NASDAQ:ODD

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ODDITY Tech Plunges 29% as Advertising Disruption Drives Revenue Decline and Losses

Shares of ODDITY Tech (NASDAQ: ODD) plunged 29% after the beauty and wellness company reported a sharp decline in revenue and swung to a loss, as ongoing issues with its largest advertising partner continued to weigh heavily on customer acquisition and profitability.

First-quarter revenue fell 26% year-over-year to $197.9 million, while the company reported a net loss of $21.4 million compared with net income of $37.8 million a year earlier. Adjusted EBITDA also turned negative at $7.0 million, versus positive EBITDA of $52.4 million in the prior-year period.

Management attributed the weakness to a significant disruption in advertising performance. The company said customer acquisition costs (CPA) with its largest advertising partner increased dramatically, in some cases reaching levels more than double historical expectations. This resulted in fewer new customer orders and reduced marketing efficiency throughout the quarter.

Despite the difficult quarter, management highlighted signs of improvement. ODDITY reported that customer acquisition costs for its IL MAKIAGE brand improved by an estimated 28% in May compared with April, suggesting remediation efforts may be beginning to work. The company also said it remains on track for normalization during the second half of 2026.

The company's newest brand, METHODIQ, continued to perform well, while ODDITY maintained a strong financial position with $667 million in cash, cash equivalents, and investments and no borrowings under its $350 million credit facilities. The company also repurchased $82.3 million of stock during the quarter under its recently authorized $200 million buyback program.

Looking ahead, ODDITY expects second-quarter revenue to decline 25% to 30% year-over-year and forecasts adjusted EBITDA of $8 million to $10 million. While management expressed confidence that conditions will improve later this year, investors reacted negatively to the continued revenue decline and the uncertainty surrounding the timing of a full recovery.
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The Investor 06-02-26
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