Thank you, operator. I'm joined by Oran Holtzman, ODDITY's Co-Founder and CEO, and Lindsay Drucker Mann, ODDITY's Global CFO.

Niv Price, ODDITY's CTO, will also be available for the question-and-answer session. As a reminder, management's remarks on this call that do not concern past events are forward-looking statements.

These may include predictions, expectations, or estimates, including statements made about ODDITY's business strategy, market opportunity, future financial performance, customer acquisition costs, and potential long-term success. Forward-looking statements involve risks and uncertainties, and actual results could differ materially due to a variety of factors.

These factors are described under forward-looking statements in our earnings press release issued earlier today and in our most recent annual report on Form 20-F filed with the Securities and Exchange Commission on February 25th, 2025. We do not undertake any obligation to update forward-looking statements, which speak only as of today.

Finally, during this call, we will discuss certain non-GAAP financial measures, which we believe are useful supplemental measures for understanding our business. Additional information about these non-GAAP financial measures, including their definitions, are included in our earnings press release, which we issued today.

I'll now hand the call over to Oran.

Thanks, everyone, for joining our call today. 2025 was a strong year for ODDITY.

We delivered record financial results, with revenue, adjusted EBITDA, and adjusted EPS all ahead of our plan. Revenue increased 25% to a record $810 million.

We delivered record adjusted EBITDA of $163 million, representing 20.2% adjusted EBITDA margin. Across the year, we were able to once again raise our financial outlook every quarter on revenue and profit, and this is despite experiencing challenging user acquisition cost in H2 that drove an increase in advertising spend.

Our strong and profitable repeat rates allowed us to once again deliver results ahead of our plan, and we accomplished all of this while investing heavily in our future. Notably, this year we successfully launched our third brand, METHODIC, which expands our reach into the medical-grade space where we see enormous potential.

In addition, we continued our ongoing investments in ODDITY LABS, in our tech infrastructure, as well as new products and new brands. We believe that our powerful platform, brand, and technology, combined with our growth investments, create long runway for us to grow in a big, attractive, and profitable category where we are well-positioned to outrun our competition.

We finished the year with strong balance sheet position with $776 million in cash and cash equivalents. Even as we work tirelessly to address what we believe is a near-term dislocation in our user acquisition cost, there is no change to our long-term vision, strategy, or our commitment to growth.

First, the consumer migration online where our brands maintain leading positions. One of the best indicators of our business health is our very strong repeat sales.

In 2025, approximately 70% of ODDITY's revenue came from repeat sales. Customer cohorts' repeat behavior remains very strong and continues to increase.

12-month net revenue repeat rates for our 2024 cohort of first purchasers increased from the 2023 cohort and remained over 100%. We believe these are outstanding repeat metrics compared with other direct-to-consumer companies, and reflect the health of our brands, the quality of our products, and the high satisfaction from our customers.

Moving to our brands. IL MAKIAGE grew revenue low double digits in 2025 to approximately $560 million.

IL MAKIAGE Skin was a highlight as planned and finished the year at approximately 40% of IL MAKIAGE brand revenue, expanding from around 30% of brand revenue in 2024. The rapid success of IL MAKIAGE Skin since its launch in 2022 demonstrates the power of our platform and our ability to leverage our user base and technology to quickly scale new products and categories.

International markets were also a key driver for IL MAKIAGE. ODDITY international revenue, the majority of which is from IL MAKIAGE, grew 42% for the year.

International markets represent 17.5% of overall ODDITY net revenue for 2025, compared with many of our competitors that generate more than 65% of net sales from international markets. SpoiledChild also had a strong year, increasing revenue double digits to approximately $250 million.

This is an incredible accomplishment for an online-only brand that just launched four years ago, and once again shows the power of our platform and ability to scale. We remain excited about SpoiledChild's long-term potential, including new products expansion in beauty and wellness.

The launch of METHODIC, our third brand, was a highlight accomplishment in 2025. METHODIC is a medical telehealth platform that aims to deliver high-efficacy treatment at scale, starting in dermatology, addressing concerns like acne, hyperpigmentation, and eczema.

