“Our third quarter is our best third quarter ever, exceeding our guidance. We delivered net revenue growth of 60% and adjusted EBITDA of
ODDITY achieved a number of objectives during the third quarter, supporting strong financial performance today and positioning the business for the future. These include:
- Better-than-expected financial results for the third quarter and an improved outlook for the full year 2023.
- Excellent, profitable growth at both IL MAKIAGE and SpoiledChild brands across markets and products.
- Progress in the ODDITY LABS molecule discovery platform, powered by the Revela integration, including tripling the lab headcount with majority PhD hires.
- Strong financial position including
$164 million of cash, restricted cash, and short-term deposits, with no debt on the balance sheet. This cash position was supported by$78 million of free-cash flow year-to-date.
“We are pleased with our third quarter results, which exceeded the initial guidance we issued in August, as well as the preliminary results we reported in October across sales, gross profit, and adjusted EBITDA. The upside relative to our guidance was driven in part by stronger repeat sales relative to our previous outlook. We reinvested a portion of this revenue upside against future growth initiatives including new brands and markets, which is consistent with our commitment to long-term reinvestment,” said
Third Quarter Fiscal 2023 Financial Highlights¹:
Results for the third quarter ended
- Net revenue was
$94 million compared to$69 million in the third quarter of 2022, representing a 37% year-over-year increase. - Gross profit was
$66 million compared to$47 million in the third quarter of 2022, representing a 41% year-over-year increase. Gross margin was70.3%, expanding 217 bps versus gross margin of 68.1% in the third quarter of 2022. - Net income was
$3.8 million compared to$2.8 million in the third quarter of 2022. Net income margin was 4.1% compared to 4.0% in the third quarter of 2022. - Adjusted net income was
$13.0 million compared to$3.9 million in the third quarter of 2022, representing a 231% year-over-year increase. Adjusted net income margin was 13.8% compared to 5.7% in the third quarter of 2022. - Adjusted EBITDA was
$21 million compared to$6.4 million in the third quarter of 2022, representing a 227% increase. Adjusted EBITDA margin was 22.0%, expanding 1280 bps versus adjusted EBITDA margin of 9.2% in the third quarter of 2022. - The weighted average number of outstanding shares used in computing our basic earnings per share (“EPS”) was 56.4 million and 53.3 million for the third quarter of 2023 and 2022, respectively. The weighted average number of outstanding shares used in computing our diluted EPS and Adjusted Diluted EPS was 61.4 million and 56.2 million for the third quarter of 2023 and 2022, respectively.
- Diluted earnings per share (“EPS”) were
$0.06 compared to$0.05 in the third quarter of 2022. Adjusted Diluted EPS were$0.21 compared to$0.07 in the third quarter of 2022. - Cash and cash equivalents, restricted cash, and short-term deposits were
$164million , with no outstanding debt as ofSeptember 30, 2023 .
The table below sets forth our actual results for the three months ended
Three months ended | |||
Actual | Initial Guidance | Initial Guidance | |
Results | Low End | High End | |
Net Revenue Growth | 37.00% | 18.00% | 23.00% |
Gross Margin | 70.30% | 67.50% | 67.50% |
Adjusted EBITDA Margin | 22.00% | 20.00% | 21.50% |
Adjusted Diluted EPS |
Financial Outlook:
Based on the strong third quarter results, ODDITY is raising its outlook for 2023 to reflect higher revenue, profit margins, and earnings than previously expected.
ODDITY is providing the following guidance for the full year ending
- Net revenue between
$493 million and$497 million , above our prior expectation for$475-480 million , and now representing year-over-year growth between 52% and 53% as compared to our prior expectation of between 46% and 48%. - Gross margins of approximately 70.0%, above our prior expectation of 69.5 %.
- Adjusted EBITDA between
$104 million and$105 million , above our prior expectation of between$96 million and$101 million . - Adjusted EBITDA margin of21.0%, at the top end of our prior expectation of 20.0-21.0%
- Adjusted Diluted EPS between
$1.21 and$1.23 , above our prior expectation of$1.11-1.17 . This assumes a tax rate of approximately 25.5% and average fully diluted shares of approximately 60 million.
