioned in the call, we see them waste from all the consumer today, we see how much time, you spend a lot on our product pages and how many questions.

Oran Holtzman: Hi Dara, thank you for that, I'll start with Oddity Labs and then we'll nudge repeat rate , look it, as I mentioned before it was my dream to use technology to develop better ingredients, our industry still looks the same as when I started the company, same ingredients, same manufacturers serving the same companies.

<unk> been reduction really break.

As I mentioned before it was my dream to use technology to develop better ingredients.

Our industry still look the same as.

When I started the company same ingredients so manufacturers serving the same companies.

Oran Holtzman: And with Oddity Labs you are doing something different and we are about to change it, with Revela and Oddity labs and is the same technology being developed in Pharma to develop higher efficacy molecules and this opportunity is endless and this is why I spend so much time of my time in the field around this topic. As I mentioned in the call, we see them waste from all the consumer today, we see how much time, you spend a lot on our product pages and how many questions.

And we taught it loves Youre doing something.

Something different and we are about to change it and OLED labs.

The same technology being developed in pharma to develop higher efficacy molecules and this opportunity is endless and this is why I spend so much time of my time in the field around this topic.

Oran Holtzman: As I mentioned in the call, we see waste from all the consumer today, we see how much time you spend on our product pages and how many questions you ask, which leads us to believe that we're going to see a trend towards signed back products, regardless the brand itself. Call it product loved versus just brand love and beauty in terms of how we marketed it that's the magic because we all need to see and model we use our user base to build segmentation profile. Then we built the product and we are going back to the consumer and to the user. Offerings. Your molecule on new product. If you want but also when it comes to Audi Labs. There is no change to the criteria for how we think about the market opportunities. Has to be huge them, where we see real demand opportunity. What do you know the economics work for online and where we believe we can truly solve the consumer pain point. We loved it makes a lot easier I'm. Just because it's been the best they just had their users and they need to develop blood based on no way or are you and Jim and for product development and with science backed product. Just like when meeting the teams and see the talent. The amount of bids that we have now in Boston and it's something that is unrelated.

As I mentioned in the call, we see them waste from all the consumer today, we see how much time, you spend a lot on our product pages and how many questions.

Which leads us to believe that and we're going to see a trend towards signed back products, regardless of the brand itself.

Call it product loved versus just brand love and beauty in terms of how we marketed it that's the magic because we all need to see and model we use our user base to build segmentation profile. Then we built the product and we are going back to the consumer and to the user.

Oran Holtzman: Call it product loved versus just brand love and beauty. in terms of how we marketed it that's the magic because we all need to see and model we use our user base to build segmentation profile. Then we built the product and we are going back to the consumer and to the user. Offerings. Your molecule on new product. If you want but also when it comes to Audi Labs. There is no change to the criteria for how we think about the market opportunities. Has to be huge them, where we see real demand opportunity. What do you know the economics work for online and where we believe we can truly solve the consumer pain point. We loved it makes a lot easier I'm. Just because it's been the best they just had their users and they need to develop blood based on no way or are you and Jim and for product development and with science backed product. Just like when meeting the teams and see the talent. The amount of bids that we have now in Boston and it's something that is unrelated.

Oran Holtzman: Call it product loved versus just brand love and beauty.

Oran Holtzman: In terms of how we market it, that's the magic because we all need to see a model we used our user base to build segmentation and profile, then we build the product and we are going back to the consumer and to the users and offering that new molecule on new product if you want. but also when it comes to Audi Labs. There is no change to the criteria for how we think about the market opportunities. Has to be huge them, where we see real demand opportunity. What do you know the economics work for online and where we believe we can truly solve the consumer pain point. We loved it makes a lot easier I'm. Just because it's been the best they just had their users and they need to develop blood based on no way or are you and Jim and for product development and with science backed product. Just like when meeting the teams and see the talent. The amount of bids that we have now in Boston and it's something that is unrelated.

Offerings.

Your molecule on new product.

If you want but also when it comes to Audi Labs. There is no change to the criteria for how we think about the market opportunities.

Oran Holtzman: But also when it comes to Oddity Labs, there is no change to the criteria of how we think about market opportunities, it has to be huge TAM where we see real demand opportunity, where the unit economics work for online and where we believe we can truly solve the consumer pain point. We loved it makes a lot easier I'm. Just because it's been the best they just had their users and they need to develop blood based on no way or are you and Jim and for product development and with science backed product. Just like when meeting the teams and see the talent. The amount of bids that we have now in Boston and it's something that is unrelated.

Has to be huge them, where we see real demand opportunity. What do you know the economics work for online and where we believe we can truly solve the consumer pain point.

We loved it makes a lot easier I'm.

Oran Holtzman: We'd love it makes all a lot easier just because if in the past I just had the users and I need to develop product based on any, now I have a huge engine for product development and with science backed products, just like when meeting the teams and see the talent there, the amount of PHDs that we have now in Boston it's something that is unrelated to the industry because so far we sold those talents simply just in Pharma, is the first time that I see a team, thank god it's our team, it's all within that is walking around beauty and building something better so I. As for the future next year, we are launching dumped products coming from all the clubs. But this is nothing but like the the runway in the pipeline that we have with OTT labs is huge therefore, we continue to hire and therefore you have to spend. A huge portion of my time. Alrighty labs. Again today, you see two brands <unk>, and Brent falling to making and Brent create is going to use them. The services or 40 to laugh because part of the significant part of the of the product range are going to come from there, but it's also grateful to <unk>. For the first time, both for their development team working with four different products or things that we didn't believe it can be done in the industry because. That's what we were. What we were told by them by manufacturers, but now like a new world. Is open to us. And again, it's very early and. I believe this distributor of the company. As for repeat rate and again repeat like is growing.

Just because it's been the best they just had their users and they need to develop blood based on no way or are you and Jim and for product development and with science backed product.

Just like when meeting the teams and see the talent.

Oran Holtzman: The amount of PHDs that we have now in Boston it's something that is unrelated to the industry because so far we sold those talents simply just in Pharma, is the first time that I see a team, thank god it's our team, that is working around beauty and building something better so, as for the future next year, we are launching dumped products coming from all the clubs. But this is nothing but like the the runway in the pipeline that we have with OTT labs is huge therefore, we continue to hire and therefore you have to spend. A huge portion of my time. Alrighty labs. Again today, you see two brands <unk>, and Brent falling to making and Brent create is going to use them. The services or 40 to laugh because part of the significant part of the of the product range are going to come from there, but it's also grateful to <unk>. For the first time, both for their development team working with four different products or things that we didn't believe it can be done in the industry because. That's what we were. What we were told by them by manufacturers, but now like a new world. Is open to us. And again, it's very early and. I believe this distributor of the company. As for repeat rate and again repeat like is growing.

Oran Holtzman: The amount of PHDs that we have now in Boston it's something that is unrelated to the industry because so far we saw all those talents simply just in Pharma, is the first time that I see a team, thank god it's our team, that is working around beauty and building something better so.

The amount of bids that we have now in Boston and it's something that is unrelated.

Weighted to the industry because so far we sold those talents simply just in pharma is the first time that <unk>.

Tim Thank God, it's all within that is walking around beauty and building something better so I.

As for the future next year, we are launching dumped products coming from all the clubs.

Oran Holtzman: As for the future, next year we are launching 10 products coming from Oddity Labs but this is nothing like the runway and the pipeline that we have with Oddity labs is huge, therefore we continue to hire and therefore I have continued to spend a huge portion of my time around Oddity Labs, again today you see two brands, Brand 3 and Bran 4 in the making and Brand 3 is going to use the services of Oddity Labs because part of the significant part of the of the product range are going to come from there, but it's also grateful to <unk>. For the first time, both for their development team working with four different products or things that we didn't believe it can be done in the industry because. That's what we were. What we were told by them by manufacturers, but now like a new world. Is open to us. And again, it's very early and. I believe this distributor of the company. As for repeat rate and again repeat like is growing.

But this is nothing but like the the runway in the pipeline that we have with OTT labs is huge therefore, we continue to hire and therefore you have to spend.

A huge portion of my time.

Alrighty labs.

Again today, you see two brands <unk>, and Brent falling to making and Brent create is going to use them.

Oran Holtzman: Again today you see two brands, Brand 3 and Brand 4 in the making, and Brand 3 is going to use the services of Oddity Labs because part of and the significant part of the product range are going to come from there, but it's also great for SpoiledChild and IL MAKIAGE, for the first time, both of their development teams are working with Oddity Labs for different products or things that we didn't believe that can be done in the industry because that's what we were told by manufacturers, but now like a new world is open to us and again, it's very early and I believe this is the future of the company. As for repeat rate and again repeat like is growing.

The services or 40 to laugh because part of the significant part of the of the product range are going to come from there, but it's also grateful to <unk>.

For the first time, both for their development team working with four different products or things that we didn't believe it can be done in the industry because.

That's what we were.

What we were told by them by manufacturers, but now like a new world.

Is open to us.

And again, it's very early and.

I believe this distributor of the company.

As for repeat rate and again repeat like is growing.

