Q2 2024 Oddity Tech Ltd Earnings Call

August 8, 2024

Operator: Please stand by. Your conference is about to begin. Good day, everyone, and welcome to this ODDITY second quarter 2024 earnings conference call. Today's conference is being recorded, and we have allocated time for prepared remarks as well as Q&A. At this time, I'd like to turn the conference over to Maria Lycouris, Investor Relations, for ODDITY. Thank you. You may begin.

Maria Lycouris: Thank you, operator. I'm joined by Oran Holtzman, ODDITY co-founder and CEO, and Lindsey Druckerman, 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 ODDITY's business strategy, market opportunity, future financial performance, and potential long-term success. Forward-looking statements involve risks and uncertainties, and actual results can differ materially due to a variety of factors.

Maria Lycouris: These factors are described in forward-looking statements in our earnings press release issued yesterday and in our annual report on Form 20-F filed with the Securities and Exchange Commission on March 6, 2024. 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, is included in our earnings press release, which we issued yesterday. I'll now hand the call over to Oran.

Oran Holtzman: Thanks, everyone, for joining us today. The second quarter and the first half of the year were another set of record breakers for us. We grew first half revenue 28% to $404 million, delivered $110 million of adjusted EBITDA, and generated $104 million of free cash. Our business is firing on all cylinders with no signs of slowing. The $110 million of adjusted EBITDA we delivered in just the first half of 2024 is more EBITDA than we delivered in the full year of 2022.

Oran Holtzman: Growing 28% in the first half, more than three weeks faster than legacy incumbents, and with a 27% EBITDA margin, proved again that our platform is very strong and enables scale, growth, and very high profitability consistently. Our investment in technology in the past six years continues to pay great dividends, and our record margins allow us to keep doubling down on investment in technology, science, and building new brands. I will reiterate what I have said multiple times before; the opportunities that they see ahead for our business are massive.

Oran Holtzman: The beauty and wellness industry is huge, profitable, and growing, and it is dominated by offline incumbents that are behind the curve. We can see today how some of them are paying the price as they struggle to adapt.

Oran Holtzman: We are still only a tiny fraction of the global market, and therefore, the opportunity is so big. I strongly believe that we have what is needed to continue winning and living in the most important areas of the country's growth. With our capabilities and DNA as a company, we are in the best industry in the world for our technology. In my view, we are unlocking two areas that are changing the industry. First, we are unlocking it online, where we are already dominating as the largest direct-to-consumer platform. This is the future of the category.

Oran Holtzman: We see it clearly with massive demand on our website. We expect online to grow to 50% of the market in the coming years, and ODDITY is leading this transformation. The second area of category growth is towards high-tech.

Oran Holtzman: ODDITY Labs can be a game-changer here, turbocharging ingredients innovation to solve consumer pain points, and we are spending time and resources building it. Drilling into online, the opportunity for us to continue unlocking beauty in this channel is huge, and our competitive advantage grows daily. We have three core areas for unlocking beauty online that we invest in to fuel our long-term growth. Starting with our platform model, we have more than 50 million Unix users.

Oran Holtzman: We're ready for the restaurants to launch products, categories, and brands. We have shown this ability again and again, starting with in-makeup and color cosmetics, spoil charging skin and hair, and now in-makeup and skin, which is on track to be around 25% of its in-makeup brand revenue in 2024. Second, our in-house technology. Our machine models and algorithms allow us to understand what consumers want, to match them to the right product, and show them how to use it.

Oran Holtzman: In addition to our machine learning models, in the past three years, we invested a lot of time and money in our vision technology. These investments gave us a new way to gather data and to get answers to questions that even our users don't necessarily know. We have made major strides in building our vision tools, and 2024, in particular, has been a breakout year. We incorporate vision into our latest trade matching models, which is driving improvement in matching accuracy, reducing return rates on like-to-like products, and driving better..., and I believe it will continue to get even better over time. We have also made progress in vision machines for brain trees, where we can now identify accident agents, track them, and model progress over time.

Oran Holtzman: To the best of my knowledge, no one in our industry has anything that is even close to what we are building here, technology-wise. And it will be the core technology for brand three. The third core investment area is our brand building. At ODDITY, we are building brands from scratch based on first-party data we get from our users. Our brands have distinct points of view but are all anchored in quality and high-performance product formulations. This is by design.

Oran Holtzman: Any product that we launch must meet a top-performing formulation in the market, based on data from consumer trials and based on total data we collect from real users. We don't have heads of make-up artists or heads of stylists that get to pick which products we launch. Only data decides that.

Oran Holtzman: Our approach to product development is unlike anything else in the industry, in my view, and it is based solely on big data. This is why El Makiage and Spoiled Child are launching winners and delivering such high repeat rates and, therefore, are generating unparalleled profit margins for all. I believe that both of our existing brands, Immortiage and Spoiled Child, are on track to be $1 billion brands. All the KIAs you expect to accumulate in the next four years.

Oran Holtzman: In addition to Real Maquillage and Spoiled Child, we continue to work hard on developing new brands to serve our user base, and we are making great progress. Brand 3 and Brand 4 are on track to be launched in the second half of 2025. As a reminder, Brain Tree is a medical-grade skin and body brand that will address a range of issues including acne, eczema, hyperpigmentation, and other major concerns.

Oran Holtzman: So, to summarize, data, technology, and our excellent new breadth development mission are fueling, and will continue to fuel, our online growth and profitability. This is the proof that we are moving to science-backed products via ONCLAB. For years, it was my dream to use science to create better products for our consumers, to solve their pain points, and to carve out another source of competitive edge for us. But for years, I was amazed by the lack of scientific innovation in our industry. It just didn't make sense to me, given the size of the industry and the progress in science and biotech in the last two decades.

Oran Holtzman: The acquisition of Prevella in 2023 gave us the foundation for building quality labs in Boston, and for our science-backed new product training. As a reminder, at ODDITY Labs, we are using digital biology to discover, launch, and own the next generation of science-backed products that our consumer is so eager for. Last quarter, I spoke about the important steps we have been taking to build up, to grow the teams, and to develop infrastructures and systems to ensure we are building a platform that works at scale.

Oran Holtzman: As part of that, we are excited to announce that Dr. Ido Bachelet is joining us as the chief science officer to lead our science and policy lab. Bringing IDO on board is a great milestone for us. I spent time speaking with many scientists, and IDO was by far the strongest. IDO is a highly accomplished world-class scientist with deep experience building and scaling multiple high-impact biotech labs, is super creative, and shares our culture of disruption and building.

Oran Holtzman: After years in therapeutics, he decided that instead of developing another drug, he wanted to join us in changing an entire industry through science. Dr. Evan Zhao, the co-founder of Rebella, has decided to depart ODDITY to pursue other interests.

Oran Holtzman: Evan is a very talented entrepreneur who built Prevella into a disruptive consumer brand. Thanks to the acquisition of Rebella, ODDITY now has the foundation to be at the forefront of science-backed transformation in our industry, and we are grateful for that. I want to personally thank Evan and wish him the best in his future endeavors. As I've said before, OD Labs is a new master-level building and a complicated one.

Oran Holtzman: Very similar to our early days building our technology backbone, it takes time and iterations to build something new. Therefore, as I said before, we are not counting on growth coming from all three labs in the near term. We don't need it to achieve our financial targets. We have a ton of growth ahead for Illumak Yash and Spoiled Child alone, and even more growth on top of that coming from new brands in the pipeline.

Oran Holtzman: At labs, we are literally building another large platform from scratch. But if we get it right, we can differentiate ODDITY even more from our competitors in the long term. It is hard, and it takes time, but I truly believe in it, and I'm confident we'll make it.

Oran Holtzman: Looking ahead, as we told you last quarter, 2024 for us is essentially in the rearview mirror. We have full confidence in achieving our financial targets, and we are once again raising our full yield outlook. Our teams are now almost entirely focused on preparing 2025 and beyond, and we are feeling confident in our execution next year. First, because we are leaving growth on the table in 2024 and staying disciplined about placing our... It is something we have always done, so we deliver on our commitments, which we have achieved not just every quarter as a public company but every quarter as a private company as well.

Oran Holtzman: Second, because of all the growth levers our team is preparing for next year. The teams are now head down with planning, testing, and iterating on winners on many fronts, new marketing campaigns, new products, new models, and new geographies. Based on what I see today, we are in a strong position for 2025.

Oran Holtzman: But before I hand it to Lindsay, I want to take a moment to reflect on our first year as a public company. We decided to take the company public because we wanted to build something huge. Because I felt then, as I do now, bullish on our ability to disrupt this enormous global market with our platform and create massive value for our shareholders.

Oran Holtzman: To be candid, it's not easy to be a public company, but we have made great accomplishments in this past year since our IPO. We are very proud of our financial results. We delivered on our promises to the shareholders. We beat revenue and profit and earned extra shares every quarter since going public. At the same time, we didn't change the DNA of our company, a DNA of building innovation and investing behind big and hard rims.

Oran Holtzman: And this is something I am very proud of. We have kept our hungry, outsider startup culture despite our growth. This is the most important thing for our future success. We have also begun returning cash to our shareholders with buybacks. We believe our stock offers incredible value, and we'll use our strong balance sheet to take advantage of that. With that, I will turn it over to Lynn.

Lindsay Mann: Thanks, Oran. Let's turn to our Q2 results, which I'll refer to on an adjusted basis. You can find the full reconciliation to GAP in our press release. ODDITY delivered a record-breaking second quarter and first half across the board.

Lindsay Mann: We grew net revenue by 27% in the quarter to $193 million. The strength was driven by both ill-maquillage and spoiled children across a range of product categories. Revenue growth was driven primarily by an increase in orders, while average order value increased 6% year-over-year. Average order value growth was driven both by an increase in items per order and a positive mix shift to higher-priced products like skin, partially offset by mix shift to repeat sales, which carry lower AOE.

Lindsay Mann: The proportion of our sales from repeat customers increased on a year-over-year basis this quarter and is on track to be a higher percentage of our sales in the full year 2024 as compared to 2023. Drilling into revenue composition for the quarter, 94% of our net revenue came from sales on our own website directly to consumers. The remaining 6% of net revenue in the quarter came from sales in Israel and marketing affiliates.

Lindsay Mann: As a reminder, we do not sell any products to Amazon, eBay, or other third-party marketplaces, nor do we generate any direct revenue from products sold on these sites. Any product we sell on those sites is unauthorized and done without our consent.

Lindsay Mann: Moving down to P&L, growth margin of 72.2% expanded by 150 basis points year-over-year. The growth margin improvement was driven by specific supply chain and logistics efficiencies at both brands. We delivered adjusted EBITDA of $62 million in the quarter. Adjusted EBITDA margin of 32.3% expanded 470 basis points from the prior year, driven partly by gross margin expansion and a higher mix of repeats. EBITDA exceeded our original guidance of $53 to $56 million, and that was driven in part by the timing of investments into new brands and auditing labs, although the timing of these investments is delayed into the back half of the year.

Lindsay Mann: We delivered adjusted diluted earnings per share of $0.82. Our adjusted EBITDA and EPS include approximately $7 million of share-based compensation. Our free cash conversion remains excellent. We've delivered $104 million of free cash flow year to date. This free cash generation is a clear reflection of the strength and quality of our business model. In June, our board authorized a $150 million three-year buyback. We will purchase 250,000 shares for $10 million in the second quarter and have $140 million remaining in our authorization. We exited the quarter with $268 million of cash, equivalents, and investments on our balance sheet and zero debt.

Lindsay Mann: Turning to our outlook, we're raising our 2024 full-year guidance based on the better-than-expected second-quarter results and our high visibility to repeat sales for the remainder of the year. We now expect net revenue between $633 million and $640 million, representing 24 to 26 percent year-over-year growth. We expect to deliver 71 percent gross margin for the full year, and we expect to deliver adjusted EBITDA between $142 and $146 million, which includes a step-up in growth investments for ODDITY Labs and our new brand. We expect full year adjusted diluted earnings per share will be between $1.71 and $1.76.

Lindsay Mann: Turning to the third quarter outlook, we're off to an excellent start and are pleased with the composition of our growth across both brands and categories, as well as our cohort repeat rates. We expect year-over-year net revenue growth in the quarter to be between 22 and 24 percent. You can find more details on our Q3 outlook and our press release. Lastly, I'll provide some early thoughts on 2025. We expect to deliver net revenue growth of 20% and an adjusted EBITDA margin of 20% consistent with our long-term algorithm.

Lindsay Mann: We plan to incur significant investments in Brand 3, Brand 4, and ODDITY Labs, and we do not expect to benefit from any material revenue contribution from these initiatives in 2025. On the topic of supply chain and tariffs, while the ultimate policy outcomes are still to be determined, we're confident in our ability to manage through with limited financial impact based on the proposals currently in discussion. Our gross margin is high, as is our pricing power, and our financial exposure to tariffs and duties is very small.

Lindsay Mann: As a reminder, we source the majority of our products from Europe, and we purchase some components and packaging out of Asia, including China. In 2023, total costs related to tariffs and duties, including from product sources out of China, amounted to less than 1% of sales.

Operator: With that, I'll turn it back to the operator for questions.

Operator: Thank you very much. And to our audience joining us today, at this time, if you would like to ask a question, simply press star and 1 on your telephone keypad. Pressing stars and 1 will place your line in a queue, and we'll take your questions one at a time. Also, today, we ask you to please limit yourselves to a single question. A friendly reminder that if you're joining on a speakerphone today, please return to your handset to be certain that your signal does reach our equipment. That is Star and 1 for questions, ladies and gentlemen. We'll hear first from Dara Mohsenian at Morgan Stanley.

Dara Mohsenian: So the metrics you gave on the year over year performance were helpful. Can you also spend some time talking about where revenue upside came from in the quarter, both in terms of metrics? Repeat, Average Order Size, etc., but also at the brand level in terms of spoiled child versus no maquillage and how you think about the sequential pace of Spoiled Child going forward after a very successful launch over the last couple of years and how that brand is developing versus your expectations.

Operator: Sure. Hi Dara.

Oran Holtzman: Hi guys. Again, as mentioned, a very strong start today. Both Il Makiage and Spoiled Child both grew double digits, very strong according to the plan and across a range of products and categories. Growth in revenue was also driven by skin penetration massively in Il Makiage. It grew from nothing in Q1 and it's going to be like 25% in 2024. And just when I think about it, it's like $100 million, which is a lot for a brand that, like, three years ago, we had nothing in the skin. The team did a very good job in penetration, and it was a ton of work, but like at the end of the day, we did perfectly.

Oran Holtzman: Increasing revenue was driven by more orders and higher ILVM. It's a positive makeshift towards higher priced products. And unlike most direct-to-consumer companies, we generate most of our revenue from repeat customers. And although we grew 28% in Q1, this is why the business is so profitable. And we continue to see the repeat percentage of revenue increase consistently. There is nothing more impactful and meaningful to business strength than this. We entered the second quarter with great momentum from the first quarter, and we began reducing our acquisition spending to slow growth down to lend closer to our algorithm of 20% growth.

