Oddity Tech Reports Q2 Earnings Amid Advertising Algorithm Dislocation
Oddity Tech (ODD) reported second-quarter earnings for 2026 with net revenue of $181 million, a 25% year-over-year decline primarily due to issues with the advertising algorithm affecting its IL MAKIAGE brand. Gross margin dropped by 360 basis points to 68.7%, driven by lower average order values and fixed cost deleverage. Despite these challenges, adjusted EBITDA came in at $13 million—surpassing guidance—and cash reserves stood at $561 million. The company highlighted strong performance from its SpoiledChild brand, with revenue approaching $350 million for the year and projected annual growth of over 35%. Management also expressed optimism about METHODIQ's potential to outperform SpoiledChild in first-year revenue due to high customer satisfaction. However, ongoing issues with IL MAKIAGE’s advertising partner continue to raise concerns around higher customer acquisition costs. Oddity Tech provided guidance for a narrower Q3 revenue decline of approximately 5% year-over-year and expects adjusted EBITDA between $18 million and $20 million as the company works through algorithmic challenges. The full-year outlook remains cautious, with expected revenue down about 19%, but liquidity is strong due to undrawn credit facilities and share repurchase activity.
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