Cosmetics and tech company Oddity, which runs the Il Makiage and Spoiled Child brands, filed for an IPO on Friday because the previously frozen IPO market heats up.
An Israeli-based company plans to trade on the Nasdaq using the ODD marker. The company didn’t immediately disclose how the offer can be priced within the regulatory filings and declined to comment when asked when the figures can be published.
“The number of shares to be offered and the worth range of the proposed offer haven’t yet been determined. The offer is subject to market conditions and there isn’t any certainty if or when the offer will end, or as to the actual size or terms of the offer,” Oddity said in a press release.
Founded in 2018 by brother and sister duo Oran Holtzman and Shiran Holtzman-Erel, Oddity uses data and AI to grow brands and develop customized product recommendations for purchasers.
The company is in search of to disrupt a market long dominated by traditional retailers by replacing the in-store experience with AI and data-driven product recommendations. At the guts of its business model is proprietary technology – including technology developed by a former Israeli defense official – and the billions of data points it has collected from tens of millions of users.
Within the three months ending March 31, the corporate posted $165.65 million in revenue, up from $90.41 million within the year-ago period. It reported net income of $19.59 million, or $5.34 per share, compared to $3.01 million, or 82 cents per share, a 12 months earlier.
Figures revealed within the regulatory filing show the direct-to-consumer retailer has been profitable on an annualized basis since no less than 2020.
In fiscal 2022, Oddity had sales of $324.52 million and reported net income of $21.73 million, or $5.94 per share. A 12 months earlier, the retailer reported $222.56 million in revenue and net income of $13.92 million, or $4.01 per share.
In 2020, it reported $110.64 million in sales and net income of $11.71 million, or $3.45 per share.
For comparison when The beauty of the elves filed for going public in August 2016, its profits and sales were lower than Oddity’s. ELF, a multi-brand beauty company, reported sales of $144.94 million in fiscal 2014 and a net loss of $2.88 million. The following 12 months, it reported $191.41 million in sales and a net income of $4.36 million.
In fiscal 2016, it had sales of $229.57 million and a net income of $5.31 million.
Since going public, ELF’s sales and profits have increased. In its most up-to-date fiscal 12 months, which ended March 31, it reported sales of $578.84 million and net income of $61.53 million.
As a direct-to-consumer retailer, Oddity sees high margins accompanying this strategy. Within the three months ended March 31, gross margins were 71%, up 4 percentage points from 67% within the year-ago period. Its annual margins have fallen every 12 months since 2020 as the corporate has made acquisitions and invested in expanding its business.
In 2020, Oddity had an annualized gross margin of 70%, and in 2021 it fell by 1 percentage point to 69%. In 2022, the retailer’s annual gross margin was 67%, down 2 percentage points compared to the previous 12 months.
As of March 31, the corporate had over 4 million lively customers, which is defined as a unique customer account that has made no less than one purchase within the previous 12 months.
“We drive visitors to our site, turn visitors into users by asking questions and learning about them, after which use the info we now have on the platform to convert them into paying customers,” reads the regulatory filing.
Oddity launched internationally, with sales from these markets accounting for about 26% and 27% of its net revenues in fiscal 2022 and 2021, respectively. As of Friday, Oddity launched within the US, Canada, UK, Continental Europe and Australia. He noted that he has plans to further increase that footprint.
The company plans to use the proceeds from the IPO to develop and launch latest brands. The funds may even be used for working capital, other general corporate purposes, and potentially for acquisitions and other investments.
During an interview earlier this 12 months, the corporate’s global CFO, Lindsay Drucker Mann, a former Goldman Sachs executive, told CNBC that Oddity is making a living and growing – even in a difficult macroeconomic environment that has proven increasingly dangerous for digital-only retailers.
On average, Oddity’s gross sales have doubled every year since 2018, the corporate said.
IN The first 12 months of a spoiled child available in the market, the brand new brand generated $48 million in gross sales, which doesn’t include returns.
Within the regulatory filing, Holtzman, the corporate’s CEO and co-founder, said the corporate recruits from the highest tech units of the Israel Defense Forces. Technologists account for over 40% of the worldwide workforce.
“As industry outsiders, we noticed many shortcomings within the approach to the established order. The empires that those available in the market have built over a long time haven’t evolved with the times, leading to a significant delay in online adoption,” Holtzman wrote within the founder’s letter attached to the Securities Sawing.
“Their underinvestment in technology has left this category behind the digital curve, despite the patron who’s inherently prepared to shop online – he spends a lot of time on social media searching for beauty content and quickly shifts money online into other categories.”
The company says that as well as to developing latest products and types, Oddity can be trying to increase the effectiveness of beauty products.
In late April, it announced it could invest over $100 million to acquire biotech start-up Revel and open a lab within the US.
The merger brought a team of scientists to Oddity tasked with creating entirely latest molecules using artificial intelligence that could possibly be utilized in its beauty brands and future lines.
In 2021, Weirdness acquired Voyage81an AI-based computational imaging startup founded in 2019 by Niv Price, former head of research and development for one of Israel Defense Forces’ elite technology units, together with Dr. Boaz Arad, Dr. Rafi Gidron, and Omer Shwartz.
The technology is in a position to map and analyze skin and hair characteristics, detect facial blood flow, and create melanin and hemoglobin maps using a easy smartphone camera.
The filing follows a year-and-a-half drought within the IPO market, which is just starting to open up and showing signs of green shoots.
Earlier this month, Mediterranean restaurant chain Cava went public, with its shares up 117% in its market debut.
“[In 2022] investors didn’t even want to go near an IPO, but now that they are making a living again and issuers see they’ll get close to decent valuations, I believe that is bringing people back to the market,” said Matt Kennedy, senior IPO market strategist at Renaissance Capital.
“The consumer sector lends itself to those periods where investors can see a business model they understand, a business they might be accustomed to, and one which is usually profitable or near-profitable, preferably one which has growth.”