Q1 2026 ODDITY Tech Ltd Earnings Call

June 2, 2026

Operator: Good morning, welcome to ODDITY's Q1 2026 Earnings Conference Call. Today's call is being recorded, we have allocated time for prepared remarks and Q&A. At this time, I'd like to turn the call over to Maria Lycouris, investor relations for ODDITY. Thank you. You may begin.

Speaker #2: At this time, I'd like to turn the call over to Maria Lycouris, Investor Relations for Oddity. Thank you. You may begin. Thank you, operator.

Maria Lycouris: Thank you, operator. I'm joined by Oran Holtzman, ODDITY's co-founder and CEO, and Lindsay Drucker Mann, ODDITY's global CFO. Niv Price, ODDITY's CTO, will also be available for the question and answer session. 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 made about ODDITY's business strategy, market opportunity, future financial performance, customer acquisition costs, and potential long-term success. Forward-looking statements involve risks and uncertainties, and actual results could differ materially due to a variety of factors. These factors are described under forward-looking statements in our earnings press release issued earlier today and in our most recent annual report on Form 20-F, filed with the Securities and Exchange Commission on 17 March 2026. We do not undertake any obligation to update forward-looking statements, which speak only as of today.

Speaker #2: I'm joined by Oran Holtzman, Oddity's co-founder and CEO, and Lindsay Druckerman, Oddity's global CFO. Niv Price, Oddity's CTO, will also be available for the question and answer session.

Speaker #2: As a reminder, managers' remarks on this call that do not concern past events are forward-looking statements. These may include predictions, expectations, or estimates, including statements made about ODDITY's business strategy, market opportunity, future financial performance, customer acquisition costs, and potential long-term success.

Speaker #2: Forward-looking statements involve risks and uncertainties and actual results could differ materially due to a variety of factors. These factors are described under forward-looking statements in our earnings press release issued earlier today and in our most recent annual report on Form 20F filed with the Securities and Exchange Commission on March 17, 2026.

Speaker #2: We do not undertake any obligation to update forward-looking statements which speak only as of today. Finally, during this call, we will discuss certain non-gap financial measures which we believe are useful, supplemental measures for understanding our business.

Maria Lycouris: Finally, during this call, we will discuss certain non-GAAP financial measures which we believe are useful supplemental measures for understanding our business. Additional information about these non-GAAP financial measures, including their definitions, are included in our earnings press release, which we issued today. I will now hand the call over to Oran.

Speaker #2: Additional information about these non-gap financial measures, including their definitions, are included in our earnings press release which we issued today. I'll now hand the call over to Ron.

Speaker #3: Thanks, everyone, for joining our call today. While we continue to navigate account dislocation with our largest advertising partner, we remain hopeful that we will return to normalization in the second half of this year, as we communicated in Q4 earnings.

Oran Holtzman: Thanks everyone for joining our call today. While we continue to navigate account dislocation with our largest advertising partner, we remain hopeful that we will return to normalization in H2 of this year, as we communicated in Q4 earnings. We saw a meaningful improvement in Il Makiage CPA this May, which declined an estimated 28% from April, breaking a negative trend of multiple months of CPA increases with this advertising partner. While we cannot guarantee that this positive trend will continue, it is a good indication after months of a negative trend. We plan to continue to aggressively implement improvements until the problem is completely solved. We have been working closely with this advertising partner, including top product and engineering team, to fix the issue.

Speaker #3: We saw a meaningful improvement in earmark AI CPA this May, which declined an estimated 28% from April, breaking a negative trend of multiple months of CPA increases with this advertising partner.

Speaker #3: And while we cannot guarantee that this positive trend will continue, it is a good indication after months of a negative trend. We plan to continue to aggressively implement improvements until the problem is completely solved.

Speaker #3: We have been working closely with this advertising partner, including the top product engineering team, to fix the issue. We have heard from them directly that they estimate we can recover 40% to 60% of CPA based on their system alone, without considering macro or other factors.

Oran Holtzman: We have heard from them directly that they estimate that we can recover 40% to 60% of CPA based on their system alone, without considering macro or other factors. If we get there, it would signal that the business is healthy and positioned to go back to growth and profitability as it was for many years. If we had planned for that level of CPA in 2026, we believe we would have guided to a normal earnings year of 20% revenue growth and 20% of EBITDA margin. We want to share more data and context for the anomaly we experienced. We provide data on historic Il Makiage index CPA levels with this advertising partner based on our internal attribution system in our press release, which I will refer to now. For many years, our CPA was very stable.

Speaker #3: If we get there, it would signal that the business is healthy and positioned to go back to growth and profitability, as it was for many years.

Speaker #3: And if we had planned for that level of CPA in 2026, we believe we would have guided to a normal earnings year of 20% revenue growth and 20% adjusted EBITDA margin.

Speaker #3: We want to share more data in context for the anomaly we experienced. We provide detailed historic earmark AI index CPA levels with this advertising partner, based on our internal attribution system, in our press release, which I will refer to now.

Speaker #3: For many years, our CPA was very stable. As you can see in the table provided, steady and consistent mid-team CPA increases every year, with gradual yearly increases correlated with our industry.

Oran Holtzman: As you can see in the table provided, steady and consistent mid-teen CPA increases every year with gradual yearly increases correlated with our industry. While we did not build our business on favorable user acquisition costs, rather on strong over 100% 12-month repeat rate, in 2026, we saw levels of CPA that in some cases were two ticks higher than what we were expecting and what we see in other competitors. At this level, the unit economics get much difficult as expected for off-market costs. The data indicates, in our view, how the issue is technical and not brand or saturation issue. One, the change was sudden, indicating a dramatic break, not steady deterioration over time, but clear and definitive months of collapse.

Speaker #3: While we did not build our business on favorable user acquisition costs, rather on a strong over 100% 12-month repeat rate in 2026, we saw levels of CPA that in some cases were 2x higher than what we were expecting and what we see in other competitors.

Speaker #3: At these levels, the unit economics get much more difficult, as expected for off-market costs. The data indicates, in our view, how the issue is technical and not a brand or saturation issue.

Speaker #3: One, the change was sudden, indicating a dramatic break—not steady derivation over time, but clear and definitive months of collapse. Two, a breakdown occurred in different earmark AI head accounts, in different markets, with the same pattern simultaneously: US, Canada, UK, Australia, and Israel.

Oran Holtzman: Two, a breakdown occurred in different Il Makiage ad accounts, different markets with the same pattern simultaneously, US, Canada, UK, Australia, and Israel, which suggests it has nothing to do with the brand. There is nothing that can happen in our offering or business that can explain it at the same time in multiple geographies. Three, we believe a significant driver of the break comes from spiking bounce rates. In our view, it suggests the issue is with lower quality audiences being served with our ads by this algorithm. Furthermore, our fundamental brand health is confirmed by behavior we see among existing customers. Net revenue repeat on 12 months basis cohorts are strong with support our 11 months contribution margins. A focus area for us in the last few months has been successful implementation in our try before you buy model.

Speaker #3: Which suggests it has nothing to do with the brand. There is nothing that can happen in our offering or business that can explain it happening at the same time in multiple geographies.