Oran Holtzman: As for repeat rate and again repeat like is going, when people ask me about our view to predict the business, obviously, it's easier because we are not relying on any third parties, the D2C model is very easy to understand the cohorts for most of the business and is my decision whether I want to turn on or off or cut back spend for new user acquisition, but one thing I cannot see it's with ew products or new brands like the repeat rate and what we missed here again. It took me a bit it's it's like the repeat rates coming from spoiled child that exceeded my expectations and that's why. The revenue came stronger this quarter. And I don't see any ceiling like every cohort is getting better and better. Because we are doing. I think our data better but also. Because we are because you just put the right product in the right hands. So we expect that the the we'd be critical to grow and to continue to see the vast. A majority of our revenue coming from repeat customers, which is very healthy and that's why we are able to generate cash. Every month every quarter. Hey, there I will just add. So quickly to what Ron said on your first question as it relates to Audi labs. There is no change based on labs to our long term algorithm of 20% plus revenue, 20% plus EBITDA margins and the way that we're driving that business is still in a very asset efficient way cost efficient way with high profitability and high cash flow. So despite the fact that that piece of the business is coming together. Even better and stronger than what we had anticipated there's there's no change to how it affects us financially. Yeah.

When people ask me about our big to predict the business, obviously, it's easier because we are not relying on any third party D to C model very easy to understand the GOR to most of the business and my decision, but I want to turn on or off or cut back spend for new user acquisition, but one thing I cannot see it.

New products or new brands like the repeat rate and what we missed here again. It took me a bit it's it's like the repeat rates coming from spoiled child that exceeded my expectations and that's why.

Oran Holtzman: But one thing I cannot see is with new products or new brands, like the repeat rate, and what we missed here again, it took me a wee bit, it's it's the repeat rates coming from SpoiledChild that exceeded my expectations and that's why the revenue came stronger this quarter. And I don't see any ceiling, like every cohort is getting better and better and it's both ecause we are doing. I think our data better but also. Because we are because you just put the right product in the right hands. So we expect that the the we'd be critical to grow and to continue to see the vast. A majority of our revenue coming from repeat customers, which is very healthy and that's why we are able to generate cash. Every month every quarter. Hey, there I will just add. So quickly to what Ron said on your first question as it relates to Audi labs. There is no change based on labs to our long term algorithm of 20% plus revenue, 20% plus EBITDA margins and the way that we're driving that business is still in a very asset efficient way cost efficient way with high profitability and high cash flow. So despite the fact that that piece of the business is coming together. Even better and stronger than what we had anticipated there's there's no change to how it affects us financially. Yeah.

The revenue came stronger this quarter.

Oran Holtzman: And I don't see any ceiling, like every cohort is getting better and better, and it's both because we are doing, we are using our data better, but also because we are, because you just put the right product in the right hands, so we expect that the repeat rate to continue to grow and to continue to see the vast majority of our revenue coming from repeat customers, which is very healthy and that's why we are able to generate cash. Every month every quarter. Hey, there I will just add. So quickly to what Ron said on your first question as it relates to Audi labs. There is no change based on labs to our long term algorithm of 20% plus revenue, 20% plus EBITDA margins and the way that we're driving that business is still in a very asset efficient way cost efficient way with high profitability and high cash flow. So despite the fact that that piece of the business is coming together. Even better and stronger than what we had anticipated there's there's no change to how it affects us financially. Yeah.

And I don't see any ceiling like every cohort is getting better and better.

Because we are doing.

I think our data better but also.

Because we are because you just put the right product in the right hands.

So we expect that the the we'd be critical to grow and to continue to see the vast.

A majority of our revenue coming from repeat customers, which is very healthy and that's why we are able to generate cash.

Lindsay Drucker Mann: Hey, there I'll just add quickly to what Oran said, on your first question as it relates to Oddity labs, there is no change based on labs to our long term algorithm of 20% plus revenue, 20% plus EBITDA margins, and the way that we're driving that business is still in a very asset efficient way, cost efficient way with high profitability and high cash flow, so despite the fact that that piece of the business is coming together even better and stronger than what we had anticipated there's no change to how it affects us financially. Yeah.

Every month every quarter.

Hey, there I will just add.

So quickly to what Ron said on your first question as it relates to Audi labs.

There is no change based on labs to our long term algorithm of 20% plus revenue, 20% plus EBITDA margins and the way that we're driving that business is still in a very asset efficient way cost efficient way with high profitability and high cash flow. So despite the fact that that piece of the business is coming together.

Even better and stronger than what we had anticipated there's there's no change to how it affects us financially.

Yeah.

Dara Mohsenian: Great. Thanks.

Oran Holtzman: Thank you.

Operator: Thank you, The next question comes from Scott Schoenhaus with Keybank, please go ahead.

The next question comes from Scott Schoenhof's with Keybanc. Please go ahead.

Scott Schoenhaus: Thanks, Hi team, thanks for taking my question I actually wanted to follow up on the Oddity Labs as well, so just wanted to confirm, I think last time you commented that there were 10 products coming out of the labs in next year and as a follow up question, can you talk about how Oddity Labs and the combination of your vision tech will be deployed for diagnostics for your upcoming brands. Thanks.

And as a follow up question can you talk about how oddity labs and the combination of your vision Tech will be deployed for diagnostics for your upcoming brands. Thanks.

Oran Holtzman: Hi, Scott sure, yeah so as I mentioned, ten products are going to hit the market next year coming from Oddity Labs, to the second question like the, the way that we doit in the, within the company we have two type of labs and one is the tech side and the other one is the science in Boston, one in Tel Aviv, one in Boston. Did the Agnosis for Grand Prix. He is going to be done with our computer computed by our computer vision technology from them and from the team in Tel Aviv. And the products. In development from what are your labs, so boat. R&D centers are walking them. To develop something better for <unk>, which is the medical and great skin and body brand. Which relate heavily on the agnostic. What's coming for computer vision.

So as I mentioned, then our products are going to hit the market next year coming from quality labs.

So the second question.

Like the in the.

The way it would be good in the and within the company. We have two type of labs and one is the tech side and the other one is the science in Boston one in Tel Aviv, one in Boston.

Did the Agnosis for Grand Prix.

Oran Holtzman: So the diagnosis for Brand 3 is going to be done with our computer, by our computer vision technology from the team in Tel Aviv, and the products are in development from Oddity Labs, so both R&D centers are working to develop something better for Brand 3, which is the medical grade skin and body brand, which relay heavily on diagnosis which are coming from computer vision.

He is going to be done with our computer computed by our computer vision technology from them and from the team in Tel Aviv.

And the products.

In development from what are your labs, so boat.

R&D centers are walking them.

To develop something better for <unk>, which is the medical and great skin and body brand.

Which relate heavily on the agnostic.

What's coming for computer vision.

Scott Schoenhaus: Great can I ask just one more follow up, given the growth that you're seeing or the unexpected pace of advancement on the Oddity Labs, can you talk about how Evan and his team are hiring, I know Lindsay just mentioned that the margin profile on the cost controls will be in place to maintain your long term objective, but just talk to me about obviously you're hitting your targets there faster than expected, what are the, what's Evan and his team doing too help the labor behind that thanks.

Given the growth that youre seeing or the unexpected pace of.

Advancement on the Oddity labs can you talk about how evident and his team are our hiring I know of Lindsay just mentioned that the margin profile on the cost controls will be in place to maintain your long term objective, but just talk to me about obviously youre hitting your targets there faster than expected.

What are the what's.

Kevin and his team doing too.

Harper labor behind that thanks.

Oran Holtzman: Yeah sure so, when we started we let you know, we gave them like them like a small amount talk that we ask for both IL MAKIAGE and SpoiledChild and when we saw that it's truly like that they can do way more we have more projects and again all projects came from true needs coming from users as we see it in our platform and then I guess, Kevin like let's try to see if we can add more. Like like to increase the manpower and wed like to continue to have the same level of talent, but lets grow the team. And surprisingly we saw that you know that. We're able to do it we grew the team three X. A few months. People are excited to work on something different than just pharma using the same technology and again. Talent attracted talent and when you see that and if you one day I would like to visit them. And you'll see the thought that you would understand why. For us to recruit in addition, about you know it's not an easy industry. Today. So we are leveraging the fact that we are profitable and we are we don't need external capital to continue to grow which makes it very. <unk> attractive for this talent once stability. So we continue to grow the team and since our margin would have been stronger than what we envision it allow me to continue to invest. And that's why we didn't come this you know this quarter was 25% margin we invest in. Lab, and we invest in building teams will bring drain Brent floor.

Oran Holtzman: Yeah sure so, when we started we let you know, we gave them like a small amount of talk that we asked for both IL MAKIAGE and SpoiledChild and when we saw that it's truly like, that they can do way more, we added more projects and again all projects came from true needs coming from users as we see it in our platform.

When we started we let you know we gave them like them like a small amount of debt.

We ask for bolt in my guidance for the trial and when we saw that it's truly like like that they can do way more we have more projects.

And again all projects came from true nips coming from users.

Oran Holtzman: And then I asked Evan, like let's try to see if we can add more, like to increase the manpower and to have like, to continue to have the same level of talent but lets grow the team and surprisingly we saw that, you know, that we were able to do it, we grew the team three X in just a few months and people are excited to work on something different than just pharma using the same technology and again. Talent attracted talent and when you see that and if you one day I would like to visit them. And you'll see the thought that you would understand why. For us to recruit in addition, about you know it's not an easy industry. Today. So we are leveraging the fact that we are profitable and we are we don't need external capital to continue to grow which makes it very. <unk> attractive for this talent once stability. So we continue to grow the team and since our margin would have been stronger than what we envision it allow me to continue to invest. And that's why we didn't come this you know this quarter was 25% margin we invest in. Lab, and we invest in building teams will bring drain Brent floor.

As we see it in our platform and then I guess, Kevin like let's try to see if we can add more.