Oran Holtzman: And as a result, repeat business was the majority of our revenue in this quarter. And that's why the profitability is so huge, 32% of just the margin. We have shown once again that we can power the business, and we have full control. This is a huge advantage for us. And in terms of efficiency, we are spending in the first half more than double than what we spent two years ago in terms of spending on media. And efficiency is even stronger now. So the business is in full control. Our next question will come from...

Operator: Our next question will come from Youssef Squali at Truist Security. I believe we may have lost Mr. Squali. I invite you to re-signal, sir. Next, we'll hear from Andrew Boone at JMP Security. We may have lost that line as well.

Operator: Again, I do invite you to re-signal with star and one. We'll try to go to Lauren Lieberman at Barclays. Are you able to speak? Your line is open. I mean, can you hear me? Yes, ma'am. Hi, Lorraine.

Operator: All right. Cool. Exciting. Hi. My phone worked.

Lauren Lieberman: Cool. So I'm going to loop two questions into one. So first, Oran, I thought the sort of discussion you shared about labs and the time it takes to build what you're hoping for. But I was curious as we think about new product launches, including brands three and four for next year, whether there are, you know, sort of unique and discrete molecules that will be included in those. So I think my recollection is that was the hope that, you know, laboratories would be contributing in 2025 to some of the new products you'd be bringing to market. So I wanted to just get a status check on that.

Lauren Lieberman: And then the second piece was the step up in SG&A spending in the second half. And I know you guys have a habit of investing ahead and planning ahead for growth. But given that brands three and four aren't launching in the second half of 25, it seems like a lot of spending closer in. So I was curious if that's where it's directed or if it's more towards continuing to scale.

Remarks, as well as Q&A at this time I'd like to turn the conference over to Maria like Chorus Investor Relations for oddity. Thank you you may begin.

Conference over to Maria like Horus Investor Relations for Oddity. Thank you you may begin.

Oran Holtzman: We will have a few launches before that, that we go into oil-child in Ilmaquillage, but overall in the next year or two, it's mainly expenses and we are doing it. We are happy to do it.

Speaker Change: Thank you operator, I am joined by Iran. Haltzman, an oddity co founder and CEO and Lindsay Drucker Mann on these global CFO.

Speaker Change: Thank you operator, I'm joined by Ron Holtzman, an oddity co founder and CEO and Lindsay Drucker Mann on these global CFO.

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

Lindsay Druckerman: We are happy to do it. We believe that, like we are in the beginning of massive transformation, where brand is not enough when people will, as for modern that and we believe that size by product is the future of the industry. And we see it as a race, and therefore we are investing a lot in building this capability. I believe that ODDITY has the ability to do something that no one has can because of our ability to build something from scratch.

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

Oran Holtzman: We believe that, like we are in the beginning of massive transformation, where brand is not enough when people will, as for modern that and we believe that size by product is the future of the industry. And we see it as a race, and therefore we are investing a lot in building this capability. I believe that ODDITY has the ability to do something that no one has can because of our ability to build something from scratch. And we are building another platform.

Forward looking statements involve risks and uncertainties and actual results could differ materially due to a variety of factors.

Speaker Change: Weird looking statements involve risks and uncertainties and actual results could differ materially due to a variety of factors.

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Speaker Change: These factors are described under forward looking statements in our earnings press release issued yesterday and in our annual report on form 20-F filed with the <unk> and Exchange Commission on March six 2024.

Lindsay Druckerman: And we are building another platform. If I wanted, I could already have products in the market from labs, but first of all, I don't need because we are growing more than what I want without it. And second, because I want to build something that we can be proud of and the products are not best in class, way more than that, comparing to the competitors. So, hope it has answered your question. So, yes, brand three and brand four.

Oran Holtzman: And in addition to that, we will see some products within Ilmaquillage, in the next six to 12 months.

Oran Holtzman: If I wanted, I could already have products in the market from labs, but first of all, I don't need them because we are growing more than what I want without it. And second, because I want to build something that we can be proud of, and the products are not best in class, way more than that, comparing to the competitors.

Speaker Change: 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 as 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.

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

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Speaker Change: During this call we will discuss certain non-GAAP financial measures, which we believe are useful as 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.

Please stand by. Your conference is about to begin.

Oran Holtzman: So, hope it has answered your question. So, yes, Brand three and Brand four. And in addition to that, we will see some products within Ilmaquillage in the next six to twelve months.

Iran: Now hand, the call over to Iran.

Iran: Thanks, everyone for joining us today.

Iran: Ill hand, the call over to Iran.

Speaker Change: Good day everyone and welcome to this ODDITY second quarter 2024 earnings conference call.

Iran: The second quarter and the first half of the year were another record breaker for us.

Iran: Thanks, everyone for joining us today.

Iran: The second quarter and the first half of the year were another record breaker for us.

Iran: First half revenue of 28% from $404 billion delivered $110 million of adjusted EBITDA and generated $104 million for free cash flow.

Today's conference is being recorded, and we have allocated time for prepared remarks as well as Q&A. At this time, I'd like to turn the conference over to Maria Lycouris, Investor Relations for ODDITY. Thank you. You may begin.

Lindsay Druckerman: I'll take the FUNA piece of that. So, as you know, we started the year off with very ambitious investment and spending plans across 2024 in support of all of our initiatives in 2025, including the two new brands plus out of the labs. As the year progressed, the timing of some of that spending got pushed. We have delivered upside, of course, to our numbers. And you saw that in the fact that our full-year guidance, we've continued to raise.

Lindsay Druckerman: I'll take the FUNA piece of that.

Iran: We grew first half revenue of 28% from $404 billion delivered $110 million of adjusted EBITDA and generated $104 million for free cash flow.

Lindsay Druckerman: So, as you know, we started the year off with very ambitious investment and spending plans across 2024 in support of all of our initiatives in 2025, including the two new brands plus out of the labs. As the year progressed, the timing of some of that spending got pushed. We have delivered upside, of course, to our numbers. And you saw that in the fact that our full-year guidance, we've continued to raise. But to the degree we've had really remarkable profitability in the first half of the year, we didn't expect to be as profitable in the first half just because of the spending.

Iran: Our business is firing on all cylinders with no signs of slowing.

Speaker Change: thank you operator i'm joined by iron ltzman and audy coke founder in ce o and lindy druerman on these global cfo

Iran: Our business is firing on all cylinders with no signs of slowing the $110 million of adjusted EBITDA. We delivered in just the first of 2024 is more EBITDA than we delivered in the full year of 2023.

Iran: The $110 million of adjusted EBITDA, We delivered just the first of 2024.

Iran: EBITDA did we delivered in the full year of 2023.

Speaker Change: 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 auditing business strategy, market opportunity, future financial performance, and potential long-term success.

Iran: Growing 28% in the first of more than <unk> faster than legacy incumbents, and with 27% EBITDA margins.

Iran: Again that our platform is very strong and enabled scale growth and very high profitability consistently.

Iran: Proved again that our platform is very strong and our neighbors scale growth and very high profitability consistently.

Lindsay Druckerman: But to the degree we've had really remarkable profitability in the first half of the year, we didn't expect to be as profitable in the first half just because of the spending. But you can you get a sense of how profitable the underlying business is, even though with what we delivered in the first half of of 24, we still, you know, that's still with some additional growth spending layered on. So, if we were to pull all of that investment off, you haven't even more profitable business.

forward-looking statements in vol risks and uncertainties and actual results could differ materially due to variety of factors

Speaker Change: We invested in technology in the past six years continued to pay great dividends and our record margins allow us to keep doubling down on investments and technology side and building new brands.

Iran: Our investments in technology in the past six years continued to pay great dividends and our record margins allow us to keep doubling down on investments and technology side and building new brands.

Speaker Change: these factors are described under forward-looking statements in our earnings press release isu yesterday and in our annual report on four and twenty asked out with this t exchange commission on march six two thousand and twenty-four

Lindsay Druckerman: But you can get a sense of how profitable the underlying business is, even though with what we delivered in the first half of 24, we still, you know, that's still with some additional growth spending layered on. So, if we were to pull all of that investment off, you haven't even more profitable business. And that's a function of, as Iran said, just how incredible the repeat is. We also continue to be very efficient on our acquisition spend, which, as you know, the first half of the year, that's where the bulk of our acquisition activity happens.

Speaker Change: Iterate, what I said multiple times before Doe opportunities that I see ahead for our business are massive.

Speaker Change: To reiterate what I said multiple times before the opportunities that they see ahead for our business are massive.

Speaker Change: do not undertake any obligation to update forward-looking statements which speak only as of today.

Speaker Change: The beauty and wellness industry is huge profitable and growing and it is dominated by offline convinced that all behind the curve.

Speaker Change: Finally, during this call, we will discuss our 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'll now hand the call over to Oran.

Speaker Change: The beauty and wellness industry is huge profitable and growing and it is dominated by offline campaigns that are behind the curve.

Lindsay Druckerman: And that's a function of as Iran said, just how incredible the repeat is. We also continue to be very efficient on our acquisition spend, which, as you know, the first half of the year, that's where the bulk of our acquisition activity happens.

Speaker Change: We can see today are some of them of being the price as they struggled to adapt.

Speaker Change: We could see today are some of them are paying the price as they struggled to adapt.

Speaker Change: This sets up the massive opportunity for <unk>, we are still only a tiny fraction of the global market and therefore, the opportunity is so big for us.

Speaker Change: This sets up the Matthew opportunity for OTT, we are still only a tiny fraction of the global market and therefore, the opportunity is so big for us.

Oran Holtzman: Thanks, everyone, for joining us today. The second quarter and the first half of the year were another set of record breakers for us. The $110 million of adjusted EBITDA we delivered in just the first half of 2024 is more EBITDA than we delivered in the full year of 2022 and proves again that our platform is very strong and enables scale, growth, and very high profitability consistently. Our investment in technology in the past six years continues to pay great dividends, and our record margins allow us to keep doubling down on investment in technology, science, and building new brands.

Lindsay Druckerman: So, you're seeing right now this kind of perfect, perfect filial of a CDC model that is super profitable because of strong repeat and continues to acquire in a very efficient way and is then able to redeploy that excess return and future investments, which we believe will drive us for many years in the future. The types of expenses, I say, it's a bunch of things. Product development, you know, brand development, people, we have a whole lot going on and we've front loaded those costs as much as possible. We'll have more of course in 2025 and that underpins the guidance that the preliminary guidance that we gave you on 2025 today.

Oran: thanks seeveryone for joining us today its second quarter in the first half of the year where in another b of frecord breakers for us

I strongly believe that we have what is needed to continue winning and leading in the most important areas of the category growth.

Speaker Change: I strongly believe that we have what is needed to continue winning and leading in the most important areas of the category growth.

Oran: We grew First Half Revenue 28% to $404M, delivered $110M of Adjusted EBITDA, and generated $104M of Free Cash Flow.

Iran: All of the capabilities and DNA as a company we are in the best industry Award for our type of company.

Speaker Change: Our capabilities and DNA as a company we are in the best industry in the world for our type of company.

Iran: In my view, we are unlocking two areas little change in the industry.

Lindsay Druckerman: The types of expenses, I say, it's a bunch of things. Product development, you know, brand development, people; we have a whole lot going on, and we've front-loaded those costs as much as possible. We'll have more, of course, in 2025, and that underpins the guidance that the preliminary guidance that we gave you on 2025 today.

Speaker Change: In my view, we are looking to areas that they'll change for the industry.

Oran: Our business is firing on all cylinders with no signs of slowing. The $110 million of adjusted EBITDA we delivered in just the first half of 2024 is more EBITDA than we delivered in the full year of 2023.

Iran: We are looking online where we're already dominating the largest direct to consumer platform. This is the future of the category, we see clearly with massive demand on the old websites.

Speaker Change: We are looking online where we're already dominating the largest direct to consumer platform. This is the future of the category, we see clearly with massive demand on the old websites.

Iran: We expect online to grow to 50% of the market in the upcoming years and auditing is leading this transformation.

Oran: Growing 28% in the first half, more than 3x faster than legacy incumbents, and with 27% EBITDA margins.

Speaker Change: We expect online to grow to 50% of the market in the upcoming years and OTT is leading this transformation.

Iran: The second area of category growth is toward science backed high efficacy products.

Oran: Proved again that our platform is very strong and enables scale, growth, and very high profitability consistently.

Speaker Change: The second area of category growth is stored science backed high efficacy products or.

Iran: What do you see labs can be a game changer turbocharging ingredient innovation to solve customer pain points, and we are spending time and resources to build it.

Youssef Squali: And now we will go to Youssef Squali at Truace Securities. All right. Can you guys hear me? Yes, how you doing? Excellent. Thank you, beautiful. Thanks a lot. Sort of had that. No, it happened.

Speaker Change: Quality labs can be a game changer turbocharging ingredient innovation to solve customer pain points, and we are spending time and resources to build it.

Oran: Our investment in technology in the past six years continues to pay great dividends, and our record margins allow us to keep doubling down on investment in technology, science, and building new brands. I will reiterate what I said multiple times before, the opportunities that I see ahead for our business are massive.

Speaker Change: Drilling into online the opportunity for us to continue unlocking beauty in this channel is huge and our competitive advantage grows daily we have three core areas are looking online that reinvesting to fuel our long term growth.

Youssef Squali: So, two questions. Maybe, can you just unpack a little more the investments that you guys have in store for? Brand number three, brand number four, versus brand, versus the investment in reality labs. It seems that you guys are looking at the two somewhat differently reality labs is more of a long-term kind of investment with an ROI that's still not very clear to us. Although they seem to be very clear to you, but number three investment and brand number three and number and brand number four seem to be kind of more specific. So, anything you can any any kind of clarity you can shed on that would be really helpful.

Youssef Squali: So, two questions. Maybe, can you just unpack a little more the investments that you guys have in store for? Brand number three, brand number four, versus brand, versus the investment in Reality Labs. It seems that you guys are looking at the two somewhat differently. Reality Labs is more of a long-term kind of investment with an ROI that's still not very clear to us. Although they seem to be very clear to you, but number three investment and brand number three and number and brand number four seem to be kind of more specific. So, anything you can, any kind of clarity you can shed on that would be really helpful.

Oran Holtzman: The beauty and wellness industry is huge, profitable, and growing, and it is dominated by offline incumbents that are behind the curve. Starting with our platform model, we have more than 50 million Unix users who are ready for restaurants to launch products, categories, and brands. In addition to our machine learning models, in the past three years, we invested a lot of time and money in our vision technology.

