Oddity Tech, the Israel-based parent company of makeup brands Il Makiage and SpoiledChild, started trading on the Nasdaq under the symbol ODD. The business is profitable and fast growing, a combination that is a welcome change from 2021 listings that have largely fallen flat. 

WHO: 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 start-up NeoWize. In 2021, the group acquired the Israeli AI computational imaging start-up Voyage81. In February 2022, the group launched its second brand SpoiledChild 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.

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

IN THEIR OWN WORDS: “We are taking the company public because I want to build something huge, otherwise I would sell the company. So this is just another milestone,” co-founder and CEO Oran Holtzman told CNBC. “Meeting so many investors in the past two weeks and ... seeing them getting what we do and connecting to our vision after so much hard work, I think that’s what makes me so happy and so grateful.” 

“We are unlocking online for one of the most attractive and lucrative [total addressable markets] on the planet,” said Lindsay Drucker Mann, Oddity’s global CFO and a former Goldman Sachs executive. “We have delivered a playbook that supports a financial profile that has, up to this point, been elusive in direct-to-consumer and certainly elusive in beauty and wellness. It’s only enabled by our unique model, which has technology at the center and is based on data.”

"When we made our investment in Oddity, we saw exceptional leadership and an extraordinarily rigorous, data-driven new product development process. They continued to invest in their data science, AI, hyperspectral recovery, and science capabilities to develop high performance products culminating in a passionate following," said Michael Farello, a Managing Partner of the Growth Fund at L Catterton. "[This] milestone is a testament to the team's unwavering commitment to redefining and building the future of beauty and wellness. It's been an honor to be part of Oddity's tremendous growth and we look forward to continuing to support the company in its ongoing efforts to disrupt the beauty and wellness market through AI and data science to solve pain points for consumers buying online."

DETAILS: 

• Oddity sold 12.1 million shares, raised approximately $424 million, and closed the first day of trading with a market capitalization of $2.69 billion.
• In the three months ended March 31, the company saw $165.7 million in revenue, up from $90.4 million over last year in the same period. It 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 brought in $324.5 million in sales and saw net income of $21.7 million, or 39 cents a share. In the year prior, the retailer saw $222.6 million in revenue and net income of $13.9 million, or 26 cents a share.
• In 2020, it saw $110.6 million in sales and net income of $11.7 million, or 22 cents 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. 
• Oddity has accumulated a user base (an individual that has “interacted with our website and shared at least 50 unique data points with us”) of 40 million in the five years since Il Makiage launched. 
• Oddity's second brand, SpoiledChild, generated $26 million in net revenues in 2022 and is scaling even faster than Il Makiage.  
• Currently, about 10 percent of this base has purchased products from either Il Makiage or SpoiledChild in the last 12 months.
• Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, and Allen & Company LLC are acting as lead book-running managers for the proposed offering. BofA Securities, Barclays Capital Inc., Truist Securities, Inc., JMP Securities, A Citizens Company, and KeyBanc Capital Markets Inc. are acting as book-running managers for the proposed offering.

Historic Funding:

• In January 2022, Oddity, the parent company to Il Makiage, closed a $130 million secondary-market private round that valued 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 token offering a new way for investors to participate in the growth of the company by “democratizing” investor opportunity and broadening individual access to 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% stake in the business for $29 million, increasing its investment to $44 million.