Olaplex Holdings, Inc.

Greetings and welcome to the Olaplex Holdings Inc. Third Quarter 2025 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Michael Oriolo, Head of Investor Relations. Please go ahead.

Good morning, everyone. Welcome to our third quarter fiscal 2025 earnings call. Joining me today are Amanda Baldwin, Chief Executive Officer, and Katherine Dunleavy, Chief Operating Officer and Chief Financial Officer. Before we start, I would like to remind you that management will make certain statements today which are forward-looking, including statements about the outlook for the Olaplex business and other matters referenced in the company's earnings release issued today. Each forward-looking statement is subject to risk and uncertainties that could cause actual results to differ materially from those projected or implied by such statements. Additional information regarding these factors appears under the heading cautionary note regarding forward-looking statements in the company's earnings release and the filings the company makes with the Securities and Exchange Commission that are available at www.sec.gov and on the investor relations section of the company's website at ir.olaplex.com. The forward-looking statements on this call speak only as of the original date of this call and we undertake no obligation to update or revise any of these statements. Also, during this call, management will discuss certain non-GAAP financial measures, which management believes can be useful in evaluating the company's performance. The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP financial measures to the most directly comparable gap measures in the company's earnings release. A live broadcast of this call is also available on the investor relations section of the company's website at ir.olaplex.com. Additionally, during this call, management will refer to certain data points, estimates, and forecasts that are based on industry publications or other publicly available information, as well as our internal sources. The company has not independently verified the accuracy or completeness of the data contained in these industry publications and other publicly available information. Furthermore, the information involves assumptions and limitations, and you are cautioned not to give undue weight to these estimates. For today's call, Amanda will start by providing highlights of our third quarter performance and discuss the progress we have made on our strategic areas of focus. Then, Catherine will discuss our financial results and outlook. Following this, we will turn the call over to the operator to conduct the question and answer session. With that, I will now turn the call over to Amanda.

Good morning and thank you, Mike. We're pleased to share third quarter results that exceeded our expectations. Our team executed well across a range of key initiatives, resulting in improvement in our sell-through trends at the end of the third quarter. This sell-through improvement coincided with the hair mask launch and our first fully coordinated 360-degree marketing campaign, and demonstrates marked progress in our transformational journey. We remain focused on delivering the annual results we guided to at the outset of the year and building Olaplex for consistent profitable growth over the long term. Before diving into our strategic progress, here's a summary of our third quarter results. Net sales of 114.6 million, down 3.8% year over year, yet better than our expectations, partially driven by earlier timing of shipment. Adjusted EBITDA of 30.8 million, a margin of 26.9%. This exceeded our internal expectations driven by a strong flow-through of our sales feed. Turning to our performance by channel. In professional, net sales grew as we continued to benefit from our strong management of promotions. We outperformed our expectations and are seeing early green shoots in regions where we reset our relationships and are starting to invest in marketing and education, working more closely with our partners overall. Specialty retail sales were down in the quarter as expected, Quarterly sell-through was broadly consistent in the second and third quarters, with encouraging improvement exiting Q3, led by recent innovation. Direct-to-consumer sales declined as expected, following large sales events in the second quarter. However, we outperformed our expectations and saw strong sales momentum coinciding with tentpole events, where we have strategically focused our marketing and promotional efforts. Now let me discuss our progress in the execution against our strategic priorities. As we've discussed, we have three strategic priorities for 2025. One, generate brand demand. Two, harness innovation. And three, execute with excellence. First, generate brand demand. Year to date, we have invested significantly in our brand, while still generating strong 25.5% adjusted EBITDA margins. We believe these investments are showing early signs of working. In 2025, we set out to build a brand and a marketing engine implemented in three stages. First, building the brand baseline. Second, creating a brand platform. And third, building an ongoing content engine. In the first half of the year, we focused on the first two stages with our late February brand refresh in the US and the April launch of our new Design to Defy brand platform. Our recent brand health tracker indicates that this investment