Speaker Change: the billion relig industries huge profitable and growing and it is dominated by also incumbent that i'll behind the ter we can say today out some of them i'll aying the price is they trished to adapt

Speaker Change: Starting with our platform model, we have more than 50 million unique users were already audience for us to launch product categories and brands into we have shown this ability again and again, starting with INO Mark Yockey in color cosmetics spoiled children skewed in half and now <unk>.

Speaker Change: Starting with our platform model, we have more than 50 million unique users were ready audience for us to launch product categories and brands into we have shown this ability again and again, starting with intermec, Yahtzee and pellicle <unk> spoil charges skeet in half and now <unk>.

Speaker Change: This set up a massive opportunity for ODDITY. We are still only a tiny fraction of the global market, and therefore the opportunity is so big for us.

Speaker Change: <unk> skin, which is on track to be around 25% or <unk> revenue in 2024.

Speaker Change: Scheme, which is on track to be around 25% or <unk> revenue in 2024.

Speaker Change: I strongly believe that we have what is needed to continue winning and leading in the most important areas of the category's growth. With our capabilities and DNA as a company, we are in the best industry in the world for our type of company.

Speaker Change: Second is our technology, our machine models and algorithms allow us to understand what consumer wants to match them to the right product and showed them how to use it.

Iran: Second is our in house technology, our machine models and algorithms allow us to understand what consumer wants to match them to the right product and show them how to use it.

Speaker Change: In addition to our machine learning models in the past three years, we invested a lot of time and money behind our vision technology.

Oran Holtzman: And then maybe as a somewhat of a related question, Oran maybe talk a little bit about the changing leadership at labs. Any change in direction, any impacts on maybe the cadence of output of either products from all of you, however you want to define it out of the. Yeah, I agree. Out of that, you know, labs now that the you have new new kind of leadership there. Thank you. Sure. Thanks. So I'll start with the second question. Then I'll move to the first one. There is no change because I'm still here. Fortunately, unfortunately, and that like the piece we are trying to solve here, we are building a platform.

Oran: In my view, we are unlocking two areas that are changing the industry.

Iran: In addition to our machine learning models in the past three years, we invested a lot of time and money behind our vision technology.

Speaker Change: These investments gave us a new way to gather data and to get answers to questions that even our users don't necessarily know.

Speaker Change: First, we are unlocking online, where we are already dominating as the largest direct-to-consumer platform. This is the future of the category. We see it clearly with massive demand on our websites.

Iran: These investments gave us a new way together data and to get answers to questions that even our users don't necessarily know.

Speaker Change: We have made major strides in building our vision tools in 2024 in particular has been a breakout here.

Iran: We have made major strides in building our vision tools in 2024 in particular has been a breakout here.

Speaker Change: We expect online to grow to 50% of the market in the upcoming years and ODDITY is leading this transformation.

Speaker Change: We incorporated vision into our latest trade matching model, which is driving improvement in matching maturity, reducing return rates on a like to like products and driving better LTV.

Iran: We incorporated <unk> into our latest trade matching models, which is driving improvement in making that you were seeing reducing return rates on a like to like products and driving better LTV.

Speaker Change: The second area of category growth is towards high-efficacy products.

Speaker Change: ODDITY Labs can be a game changer here, turbocharging ingredient innovation to solve consumer pain points and we are spending time and resources to build it.

Oran Holtzman: So I'll start with the second question. Then I'll move to the first one. There is no change because I'm still here. Fortunately, unfortunately, and that like the piece we are trying to solve here, we are building a platform. And it's a combination between building something new and blitzkilling because I believe again, as I mentioned before that we are in a race to get to get it right. I believe that the rest of the industry will go there and we need to move fast.

Speaker Change: And I believe it will continue to get even better over time.

Iran: And I believe it will continue to get even better over time.

Speaker Change: We have also made progress envision machines for Brent Korea, where we now can identify ocular lesions drug them and motor progress overtime.

Iran: We have also made progress envision machines for Brent Korea, where we now can identify ocular lesions drug them and model progress overtime.

Speaker Change: Drilling into online, the opportunity for us to continue unlocking beauty in this channel is huge, and our competitive advantage grows daily. We have three core areas for unlocking online that we invest in to fuel our long-term growth.

Oran Holtzman: And it's a combination between building something new and blitzkilling because I believe, again, as I mentioned before, that we are in a race to get to get it right. I believe that the rest of the industry will go there, and we need to move fast. And this is part of the reasons for the change. I want to hire more. I want to build more. I want to have more oversight. I've done it before. We detect him, and I want to do the same in science in Boston. And therefore, we are making some changes there in leadership in terms of direction, same direction.

Speaker Change: My knowledge no one in our industry is something that is even close to what we are building here at technology wise and it will be the core technology for Brent.

Iran: My knowledge no one in our industry is something that is even close to what we are building technology wise and it will be the core technology for Brent.

Speaker Change: The third core investment area is our brand building machine.

Speaker Change: Starting with our platform model, we have more than 50 million unique users who are ready for the restaurants to launch products, categories, and brands into.

Iran: The third core investment area is our brand building machine.

Speaker Change: OTT, we are building a brand from scratch based on first party data we have from our users.

Oran Holtzman: And this is part of the reasons for the change. I want to hire more. I want to build more. I want to have more oversight. I've done it before we detect him and I want to do the same in science in Boston. And therefore, we are making some changes there in leadership in terms of direction, same direction. I'm very involved. My sister is involved. And now we are going to bring more people that are sharing our philosophy of how to move and faster toward this direction.

Iran: ODT, we are building a brand from scratch based on first party data we have from our users.

Speaker Change: We have shown this ability again and again, starting with Illumakiaj in color cosmetics, Spoiled Child in Skin and Hair, and now Illumakiaj in Skin, which is on track to be around 25% of Illumakiaj brand revenue in 2024.

Speaker Change: Our brands have distinct points of view, but they'll all anchored in quality high performing product formulations.

Iran: Our brands have distinct points of view, but they'll all anchored in quality high performing product formulations. These by design any product that we launched must be the top performing formulation in the market based on data from consumer trial and based on Golar data, we collect from real users we.

Speaker Change: By design any product that we launched must be the top performing formulations in the market based on data from consumer trial and based on data we collect from real users.

Speaker Change: Second is our in-house technology. Our machine models and algorithms allow us to understand what consumers want, to match them to the right product, and show them how to use it.

Oran Holtzman: I'm very involved. My sister is involved. And now we are going to bring more people that are sharing our philosophy of how to move and faster toward this direction. And I think that Edo is the best candidate for that. I met so many people. And I think that his creativity and his ability to go from zero to one is something that we need there, and it fits perfectly to our view. And so the same is the same on the call before, and we are building; we are doing both and hiring a lot at the same time oversight and structure and protocols to make sure that we are not just spending money to make sure that we are building something that is sustainable for long term.

Speaker Change: We don't have head makeup artist or head of stylist they'd get to pick which products were launched only data decided.

Iran: We don't have had to make up all of these or head of stylist they'd get to pick which products. We launch only data decides it or.

Speaker Change: In addition to our machine learning models, in the past three years we've invested a lot of time and money behind our vision technology.

Speaker Change: Our approach to product development is unlike anything else in the industry in my view and it is based solely on large data sets.

Speaker Change: These investments gave us a new way to gather data and to get answers to questions that even our users don't necessarily know.

Iran: Our approach to product development is unlike anything else in the industry in my view and it is based solely on large data sets.

Oran Holtzman: And I think that Edo is the best candidate for that. I met so many people. And I think that his creativity and his ability to go from zero to one is something that we need there and it fits perfectly to our view. And so the same is the same on the call before and we are building we are doing both and hiring a lot the same time oversight and structure and protocols to make sure that that we are not just spending money to make sure that we are building something that is sustainable for long term.

Speaker Change: This is why a macchiato spoiled child launching windows in delivering such high repeat rates and therefore, all generating unparalleled profit margins for OTT.

Speaker Change: This is why any macchiato spoiled child are launching windows and delivering such high repeat rates and therefore generating unparalleled profit margins for OTT I believe that both of our existing brands into Montreal spoiled child, all drugs, there will be a 1 billion dollar brands fully but yes, we expect together in the next four years.

Speaker Change: We have made major strides in building our vision tools, and 2024 in particular has been a breakout year.

Speaker Change: I believe that both of our existing brands Maquillage had spoiled child, all drugs there will be a 1 billion dollar brands fullback you guys would expect together in the next four years.

Speaker Change: We incorporated Vision into our latest trade matching models, which is driving improvement in matching accuracy, reducing return rates on like-to-like products, and driving better LTV.

Speaker Change: In addition to its full child, we continue to work hard on developing new brands to several of our user base and we are making great progress.

Speaker Change: and i believe that we continue to get even better over time

Iran: In addition to enter much judges spoiled child, we continue to work hard on developing new brands to several of our user base and we are making great progress Brent Brent Brent for our truck to be launched in the second half of 2025.

Speaker Change: We have also made progress in vision machines for brain tree, where we now can identify acne lesions, track them, and model progress over time.

Speaker Change: <unk> Brent for our truck to be launched in the second half of 2025.

Speaker Change: As a reminder, <unk> is a medical grade skin and body brand that will address a range of issues, including acne eczema hyperpigmentation and other large consumer pain points.

Oran Holtzman: And to your first question, the difference between building bread and building labs. So building labs is more like building a platform, more like building the technology team in Israel. It takes time, it takes iterations. And we are spending a lot on learning, and it's a long term game. By the way, when I say, when I say long term, I'm not referring to 10 years from now and some products I believe that are going to be ready. For brand three and brand four and going to be great, but we are building something that is with way more power to sell more than just two brands or two products or five products. We are building a platform there.

Speaker Change: To the best of my knowledge, no one in our industry has something that is even close to what we are building here, technology-wise. And it will be the core technology for brand three.

Speaker Change: As a reminder, <unk> medical grade skin and body brand that will address a range of issues, including acne eczema hyperpigmentation and other large consumer pain points.

Speaker Change: So to summarize data technology, and I will tell them, you're Brexit vote and machines are fueling and will continue to fuel our online growth and profitability.

Speaker Change: the third core investment area is our brand billing machine atodity we are building branttal scratch based on first poid data we are from our user

Speaker Change: So to summarize data technology and hour, telling you Brexit vote, and Michigan are fueling and will continue to fuel our online growth and profitability.

Speaker Change: This is the core of 42.

Speaker Change: Our brands have distinct points of view, but are all anchored in quality and high-performing product formulations. This is by design. Any product that we launch must meet a top-performing formulation in the market, based on data from consumer trials and based on total data we collect from real users.

Speaker Change: Moving to size back products, Yeah, obviously labs.

Speaker Change: This is the core of 42.

Speaker Change: Moving to seismic products, Yeah, obviously labs for years. It was my dream to use science to create better products for our consumers to solve their pain points and to carve out another source of competitive edge for us.

Speaker Change: For years. It was my dream to use science to create better products for our consumers to solve their pain points and to carve out another source of competitive edge for us.

Oran Holtzman: For brand three and brand four and going to be great, but we are building something that is with way more power to sell more than just two brands or two products or five products we are building a platform there. So it requires way more in terms of focus and investments. And thank God, I'm in a position that, you know, you saw my and my adjusted EBDA margin. I don't want I don't want to be 32% EBDA margin.

Speaker Change: For years I was amazed by the lack of scientific innovation in our industry. It just didn't make sense to me given the size of the industry and the progress in science in biotech in the last two decades.

Oran Holtzman: So it requires way more in terms of focus and investments. And thank God, I'm in a position that, you know, you saw my and my adjusted EBDA margin. I don't want I don't want to be 32% EBDA margin. I don't think it's like what we need as a company, and we have, and my commitment is to continue to invest to build something something meaningful, and while using our strong profitability. The difference between that and brand three and brand four, brand three and brand four we've done before. We build in Machiaz, we build small child, we know how to do it.

Speaker Change: We don't have head of makeup artists or head of stylists that get to pick which products we launch. Only they identify it. Our approach to product development is unlike anything else in the industry, in my view, and it is based solely on large data sets.

Speaker Change: The acquisition of prevailing 2023 gave us the foundation for building owners elapsed and Boston is our.

Oran Holtzman: I don't think it's like what we need as a company and we have and my commitment is to continue to invest to build something something meaningful and while using our strong profitability. The difference between that and brand three and brand four, brand three and brand four we've done before. We build in Machiaz, we build small child, we know how to do it. It's more labor, it's more planning and strategy and and branding and NPD.

Speaker Change: The acquisition will prevail in 2023 gave us the foundation for building owners elapsed and Boston is our science backed new product engine.

Speaker Change: Our science backed new product engine.

Speaker Change: This is why El Makiage and Spoiled Child are launching winners and delivering such high repeat rates, and therefore are generating unparalleled profit margins for ODDITY.

Speaker Change: As a reminder, anthology labs, we are using digital biology to discover launch and own. The next generational seismic product that our consumer is so eager for.

Speaker Change: As a reminder, quality labs, we are using digital biology to discover launching one the next generation of seismic product that our consumer is so eager for.

Speaker Change: I believe that both of our existing brands, Skin Maquillage and Spoiled Child, are on track to be one billion dollar brands. Full maquillage we expect together in the next four years.

Speaker Change: Last quarter I spoke about the important steps, we've been taking to build apps.

Oran Holtzman: It's more labor, it's more planning and strategy, and branding and NPD. We've done before. The main difference between brand three and brand four, with brand three again, we are building more than just a brand. We are building a telehealth platform and we start with medical grade skin and body issues like art and exam and type of invitation. It's a huge pain point and impact massive part of our users. And the reason that we do it that we started the satisfaction with corn solution is terrible. Either in convenient business to doctors' office or picking ineffective treatments and drug stores.

Speaker Change: Last quarter I spoke about the important steps, we've been taking to build apps.

Speaker Change: So the teams and to develop infrastructure and systems to ensure we are building a platform that works at high scale.

Il Makiage: In addition to Il Makiage's whole child, we continue to work hard on developing new brands to serve our user base, and we are making great progress.

Speaker Change: So the teams and to develop infrastructure and systems to ensure we are building a platform that works at high scale.

Oran Holtzman: We've done before. The main difference between brand three and brand four, with brand three again, we are building more than just a brand. We are building a telehealth platform and we start with medical grade skin and body issues like art and exam and type of invitation. It's a huge pain point and impact massive part of our users. And the reason that we do it that we started the satisfaction with corn solution is terrible.

Speaker Change: As part of that we are excited to announce that Dr. Igor Bachelet is joining us as the Chief Science officer to lead our scientists obviously loves.

Speaker Change: brand crean and branch for our drug to be unch in the second half of twothousandandtwentyfive is a reminder bran crees the medical grad scanand body brand that will address range of issues including archnect exama e implementation and other large consumer pain points

Ido Bachelet: As part of that we are excited to announce that Dr. Ido Bachelet is joining us as Chief Science officer to lead our scientists obviously loves.

Speaker Change: Bring it on board is a great milestone for US I spent time meeting with many scientists and Evo was by far the strongest state.

