ODDITY Tech Ltd.

Investor Relations for Oddity. Thank you. You may begin.

Thank you, operator. I'm joined by Aron Holtzman, Oddity's co-founder and CEO, Niv Price, Oddity's CTO, and Lindsay Druckerman, Oddity's global CFO. 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, and future financial performance, 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 yesterday and in our most recent annual report on Form 20F filed with the Securities and Exchange Commission. 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 yesterday. I will now hand the call over to Aram.

Thanks, everyone, for joining our call today. 2024 was another strong year for us, both for financial achievements, but even more importantly, for the investments we've made to drive our business in the future. As I tell my teams, our success today is because of the hard work we did two and three years ago. We are proud of it, but it is in the past. We must continue to work hard to invest today to ensure we keep winning. It is for this reason that I am bullish about 2025 and beyond. Our business is very strong and we are developing more engines of growth than ever before. Engines across all the labs, new brands and AI. So let's start with our 2024 performance. In 2024, we grew revenue 27% to $647 million and delivered adjusted EBITDA of $150 million at a 23.3% margin. growing adjusted EBITDA 40% year over year. We generated $134 million of free cash flow, converting over 130% of our net income into cash. We again proved the power of online. We beat our earnings guidance every single quarter since going public and continuously raised our outlook on sales and profitability. Every single quarter, seven quarters in a row. Both our brands did great in 2024, each growing revenue double digits. Il Makiash crossed the 500 million revenue mark in 2024, and Spoiled Child recently crossed the 150 million mark for its third birthday anniversary this month. We maintained strong and consistent momentum across the year, including our fourth quarter, where we grew revenue by 27%. This momentum continued into 2025, where we had a great start for the first quarter, growing across brands and product categories. And given the importance of our first quarter, it put us in a good position to once again meet our annual targets for revenue growth of 20% and adjusted EBITDA margin of 20%, which we are committed to doing every year. One of the most important focus metrics for us is repeat sales. Repeat is the best indicator we have of customer happiness and satisfaction and of our ability to sell new products into existing customers. And of course, repeat revenue is high margin for us and drives our strong profitability. We are therefore pleased to have further strengthened our repeat sales in 2024 and increased it as a percentage of our business from 2023. This was driven by our strong 12-month revenue repeat rate of over 100%, a level that we believe is best in class across B2C. We are clearly an outlier versus other beauty companies that have reported weak demand and excess inventories. I want to explain why we are outperforming today and why we believe we will continue to do so in the future. First, we are deliberately focused on the most attractive growth areas of the market, This includes the shift to online and the increasing consumer demand for high-performance products. In our view, the move in recent quarters to online appears to be having more meaningful impact than in the past. There is too much product in too many physical points of distribution, while online is growing at a strong pace of a larger base. The global beauty industry is one of the most attractive markets in the world in our view. huge in size and highly profitable, with so many areas to innovate and grow. I believe that e-commerce have underinvested in technology and have been slow to adapt to a changing consumer. We can see how it is hurting their business today and creates an opportunity for us as we continue to invest and strengthen our mode on those fronts. The second reason for our performance is our direct-to-consumer model, which has so many advantages over wholesale brands. And in a tough industry backdrop, those advantages really shine. We have a direct dialogue with consumers without Twitter interference. We understand the performance of every product by platform, by ad, by geography, by funnel, every hour of the day. We double down on what is working and continuously optimize to make sure we never hit a wall. Due to our D2C model, we have a very accurate read and strong planning. We have full control of our inventory, avoiding the access inventory that Holzer brands are facing today, including all the discounting that comes along with it. Turning now to physical product, one of the greatest strengths at ODT is our ability to develop high-performing products, launch them into our user base, and create new hero franchises. From the very beginning, we built a culture at ODT that truly believes in product, product that solves our pain points and does it better than others, product that she loves and wants to come back to. And this strength really shows in our numbers today. Starting with the original product portfolio we launched back in 2018, which continued to grow double-digit. Based on industry data, we believe Ilmak Yaja is the number one foundation, the number one primer, and the number two concealer in the U.S. prestige dollar sales. Our product innovations are growing even faster. A good example is Ilmakia Skin, which we launched in 2022, and as of 2024, represented around 30% of the brand revenue, and it should continue to grow. Boy Child is another example, launched in 2022, and now makes up almost 25% of audited revenue today and growing double digits. Part of our product innovation machine is our direct connection with the consumer that enable us to learn what she needs. Another is our strict development protocols that require any product we launch to beat competitors in large-scale consumer trials. If it isn't perfect, we won't launch it, even if it means we don't launch new products. What was recently added to our existing