Inquired about the magnitude of acquisition spend reduction compared to last year and if the reduction was evenly spread across Q1, particularly regarding the May CPA improvement.

Lindsay confirmed media spend was down slightly YoY, but efficiency was much worse. Oran added that spending continues to fix the problem, as testing requires spend. May's CPA improvement was the first sequential positive trend after several months of deterioration. “And the reason that we're still spending is to fix the problem. Without spending, we will not be able to identify the problem, and we will not be able to test all the things that we have done in the past quarter.”

Asked for deeper insight into the drivers of the 28% CPA decline in May and why Q2 revenue guidance (down 25-30%) seemed disconnected from this improvement.

Oran attributed CPA improvement to structural and technical fixes, infrastructure adjustments, audience strategy shifts, and campaign setup, alongside close collaboration with the ad partner. Lindsay explained that while May showed improvement, overall Q1 CPA was still difficult, and the loss of Q1 first orders would continue to impact Q2 repeat orders. “The fixes that we are doing are primarily structural and technical auditing signals, adjusting our infrastructure, shifting audience strategies and, of course, campaign setup, but that's only on our end.”

Inquired about changes within ODDITY's in-house marketing organization or consideration of third parties given the CPA issues.

Oran reiterated that ODDITY has historically done marketing in-house successfully. While they brought in an external team to review, they believe the problem is not on their end. Lindsay highlighted the advertising partner's estimate of 40-60% CPA recovery from their system alone. “We also brought in another team recently to take a look. But again, we don't believe that the problem sits on our end, but we continue to do everything in our power to exit this spiral as soon as possible.”

ODD

ODDITY (ODD) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Consumer Staples· Jun 2, 2026

Source: earnings call transcript

Executive summary

ODDITY Q1 FY26 — CPA Challenges Persist, H2 Normalization Expected

ODDITY navigated a challenging Q1 FY26 marked by significant CPA increases with its largest advertising partner, leading to a 26% revenue decline. While May showed a promising 28% CPA improvement, the company anticipates continued headwinds in Q2 with a projected 25-30% revenue decline. Management remains hopeful for normalization in the second half of the year, driven by ongoing technical remediation efforts and the strong performance of its new METHODIQ brand.

Highlights

May CPA for IL MAKIAGE declined 28% from April, breaking a negative trend.
Q1 net revenue decline of 26% was slightly better than the outlook of approximately 30%.
METHODIQ, a new brand, is off to a strong start, expected to deliver $25 million in revenue in its first year.
Successfully shifted 40% of acquisition revenue out of Try Before You Buy model with no impact on unit economics.
Repurchased approximately 6 million ordinary shares for $82 million, reducing shares outstanding by around 10%.

Concerns

Q1 net revenue declined 26% year-over-year due to significant reduction in acquisition efficiency.
Adjusted EBITDA was negative $7 million in Q1 due to abnormal CPA levels and continued investment in acquisition spend.
Adjusted diluted EPS was negative $0.17 in Q1.
Q2 net revenue expected to decline between 25% and 30% year-over-year.
Media uncertainty continues to make visibility to full-year financials challenging, though positive adjusted EBITDA is expected.

Guidance & targets

Category	Target	Timeline	Confidence
METHODIQ revenue	$25 million medium materiality	FY26 · 2026	High
Full-year adjusted EBITDA	Positive high materiality	FY26 · 2026	Medium
Q2 Net Revenue Growth	Decline between 25% and 30% high materiality	Q2 · 2026	High
Q2 Adjusted EBITDA	$8 million and $10 million high materiality	Q2 · 2026	High
Full-year Adjusted EBITDA	Profitable high materiality	FY26 · 2026	High

Product announcements

Product	Type	Timeline
Neurexa	launch	Q1 FY26
Zeralaq	launch	Q1 FY26
Anti-aging program molecule	roadmap	Currently conducting human-focused group testing
Hyperpigmentation treatment	roadmap	Focus groups currently underway
Acne prevention pipeline molecule	roadmap	Currently in final laboratory validation phase

Capital programs

Share Buyback Program underway $200 million

Period spend: $82 million

Spent to date: $82 million

Start: March of 2026

Benefit:repurchase of up to $200 million of the company's Class A ordinary shares

Replaced and superseded a previously announced $150 million plan. Approximately $167 million remaining on authorization.

Risks & headwinds

Account dislocation with largest advertising partner leading to abnormal CPA levels. Ongoing since Q4 '25, material impact in H1 '26, hopeful for normalization in H2 '26.

CPA levels in some cases 2x higher than expected; Q1 net revenue declined 26%; Q1 adjusted EBITDA negative $7M.