Speaker Change: Bring it on board is a great milestone for US I spent time meeting with many scientists and Eagle was by far the strongest speeds.

Oran Holtzman: So to summarize, data, technology, and our Intelligent Brands Development Machine are fueling and will continue to fuel our online growth and profitability. This is the core of quality.

Speaker Change: He is highly accomplished water a scientist with deep experience building and scaling multiple high impact biotech clubs.

Oran Holtzman: Either in convenient business to doctors office or picking ineffective treatments and drug stores. And that's a huge opportunity for us and developing line of OTC and Rx products and discover multiple face and body at the start. Then building first of a kind mobile app is something that we know how to do. The vision technology is cool. We are building it for the past two years. And I think that's going to differentiate us and almost make a break and based on the numbers that I saw from our vision model lately, it's make no break. And number three, leveraging the platform and the users that we have to serve and and to drive revenue and very efficiently. And again, we've done it before. So different types of expenses and best.

Speaker Change: He is highly accomplished what are scientist with deep experience building and scaling multiple high impact biotech labs.

Oran Holtzman: And that's a huge opportunity for us and developing line of OTC and Rx products and discover multiple face and body at the start. Then building first of a kind mobile app is something that we know how to do. The vision technology is cool. We are building it for the past two years. And I think that's going to differentiate us and almost make a break, and based on the numbers that I saw from our vision model lately, it's make no break. And number three, leveraging the platform and the users that we have to serve and to drive revenue very efficiently.

Oran Holtzman: Moving to science-backed products via Oniki Lab. For years, I was amazed by the lack of scientific innovation in our industry. It just didn't make sense to me, given the size of the industry and the progress in science and biotech in the last two decades. As a reminder, at ODDITY Labs, we are using digital biology to discover, launch, and own the next generation of science tech products that our customers are so eager for.

Speaker Change: Is super creative and shows our culture or disruption and building.

Speaker Change: Is super creative and shows our culture of disruption and building.

Oran Holtzman: Moving to science-backed products via ODK Labs. For years, it was my dream to use science to create better products for our consumers, to solve their pain points, and to carve out another source of competitive edge for us.

Speaker Change: After using therapeutics, he decided that instead of developing another drug you want to join us in changing an entire industry through science.

Eagle: After using therapeutics, he decided that instead of developing another drug you want to join us and changing an entire industry for science.

Speaker Change: Those are <unk> the co founder for Villa has decided to depart oddity to pursue other interests.

Speaker Change: Those were ever zone, the cofounder of Rubella has decided to depart oddity to pursue other interests.

Speaker Change: a year that was 't made by the lack of scientific innovation in our industry it just didn't make sense to lead giving the size of the industry and the progress in science about the inteinternationalal decades

Speaker Change: He's a very talented entrepreneurial real.

Speaker Change: We're very lucky to have disruptive consumer about it.

Speaker Change: He's a very talented adult real quick.

Speaker Change: Thanks to the acquisition of for Villa ODT now has the foundation to be at the forefront of site Beckworth's formation in our industry and we are grateful for that I want to personally thank everyone and wish him the best in his field trial with <unk>.

Speaker Change: The consumer about it.

Speaker Change: Thanks to the acquisition of for Villa OTT now has the foundation to be at the forefront of size Beckwith formation in our industry and we are grateful for that I want to personally thank everyone and wish him the best in his future undertakings.

Oran Holtzman: The acquisition of Prevella in 2023 gave us the foundation for building OT Labs in Boston as our science-backed new product engine.

Oran Holtzman: And again, we've done it before. So different types of expenses and best.

Speaker Change: as a reminder and quality labs we are using digital biology to discover lunching on the next generation sciific product that i would consumer heis so either for

Speaker Change: As I've said before <unk> is a new muscle building and a complicated one very similar to our early days building our technology backbone. It takes time any duration to build something meaningful.

Speaker Change: As I've said before <unk> is a new muscle building and a complicated one very similar to our early days building out what technology backbone. It takes time and iterations to build something meaningful there.

Andrew Boone: Andrew Boone at JMP Securities, please go ahead with your question. Your line is open. Thanks much for taking my question. Ron, you said earlier that Media Spended doubled in the first half of this year versus two years ago. Revenue was up more than that. Can you just talk about the efficiencies that you guys are being able to generate on Media Spended and the confidence that continues? What has worked, what hasn't worked, and where you guys are finding pockets of strength?

Andrew Boone: Andrew Boone at JMP Securities, please go ahead with your question. Your line is open. Thanks much for taking my question. Ron, you said earlier that media spended doubled in the first half of this year versus two years ago. Revenue was up more than that. Can you just talk about the efficiencies that you guys are being able to generate on media spent and the confidence that continues? What has worked, what hasn't worked, and where you guys are finding pockets of strength? And then Lindsay, as I think about the formulation for revenue growth this quarter, I think you said AOV was up 6%, and it kind of implies that orders are right at that 20% level.

Oran Holtzman: Last quarter I spoke about the important steps we have been taking to build labs, to grow the teams, and to develop infrastructures and systems to ensure we are building a platform that works at high scale.

Speaker Change: Therefore, as I said before we are not counting on growth coming from <unk> labs in the near term, we don't needed to achieve our financial targets. We have a ton of growth ahead for Macchiato spoilt child alone and even more growth on top of that coming from new brands in the pipeline.

Speaker Change: Therefore, as I said before we are not counting on growth coming commodity labs in the near term, we don't needed to achieve our financial targets. We have a ton of growth ahead for <unk> boy child alone and even more growth on top of that coming from new brands in the pipeline.

Oran Holtzman: As part of that, we are excited to announce that Dr. Ido Bachelet is joining us as the chief science officer to lead our science and policy lab. He is super creative and shares our culture of disruption and building. Evan is a very talented entrepreneur who built Prevela into a disruptive consumer brand. As I've said before, OD Labs is a new mass-market building and a complicated one.

Oran Holtzman: As part of that, we are excited to announce that Dr. Ido Bachelet is joining us as the Chief Science Officer to lead our Science and Policy Labs.

Speaker Change: Our clubs.

Speaker Change: Bringing IDO on board is a great milestone for us. I spent time speaking with many scientists, and IDO was by far the strongest fit. It highly accomplished world-class scientists with deep experience building and scaling multiple high-impact biotech labs.

Speaker Change: Surely building another large russell from scratch, but if we get it right. We can differentiate audit to even more from our competitors in the long run it is hard and it takes time, but I fully believe in it and I'm confident we'll make it.

Andrew Boone: And then Lindsay, as I think about the formulation for Revenue growth this quarter, I think you said AOV was up 6%, and it kind of implies that orders are right at that 20% level. Is that the right framework that we should think about growth coming forward? Is that, hey, maybe AOV is mid-single digits and order growth is kind of 20% you guys are solving for that 20? Is there any way that we should think about the breakdown of kind of P times QQ calls are? Thanks much.

Speaker Change: Our clubs, we are literally building another large struggled from scratch, but if we get it right. We can differentiate audit even more from our competitors in the long run it is hard and it takes time, but I fully believe in it and I'm confident we'll make it.

Lindsay Druckerman: Is that the right framework that we should think about growth coming forward? Is that, hey, maybe AOV is mid-single digits and order growth is kind of 20%? You guys are solving for that 20? Is there any way that we should think about the breakdown of kind of P times QQ calls are?

Speaker Change: Looking ahead as we told you last quarter 'twenty 'twenty four for US is essentially in the rearview, we have full confidence in achieving our financial targets and we are once again, raising our full year outlook today.

Speaker Change: it is still creative and share our culture of disruption and buildingafter using ter apeutics it decided that himself developing another product you want to join us in changing an entire industry for science

Speaker Change: Looking ahead as we told you last quarter 'twenty 'twenty four for US is essentially in the review we have full confidence in achieving our financial targets and we are once again, raising our full year outlook today.

Andrew Boone: Thanks much.

Speaker Change: Our teams are now almost entirely focused on becoming 2025 and beyond and we are feeling confident in our execution next year.

Speaker Change: Dr. Evan Zhao, the co-founder of Fribella, has decided to depart ODDITY to pursue other interests. Evan is a very talented entrepreneur who built Fribella into a disruptive consumer biotech.

Oran Holtzman: Hey, Andrew, thanks for the question. Although all the noises out the acquisition environment is still favorable for us, and you can see it like with our strong margins, if I spend more I wouldn't bring 32% up even with a margin, and 27% on age one was didn't prove versus last year, and we spent in age one 24 almost double amount of on media than what we spend in age one 20 22 while keeping our overall market efficiency raw and this is unusual and show the efficiency of our platform.

Oran Holtzman: Hey, Andrew, thanks for the question. Although all the noises out the acquisition environment is still favorable for us, and you can see it like with our strong margins, if I spend more I wouldn't bring 32% up even with a margin, and 27% on age one was didn't prove versus last year, and we spent in age one 24 almost double amount of on media than what we spend in age one 20 22 while keeping our overall market efficiency raw, and this is unusual and show the efficiency of our platform.

Speaker Change: Our teams are now almost entirely focused on becoming 2025 and beyond and we are feeling confident in our execution next year.

Speaker Change: First because we are leaving growth on the table in 'twenty 'twenty, four and staying disciplined about pacing ourselves. This is something we've always done so we deliver on our commitments, which we have achieved not just every quarter as a public company, but every quarter is a private company as well.

Speaker Change: Thanks to the acquisition of Rebella, ODDITY now has the foundation to be at the forefront of science-backed transformation in our industry, and we are grateful for that. I want to personally thank Evan and wish him the best in his future undertakings.

Speaker Change: Second is because of all the growth levers our team is preparing for next year.

Speaker Change: as i've said before bodyil l is a new massive avail buildiness and a complicated one very are similar to our everyday good thing our techcology backbound it takes time and iterations to build something meaning ful

Speaker Change: Second is because of all the growth levers our team is preparing for next year. The teams are now heads down with planning testing and Iterating on winners on many fronts, new marketing campaigns, new products, new models and new geographies.

Speaker Change: I'll now heads down with planning testing and Iterating on winners on many fronts, new marketing campaigns, new products, new models and new geographies.

Oran Holtzman: We are bullish about our major efficiency Q224 was our highest scale of Q2 ever and despite that we were able to achieve the highest EBDA margin as I mentioned before, but remember that we have very different approach from other companies which makes it easier for us, we are not acquiring customers, we are acquiring users, and over time converging them and that it has a lot and like delivering those results.

Oran Holtzman: We are bullish about our major efficiency. Q224 was our highest scale of Q2 ever, and despite that, we were able to achieve the highest EBDA margin, as I mentioned before. But remember that we have a very different approach from other companies, which makes it easier for us. We are not acquiring customers; we are acquiring users, and over time converging them, and that has a lot and like delivering those results.

Oran Holtzman: Therefore, as I said before, we are not counting on growth coming from all three labs in the near term. We don't need it to achieve our financial targets. Our teams are now almost entirely focused on the current 2025 and beyond, and we are feeling confident in our execution next year. First, because we are living close to the table in 2024 and staying disciplined about facing our... To be candid, it's not easy to be a public company, but we have made a great accomplishment in this past year since our IPO.

Speaker Change: Therefore, as I said before, we are not counting on growth coming from ODDITY Labs in the near term. We don't need it to achieve our financial targets. We have a ton of growth ahead of E-Machiage and Spoiled Childs alone, and even more growth on top of that coming from new brands in the pipeline.

Speaker Change: Based on what I see today, we are in a strong position for 2025.

Speaker Change: But before I hand, it to Lindsay I wanted to take a moment to reflect on our first year as a public company.

Speaker Change: We decided to take the company public because you wanted to build something huge because they felt then as they do now bullish on our ability to disrupt this enormous global market with our platform and create massive value for our shareholders.

Lindsay: We decided to take the company public because you wanted to build something huge because they fill them as they do now bullish on our ability to disrupt this enormous global market with our platform and create massive value for our shareholders.

Oran Holtzman: At Labs, we are literally building another large platform from scratch. But if we get it right, we can differentiate ODDITY even more from our competitors in the long run. It is hard and it takes time, but I fully believe in it and I'm confident we'll make it.

Lindsay Druckerman: Hey, Andrew Sonsi, so as far as the revenue composition goes, this quarter year right AOV was up around 6% most of our revenue growth was driven by orders, return rate was a little bit better on a year over your basis as well. We don't plan our business for AOV versus order, and so it's not possible for me to give you kind of the equation going forward. We focus really on revenue versus our acquisition dollars, it's really more of a raw as metric.

Lindsay Druckerman: Hey, Andrew Sonsi, so as far as the revenue composition goes, this quarter year right AOV was up around 6%. Most of our revenue growth was driven by orders. Return rate was a little bit better on a year-over-year basis as well.

Speaker Change: To be candid its not easy to be public company, but we have made a great accomplishment in this past year since our IPO.

Lindsay: To be candid, it's not easy to be public company, but we have made a great accomplishment in this first year since our IPO.

Speaker Change: We are very proud of our financial results, we delivered on our promises to the shareholders. We beat revenue and profit and earnings per share every quarter since going public at the same time, we didn't change the DNA for the company and Daniel building innovation and investing behind Big and haulage rooms, and this is something I'm very proud of.

Speaker Change: looking atahead as weretold you last quarter two thousand and twenty four for us is essentially in the review we have four confidident in achieving our of financial targets and we are once again raising our full year outlook thing

Lindsay Druckerman: We don't plan our business for AOV versus order, and so it's not possible for me to give you kind of the equation going forward. We focus really on revenue versus our acquisition dollars; it's really more of a raw as metric. There are different factors that can affect our AOV, and as a result, really not solving for it. So, for example, the types of new products, the types of products overall which may have lower price points, but make sense from a contribution margin perspective. For example, they might have better repeat itself as a lower AOV is a lower AOV category for us, so that can be a drag overall. But what we have seen over the last few years is that we're seeing higher AOV in both first order and repeat, and it's been in a large part of the function of people just adding more items to their basket, more items to their order. And we're able to do that number one, just as our models get better at recommending, doing a better job and things like upsells and bundles, but also because we have a broader product portfolio now. Today, there's more things for her to find, and we know how to show them to her and to drive that conversion. So that's been a really important driver on both first order and repeat, and then of course the positive mix of skin is also a nice driver. But we're not committed to continuous improvement on AOV as an ongoing driver of revenue; it's just not how we run the business.

Oran Holtzman: Our teams are now almost entirely focused on preparing 2025 and beyond, and we are feeling confident in our execution next year.

Daniel: Daniel building innovation, and investing behind big and how dreams.

Speaker Change: We have kept our Hungary outsiders startup culture. Despite our growth. This is the most important thing for future success. We have also begun returning cash to our shareholders with buybacks. We believe always talked offers an incredible value and we will use our strong balance sheet to take advantage of that.

Daniel: This is something I'm very proud of.

