Oddity Tech Ltd. Q2 2026 Earnings Call Summary

Oddity Tech Ltd. Q2 2026 Earnings Call Summary Moby Intelligence Thu, September 10, 2026 at 2:02 AM GMT+9 3 min read NVDA -0.72% ODD +28.60% Oddity Tech Ltd. Q2 2026 Earnings Call Summary - Moby Strategic Performance and Operational Context Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here.

Management attributes the 25% revenue decline primarily to a technical 'algorithm dislocation' with its largest advertising partner, causing an audience drift that sharply increased customer acquisition costs (CPA) for IL MAKIAGE.

The company is prioritizing technical remediation over immediate growth for IL MAKIAGE, shifting resources toward intensive testing to retrain the ad algorithm rather than executing its planned product pipeline.

SpoiledChild is demonstrating operational resilience, on track for $350 million in 2026 revenue by maintaining strong unit economics and 12-month net revenue repeat rates exceeding 100% despite broader platform headwinds.

The launch of METHODIQ signals a strategic pivot toward the 'beauty and medicine' convergence, leveraging computer vision and ODDITY Labs' patented molecules to capture higher-intent medical-grade customers.

Management believes the current technical challenges are isolated to acquisition channels and do not reflect a lack of brand runway, citing stable trends in non-correlated business segments.

Strategic positioning is shifting toward a multi-brand platform to reduce dependency on any single brand or acquisition channel, The company is working to increase its distribution and channels to make the business more resilient, though it has no specific announcements to make yet, and aims for IL MAKIAGE to return to growth by 2027.

The 2027 strategy for IL MAKIAGE focuses on a return to growth supported by a deferred pipeline of new products, Management targets a return to growth for IL MAKIAGE in 2027, supported by a pipeline of new products ready to launch once acquisition costs recover.

METHODIQ is expected to exceed SpoiledChild's first-year revenue performance, with 2027 expansion plans targeting high-demand categories like longevity, metabolic health, and injectable peptide therapies.

Management plans to launch 'BRAND 4' in 2027, further diversifying the portfolio and leveraging the company's existing prescription and pharmacy fulfillment infrastructure.

Guidance for the remainder of 2026 assumes sequential improvement in revenue trends as the compounding impact of lost repeat sales from early-year acquisition gaps begins to stabilize.

Future gross margin targets remain in the high 60s, with management expecting recovery as they resume AOV optimization efforts that were paused during the current dislocation period.

The company aggressively managed its capital structure by repurchasing 11.7 million shares year-to-date, reducing ordinary shares outstanding by approximately 20%.

A $50 million face value of zero-coupon exchangeable notes was repurchased at a discounted price of $35 million to optimize the balance sheet.

Inventory levels are currently elevated due to purchase commitments made prior to the IL MAKIAGE dislocation; management expects to reach a 'better balance' by 2027.

The 'Try Before You Buy' model is being strategically rebalanced, with over 50% of acquisition shifting to immediate 'Buy' to help remediate signal distortion in advertising data.

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Management believes they are closer to a solution as data indicates the root cause is an 'audience drift' in the algorithm that requires retraining.

Once resolved, the brand will immediately deploy a ready pipeline of products and marketing plans that were sidelined during the dislocation.

The projected Q4 slowdown relative to Q3 reflects management's decision to leave budget flexibility for inefficient 'testing' spend versus revenue-generating spend.

Management characterized the outlook as a realistic assessment of 'unknowns' rather than intentional sandbagging.

Unlike SpoiledChild's recent focus on efficiency, management does not plan to place growth constraints on METHODIQ during its second year.

Early signals show high satisfaction in hyperpigmentation treatments, particularly for ODDITY Labs' non-prescription molecules, which justifies higher initial acquisition costs.

The crisis has accelerated efforts to diversify distribution and channels to make the business model more resilient to single-partner technical failures.

Management noted that the current multi-brand scale (SpoiledChild and METHODIQ) provides a buffer that did not exist during the company's IPO.