ODDITY Tech Ltd.

Good morning. Welcome to Oddity's third quarter 2025 earnings conference call. Today's call is being recorded. We have allotted time for prepared remarks and Q&A. At this time, I would like to turn the conference over to Maria Lucuris, Investor Relations for Oddity. Thank you. You may begin.

Thank you, Operator. I'm joined by Aron Holtzman, Audity's co-founder and CEO, and Lindsay Druckerman, Audity's global CFO. Niv Price, Audity's CTO, will also be available for the question and answer session. As a reminder, managers' remarks on this call that do not concern past events are forward-looking statements. These may include predictions, expectations, or estimates, including statements about Audity's business strategy, market opportunity, 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 on February 25, 2025. 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 Iran.

Thanks everyone for joining us today. We delivered an outstanding third quarter with strong financial performance while achieving major milestones in our growth initiatives, including new brands, new markets, ODT Labs, and tech innovation. Even in a challenging industry backdrop, ODT continues to deliver on its near-term financial commitments while building our future growth and engines. Our financial performance once again exceeds our targets, as we have done every quarter for the last 10 quarters as a public company, across revenue, profit, and earnings, including 24% revenue growth and 24% growth in adjusted diluted earnings per share year over year, despite category challenges. We are also once again raising our full year guidance. We achieved a huge milestone this week with the official launch of Methodic, the third brand in the Audity platform. Methodic is our most ambitious endeavor. Our long-term goal for Methodic is not just to launch another great brand and a telehealth platform, but to transform a broken medical care system using the best treatments and the highest standards of care available to everyone. Our objective is to address medical issues with customized efficacy treatments without the need of going to a doctor's office or getting lost in a drugstore. achieving our planned timeline for methodology is a great accomplishment and speaks to what makes audity and our culture so strong this is four years of heavy r d in the making supported by two acquisitions including voyage 81 and rivela developed with what we believe is an unprecedented scale of over 20 000 real user trials for our product line methodic is starting in dermatology but our long-term and these are in development as we speak. Our launch into dermatology takes on a massive problem. Industry data shows that nearly 50 million Americans suffer from acne, nearly 30 million from hyperpigmentation, and more than 30 million from eczema, and many of them are unsatisfied with the current options on the market. Drugstore products lack efficacy and personalization. Going to a dermatologist is a high friction, and the standard of care for these conditions has declined. At the same time, dermatologists will tell you that issues like acne are curable. You only need to ensure that the person has the right products and that they stay compliant. To tackle this big challenge, we built an ambitious and complex brand. Methodic is expected to feature a huge line of 28 prescription and non-prescription products, which combine for more than 100 unique treatment combinations for precision personalization. We have aimed to optimize these products to balance between maximizing efficiency At the same time, to provide the best-in-class beauty experience using the same standards for things like texture and scent that we have at Il Makiage and Spoiled Child, while beating top benchmark competitors in their category based on internal data. Our launch portfolio spans oral, topical, supplement, and medical-grade makeup that conceals white hills. Within the first six months of launch, we'll be live in the market with four methodic products formulated with all the lab's molecules that are proprietary to us, addressing a range of skin conditions that includes dark spots, acne scarring, eczema, and skin firming. Methodic suite of vision tools was developed alongside our team of dermatologists to analyze visible skin features like breakouts and pigmentation to help our doctors' networks understand each user condition. These vision models were built drawing on more than 1 million images of real individuals with no facial skin condition, which we believe is the largest image data set of its kind and was curated from over 13 million facial images in OLEDT's database. Users are delivered continuous care through a methodic search of its kind tracking app for weekly check-ins where our vision technology quantifies progress and gives updates to the clinician, ensuring compliance and success. We soft-launched Methodic in Q3 and went live with our formal launch earlier this week, exactly as planned. This launch includes a major media campaign showcasing Methodic's distinctive brand voice and inspires consumers to commit to the care. We are running a large-scale out-of-home takeover in New York City and a massive TikTok activation partnering with the biggest medical and skin influencers to create brand awareness and to build trust. This is the biggest TikTok activation in Audit's history. And as we have said, the methodology is just the beginning. We are working on additional medical domains for expansion, and we expect to have more to announce for Methodics in the future. Turning to Ilmakiyaj, Q3 were once again strong. Ilmakiyaj revenue grew double digit online. The brand remains on track to achieve our target of 1 billion revenue by 2028. We continue to show healthy expansion international. At the auditory level, international revenue increased around 40% year over year in the first nine months of 2025. We have successfully scaled in existing markets like UK and Australia while conducting larger scale tests in new markets like France, Italy, and Spain. We see huge opportunity in international markets and plan to further scale those across the board in 2026. Skin remains a standout growth area and it's on track to be around 40% of Il Makiage brand revenue this year. Successful product innovation has been a key driver of Skin and we expect this will continue in 2026 with our solid lineup of new product launches. Turning to Spoiled Child, which is having a strong year. We now expect the brand to cross $225 million of revenue in 2025. We are excited about our innovation lineup for 2026, including new product tests. Moving to IT Labs, where our very hard work over the last two years is starting to bear fruit. We have made significant improvement over the last year to our systems, infrastructure, and teams, which we believe will translate into strong commercial discoveries. The near-term commercial impact for ODT Labs is increasing. We plan to have at least eight products with Labs Molecule on the market in 2026 for our existing brands, including four products for Methodic and four for Illumatiare and Spoiled Child. Beyond these eight, we have additional products planned for our brand four launch, lastly on tech product innovation, which is the backbone of our business and an area of continuous investment. Artificial intelligence has been a centerpiece of our tech platform since we first launched in 2018. Advances in large language models and generative AI, together with our large and growing proprietary data sets, allow us to push the frontier of how we can use machine learning to drive direct consumer. We have a range of initiatives in development on this front, including commerce agents that write conversion and satisfaction, integrating this state-of-the-art models into our advertising, creative, and other customer-facing initiatives. With that, I will hand it over to Lindsay.

