Business Context and Reporting Period
Company: Oddity Tech Ltd.
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Oddity is a consumer tech platform operating in the global beauty and wellness market. It utilizes data science, machine learning, and computer vision to power direct-to-consumer brands, including IL MAKIAGE, SpoiledChild, and the newly launched medical telehealth platform, METHODIQ. The company operates as a single segment with significant revenue concentration in the United States.
Key Financial Metrics
| Metric | 2025 | 2024 | 2023 |
|---|---|---|---|
| Net Revenue | $809.8 million | $647.0 million | $508.7 million |
| Gross Profit | $588.7 million | $468.3 million | $358.2 million |
| Gross Margin | 72.7% | 72.4% | 70.4% |
| Operating Income | $118.8 million | $115.6 million | $74.3 million |
| Net Income | $110.7 million | $101.5 million | $58.5 million |
| Adjusted EBITDA | $163.3 million | $150.5 million | $107.3 million |
| Adjusted EBITDA Margin | 20.2% | 23.3% | 21.1% |
| Cash & Equivalents (Total Liquidity) | $776.0 million | $169.1 million | N/A |
| Debt (Exchangeable Notes) | $600.0 million | $0 | $0 |
Note: Total Liquidity includes cash, cash equivalents, restricted cash, short-term deposits, and marketable securities.
Material Changes vs. Prior Period
- Revenue Growth: Net revenue increased 25.2% year-over-year to $809.8 million, driven primarily by higher order volume. International revenue grew to $142.1 million (18% of total).
- Expense Pressure: Selling, general, and administrative (SG&A) expenses rose 33.2% to $470 million. This was primarily due to an $81 million increase in advertising costs to support sales growth and elevated customer acquisition costs.
- Customer Acquisition Challenges: Management disclosed a significant increase in customer acquisition costs due to algorithm changes by major advertising platforms. This has negatively impacted the efficiency of the "Try Before You Buy" model and is expected to adversely affect results in the first half of 2026.
- Capital Structure: In June 2025, the company issued $600 million in 0% Exchangeable Senior Notes due 2030. Proceeds were used to fund operations and investments, resulting in a substantial increase in long-term liabilities.
- Investing Activity: Net cash used in investing activities was $267.2 million, primarily due to a $298.9 million investment in marketable securities.
Guidance, Outlook, and Risks
- Outlook: Management maintains long-term targets of 20% annual revenue growth and 20% Adjusted EBITDA margin but explicitly stated they do not expect to achieve these targets for as long as customer acquisition costs remain elevated.
- 2026 Challenges: The company anticipates challenges in 2026, specifically in the first half, due to the lag effect of reduced new customer acquisition on repeat sales.
- Geopolitical Risks: As an Israeli-incorporated company, Oddity faces risks related to ongoing military conflicts in the Middle East (Israel, Iran, Hezbollah), which could disrupt operations, supply chains, and employee availability due to reserve duty call-ups.
- Regulatory & Legal: The company is subject to evolving regulations regarding AI (EU AI Act), data privacy (GDPR, CCPA), and product safety (FDA, MoCRA). There are two pending putative class action lawsuits alleging securities violations related to the IPO and a secondary offering.
- Supply Chain: Reliance on single-source suppliers for certain components and global shipping disruptions (e.g., Red Sea) pose risks to inventory management and margins.
Investor Verification Checklist
- Customer Acquisition Cost (CAC) Trends: Verify if CAC has normalized in Q1 2026 or if the impact of advertising algorithm changes persists.
- Exchangeable Note Terms: Review the specific exchange conditions and potential dilution impact of the $600 million notes issued in 2025.
- Geopolitical Exposure: Assess the current status of military reserve call-ups for Israeli employees and any supply chain disruptions from the Middle East.
- Legal Proceedings: Monitor the status of the Hoare v. Oddity Tech Ltd. and Peters v. Oddity Tech Ltd. class action lawsuits.
- Inventory Levels: Review inventory turnover ratios to ensure the company is not overstocked due to demand forecasting errors amidst high acquisition costs.