20-F: Oddity Tech Boosts Credit to $350M, Reports Strong 2025 Growth

Sentiment:

Annual Report 17 March 2026 4:20 PM

Oddity Tech Ltd. reported significant revenue and profit growth in 2025, while securing an expanded $350 million credit facility and approving a new $200 million share buyback program, despite anticipating challenges in customer acquisition for 2026.

Worse than expectedManagement explicitly states that they expect to encounter challenges to their business in 2026 due to difficulty acquiring new customers cost-efficiently.The increase in customer acquisition costs is expected to have an adverse impact on results of operations for fiscal year 2026, with the most significant impact in the first half.The company does not expect to achieve its long-term financial targets (20% annual revenue growth and 20% Adjusted EBITDA margin) for as long as customer acquisition costs remain elevated.Lower levels of customer acquisition in the first half of 2026 are expected to result in lower repeat sales over the balance of the year.

Summary

Net revenue for the year ended December 31, 2025, increased by 25.2% to $809.8 million, up from $647.0 million in 2024.
Net income grew to $110.7 million in 2025, compared to $101.5 million in 2024 and $58.5 million in 2023.
Adjusted EBITDA reached $163.3 million in 2025, an increase from $150.5 million in 2024 and $107.3 million in 2023.
Gross margin improved to 72.7% in 2025, up from 72.4% in 2024, driven by supply chain efficiencies and cost improvement efforts.
Selling, general and administrative expenses increased by 33.2% to $469.9 million in 2025, primarily due to an $81 million increase in advertising costs.
The company secured new aggregate credit facilities of $350 million, replacing the previous $200 million facilities, with a maturity date of January 14, 2031.
A new share buyback program of up to $200 million for Class A ordinary shares was approved, replacing the prior $150 million authorization.
Two putative class action lawsuits alleging securities law violations were filed against the company and certain officers/directors in July 2024 and March 2026.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this filing as neutral to slightly negative. While 2025 financial results were strong and the company secured an expanded credit facility and new share buyback, the explicit forward-looking statements about significant challenges in customer acquisition and expected failure to meet long-term targets in 2026 introduce considerable uncertainty and downside risk.

Positives

Achieved strong net revenue growth of 25.2% in 2025, reaching $809.8 million.
Increased net income to $110.7 million in 2025, demonstrating continued profitability.
Adjusted EBITDA grew to $163.3 million in 2025, exceeding long-term financial targets.
Improved gross margin to 72.7% in 2025 due to supply chain efficiencies and cost management.
Secured an expanded $350 million credit facility, providing enhanced liquidity and financial flexibility.
Approved a new $200 million share buyback program, indicating confidence in valuation and commitment to shareholder returns.
Successfully launched a third brand, METHODIQ, in 2025, expanding into medical telehealth for dermatology.

Negatives

Experienced a significant increase in customer acquisition costs, negatively impacting the ability to acquire new customers efficiently.
Expects the increase in customer acquisition costs to adversely impact results of operations for fiscal year 2026, particularly in the first half.
Anticipates slower revenue growth or potential decline in future periods, and does not expect to achieve long-term financial targets while customer acquisition costs remain elevated.
Incurred higher selling, general and administrative expenses, primarily due to increased advertising costs.
Net cash provided by operating activities decreased to $87.6 million in 2025 from $137.8 million in 2024, mainly due to inventory investments and increased prepaid expenses.
Operating income margin decreased to 14.7% in 2025 from 17.9% in 2024.
Net income margin decreased to 13.7% in 2025 from 15.7% in 2024.