Like like to increase the manpower and wed like to continue to have the same level of talent, but lets grow the team.

And surprisingly we saw that you know that.

We're able to do it we grew the team three X.

Oran Holtzman: And people are excited to work on something different than just pharma using the same technology and again, talent attracted talent and when you see that and if you one day would like to visit them or if you are in Boston you'll see the talent there and you would understand why is easier for us to recruit in addition, about you know it's not an easy industry. Today. So we are leveraging the fact that we are profitable and we are we don't need external capital to continue to grow which makes it very. <unk> attractive for this talent once stability. So we continue to grow the team and since our margin would have been stronger than what we envision it allow me to continue to invest. And that's why we didn't come this you know this quarter was 25% margin we invest in. Lab, and we invest in building teams will bring drain Brent floor.

A few months.

People are excited to work on something different than just pharma using the same technology and again.

Talent attracted talent and when you see that and if you one day I would like to visit them.

And you'll see the thought that you would understand why.

For us to recruit in addition, about you know it's not an easy industry. Today. So we are leveraging the fact that we are profitable and we are we don't need external capital to continue to grow which makes it very.

Oran Holtzman: In addition, about you know it's not an easy industry today so, we are leveraging the fact that we are profitable and we are, we don't need external capital to continue to grow which makes it very attractive for this talent who want stability, so we continue to grow the team and since our margins have been stronger than what we envisioned, it allowed me to continue to invest and that's why we didn't come this, you know, this quarter with 25% margin, we invest in Lab, and we invest in building teams for Brand 3 and Brand 4.

<unk> attractive for this talent once stability.

So we continue to grow the team and since our margin would have been stronger than what we envision it allow me to continue to invest.

And that's why we didn't come this you know this quarter was 25% margin we invest in.

Lab, and we invest in building teams will bring drain Brent floor.

Scott Schoenhaus: Thanks for all that color it yes, no the biotech weakness should allow you to attract some very good talent, thank you.

Yes.

Oran Holtzman: Thank you.

Operator: Thank you, the next question comes from Youssef Squali with Truist, please go ahead.

The next question comes from Youssef Squali with Truest. Please go ahead.

Youssef Houssaini Squali: Excellent, thank you guys and congrats on a solid quarter, so a couple of questions maybe starting with the 10 products Oran that you talked about for next year, how meaningful are kind of these products, obviously they're not brands, they're extensions of the two existing brands, can you just share some color there as to how potentially meaningful they could be just for us to kind of get a sense of ultimately how impactful that could be to the revenue. And then. Lindsay. With such a high repeat rate your marketing efficiency must be going through the roof. So can you maybe talk a little bit about that and whether that's like a step up. In your thinking about longer term margins, because if that repeat rate stays high and obviously your margins are going to be higher than your marketing efficiency is going to be that much higher. So just or is it just too early for us to get to that two to <unk> to conclude that at this point. Thank you.

The the 10 products or on that you talked about for next year, how meaningful are kind of.

These products, obviously, they're not.

Brands are extensions of.

The two existing brands can you just share some.

Color there as to how potentially meaningful they are they could be just for us to kind of get a sense of ultimately how impactful that could be to the revenue.

Youssef Houssaini Squali: And then Lindsay with such a high repeat rate, your marketing efficiency must be going through the roof, so can you maybe talk a little bit about that and whether that's like a step up in your thinking about longer term margins, because that if that repeat rate stays high then obviously your margins are going to be higher and your marketing efficiency is going to be that much higher so just, or is it just too early for us to get to that, to conclude that at this point. Thank you.

And then.

Lindsay.

With such a high repeat rate your marketing efficiency must be going through the roof. So can you maybe talk a little bit about that and whether that's like a step up.

In your thinking about longer term margins, because if that repeat rate stays high and obviously your margins are going to be higher than your marketing efficiency is going to be that much higher. So just or is it just too early for us to get to that two to <unk> to conclude that at this point. Thank you.

Oran Holtzman: Sure, I will start with the first question and how are you first of all Youssef, I will start with the first one, the ten products, We can beat like the way that we operate, we never count on one thing, we can beat that we always run with multiple levers to deliver our growth that we want to see next year, we don't need those 10 products to beat our plan in addition, but I want to say like in SpoiledChild or they could have done. This Jim just you know the plan just waking them up yes, but they pushed more sports out because I want us to diversity and I want to see more like revenue coming from different sources. So I will do the same with the new products coming from all these lab. Just for the sake of building this engine. But. I don't need it to grow I don't need it. For to justify my plan for next year. So the second question I will hand, it to Lindsay I would just say that regarding long term margins like in my school, you don't need more than 20% EBITDA margin and I want to continue to invest in the business. We could have done more than 25% this quarter. And I definitely decided to hire more people and Brent framed brentsville to be to make sure that we are better positioned to labs and to make sure that again also wind up there on the tech side that we continue to have the best people and to develop more products and doing like to invest in our future, but I will hand, it to Lisa.

I will start with the first one the Teng product. We can we can be like the way that we operate we never count on one thing we can beat that we always run with multiple levers to deliver on our growth.

Oran Holtzman: We don't need those 10 products to beat our plan in addition, but I want to see, like in SpoiledChild I could have done the same, you know, the plan just with IL MAKIAGE but they pushed more SpoiledChild because I want to see diverse and I want to see more like revenue coming from different sources. So I will do the same with the new products coming from all these lab. Just for the sake of building this engine. But. I don't need it to grow I don't need it. For to justify my plan for next year. So the second question I will hand, it to Lindsay I would just say that regarding long term margins like in my school, you don't need more than 20% EBITDA margin and I want to continue to invest in the business. We could have done more than 25% this quarter. And I definitely decided to hire more people and Brent framed brentsville to be to make sure that we are better positioned to labs and to make sure that again also wind up there on the tech side that we continue to have the best people and to develop more products and doing like to invest in our future, but I will hand, it to Lisa.

Oran Holtzman: We don't need those 10 products to beat our plan in addition, but I want to see, like in SpoiledChild I could have done the same jut, you know, the plan just with IL MAKIAGE but they pushed more SpoiledChild because I want to see diverse and I want to see more like revenue coming from different sources, so I will do the same with the new products coming from all these labs just for the sake of building this engine but I don't need it to grow, I don't need it to justify my plan for next year.

We want to see next year, we don't need those 10 products like to beat our plan.

In addition, but I want to say like in spoilage or they could have done. This Jim just you know the plan just waking them up yes, but they pushed more sports out because I want us to diversity and I want to see more like revenue coming from different sources. So I will do the same with the new products coming from all these lab.

Just for the sake of building this engine.

But.

I don't need it to grow I don't need it.

Oran Holtzman: So the second question I will hand it to Lindsay I would just say that, regarding long term margins like, in my school, you don't need more than 20% EBITDA margin and I want to continue to invest in the business, we could have done more than 25% this quarter and I intentionally decided to hire more people in Brand 3 and Brand 4 to be, to make sure that we are better positioned in Oddity Labs and to make sure that, again also on the tech side that we continue to have the best people and to develop more products and doing like, to invest in our future, but I will hand, it to Lindsay.

For to justify my plan for next year. So the second question I will hand, it to Lindsay I would just say that regarding long term margins like in my school, you don't need more than 20% EBITDA margin and I want to continue to invest in the business.

We could have done more than 25% this quarter.

And I definitely decided to hire more people and Brent framed brentsville to be to make sure that we are better positioned to labs and to make sure that again also wind up there on the tech side that we continue to have the best people and to develop more products and doing like to invest in our future, but I will hand, it to Lisa.

Lindsay Drucker Mann: Yes thanks so, Youssef of as we think about our repeat rates as Oran mentioned that was a key driver of the upside relative to our expectations in the quarter, we're thrilled to see the very strong repeat rates at both brands, IL MAKIAGE and SpoiledChild for each of those brands repeat revenue will be more than half of our revenue for this year, which is remarkable when you consider how young each of those brands is yamaki hours only having launched five years ago in the U S and spoiled child, which is less than two years old and growing as much as it is another Ron mentioned around 100 million. And that revenue this year and profitable to be able to deliver that kind of repeat is something we believe is unprecedented across not just beauty, but any vertical indeed to see we'd love to repeat for a number of reasons first of all it reflects the strong customer satisfaction. The fact that our customers love the product they come back and we're truly filling a need for them that's not being filled outside. Number two of course repeat is very profitable for us. Because we don't have to as you were sort of pointing to before we don't need to deploy any material opex or marketing spend in order to generate it relative to. Two our first purchases. The fact that our repeat rates are so high reflect those things, but they also reflect the fact that we have significantly underinvested in our potential for new customers. This year as we purposely pace the business and try to slow it down to the fact that you've got a brand that's less than two years old with more than 50% repeat and nicely profitable and spoiled child means. You could have grown a lot faster if you wanted to as Ron said, but based on the size of the opportunity ahead of US we are operating in a massive 600 billion dollar global town in beauty and wellness. It's dominated by offline incumbents, who we believe have significantly underinvested in technology. We think the category moves to 50% online before you know it and we are we believe way ahead of others and our ability to capture this our focus is very much on reinvesting that. That profitability in order to deliver against those goals, our underlying business wants to be much more profitable than we're letting it but we're disciplined about. Talking to that 20% EBITDA margin, which by the way is still incredibly profitable relative to anything in our peer set. So we think that's a a strong return it allows us to generate a lot of cash to invest in the future, but it doesn't change our overall thinking in terms of the algorithm the profitability or growth algorithm.

