ODDITY Tech Ltd. Class A ((ODD)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for ODDITY Tech Ltd. Class A painted a picture of a company on a strong upward trajectory. The sentiment was overwhelmingly positive, with the company showcasing impressive financial growth, particularly in revenue and EBITDA. Despite some challenges like adjusted EBITDA margin compression and lower gross margins for new brands, the overall outlook remains optimistic. The company’s consistent ability to exceed guidance and its strategic investments in innovation and international expansion were highlighted as key drivers of its positive trajectory.
Record Revenue Growth
Oddity Tech Ltd. reported a remarkable 27% increase in revenue year-over-year, reaching $647 million for fiscal year 2024. This record growth underscores the company’s robust market performance and its ability to capture and expand its customer base effectively.
Impressive Adjusted EBITDA Growth
The company’s adjusted EBITDA saw a significant 40% year-over-year growth, reaching $150 million at a 23.3% margin. This impressive growth reflects the company’s operational efficiency and strategic financial management.
Strong Free Cash Flow
Oddity Tech Ltd. generated $134 million in free cash flow, converting over 130% of net income into cash. This strong cash flow position highlights the company’s financial health and its ability to reinvest in growth opportunities.
Consistent Outperformance
The company has consistently exceeded earnings guidance every quarter since going public, raising outlooks on sales and profitability for seven consecutive quarters. This track record of outperformance demonstrates the company’s strong market position and strategic foresight.
Successful Brand Performance
Both Il Makiage and Spoiled Child, key brands under Oddity Tech, experienced double-digit revenue growth. Notably, Il Makiage surpassed $500 million in revenue, showcasing the brand’s strong market appeal and customer loyalty.
High Customer Repeat Rate
Achieving a twelve-month revenue repeat rate of over 100%, Oddity Tech Ltd. has demonstrated high customer satisfaction and loyalty, which is crucial for sustained growth.
Strong International Expansion
The company is actively pursuing international expansion, with promising developments in markets such as the UK, Germany, and Australia. These initiatives are expected to further enhance the company’s global footprint.
Innovative Product Pipeline
Oddity Tech is investing in innovation with new brands like Brand 3 and Brand 4, and initiatives such as Oddity Labs. These efforts highlight the company’s commitment to future growth and market leadership.
Robust AI and Tech Development
Significant advancements in AI-based commercial engines and product personalization have been reported, enhancing customer experience and operational efficiency, and positioning the company as a tech leader in its industry.
Strategic Share Buybacks
The company repurchased 3.6 million shares, totaling approximately $147 million. This move indicates strong cash flow and a commitment to enhancing shareholder value.
Adjusted EBITDA Margin Compression
The adjusted EBITDA margin decreased by 453 basis points due to planned incremental expenses for new growth initiatives. This reflects the company’s strategic investments in future growth.
Lower Gross Margin for New Brands
Anticipated lower gross margins for Brand 3 due to higher costs associated with prescription offerings and telehealth infrastructure were noted. This is part of the company’s strategy to expand its service offerings.
Increased Marketing Costs
Higher marketing expenses were observed, particularly in Q1, though these were mitigated by strong repeat business, underscoring the effectiveness of the company’s marketing strategies.
Forward-Looking Guidance
Looking ahead, Oddity Tech Ltd. is optimistic about 2025, setting a target for 20% revenue growth and a 20% adjusted EBITDA margin. The company plans to expand its international presence and invest significantly in new brands and technologies, including a telehealth platform and Oddity Labs, to drive future growth. The successful online shift and the direct-to-consumer model are expected to continue supporting strong margins and effective inventory management.
In conclusion, ODDITY Tech Ltd.’s earnings call highlighted a company in robust health, with strong financial performance and a clear strategy for future growth. The positive sentiment expressed during the call, coupled with strategic investments and consistent outperformance, positions the company well for continued success in the coming years.