Risks

Difficulty in attracting new customers cost-efficiently and retaining existing customers, with recent significant increases in customer acquisition costs.
Reliance on social media platforms and content creators for brand awareness, with risks from negative publicity, algorithm changes, and regulatory non-compliance.
Inability to anticipate and respond to market trends and changes in consumer preferences for beauty and wellness products.
Reliance on single-source suppliers for certain component materials, leading to potential supply chain disruptions or increased costs.
Challenges in accurately forecasting customer demand, managing inventory, and planning for future expenses, which could lead to excess inventory or product shortages.
Historical rapid growth may not be sustainable or indicative of future results, with expected challenges in 2026.
Intense competition in the beauty and wellness categories from multinational and independent brands.
Fluctuating costs of raw materials could increase cost of goods sold.
Illegal distribution and sale of counterfeit products or unauthorized diversion of products by third parties could harm reputation and revenue.
Disruptions to shipping arrangements, including port congestion, labor disputes, and geopolitical conflicts (e.g., Red Sea rerouting), could affect delivery times and profitability.
Challenges in managing growth effectively, including employee base, hiring needs, and expanding infrastructure.
General economic downturns, inflation, interest rates, and consumer confidence could affect discretionary spending.
Loss of key executive leadership or inability to attract and retain highly skilled employees.
Potential for AI models to contain errors, be less accurate, or be ineffective, leading to competitive harm or legal liability.
Dependence on customer data and third-party data for AI models, with risks from data loss, inaccuracies, or regulatory restrictions on data use.
Failure to offer high-quality customer support could lead to dissatisfaction and reduced repeat purchases.
Need for additional capital, with no assurance of availability on favorable terms, potentially leading to dilution or restrictive debt covenants.
Inability to raise funds to settle exchanges of Exchangeable Notes or repurchase them upon a fundamental change, potentially affecting liquidity.
Dilution of ownership interest for shareholders upon exchange of Exchangeable Notes.
Disputes and legal/regulatory proceedings, including class action lawsuits, could result in unexpected expenses, reputational harm, or significant damages.
Compliance with evolving U.S. federal, state, and international laws and regulations related to product safety, labeling, advertising, data privacy, and AI technology.
Risks associated with international operations, including cultural differences, regulatory environments, and foreign currency fluctuations.
Vulnerability to cybersecurity threats, data breaches, and other security incidents affecting information technology systems or third-party service providers.
Potential negative impact from corporate citizenship and sustainability matters, including failure to meet goals or negative publicity.
Risks associated with pursuing acquisitions, including integration challenges and increased indebtedness.
Uninsured risks, such as war, force majeure, or certain business interruptions, and potential inability to renew insurance policies on favorable terms.
Volatility in the share price of Class A ordinary shares due to various market and company-specific factors.
Concentration of voting power with the co-founder and CEO due to the dual-class share structure.
Potential reclassification as a passive foreign investment company (PFIC) or loss of foreign private issuer status, leading to adverse tax consequences or increased regulatory burden.
Conditions in Israel, including political, economic, and military conflicts, could adversely affect business operations and financial results.

Future Outlook

The company expects to encounter challenges in 2026 due to difficulty acquiring new customers cost-efficiently, with the most significant impact anticipated in the first half of the year. This will result in slower revenue growth or a potential decline, and the company does not expect to achieve its long-term financial targets of 20% annual revenue growth and 20% Adjusted EBITDA margin for as long as customer acquisition costs remain elevated. Remedial actions are being implemented, but success is not assured. The company plans to continue investing in innovation, technology, and launching new brands.

Management Comments

"We believe that continued growth in revenue, as well as our ability to improve or maintain margins and profitability, will depend upon, among other factors, our ability to address the challenges, risks, and difficulties described elsewhere in this Risk Factors section."
"We expect the increase in customer acquisition costs will have an adverse impact on our results of operations for the fiscal year ended December 31, 2026, with the most significant impact expected in the first half of the year."
"Although we believe we have both recently identified the root cause of the problem and implemented actions that will allow us to redirect our ads to a more desirable audience and return our customer acquisition costs to historical levels, we can provide no assurance that our remedial actions will be successful."
"We hope these elevated costs will eventually normalize and therefore we have not changed our long-term financial targets. However, we do not expect to achieve our long-term financial targets for so long as our customer acquisition costs remain elevated."
"Our historical rate of growth may not be sustainable or indicative of our future rate of growth, and in future periods, we expect that our revenue will grow more slowly or decline."

Industry Context

StockSavvy.ai notes that Oddity Tech operates in the highly competitive and rapidly evolving global beauty and wellness market, estimated at over $600 billion. The company's strategy to leverage technology, AI, and direct-to-consumer models positions it at the forefront of two powerful secular trends: the migration of consumers online and the demand for science-backed products. The establishment of ODDITY LABS for AI-based molecule discovery is a significant differentiator, aiming to disrupt product development. However, the industry's reliance on digital marketing platforms means companies like Oddity are highly susceptible to changes in advertising algorithms and customer acquisition costs, a challenge explicitly acknowledged by Oddity. The launch of METHODIQ into medical telehealth indicates a broader strategic play beyond traditional beauty, aligning with a trend towards personalized, high-efficacy wellness solutions.