Mitigation:Working closely with advertising partner's product and engineering teams; implementing structural and technical fixes; adjusting infrastructure; shifting audience strategies; maintaining reduced acquisition spend to feed algorithm signals; shifting 40% of acquisition revenue from Try Before You Buy to standard Buy model.

Technical issue causing spiking bounce rates and lower quality audiences. Ongoing.

Significant driver of the break comes from spiking bounce rates.

Mitigation:Working with ad partner to recalibrate algorithm; internal remediation efforts.

Operating deleverage from lower revenue. Q1 and Q2 FY26.

Q1 adjusted EBITDA negative $7M; Q2 adjusted EBITDA $8M-$10M (impacted by deleverage).

Mitigation:Managing costs across the business while protecting forward investments.

Elevated inventory position due to revenue shortfall. Exited Q1 FY26.

Slightly elevated inventory position.

Mitigation:Plan to work through this inventory going forward.

Reduced user acquisition activity in H1 will weigh on repeat sales. Remainder of the year.

Repeat orders declined ~15% in Q1.

Mitigation:Hopeful for CPA normalization to drive first orders and subsequent repeat sales.

SpoiledChild also navigating higher CPA costs. Ongoing.

Less severe than IL MAKIAGE.

Mitigation:Plan to implement similar remediation steps as IL MAKIAGE once solutions are identified.

Loss of new users in 2026 will impact 2027. Impacting 2027.

lost a big chunk of new users.

Mitigation:Plan to go full power back to growth as soon as the CPA problem is fixed to compensate for new user loss.

Q&A highlights

Asked about the expected quarterly cadence of EBITDA and whether customer acquisition would shift to H2 given the Q2 guidance.

Lindsay stated that Q1 first orders were down significantly (50%) and difficult to make up in H2 due to seasonality. The focus is on CPA improvement to drive first orders, which then drives repeat sales and profitability. Full-year EBITDA is expected to be positive, but quarterly visibility for H2 is limited.

“We didn't give EBITDA guidance by quarter for the back half by design. We just don't have enough visibility right now, but we do have confidence that we will be profitable for the full year based on everything that we see today.”

asked by Brian Tanquilut · answered by Lindsay Mann

2 min read 6 chapters

Detailed narrative

Advertising Partner Dislocation and Remediation

ODDITY continues to grapple with significant CPA increases from its largest advertising partner, which led to a 26% decline in Q1 net revenue. The company is working closely with the partner's product and engineering teams, who estimate a potential recovery of 40% to 60% of CPA based on their system alone.

Remediation efforts include structural and technical auditing, adjusting infrastructure, and shifting audience strategies, alongside a deliberate decision to maintain reduced acquisition spend to feed algorithm signals.

Try Before You Buy Model Adjustment

To mitigate exposure to the advertising algorithm issues, ODDITY successfully shifted 40% of its acquisition revenue from the "Try Before You Buy" (TBYB) model to a standard "Buy" model by the end of Q1. This transition was achieved with no negative impact on unit economics, demonstrating the company's ability to adapt its acquisition strategy while maintaining profitability.

TBYB remains a part of the model, but with a more balanced approach.

METHODIQ's Strong Launch

The newly launched medical telehealth platform, METHODIQ, is performing strongly, with an expected $25 million in revenue for its first year, mirroring SpoiledChild's initial success. The platform offers 28 prescription and nonprescription products for dermatology, supported by a progress tracking app showing strong user engagement and compliance. ODDITY Labs continues to integrate novel molecules into METHODIQ's product lineup, including treatments for eczema and acne.

ODDITY Labs Innovation Pipeline

ODDITY Labs is actively developing several novel molecules targeting significant pain points in beauty and wellness. Key areas of focus include anti-aging, with a molecule showing robust in vitro efficacy in collagen synthesis; optimizing hyperpigmentation treatment by targeting novel pathways with existing molecules; and acne prevention, with a leading candidate molecule in the final laboratory validation phase designed to reduce sebum production.

Share Buyback Program

ODDITY's Board approved a new $200 million share buyback program in March 2026, replacing the previous $150 million plan. During Q1, the company repurchased approximately 6 million ordinary shares for $82 million, reducing outstanding shares by around 10%. Approximately $167 million remains on the current authorization, reflecting a commitment to capital return despite current operational headwinds.

Fundamental Brand Health and Repeat Business

Despite the acquisition challenges, ODDITY emphasizes that its fundamental brand health remains strong, confirmed by existing customer behavior. Net revenue repeat on a 12-month basis cohorts are robust, supporting contribution margins. Repeat sales represented approximately two-thirds of net revenue in Q1, up from 56% in Q1 2025, indicating resilience in its established customer base.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.