Israeli Cosmetics AI Platform Oddity Tech Surprises with Strong Q1 Results Amid Retail Slowdown

Oddity Tech, a newly public Israeli cosmetics platform, has defied expectations with its first quarter results, showcasing a remarkable performance that surpasses Wall Street's projections. The company, which leverages AI to develop innovative beauty products, has reported substantial growth in both earnings and revenue.

Financial Performance

Oddity Tech posted remarkable first quarter results, exceeding market expectations. The company reported earnings per share of 61 cents, adjusted, compared to the anticipated 49 cents. Its revenue also soared to $211.63 million, surpassing the expected $205 million.

Net income for the three-month period ending March 31 stood at $32.98 million, or 53 cents per share, a significant increase from the previous year's $19.59 million, or 35 cents per share. Excluding one-time items, Oddity reported earnings of 61 cents per share. Additionally, the company's sales rose by approximately 28% to $212 million, up from $166 million in the prior year.

Guidance and Outlook

Oddity Tech has raised its full-year guidance, now expecting revenue to be between $626 million and $635 million, compared to the earlier outlook of $620 million to $630 million. Adjusted earnings per share are projected to be between $1.57 and $1.62, up from the prior guidance of $1.49 to $1.54.

For the current quarter, the company anticipates sales to range between $185 million and $189 million, with adjusted earnings per share expected to be in the range of 61 cents to 64 cents.

Analysts had expected full-year revenue of $627 million and adjusted earnings per share of $1.51, according to LSEG. The company's performance has surpassed these estimates, resulting in a positive outlook for Oddity Tech.

Following the impressive results, Oddity's shares surged nearly 10% in extended trading, reflecting the market's positive response to the company's performance.

Shifting Consumer Behavior

While traditional beauty retailers like Ulta Beauty foresee a slowdown in the demand for beauty products, Oddity Tech's approach challenges these projections. The company believes that the future of beauty and wellness products lies in online platforms driven by AI-powered innovation.

Oddity Tech is confident that beauty and wellness products are best marketed and sold online, eliminating the need for physical visits to beauty shops. By leveraging AI to enhance product selection and provide personalized recommendations, the company aims to revolutionize the beauty and wellness industry.

Response to Industry Trends

Contrary to the concerns raised by Ulta Beauty, Lindsay Drucker Mann, Oddity's chief financial officer, asserts that there is no slowdown in new user acquisition and existing user engagement. The company emphasizes the growing demand for online beauty products, highlighting the industry's transition to high-efficiency solutions catering to evolving consumer needs.