Current FY2023 Outlook | Prior FY2023 Outlook | |
Net Revenue | ||
Gross Margin | 70.00% | 69.50% |
Adjusted EBITDA | ||
Adjusted Diluted EPS |
ODDITY is providing the following guidance for the fourth quarter ending
- Net revenue between
$82 million and$85 million , representing year-over-year growth between 22-26 %. - Gross margin of approximately 66.0%.
- Adjusted EBITDA between
$13 and$14 million , representing Adjusted EBITDA margin of between 15.5-16.5%. - Adjusted Diluted EPS between
$0.10 and$0.12 . This assumes a tax rate of approximately 35% and average fully diluted shares of approximately 63 million. - Stock-based compensation expense is expected to be approximately
$8 million in the fourth quarter of 2023.
Current 4Q 2023 Outlook | |
Net Revenue | |
Gross Margin | 66.00% |
Adjusted EBITDA | |
Adjusted Diluted EPS |
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, Adjusted net income margin and Adjusted Diluted EPS are non-GAAP financial measures. Please see the sections titled “Non GAAP Financial Measures” and “Reconciliations of GAAP to Non-GAAP Measures” below for more information regarding ODDITY’s use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures. ODDITY has not provided a quantitative reconciliation of its Adjusted EBITDA and Adjusted Diluted EPS outlook to the corresponding net income and diluted EPS GAAP measures, because the quantification of certain items included in the calculation of GAAP net income and GAAP diluted EPS cannot be calculated or predicted at this time without unreasonable efforts. However, for the fourth quarter and full year 2023, ODDITY expects stock-based compensation expense as set forth above. ODDITY is unable to address the probable significance of the unavailable reconciling items, which could have a potentially unpredictable, and potentially significant, impact on its future GAAP financial results.
The financial outlook figures presented above are forward-looking statements that are subject to a variety of assumptions and estimates. Actual results may differ materially from ODDITY’s financial outlook as a result of, among other things, the factors described under “Forward-Looking Statements” below.
Conference Call Details:
A conference call to discuss ODDITY’s Q3 2023 financial and business results and outlook is scheduled for tomorrow,
Non-GAAP Financial Measures:
In addition to the GAAP financial measures set forth in this press release, ODDITY has included the following non-GAAP financial measures: Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, Adjusted net income margin and Adjusted Diluted EPS. ODDITY believes these non-GAAP financial measures provide useful supplemental information to management and investors to help evaluate ODDITY’s business, measure its performance, identify trends, prepare financial projections and make business decisions.
ODDITY defines “Adjusted EBITDA” as net income before financial expenses (income), net, taxes on income, and depreciation and amortization as further adjusted to exclude share-based compensation expense and non-recurring adjustments. “Adjusted EBITDA margin” is defined as Adjusted EBITDA divided by net revenue. ODDITY believes Adjusted EBITDA and Adjusted EBITDA margin are useful for financial and operational decision-making and as a means to evaluate period-to-period comparisons. By excluding certain items that may not be indicative of its recurring core operating results, ODDITY believes that Adjusted EBITDA and Adjusted EBITDA margin provide meaningful supplemental information regarding its performance. In addition, Adjusted EBITDA and Adjusted EBITDA margin are widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as depreciation and amortization, interest expense, and interest income, which can vary substantially from company to company depending on their financing and capital structures and the method by which their assets were acquired.
ODDITY defines “Adjusted net income” as net income adjusted for the impact of share-based compensation, non-recurring adjustments and the tax effect of non-GAAP adjustments and “Adjusted net income margin” as Adjusted net income divided by net revenue. In addition, ODDITY defines “Adjusted diluted earnings per share” as Adjusted net income divided by diluted shares outstanding. ODDITY believes the presentations of Adjusted net income, Adjusted net income margin, and Adjusted diluted earnings per share are useful because they are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Further, ODDITY believes these measures are helpful in highlighting trends in our operating results, because they exclude the impact of items that are outside the control of management or not reflective of our ongoing operations and performance.
ODDITY’s non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, its financial results prepared in accordance with
Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included with the financial tables at the end of this release under the heading “Reconciliations of GAAP to Non-GAAP Measures.”