Use of as we think about our repeat rates as Ron mentioned that was a key driver of the upside relative to our expectations in the quarter were thrilled to see the very strong repeat rates at both brands.

And spoiled child for each of those brands repeat revenue will be more than half of our revenue for this year, which is remarkable when you consider how young each of those brands is yamaki hours only having launched five years ago in the U S and spoiled child, which is less than two years old and growing as much as it is another Ron mentioned around 100 million.

Lindsay Drucker Mann: Which is remarkable when you consider how young each of those brands is IL MAKIAGE only having launched five years ago in the US and SpoiledChild, which is less than two years old and growing as much as it is, and as Oran mentioned around 100 million in net revenue this year and profitable to be able to deliver that kind of repeat is something we believe is unprecedented across not just beauty, but any vertical indeed to see we'd love to repeat for a number of reasons first of all it reflects the strong customer satisfaction. The fact that our customers love the product they come back and we're truly filling a need for them that's not being filled outside. Number two of course repeat is very profitable for us. Because we don't have to as you were sort of pointing to before we don't need to deploy any material opex or marketing spend in order to generate it relative to. Two our first purchases. The fact that our repeat rates are so high reflect those things, but they also reflect the fact that we have significantly underinvested in our potential for new customers. This year as we purposely pace the business and try to slow it down to the fact that you've got a brand that's less than two years old with more than 50% repeat and nicely profitable and spoiled child means. You could have grown a lot faster if you wanted to as Ron said, but based on the size of the opportunity ahead of US we are operating in a massive 600 billion dollar global town in beauty and wellness. It's dominated by offline incumbents, who we believe have significantly underinvested in technology. We think the category moves to 50% online before you know it and we are we believe way ahead of others and our ability to capture this our focus is very much on reinvesting that. That profitability in order to deliver against those goals, our underlying business wants to be much more profitable than we're letting it but we're disciplined about. Talking to that 20% EBITDA margin, which by the way is still incredibly profitable relative to anything in our peer set. So we think that's a a strong return it allows us to generate a lot of cash to invest in the future, but it doesn't change our overall thinking in terms of the algorithm the profitability or growth algorithm.

And that revenue this year and profitable to be able to deliver that kind of repeat is something we believe is unprecedented across not just beauty, but any vertical indeed to see we'd love to repeat for a number of reasons first of all it reflects the strong customer satisfaction.

Lindsay Drucker Mann: We love the repeat for a number of reasons first of all it reflects the strong customer satisfaction, the fact that our customers love the product they come back and we're truly filling a need for them that's not being filled outside, number two of course repeat is very profitable for us because we don't have to, as you were sort of pointing to before, we don't need to deploy any material OPEX or marketing spend in order to generate it relative to our first purchases. The fact that our repeat rates are so high reflect those things, but they also reflect the fact that we have significantly underinvested in our potential for new customers. This year as we purposely pace the business and try to slow it down to the fact that you've got a brand that's less than two years old with more than 50% repeat and nicely profitable and spoiled child means. You could have grown a lot faster if you wanted to as Ron said, but based on the size of the opportunity ahead of US we are operating in a massive 600 billion dollar global town in beauty and wellness. It's dominated by offline incumbents, who we believe have significantly underinvested in technology. We think the category moves to 50% online before you know it and we are we believe way ahead of others and our ability to capture this our focus is very much on reinvesting that. That profitability in order to deliver against those goals, our underlying business wants to be much more profitable than we're letting it but we're disciplined about. Talking to that 20% EBITDA margin, which by the way is still incredibly profitable relative to anything in our peer set. So we think that's a a strong return it allows us to generate a lot of cash to invest in the future, but it doesn't change our overall thinking in terms of the algorithm the profitability or growth algorithm.

The fact that our customers love the product they come back and we're truly filling a need for them that's not being filled outside.

Number two of course repeat is very profitable for us.

Because we don't have to as you were sort of pointing to before we don't need to deploy any material opex or marketing spend in order to generate it relative to.

Lindsay Drucker Mann: The fact that our repeat rates are so high reflect those things, but they also reflect the fact that we have significantly underinvested in our potential for new customers this year as we purposely pace the business and try to slow it down to the fact that you've got a brand that's less than two years old with more than 50% repeat and nicely profitable as SpoiledChild means you could have grown a lot faster if you wanted to as Oran said. but based on the size of the opportunity ahead of US we are operating in a massive 600 billion dollar global town in beauty and wellness. It's dominated by offline incumbents, who we believe have significantly underinvested in technology. We think the category moves to 50% online before you know it and we are we believe way ahead of others and our ability to capture this our focus is very much on reinvesting that. That profitability in order to deliver against those goals, our underlying business wants to be much more profitable than we're letting it but we're disciplined about. Talking to that 20% EBITDA margin, which by the way is still incredibly profitable relative to anything in our peer set. So we think that's a a strong return it allows us to generate a lot of cash to invest in the future, but it doesn't change our overall thinking in terms of the algorithm the profitability or growth algorithm.

Two our first purchases.

The fact that our repeat rates are so high reflect those things, but they also reflect the fact that we have significantly underinvested in our potential for new customers. This year as we purposely pace the business and try to slow it down to the fact that you've got a brand that's less than two years old with more than 50% repeat and nicely profitable and spoiled child means.

You could have grown a lot faster if you wanted to as Ron said, but based on the size of the opportunity ahead of US we are operating in a massive 600 billion dollar global town in beauty and wellness. It's dominated by offline incumbents, who we believe have significantly underinvested in technology.

Lindsay Drucker Mann: But based on the size of the opportunity ahead of us we are operating in a massive 600 billion dollar global TAM and beauty and wellness it's dominated by offline incumbents, who we believe have significantly underinvested in technology, we think the category moves to 50% online before you know it and we are, we believe way ahead of others in our ability to capture this our focus is very much on reinvesting that. That profitability in order to deliver against those goals, our underlying business wants to be much more profitable than we're letting it but we're disciplined about. Talking to that 20% EBITDA margin, which by the way is still incredibly profitable relative to anything in our peer set. So we think that's a a strong return it allows us to generate a lot of cash to invest in the future, but it doesn't change our overall thinking in terms of the algorithm the profitability or growth algorithm.

We think the category moves to 50% online before you know it and we are we believe way ahead of others and our ability to capture this our focus is very much on reinvesting that.

Lindsay Drucker Mann: Our focus is very much on reinvesting that profitability in order to deliver against those goals, our underlying business wants to be much more profitable than we're letting it, but we're disciplined about talking to that 20% EBITDA margin, which by the way is still incredibly profitable relative to anything in our peer set, so we think that's a a strong return, it allows us to generate a lot of cash to invest in the future, but it doesn't change our overall thinking in terms of the algorithm, the profitability or growth algorithm.

That profitability in order to deliver against those goals, our underlying business wants to be much more profitable than we're letting it but we're disciplined about.

Talking to that 20% EBITDA margin, which by the way is still incredibly profitable relative to anything in our peer set. So we think that's a a strong return it allows us to generate a lot of cash to invest in the future, but it doesn't change our overall thinking in terms of the algorithm the profitability or growth algorithm.

Youssef Houssaini Squali: Ok no that's understood and the impressive, maybe just one more before I let you go, Lindsey can you just remind us please of the seasonality in the business, this is not similar to other kind of DTC retail, just so that we kind of understand how do you know kind of the linearity throughout the year happens.

That's understood.

And the impressive.

Maybe just one more before I, let you go Lindsey can you just remind us please of the seasonality in the business. This is not similar to other kind of DTC retail just so that we kind of understand how how do you know kind of the.

The linearity throughout the year happens.

Lindsay Drucker Mann: Yeah so as you allude to Youssef our first and second quarters of the year are much larger than the second half of the year and that is unusual for lots of consumer companies, beauty companies, DTC companies where typically holiday in the fourth quarter is the biggest time of year I think seasonality is a misnomer, it's really more about cadence and how we choose to pulse our business. Obviously, if you look industry wide and those categories holiday is naturally very very large there's nothing. Naturally very very large in our industry about the first or second quarter. So this is really about when we go full power and take advantage of. Our opportunity to really dominate in the market and candidly to with very high visibility get the full year done and I know that's unusual relative to what you typically see for other businesses that are going kind of as hard as they can all year long to sort of match the pace of spending of the consumer for us. It's been really important for us to pace our growth. So it will be more than 50% revenue growth. This year, that's on top of approaching 50% last year at 100% the year before we've been growing at a very very rapid pace, but we want to make sure that the way that we're growing allows us to deliver over the long term compounding durable sustainable and Super high quality crude. Growth for many many years to come and that's been our decision to restrain growth growth in the back half when we were able to over deliver on our budget. So early in the year I think another thing that's important to point out is we don't participate in the holiday promotional Fray you won't see us discounting you won't see us fighting in a low quality. Any way like that we are a full price business isn't at full price brand, which is <unk>. Well done. While the majority of the industries they serve 2% off so that's what we're that's why it doesn't make sense for me to like to complete in Q4. Yeah. Correct. So again this is really more about our decision on the timing of when we power the business versus any natural seasonality. Yeah exactly awesome. Thank you both.

And that is unusual for lots of consumer companies beauty companies D to C companies were typically holiday in the fourth quarter is the biggest time of year I think seasonality is a misnomer, it's really more about cadence and how we choose to pulse our business. Obviously, if you look industry wide and those categories holiday is naturally very very large there's nothing.