Lindsay Druckerman: There are different factors that can affect our AOV, and as a result really not solving for it, so for example, the types of new products, the types of products overall which may have lower price points, but make sense from a contribution margin perspective. For example, they might have better repeat itself as a lower AOV is a lower AOV category for us, so that can be a drag overall, but what we have seen over the last few years is that we're seeing higher AOV in both first order and repeat, and it's been in a large part of the function of people just adding more items to their basket, more items to their order, and we're able to do that number one, just as our models get better at recommending, doing a better job and things like upsells and bundles, but also because we have a broader product portfolio now today, there's more things for her to find, and we know how to show them to her and to drive that conversion, so that's been a really important driver on both first order and repeat, and then of course the positive mix of skin is also a nice driver, but we're not committed to continuous improvement on AOV as an ongoing driver of revenue, it's just not how we run the business.

Daniel: We have kept our hungry outsider startup culture. Despite our growth. This is the most important thing for future success.

Oran Holtzman: First, because we are living growth on the table in 2024 and staying disciplined about facing ourselves. This is something we have always done, so we deliver on our commitments, which we have achieved not just every quarter as a public company, but every quarter as a private company as well.

Speaker Change: We've also begun returning cash to our shareholders with buybacks. We believe our stock offers an incredible value and we will use our strong balance sheet to take advantage of that with that I will turn it over to Lindsay.

Operator: Thank you.

Speaker Change: With that I will turn it over to Lindsay.

Oran Holtzman: Second is because of all the growth levers our team is preparing for next year. Teams are now head down with planning, testing, and iterating on winners of many fronts, new marketing campaigns, new products, new models, and new geographies.

Lindsay: Thanks, Ron let's turn to our Q2 results, which I'll refer to on an adjusted basis you can find a full reconciliation to GAAP in our press release.

Lindsay: We delivered a record breaking second quarter and first half across the board. We grew net revenue by 27% in the quarter to $192 million. The strength was driven by both <unk> and spoiled child across a range of product categories net.

Lindsay: Hanmi delivered a record breaking second quarter and first half across the board. We grew net revenue by 27% in the quarter to $192 million.

Oran Holtzman: Based on what I see today, we are in a strong position for 2025.

Oran Holtzman: But before I hand it to Lindsay, I want to take a moment to reflect on our first year as a public company.

Lindsay: <unk> was driven by both <unk> and spoiled child across a range of product categories.

Lindsay: Net revenue growth was driven primarily by an increase in orders, while average order value increased 6% year over year.

Speaker Change: we decid take the company because we wanted to build something new because it shall then as they do now bullish our ability to disrupt this enormous global market with our platform and create massive by the powerar shareholders

Lindsay: Net revenue growth was driven primarily by an increase in orders, while average order value increased 6% year over year.

Speaker Change: Average order value growth was driven both by an increase in items per order and positive mix shift to higher priced products like skin, partially offset by mix shift to repeat sales, which carry lower A&P.

Lindsay: Average order value growth was driven both by an increase in items per order and positive mix shift to higher priced products like skin, partially offset by mix shift to repeat sales, which carry lower A&P.

Oran Holtzman: To be candid, it's not easy to be a public company, but we have made a great accomplishment in this past year since our IPO.

Oran Holtzman: We are very proud of our financial results. We delivered on our promises to the shareholders. We have peaked revenue, profit, and earnings per share every quarter since going public. But at the same time, we haven't changed the DNA of our companies. A DNA of building innovation and investing behind big and hard rims. We have kept our hungry, outsider, start-up culture despite our growth. This is the most important thing for our future success. We have also begun returning cash to our shareholders through buybacks.

Speaker Change: The proportion of our sales from repeat customers increased on a year over year basis. This quarter and is on track to be a higher percentage of our sales in our full year 2024 as compared to 2023.

Oran Holtzman: We are very proud of our financial results. We delivered on our promises to the shareholders. We peaked revenue and profit and earnings per share every quarter since going public. At the same time, we didn't change the DNA of our company.

Speaker Change: A proportion of our sales from repeat customers increased on a year over year basis. This quarter and is on track to be a higher percentage of our sales in our full year 2024 as compared to 2023.

Speaker Change: Filling into revenue composition for the quarter, 94% of our net revenue came from sales on our owned website directly to consumers.

Oran Holtzman: at the end of building innovation and investing behind big and hard rims. And this is something I am very proud of.

Speaker Change: <unk>, 6% of net revenue in the quarter came from sales in Israel and to marketing affiliates.

Mark Mahaney: Thank you. We'll hear a question now from Mark Mahaney at Evercore. Your line is open, sir. Thanks. Two questions, please.

Oran Holtzman: We have kept our hungry, outsider, start-up culture despite our growth. This is the most important thing for our future success. We have also began returning cash to our shareholders with buybacks. We believe our stock offers an incredible value and will use our strong balance sheet to take advantage of that.

Mark Mahaney: We'll hear a question now from Mark Mahaney at Evercore. Your line is open, sir. Thanks two questions please. You just talk about what are the biggest governors or factors that have determined the launch times for brands three and four. Is it, is it product readiness? Is it, you know, go to market plan readiness? Like what, what, what determines for you that it's why they're launching the second half of 25 versus the first half of 25 and in just your current business. Did you talk about any regions in geographical regions of strength or weakness and embed in that question? Any signs of consumer discretionary spend softness? Thank you very much.

Speaker Change: <unk>, 6% of net revenue in the quarter came from sales in Israel and to marketing affiliates.

Speaker Change: As a reminder, we did not sell any products to Amazon ebay or other third party marketplaces, nor do we generate any direct revenue from products sold on the site.

Speaker Change: As a reminder, we do not sell any products to Amazon ebay or other third party marketplaces, nor do we generate any direct revenue from products sold on the site.

Oran Holtzman: You just talk about what are the biggest governors or factors that have determined the launch times for brands three and four. Is it, is it product readiness? Is it, you know, go to market plan readiness? Like what, what, what determines for you that it's why they're launching the second half of 25 versus the first half of 25 and in just your current business.

Speaker Change: The product we sold on our site as unauthorized and done without our consent.

Oran Holtzman: With that, I will turn it over to Lindsay.

Speaker Change: Moving down the P&L gross margin of 72, 2% expanded 150 basis points year over year.

Oran Holtzman: Thanks, Oran. Let's turn to our Q2 results, which I'll refer to on an adjusted basis. You can find the full reconciliation to GAP in our press release.

Speaker Change: Moving down the P&L gross margin of 72.2% expanded 150 basis points year over year.

Speaker Change: Gross margin improvement was driven by specific supply chain and logistics efficiencies at both brands we.

Speaker Change: The gross margin improvement was driven by specific supply chain and logistics efficiencies at both brands.

Speaker Change: i'm delivered a record rking second quarter and first half across the board we grew that revenue by twenty-seven percent in the quarter to one hundred andninety three million dollars the strength was driven by both ilakiage and fooil child across a range of product categories

Speaker Change: We delivered adjusted EBITDA of $62 million in the quarter adjusted EBITDA margin of 32, 3% expanded 470 basis points from the prior year, driven partly by gross margin expansion and a higher mix of repeat.

Lindsay Druckerman: Did you talk about any regions in geographical regions of strength or weakness and embed in that question? Any signs of consumer discretionary spend softness? Thank you very much.

Speaker Change: Q2, EBITDA exceeded our original guidance of $53 million to $56 million and that was driven in part by the timing of investments into new brands and out of the lab.

Oran Holtzman: Sure, so I will take the first question and Lindsay, you can talk about the second one. Look, in terms of brand three and brand four and first of all, of course, the teams are building those brands. It takes time, especially brand three and it's probably development. It's the app. It's technology. It's vision technology. It's so many things that we that we need to like to build in order to be ready and therefore we committed to eight to not to age one.

Oran Holtzman: Sure, so I will take the first question, and Lindsay, you can talk about the second one. Look, in terms of brand three and brand four, and first of all, of course, the teams are building those brands. It takes time, especially brand three, and it's probably development. It's the app. It's technology. It's vision technology. It's so many things that we that we need to like to build in order to be ready, and therefore we committed to eight to not to age one. That's what the plan from the get go; within change it. But, as I mentioned multiple times, like, even if I had now brand three or four ready, I wouldn't launch it because I don't need a growth.

Oran Holtzman: That revenue growth was driven primarily by an increase in orders, while average order value increased 6% year-over-year.

Speaker Change: <unk> EBITDA exceeded our original guidance of $53 million to $56 million and that was driven in part by the timing of investments into new brands, an oddity labs.

Speaker Change: Average order value growth was driven both by an increase in items per order and positive mix shift to higher priced product like skin, partially offset by mix shift to repeat sales which carry lower AOE.

Speaker Change: Timing of these investments is delayed into the back half of the year.

Speaker Change: Timing of these investments is delayed until the back half of the year.

Speaker Change: We delivered adjusted diluted earnings per share of 80%.

Speaker Change: We delivered adjusted diluted earnings per share of 82 cents.

Speaker Change: Our adjusted EBITDA, and EPS exclude approximately $7 million of share based compensation.

Speaker Change: the proportion of sales from repeat customers increased on the year-over-abbasis this quarter and track to be a higher percentage of our sales in thefull year two thousand and twenty four as compared to t pri three

Speaker Change: Our adjusted EBITDA, and EPS exclude approximately $7 million of share based compensation.

Speaker Change: Our free cash conversion remains excellent we delivered $104 million of free cash flow year to date. This free cash generation is a clear reflection of the strength and quality of our business model.

Oran Holtzman: That's what the plan from the get go within change it. But as I mentioned multiple times, like, even if I had now brand three or four ready, I wouldn't launch it because I don't need a growth. We are committed to our model. We want to build the business at the right pace. 20% growth is already like three weeks than my and then my combat and there is no reason to go as faster than that.

Oran Holtzman: Drilling into revenue composition for the quarter, 94% of our net revenue came from sales on our own website directly to consumers. The remaining 6% of net revenue in the quarter came from sales in Israel and to marketing affiliates.

Speaker Change: In June our board authorized $150 million three year buyback, we purchased 250000 shares for $10 million in the second quarter and had $140 million remaining in our authorization.

Speaker Change: In June our board authorized $150 million two year buyback, we repurchased 250000 shares for $10 million in the second quarter and had $140 million remaining in our authorization.

Oran Holtzman: We are committed to our model. We want to build the business at the right pace. 20% growth is already like three weeks than my and then my combat and there is no reason to go as faster than that. We want to make sure that our customers are happy that we are doing things properly.

Speaker Change: As a reminder, we do not sell any products to Amazon, eBay, or other third-party marketplaces, nor do we generate any direct revenue from products sold on these sites. Any product we sold on those sites is unauthorized and done without our consent.

Speaker Change: We exited the quarter with $268 million of cash equivalents and investments on our balance sheet and zero debt.

Oran Holtzman: We want to make sure that our customers are happy that we are doing things properly. So now the plan and we will be ready for both brands in age to next year and we will launch it when we think it's the right moment. Mark, can you repeat that second question? With apologies, ma'am, he's been returned to the conference. Mr. Haney, would you please recuse her? Why did you catch it? I didn't hear it.

Speaker Change: Turning to our outlook, we're raising our 2020 for full year guidance based on our better than expected second quarter results and our high visibility to repeat sales for the remainder of the year.

Oran Holtzman: So now the plan and we will be ready for both brands in age to next year and we will launch it when we think it's the right moment.

Speaker Change: Moving down to P&L, growth margin of 72.2% expanded 150 basis points year-over-year. The growth margin improvement was driven by specific supply chain and logistics efficiencies at both brands.

Speaker Change: We now expect net revenue between $633 million and $640 million, representing 24% to 26% year over year growth.

Mark Mahaney: Mark, can you repeat that second question? With apologies, ma'am, he's been returned to the conference. Mr. Haney, would you please recuse her?

Oran Holtzman: We delivered adjusted EBITDA of $62 million in the quarter. Adjusted EBITDA margin of 32.3% expanded 470 basis points from the prior year, driven partly by gross margin expansion and a higher mix of repeats.

Speaker Change: We now expect net revenue between $633 million and $640 million, representing 24% to 26% year over year growth.

Speaker Change: We expect to deliver 71% gross margin for the full year and we expect to deliver adjusted EBITDA between 142 at $146 million, which includes the step up in growth investments for oddity lab and our new brand.

Mark Mahaney: Why did you catch it? I didn't hear it. Yeah, I think it was asking regarding like a witness in specific geographies or in general in the US. Okay, great. Any stopness that we see in our platform? Sorry, Mark, if you want to keep back and re-ask again, but I'll answer that question. Mr. Haney, I apologize. Your line is open, sir. No, Ron, you got my question right. Any regions of strength or weakness to call out in any signs of consumer softness? Thank you. We're not seeing it. You know, I know a lot of other of our competitors in the category, and of course other pockets of consumers are seeing this kind of weakness, but we simply are not.

Oran Holtzman: Yeah, I think it was it was asking regarding like an witness in in specific geographies or in general in the US. Okay, great. Any stopness that we see in our platform? Sorry, Mark, if you if you want to keep back and re-ask again, but I'll answer that question. Mr. Haney, I apologize. Your line is open, sir. No, Ron, you got my question right. Any regions of strength or weakness to call out in any signs of consumer softness?

Oran Holtzman: 2Q EBITDA exceeded our original guidance of $53 to $56 million, and that was driven in part by the timing of investments into new brands and AutoView Labs. The timing of these investments is delayed into the back half of the year.

Speaker Change: We expect full year adjusted diluted earnings per share will be between $1 71, and $1 76.

Speaker Change: Turning to the third quarter outlook, we're off to an excellent start and are pleased with the composition of our growth across both brands and categories as well as a cohort repeat rates, we expect year over year net revenue growth in the quarter to be between 22, and 24% you can find more details on our Q3 outlook in our press release.

Oran Holtzman: we delivered adjusted diluted earnings per sha of eighty cents our adjusted ebitda appss exclude approximately seven million dollars of sharebbased compensation

Oran Holtzman: Our free cash conversion remains excellent. We've delivered $104 million of free cash flow year-to-date. This free cash generation is a clear reflection of the strength and quality of our business model.

Speaker Change: Lastly, I'll provide some early thoughts on 2025, we expect to deliver net revenue growth of 20% and adjusted EBITDA margin of 20% consistent with our long term algorithm, we plan to incur significant investments in brand three brands for an oddity labs, and we do not expect to benefit from any material revenue contribution from these initiatives.

Oran Holtzman: Thank you. We're not seeing it. You know, I know a lot of other of our competitors in the category and of course other pockets of consumers are are seeing this kind of weakness, but we simply are not. In fact, we're seeing a lot of broad-based strength in both of our brand and different product categories. So, Ron talked about the strength and skin, which again is a higher price point item, but also our color business continues to be very strong for Ilmakiage and spoiled child is growing very, very well.

