Oddity to start trading after pricing IPO above range — here’s what the beauty and tech company does

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Courtesy: Oddity

Oddity Tech, the beauty and wellness company that uses AI to develop cosmetics and has former Israeli defense officials on staff, is set to go public on Wednesday as the IPO market heats up.

The direct-to-consumer platform behind the Il Makiage and Spoiled Child brands priced its shares at $35, above a previously set range of $32 to $34 per share after it received an enthusiastic response from investors.

The company sold 12.1 million shares, giving it an initial valuation of roughly $1.98 billion.

Oddity and its shareholders, which include private equity powerhouse L Catterton, raised about $424 million in the deal.

The stock will trade on the Nasdaq under the ticker symbol “ODD.”

“We are taking the company public because I want to build something huge, otherwise I would sell the company. So this is just another milestone,” CEO and co-founder Oran Holtzman told CNBC. “Meeting so many investors in the past two weeks and… seeing them getting what we do and connecting to our vision after so much hard work, I think that’s what makes me so happy and so grateful.”

Launched in 2018 by Holtzman and his sister Shiran Holtzman-Erel, Oddity aims to disrupt the legacy beauty market and replace the in-store experience by using data and AI to develop brands and make tailored product recommendations.

At the heart of Oddity’s business model is its proprietary technology — including tools developed by a former Israeli defense official — and the billions of data points it has collected from its millions of users.

The company stands out compared to other direct-to-consumer retailers that went public in 2021 because it has grown while achieving a profit.

“We are unlocking online for one of the most attractive and lucrative [total addressable markets] on the planet,” said Lindsay Drucker Mann, Oddity’s global CFO and a former Goldman Sachs executive. “We have delivered a playbook that supports a financial profile that has, up to this point, been elusive in direct to consumer and certainly elusive in beauty and wellness. It’s only enabled by our unique model, which has technology at the center and is based on data.”

In the three months that ended March 31, the company saw $165.7 million in revenue, up from $90.4 million in the year-ago period. It reported a net income of $19.6 million, or 35 cents a share, compared with about $3 million, or 5 cents a share, a year earlier.

In fiscal 2022, Oddity brought in $324.5 million in sales and saw a net income of $21.7 million, or 39 cents a share. In the year prior, the retailer saw $222.6 million in revenue and a net income of $13.9 million, or 26 cents a share.

In 2020, it saw $110.6 million in sales and a net income of $11.7 million, or 22 cents a share.

In the three months that ended March 31, its gross margins were 71%, up 4 percentage points from 67% in the year-ago period.

On average, Oddity’s gross sales have doubled each year since 2018, the company has said.

In a regulatory filing, Holtzman touted the company’s workforce and said 40% of its global head count is comprised of technologists, many of whom were recruited from the Israeli Defense Forces’ best technology units.

In late April, Oddity announced it was investing more than $100 million to acquire biotech startup Revela and open a U.S.-based lab so it could create brand-new molecules, using AI, that it can use in its cosmetics brands and future lines.

Looking ahead, Oddity plans to launch more brands and will use the proceeds from its offering to invest more into its data and technology and create products it says are backed by science.

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