It is off to a great start, and we are very pleased to see its initial success. Our early focus on acne, hyperpigmentation, and color products is showing good traction, and we believe this will be big categories for us.

We are seeing good metrics and continuous improvement in our KPIs, even as our customer cohorts increase in size. What we see in METHODIC's app engagement reinforces our view that METHODIC can uniquely deliver high standards of care for a broad audience and do it with great convenience.

When we look at the app download rates, onboard completion, weekly check-in rates, and care team engagement, we can see the demand, and we are bullish about how our app technology will drive user compliance, satisfaction, and success. Moving on to the second focus area of our long-term growth strategy, the consumer adoption of high-performance products that better address their pain points.

Our product development pipeline for all three brands are focused on bringing the market top performers that we believe beat the competition on efficacy. ODDITY LABS continue to push the frontier of ingredient innovation in beauty and wellness.

Over the past 18 months, we have made major strides in our capabilities and infrastructure to improve our work with the goal of shrinking our timelines and improving the probability of success in identifying game-changing molecules. Our efforts in process and infrastructure have driven significant improvements in our productivity, increasing the number of targets we can tackle and allowing us to push projects along faster with greater accuracy.

One highlight area is our work in translational biology, which expands on our strong in silico and in vitro foundations. This work helps us to get stronger read on the most relevant biomarkers for our products, increases our predictive power of success, and does it in a way that is scalable, representative, and with rigorous science.

Another highlight is our ability to identify biological targets that can influence a desired effect. We are focused on pain points with large commercial opportunities, including acne, hyperpigmentation, and aging, and our target list includes pathways like reducing melanin production and boosting collagen and elastin.

We are leveraging AI agents to map targets and structures, and also applying our work in translational biology to identify novel targets. We recently expanded our capabilities into peptides to add to our small molecule foundations, and are working on peptide solutions in areas like acne and aging.

This expansion into peptides gives us flexibility to identify the right modality to address an individual biological target. At the same time, we are working in parallel to improve topical delivery of different activities to ensure they reach the relevant areas in skin and maximize the biological effect.

We expect to have eight products in market in 2026 made with ODDITY LABS molecules. The innovation for METHODIC is especially exciting, including molecules that cover key categories including acne, eczema, and hyperpigmentation, and more to come in the future that we are bullish about.

Turning to our acquisition costs. We experienced an unprecedented dislocation in our account with our largest advertising partner, which we believe is due to a recent changes in their algorithms that likely diverted us to less desirable auctions and traffic at abnormally high costs.

These changes resulted in a significant, abnormal increases in our new user acquisition cost for ODDITY that are not correlated with the market or our historical experience. We have never seen anything close to those acquisition costs, not in ODDITY, and also not in other beauty advertisers.

This elevated acquisition cost is severely hurting our ability to acquire new users efficiently at high scale, as we normally do in the first half of each year and have done consistently for the past eight years very successfully. Both IL MAKIAGE and SpoiledChild appear to be impacted by these algorithm changes, although the impact on IL MAKIAGE was more severe, probably due to its higher scale.

After identifying the root cause in late January, we quickly moved to implement strong remediation actions, primarily around the model infrastructure, that we hope will get us back to the right auctions and ultimately drive improvement in our new user acquisition, with significant progress in Q2 and normalization in Q3 or Q4. These types of algorithm updates are not new and have been ongoing through the years, and we've historically adapted to them.

In this case, it was harder than before to identify how these updates were impacting our business, and therefore it was harder to identify the root cause. We believe we got hit by the algorithm change due to our user acquisition strategy that includes a try-before-you-buy offering, which is a rare in beauty, and therefore maybe an edge case within the new algorithm changes.

We believe the algorithm updates impacts on how this platform interprets and weights the signals associated with try-before-you-buy model, primarily due to its inherent higher return rates, and diverted us to lower-quality auctions at abnormally high costs disconnected from the market. For more context about the model, try-before-you-buy is designed for the benefit of the consumer by reducing their risk of trying our products online.