has been successful and helping reach our goal of creating the emotional connection that drives lasting brand relevance, resilience, and love. As you may recall, early research conducted when I first joined Olaplex indicated that our brand was seen as effective, yet cold and clinical. According to the latest brand health tracker, which we fielded at the end of the quarter, versus the baseline taken before we relaunched the brand, Olaplex is now perceived as more approachable and alluring, while retaining its core identity as a scientific and iconic brand. We achieved significant growth across every stage of the brand funnel, awareness, consideration, net promoter score, and saw important gains across key associations, such as helps me take great care of my hair, and is key to my beauty routine. Increased awareness successfully translated into stronger consideration, including significant lift in both current stated usage and future purchase intent. This is very encouraging, as we believe this survey is a leading indicator of future brand momentum. In the third quarter, we shifted to executing against the last phase of brand building, developing a consistent digital-first content engine that supports both the transformational and scientific storytelling behind our core and new product launches. This is critical to amplifying the early indicators we saw in our brand health tracker. This strategic evolution was evident in our marketing campaigns surrounding the late August launch of our two new hair masks, Rich Hydration Mask and Weightless Nourishing Mask. This was the most integrated product launch in our history with full 360 degree execution. Simply put, this launch was the first time in which we had the team coordinated and the brand baseline built to execute the right content at the right time in the right place. As I have discussed in prior calls, an essential part of our strategy is clearly explaining and getting credit for the power of our science in a meaningful, compelling way. Our hair mask marketing campaign was anchored in this strategy with content that made our superiority clear and easy to understand for both professionals and for consumers. Our hair masks extend results through five washes in a marketplace which is often oriented to instant cosmetic impact, not long-lasting, healthy hair results. Across our professional and specialty retail channel, our education materials and visual merchandising provided compelling support for this superiority, with microscopic images of hair when using our hair masks versus competitor offerings, and with model shots highlighting hair results before use, after a single wash, and after five washes. In addition to having the right marketing content rooted in science and product efficacy, our team successfully coordinated the launch with a single big bang approach across all channels, creating initial buzz and a more sustained and measurable impact. First, consistent with our strategy to honor and empower the pro as the start of our flywheel, we initially launched our mask with pros several weeks before the products were placed on retail shelves. In addition, we launched masks with back bar sizing, which, combined with our recent scalp innovation, allows for a complete root-to-tip service offering for our pros. By launching with the pro first We reinforced our commitment, ensuring professional validation, and brought education directly to salons across North America. Secondly, we coordinated a timely and unified launch across PR, influencers, merchandising, and our own channels to create buzz through a disciplined, full-funnel strategy directed at driving and converting broad awareness down to the point of sale at retail and e-commerce. We implemented a full funnel influencer approach with over 1,000 high-impact and mid-funnel influencers that supported always-on content, combining both education and science storytelling for emotional appeal. We created a high-visibility experiential activation through the mask market, a pop-up event in New York City which connected pros, influencers, media, and consumers during Fashion Week. The event focused on hair innovation and brought hair science to life in an engaging format featuring interactive stations, hands-on demos, and personalized routines where guests could discover which of Olaplex's two breakthrough hair masks is right for them. Ahead of the event, there was a line stretching from multiple city blocks, which speaks to the brand's strength of Olaplex. The event generated nearly 700,000 impressions across outlets in only three days. We are pleased with the early success of the campaign, with both sell-in and sell-through outperforming expectations at key retail partners. Now that we have the three foundational pieces of marketing and generating brand demand in place, we will work to refine, optimize, and accelerate our strategy as we move into Q4 and plan for 2026 and beyond. Moving on to our second priority, Harness Innovation. The successful launch of MASS highlights our strategy to create new scientific products that have the potential to change our trajectory. To that end, let me share a bit more about the science that served as the foundation for our fully integrated marketing campaign. Hair masks are intensive conditioning treatments. Adding a hair mask to a routine can provide additional benefits, helping to repair, strengthen, and restore moisture even