Lindsay Drucker Mann: I think seasonality is a misnomer, it's really more about cadence and how we choose to pulse our business, obviously, if you look industry wide in those categories, holiday is naturally very very large, there's nothing that's naturally very very large in our industry about the first or second quarter, so this is really about when we go full power and take advantage of our opportunity to really dominate in the market and candidly to, with very high visibility, get the full year done and I know that's unusual relative to what you typically see for other businesses that are going kind of as hard as they can all year long to sort of match the pace of spending of the consumer, for us It's been really important for us to pace our growth. So it will be more than 50% revenue growth. This year, that's on top of approaching 50% last year at 100% the year before we've been growing at a very very rapid pace, but we want to make sure that the way that we're growing allows us to deliver over the long term compounding durable sustainable and Super high quality crude. Growth for many many years to come and that's been our decision to restrain growth growth in the back half when we were able to over deliver on our budget. So early in the year I think another thing that's important to point out is we don't participate in the holiday promotional Fray you won't see us discounting you won't see us fighting in a low quality. Any way like that we are a full price business isn't at full price brand, which is <unk>. Well done. While the majority of the industries they serve 2% off so that's what we're that's why it doesn't make sense for me to like to complete in Q4. Yeah. Correct. So again this is really more about our decision on the timing of when we power the business versus any natural seasonality. Yeah exactly awesome. Thank you both.

Naturally very very large in our industry about the first or second quarter. So this is really about when we go full power and take advantage of.

Our opportunity to really dominate in the market and candidly to with very high visibility get the full year done and I know that's unusual relative to what you typically see for other businesses that are going kind of as hard as they can all year long to sort of match the pace of spending of the consumer for us.

Lindsay Drucker Mann: And I know that's unusual, relative to what you typically see for other businesses that are going kind of as hard as they can all year long to sort of match the pace of spending of the consumer, for us It's been really important for us to pace our growth, so it will be more than 50% revenue growth this year, that's on top of approaching 50% last year at 100% the year before we've been growing at a very very rapid pace, but we want to make sure that the way that we're growing allows us to deliver over the long term compounding durable sustainable and Super high quality growth for many many years to come and that's been our decision to restrain growth growth in the back half when we were able to over deliver on our budget. So early in the year I think another thing that's important to point out is we don't participate in the holiday promotional Fray you won't see us discounting you won't see us fighting in a low quality. Any way like that we are a full price business isn't at full price brand, which is <unk>. Well done. While the majority of the industries they serve 2% off so that's what we're that's why it doesn't make sense for me to like to complete in Q4. Yeah. Correct. So again this is really more about our decision on the timing of when we power the business versus any natural seasonality. Yeah exactly awesome. Thank you both.

It's been really important for us to pace our growth. So it will be more than 50% revenue growth. This year, that's on top of approaching 50% last year at 100% the year before we've been growing at a very very rapid pace, but we want to make sure that the way that we're growing allows us to deliver over the long term compounding durable sustainable and Super high quality crude.

Lindsay Drucker Mann: That's on top of approaching 50% last year and 100% the year before, we've been growing at a very very rapid pace, but we want to make sure that the way that we're growing allows us to deliver, over the long term, compounding, durable, sustainable and super high quality growth for many many years to come and that's been our decision, to restrain growth growth in the back half when we were able to over deliver on our budget so early in the year I think another thing that's important to point out is we don't participate in the holiday promotional Fray you won't see us discounting you won't see us fighting in a low quality. Any way like that we are a full price business isn't at full price brand, which is <unk>. Well done. While the majority of the industries they serve 2% off so that's what we're that's why it doesn't make sense for me to like to complete in Q4. Yeah. Correct. So again this is really more about our decision on the timing of when we power the business versus any natural seasonality. Yeah exactly awesome. Thank you both.

Growth for many many years to come and that's been our decision to restrain growth growth in the back half when we were able to over deliver on our budget. So early in the year I think another thing that's important to point out is we don't participate in the holiday promotional Fray you won't see us discounting you won't see us fighting in a low quality.

Lindsay Drucker Mann: I think another thing that's important to point out is, we don't participate in the holiday promotional Fray, you won't see us discounting, you won't see us fighting in a low quality way like that, we are a full price businesses and full price brand, which is <unk>. Well done. While the majority of the industries they serve 2% off so that's what we're that's why it doesn't make sense for me to like to complete in Q4. Yeah. Correct. So again this is really more about our decision on the timing of when we power the business versus any natural seasonality. Yeah exactly awesome. Thank you both.

Any way like that we are a full price business isn't at full price brand, which is <unk>.

Well done.

While the majority of the industries they serve 2% off so that's what we're that's why it doesn't make sense for me to like to complete in Q4.

Lindsay Drucker Mann: While the majority of the industries is 50% off, so that's why it doesn't make sense for me to like to complete in Q4. Yeah, Correct. So again this is really more about our decision on the timing of when we power the business versus any natural seasonality. Yeah exactly awesome. Thank you both.

Oran Holtzman: While the majority of the industries is 50% off, so that's why it doesn't make sense for me to like to complete in Q4.

Yeah.

Correct. So again this is really more about our decision on the timing of when we power the business versus any natural seasonality.

Lindsay Drucker Mann: Yeah, Correct, so again this is really more about our decision on the timing of when we power the business versus any natural seasonality. Yeah exactly awesome. Thank you both.

Lindsay Drucker Mann: Yeah, Correct, so again this is really more about our decision on the timing of when we power the business versus any natural seasonality.

Yeah exactly awesome. Thank you both.

Lindsay Drucker Mann: Yeah exactly awesome. Thank you both.

Oran Holtzman: Yeah exactly

Youssef Houssaini Squali: Awesome, Thank you both.

Oran Holtzman: Thank you very much.

Operator: Thank you, the next question comes from Andrew Boone with JMP Securities. Please go ahead.

The next question comes from Andrew Boone with JMP Securities. Please go ahead.

Andrew M. Boone: Hi guys Thanks, so much for taking my questions, Can you help us understand how top of funnel is trending, how has conversion trended last quarter, and is there any update on the 40 million users you guys have. Yeah. I would just say that you know. When I slowdown people tell me that it's because of the market because it's a very. Because of the softness in marketing, but I can tell you that you know just in Macchiato and user acquisition in Q3 was the lowest that we had in the past 14 quarters. Since Q1 2020, and despite the fact that he was like religion efficiency need macchiato. This strong growth was 70% higher than Q3 of last year and still I spent 40% less than Q3. Yeah. Like we don't see any softness. In the upper funnel, we see very strong demand and we decide when to take it or not. That makes sense. Thank you.

Can you help us understand how top of funnel is trending how is.

Conversion.

Trended last quarter end and is there any update on the 40 million users did you guys have.

Oran Holtzman: Yeah, I would just say that you know, when I slowdown people tell me that it's because of the market it's, because it's a very, because of the softness in marketing, but I can tell you that, you know, just in IL MAKIAGE the user acquisition in Q3 was the lowest that we had in the past 14 quarters, since Q1 2020, and despite the fact that the user acquisition efficiency in IL MAKIAGE was unbelievably strong growth was 70% higher than Q3 of last year and still I spent 40% less than Q3 las year and again, Like we don't see any softness. In the upper funnel, we see very strong demand and we decide when to take it or not. That makes sense. Thank you.

Yeah.

I would just say that you know.

When I slowdown people tell me that it's because of the market because it's a very.

Because of the softness in marketing, but I can tell you that you know just in Macchiato and user acquisition in Q3 was the lowest that we had in the past 14 quarters. Since Q1 2020, and despite the fact that he was like religion efficiency need macchiato.

Oran Holtzman: And despite the fact that the user acquisition efficiency in IL MAKIAGE was unbelievable, strong growth was 70% higher than Q3 of last year and still I spent 40% less than Q3 of last year and again, we don't see any softness in the upper funnel, we see very strong demand and we decide when to take it or not. That makes sense. Thank you.

This strong growth was 70% higher than Q3 of last year and still I spent 40% less than Q3.

Yeah.

Like we don't see any softness.

In the upper funnel, we see very strong demand and we decide when to take it or not.

That makes sense. Thank you.

Andrew M. Boone: That makes sense thank you, and then as we think about really as a follow up on the users question, we're two months away now from January, can you guys just talk about any features or new geographies that you guys may be launching, as we think about 1Q 24, that gives you the confidence to be able to really pull that growth forward in the first half of next year. Thanks, So much.

And then as we think about really as a follow on to use of <unk> question.

We're two months away now from January can you guys. Just talk about any features or new geographies that you guys may be launching as we think about <unk> 24 that gives you the confidence to be able to really pull that growth forward in the first half of next year. Thanks, So much.

Oran Holtzman: Yeah, I'll start by saying that we are in a very strong position entering 2024 and the plan is to execute well every quarter, and we are not providing now guidance for 2024 and also of Q1, and you already know our algorithm, but I would try to touch it more generally. thanks to the huge TAM of our industry we have so many ways to grow and my job is always to make sure we are spending time and resources I'm going up to the right targets and <unk>. And between the opportunity size and Kansas and we can get it done and it's true to all we do new products, new brands, new categories, New Tech products, new innovative molecules and we are always working on all five mm mm, but with massive pipelines. And this quarter do you allow me to grow the business consistently. 110 million in 2020 $220 million in 2021 325 million in 'twenty, two and approaching 500 million. This year, we talked about $100 million of EBITDA. But you know when when when we try to understand like how we break it down first is our existing brands and Mckesson spoiled child, and which are still small in the market share and not even close to hitting the limits with the categories. We are already in. This Brent pipeline comprised from new product and you've got that going for both brands as well as new geographies as you mentioned and the teams are already in market testing new product launches and based on those early reads alone. We are we have a very good feeling good about 'twenty 'twenty four maquillage and we have number of exciting product in skin to expand our. Strong foundation there. And in addition in Machias leadership is ready with new markets to launch in where our tests have come back very strong in terms of unit economics of customers inspection and we are slow play this market expansion to ensure all those unhappy in our core market, but we have numerous markets ready to go and it's multiple markets. Spoilt child, we have a pipeline of products in both her and scale to drive those two categories and to continue the hyper growth of the brand and so I'm not concerned at all that the meaningful growth with comparable friends.