It is a pro-consumer model that allow us to replicate online the experience of physical stores like Sephora where consumers can try products in real life and materially reduce the risk of purchase. This model is rare in beauty due to its complex execution.

We believe it's an edge case and a non-obvious interaction within the platform's new auction dynamics. After assessing the driver of what we believe is hitting us, we quickly moved to fix it.

Our remediation actions are designed to reduce try-before-you-buy downweighting while preserving the ability for new customers to purchase products on trial basis with minimal risk. Important to know, try-before-you-buy isn't a dependency for us.

We offer it as a better alternative for consumer, but our agile model allow us to rebalance toward a standard buy offering if we see it is needed. Unfortunately, because we only recently identified the root cause, and despite working tirelessly to fix it, we have not had much time to take action, and it takes time to recover.

Therefore, we expect negative impact on our 2026 financial results, with the most significant impact expected in H1. I want to be very clear.

Despite the dislocation in our new user acquisition we are currently facing, we are not changing our model, our strategy, or our long-term focus on growth. The main objective of the company right now is correcting this issue and being a position to immediately pivot back to growth.

I want to close with some perspective on this moment in time. Over the past eight years, we grew from $25 million of revenue to $800 million in revenue despite multiple changes on ad tech side.

A prominent one was iOS 14. We have navigated algorithm adjustments by our ad partners in the past, and we believe we will be able to also address the current dislocation.

Most importantly, we believe we understand the problem, and in a world of complex online auctions, understanding the problem is always the hardest part. We don't see this as a structural issue or a secular disruption, as you are seeing in other sectors, or a negative macro trend for our category.

It is a technical issue, and from here, we believe it is a matter of time and execution to deliver the strong outcomes we have constantly delivered over the past eight years. As I said, we believe we have strong plan in place, and I hope to see normalization in H2.

With that, I will turn it over to Lindsay.

Thanks, Oran. Let's turn to our Q4 results, which I'll refer to on an adjusted basis.

You can find the full reconciliation to GAAP in our press release. ODDITY delivered an outstanding quarter to cap off a record-breaking year.

We grew net revenue by 24% in the quarter to $153 million. Growth was driven primarily by an increase in orders, while average order value declined slightly year-over-year.

The 24% revenue growth we delivered this quarter exceeded our guidance for growth of 21 to 23%. Gross margin of 70.5% compressed 220 basis points year-over-year and exceeded our guidance for gross margins of 69%.

The delta versus our outlook was driven in part by product mix. We delivered adjusted EBITDA of $13 million in the quarter and adjusted EBITDA margin of 8.2%, above our guidance for adjusted EBITDA of 10 to $12 million.

Adjusted EBITDA margin compressed by 410 basis points year-over-year due to planned investments for future growth, including the METHODIC brand launch, ODDITY LABS, and brand four, as well as higher media costs. We delivered adjusted diluted earnings per share of 20 cents, compared to our guidance for between 11 and 13 cents.

Our adjusted EBITDA and earnings per share excludes approximately $8 million of share-based compensation. Turning to some highlights for the full year of 2025.

We grew net revenue by 25% to $810 million, with double-digit growth from both IL MAKIAGE and SpoiledChild. This 25% growth is ahead of our long-term algorithm target for 20% sustained top-line growth.

Net revenue growth was primarily driven by an increase in orders, while average order value increased slightly year-over-year. Gross margin of 72.7% expanded 30 basis points year-over-year, driven by cost efficiencies.

We delivered adjusted EBITDA of $163 million. Adjusted EBITDA margin of 20.2% is consistent with our 20% long-term earnings algorithm target.

That's despite our planned investments in future growth initiatives, including METHODIC brand launch and ODDITY LABS, and despite increased advertising costs. Advertising costs increased approximately 50% year-over-year, reflecting growth investments in international markets and METHODIC, as well as higher acquisition costs for IL MAKIAGE and SpoiledChild.

We delivered adjusted diluted earnings per share of $2.21. We exited the year in a strong liquidity position, including $776 million of cash, cash equivalents, and investments on our balance sheet.