Speaker #3: Third, we believe a significant driver of the break comes from spiking bounce rates, in our view. It suggests the issue is with lower-quality audiences being served our ads by this algorithm.

Speaker #3: Furthermore, our fundamental brand health is confirmed by behavior we see among existing customers, net revenue repeat on 12-month basis cohorts are strong, with support our 12-month contribution margins.

Speaker #3: A focus area for us in the last few months has been successfully remediation in our try before you buy model. As a reminder, try before you buy is a pro-consumer model that allows to replicate the online experience or physical stores like Sephora where consumer can try a product in real life and materially reduce the risk of purchase.

Oran Holtzman: As a reminder, try before you buy is a pro-consumer model that allows to replicate the online experience of physical stores like Sephora, where consumer can try products in real life and materially reduce the risk of purchase. This model is very unique due to complex execution, which we believe makes it an edge case and non-obvious interaction with the platform new dynamics. Towards the end of Q1, we already successfully shifted 40% of our acquisition revenue out of try before you buy into standard buy model, reducing our exposure to this model with no impact on our unit economics, which is very encouraging. Unfortunately, because it takes time for algorithms to recalibrate, as expected, this dislocation will have meaningful negative impact on our 2026 financial results, especially in H1. As focused in our Q4 earnings, it had material impact to Q1.

Speaker #3: This model is rare in beauty due to the complex execution, which we believe makes it an edge case and non-obvious interaction with the platform new dynamics.

Speaker #3: Towards the end of Q1, we successfully shifted 40% of our acquisition revenue out of Try Before You Buy and into the standard buy model, reducing our exposure to this model with no impact on our unit economics, which is very encouraging.

Speaker #3: Unfortunately, because it takes time for algorithms to recalibrate, as expected, this dislocation will have meaningful negative impact on our 2026 financial results, especially in H1.

Speaker #3: As focused in our Q4 earning, it had material impact to Q1. Says the client, 26% versus the prior year—slightly better than our outlook for sales decline, approximately 30%.

Oran Holtzman: Sales declined 26% versus the prior year, slightly better than our outlook for sales decline of approximately 30%. I noted a strong improvement in May from April. This is our first month of sequential recovery since Q4 2025. We believe it's a positive sign. It's also supported by our deliberate decision to maintain reduced level of acquisition spend as we work towards recovery. All things taken together, we remain hopeful that we will achieve normalization as planned in H2 this year as we continue to implement recovery initiatives to recalibrate the algorithm. Moving to our other brands and growth drivers. Similar to Il Makiage, SpoiledChild is navigating higher CPA cost, but with less severity. We plan to implement similar remediation steps in SpoiledChild once we finish identifying the technical initiatives that can resolve the algorithms and CPA problems in Il Makiage.

Speaker #3: I noted a strong improvement in May from April. This is our first month of sequential recovery since Q4 25, and we believe it's a positive sign.

Speaker #3: It also supported by our deliberate decision to maintain reduced level of acquisition spend, as we work towards recovery. All things taken together, we remain hopeful that we will achieve normalization as planned in the second half of this year, as we continue to implement recovery initiatives to recalibrate the algorithm.

Speaker #3: Moving to our other brands and growth drivers: Similar to Earmark AI, Spiritual is navigating higher CPA costs, but with less severity. We plan to implement similar remediation steps in Spoiled Chart while we finish identifying the technical initiatives that can resolve the algorithms and CPA problems in Earmark AI.

Speaker #3: Moving on to methodic, which is off to a strong start following its launch late last year. We expected to deliver 25 million dollar revenue this year.

Oran Holtzman: Moving on to Methodiq, which is off to a strong start following its launch late last year. We expected to deliver $25 million revenue this year, in line with SpoiledChild's strong success in year one. As a reminder, Methodiq is a medical telehealth platform designed to deliver high efficacy treatments at scale. Our goal is to help transform a broken medical care system, starting in dermatology, using our best treatments and the highest standards of care available to everyone. We are proud of Methodiq product line, which spans 28 prescriptions and non-prescription products, including oral, topical supplements, and medical grade makeup, all designed to maximum efficacy, minimize side effect, and give an unparalleled experience. We believe it's a game-changing innovation for the benefit of large underserved customer base.

Speaker #3: In line with spoiled chart's strong success in year one. As a reminder, methodic is a medical telehealth platform designed to deliver high efficacy treatments at scale.

Speaker #3: Our goal is to help transform a broken medical care system, starting in dermatology, using our best treatments and the highest standards of care available to everyone.

Speaker #3: We are proud of methodic product line, which spans 28 prescriptions and non-prescription products, including oral topical supplements and medical grade makeup. All designed to maximum efficacy, minimize side effects, and give an unallowed experience.

Speaker #3: We believe it's a game-changing innovation for the benefit of large underserved customer base. We are also seeing good signs from our progress tracking app, where users are delivered continuous care throughout the combination of our vision technology and care team engagement.

Oran Holtzman: We are also seeing good signs from our progress tracking app, where users are delivered continuous care throughout the combination of our vision technology and care team engagement. App downloads rates, weekly check-ins rates, and care team engagement are strong signals of demand and our ability to use this technology to drive compliance, satisfaction, and success. ODDITY Labs continue to push the frontier of ingredients innovation in beauty and wellness, focusing on pain points with large commercial opportunities like acne, hyperpigmentation, and aging. We added two additional products made with Labs molecule in our Methodiq product line up this quarter. First, Duracai, a topical eczema treatment formulated with our proprietary ODDL1669 molecule and other inactives, engineered with the goal of achieving superior efficacy to traditional eczema treatment with minimal side effects.

Speaker #3: App download rates, weekly check-in rates, and care team engagement are strong signals of demand and our ability to use this technology to drive compliance, satisfaction, and success.

Speaker #3: OD Labs continues to push the frontier of ingredient innovation in beauty and wellness, focusing on pain points with large commercial opportunities like acne, hyperpigmentation, and aging.

Speaker #3: We added two additional products made with LABS molecule in our Methodic product lineup this quarter. First, Nurexide topical eczema treatment formulated with our proprietary ODDL1669 molecule and other inactives.

Speaker #3: Engineered with the goal of achieving superior efficacy to traditional eczema treatments with minimal side effects. Second is Zarelac, a first-of-its-kind acne scar prevention treatment powered by our ODDL103 molecule, which reduces inflammation and promotes the healing of active breakouts.

Oran Holtzman: Second is Zeralaq, a first-of-its-kind acne scar prevention treatment powered by our ODDL103 molecule, which reduces inflammation and promotes the healing of active breakouts. Looking ahead, we are working on several novel molecules targeting different indications. One, in our anti-aging program, our novel molecules have demonstrated robust in vitro efficacy in increasing collagen synthesis and reducing aging markers. We are now conducting human focus group testing to ensure clinical translation. Two, to optimize hyperpigmentation treatment, we are targeting novel pathways designed to work with our existing ODDL1007 molecule. Focus groups are currently underway to evaluate the enhanced therapeutic efficacy and performance of this combined treatment. Three, in our acne prevention pipeline, we are developing novel topical approach designed to prevent acne breakouts by reducing sebum production and preventing clogged pores. Our leading candidates molecule are currently in final laboratory validation phase.