Thanks, Iran. Turning to our third quarter financial results, which I'll refer to on an adjusted basis, you can find the full reconciliation to gap in our press release. Q3 was another good quarter for us, setting us up for a record-breaking full-year result in 2025. A lot of these strong financial results continue to stand out relative to our competitors. This outperformance has been driven by the strength of our direct-to-consumer model and exposure to what we see as the key durable growth vectors in the industry, which are the consumer shift online and the migration towards high-efficacy products. We grew revenue by 24% in the third quarter to $148 million, exceeding our guidance for revenue growth of between 21% and 23%. The strength was driven by double-digit online growth at both Il Makiage and Spoiled Childs. Net revenue was driven by an increase in orders, while average order value declined around 1%. Average order value was impacted by NICs, including faster growth in international markets, which carry lower AOV. Repeat increased as a percentage of sales year over year, and our 12-month net revenue repeat cohort trends remained strong at north of 100%. Gross margins of 71.6% expanded 170 basis points versus the prior year, and exceeded our guidance of 68%. We did experience some gross margin impact from the flow through of higher tariffs during the period, but this was offset in part by cost efficiencies and favorable mix relative to our plan. We continue to expect tariff headwinds will remain manageable for the balance of 2025 and into 2026. And while we have the flexibility to take pricing as needed, we have no specific price increases planned to offset tariff related inflation. We delivered adjusted EBITDA of $29 million in the quarter, above our guidance of $26 to $28 million. We continued to invest in our long-term growth engines, including our methodic brand launch and other future brands, Audity Labs, and our tech platform. We had higher than planned media costs in the quarter and have seen the media backdrop improve as we progressed into the fourth quarter. We delivered adjusted diluted earnings per share of 40 cents, compared to our guidance of 33 to 36 cents. Adjusted diluted earnings per share exclude approximately $9 million of share-based compensation expense. We delivered strong free cash flow of $90 million for the first nine months of the year. This included around $16 million of outflows related to inventory as we built inventory for Methodic and modified our inventory shipment timing for tariff planning purposes. We ended the quarter with $793 million of cash, cash equivalents, and investments on our balance sheet, with an additional $200 million available on our undrawn credit facilities. Turning to our outlook for 2025, after a strong first nine months, we're on track for another record-breaking fiscal year and are once again raising full-year guidance. We now expect full-year 2025 net revenue will be between $806 and $809 million, representing between 24% and 25% year-over-year growth. We expect gross margin will be approximately 72.5%. We expect adjusted EBITDA will be between $161 and $163 million, and we expect adjusted diluted earnings per share will be between $2.10 and $2.12, assuming no share buybacks in 2025. This full-year outlook includes our expectation that revenue in the fourth quarter will increase between 21% and 23% year-over-year. You can find more details on our Q4 outlook in our press release. With that, I'll turn the call back to the operator for questions.