Forward-Looking Statements:
Certain statements in this press release may constitute “forward-looking” statements and information, within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the safe harbor provisions of the
About ODDITY:
ODDITY is a consumer tech company that builds and scales digital-first brands to disrupt the offline-dominated beauty and wellness industries. The company serves over 40 million users with its AI-driven online platform, deploying data science to identify consumer needs, and developing solutions in the form of beauty and wellness products. ODDITY owns IL MAKIAGE and SpoiledChild. The company operates with business headquarters in
Contacts:
Press:
michaelb@oddity.com
Investor:
investors@oddity.com
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Unaudited | ||||||||||||||||
Net revenue | $ | 94,474 | $ | 68,948 | $ | 411,439 | $ | 257,021 | ||||||||
Cost of revenue | 28,060 | 21,976 | 120,695 | 83,101 | ||||||||||||
Gross profit | 66,414 | 46,972 | 290,744 | 173,920 | ||||||||||||
Selling, general and administrative | 60,102 | 43,251 | 222,878 | 146,113 | ||||||||||||
Operating income | 6,312 | 3,721 | 67,866 | 27,807 | ||||||||||||
Financial expenses (income), net | (2,146 | ) | 138 | (2,883 | ) | (1,548 | ) | |||||||||
Income before taxes on income | 8,458 | 3,583 | 70,749 | 29,355 | ||||||||||||
Taxes on income | 4,624 | 830 | 17,328 | 6,967 | ||||||||||||
Net income | $ | 3,834 | $ | 2,753 | $ | 53,421 | $ | 22,388 | ||||||||
Basic earnings per share of Class A and Class B ordinary share and Redeemable A share (**) | $ | 0.07 | $ | 0.05 | $ | 0.97 | $ | 0.43 | ||||||||
Diluted earnings per share of Class A and Class B ordinary share and Redeemable A share (**) | $ | 0.06 | $ | 0.05 | $ | 0.92 | $ | 0.40 | ||||||||
(**) Issued and outstanding share information adjusted for the issuance of Class B ordinary shares and additional Redeemable A shares in |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
2023 | 2022 | |||||||
Unaudited | ||||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 63,897 | $ | 40,955 | ||||
Short-term deposits and restricted cash | 100,202 | 20,159 | ||||||
Trade receivables | 7,971 | 7,576 | ||||||
Inventory | 70,253 | 70,230 | ||||||
Prepaid expenses and other current assets | 10,107 | 7,013 | ||||||
Total current assets | 252,430 | 145,933 | ||||||
LONG-TERM ASSETS: | ||||||||
Property, plant and equipment, net | 9,338 | 9,468 | ||||||
101,437 | 43,037 | |||||||
Operating lease right-of-use assets | 14,348 | 13,278 | ||||||
Other assets | 5,855 | 4,692 | ||||||
Total long-term assets | 130,978 | 70,475 | ||||||
Total assets | $ | 383,408 | $ | 216,408 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
2023 | 2022 | |||||||
Unaudited | ||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 41,759 | $ | 44,807 | ||||
Other accounts payable and accrued expenses | 54,234 | 37,792 | ||||||
Short-term debt and current maturities of long-term debt | - | 3,917 | ||||||
Current maturities of operating lease liabilities | 3,723 | 3,890 | ||||||
Total current liabilities | 99,716 | 90,406 | ||||||
LONG-TERM LIABILITIES: | ||||||||
Operating lease liabilities, non-current | 8,922 | 8,076 | ||||||
Other long-term liabilities | 3,787 | 6,946 | ||||||
Total liabilities | 112,425 | 105,428 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Redeemable A shares | - | 12,275 | ||||||
SHAREHOLDERS' EQUITY: | ||||||||
Share capital and additional paid-in capital | 172,580 | 53,723 | ||||||
Cumulative translation adjustments | 1,738 | 1,738 | ||||||
Retained earnings | 96,665 | 43,244 | ||||||
Total shareholders' equity | 270,983 | 98,705 | ||||||
Total liabilities and shareholders' equity | $ | 383,408 | $ | 216,408 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Nine months ended | ||||||||