The build-up in reserves in 2025 was driven by our successful exchangeable note offering and free cash generation of $84 million for the year. Free cash flow in the fourth quarter was negatively impacted by approximately $19 million of increased inventory, due in part to new inventory investments in METHODIC on top of our seasonal inventory build ahead of the Q1 selling period.

We amended our credit facilities in January of 2026 to expand our borrowing capacity to $350 million. These facilities remain undrawn.

As for potential uses of cash, we believe repurchasing our stock is attractive at recent share prices and intend to opportunistically return cash to shareholders through buybacks. There's $103 million remaining on our previously announced repurchase authorization.

As Oran discussed, we experienced a significant increase in our new user acquisition spend Q1 to date. The timing of normalization is uncertain, although we're working hard to have this behind us.

Our remediation actions have started, but are still in early stages, we're not going to make any predictions on their success. Due to the uncertain timing of recovery, we're not issuing full-year '26 guidance at this time, but we'll provide updates to our progress and outlook as we get more visibility.

A few things to keep in mind for your models: we expect Q1 sales will decline approximately 30% due to reduced acquisition revenue. We're still spending acquisition dollars today despite much higher CPA, and this is so that we can continue feeding the algorithms the signals needed to reset and normalize.

At current CPAs, we are not profitable at first order, and that has material negative impact on our near-term EBITDA. We are, however, still profitable on a 12-month direct contribution margin basis because of the strong repeat we generate from acquisition sales.

Based on the expected timing of CPA normalization, Q2 sales are also likely to decline, but it's too soon to determine the magnitude. Q1 and Q2 are historically our largest periods of user acquisition, and from that acquisition, we typically generate significant repeat revenue over the balance of the year.

The reduced user acquisition activity today will therefore result in lower repeat sales later in the year, even if acquisition costs normalize. We're managing costs through this period to offset EBITDA pressure, but continue to carve out investments in growth initiatives like ODDITY LABS, new brands, product development, and our tech infrastructure.

We believe this is the right strategy to set us up for sustained growth if CPA normalizes. With that, I'll hand it back to the operator for questions.

Great. Thank you, guys, for taking the question.

Maybe dig a little deeper into the algo change. I'm assuming this is related to Google's Andromeda.

When did the issue actually start? When did you start seeing it?

Is the trend continuing to worsen, or has it kind of stabilized? Lastly, Oran, when you talk about the issue being related to try-before-you-buy, does that mean that you guys are going to de-emphasize that, or is there a workaround it such that you can continue to differentiate yourself through that offering and still maybe rank higher?

Thanks.

Thanks, Youssef. We didn't specifically name the advertising partner, but we first observed that something was different in the second half of 2025, and we did call it out on our November earnings call.

It did get much worse as we entered 2026 and really began to scale our business. I think, at the time, when we'd spoken to you, we had started to see some improvement, but it's always difficult for us to get a read on CPA, as you go in the holiday quarter because it's just not a typical market.

There's a lot of noise, and so as we moved into Q1 and we started to scale, that's when we saw the dislocation.

Hi Youssef, as for moving from try-before-you-buy, look, we believe that we can still solve it. As I mentioned, we believe it's pro-consumer, we believe it's the right thing to do, but I also mentioned that we know how to move to buy like the rest of the industry.

I want to say that more than 90 or 95% are selling via buy, it's not something new and we know how to do. As for what we do, there are range of things that we did to identify the issue and working on fixing it with try-before-you-buy, including deep signals audit, funnel UI and UX adjustments, a lot of work on the infrastructure side, building new prediction models, offering adjustments, and different audience strategies.

We wouldn't sit here today if we didn't think that we can solve it with try. We would say that we are moving to buy, but the fact that we believe that it's solvable with the current business model.

Great. Thank you both.

Hi. Good morning.

Thank you so much for the question. Just wanted to ask on the change or the lack of guide here, I guess, and what you can recover for the remainder of the year.

It does seem like an uphill battle. Is it possible to shift this user acquisition really from Q1 or H1 into Q2 or H2, or will there be more of a delay?

Does this change your thinking at all on distribution just given you are vastly sold on direct-to-consumer? Would this make you think at all about going into retail?