I'll start by saying that Youre in a very strong position entering 2024.

And the plan is to execute well every quarter.

We are not providing no guidance about 24 months of Q1, and you already know our algorithm, but that would try to touch more generally and thanks to the huge dumb about industry of so many ways to grow and my job is always to make sure. We are spending diamond resources I'm going up to the right targets and <unk>.

Oran Holtzman: Thanks to the huge TAM of our industry we have so many ways to grow and my job is always to make sure we are spending time and resources and going after the right targets, and balancing between opportunity size and chances in we can get it done and it's true to all we do, new products, new brands, new categories, new tech products, new innovative molecules and we are always working on all five but with massive pipelines and this strategy allowed me to grow the business consistently from $110 million in 2020, $220 million in 2021, %325 million in 2022 and approaching $500 million this year, we're talking $100 million of EBITDA. But you know when when when we try to understand like how we break it down first is our existing brands and Mckesson spoiled child, and which are still small in the market share and not even close to hitting the limits with the categories. We are already in. This Brent pipeline comprised from new product and you've got that going for both brands as well as new geographies as you mentioned and the teams are already in market testing new product launches and based on those early reads alone. We are we have a very good feeling good about 'twenty 'twenty four maquillage and we have number of exciting product in skin to expand our. Strong foundation there. And in addition in Machias leadership is ready with new markets to launch in where our tests have come back very strong in terms of unit economics of customers inspection and we are slow play this market expansion to ensure all those unhappy in our core market, but we have numerous markets ready to go and it's multiple markets. Spoilt child, we have a pipeline of products in both her and scale to drive those two categories and to continue the hyper growth of the brand and so I'm not concerned at all that the meaningful growth with comparable friends.

And between the opportunity size and Kansas and we can get it done and it's true to all we do new products, new brands, new categories, New Tech products, new innovative molecules and we are always working on all five mm mm, but with massive pipelines.

And this quarter do you allow me to grow the business consistently.

110 million in 2020 $220 million in 2021 325 million in 'twenty, two and approaching 500 million. This year, we talked about $100 million of EBITDA.

Oran Holtzman: But you know when we try to understand like, how we break it down, first is our existing brands, IL MAKIAGE and SpoiledChild, and which are still small in the market share and not even close to hitting the limits with the categories we are already in, and this brands pipeline comprised from new product and new categories for both brands, as well as new geographies as you mentioned and the teams are already in market testing new product launches and based on those early reads alone we are we have a very good feeling good about 2024. IL MAKIAGE and we have number of exciting product in skin to expand our. Strong foundation there. And in addition in Machias leadership is ready with new markets to launch in where our tests have come back very strong in terms of unit economics of customers inspection and we are slow play this market expansion to ensure all those unhappy in our core market, but we have numerous markets ready to go and it's multiple markets. Spoilt child, we have a pipeline of products in both her and scale to drive those two categories and to continue the hyper growth of the brand and so I'm not concerned at all that the meaningful growth with comparable friends.

But you know when when when we try to understand like how we break it down first is our existing brands and Mckesson spoiled child, and which are still small in the market share and not even close to hitting the limits with the categories. We are already in.

This Brent pipeline comprised from new product and you've got that going for both brands as well as new geographies as you mentioned and the teams are already in market testing new product launches and based on those early reads alone. We are we have a very good feeling good about 'twenty 'twenty four maquillage and we have number of exciting product in skin to expand our.

Oran Holtzman: IL MAKIAGE, and we have number of exciting products in skin to expand our strong foundation there and in addition, IL MAKIAGE leadership is ready with new markets to launch, in where our tests have come back very strong in terms of unit economics and customers satisfaction, and we have slow played this market expansions to ensure all those unhappy in our core market, but we have numerous markets ready to go and it's multiple markets. Spoilt child, we have a pipeline of products in both her and scale to drive those two categories and to continue the hyper growth of the brand and so I'm not concerned at all that the meaningful growth with comparable friends.

Strong foundation there.

And in addition in Machias leadership is ready with new markets to launch in where our tests have come back very strong in terms of unit economics of customers inspection and we are slow play this market expansion to ensure all those unhappy in our core market, but we have numerous markets ready to go and it's multiple markets.

Oran Holtzman: And we have slow played this market expansions to ensure our users are happy in our core market, but we have numerous markets ready to go and it's multiple markets in SpoiledChild, we have a pipeline of new products in both hair and skin to drive those two categories and to continue the hyper growth of the brand and so, I'm not concerned at all that meaningful growth downs will come from both brands

Spoilt child, we have a pipeline of products in both her and scale to drive those two categories and to continue the hyper growth of the brand and so I'm not concerned at all that the meaningful growth with comparable friends.

Andrew M. Boone: Thank you.

Yeah.

Operator: Thank you, the next question comes from Lorraine Hutchinson with Bank of America, please go ahead.

The next question comes from Lorraine Hutchinson with Bank of America. Please go ahead.

Lorraine Hutchinson: Hi, this is Melanie on for Lorraine, I just wanted to touch on something you actually just said in your response about entering new markets, so do you have any update on your international expansion strategy for both brands if so, what are some of those new markets that you look at and is that embedded into any of your plans going forward. Thanks.

If so what are some of those new markets that you look at and is that embedded into any of your plans going forward. Thanks.

Lindsay Drucker Mann: Yeah thanks, new markets outside the US are a huge opportunity for us today and over the long term around a quarter of IL MAKIAGE is outside the US, SpoiledChild, has not endeavored outside the US yet, and as you know from our competitors, I call it you know two thirds, maybe 70% of their business is outside the US, so we know this is a significant opportunity for us. as part of our you know what I mentioned before in terms of pacing our growth. We have been really slow played this opportunity in terms of actually unleashing it that being said, we set out significant setup significant infrastructure and capabilities in order to. Unleash it when we're ready and that includes conducting many many tests are in different markets laying the groundwork. And getting the wheels in motion getting a read from the customer what we see is. Basically all the markets that we're testing you're seeing very very good customer satisfaction cohort data the foundational things that give us confidence that the unit economics will work and that we can scale them across a number of different markets that we're not in already. For spoiled child International is really not on the table and are in the near term are the teams have asked and want to expand more aggressively overseas that we've made. Make sure that we're still focusing on the U S. But we do see significant opportunity when we're ready to start building that overseas as well and it's easy for US based on the infrastructure, we've already built for Oh, my gosh to leverage that. It's part of as we think about the bill to $1 billion for El Maquillage them for spoiled child International plays an important role.

Outside the U S. So we know this is a significant opportunity for us as part of our you know what I mentioned before in terms of pacing our growth. We have been really slow played this opportunity in terms of actually unleashing it that being said, we set out significant setup significant infrastructure and capabilities in order to.

Lindsay Drucker Mann: As part of our, you know, what I mentioned before, in terms of pacing our growth, we have been really slow played this opportunity in terms of actually unleashing it, that being said, we set out significant, setup significant infrastructure and capabilities in order to unleash it when we're ready, and that includes conducting many many tests in different markets, laying the groundwork and getting the wheels in motion, getting a read from the customer, what we see is basically, all the markets that we're testing, you're seeing very very good customer satisfaction cohort data, the foundational thing that give us confidence is that the unit economics will work and that we can scale across a number of different markets that we're not in already. For spoiled child International is really not on the table and are in the near term are the teams have asked and want to expand more aggressively overseas that we've made. Make sure that we're still focusing on the U S. But we do see significant opportunity when we're ready to start building that overseas as well and it's easy for US based on the infrastructure, we've already built for Oh, my gosh to leverage that. It's part of as we think about the bill to $1 billion for El Maquillage them for spoiled child International plays an important role.

Lindsay Drucker Mann: And that includes conducting many many tests in different markets, laying the groundwork and getting the wheels in motion, getting a read from the customer, what we see is basically, all the markets that we're testing, you're seeing very very good customer satisfaction cohort data, the foundational thing that give us confidence is that the unit economics will work and that we can scale across a number of different markets that we're not in already.

Unleash it when we're ready and that includes conducting many many tests are in different markets laying the groundwork.

And getting the wheels in motion getting a read from the customer what we see is.

Basically all the markets that we're testing you're seeing very very good customer satisfaction cohort data the foundational things that give us confidence that the unit economics will work and that we can scale them across a number of different markets that we're not in already.

Lindsay Drucker Mann: For SpoiledChild, International is really not on the table in the near term, the teams have asked and want to expand more aggressively overseas but we've made sure that we're still focusing on the US, but we do see significant opportunity when we're ready to start building that overseas as well and it's easy for us based on the infrastructure, we've already built for IL MAKIAGE to leverage that, it's part of as we think about the build to $1 billion for IL MAKIAGE them for SpoiledChild International plays an important role.

For spoiled child International is really not on the table and are in the near term are the teams have asked and want to expand more aggressively overseas that we've made.

