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Oddity Tech, the beauty and wellness company that uses artificial intelligence to develop cosmetics and has former Israeli defense officials, 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 has priced its shares at $35, above a predetermined range of $32 to $34 per share after receiving an enthusiastic response from investors.
The company sold 12.1 million shares, giving it an initial valuation of about $1.98 billion.
Oddity and its shareholders, including the private equity powerhouse L Catterton, raised about $424 million in the deal.
The stock will be traded on NASDAQ under the ticker symbol “ODD”.
“We’re going public because I want to build something huge, otherwise I would have sold the company. So this is just another milestone,” co-founder and CEO Oran Holtzman told CNBC. “Meeting so many investors in the last couple of weeks and…seeing them get what we do and get in touch with 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 aging beauty market and replace the in-store experience by using data and artificial intelligence to develop brands and provide personalized product recommendations.
At the heart of Oddity’s business model are its technology — including tools developed by a former Israeli defense official — and the billions of data points it has collected from millions of users.
The company stands out from other direct-to-consumer retailers that went public in 2021 because it grew while turning a profit.
“We are opening up the Internet to one of the most attractive and lucrative (total accessible markets) markets on the planet,” said Lindsay Drucker Mann, global CFO of Oddity and former CEO of Goldman Sachs. “We’ve provided evidence to support a financial profile that has, up to this point, been directly out of reach for consumers and certainly out of reach in terms of beauty and wellness. It is only enabled by our unique model, which has technology at the center and is data-driven.”
In the three months ended March 31, the company generated $165.7 million in revenue, up from $90.4 million in the year-ago period. It reported net income of $19.6 million, or 35 cents per share, compared to about $3 million, or 5 cents per share, in the previous year.
In fiscal 2022, Oddity brought in $324.5 million in sales and had net income of $21.7 million, or 39 cents per share. In the prior year, the retailer had $222.6 million in revenue and net income of $13.9 million, or 26 cents a share.
In 2020, it saw sales of $110.6 million and net income of $11.7 million, or 22 cents a share.
In the three months ended March 31, its gross margins were 71%, up 4 percentage points from 67% in the year-ago period.
The company said Oddity’s total sales have, on average, doubled every year since 2018.
In an organizational filing, Holtzman praised the company’s workforce and said that 40% of its global staff consisted of technicians, many of whom were recruited from the IDF’s top technology units.
In late April, Oddity announced it was investing more than $100 million to acquire biotech startup Revela and open a lab in the US so it can create entirely new molecules, using artificial intelligence, that can be used in its cosmetic brands and future lines. .
Looking to the future, Oddity plans to launch more brands and will use the proceeds from its show to invest more in its data and technology and create products it says are backed by science.
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