Oran Holtzman: In June , our board authorized $150 million three-year buyback. We will purchase 250,000 shares for $10 million in the second quarter and have $140 million remaining in our authorization.

Lindsay Druckerman: In fact, we're seeing a lot of broad-based strength in both of our brands and different product categories. So, Ron talked about the strength and skin, which again is a higher price point item, but also our color business continues to be very strong for Ilmakiage, and Spoiled Child is growing very, very well. We also, you know, we have a very broad demographic. So we have an older customer and a younger customer, and we have a suburban customer and a city customer, and we're really geographically across the US. Very, very well represented.

Speaker Change: 2025.

Oran Holtzman: We exited the quarter with $268 million of cash, equivalents, and investments on our balance sheet and zero debt.

Speaker Change: On the topic of supply chain and tariffs while the ultimate policy outcomes are still to be determined we're confident in our ability to manage through with limited financial impact based on the proposals currently in discussion our gross margin as high as is our pricing power and our financial exposure to tariffs and duties is very small as a reminder, our resource the.

Speaker Change: 2025.

Oran Holtzman: Turning to our outlook, we're raising our 2024 full-year guidance based on the better-than-expected second quarter results and our high visibility to repeat sales for the remainder of the year. We now expect net revenue between $633 million and $640 million, representing 24 to 26 percent year-over-year growth.

Speaker Change: Gross margin as high as is our pricing power and our financial exposure to tariffs and duties is very small as a reminder, our resource the majority of our products in Europe, and we purchased some components and packaging out of Asia, including China in 2023, total costs related to tariffs and duties, including from products sourced out of China amounted to.

Oran Holtzman: We also, you know, we have a very broad demographic. So we have an older customer and younger customer and we have a suburban customer and a city customer and we're really geographically across the US. Very, very well represented. I think we're the wrong place to hunt candidly just because we're so small in a very, very large market and we're an idiosyncratic growth story as we're gaining a whole lot of market share. Because we're operating in a wide open channel, which is we think the most important channel for the consumer for for the future. So, no, we haven't seen any evidence, any indication of it at this time.

Speaker Change: We have our products in Europe, and we purchased some components and packaging out of Asia, including China in 2023, total costs related to tariffs and duties, including from products sourced out of China amounted to less than 1% of sales with that I'll turn it back to the operator for questions.

Oran Holtzman: We expect to deliver 71% gross margin for the full year, and we expect to deliver adjusted EBITDA between $142 and $146 million, which includes a step-up in growth investments for ODDITY Labs and our new brand.

Lindsay Druckerman: I think we're the wrong place to hunt candidly just because we're so small in a very, very large market and we're an idiosyncratic growth story as we're gaining a whole lot of market share. Because we're operating in a wide open channel, which is, we think, the most important channel for the consumer for the future. So, no, we haven't seen any evidence, any indication of it at this time.

Speaker Change: Less than 1% of sales with that I'll turn it back to the operator for questions.

Speaker Change: Thank you very much and to our audience joining today at this time, if you would like to ask a question simply press star and one on your telephone keypad pressing star one replace your line into a queue and we will take your questions. One at a time also we asked today that you. Please limit yourself to a single question.

Oran Holtzman: We expect full year adjusted diluted earnings per share will be between $1.71 and $1.76.

Oran Holtzman: Turning to the third quarter outlook, we're off to an excellent start and are pleased with the composition of our growth across both brands and categories, as well as our cohort repeat rates.

Oran Holtzman: We expect year-over-year net revenue growth in the quarter to be between 22% and 24%. You can find more details on our Q3 Outlook and our press release. Lastly, I'll provide some early thoughts on 2025. We expect to deliver net revenue growth of 20% and an adjusted EBITDA margin of 20%, consistent with our long-term algorithm. We plan to incur significant investments in Brand 3, Brand 4, and ODDITY Labs, and we do not expect to benefit from any material revenue contribution from these initiatives in 2025.

Dara <unk>: A friendly reminder, that if youre joining on a speaker phone today. Please return to your handset to be certain that Youre signal does reach our equipment that is star and one for questions, Ladies and gentlemen, we'll hear first today from Dara <unk> at Morgan Stanley.

Speaker Change: we expect needter over -year net revenue growth in the quarter to be between twenty-two and twenty-four percent you can find more details on our q three outlooks in our press release

Oran Holtzman: And that was the final question from our audience today. Mr. Holtzman, I'm happy to turn it back to you sir for any additional closing remarks. No, thank you very much, guys, for joining us. See you next water. Have a good day. Ladies and gentlemen, this does conclude today's teleconference and we thank you all for your participation.

Operator: And that was the final question from our audience today.

Dara <unk>: A friendly reminder, that if you're joining on a speaker phone today. Please return to your handset to be certain that Youre signal does reach our equipment that is star and one for questions, Ladies and gentlemen, we'll hear first today from Dara <unk> at Morgan Stanley.

Oran Holtzman: Mr. Holtzman, I'm happy to turn it back to you, sir, for any additional closing remarks. No, thank you very much, guys, for joining us.

Oran Holtzman: Lastly, I'll provide some early thoughts on 2025.

Operator: See you next water. Have a good day.

Oran Holtzman: pect to deliver net revenue growth of twenty percent at adjusted ebitda margin of twenty percent consistent with our long-term algorith

Operator: Ladies and gentlemen, this does conclude today's teleconference, and we thank you all for your participation. You may now disconnect your lines.

Dara <unk>: Hey, good morning, guys.

Dara <unk>: So the metrics you gave on the year over year performance were helpful. Can you also spent some time talking about where revenue upside came from in the quarter. Both in terms of metrics repeat average order size et cetera.

Dara: Hey, good morning, guys.

Operator: You may now disconnect your lines.

Dara: So the metrics you gave on the year over year performance were helpful. Can you also spend some time talking about where revenue upside came from in the quarter.

Oran Holtzman: We plan to incur significant investments in Brand 3, Brand 4, and ODDITY Labs, and we do not expect to benefit from any material revenue contribution from these initiatives in 2025.

Oran Holtzman: On the topic of supply chain and tariffs, while the ultimate policy outcomes are still to be determined, we're confident in our ability to manage through with limited financial impact based on the proposals currently in discussion. Our gross margin is high, as is our pricing power, and our financial exposure to tariffs and duties is very small. As a reminder, we source the majority of our products from Europe, and we purchase some components and packaging from Asia, including China. In 2023, total costs related to tariffs and duties, including from products sourced from China, amounted to less than 1% of sales.

Speaker Change: Both in terms of metrics repeat average order size et cetera.

Speaker Change: on the topic of supply chain in tariff while the ultimate policy outcomes are still t be determined were confident in our ability to manage through with limited financial impact based on the proposalals currently discussion

Speaker Change: But also at the brand level in terms of spoiled child versus <unk> and how you think about the sequential pace of spoiled child going forward. After a very successful launch over the last couple of years.

Speaker Change: But also at the brand level in terms of spoiled child versus <unk> and how you think about the sequential pace of of spoiled child going forward. After a very successful launch over the last couple of years.

Oran Holtzman: Our gross margin is high, as is our pricing power, and our financial exposure to tariffs and duties is very small. As a reminder, we source the majority of our products from Europe , and we purchase some components and packaging out of Asia, including China.

Speaker Change: How that brand is developing versus your expectations.

Speaker Change: Sure Hi, Dara Hi, guys.

Speaker Change: Again as mentioned very strong start to the year, both in Mckesson spoiled child, and both grew double digit very strong according to the plan.

Oran Holtzman: in two thousand and twenty-three total costs related to terrorists and duties including from product source out of china addted to less than one percent of sales if that i'll turn it back to the operator for questions

Speaker Change: Again as mentioned very strong start to the year, both in Mckesson spoiled child, and both grew double digit very strong according to the plan.

Operator: With that, I'll turn it back to the operator for questions.

Speaker Change: And in a growth range of product categories.

Speaker Change: And across range of product categories.

Speaker Change: Growth in revenue was also driven by skin penetrating massively needed with yours, we grew from nothing in Q1.

Speaker Change: thank you very much and to our audience joining today at this time if you would like to ask the question simply press star and one on your telephone key hadad cing on one with your atin into a q and we'll take your questions wantedat a time also we'd askedask today that you please limit yourselves to a single question

Speaker Change: Growth in revenue was also driven by skin penetrating massive they need them with yours, we grew from nothing in Q1.

Speaker Change:

Speaker Change: It's going to be like 25% in 2024.

Speaker Change: It's going to be now like 25% in 2024, and just when you think about it it's like $100 million, which is a lot for our branded like three years ago, we have nothing in skin.

Speaker Change: And just when you think about it it's like $100 million, which is a lot for our brand is like three years ago, we have nothing in skin.

dara mossenniian: a friendally remind that tr in on the speaker poone today please return to your hand set to be certainthat your signal does reachourequipment that is star and one for questions ladies and gentlemen will hear first today from dara mossenniian at morgan sanilyy

Speaker Change: The team did a very good job in penetration and.

Speaker Change: The team did a very good job in.

Speaker Change: It will start off Joe, but like in the end of the day and we did perfectly increasing revenue was driven by more orders and how you like it it's a positive mix shift towards higher priced products.

Speaker Change: Penetration and we'd like you to start off Joe, but like in the end of the day and we did perfectly increase in revenue was driven by more orders and how you like it.

Speaker Change: Hey, good morning guys. So the metrics you gave on the year-over-year performance were helpful. Can you also spend some time talking about where revenue upside came from in the quarter, both in terms of metrics?

Speaker Change: Positive mix shift towards higher priced products.

Speaker Change: And unlike most direct to consumer companies, but generally most of our revenue from repeat and although we grew 28% in Q1 business quite a busy so profitable.

Speaker Change: And unlike most direct to consumer companies, but generally most of our revenue from repeat and although we grew 28% in Q1 piece is quite a busy so profitable.

Youssef Squali: Repeat, Average Order Size, etc., but also at the brand level in terms of spoiled child versus no maquillage and how you think about the sequential pace of Spoiled Child going forward after a very successful launch over the last couple of years and how that brand is developing versus your expectations.

Speaker Change: And we continue to see the repeat percentage of revenue increased consistently there is nothing more impactful and meaningful to the business strength and then this.

Youssef Squali: you know, repeat, average order size, etc. But also at the brand level in terms of spoiled child versus no maquillage.

Speaker Change: And we continue to see the repeat percentage of revenue increased consistently there is nothing more impactful and meaningful to the business strength and then this.

Speaker Change: We enter to the second quarter with great momentum from the first quarter.

Youssef Squali: And how you think about the sequential pace of Spoiled Child going forward after a very successful launch over the last couple of years, and how that brand is developing versus your expectations.

Speaker Change: We enter to the second quarter with great momentum from the first quarter.

Speaker Change: And we began reducing our acquisition spend in order to slow growth down to lend close algorithm with 30% growth and as a result.

Speaker Change: We began reducing our acquisition spend in order to slow growth down to land closer to all the algorithm with 30% growth.

Speaker Change: As a result, our repeat business was the majority of our revenue in this quarter and that's why the profitability. So huge subgroup of central them, if adjusted EBITDA margin.

Speaker Change: And as a result.

Dara: Hi, Dara. Hi, guys.

Speaker Change: As a result, our repeat business was the majority of our revenue in this quarter and that's why the profitability. So you said, 2% of them adjusted EBITDA margin.

Speaker Change: Again, as mentioned, a very strong start today, both in MacGyver's Spoiled Child, both grew double digits, very strong according to the plan, and across a range of products and categories.

Speaker Change: We have shown once again that we have.

Speaker Change: And we can forward the business and we have full control. This is a huge advantage for us.

Speaker Change: We have shown once again that we have.

Speaker Change: We can follow the business and we have full control. This is a huge advantage for us in terms of efficiency you know real estate, we spend in deferred in the first half and more than double than what we spent two years ago in terms of spending media and efficiencies even stronger now so the busy symptom control.

Speaker Change: growth in revenue was also driven by skin penetrating massivesaing a yage

Speaker Change: And in terms of efficiency, you know real estate, we spend in the third in the first half and more than double than what we spent two years ago in terms of spending and media and the efficiencies even stronger now so.

Speaker Change: we grew from nothing into one and it's going to be out like twenty five percent in train twenty fourth and just when you think about it like hundred milliondollars which is a lot for a branded experience agowe had notnothing skinned

Speaker Change: The busy its insulin control.

Speaker Change: Our next question will come from Youssef Squali at Truest Securities.

Speaker Change: The teams did a very good job in penetration, and it was a ton of job, but at the end of the day, we did it perfectly. Increasing revenue was driven by more orders and higher ILVM. It's a positive makeshift towards higher-priced products.

Speaker Change: Our next question will come from Youssef Squali at Truest Securities.

Speaker Change: I believe we May have lost Mr. Squali I invite you to re signal Sir next we'll hear from Andrew Boone at JMP Securities.

Speaker Change: I believe we May have lost Mr. Squali I invite you to re signal Sir.

Speaker Change: Next we'll hear from Andrew Boone at JMP Securities.

Speaker Change: We may have lost that line as well again I.

Speaker Change: We may have lost that line as well again.

Speaker Change: I do invite you to re signal with Star and one we'll try to go to Lauren Lieberman Barclays.

Speaker Change: And unlike most direct-to-consumer companies, we generate most of our revenue from repeat. And although we grew 28% in Q1, this is why the business is so profitable. And we continue to see the repeat percentage of revenue increase consistently. There is nothing more impactful and meaningful to the business strength than this.

Speaker Change: I do invite you to re signal with Star and one we'll try to go to Lauren Lieberman at Barclays are you able to speak your line is open.

Lauren Lieberman: Are you able to speak your line is open I mean can you hear me, yes, yes, ma'am, alright, alright, cool exciting hi, Mike.

Lauren Lieberman: Can you hear me, yes, yes ma'am.

Speaker Change: My phone works.

Speaker Change: Cool exciting high.

Speaker Change: Closely loop two questions into one.

Speaker Change: My phone works.

Speaker Change: Closely loop two questions into one.

Speaker Change: We entered the second quarter with great momentum from the first quarter, and we began reducing our acquisition spending going to slow growth down to land closer to our algorithm of 20% growth. And as a result,

Speaker Change: So first Ron I thought it was helpful. The sort of discussion you shared on labs and the time it takes to to build what youre, what youre hoping to.

Lauren Lieberman: So first Ron I thought it was helpful. The sort of discussion you shared on labs and the time it takes to to build what youre, what youre hoping to.

Speaker Change: But I was curious as we think about new product launches and inclusive of brand three and four for next year.

Speaker Change: But I was curious as we think about new product launches inclusive of brand three and four for next year.

Speaker Change: As a result, our repeat business was the majority of our revenue in this quarter. And that's why the profitability is so huge, 33% of just EBITDA margin.

Speaker Change: Whether there are sort of unique and discrete molecules that will be included in those I think my recollection is that was the hope that labs would be contributing.