Make sure that we're still focusing on the U S. But we do see significant opportunity when we're ready to start building that overseas as well and it's easy for US based on the infrastructure, we've already built for Oh, my gosh to leverage that.

It's part of as we think about the bill to $1 billion for El Maquillage them for spoiled child International plays an important role.

Yeah.

Okay.

Operator: Thank you, the next question comes from Lauren Lieberman with Barclays, please go ahead.

The next question comes from Lauren Lieberman with Barclays. Please go ahead.

Lauren Rae Lieberman: Great thanks, good morning, covered a lot of ground, but two things I wanted to follow up on, the first was on the repeat rate, I was just curious do you agree with your visibility on with your visibility into everything but, if you can comment on, these repeat rates being existing consumers replenishing products they've already bought in the past and are coming back at a higher rate than you had forecast, or is it a basket size thing right, that they're now buying more things from Spoiled or IL MAKIAGE, but are existing consumers of other products within the portfolio, so that's kind of number one. And then number two was on the 10 new product launches. With Tac from Oddity labs, I didn't know how that compares to a normal year of new product activity as 10 products a lot of little just some sort of benchmark for thinking about what <unk> means in the context of a typical year.

<unk> covered a lot of ground, but two things I wanted to follow up on the first was on the repeat rate.

I was just curious did you agree with your visibility on when your visibility into everything but.

If you can comment on.

These repeat rates being existing.

Existing consumers replenishing products, they've already bought in the past and are coming back at a higher rate than you had.

We had forecast.

Or is it a basket size thing right that they're now buying more things from spoils or el maquillage, but where existing consumers of other products within the portfolio. So that's kind of number one.

Lauren Rae Lieberman: And then number two was, on the 10 new product launches with Tech from Oddity labs, I didn't know how that compares to a normal year of new product activity is 10 products a lot? a little? just some sort of benchmark for thinking about what 10 means in the context of a typical year, thanks

And then number two was on the 10 new product launches.

With Tac from Oddity labs, I didn't know how that compares to a normal year of new product activity as 10 products a lot of little just some sort of benchmark for thinking about what <unk> means in the context of a typical year.

Oran Holtzman: Sure, I'll start by talking about replenishment, you know, it's both and both A or B, and both like new products and also both like replenishment, but like the less visibility that we have it's mainly around new products, or new brands, or new categories that we launch and we don't have enough history to predict the repeat rate and that's why we thought it will be an excellent we are coming back with way higher. But you can see it across the board in Waukegan spoiled child, both all cohorts are growing and the percentage of revenue coming from although we grew up massively in the past two years. The majority of the revenues coming from repeat so we just show the strength. As to the second question that product I don't know can bring to vote comparing to us it's not a lot because we launch way more and we. We're not always successful so we have way more than 10 products. We test them and then if we see that everything works both inspection and unit Economics, then we continue to push and so we have more than products, but we are very bullish about those products because they came from from that. Hey, Lloyd I'll, just just to add to on your first question as you know our net revenue repeat rates have continuously improved since the first time. We spoke to you was I think December 2021, we talked about net revenue repeat rates in the kind of low to mid forties, those net revenue repeat rates as of <unk>. You'll see in our F. One for IPO, where I Wanna say around 80% on a 12 month basis and today are closer to a 100%. We don't see a ceiling that has been an ongoing story for us the continuous improvement in repeat rate and it is so many factors, but I have to call out our technology and how for example, our machine model.

I'll start by talking about replenishment.

Both and both <unk> and bolt like new products and also board likes replenishment, but like the less visibility that we have these is it mainly around new products or new brands or categories that we launch and we don't have enough history to print.

Oran Holtzman: And that's why we thought that we will be (inaudible) and coming back with way higher, but you can see it across the board in IL MAKIAGE and SpoiledChild, both all cohorts are growing and the percentage of revenue coming from, although we grew massively in the past two years, the majority of the revenues coming from repeat so we just show the strength. As to the second question that product I don't know can bring to vote comparing to us it's not a lot because we launch way more and we. We're not always successful so we have way more than 10 products. We test them and then if we see that everything works both inspection and unit Economics, then we continue to push and so we have more than products, but we are very bullish about those products because they came from from that. Hey, Lloyd I'll, just just to add to on your first question as you know our net revenue repeat rates have continuously improved since the first time. We spoke to you was I think December 2021, we talked about net revenue repeat rates in the kind of low to mid forties, those net revenue repeat rates as of <unk>. You'll see in our F. One for IPO, where I Wanna say around 80% on a 12 month basis and today are closer to a 100%. We don't see a ceiling that has been an ongoing story for us the continuous improvement in repeat rate and it is so many factors, but I have to call out our technology and how for example, our machine model.

<unk> then the repeat rate and Thats why we thought it will be an excellent we are coming back with way higher.

But you can see it across the board in Waukegan spoiled child, both all cohorts are growing and the percentage of revenue coming from although we grew up massively in the past two years. The majority of the revenues coming from repeat so we just show the strength.

Oran Holtzman: As to the second question, 10 products, I don't know comparing to who, comparing to us it's not a lot because we launch way more and we're not always successful, so we have way more than 10 products, we test them and then, if we see that everything works both satisfaction and unit Economics, then we continue to push and so we have more than 10 products, but we are very bullish about those products because they came from that. Hey, Lloyd I'll, just just to add to on your first question as you know our net revenue repeat rates have continuously improved since the first time. We spoke to you was I think December 2021, we talked about net revenue repeat rates in the kind of low to mid forties, those net revenue repeat rates as of <unk>. You'll see in our F. One for IPO, where I Wanna say around 80% on a 12 month basis and today are closer to a 100%. We don't see a ceiling that has been an ongoing story for us the continuous improvement in repeat rate and it is so many factors, but I have to call out our technology and how for example, our machine model.

As to the second question that product I don't know can bring to vote comparing to us it's not a lot because we launch way more and we.

We're not always successful so we have way more than 10 products. We test them and then if we see that everything works both inspection and unit Economics, then we continue to push and so we have more than products, but we are very bullish about those products because they came from from that.

Lindsay Drucker Mann: Hey Oran I'll, just to add to on your first question as you know our net revenue repeat rates have continuously improved since the first time we spoke to you was I think December 2021, we talked about net revenue repeat rates in the kind of low to mid forties, those net revenue repeat rates as of, You'll see in our F1 for IPO, were I Wanna say around 80% on a 12 month basis and today are closer to a 100%, we don't see a ceiling that has been an ongoing story for us, the continuous improvement in repeat rate and it is so many factors, but I have to call out our technology and how, for example, our machine model. That support us and re targeting and how we market and making sure we're maximizing things like bundles and Upsells and adding basket size are in in getting people to engage again with the products and we just continue to get better and better and better as we get more data in an optimized for our models. So that's been a really important driver for us and of course. Now that we've layered spoiled child on top of your Macchiato and we're building the platform, we're able to extract more from the same wallet and that's part of the really strong financial profile of our business, which makes us more like what you would see in a software land and expand type of model, where we know. Who the user is we understand their profile, we understand so much about the products that we need and then we're building those products specifically for them. Allows us to extract more from the same wallet and drive repeat that to a lab. For us that we only just started realizing really with a spoiled child and to some degree with the launch it you'll maquillage skin, we're extracting more from that same user but that will just continue to compound over time, as we add more products and more brands to the platform. And then I guess, one clarification. The 10 products are purely oddity labs, that's not the full scope of products that we will introduce for Yamaki Ige and spoiled child in total next year.

Hey, Lloyd I'll, just just to add to on your first question as you know our net revenue repeat rates have continuously improved since the first time. We spoke to you was I think December 2021, we talked about net revenue repeat rates in the kind of low to mid forties, those net revenue repeat rates as of <unk>.

You'll see in our F. One for IPO, where I Wanna say around 80% on a 12 month basis and today are closer to a 100%. We don't see a ceiling that has been an ongoing story for us the continuous improvement in repeat rate and it is so many factors, but I have to call out our technology and how for example, our machine model.

Lindsay Drucker Mann: That has been an ongoing story for us, the continuous improvement in repeat rate and it is so many factors, but I have to call out our technology and how, for example, our machine models that support us in re-targeting, in how we market, in making sure we're maximizing things like bundles and Upsells and adding basket size, in getting people to engage again with the products and we just continue to get better and better and better as we get more data in and optimized for our models. So that's been a really important driver for us and of course. Now that we've layered spoiled child on top of your Macchiato and we're building the platform, we're able to extract more from the same wallet and that's part of the really strong financial profile of our business, which makes us more like what you would see in a software land and expand type of model, where we know. Who the user is we understand their profile, we understand so much about the products that we need and then we're building those products specifically for them. Allows us to extract more from the same wallet and drive repeat that to a lab. For us that we only just started realizing really with a spoiled child and to some degree with the launch it you'll maquillage skin, we're extracting more from that same user but that will just continue to compound over time, as we add more products and more brands to the platform. And then I guess, one clarification. The 10 products are purely oddity labs, that's not the full scope of products that we will introduce for Yamaki Ige and spoiled child in total next year.

That support us and re targeting and how we market and making sure we're maximizing things like bundles and Upsells and adding basket size are in in getting people to engage again with the products and we just continue to get better and better and better as we get more data in an optimized for our models. So that's been a really important driver for us and of course.

