Beauty
and
tech
company
Oddity,
which
runs
the
Il
Makiage
and
Spoiled
Child
brands,
filed
to
go
public
Friday
as
the
once-frozen
IPO
market
warms
up.
The
Israel-based
company
plans
to
trade
on
the
Nasdaq
using
the
ticker
ODD.
The
company
didn’t
immediately
disclose
how
the
offering
would
be
priced
in
regulatory
filings
and
declined
comment
when
asked
when
the
numbers
would
be
released.
“The
number
of
shares
to
be
offered
and
the
price
range
for
the
proposed
offering
have
not
yet
been
determined.
The
offering
is
subject
to
market
conditions,
and
there
can
be
no
assurance
as
to
whether
or
when
the
offering
may
be
completed,
or
as
to
the
actual
size
or
terms
of
the
offering,”
Oddity
said
in
a
press
release.
Launched
in
2018
by
brother
and
sister
duo
Oran
Holtzman
and
Shiran
Holtzman-Erel,
Oddity
uses
data
and
AI
to
develop
brands
and
make
tailored
product
recommendations
for
customers.
The
business
is
seeking
to
disrupt
a
market
long
dominated
by
legacy
retailers
by
replacing
the
in-store
experience
with
product
recommendations
driven
by
AI
and
data.
At
the
heart
of
its
business
model
is
its
proprietary
technology
—
including
tech
developed
by
a
former
Israeli
defense
official
—
and
the
billions
of
data
points
it
has
collected
from
its
millions
of
users.
In
the
three
months
that
ended
March
31,
the
company
saw
$165.65
million
in
revenue,
up
from
$90.41
million
in
the
year-ago
period.
It
reported
a
net
income
of
$19.59
million,
or
$5.34
a
share,
compared
with
$3.01
million,
or
82
cents
a
share,
a
year
earlier.
Numbers
revealed
in
its
regulatory
filing
show
the
direct-to-consumer
retailer
has
been
profitable
on
an
annual
basis
since
at
least
2020.
In
fiscal
2022,
Oddity
brought
in
$324.52
million
in
sales
and
saw
a
net
income
of
$21.73
million,
or
$5.94
a
share.
In
the
year
prior,
the
retailer
saw
$222.56
million
in
revenue
and
a
net
income
of
$13.92
million,
or
$4.01
a
share.
In
2020,
it
saw
$110.64
million
in
sales
and
a
net
income
of
$11.71
million,
or
$3.45
a
share.
By
comparison,
when
E.L.F.
Beauty
filed
to
go
public
in
August
2016,
its
profits
and
sales
were
lower
than
Oddity’s.
E.L.F.,
a
multibrand
beauty
company,
saw
$144.94
million
in
sales
in
fiscal
2014
and
a
net
loss
of
$2.88
million.
The
following
year,
it
saw
$191.41
million
in
sales
and
a
net
income
of
$4.36
million.
In
fiscal
2016,
it
brought
in
$229.57
million
in
sales
and
a
net
income
of
$5.31
million.
Since
going
public,
E.L.F.’s
sales
and
profits
have
climbed.
During
its
most
recent
fiscal
year,
which
ended
March
31,
it
saw
$578.84
million
in
sales
and
a
net
income
of
$61.53
million.
As
a
direct-to-consumer
retailer,
Oddity
is
seeing
the
high
margins
that
come
along
with
the
strategy.
In
the
three
months
that
ended
March
31,
its
gross
margins
were
71%,
up
4
percentage
points
from
67%
in
the
year-ago
period.
Its annual
margins
have
slipped
each
year since
2020
as
the
company
has
made
acquisitions
and
invested
in
growing
the
business.
In
2020,
Oddity
had
an
annual
gross
margin
of
70%,
and
in
2021,
it
dropped
1
percentage
point
to
69%.
In
2022,
the
retailer’s
annual
gross
margin
was
67%,
down
2
percentage
points
from
the
year-ago
period.
As
of
March
31,
the
company
had
more
than
4
million
active
customers,
which
it
defines
as
a
unique
customer
account
that
made
at
least
one
purchase
in
the
preceding
12-month
period.
“We
bring
visitors
to
our
website,
turn
visitors
into
users
by
asking
questions
and
learning
about
them,
and
then
leverage
the
data
we
have
across
the
platform
to
convert
them
into
paying
customers,”
a
regulatory
filing
says.
Oddity
has
launched
internationally,
and
sales
from
those
markets
accounted
for
about
26%
and
27%
of
its
net
revenue
in
fiscal
2022
and
2021,
respectively.