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit to one question. Our first question is from Dara Mosian with Morgan Stanley. Proceed.

Good morning, guys. So, Oran, on the base business, can you just help us unpack the 40% year-to-date growth you mentioned in international markets? Obviously, that's been a greater focus for you guys year-to-date. What have been the key geographic drivers of growth there from a country standpoint? And then just as you look out to 2026, you mentioned further scaling the international business. Is that around... Further country penetration? Is it spoiled child expansion? Just the key expansion or white space opportunities as you look going forward. Sure.

Hi, guys. So the first nine months, just to put things in perspective, still 83% of revenue came from the U.S. So although international grew 40%, it is still tiny comparing to the U.S., while for others, as you know, international is approximately two-thirds of their business. For us, it's still 17%. Our plan is to continue to responsibly grow across the board in international markets. But as we said in our remarks, it's a huge revenue and profit opportunity for us, and we see that it's strategically important for us. We scale international when we think it makes sense. We don't run and spend a new acquisition just because we want to grow international or because we see softness in the U.S. The opposite, where we see opportunity, this is where we push and we get more revenue. This year we grew 40%, but the objective is not just to grow the international market. In terms of countries, today existing countries, Canada, U.K., Germany, Australia, Israel, and France. New geographies are Italy, Spain, Netherlands, Ireland, Sweden, and Denmark. markets that we are adding as testing are Japan, Mexico, Korea, Belgium, and few others. But this year, only 2% of revenue came from new countries, and 15% came from existing countries. So basically, the majority of the growth came from countries that we already were active in.

That's very helpful. And then just one on method IQ, just High level, any thoughts after you've done some testing there on how much ability the platform has to bring in new customers to the Oddity franchise and perhaps over time indirectly drive beauty sales and cross-sell? And just as you see initial interest in the platform, how much of that is coming from your existing consumer base versus a new consumer base? Thanks.

Listen, every new country is completely new because we don't have users there. So that's why in terms of cost, it costs more because we don't have any existing users.

Oran, his question is on methodic. The question is on methodic, right, Dara?

Sorry, I couldn't hear you. Yeah, sorry. In terms of methodics, yes, of course, like Spoiled Child, when we started, the majority of revenue came from ill maquillage. and we expect that a decent percentage will come from Ilmak Agents for Methodic. Of course, we are also doing user acquisition because we want to expand our user base, so it will be mixed. Over time, of course, when the brand grows, then we will have more acquisition, but we are doing both.

Okay, great. Thank you, guys.

Our next question is from Anna Lizul with Bank of America. Please proceed.

Hi, good morning. Thank you so much for the question. On Methodic, just wondering, you know, in terms of how we should be thinking about this brand for 26, just wondering if you can continue to elaborate on, you know, how you're thinking about new customer acquisition for Methodic. Just, you know, how can we think about it incrementally versus Spoiled Child and El Maquillage? And just in terms of the investments that you're making, we previously expected, I guess, a larger headwind on the second half in SG&A, and the guidance for Q4 implies that this might not be as bad as we previously expected. So sorry if you can comment on this also for the beginning of 26 in the context of the new brand launch. Thank you so much.

I will start with high-level expectations from a methodic brand tree. is to scale faster than Spoiled Child, which was one of the best D2C lounges of all time. And our expectation here is to see even bigger numbers. In terms of contribution, due to the fact that it's relatively small, no matter like Spoiled Child did 25 million in year one, even if we do a bit more still compared to our next year, revenue goal is still tiny. So, Lindsay, if you want to touch regarding contribution for both top-line and bottom-line remethodics.

