Il Makiage parent Oddity Tech’s stock rockets out of the gate in trading debut

“We’ve unlocked online one of the most attractive and lucrative TAMs on the planet,” said the CFO, referring to the sector’s total addressable market. The beauty industry is worth an estimated $600 billion and is still dominated by bricks-and-mortar retailers.

“The encumbents are amazing megacap businesses that have built so much value over time,” said Drucker Mann. “But we believe the consumer has moved on and that we’re building the future of the category.”

The company, which was founded by Israeli sister-brother team Oran Holtzman, who is chief executive, and Shiran Holtzman-Erel, who is chief product officer, is confident its high-tech approach to the beauty business gives it a strong advantage.

For more, see: Il Makiage parent Oddity Tech is going public: 5 things to know about the Israeli digital beauty company

Oddity harnesses data science, machine learning and computer vision and artificial intelligence to allow its customers identify the correct products, formulations and shades, and it owns patented software that allows them to do it using their smartphones.

The company acquired Voyage 81 in 2021, a company that has developed software that can provide hyperspectral information.

Simply put, the eye can only see three colors — red, green and blue — but there are many more colors on smaller wavelength bands that remain invisible. Technology developed by NASA can extract that information but the hardware is expensive at a cost of $20,000 or more.

The Voyage81 software can extract the same information and bring it to all devices, allowing consumers to see more colors.

“We can analyze skin and hair features, detect facial blood flows and more. We’re building a whole new suite of tools to harness that power,” said Drucker Mann.

The results are impressive. The company’s first brand, Il Makiage, which was launched in 2018, was the fastest-growing global beauty direct-to-consumer platform from 2020 through 2022, says the prospectus, citing trade magazine Women’s Wear Daily.

Il Makiage was also the fastest-growing digital, direct-to-consumer beauty brand in the U.S. through 2021, says the IPO prospectus, citing data from Digital Commerce 360, which is its most recent available.

The second brand, SpoiledChild, launched in 2022 with the goal of disrupting the wellness category online, and is scaling even faster, said Drucker Mann.

The company now has more than 40 million users on the platform that have generated more than 1 billion data points on their beauty preferences. As of end-March, Oddity had more 4 million active customers, or customers that had made at least one purchase in the last year.

“Our business is unique in that it’s a company that’s growing and as young as we are and in tech, we’re profitable from very early on,” said Drucker Mann. “We have generated significant Ebitda margins and cash flow and so we have more than $100 million of cash on our balance sheet from earnings, and not from a capital raise.”

The company plans to use the proceeds from today’s deal to develop new products and expand into new markets. Some of those products will come out of Oddity Labs, which it set up in April to bring AI-based molecule discovery to beauty and wellness.

Brands three and four are in the works, although Drucker Mann is unable to offer details just yet.

“There are so many pain points that consumers have told us about so we’re developing products to address those,” she said.

The executive’s background as a Goldman Sachs banker made her passionate about companies and consumer products, understanding how a company works and what makes a business succeed.

“Getting global capital markets behind us when the business has never been stronger is making us excited as we look at 2024 and beyond,” she said.

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