Speaker #3: Looking ahead, we are working on several novel molecules targeting different indications. In our anti-aging program, our novel molecule has demonstrated robust in vitro efficacy in increasing collagen synthesis and reducing aging markers.

Speaker #3: We are now conducting human-focused group testing to ensure clinical translation. Second, to optimize hyperpigmentation treatment, we are targeting novel pathways designed to work with our existing ODDL1007 molecule.

Speaker #3: Focus groups are currently underway to evaluate the enhanced therapeutic efficacy and performance of this combined treatment. Three, in our acne prevention pipeline, we are developing novel topical approaches designed to prevent acne breakouts by reducing sebum production and preventing clog pores.

Speaker #3: Our leading candidate molecules are currently in the final laboratory validation phase. Before I hand it over to Lindsay, I want to reiterate our view on this moment in time.

Oran Holtzman: Before I hand it over to Lindsay, I want to reiterate our view on this moment in time. We continue to be bullish on the structural dynamics in our industry. Beauty is a large category with attractive secular characteristics. Consumers continue to migrate online and towards the high-efficacy products. We believe incumbents are at a disadvantage to meet this demand, while we are set up for well gain share. We are working tirelessly to get back to our historical strong position. As a company, we have navigated algorithmic adjustments by our ad partners in the past with success. We are hopeful based on the improvements we see today that we will resolve this dislocation and get back to our long track record of consistent, strong growth and attractive profitability.

Speaker #3: We continue to be bullish on the structural dynamics in our industry. Beauty is a large category with attractive secular characteristics. Consumer continue to migrate online and towards the high efficacy products.

Speaker #3: We believe incoming comments are a disadvantage to meet this demand, while we are set up for well-gained share. We are working tirelessly to get back to our historically strong position.

Speaker #3: As a company, we have navigated algorithmic adjustments by our ad partners in the past with success. We are hopeful, based on the improvements we see today, that we will resolve this dislocation and get back to our long track record of consistently strong growth at attractive profitability.

Oran Holtzman: As a company, we have navigated algorithmic adjustments by our ad partners in the past with success. We are hopeful based on the improvements we see today that we will resolve this dislocation and get back to our long track record of consistent, strong growth and attractive profitability. We have seen no reason that we couldn't solve what we believe is a technical problem as we have in the past. With that, I will turn it over to Lindsay.

Speaker #3: We have seen no reason that we couldn't solve what we believe is a technical problem, as we have in the past. With that, I will turn it over to Lindsay.

Oran Holtzman: We have seen no reason that we couldn't solve what we believe is a technical problem as we have in the past. With that, I will turn it over to Lindsay.

Speaker #1: Thanks, Aaron. Let's turn to our Q1 results, which I will refer to on an adjusted basis. You can find the full reconciliation to gap in our press release.

Lindsay Drucker Mann: Thanks, Oran. Let's turn to our Q1 results, which I will refer to on an adjusted basis. You can find the full reconciliation to GAAP in our press release. Net revenue declined 26%, slightly less negative than our expectation of an approximate 30% decline. The decline was driven largely by first orders, which declined by around 50%, driven by the significant reduction in our acquisition efficiency due to the abnormal higher CPA. Repeat orders declined by around 15%, mainly attributed to a decline in Q1 first orders and a decline in the proportion of our repeat that is more sensitive to acquisition spend. Repeat sales represented approximately two-thirds of our net revenue this quarter versus approximately 56% in Q1 2025. AOV declined low single digits driven by higher mix of SpoiledChild versus Il Makiage and product mix. Gross margin was 69.7%, compressing approximately 520 basis points year-over-year.

Speaker #1: Net revenue declined 26%, slightly less negative than our expectation of an approximate 30% decline. The decline was driven largely by first orders, which declined by around 50%, driven by the significant reduction in our acquisition efficiency due to the abnormal higher CPA.

Speaker #1: Repeat orders declined by around 15%, mainly attributed to a decline in Q1 first orders and a decline in the proportion of our repeat that is more sensitive to acquisition spend.

Speaker #1: Repeat sales represented approximately two-thirds of our net revenue this quarter, versus approximately 56% in Q1 '25. AOV declined low single digits, driven by higher mix to IL Makiage versus EARMARK and product mix.

Speaker #1: Gross margin was 69.7%, compressing approximately 520 basis points year over year. The compression was driven in part by product mix and lower AOV. Our remediation activity during the quarter created some temporary noise in the P&L.

Lindsay Drucker Mann: The compression was driven in part by product mix and lower AOV. Our remediation activity during the quarter created some temporary noise in the P&L. We ran many tests to try and isolate the technical problem. This included turning off different tech products, funnel offerings, and testing different PBYB return policies. These changes had temporary negative impact on our Q1 margins. We delivered adjusted EBITDA of -$7 million. The year-over-year decline reflects the abnormal CPA levels and our decision to continue spending in order to accelerate a recalibration of the algorithm. Margins were also impacted by operating deleverage from lower revenue and our continued planned investments in core growth initiatives. We are managing costs across the business to offset some of the EBITDA pressure while protecting these forward investments. Adjusted diluted EPS was -$0.17.

Speaker #1: We ran many tests to try and isolate the technical problem, and this included turning off different tech products, funnel offerings, and testing different TBYB return policies.

Speaker #1: These changes had temporary negative impact on our Q1 margins. We delivered adjusted EBITDA of negative $7 million. The year-over-year decline reflects the abnormal CPA levels, and our decision to continue spending in order to accelerate a recalibration of the algorithm.

Speaker #1: Margins were also impacted by operating de-leverage from lower revenue and our continued planned investments in core growth initiatives. We are managing costs across the business to offset some of the EBITDA pressure while protecting these forward investments.

Speaker #1: Adjusted diluted EPS was negative 17 cents. Q1 free cash flow was negative 21 million dollars, driven by the net loss. We exited the quarter with a slightly elevated inventory position due to the revenue shortfall relative to our purchase plans late last year, and we plan to work through this inventory going forward.

Lindsay Drucker Mann: Q1 free cash flow was -$21 million, driven by the net loss. We exited the quarter with a slightly elevated inventory position due to the revenue shortfall relative to our purchase plans late last year. We plan to work through this inventory going forward. We exited the quarter with $667 million of cash equivalents, and investments on our balance sheet. Our $350 million of amended credit facilities secured in January 2026 remain undrawn. Turning to capital return. In March 2026, ODDITY's board of directors approved new share buyback program authorizing the repurchase of up to $200 million of the company's Class A ordinary shares, which replaced and superseded the previously announced $150 million share buyback plan. ODDITY repurchased approximately 6 million ordinary shares during the quarter for approximately $82 million, reducing ordinary shares outstanding by around 10%.

Speaker #1: We exited the quarter with $667 million of cash, cash equivalents, and investments on our balance sheet. Our $350 million of amended credit facilities, secured in January of 2026, remain undrawn.

Speaker #1: Turning to capital return. In March of 2026, Oddity's board of directors approved new share buyback program, authorizing the repurchase of up to 200 million dollars of the company's class A ordinary shares.