Comparison to Industry Standards

Oddity Tech's reported 2025 net revenue growth of 25.2% and Adjusted EBITDA margin of 20.2% exceeded its long-term financial targets of 20% annual revenue growth and 20% Adjusted EBITDA margin, indicating strong performance relative to its own benchmarks.
The company's international penetration level, with sales outside the U.S. accounting for approximately 18% of net revenue in 2025, is noted as being below that of its large global competitors, suggesting significant room for growth in international markets.
The gross margin of 72.7% in 2025 is indicative of a premium product offering and efficient supply chain, potentially outperforming many traditional beauty companies that may have lower margins due to extensive retail footprints and distribution costs.
The company's strategy of building digitally native prestige brands like IL MAKIAGE and SpoiledChild, and expanding into medical telehealth with METHODIQ, contrasts with legacy beauty companies often characterized by offline distribution and less integrated technology capabilities.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Director Re-election	Lilach Payorski was re-elected as an external director for a period of three years commencing on March 1, 2025.	2025-03-01	Ensures continuity of experienced independent oversight on the board and audit committee.
Committee Composition	The company relies on foreign private issuer exemptions for Nasdaq rules regarding shareholder meeting quorums and the number of independent directors on the board and its committees. Specifically, the compensation committee is not comprised solely of independent directors, and director nominees are not selected by a majority of independent directors or a nominations committee solely of independent directors.	N/A	May provide less stringent corporate governance protections compared to U.S. domestic companies, potentially affecting investor confidence in governance practices.
Chairperson of the Board	Mr. Holtzman, the Chief Executive Officer, is serving as chairperson of the board of directors for a period of five years following the initial public offering, as approved by the board and shareholders.	N/A	Concentrates leadership roles, which may limit independent oversight but ensures strong founder vision and execution. Requires special shareholder approval under Israeli law.
Insider Trading Policy Update	The company has an Insider Trading Compliance Policy and Procedures, which includes blackout periods and preclearance requirements for certain individuals, and prohibits certain transactions like short sales and hedging.	N/A	Aims to promote compliance with insider trading laws and maintain market integrity, reducing legal and reputational risks.
Exclusive Forum Provisions	Amended and restated articles of association provide that federal district courts of the United States are the exclusive forum for Securities Act claims, and competent courts in Tel Aviv, Israel, are the exclusive forum for derivative actions, fiduciary duty claims, or claims under Israeli Companies Law/Securities Law.	N/A	May limit shareholders' ability to choose a favorable judicial forum and could increase litigation costs, potentially discouraging certain lawsuits against the company and its management.

Legal Proceedings

A putative class action lawsuit, Hoare v. Oddity Tech Ltd., et al., was filed in July 2024, alleging false or misleading statements and omissions in connection with and following the company's initial public offering and secondary public offering. The company is vigorously defending this action.
A putative class action lawsuit, Peters v. Oddity Tech Ltd., et al., was filed in March 2026, asserting violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, alleging false or misleading statements and omissions. The company intends to vigorously pursue its defenses.

Related Party Transactions

On November 12, 2024, the company repurchased approximately 2.35 million Class A ordinary shares from LCGP3, a major shareholder, for approximately $100 million.
On March 15, 2024, LCGP3 sold 4.78 million Class A ordinary shares in an underwritten secondary offering, from which the company received no proceeds.
On November 27, 2023, the company entered into a Nominee and Indemnity Agreement with Catterton Management Company, L.L.C. (investment manager of LCGP3) and Michael Farello (a director), where Mr. Farello agreed to hold stock awards as nominee for Catterton Management and have cash compensation paid directly to them.
The company has a registration rights agreement with Oran Shilo Investments LP, Il Makiage Investments L.P. (both controlled by CEO Oran Holtzman), and LCGP3, entitling them to certain registration rights.
On August 2, 2017, the company signed a letter agreement with Cosmofill Industries Ltd. (controlled by Mr. Holtzman) and LCGP3, granting LCGP3 the unilateral right to initiate a merger of Cosmofill with the company at no cost to the company. Cosmofill is currently undergoing liquidation.
On June 22, 2023, the board granted co-founders Oran Holtzman and Shiran Holtzman-Erel option awards to purchase 2,327,428 Class A Ordinary shares, subject to time-based and market-based vesting conditions.