Speaker Change: Whether there are sort of unique and discrete molecules that will be included in those I think my recollection is that was the hope that labs would be contributing in 2025 to some of the new products you would be bringing to market. So I wanted to just get a status check on that and then the second piece was the step up in SG&A spending in the second half and I know you've.

Speaker Change: We have shown once again that we can power the business and we have full control. This is a huge advantage for us.

Speaker Change: In 2025 to some of the new products, you would be bringing to market. So I wanted to just get a status check on that and then the second piece was the step up in SG&A spending in the second half and I know you guys have a.

Youssef Squali: And in terms of efficiency, you know, we spend in the first half more than double than what we spent two years ago in terms of spending in media. And the efficiency is even stronger now, so the business is in full control.

Speaker Change: Habit of investing ahead and planning ahead for growth, but given the brand's three and four aren't launching into the second half of 'twenty five it seems like a lot of spending closer and so I was curious if that's where it's directed or if it's more towards.

Speaker Change: Guys have a.

Youssef Squali: Our next question will come from Youssef Squali at Truist Securities.

Speaker Change: Entering to Scout labs. Thanks.

Lauren: Yeah, Hi, Lauren.

Speaker Change: Look in terms of clubs as I mentioned.

Lauren: Yeah, Hi, Lauren.

Operator: I believe we may have lost Mr. Squali. I invite you to re-signal, sir. Next, we'll hear from Andrew Boone at JMP Security.

Speaker Change: Look in terms of clubs as I mentioned.

Speaker Change: Working a lot on building the platform to properly and when we discussed last quarter I said that and we're going to see the majority of like the first fruit from labs, and Brent Korean brands or it's still the plan. We will have a few launches before that that we go into <unk>, but overall.

Operator: I believe we may have lost Mr. Squali. I invite you to re-signal, sir. Next we'll hear from Andrew Boone at JMP Securities.

Speaker Change: Working a lot on building the platform to properly and when we discussed last quarter I said that and we're going to see the majority of like the first fruit from labs and brand Korean brands for it still the plan. We will have a few launches before that that we go into <unk>.

Speaker Change: And in the next year or two it's mainly expensive and we are doing it.

Speaker Change: All children in Macchiato, but overall.

Speaker Change: In the next year or two it's mainly expenses and we are doing it.

Speaker Change: We may have lost that line as well. Again, I do invite you to re-signal with star and one. We'll try to go to Lauren Lieberman at Barclays. Are you able to speak? Your line is open. I mean, can you hear me?

Speaker Change: We are happy to do it and we believe that like in the beginning of massive transformation what brands and what.

Speaker Change: We are happy to do it.

Speaker Change: And we believe that like we are.

Speaker Change: In the beginning of massive transformation, what brand and what.

Speaker Change: Brendan bought enough when people will as promoting that and we believe that seismic products in the future of the industry and we see it as a race and therefore, we are investing a lot in building. This capability I believe that the OTT as a way to do something that no one has ken because of our.

Brendan: Brendan not enough when people will.

Speaker Change: yeah yes and i right cool exciting high my phone work coolse way mean to loop

Brendan: As promoting that and we believe that the seismic product in the future of the industry.

Brendan: And we see it as a race and therefore, we are investing a lot in building. This capability I believe that the OTT debate to do something that no one has ken because of our.

Andrew Boone: Two questions into one. So first, Oran, I thought it was helpful, the sort of discussion you shared on labs and the time it takes to build what you're hoping to. But I was curious as we think about new product launches, inclusive of Brand 3 and 4 for next year.

Speaker Change: Our base to build something from scratch.

Speaker Change: And we're building another platform.

Brendan: A big to build something from scratch.

Speaker Change: If I wanted I could already have product in the market from labs, but first of all even made because we are growing more than what they want without it and second because I want to build something.

Brendan: And we're building another platform.

Brendan: If I wanted I could already have product in the market from labs, but first of all they don't need because we are growing more than what they want without it and second because I want to build something that.

Andrew Boone: whether there are, you know, sort of unique and discrete molecules that will be included in those. So I think my recollection is that was the hope that, you know, labs would be contributing in 2025 to some of the new products you'd be bringing to market. So I wanted to just get a status check on that.

Speaker Change: We can be proud off and the product though.

Brendan: We can be proud off and the product though.

Speaker Change: <unk> best in class, a way more than that comparing to the competitors.

Speaker Change: So hope it hope it answer your question, so, yes, Brent <unk> Brent for.

Brent: So hope it answer your question, so, yes, Brent <unk> Brent for.

Speaker Change: And in addition to that we will see some products and within immigrants boy child in the next six to 12 months.

Brent: And in addition to that we will see some products and we Didnt immigrants boy child in the next six to 12 months.

Lindsay: Lindsay I'll take the.

Lindsay: I'll take the SG&A piece of that so.

Lindsay: Lindsay I'll take the.

Speaker Change: And as you know we started the year off with.

Lindsay: I'll take the SG&A piece of that so.

Brent: And as you know we started the year off with they're ambitious investment and spending plans.

Speaker Change: They're ambitious investment and spending plans.

Speaker Change: <unk> 2024 in support of our all of our initiatives in 2025.

Speaker Change: Cleaning that genius brands plus IV lab.

Speaker Change: Including that tenet brands, plus IV lab.

Speaker Change: As the year progressed, the timing of some of that spending got pushed.

Brent: As the year progressed, the timing of some of that spending got pushed.

Speaker Change: We have delivered upside of course to our numbers and you saw that in the fact that our full year guidance, we've continued to raise.

Brent: We have delivered upside of course to our numbers and you saw that in the fact that our full year guidance, we've continued to raise them.

Speaker Change: But to the degree we've had and.

Brent: But to the degree we've had.

Speaker Change: Really remarkable profitability in the first half of the year, we didn't expect to be as profitable in the first half just because of the spending but you can get a sense of how profitable the underlying businesses.

Speaker Change: <unk> really remarkable profitability in the first half of the year.

Brent: We didn't expect to be as profitable in the first half just because of the spending but you can get a sense of how profitable the underlying businesses.

Speaker Change: Even though with what we delivered in the first half of.

Speaker Change: 24, we still that's still with some additional growth spending layered on until if we were to pull all of that investment off do you have an even more profitable business and that's a function of as Ron said just now.

Brent: Even though with what we delivered in the first half of.

Brent: 24, we still that's still with some additional growth spending layered on until if we were to pull all of that investment off do you have an even more profitable business and that's a function of as Ron said just now.

Speaker Change: Incredible repeat is we also continued to be very efficient on our acquisition spend.

Ron Holtzman: Incredible the repeat is we also continued to be very efficient on our acquisition spend.

Speaker Change: <unk> as you know the first half of the year, that's where the bulk of our acquisition activity happened. So youre seeing right. Now is this kind of perfect perfect flywheel of our <unk> model that is super profitable because of strong repeat and continue to acquire in a very efficient way and is unable to redeploy that excess return it to future investments, which we believe.

Speaker Change: <unk> as you know the first half of the year, that's where the bulk of our acquisition activity happens. So you are seeing right. Now is this kind of perfect perfect flywheel of our <unk> model that is super profitable because of strong repeat and continue to acquire in a very efficient way and is unable to redeploy that excess return it to future investments, which we believe.

Speaker Change: We will drive us.

Speaker Change: For many years in the future the types of expenses I'd say, it's a it's a bunch of things.

Brent: We will drive us.

Speaker Change: For many years in the future are the types of expenses I'd say, it's a it's a bunch of things.

Speaker Change: Product development.

Speaker Change: Brand development people and we have a whole lot going on and we have frontloaded those costs as much as possible. We will have more of course in 2025 and that underpins the.

Brent: Product development.

Brent: Brand development people and we have a whole lot going on and we have frontloaded those costs as much as possible. We will have more of course in 2025 and that underpins the.

Speaker Change: The guidance that the preliminary guidance that we gave you on 2025 today.

Brent: The guidance that the preliminary guidance that we gave you on 2025 today.

Speaker Change: And now we will go to Youssef Squali at true of Securities.

Brent: And now we will go to Youssef Squali at true of Securities.

Youssef Squali: Alright can you guys hear me.

Youssef Squali: Yes, I'd tell you as to how you doing.

Youssef Squali: Alright can you guys hear me.

Youssef Squali: Excellent. Thank you beautiful thanks, a lot sort of at that never happened. So two questions maybe.

Youssef Squali: Yes, I'd tell you as to how you doing.

Youssef Squali: Excellent. Thank you beautiful thanks, a lot sort of at that never happened. So two question maybe can you just unpack a little more the investments that you guys.

Youssef Squali: Maybe can you just unpack a little more the investments that you guys.

Speaker Change: Have in store for brand number three brand number four versus brand versus the investment and in reality labs.

Speaker Change: <unk> has in store for brand number three number four versus brand versus the investment and in reality labs.

Speaker Change: It seems that you guys are looking at the two somewhat differently. A reality labs is more of a long term kind of investment with an ROI, that's still not very clear to us although it seems to be very clear to you, but number three investment and brand number three and number and Brendan before seem to.

Speaker Change: Being kind of more more specifics. So anything you can any any kind of clarity you can shed on that would be really helpful. And then maybe as a.

Speaker Change: <unk> kind of more more specifics. So anything you can any any kind of clarity you can shed on that would be really helpful. And then maybe.

Oren: Somewhat of a related question Oren, maybe talk a little bit about the change in leadership at labs.

Oren: Somewhat of a related question Oren, maybe talk little bit about the change in leadership at labs.

Oren: Any change in direction any impacts on maybe the cadence of output.

Oren: Any change in direction any impacts on maybe the cadence of the output.

Speaker Change: Either products for molecules that however, you want to.

Oren: Of either products or molecules. However, you want to define it out of the house.

Speaker Change: Defined it out of the.

Speaker Change: Great.

Speaker Change: Out of that.

Speaker Change: <unk> now that the.

Oren: Out of that.

Speaker Change: Revenue you kind of leadership there. Thank you.

Speaker Change: Lapsed now that the.

Speaker Change: Revenue you kind of leadership there. Thank you.

Speaker Change: Sure. So I'll start with the second question, then I'll move to the first one there was no change because I'm still here.

Speaker Change: Sure. So I'll start with your second question and then I'll move to the first one there was no change because I'm still here.

Speaker Change: Fortunately or unfortunately did like the piece we are trying to solve here we're building a platform.

Speaker Change: Fortunately or unfortunately.

Speaker Change: The like the piece, we are trying to solve here we are building a platform.

Speaker Change: And it's a combination between building something new and Blitz scaling because I believe again as I mentioned before that we are in a race.

Speaker Change: Get them to get it right I believe that the rest of the industry will go there and we need to move fast and this is part of the reason for the change.

Speaker Change: To get to get it right I believe that the rest of the industry will go there and we need to move fast and this is part of the reason for the change and I want to hire more I want to be more I want to have more oversight.

Speaker Change: Want to hire more I want to build more I want to have more oversight.

Speaker Change: I've done it before we detected and I want to do the same.

Speaker Change: I've done it before with effective and I want to do the same and in science in Boston.

Speaker Change: Ensign in Boston.

Speaker Change: And therefore, and we are making some changes in leadership in terms of direction same direction I'm very involved my sister is involved in.

Speaker Change: And therefore, and we are making some changes in leadership in terms of direction same direction I'm very involved my sister, who is involved in.

Speaker Change: And now we are going to bring more people that are sharing our philosophy of how to move it.

Speaker Change: And now we are going to bring more people that are sharing our philosophy of how to move and.

Speaker Change: Faster towards this direction S and I think the key though is the best is the best candidate for that I met so many people and I think that his creativity and his ability to go from zero to one is something that we need and it fits perfectly to our.

Youssef Squali: At faster toward this direction.

Speaker Change: S and I think the key though is the best is the best candidate for that I met so many people and I think that his creativity and his ability to go from zero to one is something that we need and it fits perfectly to our.

Speaker Change: Two our view and so.

Speaker Change: Our view and so.

Speaker Change: The same as I said on the calls before and we are building we are doing both and hiring a lot, but at same time oversight and structure and protocols to make sure that that we're not just spending money to make sure that we're building something that is sustainable for a long time.

Speaker Change: The same as I said on the calls before and we are building we are doing both and hiring a lot, but at same time oversight and structure and protocols to make sure that that we haven't just spending money to make sure that we are building something that is sustainable for a long time.

Speaker Change: And do your first question and the different between billing breath of billing labs for building loves its more like building a platform more like building the technology team in Israel. It takes time it takes to duration and we're spending a lot of learning and it's a long term game by the way when I say when I say long term I am not.

Speaker Change: And to your first question and the different between billing breath of billing labs. So building loves its more like building a platform like building the technology team in Israel. It takes time it takes the duration and we are spending a lot on learning and it's a long term game by the way when I say when I say long term I am not.

Speaker Change: Referring to 10 years from now and some products I believe that are going to be ready and for Brent Brent Brent for and going to be great. But we're building something that is with way more power to sell more than just the two brands or two product with byproducts. We are building a platform. So it requires the way more in terms of focus and.

Speaker Change: Referring to 10 years from now and some products I believe that are going to be ready and for Brent Brent Brent for and going to be great. But we are building something that is with way more power to sell more than just the two brands or to product type products. We are building a platform that so.

Speaker Change: Investments and thank God I'm in a position that.

Speaker Change: <unk> way more in terms of focus and investment and thank God I'm in a position that you know.

Speaker Change: So my and my adjusted EBITDA margin I don't want to I don't want to be at 32% EBITDA margin I don't think it's like what do we need as a company and we have and my commitment is to continue to invest to build something and something meaningful.

Speaker Change: So my and my adjusted EBITDA margin I don't want to I don't want to be in 32% EBITDA margin I don't think it's like what we need as a company and we have and my commitment is to continue to invest to build something and something meaningful and while using our strong profitability the difference between that and Brent or <unk>.

Speaker Change: While using our strong profitability the difference between that and Brent drained brimful, Brent framed brentsville, we've done before we built in one category, but it's spoiled child, we noted the ways. It's more labor, it's more planning and strategy and branding and NPD. We've done before the main different didn't rent rent Brent for with Brent We again, we have built.

Brent: <unk> for Brent Brent Brentsville, we've done before we built in mechanical but it's spoiled child with notably more labor, it's more planning and strategy and branding and MPD. We've done before the main different didn't rent rent Brent full with Brent. We again, we are building more than just a brand we are building.

Speaker Change: More than just a brand we are building in a telehealth.

Speaker Change: Telehealth platform and we start with when you feel great skin and body issue like X amount and type of limitation, it's a huge pinpoint an impact domestic part of our users.

Speaker Change: Telehealth platform.

Speaker Change: And we start with when you have great skin and body issue like I can exit my type of limitation.

Speaker Change: Huge pinpoint and inputs domestic part of our users and the reason that we do it that we started the satisfaction with corn solution, it's terrible either inconvenient visit to the doctor's office or picking ineffective treatments.