Thank you.

As mentioned, no change in our strategy. Thank God, this is our strategy.

Online is our strategy. Online continue to grow, and there is no changing our plans or no plans to move into retail at this point.

We are confident we can go back to growth. We believe it's something that it's temporary change that happened that we need to adjust to.

No change in distribution strategy. Lindsay, do you want to answer about the second half of the year?

Thanks, Anna. We're navigating a situation today where CPA is significantly higher than last year, in some cases 2+x higher in some cases, and as a result, we've dialed back on our acquisition to manage it.

Remember that as I mentioned in my prepared remarks, at current CPAs, we are not profitable at first order, and so that has a material negative impact on our near-term EBITDA. We are still profitable on a 12-month contribution margin basis, but in the near term, as we spend, you have pressure.

Since Q1 and Q2 are our largest periods of acquisition, as I mentioned in my remarks, we'll have that carryover effect into the back half of the year as we lose the repeat. In the short term, we view this as a pothole that we'll have to recover from, but as the business and CPA normalizes, as we hope it will in the back half of the year, we'll be on a track to normalize our financial model as well.

By the way, I would just add that Lindsay mentioned even more than 2x. If we saw something gradually increasing in terms of CPA, we wouldn't think that something is completely off.

We know that the current numbers that we see in user acquisition are completely off-market, and therefore we believe it's something technical. By the way, we never built the business on marketing margin, on making profit from better acquisition strategy or execution.

We built the business on repeat that can protect us from regular increase in media spend. By the way, we see it every year, but this is something completely off, very unusual.

We never saw anything like it, and based on my understanding, it doesn't exist elsewhere.

Thank you so much.

Hey, good morning. Maybe Lindsay, just as I think about the model, right, one of the things that we've always loved about your business is how you can flex the advertising spend.

Obviously, as you've said, CPA's up more than 2x in some cases. When you think about how you would strategize around this, once things normalize, should we expect kind of a steep pullback on advertising expense, or just curious how you're thinking about strategizing around this once we hit that normalization point?

Then can you just give us any color on retention rates or reorder rates that you're seeing in the market? Thanks.

I'll start, and maybe you take it. Even when media is abnormal as now, you don't want to stop the train.

You still need to feed the algorithm and continue to spend so that you are giving it signals it needs to go back on track. We have balanced between not overspending at this crazy CPA that doesn't make sense while keep the signals going, and that's our plan to keep balanced that way until we fix it.

As far as what normalization looks like for us, it would be something in line with what the rest of the industry CPA is. That's typically how our business has operated.

It's a very, very big auction. It's a lot of competitors in there, and we typically are around where we would see our competition in terms of CPA.

Right now, we're completely dislocated and off-market based on this dislocation and this malfunction of sorts. As we address it, as Oran said, we should be getting back to track.

I don't know if I remember your second question. Oh,

just on the reorder rates, if you're seeing any

[unclear]

there as well.

Oh, yeah. Repeat rates remain very strong.

This is one of the reasons why we know we don't have a brand issue, we don't have a saturation issue. We continue to see very good performance out of our repeats.

Repeat revenue is for 2025 around 70% of our sales. As we look at our 12-month net revenue repeat rates, those increased again, the 2024 cohort that repeated in 2025, that number increased relative to the prior year, it's nicely over 100%.

Even as we look at our more recent cohorts who started in 2025, those net revenue repeat rates on a six-month or so basis are better than they were in the prior year. That trend remains very strong.

Thank you.

Thanks so much for taking my question. Can you guys help us understand just what exactly is changing within your guys's funnel?

Is this higher CPMs? Is this lower click-through rates?

Is this worse on-site conversion, meaning it's a lower-quality user that you're targeting? Help us understand that dynamic.

Then one of the things that we've also always appreciated about the business is just your ability to be able to pull different levers to be able to sustain that 20% growth. Can you just help us understand the size of this channel and your inability to be able to allocate spend elsewhere and help us understand just why this is an overly large impact versus what we would have thought was more diversified ad platform?

