Sep 9, 2026 earnings call — Ad account dislocation and brand updates
Company said Q3 net revenue will decline approximately 5% year-over-year, after Q2 net revenue fell 25% to $181 million.
Revenue $0.2B (est $0.2B) · EPS $0.20 (est $0.12)
Key quotes
"For IL MAKIAGE, we continue to work extremely hard with our main ad partner to solve the algorithm dislocation and remain hopeful that we are on a path to normalization."
"One of METHODIQ's hyperpigmentation hero products is Melanex 509, powered by ODDL1007, ODDITY Labs' patented molecule combination."
"SpoiledChild had a good quarter and a strong YTD 2026 overall, and is on track to grow at least 35% this year and approach $350 million of net revenue in 2026."
Analyst Q&A 8
IL MAKIAGE recovery and SpoiledChild expansion
Q (Dara Mohsenian · Morgan Stanley): Will IL MAKIAGE return to normal growth in 2027 if the ad problem is fixed? Also, what are the international plans for SpoiledChild now that it is scaling?
A: They believe once they solve the ad problem, IL MAKIAGE will return to growth, and they have products and plans ready that they did not execute because of the issue. They said they have not solved it yet but think they are closer and that the root cause looks like audience drift in the algorithm. For SpoiledChild they see strong demand, are expanding it internationally, and have more than 8 products and categories planned for next year.
"We believe that once we solve the problem, we plan to continue to go back to growth with IL MAKIAGE." — Oran Holtzman (CEO)
Seasonality and repeat revenue
Q (Brian Tanquilut · Jefferies): How did you model seasonality for the back half and fourth quarter? What repeat revenue rate assumptions underlie the guidance versus history and first-half trends?
A: They said there is no broad change to how they think about seasonality: the first half tends to be stronger for acquisition and revenue tends to flow through in the second half. This year is different because much acquisition activity was spent on testing, so seasonality may differ and it's too soon to know the go-forward pattern. They also said repeat trends remain very strong and they remain well in excess of 100% net revenue repeat rate over 12 months, with strong repeat from SpoiledChild.
"We remain well in excess of 100% net revenue repeat rate over 12 months." — Lindsay Mann (CFO)
What they learned from remediation
Q (Anna Lizzul · BofA): What did you learn during remediation about your model and resilience? What changes will you make to be more flexible?
A: They said they learned a lot and spent months digging into media-buying algorithms and details. They increased efforts to both fix the problem and make the business more resilient by adding distribution and channels, and they view D2C as a key strength while continuing to work with ad partners. They also noted the company is more resilient today with more brands, categories, and products to rely on.
"We increased our efforts both to fix the problem, but to make the business more resilient moving forward, it's including more distribution and more channels." — Oran Holtzman (CEO)
Why Q4 guide is weaker
Q (Youssef Squali · Truist): Your annual guide implies worse Q4 growth than Q3. Is that conservatism or visibility? Also, what drove the other revenue gain and is it sustainable?
A: They said for Q3 they expect a 20-point sequential improvement versus Q2 because they believe the worst of the acquisition-driven dislocation is behind them. For Q4 they want to be conservative because they do not yet know how they will allocate spending, including how much goes to testing, so they left room for the Q4 pace to slow versus Q3. They also noted 'Other' revenue relates to Israel, and that market has been volatile given dynamics with the war and their store base there.
"So on revenue, we are for Q3 guiding to a 20-point sequential improvement relative to where we were in Q2 in the first half of the year, and that is because we believe the worst of the acquisition-driven dislocation is behind us." — Lindsay Mann (CFO)
Marketing and METHODIQ plans
Q (Scott Schoenhaus · KeyBanc): How has your marketing and customer acquisition changed after the disruption, especially given SpoiledChild growth? What investments and growth targets do you have for METHODIQ and 2027 products?
A: They said SpoiledChild showed strong demand and scalable returns despite some impact from the dislocation, allowing material scale. METHODIQ launched less than a year ago with 30 products across medical-grade makeup and specialized prescription protocols, and they expect it to deliver higher revenue in its first year than SpoiledChild did. They have a framework for category expansion into big markets and plan to enter longevity and metabolic health, including delivering legally available prescription injectable and peptide therapies.
"We launched with 30 products with a great range of products for medical-grade makeup to specialized prescription protocols." — Oran Holtzman (CEO)
BRAND 4 launch and AI in labs
Q (Andrew Boone · Citizens): Beyond the near-term ad issue, what is the path for the business and BRAND 4? How is AI progressing in ODDITY Labs and what benefits will it bring?
A: They plan to launch BRAND 4 in 2027 and will continue to grow SpoiledChild and METHODIQ. They said ODDITY Labs is making great progress after multi-year investment, and AI can be leveraged to materially speed up processes and molecule discovery. They are bullish on the potential and the speed AI can bring to the business.
"It can speed up our processes and our molecule discovery there." — Oran Holtzman (CEO)
Using SpoiledChild learnings for METHODIQ
Q (Ryan MacDonald · Needham and Company): What did you learn from SpoiledChild's fast ramp and how does that inform METHODIQ's year 2 plans and early repeat-rate trends?
A: They said the early months are always focused on testing to find the right audience, fixing unit economics, and then scaling, which is the same approach for METHODIQ. They see fewer growth constraints in the first 2 years and are not planning to constrain METHODIQ next year, but they reminded that the first few years of any brand have costs that must be included in budgeting.
"For us, always the first few months is testing and trying to find the right audience and then fixing unit economics and then scaling." — Oran Holtzman (CEO)
Try Before You Buy mix and gross margin
Q (Georgia Anderson · Evercore): How much acquisition revenue remains from Try Before You Buy today versus Buy, and is the Q2 gross margin compression structural or recoverable?
A: They said they shifted acquisition away from Try and toward Buy and believe they can move 50% or more of acquisition to Buy at a minimum without notable impact on unit economics. They love the Try model and do not plan to eliminate it; the long-term gross margin target is in the high 60s and they view the Q2 gross margin deleverage from lower AOV as not structural. They also said METHODIQ's gross margin has not yet been optimized and they expect meaningful improvement there.
"We believe in our current state we can move 50% or more of our acquisition to Buy from Try at a minimum." — Lindsay Mann (CFO)