Earnings call transcript: Oddity Tech reports Q2 2025 earnings beat amid stock drop

Oddity Tech Ltd. (ODD) reported robust Q2 2025 results, with EPS of $0.92 and revenue of $241 million, both surpassing analyst expectations and reflecting 25% year-over-year revenue growth driven by strong international expansion. Despite this significant earnings beat, the stock declined 19.5% in after-hours trading, potentially indicating investor concerns about its valuation or broader market volatility given its high beta. The company reaffirmed its full-year 2025 revenue guidance of $799-$840 million and detailed plans for future growth, including the Q4 2025 launch of a new dermatology telehealth brand, aiming to maintain its long-term algorithm of 20% revenue growth and 20% adjusted EBITDA margin through strategic investments in new brands and technology.

Analysis

Oddity Tech Ltd. (ODD) presented a significant disconnect between its operational performance and market reaction in its Q2 2025 results. The company reported robust 25% year-over-year revenue growth to $241 million and an earnings per share of $0.92, surpassing analyst forecasts by 1.35% and 9.52% respectively. This growth was underpinned by a surge in international sales, which now constitute 15% of the business, and strong profitability metrics including a 72.3% gross margin and $70 million in adjusted EBITDA. Despite these strong fundamentals, the company's stock fell sharply by 19.5% in after-hours trading. This negative reaction may be attributable to valuation concerns, as an InvestingPro analysis noted the stock was trading above its fair value, and its high market sensitivity, indicated by a beta of 3.29.

Looking forward, management reaffirmed its full-year 2025 guidance for 23-24% revenue growth and reiterated its long-term algorithm of achieving 20% revenue growth with a 20% adjusted EBITDA margin. A key future catalyst is the planned Q4 2025 launch of 'Brand Three', a dermatology telehealth platform, which marks the company's strategic entry into the healthcare market. Crucially, executives clarified that revenue from this new brand is not necessary to meet growth targets for 2025 or 2026, positioning it as a source of potential upside while de-risking the near-term outlook. The company's commentary also revealed a deliberate strategy to potentially constrain growth to maintain its predictable long-term compounding model, a factor that sophisticated investors may interpret as disciplined capital management.

Key Decisions for Investors

• Investors should analyze the stark divergence between Oddity's strong fundamental performance, including a 25% revenue increase and earnings beat, and the 19.5% after-hours stock price decline, which could signal a buying opportunity for those with a long-term conviction in the business model.
• Given the stock's high beta of 3.29 and potential valuation concerns, portfolio managers should account for continued price volatility and consider sizing positions to manage risk, even with the positive operational results.
• Monitor the Q4 2025 launch and subsequent adoption of 'Brand Three' in the dermatology telehealth market, as its success is a key potential catalyst not currently baked into the company's base-case guidance for 2025-2026.
• It is pertinent to note management's explicit focus on a sustainable 20% revenue growth and 20% EBITDA margin algorithm, suggesting a preference for long-term compounding over short-term outperformance, which may align with long-horizon investment strategies.