further than a daily conditioner. Hair masks also represent a meaningful category within hair treatment with strong growth where we have been underpenetrated. Most hair masks on the market only provide immediate gratification. One wash is in, and the next is washed out. In contrast, our hair masks are formulated with Biobimedic's cuticle technology and Olotex's proprietary bond-building technology. This technology is designed to repair and seal the cuticle to lock in hydration and strength, protecting the inner hair fiber and extending results through five washes, actually improving hair health over time versus simply band-aiding it. This is clearly very powerful science that can enable the highest quality products and demonstrates our overall product philosophy to ensure we are truly improving hair over time. Beyond strong initial sell-in and sell-through trends, we've seen very positive consumer response with 4.7 star review average and strong reception from both new and existing customers with many mass customers being new to the brand according to our internal DTC data. In fact, of 2025 product launches, we have the top three selling prestige hair products in both dollar and unit sales for the third quarter of 2025, per Circana data. In addition, with product development, one must always be building for the future. Over the last year, we have created an innovation team and cross-functional processes that we believe set the stage for a robust and consistent forward-looking pipeline with a cohesive launch calendar. These changes have enabled us to launch six new innovative products this year, including our two new hair masks. We are additionally encouraged as we look at what we are building for the long term. During this quarter, we announced the acquisition of Pervala Bioscience. Pervala seeks to develop transformative bio-inspired technologies with applications across health and beauty industries. What we've accomplished to date has already left a meaningful impact on our industry. And we believe that with Pervala, we have the potential to create the next generation of disruptive science-backed product innovation alongside our patent-protected bond-building technology, Visamino. With only approximately 30 SKUs focused within Prestige Hair Care and our expectation to launch two to three meaningful innovations annually, we see large white space potential for Olaplex, and we look forward to sharing our upcoming innovations along the way. Lastly, our third strategic priority, execute with excellence. We've been working hard to improve our focus and speed of execution through streamlined processes and clear KPIs. We know that when we streamline processes and achieve those KPIs, we drive results. For example, as we started to discuss in our last call, our education and sales teams have doubled down on reconnecting with the pro via a Blitz program, which has been expanded to three additional cities. Los Angeles, Chicago, and Dallas in the quarter. Our data tells us that the sell-through in cities where we have done a blitz is on average at least mid-teens percentage higher in the two months following the blitz versus the two months prior, and also outperforming control markets. We look forward to expanding this effort. In addition, in preparation for the fourth quarter, we reorganized and increased our field sales team with improved coverage in key geographic markets. optimized our accountability and reporting metrics, and refined our event execution process to drive experiential moments in store, all with the ultimate goal of driving sell-through results. Our second key focus with this priority has been executing a globally aligned go-to-market strategy designed to focus our investments on the countries we believe offer the greatest growth potential, while ensuring brand execution is consistent around the world. This strategy follows a three-tiered approach with One, partner-led priority markets. Two, direct investment markets. And three, light-touch partner markets. We are already making tangible progress across each. In partner-led priority markets, our global sales and education teams have begun visiting and reengaging directly with key partners. In the quarter, our teams visited partners in Japan, the Nordics, and Germany. Our sales leaders are also working closely with our partners on goal setting, future planning, and setting measurable objectives and KPIs. This focus and increased partnership is already bearing fruit with our key partners aligning on joint business plans and making investments alongside us as they are inspired by what they see as a positive change in how we are working together and are leaning in on our transformation. We are also seeing positive signs in direct investment markets. In the UK, where we realigned our teams with clear KPIs and invested more in marketing, our sales are outperforming broader international trends. In summary, we are encouraged by the execution of our Bonds and Beyond strategy to date and believe the sequential improvement in KPIs since our first coordinated large-scale 360-degree marketing campaign and product launch, traction in our international realignment, and future R&D investments provide optimism for Olaplex's future. We are pleased to reiterate annual guidance. With that, I'll turn it over to Catherine to walk through more of our third quarter results and the outlook for the fourth quarter. Catherine?