Speaker #1: This replaced and superseded the previously announced $150 million share buyback plan. Oddity repurchased approximately 6 million ordinary shares during the quarter for approximately $82 million, reducing ordinary shares outstanding by around 10%.

Speaker #1: We exited the quarter with approximately $167 million remaining on our authorization. Turning to our outlook, media uncertainty continues to make visibility to full-year financials challenging, although we're hopeful we're moving in the right direction.

Lindsay Drucker Mann: We exited the quarter with approximately $167 million remaining on our authorization. Turning to our outlook. Media uncertainty continues to make visibility to full-year financials challenging, although we're hopeful we're moving in the right direction. We expect adjusted EBITDA for the full year will be positive. We hope to deliver a clearer picture of other key P&L items in coming months. For Q2, we expect net revenue to decline between 25% and 30% year over year, and we expect adjusted EBITDA will be between $8 and $10 million, impacted by higher CPA and deleverage on our reduced revenue. A few things to keep in mind for your models. We continue to spend acquisition dollars despite higher CPA in order to feed the algorithm signals they need to reset and normalize.

Speaker #1: We expect adjusted EBITDA for the full year will be positive. We hope to deliver a clearer picture of other key P&L items in coming months.

Speaker #1: For the second quarter, we expect net revenue to decline between 25% and 30% year over year. We also expect adjusted EBITDA will be between $8 million and $10 million, impacted by higher CPA and de-leverage on our reduced revenue.

Lindsay Drucker Mann: For Q2, we expect net revenue to decline between 25% and 30% year over year, and we expect adjusted EBITDA will be between $8 and $10 million, impacted by higher CPA and deleverage on our reduced revenue. A few things to keep in mind for your models. We continue to spend acquisition dollars despite higher CPA in order to feed the algorithm signals they need to reset and normalize. In addition, the reduced user acquisition activity in H1 will continue to weigh on repeat sales for the remainder of the year, even as CPAs normalize. With that, I'll hand it back to the operator for questions.

Speaker #1: A few things to keep in mind for your models. We continue to spend acquisition dollars despite higher CPA in order to feed the algorithm the signals it needs to reset and normalize.

Speaker #1: In addition, the reduced user acquisition activity in the first half will continue to weigh on repeat sales for the remainder of the year, even as CPAs normalize.

Lindsay Drucker Mann: In addition, the reduced user acquisition activity in H1 will continue to weigh on repeat sales for the remainder of the year, even as CPAs normalize.

Speaker #1: With that, I'll hand it back to the operator for questions.

Lindsay Drucker Mann: With that, I'll hand it back to the operator for questions.

Speaker #2: Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Operator: Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. To allow for as many questions as possible, we ask that you each keep to one question. Thank you. Our first question comes from the line of Brian Tanquilut with Jefferies. Please proceed with your question.

Speaker #2: You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset.

Speaker #2: Before pressing the star key, to allow first money questions as possible, we ask that you each keep to one question. Thank you. Our first question comes from the line of Brian Tanklett ett with Jefferies.

Speaker #2: Please proceed with your question.

Speaker #3: Hey, good morning. Lindsay, maybe just on the earnings trajectory. You said positive EBITDA for the year and 8 to 10 million positive EBITDA in Q2.

Brian Tanquilut: Hey, good morning. Lindsay, maybe just on the earnings trajectory. You stated +EBITDA for the year and $8 to $10 million +EBITDA in Q2. If you don't mind just talking about the cadence of EBITDA margins that you expect throughout the year, and do you still plan to have most of the acquired customer reps to come in H1, or is there a shift happening to H2?

Speaker #3: If you don't mind, could you talk about the cadence of EBITDA margins that you expect throughout the year? And do you still plan to have most of the acquired customer reps come in the first half, or is there a shift happening to the back half?

Speaker #2: Thanks, Brian. So, unfortunately, based on the technical issue we had, first orders were down, as I mentioned in my script, around 50%. And it will be very, very difficult for us to make this up in the back half, just based on seasonality.

Lindsay Drucker Mann: Thanks, Brian. Unfortunately, based on the technical issue we had, first orders were down, as I mentioned in my script, around 50%. It will be very difficult for us to make this up in H2 just based on seasonality. That being said, the leading indicator we look for is the improvement in CPA, which should allow us to drive some improvement, at least in the sequential trend of declines across the year. Once we get first orders going, that's when we can start to drive the repeat, and that's where the profitability flows through. We didn't give EBITDA guidance by quarter for H2 by design. We just don't have enough visibility right now. We do have confidence that we will be profitable for the full year.

Speaker #2: That being said, the leading indicator we look for is the improvement in CPA, which should allow us to drive some improvement—at least in the sequential trend of declines.

Speaker #2: Across the year, once we get first orders going, that's when we can start to drive the repeat business, and that's where the profitability flows through.

Speaker #2: We didn't give EBITDA guidance by quarter for the back half by design. We just don't have enough visibility right now, but we do have confidence that we will be profitable for the full year based on everything that we see today—the exact specifics of it.

Lindsay Drucker Mann: Based on everything that we see today, the exact specifics of it, we just don't have enough visibility to yet.

Speaker #2: We just don't have enough visibility to yet.

Speaker #3: Fully understood. And as a follow-up, can you go back just to the comments about maintaining a reduced level of acquisition spend? So, we're thinking: how much have you reduced your run rate by compared to last year, and then was this evenly spread across Q1, or was there something you did in May that helped bring CPAs down?

Brian Tanquilut: Totally understand. Follow-up, can you go back just to the comments about maintaining a reduced level of acquisition spend? We're thinking, how much have you reduced your run rate by compared to last year? Was this evenly spread across Q1, or was there something you did in May which helped bring CPAs down?

Speaker #2: Yeah. So we are still spending and so media spend for the quarter was down a little bit relative to the prior year. It's just that our efficiency on that media is a lot worse.

Lindsay Drucker Mann: Yeah. We are still spending, and so media spend for the Q was down a little bit relative to the prior year. It's just that our efficiency on that media is a lot worse. We talked about You can see in the table that we provided the 80%+ increase year-over-year in the H1. That rate of increase did get worse Jan, Feb, March to April, and May was our first month of sequential improvement. We are still spending. We want to

Speaker #2: We talked about—you can see in the table that we provided—the 80-plus percent increase year over year in the first half. And that rate of increase did get worse January/February, March to April, and May was our first month of sequential improvement.

Speaker #2: So, we are still spending. We want to.

Speaker #3: And the reason that we're still spending is to fix the problem. Without spending, we would not be able to identify the problem, and we would not be able to test all the things that we have done in the past quarter.

Oran Holtzman: The reason that we're still spending is to fix the problem. Without spending, we will not be able to identify the problem, and we will not be able to test all the things that we have done in the past quarter, and without that, we will not see any recovery. We need to continue to spend, but we do it. We obviously cannot increase spend because the efficiency of that spend, but we are hopeful after what we saw in May.

Speaker #3: And without it, we will not see any recovery. So we need to continue to spend, but we obviously cannot increase spend because then the efficiency of that spend—

Speaker #3: But we are hopeful after what we saw in May.