Yeah, no, that's right. We haven't given, we're not ready to give any specific plans for 2026 for Mesotic. But of course, as we look long-term, we're extremely bullish about the brand. This is a telehealth platform that really reimagines what medical care would look like if it was built entirely around the customer. Aran talked about the world-class treatments we've put together, highest standards of care. truly personalized to the individual and broadly available to everyone available online. We're starting in dermatology. That's the focus for us right now, a market that we understand really well because we've got around half of our ill maquillage and spoiled child users on the Audity platform that tell us they have issues like acne and dark spots and eczema. And so it's a nice place for us to begin, as we said with the earlier question, And there's truly nothing like it on the market. So we're very very bullish, but we are in very early stages We had our soft launch on time in the third quarter We just launched formally this week a lot of very strong early signals But still lots of work for us to do before we figure out, you know our plans in terms of timing of scaling etc But we're really excited as far as the SG&A implied guidance for Q4 versus prior. I guess what I would say is historically we like to guide to revenue and EBITDA. And then from a gross margin perspective, we always give the team a lot of flexibility. So we try to guide conservatively that allow them to kind of chase whatever products from a DC margin perspective, that's gross margin after media spend. That's how we evaluate the business. We want them to have lots of flexibility to go after the right DC margin or other products that from a strategy perspective we're focused on. So gross margin is not an internal focus metric. And as a result for our guidance, we try to walk you guys to a place where we feel really comfortable we can deliver, and we've historically delivered a bit better. But we're always managing towards that revenue and EBITDA figure. So I wouldn't read too much into that. We still have some nice investment plans for all of our growth initiatives, including Methodic. in the fourth quarter, and we talked about the growth investments in the first half of 2026 on our prior costs.

Great. Thank you so much.

Our next question is from Yosef Squally with Truist Securities. Please proceed.

Good morning. Thank you for taking the question. I have two, maybe just starting with one or on. We've seen a pretty mixed bag of earnings from various consumer-oriented companies this earnings season. I think you alluded to that a little bit in your prepared remarks. Can you maybe speak to your views about the health of the U.S. consumer right now and some of the things that you guys are doing in particular just to help oddity buck that trend? And I have another question.

Sure. Yeah, like we see what you guys see regarding softness from like from the outsides. But internally, as you can see based on our results, revenue is still like according to plan, even better. Margin is strong. This is despite the fact that we see like higher acquisition cost. And the main reason that we can offset it is just like the massive repeat that we have. And when I try to think about a way to like to think or to answer regarding softness, The first thing that I look at is obviously acquisition, but the second part is repeat. So yes, acquisition is higher, but repeat is getting way higher every quarter, and therefore, we are not impacted.

Okay, that's great to hear. And then, Lindsay, I know you're not guiding quite yet to 2026, but is the growth, although for 2026, any different? from what we've expected or what we've heard from you guys up until this point, which is committing to basically 20% top line or that 20% adjusted EBITDA margins. And maybe within that, maybe just talk about the marketing efficiency in the business that you're seeing. Thank you.

Yeah, we're not ready to give 2026 specific guidance. We'll give that when we issue our Q4 earnings results, but there's no change to our algorithm yet. of 20% revenue growth and 20% adjusted EBITDA margin. And you heard Oran reiterate in his remarks earlier that the other sort of medium-term guidance that we've given for Il Makiage to deliver a billion dollars by 2028, there's no change to that either. So business continues to be on a very healthy footing. As far as media efficiency goes, you heard Oran comment, we did have some higher acquisition costs. In my remarks, I mentioned the environment has actually improved for us as we've gotten into the fourth quarter. Overall, SG&A in the third quarter was up around 30%, and that's including some of the increased spending initiatives that we have, for example, for Methodic, Oddity Labs, et cetera. So it's been very manageable for us, and we're feeling really good as we head into Q4.

Okay. That's great. Thank you both.

Our next question is from Andrew Boone with Citizens. Please proceed.

Andrew Boone Thanks so much for taking the question. Lindsay, as we think about methodic being added to the model, is there anything that we should keep in mind in terms of the different financial profile, whether that be different AOVs, whether that be different margin profiles? Is there anything we should be considering as we think about the next three years in layering in that brand? And then on Audity Labs, it's great to see molecules start to contribute to the portfolio in 2026. Can you guys just help us understand what the expectation is of proprietary molecules? It feels like a step function change in terms of what you guys can bring to market. How do we think about that? And then what's the path beyond those eight initial products? How do we think beyond this first step? Thank you.

Lauren, you want me to start? Yes, please.

