Oddity Tech shares jump 24% on Q2 beat and revised outlook

Oddity Tech Ltd. (NASDAQ:ODD) shares rose 23.99% in premarket trading on Wednesday following the release of its second-quarter financial results. The beauty and wellness technology company reported adjusted earnings per share of $0.20, slightly exceeding the consensus estimate of $0.19. Total revenue reached $181 million, surpassing the analyst projection of $176.48 million, although this figure represents a 25% decline from the $241 million recorded in the same period last year.

The company attributed the revenue contraction to persistent technical issues with advertising algorithms affecting its flagship IL MAKIAGE brand. Oran Holtzman, co-founder and CEO, stated that the business made progress during the quarter with strong performance from its SpoiledChild and METHODIQ divisions. Management remains focused on resolving the technical challenges with its largest advertising partner to stabilize IL MAKIAGE operations. According to GN markets/earnings (en-US), the market reaction reflected confidence in the company’s ability to manage these headwinds while maintaining profitability in other segments.

Margins and cash flow metrics

Adjusted EBITDA fell sharply to $13 million in the second quarter, down from $70 million in the prior-year period. Net income decreased to $13 million from $49 million, while the gross margin ratio compressed to 68.7% from 72.3% a year earlier. Despite the decline in profitability, the company ended the period with a strong liquidity position, holding $561 million in cash, cash equivalents, and investments.

Oddity utilized its cash reserves to return capital to shareholders and reduce debt. The company repurchased approximately 5.6 million Class A ordinary shares for a total of $80 million during the quarter. Additionally, it retired $50 million of exchangeable notes, further strengthening its balance sheet and reducing interest obligations. These actions underscore the company’s focus on capital efficiency and long-term shareholder value despite the temporary revenue dip.

Third quarter and full year forecasts

Looking ahead, Oddity expects third-quarter revenue to decline approximately 5% year over year. The company forecasts adjusted EBITDA for the upcoming quarter to be between $18 million and $20 million. This guidance suggests a stabilization of the revenue decline trend compared to the 25% drop seen in the second quarter, indicating that management expects the advertising algorithm issues to have a diminishing negative impact on sales.

For full-year 2026, Oddity projects a revenue decline of approximately 19% from the previous year. Adjusted EBITDA for the fiscal year is forecast to land in the range of $30 million to $31 million. These forward-looking figures provide a clear framework for investors to assess the company’s trajectory as it navigates the ongoing technical challenges with its primary advertising partners.