product-first strategy is Audity Labs, our biotech lab in Boston that is a major investment for us. Over 60 scientists full-time working on discovering and developing new molecules that have the potential to disrupt our old industry completely. As I said before, I believe this will take time, but can be a true game changer for us. I want to close with some thoughts on why we are bullish on 2025 and discuss some of the investments we are making for the future. Starting with a core business where we have incredible strength in both in-maquillage and spoiled child, both as a great 2024 and are off to a strong start in 2025. Il Makiage is already one of the largest prestige beauty brands by revenue in the United States after only six years in the market based on industry data. And it is on track to reaching $1 billion of revenue by 2028. The color business continues to grow with great repeat. Skin is a massive opportunity. As I mentioned, it reached 30% of Il Makiage brand sales in 2024 and will continue to get even larger. Remember that for most of our largest competitors, skin business is twice the size of color. International is another major opportunity that we have slowed play throughout the years. We began slowly accelerating our growth outside of the U.S. in the first quarter of 2025, both by increasing scale in existing markets like UK, Germany, and Australia, as well as large-scale testing in new markets. So far, it looks good, and we continue to believe international will grow to big numbers. Spoiled child, we are also willing to be a billion-dollar brand. It has scaled at a healthy rate, passing the $150 million LTM revenue mark and doing it with strong repeat rates and AOV. It shows how much unmet demand there is for the brand. We have begun testing international market for Spoilshell in 2025 with good indications and see big potential there. Another reason that makes us bullish about our future is our new brands. With every brand, we push ourselves even more to not only disrupt the market, but disrupt ourselves again and again. Brandtree is a telehealth platform for consumers that will start with medical-grade skin and body issues like acne, eczema, and hyperpigmentation, and then will expand to other health domains. Our offering includes a comprehensive and innovative product range and access to prescription and OTC treatments, enabling full personalization to user profiles, types, and severities. Individual treatment plans can be updated and adjusted to minimize side effects and increase efficacy. With Brandtree, we are building a user experience and product portfolio that we believe can change the game. We have built new capabilities for it, including specialized vision technology for assessment and a mobile app with a treatment lifecycle coaching engine to encourage compliance with the treatment routine. Brand 3 is on track to launch as scheduled in the second half of this year. We plan to soft launch in Q3 and then roll out official launch in Q4. Brand 4 is also a big opportunity that we're very excited about. More details on that front to come. Moving to our labs where we are using pharma-grade technologies and AI-based molecule discovery to develop high-efficacy signed-back products for our industry. Our mission at Audity Labs is to bring real science to our industry at high scale for the first time and turbocharge distribution through Audity's online platform. We continue to grow our team with new talent across bioengineering, computation, chemistry, and delivery teams. Our scientists are actively developing both short- and long-term innovation in skin, color, hair, and body, with the singular goal of exceeding the efficacy of existing products in these spaces. To achieve this, we are working on multiple parallel R&D strategies across each of our programs to increase the chances of success. In the short term, we are working on preparing to launch new molecules for brand three and brand four. Separate teams are working on longer-term developments, ensuring we focus on both delivering short-term impact while investing in the future. These longer-term developments include our next generation of molecule delivery system, new modalities, and new biological pathways to improve efficacy. Beyond our internal R&D, we are doubling our power by partnering with leading platforms to accelerate target and hit discovery using cutting-edge technology, including screening in advanced human organoid models to identify new targets and predict molecular efficacy. AI-based platform that identifies new targets and generates predictions that modulate a given target based on genetic data and RNA sequencing. and gen-AI algorithms that develop new, highly effective complexes composed of natural ingredients. Biology is just one part of the equation. Effective delivery is essential to translating scientific breakthroughs into real-world performance. We are investing in delivery systems, building internal capabilities, and partnering with third parties to optimize how different compounds reach their targets. It is still early to know what will work as we are doing it for the first time, but I can assure you we push out 24-7 on multiple areas to increase the chances of success. As I already said in previous calls, we don't need OET Labs to meet our financial targets, but what we are building in Labs is for total disruption. If we do it right, OET Labs will change our company and our industry forever. I truly believe it. Finally, a few words on our investment in tech before I hand it to our CTO, Nif Price. Our big and early investments in tech are paying huge dividends for us today, allowing us to be ahead of our competitors in winning online. This is why we continue to double down on our investments in tech talent and capabilities. This year, with the acquisition of Phionics IP, we brought in-house an elite AI research team with experience from Israel Intelligence Units. This team will focus on solving Audity's high-impact missions, enhance our current models, and help us preserve our lead. I will now hand it to Niv to talk through what we are building in tech in more detail.