Stakeholder Impact

Shareholders: Potential for increased value through the share buyback program, but also face risks from increased customer acquisition costs, potential slower growth in 2026, and ongoing securities class action lawsuits. The dual-class share structure concentrates voting power with the CEO, limiting influence for other shareholders.
Employees: The company continues to expand its workforce (658 individuals as of Dec 31, 2025, up from 489 in 2024), indicating growth opportunities. Share-based compensation plans are in place to attract and retain talent. However, geopolitical risks in Israel and Ukraine could impact employees in those regions.
Customers: Continued focus on technology and product innovation aims to deliver superior products and experiences. The launch of METHODIQ expands offerings into medical telehealth. However, potential issues with customer acquisition efficiency could indirectly affect product availability or marketing reach.
Suppliers/Creditors: The expanded credit facilities provide financial stability, which is positive for creditors. Reliance on single-source suppliers and global supply chain disruptions remain a risk for suppliers and the company's ability to meet demand.
Regulatory Authorities: The company is subject to evolving regulations in data privacy, AI, and product safety across multiple jurisdictions, requiring ongoing compliance efforts and posing risks of enforcement actions.

Next Steps

Continue to implement remedial actions to address increased customer acquisition costs and redirect ads to a more desirable audience.
Monitor and manage the impact of increased customer acquisition costs on results of operations for fiscal year 2026, particularly in the first half.
Continue investment in ODDITY LABS for AI-based molecule discovery and product development.
Pursue additional brands and product categories through the New Ventures brand incubator, including Brand 4 which is currently in development.
Vigorously defend against the putative class action lawsuits filed in July 2024 and March 2026.
Utilize the new $350 million credit facilities for ongoing operations and growth initiatives.
Execute the new $200 million share buyback program for Class A ordinary shares, subject to market conditions and strategic priorities.