Speaker #4: Awesome. Thank you.

Brian Tanquilut: Awesome. Thank you.

Speaker #2: Thank you. Our next question comes from the line of Yousef Squalli with Truist Securities. Please proceed with your question.

Operator: Thank you. Our next question comes from line of Youssef Squali with Truist Securities. Please proceed with your question.

Speaker #5: Excellent. Thank you so much, guys. Maybe a quick question for Oran or for Lindsay. So Oran, can you delve a little deeper into the drivers of the decline in the CPA for Thelma Piaz?

Youssef Squali: Excellent. Thank you so much. Hi, guys. Maybe a quick question for Oran or for Lindsay. Oran, can you delve a little deeper into the drivers of decline in the CPA for Il Makiage? I think you talked about the 28% sequential between April and May, and just like practically, what has been working, and how much of that is sustainable and can actually compound on itself over time? Lindsay, as I look at that improvement in CPA, and I look at the guide you're providing for Q2, there seems to be a bit of a disconnect because if you look at the overall revenue growth, you're still talking about -25% to -30%. You put up -26% in Q1.

Speaker #5: I think you talked about the 28% sequential between April and May, and just—practically—what has been working, and how much of that is sustainable and can actually compound on itself over time?

Speaker #5: And Lindsay, just as I look at that improvement in CPA and I look at the guide you're providing for Q2, there seems to be a bit of a disconnect because look at the overall revenue growth.

Youssef Squali: Lindsay, as I look at that improvement in CPA, and I look at the guide you're providing for Q2, there seems to be a bit of a disconnect because if you look at the overall revenue growth, you're still talking about -25% to -30%. You put up -26% in Q1. Maybe just talk to us about the assumptions that are baked into that revenue decline, maybe from a CPA trend, and anything else you want to share on that guide. Thank you.

Speaker #5: You're still talking about negative 25 to 30. You put up 26 negative in Q1. Maybe just talk to us about the assumptions that are baked into that revenue decline, maybe from a CPA trend and anything else you want to share on that guide.

Youssef Squali: Maybe just talk to us about the assumptions that are baked into that revenue decline, maybe from a CPA trend, and anything else you want to share on that guide. Thank you.

Speaker #5: Thank you.

Speaker #6: Hi, Yousef. So needless to say that we do many, many tests in order to fix it. On the other side, it's an algorithm, and those things most of the time very hard to move the needle and exit those type of spirals.

Oran Holtzman: Hi, Youssef. Needless to say that we do many tests in order to fix it. On the other side, it's an algorithm, and those things are most of the time very hard to move the needle and exit those type of spirals. By the way, we navigated, as I mentioned, many algorithm changes in the past, and we always were able to solve it. The fixes that we are doing are primarily structural and technical, altering signals, adjusting our infrastructure, shifting audience strategies, and of course, campaign setup, but that's only on our end, of course. In parallel, our ad partner is doing analysis on their end, and we work with them closely for the past few months.

Speaker #6: By the way, as I mentioned, we have navigated many algorithm changes in the past, and we have always been able to solve them. The fixes that we are making are primarily structural and technical—auditing signals, adjusting our infrastructure, shifting audience strategies, and, of course, campaign setup.

Speaker #6: But that's only on our end. Of course, in parallel, our partners are doing analysis on their end, and we have worked with them closely for the past few months.

Oran Holtzman: We have also made some budget allocation, reducing the overall spend for Il Makiage, given the elevated spend, but continue to spend just to make sure that we can continue to have tests running. Again, for many months, we saw only negative trend. Almost every month was worse than the previous month other than May. May, we had lower spend, but still, we had also very low spend in other months, and the trend was opposite. That's for that question. Lindsay?

Speaker #6: We have also made some budget allocation, reducing the overall spend for Illma Piaz, given the elevated spend, but continue to spend just to make sure that we can continue to have tests running. And again, for many months, we saw only a negative trend.

Speaker #6: Almost every month was worse than the previous months. Other than May, we had lower spend, but still, we also had very low spend in other months, and the trend was opposite.

Speaker #6: That's for that question, Lindsay.

Speaker #2: Sure. Hey, Yousef. So our guidance for the second quarter is for revenue to be down between 25 and 30 percent. The challenge for us in part is that, A, acquisition is still very difficult.

Lindsay Drucker Mann: Sure. Hey, Youssef. Our guidance for Q2 is for revenue to be down between 25% and 30%. The challenge for us, in part, is that, A, acquisition is still very difficult. We talked about the sequential improvement in May versus April, remember that February was worse than January, March was worse than February, and April was worse than March. On balance, the overall CPA in May versus Q1 is not materially different yet, the encouraging thing for us is the positive inflection that we saw in May overall. We did lose a lot of first orders in Q1 that would have translated into repeat orders in Q2, that's a continued overhang for us. Again, where we hope to see more sequential improvement is in H2.

Speaker #2: We talked about the sequential improvement in May versus April, but remember that February was worse than January, March was worse than February, and April was worse than March.

Speaker #2: So on balance, the overall CPA in May versus Q1 is not materially different yet, but we noted the encouraging thing for us is the positive inflection that we saw in May overall.

Speaker #2: We did lose a lot of first orders in the first quarter that would have translated into repeat orders in the second quarter, and so that's a continued overhang for us.

Speaker #2: So again, where we hope to see more sequential improvement is in the second half of the year. And like I said, and what we said in our outlook, we do expect for full-year adjusted EBITDA to be profitable.

Lindsay Drucker Mann: Like I said, and what we said in our outlook, we do expect for full year adjusted EBITDA to be profitable.

Speaker #5: Thank you. Our next question comes from the line of Andrew Boone with Citizens. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Andrew Boone with Citizens. Please proceed with your question.

Speaker #6: Thanks so much for taking the question. You guys have historically run your marketing in-house. Can you guys talk about the changes that have either taken place within that organization or maybe the thought about using third parties basically?

Andrew Boone: Thanks so much for taking the question. You guys have historically run your marketing in-house. Can you guys talk about the changes that has either taken place within that organization or maybe the thought about using third parties? Basically, what's changed in terms of the marketing strategy given this speed bump?

Speaker #6: What's changed in terms of the marketing strategy given this speed bump?

Speaker #3: Yeah. Historically, we've done everything in-house. Very successfully for many, many years. For the first time, we shared with the market how stable our results are despite the fact that we were growing massively.

Oran Holtzman: Yeah. Historically, we've done everything in-house, very successfully for many, many years. For the first time, we shared with the market how stable our results are, despite the fact that we were growing massively. That's just for acquisition, of course, our repeat and other metric and compounding repeat continue to grow. That's why, despite the small change every year, we were able to continue to present such strong results. What we have now is something that we never saw before. We are evaluating it with the ad partner, and we also brought in another team recently to take a look. Again, we don't believe that the problem sits on our end, but we continue to do everything in our power to exit this spiral as soon as possible.

Speaker #3: But that's just for acquisition. Of course, our repeat and other metrics, and compounding repeat, continue to grow. That's why, despite the small change every year, we have been able to continue to present such strong results.

Speaker #3: And what we have now is something that we never saw before. We are evaluating it with the ad partner, and we also brought in another team recently to take a look.