Lindsay Drucker Mann: And of course, now that we've layered SpoiledChild on top of IL MAKIAGE and we're building the platform, we're able to extract more from the same wallet and that's part of the really strong financial profile of our business, which makes us more like what you would see in a software land and expand type of model, where we know who the user is we understand their profile, we understand so much about the products that we need and then we're building those products specifically for them. Allows us to extract more from the same wallet and drive repeat that to a lab. For us that we only just started realizing really with a spoiled child and to some degree with the launch it you'll maquillage skin, we're extracting more from that same user but that will just continue to compound over time, as we add more products and more brands to the platform. And then I guess, one clarification. The 10 products are purely oddity labs, that's not the full scope of products that we will introduce for Yamaki Ige and spoiled child in total next year.

Now that we've layered spoiled child on top of your Macchiato and we're building the platform, we're able to extract more from the same wallet and that's part of the really strong financial profile of our business, which makes us more like what you would see in a software land and expand type of model, where we know.

Lindsay Drucker Mann: Where we know who the user is we understand their profile, we understand so much about the products that we need and then we're building those products specifically for them, that allows us to extract more from the same wallet and drive repeat as a lever for us that we only just started realizing really with a SpoiledChild and to some degree with the launch of IL MAKIAGE skin, we're extracting more from that same user but that will just continue to compound over time, as we add more products and more brands to the platform. And then I guess, one clarification. The 10 products are purely oddity labs, that's not the full scope of products that we will introduce for Yamaki Ige and spoiled child in total next year.

Who the user is we understand their profile, we understand so much about the products that we need and then we're building those products specifically for them.

Allows us to extract more from the same wallet and drive repeat that to a lab.

For us that we only just started realizing really with a spoiled child and to some degree with the launch it you'll maquillage skin, we're extracting more from that same user but that will just continue to compound over time, as we add more products and more brands to the platform.

Lindsay Drucker Mann: We're extracting more from that same user but that will just continue to compound over time, as we add more products and more brands to the platform and then I guess, one clarification, the 10 products are purely Oddity Labs, that's not the full scope of products that we will introduce for IL MAKIAGE and SpoiledChild in total next year.

And then I guess, one clarification. The 10 products are purely oddity labs, that's not the full scope of products that we will introduce for Yamaki Ige and spoiled child in total next year.

Lorraine Hutchinson: Okay, great. Thanks, so much.

Operator: Thank you, the next question comes from Jason English with Goldman Sachs, please go ahead.

The next question comes from Jason English with Goldman Sachs. Please go ahead.

Jason English: Hey, good morning folks, thanks for slipping me in, interesting statistic you shared on the acquisition expense behind IL MAKIAGE being down 40% year on year, when we look at SG&A ex the stock comp, It was still up substantially this quarter up by 36% versus up 38% last quarter and it sounds like you are making a lot of capability and people investments, but maybe you can unpack that a little bit more for us, how much did, I suppose, the aggregate acquisition expense change year on year in the quarter and for the remaining growth how much is going against people in R&D labs versus other capability billing.

Interesting statistic you sure on the acquisition expense behind Yamaki ice being down 40% year on year.

When we look at SG&A ex the stock comp.

It was still up substantially this quarter up by 36% versus up 38% last quarter.

And like you are making a lot of capability and people investments, but maybe you can unpack that a little bit more for us.

How much did I suppose the aggregate acquisition expense change year on year in the quarter.

And for the remaining growth how much is going against people in R&D labs versus other capability building.

Lindsay Drucker Mann: Yeah Thanks for the question Jason, So you can see in our financial profile that we leveraged our adjusted EBITDA in a in a very significant way versus the prior year, part of that a smaller part of it was gross margin expansion, but the bigger piece of it was SG&A leverage And a big part of that was our ability to leverage marketing spending in particular user acquisition as we throttled back on our new user acquisition and delivered the majority of our revenue from repeat customers. We are making other opex investments in support of them building the business out for the long term new brands new product cat. <unk> et cetera, and Ron touched on that a little bit earlier in terms of the buckets that we're spending in.

And a big part of that was our ability to leverage marketing spending in particular user acquisition as we throttled back on our new user acquisition and delivered the majority of our revenue from repeat customers. We are making other opex investments in support of them building the business out for the long term new brands new product cat.

Lindsay Drucker Mann: We are making other OPEX investments in support of building the business out for the long term, new brands, new product categories etcetera, and Ron touched on that a little bit earlier in terms of the buckets that we're spending in.

<unk> et cetera, and Ron touched on that a little bit earlier in terms of the buckets that we're spending in.

Jason English: Okay.

Oran Holtzman: I was just, I would just say one more thing that the media and as our percentage of revenue was lower in Q3 '23 compared to clinical so we didn't spend the money against and marketing.

Just had one more thing.

The.

Our media and as a percentage of revenue was lower in Q3 23 compared to clinical so we didn't spend the money against it and marketing.

Jason English: That's helpful thank you and impressive, congrats by the way, It sounds like you are continue to make great progress on Brand 3 and Brand 4, I think you talked last quarter about even having brought the brand together and have some clarity on what the brand name is going to be, in light of the progress you are making, is there any chance that you'll be able to bring it to market in 2024 and if not, what are the gating factors that are extending the launch all the way out to 2025.

It sounds like you are continue to make great progress on <unk> III in brand for I think you talked last quarter about even having.

<unk> brought the brand together and have some clarity on what the brand name is going to be.

In light of the progress you are making.

Is there any chance that you'll be able to bring it to market in 2024.

What is what.

What are the gating factors that are extending the launch all the way out to 2025.

Lindsay Drucker Mann: Yeah, so our plan continues to be for 2025, don't expect that to change, we've committed to, as we say call it launching a new company every 18 months to two years and they call it new company because these are truly standalone businesses, Standalone operating teams that we plug into our platform with shared technology, shared data etcetera, So no change to that.

Every.

18 months to two years and they call it new company because these are truly standalone businesses Standalone operating teams that we plug into our platform with share technology shared data et cetera, So no change to that.

Jason English: Okay, and last question for me, are on there, when I talked with investors, there's a lot of enthusiasm for the potential for your company and obviously, it's validated by the results you posted last evening, where there is lingering questions are on your ability to get the sequential acceleration that's implied in consensus from 4Q to 1Q, which of course is the cadence that Lindsay was talking about earlier, remind u,s as you as you plan to drive that stepped up acquisition into next year. What are the tactical steps you take that give you, that are going to catalyze that ramp into the first quarter?

And last question for me.

They're there when I talked with investors, there's a lot of enthusiasm for the potential for your company and obviously, it's validated by the results you posted last evening, where there is lingering questions are on your ability to get the sequential acceleration that's implied in consensus from <unk> to <unk>, which of course is the cadence that Lindsay was talking about earlier.

Remind.

Remind us as you as you plan to drive that stepped up acquisition into next year. What are the tactical steps you take that give you that are going to catalyze that ramp into the first quarter.

Oran Holtzman: So first of all we are not discussing our Q1, I can just say that like every other year, we have very strong visibility in Q4 into Q1 and we are doing lots of preparation in that quarter to ensure that we hit our goals in Q1, and in Q2 and we didn't have any problem to delivering the first, I want to say 3-4 years and we intend to continue to do so, the only reason that, you know, Before being a public company I had a private equity Investor day Cobo. The budget and we decided every year to go. To go with full Boeing the first half of the year to ensure that we have time to build engine for the next year. So that's how we started. We are not spending money on user acquisition, unless we see very strong efficiency. So even in Q1 and Q2 in previous years, we had like a few weeks that we that we cut back and we run the business with full visibility and we decide in real time any second what we want to do with the budget. So it's always going to. That's the best part would be to say.

Lots of preparation in that quarter to ensure that we hit all our goals in Q1, and Q2 and what do you have any problem to be living with us I don't want to say three four years.

And we intend to continue to do so the only reason that you know.

Oran Holtzman: The only reason that, you know, before being a public company I had a private equity investor that cared about yearly budget and we decided every year to go, to go with full power in the first half of the year to ensure that we have time to build engine for the next year. So that's how we started. We are not spending money on user acquisition, unless we see very strong efficiency. So even in Q1 and Q2 in previous years, we had like a few weeks that we that we cut back and we run the business with full visibility and we decide in real time any second what we want to do with the budget. So it's always going to. That's the best part would be to say.

Before being a public company I had a private equity Investor day Cobo.

The budget and we decided every year to go.

To go with full Boeing the first half of the year to ensure that we have time to build engine for the next year.

So that's how we started.

Oran Holtzman: So that's how we started, but again we are not spending money on new user acquisition unless we see very strong efficiency, so even in Q1 and Q2 in previous years, we had like a few weeks that we that we cut back and we run the business with full visibility and we decide in real, time any second what we want to do with the budge, so it's our control, that's the best part of DTC.

We are not spending money on user acquisition, unless we see very strong efficiency. So even in Q1 and Q2 in previous years, we had like a few weeks that we that we cut back and we run the business with full visibility and we decide in real time any second what we want to do with the budget. So it's always going to.

That's the best part would be to say.

Jason English: Okay, Thanks again and congratulations once again on the results.

Oran Holtzman: Thank you very much.

Operator: Thank you, this concludes our question and answer session, I would like to turn the conference back over to Oran Holtzman for any closing remarks, over to you.

This concludes our question and answer session.

I would like to turn the conference back over to Ron Holtzman for any closing remarks.

Over to you.

Oran Holtzman: Thanks for joining us and we'll speak to you when we report the fourth quarter, have a great day guys, bye bye.

Great Hey, guys Bye bye.

Okay.

Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Q3 2023 ODDITY Tech Ltd Earnings Call

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