Key Dates

Date	Description
2013-06-23	Oddity Tech Ltd. (formerly Il Makiage Cosmetics (2013) Ltd.) incorporated in Israel.
2016-05-01	Entered into a credit line agreement with Bank Hapoalim (2016 Credit Line).
2017-06-02	Entered into a registration rights agreement with RRA Investors.
2017-08-02	Signed a letter agreement with Cosmofill Industries Ltd., other entities controlled by Mr. Holtzman, and LCGP3.
2018-01-01	Launched IL MAKIAGE in the United States.
2019-01-01	Established New Ventures brand incubator.
2020-04-01	Board of directors adopted the 2020 Equity Incentive Plan.
2020-04-01	Shareholders adopted the U.S. Sub-Plan to the 2020 Plan.
2020-04-01	Entered into a loan agreement with Bank Hapoalim (2020 Credit Facility).
2020-01-01	Achieved profitability in U.S. operations.
2021-07-09	Entered into a stock purchase agreement with shareholders of Voyage81, acquiring all shares of Voyage81.
2021-07-09	Entered into a holdback agreement with Mr. Price as a condition for the acquisition of Voyage81.
2021-09-01	Lindsay Drucker Mann joined as Global Chief Financial Officer.
2022-01-01	Launched SpoiledChild, the second brand.
2022-03-01	Lilach Payorski initially appointed to the board of directors.
2023-04-04	ODDITY Labs, LLC entered into an agreement and plan of mergers with Revela Inc.
2023-05-12	Completed the acquisition of Revela, establishing ODDITY LABS.
2023-06-22	Board of directors adopted the 2023 Employee Share Purchase Plan (ESPP).
2023-06-22	Board of Directors granted co-founders option awards to purchase 2,327,428 Class A Ordinary shares.
2023-07-07	A 15.396 forward share split of the company's then-outstanding ordinary shares was effected.
2023-07-18	Registration statement on Form F-1 for initial public offering declared effective by the SEC.
2023-07-19	Completed initial public offering (IPO) on Nasdaq, issuing 1,754,385 Class A Ordinary shares.
2023-07-18	Ohad Chereshniya initially appointed to the board of directors.
2023-07-26	First installment payment of holdback consideration made to Mr. Price.
2023-09-28	Shareholders approved the 2023 Incentive Award Plan, replacing the 2020 Plan.
2023-09-28	Shareholders ratified the appointment of Lilach Payorski and Ohad Chereshniya as external directors.
2023-11-27	Entered into a Nominee and Indemnity Agreement with Catterton Management Company, L.L.C. and Michael Farello.
2024-01-01	Entered into credit facility agreements with Bank Leumi and Bank Hapoalim (2024 Credit Facilities).
2024-03-15	Announced the pricing of an underwritten secondary offering of 4.78 million Class A ordinary shares by LCGP3.
2024-07-01	Yehoshua (Shuki) Nir joined the board of directors.
2024-07-26	Second installment payment of holdback consideration made to Mr. Price.
2024-07-01	Putative class action lawsuit titled Hoare v. Oddity Tech Ltd., et al., filed in the United States District Court for the Eastern District of New York.
2024-08-22	Hoare v. Oddity Tech Ltd. case transferred to the United States District Court for the Southern District of New York.
2024-09-05	LCGP3 filed a Schedule 13G, indicating beneficial ownership of 3,537,472 Class A ordinary shares.
2024-11-12	Entered into an agreement for the repurchase of Class A ordinary shares owned by LCGP3 for approximately $100 million.
2024-11-13	Shareholders re-elected Lilach Payorski as an external director for three years commencing March 1, 2025.
2024-11-18	Share Repurchase closed, repurchasing approximately 2.35 million shares from LCGP3.
2024-12-05	District Court issued an order appointing Alex Gordon as Lead Plaintiff in Hoare v. Oddity Tech Ltd.
2025-01-01	Launched METHODIQ, the third brand.
2025-01-01	Israel enacted certain Pillar Two measures, effective for tax years beginning on or after this date.
2025-01-30	Entered into credit facility agreements with a syndicate of three banks (2025 Credit Facilities).
2025-02-02	Certain regulations of the EU AI Act had to be complied with.
2025-02-18	Plaintiffs filed an Amended Complaint in Hoare v. Oddity Tech Ltd.
2025-06-06	Plaintiffs filed a Second Amended Complaint in Hoare v. Oddity Tech Ltd.
2025-06-12	Oddity Finance LLC completed a private offering of $600 million aggregate principal amount of 0% Exchangeable Senior Notes due 2030.
2025-06-20	Earliest date the Issuer may redeem Exchangeable Notes for cash.
2025-06-26	Defendants filed a Joint Motion to Dismiss the Second Amended Complaint in Hoare v. Oddity Tech Ltd.
2025-07-04	U.S. adopted tax legislation referred to as the One Big Beautiful Bill Act.
2025-07-28	Plaintiffs filed a brief in opposition to the Joint Motion to Dismiss the Second Amended Complaint in Hoare v. Oddity Tech Ltd.
2025-08-01	The EU AI Act entered into force.
2025-08-27	Defendants filed a reply brief in support of their Joint Motion to Dismiss the Second Amended Complaint in Hoare v. Oddity Tech Ltd.
2025-12-31	Fiscal year end for Oddity Tech Ltd.
2026-01-15	Amendments to existing agreements under the 2025 Credit Facilities became effective, securing $350 million in 2026 Credit Facilities.
2026-02-01	A ruling by the U.S. Supreme Court invalidated many of the tariffs imposed by the U.S. administration in 2025.
2026-03-11	Board of Directors approved a new share buyback program of up to $200 million (2026 Buyback Plan).
2026-03-12	Putative class action lawsuit titled Peters v. Oddity Tech Ltd., et al, filed in the United States District Court for the Southern District of New York.
2026-03-18	Officers and directors will become subject to reporting requirements of Section 16(a) of the Exchange Act following the effectiveness of the HFIAA.
2029-01-14	Last date for utilization of credits under the 2026 Credit Facilities.
2029-03-31	Expiration date of the 2026 Buyback Plan.
2030-06-15	Maturity date for the $600 million aggregate principal amount of 0% Exchangeable Senior Notes.
2031-01-14	Principal repayment date for each loan under the 2026 Credit Facilities.

Recommendation

hold

Oddity Tech demonstrated strong financial performance in 2025, exceeding its own long-term targets for revenue growth and Adjusted EBITDA margin. The expanded credit facility and new share buyback program are positive indicators of financial health and commitment to shareholder value. However, the explicit forward-looking statements from management regarding significant challenges in customer acquisition and expected slower growth in the first half of 2026, coupled with ongoing securities class action lawsuits, introduce considerable uncertainty. While the long-term strategy of leveraging AI and technology in beauty and wellness remains compelling, the near-term headwinds and legal risks warrant a cautious 'hold' recommendation until there is clearer evidence of successful mitigation of customer acquisition cost issues and resolution of legal proceedings.

Keywords

Beauty Tech, Wellness Tech, E-commerce, Direct-to-Consumer, AI, Machine Learning, Computer Vision, Biotechnology, SEC Filing, Financial Results, Credit Facility, Share Buyback, Customer Acquisition Costs, IL MAKIAGE, SpoiledChild, METHODIQ, Risk Factors, Corporate Governance, Israel, Nasdaq

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