Oddity Tech Ltd. (ODD) reported second-quarter results that topped analysts' estimates on both earnings and revenue, sending shares higher in premarket trading as the direct-to-consumer beauty company signaled its revenue decline was decelerating.
Adjusted diluted earnings per share came in at $0.20, exceeding the $0.19 forecast by 5.26%. Net revenue totaled $181 million, beating the $176.48 million consensus estimate by $4.52 million, or 2.56%, even as revenue fell 25% compared with a year earlier. The result landed at the favorable end of management's guided range of a 25% to 30% decline.
Adjusted EBITDA reached $13 million, surpassing the $8 million to $10 million midpoint. Gross margin stood at 68.7%, down 360 basis points from 72.3% a year ago. First-order net revenue dropped approximately 40% year-over-year, while repeat-order revenue declined about 20%. Average order value slipped around 8%.
The revenue pressure largely stemmed from IL MAKIAGE, Oddity's largest brand, which experienced a significant disruption in its advertising algorithm with its largest ad partner. The shift drove up customer acquisition costs and weighed on first-order sales. Management said it moved at least half of its acquisition spend away from the "try before you buy" model toward a standard purchase approach without material damage to unit economics, though it emphasized it does not plan to eliminate the model.
For the third quarter, Oddity expects net revenue to decline about 5% year-over-year, a notable sequential improvement from the 25% drop in Q2, with adjusted EBITDA guided between $18 million and $20 million. Full-year 2026 revenue is projected to decline approximately 19%, and adjusted EBITDA is expected in the $30 million to $32 million range.
On its brand portfolio, Oddity said SpoiledChild is on track to approach $350 million in net revenue in 2026, growing at least 35%, with plans to introduce more than eight new products and categories in 2027. Twelve-month repeat rates for the brand exceed 100%. METHODIQ, launched several months ago with 30 products, is expected to deliver first-year revenue ahead of SpoiledChild's debut, and will expand into longevity and metabolic health next year, beginning with legally available prescription injectable and peptide therapies. A fourth brand is planned for a 2027 launch.
The company ended the quarter with $561 million in cash, equivalents and investments, and has $350 million in undrawn credit facilities. Free cash flow increased by $14 million during the quarter, though it decreased $8 million for the first half of the year.
Oddity repurchased 5.6 million shares for $80 million in the quarter, bringing year-to-date buybacks to 11.7 million shares totaling $163 million, reducing ordinary shares outstanding by approximately 20%. About $87 million remained under the company's $200 million authorization. In June, it also repurchased $50 million face value of its zero-coupon June 2030 exchangeable notes at a discounted price of $35 million.
Shares rose 33.82%, or $4.41, in premarket trading to $17.43, up from Friday's close of $13.03. The stock remains well below its 52-week high of $64.23.