Speaker Change: And the reason that we do it that we started the satisfaction with corn solution, it's terrible either inconvenient visit to the doctor's office or picking ineffective treatments and drug stores and that's a huge opportunity for us and developing line of OTC and Rx products and discover multiple face and body.

Speaker Change: Drugstores.

Speaker Change: And that's a huge opportunity for us and developing line of OTC and Rx products and it's got multiple face and body as a start then building specialty kind mobile app is something that we know how to do with the visual technologies core we are building it for the past two years and I think that's going to differentiate us.

Speaker Change: Then building specialty kind mobile obviously is something that we know how to do with the visual technologies core we are building it for the for the past two years and I think thats going to differentiate us.

Speaker Change: It's almost like a make or break and based on the on the number that I saw from our motive vision modal am lately, it's making a break and number three and leveraging the platform and to users that we have to serve them and to drive revenue and very efficiently and again, we've done it before so different type of.

Speaker Change: And it's almost like a make or break and based on the on the number that they saw from our modest provision model am lately, it's making a break and number three and leveraging the platform and to users that we have to serve and to drive revenue and very efficiently and again, we've done it before so.

Speaker Change: Expenses and investments.

Speaker Change: Type of expenses and investments.

Speaker Change: Okay.

Speaker Change: Andrew Boone at JMP Securities. Please go ahead with your question. Your line is open.

Speaker Change: Yeah.

Andrew Boone: Thanks, so much for taking my question.

Speaker Change: Ron you said earlier that media spend it doubled in the first half of this year versus two years ago.

Andrew Boone: Ron you said earlier that media spend had doubled in the first half of this year versus two years ago.

Lindsay: Revenue was up more than that can you just talk about the efficiencies that you guys are being able to generate on media spend and the confidence that continues what has worked what hasn't worked and what are you guys finding pockets of strength and then Lindsay.

Andrew Boone: Revenue was up more than that can you just talk about the efficiencies that you guys are being able to generate on media spend and the confidence that continues what has worked what hasn't worked and what are you guys finding pockets of strength and then Lindsay.

Speaker Change: As I think about the formulation for revenue growth. This quarter. I think you said <unk> was up 6% and it kind of implies that orders are right at that 20% level is that is that the right framework that we should think about growth going forward is that hey, maybe <unk> is mid single digits in order growth is kind of 20% you guys are solving for that.

Speaker Change: As I think about the formulation for revenue growth. This quarter. I think you said <unk> was up 6% and it kind of implies that orders are right at that 20% level.

Lindsay: Is that the right framework that we should think about growth going forward is that hey, maybe <unk> is mid single digits. In order growth is kind of 20% you guys are solving for that 'twenty or is there any way that we should think about the breakdown of kind of P times Q vehicles are thanks, so much.

Speaker Change: Or is there any way that we should think about the breakdown of kind of P times Q vehicles are thanks, so much.

Speaker Change: Hey, Andrew Thanks for the question.

Youssef Squali: Hey, Andrew Thanks for the question.

Speaker Change: All the noises out the acquisition environment is still favorable for us and you can see like with our strong margins if they spend more.

Speaker Change: 32% with EBITDA margin at 27% on H, one raws did improve versus last year.

Speaker Change: 32% EBITDA margin and 27% on age one raws did improve versus last year.

Speaker Change: And we spent an age one to 24 almost double amount of on media than what we spent in age one 2022, while keeping our overall market deficiency raws and this is unusual and showed that the efficiency of our platform.

Speaker Change: And we spent an age 124 almost double the amount of.

Youssef Squali: On media than what we spent in age one 2022, while keeping our overall marketing efficiency raws.

Youssef Squali: This is unusual and showed that the efficiency of our platform.

Speaker Change: We are bullish about our media efficiency Q2, 24 was our highest scale of Q2 ever and despite that we were able to achieve the highest EBITDA margin.

Youssef Squali: We are bullish about oil major efficiency Q2, 24 was the highest scale of Q2 ever and despite that we were able to achieve the highest EBITDA margin.

Speaker Change: As I mentioned before.

Speaker Change: But remember that we have very different approach from other companies, which makes it easier for us to be on not acquiring customers, we're acquiring new users and over time converting them and that it helps us a lot.

Youssef Squali: As I mentioned before.

Speaker Change: But remember that we have very different approach from other companies, which makes it easier for us to be on not acquiring customers without going to your users and over time converting them and that it helps us a lot.

Speaker Change: <unk>.

Speaker Change: Delivering those results.

Youssef Squali: Hum.

Youssef Squali: Delivering those results.

Speaker Change: Linda Hey, Andrew something so as far as the revenue composition goes this.

Youssef Squali: Lindsay Andrew something so as far as the revenue composition goes.

Linda: This quarter, you're right. It was up around 6% most of our revenue growth was driven by.

Speaker Change: This quarter, you're right <unk> was up around 6% most of our revenue growth was driven by.

Speaker Change: Orders.

Speaker Change: On return rate was a little bit better on a year over year basis as well.

Speaker Change: Orders.

Youssef Squali: On return rate was a little bit better on a year over year basis as well.

Speaker Change: We don't plan our business for a L V versus the order and so it is not possible for me to give you kind of the equation going forward, we focus really on revenue versus our acquisition dollars, it's really more of a realized metric.

Speaker Change: We don't plan, our business for <unk> versus the order.

Speaker Change: And so it's not possible for me to give you kind of the equation going forward, we're focused really on revenue versus our acquisition dollars, it's really more of a realized metric.

Speaker Change: There are different factors that can affect our a O V and as a result, we're really not solving for it to for example.

Speaker Change: There are different factors that can affect our ANV and as a result really not solving for it to for example, the types of new products or the types of products overall.

Speaker Change: The types of new products or the types of products overall.

Speaker Change: Which may have lower price points.

Speaker Change: So it makes sense from a contribution margin perspective for example, they might have better repeat.

Youssef Squali: Which may have lower price points.

Youssef Squali: So it makes sense from a contribution margin perspective for example, they might have better repeat.

Speaker Change: Repeat itself has a lower <unk>.

Speaker Change: <unk> is a lower <unk> category for us so that can be a drag overall, but what we have seen over the last few years is that we're seeing higher <unk> in both first order and repeat.

Speaker Change: Repeat itself has a lower <unk>.

Youssef Squali: <unk> is a lower <unk> category for us so that can be a drag overall, but what we have seen over the last few years is that we're seeing higher <unk> in both first order and repeat.

Speaker Change: And it's been in large part a function of people just adding more items to their basket.

Youssef Squali: And it's been in large part a function of people just adding more items to their basket more.

Speaker Change: The items to their order and we're able to do that number one just as our models get better at recommending.

Youssef Squali: More items to their order.

Youssef Squali: We're able to do that number one just as our models get better at recommending giving.

Speaker Change: Giving a better job in things like Upsells and bundles.

Youssef Squali: Doing a better job in things like Upsells and bundles.

Speaker Change: But also because we have a broader product portfolio now today, there's more things.

Youssef Squali: But also because we have a broader product portfolio now today, there's more things for her to find and we know how to show them tour and to drive that conversion. So that's been a really important driver for us on both first order and and repeat and then of course, that's a positive mix of skin.

Speaker Change: For her to find and we know how to show them tour and to drive that conversion. So that's been a really important driver for us on both first order and and repeat and then of course, that's a positive mix of skin.

Speaker Change: <unk> is also a nice driver, but we're not committed to continuous improvement on ANV.

Youssef Squali: <unk> is also a nice driver, but we're not committed to continuous improvement on <unk>.

Speaker Change: You know as an ongoing driver of revenue that's just how we run the business.

Youssef Squali: You know as an ongoing driver of revenue that's just not how we run the business.

Speaker Change: Thank you.

Speaker Change: We will hear a question now from Mark Mahaney at Evercore. Your line is open Sir.

Speaker Change: Thank you.

Speaker Change: We'll hear a question now from Mark Mahaney at Evercore. Your line is open Sir.

Mark Mahaney: Thanks, two questions. Please could you just talk about what are the biggest governors are factors that are determined the launch times for brands three and four is it.

Mark Mahaney: Thanks two questions. Please.

Mark Mahaney: Talk about what are the biggest governors are factors.

Herman: Herman the launch times for brands three and four is it.

Mark Mahaney: Is it.

Mark Mahaney: Product readiness as it.

Speaker Change: Is it.

Speaker Change: Go to market plan readiness like what's what what determines for you that is why they are launched in the second half of 'twenty five versus the first half of 'twenty five and then just your current business could you talk about if any regions in geographical regions of strength or weakness and embedded in that question any signs of.

Speaker Change: Product readiness as it.

Speaker Change: Consumer discretionary spend softness thank you very much.

Speaker Change: Sure so.

Lindsay: I will take the first question and Lindsay you can talk about them and the second one look in terms of Brent <unk> Brent for them first of all of course and the teams are building those brands. It takes time, especially brand tree.

Speaker Change: I will take the first question and then you can talk about them and the second one look in terms of Brent when Brent for them first of all of course and the teams are building those brands. It takes time, especially brand tree.

Speaker Change: It's probably development it's Sam.

Lindsay: It's technology, it's vision technology.

Speaker Change: It's probably development exam.

Speaker Change: It's technology, it's vision technology and it's so many things that we have that we need to like 2 billion ought to be ready and therefore.

Speaker Change: So many things that we have that we need to like to build in order to be ready and therefore.

Speaker Change: We committed to eight to eight children up to age one that was the plan from the get go we didn't change it.

Speaker Change: We're committed to eight to eight going up to age one that was the plan from the get go we didn't change it.

Speaker Change: But as I mentioned multiple times.

Speaker Change: Even if I hadn't know Brent three or four already I wouldn't announce it because they don't need that growth and we are committed to automotive we want to build the business and at the right pace, 20% growth is already like <unk> then my.

Speaker Change: But as I mentioned multiple times.

Speaker Change: Even if I had no Brent three or four already I wouldn't announce it because I don't need that growth and we are committed to automotive we want to build the business and at the right pace, 20% growth is already like three <unk> and then my.

Speaker Change: Then my comment and there is no reason to go faster than that we want to make sure that our customers are happy that we are doing things properly.

Speaker Change: In my comments and there is no reason to go faster than that we want to make sure that our customers are happy that we are doing things properly.

Speaker Change: So no the plan and we will be ready for both brands in age through next year.

Mark Mahaney: So now the plan and we will be ready for both brands in age through next year.

Speaker Change: And we will launch it when when we think it's the right moment.

Mark Mahaney: And we will launch it when when we think it's the right moment.

Speaker Change: Mark can you repeat that second question.

Mark Mahaney: Mark can you repeat that second question.

Speaker Change: With apologies ma'am he has been returned to the conference.

Mr. <unk>: Mr. <unk> would you please re queue Sir.

Speaker Change: Brian did you catch it I didn't hear it.

Speaker Change: Mr. Hany would you please re queue Sir.

Brian: Yes, I think it was.

Speaker Change: Brian did you catch it I didn't hear it.

Speaker Change: It was asking regarding like them.

Brian: Yes, I think it was it was asking regarding like EM EM weakness in.

Speaker Change: Weakness in.

Speaker Change: And in specific geographies or in general in the U S.

Speaker Change: Like.

Speaker Change: In specific geographies or in general in the U S.

Speaker Change: Okay great.

Speaker Change: Great.

Brian: Yeah.

Mark Mahaney: Okay.

Brian: Any softness that you've seen in our platform.

Mark Mahaney: Yes.

Mark Mahaney: Any softness that we've seen in our platform.

Mark: So mark if you if you want to queue back in reality, but I'll answer that question. So Mr. Mahaney I apologize your line is open Sir.

Mark Mahaney: So mark if you if you want to queue back in reality, but I'll answer that question. So Mr. Mahaney I apologize your line is open Sir.

Mr. Mahaney: No Ron you.

Mahaney: You got my question right any regions of strength or weakness to call out and any signs of consumer softness. Thank you.

Mr. Mahaney: No. Ron you got my question right any regions of strength or weakness to call out and any signs of consumer softness. Thank you.

Speaker Change: But we're not seeing it.

Speaker Change: I know a lot of other.

Speaker Change: You know I know a lot of other.

Speaker Change: Of our competitors in the category and of course other pockets of consumers or are on are seeing this kind of weakness, but we simply are not in fact, we're seeing a lot of broad based strength in both of our brands and different product categories. So Ron talked about the strength in skin, which again at the higher price point item.

Speaker Change: Of our competitors in the category and of course other pockets of consumers or are on are seeing this kind of weakness, but we simply are not in fact, we're seeing a lot of broad based strength in both of our brands and different product category. So Ron talked about the strength in skin, which again at the higher price point item.

Ron: Also our color business continues to be very strong for El Nokia is in soil child. It is growing very very well.

Ron Holtzman: But also our color business continues to be very strong for El Nokia is in soil child. It is growing very very well.

Speaker Change: We also we have a very broad demographic. So we have an older customer and a younger customer and we have a suburban.

Mark Mahaney: We also have a very broad demographic. So we have an older customer the younger customer and we have a.

Speaker Change: Suburban customer and a Citi customer really geographically across the U S is very very well represented.

Mark Mahaney: Suburban customer and a Citi customer and we're really geographically across the us very very well represented.

Speaker Change: I think where the wrong place behind candidly just because we're so small in a very very large market.

Mark Mahaney: And I think where the wrong place behind candidly just because we're so small in a very very large market.

Speaker Change: And we're an idiosyncratic growth story as we are gaining a whole lot of market share because.

Mark Mahaney: And we're an idiosyncratic growth story as we are gaining a whole lot of market share.

Speaker Change: Because we're operating in a wide open channel, which is we think the most important channel for the consumer for for the future.

Mark Mahaney: And because we're operating in a wide open channel, which is we think the most important channel for the consumer for for the future.

Speaker Change: So no we haven't seen any evidence any indication of it at the at the time.

Mark Mahaney: So no we haven't seen any evidence of any indication of it at the at this time.

Speaker Change: Yeah.

Speaker Change: And that was the final question from our audience today, Mr. Holtzman I'm happy to turn it back to user for any additional or closing remarks.

Mark Mahaney: And that was the final question from our audience today, Mr. Holtzman I'm happy to turn it back to user for any additional or closing remarks.

Speaker Change: No. Thank you very much guests for joining us next.

Speaker Change: No. Thank you very much guests for joining us and see you next.

Speaker Change: Next quarter.

Speaker Change: Have a good day, ladies and gentlemen, this does conclude today's teleconference and we thank you all for your participation you may now disconnect your lines.

Speaker Change: Next quarter.

Speaker Change: Have a good day, ladies and gentlemen, this does conclude today's teleconference and we thank you all for your participation you may now disconnect your lines.

Q2 2024 Oddity Tech Ltd Earnings Call

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