ODD Q2 2024: Repeat Customers Drive Record 32% EBITDA Margin
- High repeat customer growth and robust revenue performance: Management highlighted that most revenue growth is driven by increased orders and a rising proportion of repeat sales, which underpin higher profitability and margin expansion.
- Efficient media spend driving strong platform performance: Despite doubling media spend in recent periods, the company maintained excellent ROAS and achieved record EBITDA margins, demonstrating effective and scalable customer acquisition with a long-term view.
- Broad geographical strength and resilient consumer demand: Executives pointed to strong performance across various regions with no signs of consumer spending softness, underscoring the company's diversified market appeal and consistent demand.
- Delay in Near-Term Revenue Growth: The leadership acknowledged that investments in ODDITY LABS and new brands (Brand 3 and Brand 4) are primarily long-term plays and are not expected to materially contribute to revenue in the near term.
- High Upfront Spending Risks Margin Pressure: The company plans to front-load investments, including significant SG&A and media spend increases, which could pressure adjusted EBITDA margins if revenue growth does not materialize as expected.
- Execution and Launch Timing Uncertainty: The launch of new brands is dependent on product readiness and multiple build-out factors (e.g., telehealth platform and vision technology), posing risks that delays or execution missteps could hinder growth.
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Brand Launch
Q: What drives Brand 3/4 timing and regional strength?
A: Management emphasized that thorough product development and readiness—especially for Brand 3 with its app, tech, and vision components—dictate a H2 2025 launch, while broad U.S. strength shows no regional weakness or consumer softness. -
Media Efficiency
Q: How is media spending affecting margins?
A: They noted that despite nearly doubling media spend from H1 2022 to H1 2024, maintaining strong ROAS helped preserve a 32% adjusted EBITDA margin, demonstrating efficient capital use. -
Revenue Drivers
Q: What fueled Q2 revenue upside?
A: Management attributed growth to rising orders and a 6% increase in AOV, with both IL MAKIAGE and SpoiledChild posting double-digit gains driven by high repeat sales that underpin profitability. -
Investment Strategy
Q: How do Brand 3/4 investments compare to LABS spend?
A: They explained that while ODDITY LABS is a long-term platform build with evolving outputs, investments in Brand 3/4 follow a proven model similar to past successes, with leadership enhancements aimed at speeding up progress. -
Product Innovation
Q: Will LABS deliver new product molecules soon?
A: Management indicated that initial LABS outputs will begin to integrate into existing brands within the next 6–12 months, but key molecules for Brand 3/4 remain in development as part of a longer-term innovation plan.
Research analysts covering Oddity Tech.