2023 | 2022 | |||||||
Unaudited | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 53,421 | $ | 22,388 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 6,234 | 3,310 | ||||||
Share-based compensation | 16,604 | 5,019 | ||||||
Deferred income taxes | (58 | ) | (665 | ) | ||||
Increase in trade receivables | (395 | ) | (3,237 | ) | ||||
Increase in prepaid expenses and other receivables | (3,024 | ) | (1,293 | ) | ||||
Decrease (increase) in inventory | 254 | (12,676 | ) | |||||
Decrease in trade payables | (3,048 | ) | (7,377 | ) | ||||
Increase in other accounts payable and accrued expenses | 9,616 | 14,528 | ||||||
Operating lease ROU assets and liabilities, net | (391 | ) | (1,547 | ) | ||||
Other | 337 | 826 | ||||||
Net cash provided by operating activities | 79,550 | 19,276 | ||||||
Cash flows from investing activities: | ||||||||
Purchase of property, plant and equipment | (1,582 | ) | (2,035 | ) | ||||
Capitalization of software development costs | (2,440 | ) | (3,783 | ) | ||||
Purchase of other intangible assets | - | (340 | ) | |||||
Investments in short-term deposits | (80,000 | ) | (15,000 | ) | ||||
Other investments | (1,879 | ) | - | |||||
Cash paid in conjunction with acquisition, net of cash acquired | (23,173 | ) | - | |||||
Net cash used in investing activities | (109,074 | ) | (21,158 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from initial public offering, net of issuance costs | 55,410 | - | ||||||
Proceeds from exercise of options | 1,671 | 34 | ||||||
Repayment of loans and borrowings | (4,313 | ) | (276 | ) | ||||
Other | - | 648 | ||||||
Net cash provided by financing activities | 52,768 | 406 | ||||||
Effect of exchange rate fluctuations on cash and cash equivalents | (259 | ) | (1,336 | ) | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 22,985 | (2,812 | ) | |||||
Cash, cash equivalents and restricted cash at the beginning of the period | 43,114 | 30,889 | ||||||
Cash, cash equivalents and restricted cash at the end of the period | $ | 66,099 | $ | 28,077 |
Reconciliation of GAAP to Non-GAAP Financial Information | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Reconciliation of Net Income and Adjusted EBITDA | ||||||||||||||||
Net Income | $ | 3,834 | $ | 2,753 | $ | 53,421 | $ | 22,388 | ||||||||
Financial (income) expenses, net | (2,146 | ) | 138 | (2,883 | ) | (1,548 | ) | |||||||||
Taxes on Income | 4,624 | 830 | 17,328 | 6,967 | ||||||||||||
Depreciation and amortization | 2,234 | 1,096 | 6,234 | 3,310 | ||||||||||||
Share-based compensation | 12,234 | 1,519 | 16,604 | 5,019 | ||||||||||||
Non-recurring adjustments | - | 21 | 300 | 701 | ||||||||||||
Adjusted EBITDA | $ | 20,780 | $ | 6,357 | $ | 91,004 | $ | 36,837 |
Reconciliation of Net Income and Adjusted Net Income | ||||||||||||||||
Net Income | $ | 3,834 | $ | 2,753 | $ | 53,421 | $ | 22,388 | ||||||||
Share-based compensation | 12,234 | 1,519 | 16,604 | 5,019 | ||||||||||||
Non-recurring adjustments | - | 21 | 300 | 701 | ||||||||||||
Tax impact | (3,058 | ) | (357 | ) | (4,012 | ) | (1,388 | ) | ||||||||
Adjusted Net Income | $ | 13,010 | $ | 3,936 | $ | 66,313 | $ | 26,720 |
Diluted earnings per share | $ | 0.06 | $ | 0.05 | $ | 0.92 | $ | 0.40 | ||||||||
Adjusted diluted earnings per share | $ | 0.21 | $ | 0.07 | $ | 1.14 | $ | 0.48 |
Reconciliation of net cash provided by operating activities to free cashflow | ||||||||
Nine Months Ended | ||||||||
2023 | 2022 | |||||||
(Unaudited) | ||||||||
Net operating cash flow | $ | 79,550 | $ | 19,276 | ||||
Purchase of property and equipment | (1,582 | ) | (2,035 | ) | ||||
Free cash flow | $ | 77,968 | $ | 17,241 | ||||
____________________________________
¹ Results greater than
Source:
2023 GlobeNewswire, Inc., source