Beauty brands considering a traditional IPO path pulled back in 2022, citing market volatility and other unfavorable market conditions. The public market could be warming up again for beauty brands as Oddity, the owner of Il Makiage and Spoiled Child, is preparing to go public. The Israel-based company filed for an IPO and intends on trading on the Nasdaq using the ticker ODD.

“The number of shares to be offered and the price range for the proposed offering have not yet been determined. The offering is subject to market conditions, and there can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering,” Oddity said in a press release.

Brother and sister Oran Holtzman and Shiran Holtzman-Erel, relaunched the Il Makiage brand in 2018 with backing from L Catterton. With a reputation for building brands with an “unconventional” and “boldly unconstrained” ethos, the direct-to-consumer business has been profitable since 2020 with high margins and has actively invested in the future. In 2019 the group made its first investment acquiring data science startup NeoWize. In 2021, the group acquired the Israeli AI computational imaging start-up Voyage81. In February 2022 the group launched its second brand Spoiled Child with 17 refillable stock keeping units across haircare, skincare and supplements. In April, Oddity scooped up Revela, a Boston-based biotechnology start-up and forerunner in Artificial Intelligence–based molecule discovery for beauty and wellness.

The company intends to use the IPO proceeds to develop and launch new brands, for working capital, and potentially for acquisitions and other investments.

Just The Numbers: 

• In the three months that ended March 31, the company saw $165.65 million in revenue, up from $90.41 million in the year-ago period. It reported a net income of $19.59 million, or $5.34 a share, compared with $3.01 million, or 82 cents a share, a year earlier.
• The company has been profitable on an annual basis since at least 2020.
• In fiscal 2022, Oddity had $324.52 million in sales and saw a net income of $21.73 million, or $5.94 a share. In the prior year, sales were $222.56 million with net income of $13.92 million, or $4.01 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.In 2020, Oddity had an annual gross margin of 70%, and in 2021, it dropped 1 percentage point to 69%. In 2022, the retailer’s annual gross margin was 67%, down 2 percentage points from the year-ago period.
• As of March 31, the company had more than 4 million active customers defined as those having made at least one purchase in the last 12 months. 
• International sales accounted for about 26% and 27% of its net revenue in fiscal 2022 and 2021, respectively. The company is present in the US, Canada, UK, continental Europe, and Australia, and continues to expand.

Historic Funding:

• In January 2022, Oddity, the parent company to Il Makiage, closed a $130 million secondary-market private round that values the company at $1.5 billion. The investment was led by Thomas Tull, Franklin Templeton, Fidelity Management & Research Company LLC, and First Light Capital Group with participation from additional growth equity investors. L Catterton and the brand’s founders sold 8% of their ownership of the company.
• In May 2022, Oddity unveiled its IPO-linked digital security tokenoffering a new way for investors to participate in the growth of the company by “democratizing” investor opportunity and broadening individual access securities in the company. The token is convertible into a share of Oddity stock at a 20% discount to the initial IPO price.
• In 2017, L Catterton acquired a 35.8% in the business for $29 million, increasing its investment to $44 million.

“As industry outsiders, we saw many shortcomings in the status quo approach. The empires that incumbents had built over decades had not evolved with the times, resulting in a significant lag in online adoption,” Oran Holtzman, co-founder and CEO of Oddity, wrote in a founder’s letter enclosed in a securities filing.

“Their underinvestment in technology left the category behind the digital curve, despite a consumer who is inherently primed to buy online— spending significant time on social media for beauty content and rapidly shifting dollars online in other categories.”

The proposed IPO will be led by Goldman Sachs, Morgan Stanley, and Allen & Company. Book-running managers include BofA Securities, Barclays Capital, and Truist Securities.