Despite it being a ghost town in IPOville, Oddity, a beauty and technology company responsible for managing brands like Il Makiage and Spoiled Child, has submitted its application to become a publicly traded company. The decision is noteworthy not only because initial public offerings (IPOs) are a bit scarce these days but also because it aligns with the momentum surrounding artificial intelligence (AI). AI is the cornerstone of Oddity’s operations, as the company used data to craft brands and deliver personalized product recommendations to its customers.
The Israeli firm, which was founded in 2018 by siblings Oran Holtzman and Shiran Holtzman-Erel, plans to go public on the Nasdaq stock exchange with the ticker symbol ODD. However, the company has not yet revealed the pricing specifics for its IPO in its regulatory filings. In response to inquiries about the timing of the pricing announcement, the company chose not to comment.
The company aims to disrupt a market that has traditionally been controlled by established retailers by revolutionizing the in-store experience through AI and data-driven product recommendations.
Central to its business model is its proprietary technology, which incorporates advancements developed by a former Israeli defense official. In addition, the company has amassed billions of data points from its user base.
According to the company, Oddity not only focuses on new products but also the efficacy of beauty products.
In late April, Oddity invested over $100 million to acquire Revela, a biotech startup, and establish a laboratory in the U.S.
The merger enabled Oddity to integrate a team of scientists who specialize in using AI to develop new molecules. These molecules are expected to be incorporated into the company’s existing cosmetics brands and will also contribute to the creation of future products.
Prior to that, in 2021, Oddity completed the acquisition of Voyage81, a deep tech startup specializing in AI-based computational imaging. Voyage81 was founded in 2019 by a team of experts, including Niv Price, who served as the head of research and development for a technological unit within the Israeli Defense Forces. The other founders of Voyage81 are Boaz Arad, Rafi Gidron and Omer Shwartz.
AI in the beauty industry represents a departure from traditional norms that heavily rely on sensory experiences. While the beauty industry has historically thrived on in-person interactions, AI has opened up possibilities and revolutionized the way consumers engage with beauty.
One of the ways AI breaks the norm is by enabling virtual experiences that simulate sensory interactions. Through advanced technologies like virtual reality (VR) and augmented reality (AR), consumers can virtually try on makeup, experiment with different hairstyles, and even see how skincare products work.
Take Laneige and Charlotte Tilbury, which have both ventured into the metaverse. Perfect Corp. and Google are looking to help brands and retailers create realistic AR try-on experiences.
Read more: Virtual Try-On Software Searches for Competitive Advantage as Big Tech Steps In
By leveraging machine learning algorithms and data analysis, AI can analyze vast amounts of information, such as skin types, concerns, and preferences, to deliver accurate and customized recommendations. This shift allows consumers to access personalized experiences conveniently from their homes, breaking the norm of physical presence as a prerequisite for personalization.
Furthermore, AI in beauty has expanded the definition of personalized experiences by offering individualized recommendations at scale. AI algorithms can process large volumes of data and generate personalized recommendations for many people simultaneously.
During the quarter ending on March 31, Oddity recorded an increase in revenue, reaching $165.65 million compared to $90.41 million in the same period the previous year. The company also reported a net income of $19.59 million, or $5.34 per share, in contrast to $3.01 million, or 82 cents per share, from the previous year.
The numbers disclosed in its regulatory filing demonstrate that the direct-to-consumer (D2C) retailer has consistently maintained profitability on an annual basis, starting from at least the year 2020.
Earlier this year, Lindsay Drucker Mann, the global chief financial officer of Oddity and a former executive at Goldman Sachs, mentioned in an interview with CNBC that the company is not only profitable but also growing.
According to the company, Oddity has reported an average doubling of its gross sales every year since 2018.
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