Thank you. Yeah.

When we refer to our ability to grow in multiple areas, one thing that is important to note because this change is for ODDITY is global and across brands, it makes harder, and that's why we came to the market with 30% decrease targeting in Q1. It's very hard to continue to grow without overspending, and obviously this is something that we don't want to do in those CPAs level.

Lindsay, you want to continue?

As it relates to mix, what I can tell you is that for our largest ad partner, if you just look at pure platform orders, so that's any order that can be attributed directly to an ad from this specific partner, those revenues make up just under a quarter of our revenue, and that's based on our internal attribution system. Keep in mind, this is just pure acquisition dollars, and on top of acquisition, you also get repeat, you have direct revenue, there's additional impact.

We have relationships with many different ad partners, I don't want to say all of them, but many, many different ad partners, but your ability to scale is only so much with each individual, and so this is impacting us.

Hi. Thanks so much for the time and the question.

You mentioned that you've made kind of significant actions to fix this. Can you maybe clarify if these are more structural, I guess technical fixes to your internal, I guess data feedback loops, maybe retraining your AI to find high-intent users, things like that, or is the rebound expected to come from a strategic shift in budget allocation?

Maybe just talk us through the fixes that you're making.

It's both infrastructure side, offering adjustments, and signal adjustments. We do all.

The good thing about us is at those point of time when you need to make multiple changes, we do everything in-house. We are not dependent on third parties, data scientists, developers, media buyers, we can run dozens of variants at the same time, and that's what we did in the past few weeks, and therefore we believe that we are more prepared than most companies to address it.

Thank you.

Hi team, thanks for taking my question. Oran and Lindsay, is there areas that you're currently seeing strength that you could possibly offset this weakness strategically?

I want to focus here on international opportunities and then the brand three rollout, which you've mentioned was having seen nice success. Thanks.

I'll start with the good news. We launched brand three, METHODIC, and it's growing more than what we saw in IL MAKIAGE when we launched IL MAKIAGE.

It's pacing SpoiledChild. We are very pleased to see the demand and success of METHODIC, by the way, as we thought.

As for international and other areas, you still need user acquisition, and we still don't want to overspend just to meet the revenue goals. I never run the business like that before, and that's why the business is profitable for many, many years, and last year 20%.

We first need to fix it, and then we go back to growth.

thanks. Sorry, I was muted there.

Thanks for taking my questions. As we think about balancing sort of the near-term priority of sort of fixing the problem here versus sort of balancing with longer-term investments to sort of continue the growth trajectory once these problems are solved, can you talk about sort of what that balance looks like internally right now?

Then what are some of the priorities, whether it's continuing down the path with product development with ODDITY LABS, growing METHOD IQ brand, also is there a risk here that we see a delay or a pushout in sort of the brand four launch plans as well? Thanks.

Since we believe we identified the problem, we're not changing our investments in growth. We believe it's the right thing to do.

We continue to invest in LABS, we continue to build brand four, and we continue to work tirelessly on new products in NPD for IL MAKIAGE, SpoiledChild, and METHODIC. That's for the first question.

The second one, what was it, Lindsay?

What was the second question, Ryan?

It was just any concerns about a delay in brand four? Then as we kind of come out of this, whether you lean into investment of more aggressive for growth as we work back towards the balance of 2020 or sort of work more towards margin expansion?

Thanks.

The current focus of my leadership is fixing the problem. That's the first priority.

Most of the team is working on that. At the same time, we continue to invest in ODDITY LABS, we continue to grow it, and we continue to build brand four.

Hi, thanks. I was just wondering, how does this dislocation impact the launch of METHODIC?

I know you had planned to step up spending in the first half of the year with this launch, and that was expected to have an impact on your EBITDA margins in the first half.

Yeah. The fact that METHODIC is relatively small, it means that we can continue to grow it without the negative effect that we see.

It doesn't mean that the current problem doesn't affect METHODIC, but since it's running at low scale compared to IL MAKIAGE and SpoiledChild, we can continue to grow and meet our targets for this brand for this year.

Thank you, guys, for joining. See you next quarter.