Speaker #3: But again, we don't believe that the problem sits on our end, but we continue to do everything on our in our power to exit this spiral as soon as possible.

Speaker #5: I would just add on to that, Andrew, that it was it's been very encouraging as we've worked very closely with this advertising partner to hear their view that all other things equal and as we said in our prepared remarks, not related to other things like market dynamics, just in their systems alone, they estimate that we can recover 40 to 60 percent of CPA.

Lindsay Drucker Mann: I would just add on to that, Andrew, that it's been very encouraging as we've worked very closely with this advertising partner to hear their view that all other things equal, and as we said in our prepared remarks, not related to other things like market dynamics, just in their systems alone, they estimate that we can recover 40% to 60% of CPA. If we get to those levels, we'll be back in a position to resume to healthy, profitable growth.

Speaker #5: And if we get to those levels, we'll be back in a position to resume healthy, profitable growth.

Speaker #4: Thank you. Our next question comes from the line of Ryan McDonald with Needham & Company. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Ryan MacDonald with Needham & Company. Please proceed with your question.

Speaker #6: All right. Thanks for taking my question. Maybe one for Oran and one for Lindsay. Oran, I'm curious to think about as you're thinking about product development and understand, obviously, I think probably the algo changes taking most of your time, but as we think about product development throughout the remainder of this year, we're obviously getting some updates or should get some updates in July from the FDA around peptides.

Ryan MacDonald: Hi, thanks for taking my question. Maybe one for Oran and one for Lindsay. Oran, I'm curious to think about, as you're thinking about product development, and understand, obviously, I think that probably the algo change is taking most of your time. As we think about product development throughout the remainder of this year, we're obviously getting some updates or should get some updates in July from the FDA around peptides and potentially some moving from certain peptides from category 2 to category 1 with applications in skincare like GHK-Cu copper peptides, BPC-157. Just curious what sort of opportunity and maybe what research or investments you're doing in this area and what sort of opportunity this could open up for your brands over time.

Speaker #6: And potentially, some moving from certain peptides from category two to category one with applications in skincare like GHK, CU, copper peptides, EPC-157. Just curious what sort of opportunity and maybe what research or investments you're doing in this area and what sort of opportunity this could open up for your brands over time.

Speaker #6: And then Lindsay, for you, just on the guidance, if we think about the adjusted EBITDA guidance of 8 to 10 million, are you assuming is that based on assumptions that the improvements in CPA you saw in May continue?

Ryan MacDonald: Lindsay, for you, just on the guidance, if we think about the adjusted EBITDA guidance of $8 to $10 million, is that based on assumptions that the improvements in CPA you saw in May continue, or do they revert back to April levels, Q1 levels? Thanks.

Speaker #6: Or do they revert back to April levels—first quarter levels? Thanks.

Speaker #3: Yeah. On your first question, needless to say, the vast majority of our time is spent handling the problem that we currently have with media.

Oran Holtzman: Yeah. On your first question, needless to say that the vast majority of our time is handling the problem that we currently have with media. For both me and Shiran, that's what we do 24/7. I will say that despite what we have in media, we continue to heavily invest in product across Il Makiage, SpoiledChild, and Methodiq, but more importantly, ODDITY Labs. We continue to see massive opportunity there. Once we have what to inform regarding the peptides and the new changes, we'll update the market.

Speaker #3: For both me and Shiran, that's what we do 24/7. I will say that despite what we have in the media, we continue to heavily invest in product across Il Makiage, SpoiledChild, and Methodic.

Speaker #3: But more importantly, OIT Labs—we continue to see massive opportunity there. And once we have what to inform regarding the peptides and the new changes, we'll update the market.

Speaker #4: Thanks. And as it relates to our assumptions, our assumptions assume that CPA remains similarly difficult.

Lindsay Drucker Mann: Thanks. As it relates to our assumptions, our assumptions assume that CPA remains similarly difficult.

Speaker #5: Thank you. Our next question comes from the line of Dara Mohsanian with Morgan Stanley. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Dara Mohsenian with Morgan Stanley. Please proceed with your question.

Speaker #6: Hey, good morning. So first, just a clarification. You highlighted CPA moved back down sequentially versus recently. You remain hopeful. You're on track for normalization in the second half of the year.

Dara Mohsenian: Hey, good morning. First, just a clarification. You highlighted CPA moved back down sequentially versus recently. You remain hopeful you're on track for normalization in the H2 of the year. Is that normalization more around CPA itself, or is there some hope perhaps you could get back to revenue growth at some point by the end of the calendar year? Just any thoughts on how much of this 2026 revenue pressure might extend longer term as you look out to 2027? I understand 2026 is still a moving target this year. Just looking for your conceptual thoughts on what this means to the business longer term, the issues around CPA here in 2026. Thanks.

Speaker #6: Is that normalization more around CPA itself, or is there some hope that perhaps you could get back to revenue growth at some point by the end of the calendar year?

Speaker #6: And just any thoughts on how much of this 2026 revenue pressure might extend longer term as you look out to 2027? I understand 2026 is still a moving target this year.

Speaker #6: But just looking for your conceptual thoughts on what this means to the business longer term, the issues around CPA here in 2026. Thanks.

Speaker #3: Yeah, I'll start just by saying, once we fix this problem, of course, the most important part on our end is to fix it, but then to go back to growth.

Oran Holtzman: I'll start just from once we fix this problem, of course, the most important part of our end is to fix it, but then to go back to growth. My plan, as soon as we fix it, is to go full power back to growth. As for the implication of 2026, obviously, we lost a big chunk of new users that we were not able to acquire in 2026, which will impact 2027. Again, all depends when we fix it, if we are able to fix it. As soon as we are able to fix it, we'll go back to growth to compensate some of this new users loss. Lindsay?

Speaker #3: So my plan, as soon as we fix it, is to go full power—back to growth. As for the implication of '26, obviously, we lost a big chunk of new users that we were not able to acquire in '26, which will impact '27.

Speaker #3: But again, all depends when we fix it. If we are able to fix it as soon as we are able to fix it, we'll go back to growth to compensate some of those some of these new users loss, Lindsay?

Speaker #5: Yeah. The leading indicator for us is the CPA. We have this overhang on revenue that will continue across the year. But the sequencing is better CPA allows us to drive first orders.

Lindsay Drucker Mann: Yeah. The leading indicator for us is the CPA. We have this overhang on revenue that will continue across the year. The sequencing is better CPA allows us to drive first orders. We do see that our repeat rates remain very strong. When you pull those pieces together, once the CPA is at an improved level, we can drive first orders, which will drive repeat and healthy profitability, and that's kind of the sequencing of how you'll see the business improve.

Speaker #5: We do see that our repeat rates remain very strong. And so, when you pull those pieces together, once the CPA is at an improved level, we can drive first orders, which will drive repeat and healthy profitability.

Speaker #5: And that's kind of the sequencing of how you'll see the business improve.

Speaker #4: Thank you. Our next question comes from the line of Scott Schoenhaus with KeyBank Capital Markets. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Scott Schoenhaus with KeyBanc Capital Markets. Please proceed with your question.