As
of
Friday,
Oddity
has
launched
in
the
U.S.,
Canada,
U.K.,
continental
Europe
and
Australia.
It
noted
it
has
plans
to
keep
growing
that
footprint.
The
company
plans
to
use
proceeds
from
the
IPO
to
develop
and
launch
new
brands.
It
will
also
use
the
funds
for
working
capital,
other
general
corporate
purposes
and
potentially
for
acquisitions
and
other
investments.
During
an
interview
earlier
this
year,
the
company’s
global
chief
financial
officer,
Lindsay
Drucker
Mann,
a
former
Goldman
Sachs
executive,
told
CNBC
that
Oddity
is
making
money
and
growing
—
even
against
a
tough
macroeconomic
environment
that
has
proven
increasingly
risky
for
purely
digital
retailers.
On
average,
Oddity’s
gross
sales
have
doubled
each
year
since
2018,
the
company
has
said.
In
Spoiled
Child’s
first
year
on
the
market,
the
new
brand
brought
in
$48
million
in
gross
sales,
which
does
not
include
returns.
In
a
regulatory
filing,
Holtzman,
the
company’s
CEO
and
co-founder,
said
the
company
recruits
from
the
Israeli
Defense
Forces’
best
technology
units.
Technologists
comprise
over
40%
of
its
global
head
count.
“As
industry
outsiders,
we
saw
many
shortcomings
in
the
status
quo
approach.
The
empires
that
incumbents
had
built
over
decades
had
not
evolved
with
the
times,
resulting
in
a
significant
lag
in
online
adoption,”
Holtzman
wrote
in
a
founder’s
letter
enclosed
in
a
securities
filing.
“Their
underinvestment
in
technology
left
the
category
behind
the
digital
curve,
despite
a
consumer
who
is
inherently
primed
to
buy
online — spending
significant
time
on
social
media
for
beauty
content
and
rapidly
shifting
dollars
online
in
other
categories.”
(L
to
R):
Dr.
David
Zhang,
Oddity’s
new
head
of
bioengineering
and
the
chief
science
officer
and
co-founder
of
Revela;
Oddity
co-founder
Shiran
Holtzman-Erel;
Oddity
co-founder
and
CEO
Oran
Holtzman;
Dr.
Evan
Zhou,
Oddity’s
new
chief
science
officer
and
Revela’s
co-founder
and
CEO.
Alberto
Vasari
for
ODDITY
Beyond
developing
new
products
and
brands,
Oddity
is
also
trying
to
make
beauty
products
more
effective,
the
company
has
said.
In
late
April,
it
announced
it
was
investing
more
than
$100
million
to
acquire
biotech
startup
Revela
and
open
a
U.S.-based
lab.
The
merger
brought
to
Oddity
a
team
of
scientists
tasked
with
creating
brand-new
molecules,
using
artificial
intelligence,
that
can
be
used
in
its
cosmetics
brands
and
future
lines.
In
2021,
Oddity
acquired
Voyage81,
a
deep
tech
AI-based
computational
imaging
startup
founded
in
2019
by
Niv
Price,
the
former
head
of
research
and
development
for
one
of
the
Israeli
Defense
Forces’
elite
technological
units,
along
with
Dr.
Boaz
Arad,
Dr.
Rafi
Gidron
and
Omer
Shwartz.
The
technology
is
capable
of
mapping
and
analyzing
skin
and
hair
features,
detecting
facial
blood
flows,
and
creating
melanin
and
hemoglobin
maps
using
a
regular
smartphone
camera.
The
filing
comes
after
a
year
and
a
half
of
a
drought
in
the
initial
public
offering
market,
which
is
just
beginning
to
open
up
and
show
signs
of
green
shoots.
Earlier
this
month,
Mediterranean
restaurant
chain
Cava
went
public,
and
its
shares
soared
as
much
as
117%
in
its
market
debut.
“[In
2022]
investors
didn’t
want
to
go
anywhere
near
IPOs
but
now
that
they’re
making
money
again,
and
with
issuers
seeing
that
they
can
achieve
close
to
decent
valuations,
I
think
that’s
bringing
the
people
back
into
the
market,”
said
Matt
Kennedy,
a
senior
IPO
market
strategist
for
Renaissance
Capital.
“The
consumer
sector
does
lend
itself
to
these
periods
where
investors
can
see
a
business
model
that
they
understand,
a
business
that
they
might
be
familiar
with
and
also
one
that
is
typically
profitable
or
near
profitable,
preferably
that
has
growth.”
