Oddity Tech, a beauty and wellness company that uses artificial intelligence to develop cosmetics and employs former Israeli defense officials, debuted within the public markets with a 40% pop on Wednesday because the IPO market heats up.
The direct-to-consumer platform behind Il Makiage and Spoiled Child brands opened at $49.10 a share after an IPO valuation of $35 a share Tuesday night. This was above the predetermined range of $32 to $34 per share.
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The company sold 12.1 million shares and had a market valuation of $2.8 billion as of Wednesday noon.
Oddity and its shareholders, including private equity firm L Catterton, raised roughly $424 million within the deal.
The stock is traded on the Nasdaq under the ticker symbol “ODD”.
“We’re taking the company public because I need to construct something big, otherwise I’d sell the company. That is one other milestone,” co-founder and CEO Oran Holtzman told CNBC. “Meeting so many investors over the past two weeks and … seeing them get what we’re doing and connect with our vision after working so hard, I believe that is what makes me so blissful and grateful.”
Launched in 2018 by Holtzman and his sister Shiran Holtzman-Erel, Oddity goals to disrupt the normal beauty market and replace the in-store experience by utilizing data and AI to grow brands and develop tailored product recommendations.
At the guts of Oddity’s business model is its proprietary technology – including tools developed by a former Israeli defense official – and billions of information points collected from thousands and thousands of users.
The company stands out from other direct sellers that went public in 2021 since it grew while turning a profit.
“We’re unlocking one of the crucial attractive and lucrative online [total addressable markets] on our planet,” said Lindsay Drucker Mann, Oddity’s global chief financial officer and former Goldman Sachs executive. “We’ve got delivered a manual that supports a financial profile that has thus far been elusive on to the buyer, and positively elusive by way of beauty and well-being. This is simply possible with our unique model that has technology at the guts and is driven by data.”
Within the three months ended March 31, the company reported revenue of $165.7 million, up from $90.4 million within the year-ago period. It reported net income of $19.6 million, or 35 cents per share, in comparison with roughly $3 million, or 5 cents per share, a yr earlier.
In fiscal 2022, Oddity had sales of $324.5 million and reported net income of $21.7 million, or 39 cents per share. A yr earlier, the retailer reported $222.6 million in revenue and $13.9 million in net income, or 26 cents a share.
In 2020, it reported sales of $110.6 million and net income of $11.7 million, or 22 cents per share.
Within the three months ended March 31, gross margins were 71%, up 4 percentage points from 67% within the year-ago period.
On average, Oddity’s gross sales have doubled every year since 2018, the company said.
Within the regulatory filing, Holtzman touted the company’s workforce and said that 40% of its global workforce consists of technologists, a lot of whom were recruited from the Israel Defense Forces’ top technology units.
In late April, Oddity announced it might invest over $100 million to accumulate biotech start-up Revel and open a lab within the US to create brand-new molecules using AI to make use of in its beauty brands and future lines.
Looking ahead, Oddity plans to bring more brands to market and can use the proceeds from its offering to speculate more in its data and technology and create products it claims are backed by science.