So in terms of financial profile for Methodic, over the long term we see this brand in a very similar framework that we think about with both Ill Maquillage and Spoiled Child. And those are brands that will support long term compounding 20% revenue growth and 20% adjusted EBITDA margin. So very healthy unit economics that we see for the category in general. that we think Methodic will deliver, especially as it relates to repeat and other KPIs that build into LTV. I think for the prescription product in particular, we will have lower gross margins, especially at first. We're always quite inefficient on the gross margin side when we launch a business. But in the case of prescription for Methodic, because you have the third party physician network and also the compounding pharmacies, those are extra costs for us. The business we expect will be mostly not prescription, but you do have some of the prescription cost input that will impact on the gross margin side. However, we think you're going to have a really nice repeat business there that drives healthy DC margin. Probably too early to say much else, but we look forward to sharing a bit more as we progress post-launch in 2026. As it relates to oddity labs, maybe I'll start, Naran, if you want to add additionally. As you guys know, in 2024, we made a strategic pivot with labs where we decided to extend our development timelines in order to focus on delivering molecules that had much higher efficacy and far superior performance characteristics than what was on the market today. And so we knew that would delay some of the timing of certain launches, but we thought it was a really smart trade-off to make because we believed that we could produce things that were way better. And now you're starting to see the fruits of that labor. So as we said, we expect in 26 that just for our existing brands, we'll have eight products on the market, including four for Methodic, I would describe the Methodic Brands products as some of them extremely innovative, addressing very important needs for the consumer. So we're really, really excited about that. And we have even additional, we have a lot in the pipeline, including some molecules that we expect will be delivered with Brand 4 and more beyond. So I would just say super happy to see how the level of improvement that we got out of the work that we put into Audity Labs.

I would just add that, you know, like when we started labs, we built it. We started and we built it again. It was hard because it was the first time that we've done something like it. And the fact that you see so many products and so many molecules coming to market this year just shows like that what we've done was the right thing and there is a real progress in labs. So we expect to see the same pace and even higher in the next few years. The fact that both Methodic and our e-materials brand are going to get molecules this year is very encouraging and, again, just shows the strength and the progress that we've done, which is significant in the past year and a half.

Thank you.

Our next question is from Corey Carpenter with J.P. Morgan. Please proceed.

Hey, good morning. I have two, Lindsay, probably both for you. Just hoping to expand on the comments around the media environment and higher acquisition costs now going a little lower and anything in particular to call out on the search channel. And then capital allocation, you have a healthy cash balance. You have not purchased shares since the convert earlier this year. So maybe if you could just refresh us on your capital allocation priorities. Thank you.

Sure. On the media side, Media costs, as we've said before, you know, they tend to get more expensive every year, but we are able to offset them really effectively with higher repeat and also other unlocks across our KPIs, including conversion and other things that we focus on. So this has allowed us to deliver a very healthy, sustained, profitable business and repeats running at around, call it two-thirds of our overall business. And we are really pleased to see that I discussed the net revenue repeat cohorts, like the 12-month cohorts and the cohorts that we examine, all continue to be really, really strong. So we think you're still seeing a healthy consumer environment and a solid environment for us to continue to deliver. As far as our cash position goes, we're in a very strong position, almost $800 million of cash equivalents and investments on our balance sheet today. We, you know, post the convertible earlier this year. We view this as really efficient, patient capital for us that we, you know, have flexibility to do what we want with. So we, of course, have the opportunity to deploy it for buybacks. We have the opportunity to deploy it for M&A. And we feel like we're in a really strong position where we can be patient and selective about what we use it for.

Thank you.

Our next question is from Ryan McDonald with Needham and Company. Please proceed.

Hi, thanks for taking my question. Congrats on a great quarter. As you look at the international success and into the test market, can you talk about how replicable like the data model in terms of targeting subscribers and new users and then sort of identifying maybe more local or geographic differences in terms of what their needs product-wise might be, just as you continue to scale that international efforts. And then, is your intent to immediately go international with Methodic right away, or are you going to take sort of a more measured sort of region-by-region approach like you've done with other brands in the past?

Thanks.

