ODDITY Tech Ltd. Class A Ordinary Shares 2026 Q2 Earnings Call

Thank you, operator. I am 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 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 March 17, 2026. We do not undertake any obligation to update forward-looking statements, which speak only as of today.

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

Thank you, everyone, for joining our call today. While we continue to work through the ad account dislocation at IL MAKIAGE, I am pleased to report progress in our business that hopefully positions us for recovery in 2027 and beyond. SpoiledChild had a good quarter and a strong year-to-date 2026 overall, and it is on track to grow at least 35% this year and approach $350 million of net revenue in 2026. METHODIQ is showing great promise after launching only several months ago. We expect the brand to deliver first-year revenue ahead of SpoiledChild's first year and with huge potential for the future. Both SpoiledChild and METHODIQ are building ambitious plans for 2027, and we will update you in coming months.

For IL MAKIAGE, we continue to work extremely hard with our main ad partner to solve the algorithm dislocation and remain hopeful that we are on path to normalization. We work day and night to solve the algorithm dislocation, and we continue to believe, based on data that we see, that it's technical in nature, solvable, and has nothing to do with the brand runway. Big picture, we remain bullish on Oddity's future despite our recent customer acquisition cost challenges. We are working tirelessly to strengthen our business, move past the dislocation, and return to playing offense in what we see is one of the most attractive markets in the world. Beauty and wellness has long been a large, resilient, and highly profitable growth market. We see the category in an exciting period of transformation today, with consumer demand for channel and product creating major shifts.

Putting the current technical problem we face aside, we believe we are positioning our business to win in this moment and lead the next phase of growth. With over 70 million users on our direct-to-consumer platform, we believe we have a clearer view than others on where demand is and how to best serve the customer. Consumers are smarter than ever before. They have more information ready at their fingertips, and they demand more from their products, more efficacy, more personalization. The appetite for beauty and medicine is converging as a result. Consumers want real solutions to their pain points from the inside out. They are taking control into their own hands. A lot of that is happening online, outside of traditional channels like store or medical office.

Oddity's portfolio of trusted brands today is built to serve consumers across a full range of needs, spanning categories and product types, from beauty to wellness to medical-grade, from cosmetic to OTC to prescription products. The goal is to reduce friction and deliver unmatched experience, best-in-class products, and precise treatment protocols that truly solve consumer pain points. Let's look at hyperpigmentation as an example of how our integrated platform works and how we are building a moat with vision technology, personalized treatment regimens, and ODDITY LABS. Hyperpigmentation is a big success story for METHODIQ, showing higher customer satisfaction and retention signals, which is the best indicator for us that we are onto something great.

Our plans for this market began with Oddity's user data, which showed us how much demand our user had for addressing dark spots and uneven skin tone, and also how unhappy they were with the current solution. With this insight, we made a deliberate push into hyperpigmentation and deliver something better. We built one of a kind user experience at METHODIQ, includes computer vision assessment that identifies dark spots on the skin. The relevant data analysis are then passed to METHODIQ provider, who issues personalized treatment plan aimed at maximize efficacy and minimize side effect. It might be prescription or non-prescription, or both, and can involve sequencing different product across several months to optimize for the best outcome. The entire experience is designed to mimic and improve upon a high-touch experience at a doctor office, but with incredible convenience.

One of METHODIQ's hyperpigmentation hero product is Melanex 509, powered by ODDL1007, ODDITY LABS' patented molecule combination. It targets visible discoloration of the skin with reduced side effects. This is just the beginning of what we think ODDITY LABS can do in hyperpigmentation. We have additional molecules in development, and we are making good progress finding new pathways that we believe will help us tackle hyperpigmentation from multiple angles at once. This is just an example of how Oddity's integrated platform is meeting unmet demand, and we are just at the beginning. The strong start of METHODIQ has increased our conviction in the medical-grade space. We are acquiring more determined customer with attractive LTVs and good cross-sell characteristics. Acquisition costs are higher as compared to makeup, but we believe the AOV retention as a result expected paybacks justify the cost.

Consumers are increasingly comfortable getting medical care online and looking to brands like METHODIQ for innovation and upgrading offerings to meet their needs. We are positioning METHODIQ to be a leader in this backdrop and launching new categories and products across 2027. This will build on our infrastructure of prescription and pharmacy fulfillment to better serve existing customers and also reach new audiences. The opportunity set is large, and we are moving quickly. We plan to have more updates on this expansion in the coming months. Turning to SpoiledChild. We launched SpoiledChild around four and a half years ago as a multi-category wellness brand. It has scaled faster than our expectation and on track to approach $350 million of net revenue in 2026, which will put it more than a year ahead of the time it took IL MAKIAGE to hit that milestone.

SpoiledChild continued to deliver very strong customer cohorts metrics like AOV and repeat at scale. Twelve months net revenue repeat rates for the brand are well in excess of 100% today. As we said in prior calls, we believe SpoiledChild is being impacted by the algorithm dislocation issues IL MAKIAGE is facing, but to a lesser degree, and this has allowed us to continue scaling the brand. We are hopeful that as we work through the acquisition cost challenges with IL MAKIAGE, we will then be able to deliver efficiencies also for SpoiledChild. The strong consumer metrics we see in SpoiledChild give us confidence in the brand's future potential. We plan to continue to invest in the base direct-to-consumer business while adding new growth levers in 2027.

Moving to IL MAKIAGE, where we continue to work on resolving our account dislocation with our largest advertising partner and returning to normalized audience and CPA. We continue to work very closely with this ad partner to fix the problem, and while we are not there yet, every day that passes is helping us get to fixing the issue. We and the ad partner are in intensive testing mode, and those tests are very important for solving the algorithm dislocation. Looking ahead on Oddity level, we are hopeful the worst is behind us. As our guidance indicates, we have seen sequential improvement in the rate of the year-over-year revenue decline at Oddity, and we expect Q3 net revenue will decline approximately 5% year over year.

While Oddity's revenue decline was severely impacted by the algorithms dislocation, we are seeing relatively stable trends in other parts of the business that are less correlated to the acquisition spend. We continue to work hard on other advertising channels as well. Our goal for 2027 is for IL MAKIAGE to return to growth. We have amazing pipeline of new products ready to support the brand once acquisition costs recover. We will continue to work 24/7 until this technical problem is fixed. We remain hopeful that the amount of resources and time we spend on it will lead to resolution like any other big problem we faced since I started the business 14 years ago. Full power, nonstop hard work until fixing the problem. No other way. With that, I will hand it over to Lindsay.

Thank you. Thanks, Oran. Let's turn to our Q2 results, which I will refer to on an adjusted basis.