Speaker #6: Thanks for taking my question. I wanted to focus on Methodic. You said it was performing in line with expectations. Do you see any ability to drive that revenue growth algorithm faster by investing more in the business?

Scott Schoenhaus: Thanks for taking my question. Wanted to focus on Methodiq. You said it's performing in line in expectations. Do you see any ability to drive that revenue growth algorithm faster by investing more in the business? Are you pulling resources away from the other two brands, especially Il Makiage, in order to divert more attention to Methodiq? On the hiring front, the biotech environment has strengthened here, over the last 12 months. Are you seeing any issues with retention or hiring, in that department? Thanks.

Speaker #6: Are you pulling resources away from the other two brands, especially Il Makiage, in order to divert more attention to Methodic? And then on the hiring front, the biotech environment has strengthened here over the last 12 months.

Speaker #6: Are you seeing any issues with retention or hiring in that department? Thanks.

Speaker #3: Thanks. First of all, we don't see an issue with them hiring in Boston in OIT Labs. Second question, as we believe the problem with Il Makiage is technical, and we believe we'll be able to solve it, we continue to invest in Il Makiage, and we are not shifting or allocating resources from that brand to other brands.

Oran Holtzman: Thanks. First of all, we don't see an issue with hiring in Boston in ODDITY Labs. Second question, we believe the problem with Il Makiage is technical, and we believe we'll be able to solve it. We continue to invest in Il Makiage, and we are not shifting or allocating resources from that brand to other brands. Lastly, for Methodiq, very excited and bullish about what it can be, seeing strong initial demand, and still early days, but we believe that it will be a great brand. We spend many years on building it. For your question to accelerate it's a new brand. Many things that you want to test, you don't want to accelerate it before you optimize the exact funnels and products. Therefore, it's already extremely substantial for a new brand, and we think that's the right pace.

Speaker #3: Lastly, for Methodic, we're very excited and bullish about what it can be. Seeing strong initial demand, and it's still early days, but we believe that it will be a great brand.

Speaker #3: We spent many years building it. As for your question, to accelerate it, it's a new brand. There are many things that you want to test.

Speaker #3: You don't want to accelerate it before you optimize. The exact final. And products and therefore it's already extremely substantial for a new brand. And we think that's the right pace.

Speaker #4: Thank you. Our next question comes from the line of Lauren Lieberman with Barclays. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Lauren Lieberman with Barclays. Please proceed with your question.

Speaker #7: Great, thanks. Good morning. Two questions. The first was just around—you've emphasized a couple of times this is an issue with one particular advertising partner.

Lauren Lieberman: Great. Thanks. Good morning. Two questions. First was just around, you've emphasized a couple of times, this is an issue with one particular advertising partner. I was just curious about efforts or thoughts around diversifying your partners, right? There's more than one platform out there, wanted to just get some understanding of how you're thinking about the range of opportunities on other platforms and other ad partners. Secondly, was just to clarify whether or not SpoiledChild is sort of undisturbed. We've been very focused on Il Makiage, and it may just be my memory, but I wasn't sure if Spoiled was seeing the same issues or not. If it's not, why not? Is there anything you can do or are doing to future-proof it to avoid the same kind of signal breakage that's happened with Il Makiage? Thanks.

Speaker #7: I was just curious about efforts or thoughts around diversifying your partners, right? There’s more than one platform out there, so I wanted to just get some understanding of how you’re thinking about the range of opportunities on other platforms and with other ad partners.

Speaker #7: And then secondly was just to clarify whether or not Spoiled Child is sort of undisturbed. We've been very focused on Illma Piaz, and it may just be my memory, but I wasn't sure if Spoiled was seeing the same issues or not.

Speaker #7: And if it's not, why not? And is there anything you can do, or are doing, to future-proof it to avoid the same kind of signal breakage that's happened with Illma Piaz?

Speaker #7: Thanks.

Speaker #3: Sure. As to other platforms, of course, we advertise also on other platforms. But based on the data that we have, just in 2025, our largest ad partner was by far the largest ad partner in BOT in the US.

Oran Holtzman: Sure. As to other platforms, of course, we advertise also on other platforms, but based on the data that we have, just in 2025, our largest ad partner was by far the largest ad partner in beauty in the US, way more than 50% of the market. There is a limit of how much we can, revenue or acquisition we can drive in the other platform. This platform is by far the biggest one and more the majority of the spend in beauty in the US for new user acquisition. Second question about SpoiledChild. SpoiledChild, we see also, increase in CPA, less severe than Il Makiage. The main difference, SpoiledChild continue to grow. Despite the fact that it continued to grow, the CPA is way less severe than what we see in Il Makiage.

Speaker #3: Way more than 50% of the market. So there is a limit of how much we can revenue or acquisition we can drive in the other platform.

Speaker #3: This platform is by far the biggest one, and moreover, the majority of the spend in BOT in the US is for news or acquisition. Second question, about SpoiledChild.

Oran Holtzman: Second question about SpoiledChild. SpoiledChild, we see also, increase in CPA, less severe than Il Makiage. The main difference, SpoiledChild continue to grow. Despite the fact that it continued to grow, the CPA is way less severe than what we see in Il Makiage. It's a good indication, but we are still. Once we identify the right solution for Il Makiage, we'll implement the same in SpoiledChild, and we believe that we'll have a tailwind for that brand also.

Speaker #3: Spoiled Child, we also see increasing CPA, though it is less severe than Illma Piaz. The main difference is that Spoiled Child continued to grow, and despite this continued growth, the CPA is much less severe than what we see in Illma Piaz.

Speaker #3: So it's a good indication, but we are still like once we identify the right solution for Illma Piaz, we'll implement the same in Spoiled Child.

Oran Holtzman: It's a good indication, but we are still. Once we identify the right solution for Il Makiage, we'll implement the same in SpoiledChild, and we believe that we'll have a tailwind for that brand also.

Speaker #3: We believe that we'll have a tailwind for that brand also.

Speaker #4: Thank you. Our next question comes from the line of Mark Mahaney with Evercore ISI. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Mark Mahaney with Evercore ISI. Please proceed with your question.

Speaker #3: Oh, okay. Thank you. I'm going to get back to the question on somebody asked earlier about methodic. And it looks like this product is ramping reasonably well in line with what Spoiled Child did earlier on.

Mark Mahaney: Oh, okay. Thank you. I want to get back to the question somebody asked earlier about Methodiq. Looks like this product is ramping reasonably well in line with what SpoiledChild did earlier on. That sounds promising. Talk about the customers that you've gotten for the product so far. Are these customers that are brand new to ODDITY as a whole? Are they customers that have come from other areas? Can you give us some sense about the sustainability of growth of those customers and how much they expand your market, or is it largely just a resale to existing customers? Anything on that and the type of customers coming in from Methodiq would be helpful. Thank you.

Speaker #3: That sounds promising. Talk about the customers that you've got, gotten for the product so far. Are these customers that are brand new to Oddity as a whole?

Speaker #3: Are they customers that have come from other areas? Something that can you give us some sense about the sustainability of growth of those customers and whether they how much they expand your market or is it largely just a resale to existing customers?

