F-1: Oddity Tech Seeks to Raise Capital Through Secondary Offering of Class A Ordinary Shares

Oddity Tech's selling shareholder, L Catterton, plans to offer 4 million Class A ordinary shares in a secondary offering, with the company not receiving any proceeds.

Summary

• Oddity Tech's selling shareholder, L Catterton, is offering 4 million Class A ordinary shares in a secondary offering.
• The company will not receive any proceeds from this sale.
• The offering includes an option for underwriters to purchase an additional 600,000 Class A ordinary shares within 30 days.
• Oddity Tech has two classes of ordinary shares: Class A (one vote per share) and Class B (ten votes per share), with Class B shares convertible to Class A at any time.
• As of December 31, 2023, Class B shares represent approximately 71.8% of the voting power, and co-founder/CEO Oran Holtzman holds approximately 76.1% of the voting power.
• The company is a controlled company under Nasdaq rules and qualifies as an emerging growth company and a foreign private issuer, allowing for reduced reporting requirements.
• Oddity Tech reported $508.7 million in net revenue for the year ended December 31, 2023, a 56.7% increase year-over-year.
• Revenues from the United States were $414.1 million for the year ended December 31, 2023, a 71.7% increase year-over-year.
• Revenues from other geographies were $94.6 million for the year ended December 31, 2023, a 13.4% increase year-over-year.
• The company achieved a gross margin of 70.4%, a net income margin of 11.5%, and an Adjusted EBITDA margin of 21.1% for the year ended December 31, 2023.
• Order billings grew to $595.8 million for the year ended December 31, 2023.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook, highlighting strong growth and profitability metrics. However, it also acknowledges several risks and uncertainties, preventing a higher sentiment score.

Positives

• Strong revenue growth of 56.7% year-over-year.
• High gross margin of 70.4%.
• Significant voting power held by the CEO, potentially allowing for swift decision-making.

Negatives

• The company will not receive any proceeds from the secondary offering.
• High concentration of voting power in the hands of one individual.
• The company is a controlled company, an emerging growth company, and a foreign private issuer, which allows for reduced reporting requirements.

Risks

• The share price may be volatile.
• The dual class structure concentrates voting power.
• As a controlled company, certain corporate governance requirements may be exempted.
• As an emerging growth company and foreign private issuer, reduced disclosure requirements may make the shares less attractive to some investors.
• The company operates in a highly competitive market.
• The company relies on single source suppliers for certain component materials of its products.
• The company may be unable to accurately forecast customer demand, manage its inventory, and plan for future expenses.
• The company's recent rapid growth may not be sustainable or indicative of future growth, and the company expects its growth rate to ultimately slow over time.

Future Outlook

The company aims to launch a new, standalone digitally native brand on a regular cadence to disrupt new categories and sees significant potential to grow its existing brands and to disrupt additional product categories across the global beauty and wellness market.

Management Comments

• The ODDITY platform is designed to support a portfolio of brands and services that aim to innovate and disrupt the expansive global beauty and wellness market.
• ODDITYs success is based on our outsider approach.
• We are a technology company seeking to reinvent every aspect of a massive industry.
• Our technology innovations, when combined with our world-class physical product range and compelling brands built to win online, aim to eliminate significant friction for customers and support a seamless end-to-end user experience.
• We deploy algorithms and machine learning models leveraging user data seeking to deliver a precise product match and seamless shopping experience.
• We harness our user data to develop physical beauty and wellness products that deliver excellent performance and functionality.
• We never settle on quality.
• If our data doesn't show it is the best we can deliver, we won't launch it.
• It requires marrying two different worlds of tech and physical products.
• Its not enough to build smart machine learning models, they need to be trained to match physical products.

Industry Context

The beauty and wellness market is dominated by multi-brand brick-and-mortar retailers and has been slow to transform, presenting an opportunity for digital disruptors like Oddity Tech.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• However, it does mention that legacy players continue to perform well by leveraging offline channels, suggesting that Oddity Tech's online-focused approach is a differentiator.
• The document also notes that it has been difficult for new entrants to achieve sustainable scale or profitability without the help of third-party retailers, implying that Oddity Tech's direct-to-consumer model is more efficient.

Stakeholder Impact

• Shareholders may experience dilution due to potential future equity issuances.
• Customers may benefit from continued innovation and new product launches.
• Employees may benefit from the company's growth and success.

Key Dates

Keywords

secondary offering, class A ordinary shares, oddity tech, l catterton, voting power, financial results, emerging growth company, foreign private issuer, net revenue, adjusted EBITDA, gross margin, order billings, controlled company