Sure. So first of all, regarding Methodic, we start only U.S. It's complex enough without international, so By the way, Spoiled Child was the same for the first almost three years. We didn't even test international. So we plan to do the same with Methodic. I'm not sure if it's going to be three years, but I don't think it's going to be way less than that. Regarding international and exactly what you said, that's the reason why we do tests. And when I said that, like we open market with a localized website and starting to put, to spend media against new users in those countries and to ship products based on that we see the destruction, we see repeat, we see you in economics, then we decided this market is suitable for us or not. And that's how we, that's what we've done for the past two and a half years.

Our next question is from Scott Schoenhaus with KeyBank Capital Markets. Please proceed.

Hey, Keith. Thanks for taking my question. Methodic here. Lindsay, you mentioned the majority of revenues were going to be volumes already coming from the non-prescription side versus prescription. Are the molecules, those four molecules, also going to be for non-prescription versus prescription? And then as a follow-up, on the prescription side, the physician network that you've built, there's clearly a shortage of dermatologists. And so this is an asset. How are you thinking about deploying technology to leverage more dermatologists on your network for patients?

Thank you.

Thanks, Scott.

So, the four products are not prescription. They're a combination of OTC and cosmetic. And again, we're really excited to have them out there, but those are not prescription products. And in fact, for Oddity Labs, we're not, for the most part, and certainly in the near to medium term, you won't see anything that's prescription coming from Oddity Labs that will all be either OTC or cosmetic. In terms of our physician network, we are currently plugged into third parties to help us with that. We have not brought that in-house, but we have the opportunity to do so for cost efficiency reasons down the road if we decide to do it. The networks we're using now, we're using all physicians at the moment, not all dermatologists, but all board-certified physicians. We can, of course, scale that to NPs and other medical care practitioners down the road. There's the opportunity for that, but we're starting with all physicians as we build that and learn. And I think from a technology standpoint, it's really us building capabilities that allow the network of clinicians to get the strongest signals possible to help inform treatment decisions based on the inputs that we take, you know, basically when you're going through the methodic intake and onboarding funnel, we're picking up on the contextual, real pathways and real signals that, you know, the same thing that you would look for if you were in an office, right? So you're looking at questions about demographics, hormonality, history, and that kind of stuff. the vision tools are picking up signals like number of lesions, intensity, and those kinds of signals that are really helpful for a clinician when making a decision about treatment outcomes. So that's a really important part of our technology. And then also just integrating our records directly with the provider systems that help operate the clinician interface and help them to integrate with our tools. And then I think finally, like within the Methodic app, the ability to get feedback, progress tracking, and to chat directly with your clinician to help drive things like confidence and most importantly, compliance and success. Those are enormous ways we're using technology to drive the outcomes that we want.

Perfect. Thank you so much.

Our next question is from Bonnie Herzog with Goldman Sachs. Please proceed.

All right. Thank you. Good morning. I just have a question on Il Makiage and Spoiled Child. You know, growth in the U.S. remains strong double digits for these brands, but it has moderated year to date versus last year. So could you talk about what's driving this and, you know, if the low 20% growth in the U.S. for these two brands is doable over the next few years, or should we expect a continued slowdown? I guess I'm asking especially for Il Makiage. Also, could you touch on repeat rates for the brands and if these rates are also moderating? Thank you.

I would just start by saying that, as I mentioned before, we manage growth across brands and geographies. So I don't wake up tomorrow and say, today I need to see 25% ill-makeup in the US. We look more broader and we maximize the potential based on what we see in real time. So if Germany is working better at a specific day, this is where we push more and vice versa with spoiled child. Lindsay, do you want to touch repeat?

Yeah, I mean, just to add on that, we're driving growth at the oddity level and our growth targets, we're managing growth towards 20%. We don't want to grow faster than that. And so ever since our IPO, we have been very clear and explicit about our plans to sustain 20% compounded durable growth. And that's exactly what we've been delivering on and we're managing it at the oddity level and we'll pull different levers within the different brands. Specific to Il Makiage, our target is to get to a billion dollars by 2028. And we've always talked about international being an important piece of that. And so you're seeing us flex on the international part now. At the same time, we want to make sure we're feeding spoiled child and now we have a third baby to give oxygen to. So we're managing it as a portfolio in order to deliver an overall oddity level growth. I think in terms of repeat, no, repeats continue to be very, very strong.

All right. Thank you.

Our next question is from Georgia Anderson with Evercore ISI. Please proceed.