Speaker #3: Anything on that and the type of customers coming in for methodic would be helpful. Thank you.

Speaker #6: Yeah. I'll start, and then I believe that you'll continue. With any new brand that we launch, we try to see the strength and the potential by itself, meaning it starts on its own.

Oran Holtzman: Yeah. I'll start and then, Lindsay, you continue. With any new brand that we launch, we try to see the strength and the potential by itself, meaning it start by its own, with less marketing to our existing user base. Otherwise, we will never see or understand the potential of that brand. To your question, it's in addition to our customer base in Il Makiage. Of course, when those brands operate by themselves, some of their customer base is going after the same audiences, just because Il Makiage and SpoiledChild customer base is huge. It's completely separate brand with its own efforts to acquire new users, just to understand the scale and the potential and to optimize the funnels in the hard way and not with quick wins just due to our amazing customer base of Ulta Beauty.

Speaker #6: With less marketing to our existing user base, otherwise we’ll never see or understand the potential of that brand. So you have to do your question—it’s in addition to our customer base in Il Makiage.

Speaker #6: Of course, when those brands operate by themselves, some of those customers some of the customer base is going after the same audiences just because Illma Piaz and Spoiled Child customer base is huge.

Speaker #6: But it's completely separate brand with its own efforts to acquire new users. Just to understand the scale and the potential and to optimize the funnels in the hard way and not with quick wins, just due to our amazing customer base of Illma Piaz and Spoiled Child.

Speaker #4: Thank you. Our next question comes from the line of Corey Carpenter with J.P. Morgan. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Cory Carpenter with JPMorgan. Please proceed with your question.

Speaker #8: Oh, good morning. I had two questions. Building on an earlier question, could you talk about the CPA trends that you are seeing at your other advertisers?

Cory Carpenter: Oh, good morning. I had two questions. Building on an earlier question, could you talk about the CPA trends that you are seeing at your other advertisers? That's the first question. The second question, last time we talked, I think you were hopeful that you could maintain the try before you buy program. I think on this call you said about 40% has shifted away from that. Maybe just could you give us your latest thoughts on the role that you think try before you buy can play based on your learnings with the technical changes thus far? Thank you.

Speaker #8: That's the first question. And second question, last time we talked, I think you were hopeful that you could maintain the trend before you buy a program.

Speaker #8: I think on this call, you said about 40% has shifted away from that. Maybe just—could you give us your latest thoughts on the role that you think try-before-you-buy can play, based on your learnings with the technical changes thus far?

Speaker #8: Thank you.

Speaker #3: Yep. Yeah. Try before you buy remains part of our model. We have no plan to eliminate it as a strongly believe it's great for consumer and it's the closest way of bringing physical store experience to the online world.

Oran Holtzman: Yeah. Try Before You Buy remains part of our model. We have no plan to eliminate it, as I strongly believe it's great for consumer, and it's the closest way of bringing physical store experience to the online world. Toward the end of Q1, we successfully shifted 40% of our acquisition revenue from Try Before You Buy to standard buy. This process was expensive in terms of margin, as it required many tests until we successfully landed on a solution with no impact on unit economics, which is very encouraging, at least in my view. Try Before You Buy today, based on last numbers that I saw, became to be a tiny number, a tiny percentage out of our total revenue or total orders. We intend to continue to use this program as we really believe it's great for consumers, but more balanced with standard buy.

Speaker #3: Toward the end of Q1, we successfully shifted 40% of our acquisition revenue from try before you buy to standard buy. This process was expensive in terms of margin.

Speaker #3: As it required many, many tests until we successfully landed on a solution with no impact on unit economics, which is very encouraging. At least in my view.

Speaker #3: There is no try before you buy today based on last numbers that I saw became to be a tiny number of tiny percentage out of our total revenue or total orders.

Speaker #3: But we intend to continue to use this to use this program as we believe it's great for consumers, but more balanced with standard buy.

Speaker #8: The question was on CPA at other platforms.

Shiran Holtzman-Erel: Question was on CPA at other platforms.

Oran Holtzman: Yeah. Lisa, other platforms, obviously the CPA of other platforms is taking the overall CPA of Ulta Beauty materially down. Since this is our largest platform, we work really hard to solve it, so we can go back to growth, and go back to full power spend also with the largest platform in the US.

Speaker #3: Yeah. Listen, obviously the CPA of other platforms is taking their overall CPA of Il Makiage materially down. But since this is our largest platform, we work really hard to solve it so we can go back to growth.

Speaker #3: And go back to full power spend also with the largest platform in the US.

Operator: Thank you. Our final question comes from the line of Anna Lizzul with Bank of America. Please proceed with your question.

Speaker #4: Thank you. Our final question comes from the line of Anna Lizou with Bank of America. Please proceed with your question.

Speaker #9: Hi. Good morning. Thank you so much for the question. Wanted to follow up on Lauren's question here. Now that we've heard from several beauty companies and watched the trends over the past few months, I guess we haven't really heard of the algorithm adjustment as much impacting other beauty companies.

Anna Lizzul: Hi. Good morning. Thank you so much for the question. Wanted to follow up on Lauren's question here. Now that we've heard from several beauty companies and watched the trends over the past few months, I guess we haven't really heard of the algorithm adjustment as much impacting other beauty companies. They are less exposed to the channels, but they say maybe it sees 20% of sales on e-commerce channels. I was wondering if this will make you reconsider in a broader way your marketing and user acquisition, just given the impact to what seems to be to your brand specifically? How do you ensure this doesn't happen with any other platforms in the future? Thank you.

Speaker #9: They are less exposed to the channels, but they say maybe they see 20% of sales on e-commerce channels. So I was wondering if this will make you reconsider, in a broader way, your marketing and user acquisition—just given the impact to what seems to be to your brand specifically.

Speaker #9: And then how do you ensure this doesn't happen with any other platforms in the future? Thank you.

Oran Holtzman: Lisa, I can't refer to other brands, but I don't know anyone that is on our scale, and most of them are omni-channel, and are less sensitive to algorithm changes. By the way, as I mentioned, we had many of them in the past year. The most notable one is iOS 14. I think that also then, it was harder for us than others, just due to the fact that we are 100% D2C. If we think about diversifying our channels, yes, we think about it, and when we have what to tell the market, we will.

Speaker #3: Listen, I can't refer to other brands, but I don't know anyone that is on our scale. And most of them are omnichannel. And are less sensitive to algorithm changes.

Speaker #3: By the way, as I mentioned, we had many of them in the past years. The most notable one is IOS 14. And I think that also then it was harder for us than others.

Speaker #3: That's just due to the fact that we are 100% D2C. If we think about diversifying our channels—yes, we think about it. When we have something to share with the market, we will.

Speaker #4: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Holtzman for final comments.

Operator: Thank you. Ladies and gentlemen, that concludes our question and answer session. I will turn the floor back to Mr. Holtzman for final comments.

Speaker #3: Thank you very much, guys, for joining. We'll see you in the next quarter.

Oran Holtzman: Thank you very much, guys, for joining. We'll see you next quarter.

Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Q1 2026 ODDITY Tech Ltd Earnings Call

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