Oddity Tech, a beauty and wellness company that uses artificial intelligence to develop cosmetics and counts former Israeli defense officials among its employees, made its public market debut Wednesday, with shares up 40% as the IPO market heats up.
The direct-to-consumer platform behind the Il Makiage and Spoiled Child brands opened at $49.10 a share after pricing its IPO at $35 a share Tuesday night. That was above the previously set range of $32 to $34 per share.
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The company sold 12.1 million shares, giving it a market value of about $2.8 billion as of Wednesday midday trading.
Oddity and its shareholders, which include private equity giant L Catterton, raised about $424 million in the deal.
The stock trades on Nasdaq under the ticker symbol “ODD.”
Co-founder and CEO Oran Holtzman told CNBC: “We took the company public because I wanted to build a big company, otherwise I would sell the company. So this is just another milestone. “Meeting so many investors in the last two weeks, … seeing them get what we do after so much effort and connect with our vision, I think that’s what got me Reasons to be so happy and grateful.”
Launched in 2018 by Holtzman and his sister Shiran Holtzman-Erel, Oddity aims to disrupt the traditional beauty market and replace the in-store experience by using data and artificial intelligence to develop the brand and provide tailored product recommendations.
At the heart of Oddity’s business model are its proprietary technology (including tools developed by former Israeli defense officials) and billions of data points collected from millions of users.
Compared with other direct-to-consumer retailers going public in 2021, the company stands out because it’s growing while being profitable.
“We’re tapping into one of the most attractive and profitable markets in the world online,” said Lindsay Drucker Mann, Oddity’s global chief financial officer and former Goldman Sachs executive. A playbook to support financial health has been elusive so far in direct-to-consumer and certainly in beauty and wellness. It can only be delivered through our unique model, which is technology-centric, And based on the data.”
The company’s revenue for the three months ended March 31 was $165.7 million, up from $90.4 million a year earlier. The company reported 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 reported net income of $21.7 million, or 39 cents a share, on sales of $324.5 million. Last year, the retailer earned $13.9 million, or 26 cents a share, on $222.6 million in revenue.
In 2020, the company reported net income of $11.7 million, or 22 cents a share, on sales of $110.6 million.
Its gross margin was 71% for the three months ended March 31, up 4 percentage points from 67% in the same period last year.
Oddity’s average sales have doubled every year since 2018, the company said.
In a regulatory filing, Holzman touted the company’s workforce, saying 40 percent of its global workforce is made up of technologists, many of whom are recruited from the IDF’s best tech divisions.
In late April, Oddity announced it would invest more than $100 million to acquire biotech startup Revela and open a lab in the U.S. to be able to use artificial intelligence to create entirely new molecules for use in its cosmetics brands and future product lines middle.
Going forward, Oddity plans to launch more brands and will use its product proceeds to invest more in its data and technology and create products it says are backed by science.
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