Hi. I was wondering if you could talk a little bit about the TAM for methodic. Are you guys kind of defining this as all chronic skin sufferers in the U.S.? ? globally or is it a narrow cohort, you know, acne or eczema patients who are willing to pay out of pocket? And then just kind of in terms of measuring success of the brand, do you have any milestones or KPIs that would give you confidence that Methodic is scaling towards its full TAM? Thank you.

Lindsay, I'll start with the KPIs and you'll talk about TAM?

Yep.

So like we soft launch in September, official launch this week, so of course very early, but based on what we see earlier, the demand is there. The KPIs that we look at now are user acquisition, repeat, app downloads, open rates, weekly check-ins, and like when we see that those KPIs, as we envision they are, then we will start scaling.

In terms of the TAM, the right way we think to look at this is number of people rather than dollar size. And the reason for that is because it's such a high friction market and one that hasn't been run well that we think if you actually can unleash some technology that leads to better outcomes and easier outcomes for people to access, you're going to see the overall market grow. And for these chronic skin conditions like acne and hyperpigmentation and eczema, I mean, your solutions are, number one, go to a dermatologist. Iran talked about two-thirds of U.S. counties don't even have a dermatologist. Your average wait times are over a month. People spend hours commuting to, from, plus sitting in the waiting room and waiting for a doctor's office, so it's a real pain in the neck, and it's not a great experience, so it's something people avoid. And then your alternative of, you know, going to the drugstore, bouncing around with low-efficacy products that don't really work, it's overall stifled the total potential size of the market. We think that by really opening up this much better user experience, highest standards of care, world-class treatments made available easily to everybody online, you're actually going to see the overall market size grow. And that's why we're unleashing, we think it's probably the biggest wave of innovation to dermatology worldwide. in decades and maybe ever. So we're really excited about it. And then if you look at just the number of the people, which is what we think is the right way to look at it in America, you've got 50 million Americans, around 50 million with acne, around 30 million with dark spots, hyperpigmentation, around 30 million with eczema. And just on our platform alone, we see the deep prevalence of these issues. A lot of people are buying foundation from Il Makiage already to cover them up. So it's a natural place now that we have new tools and an effective way to address it for us to expand into.

Got it. Thank you for all the color.

Our next question is from Lauren Lieberman with Barclays. Please proceed.

Great. Thanks so much. I was just curious to talk a little bit about launch plans for Mesotic and sort of learnings maybe from FOIL because I I recall that you did billboards for Spoiled. I see that you're doing it for Methodic. You talked about it being sort of the biggest, I think you said biggest TikTok activation. So just curious about how you made decisions around the non-online portions of the launch and And for how long you expect to have these kind of big TikTok activations going on? Because it's something, right, you get lots of attention, it fades. But how should we think about that ongoing TikTok activation to get the brand's awareness up? Thanks.

Sure. So it's the third brand that we are launching, and we've done the same more or less with all three. offline activation, out of the gate. For ILMA-KI, spoiled child. And now in New York, we have the same with Methodic. Regarding TikTok, yes, it's the biggest campaign that we've done so far. And we started now, and we plan to continue until end of Q1.

Our next question is from Brian Timquilla with Jefferies. Please proceed.

Hey, good afternoon. Good morning, guys. Congrats on the quarter. Maybe I'll follow up on Bonnie's question from earlier. As I think through the makeup of the growth rate for the quarter, very strong growth, obviously. How should we be thinking about volume versus pricing versus mix in that growth rate for the different product lines?

The biggest driver of the vast majority of our revenue is driven just purely by orders, right? AOV was down around 1%, so, you know, essentially flat. And order growth historically and in the future will be the dominant driver of our revenue growth.

I understand. And if I may ask a follow-up, my follow-up question would just be, as we think about methodic, is this going to be primarily a compounded drug approach? product offering or is there a non-compounded version here and how should we be thinking about like margin differentials between the two if that was the case? Thanks.

So the business today is a combination of non-prescription and prescription. Like we said, we think the prescription will be the smaller part of the business and within the prescription we're contemplating compounded products today.

with potential in the future, of course, to evolve, but that's the business model now.

Perfect. Thanks.

We have reached the end of our question and answer session. I would like to turn the conference back over to Oran for closing remarks.

Thank you very much for joining us today. See you next quarter, guys. Bye-bye.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.