Shares of Oddity Tech Ltd (NASDAQ:ODD) fell in early trading on Tuesday, ahead of the company’s second-quarter (Q2) results scheduled to be reported before market opens on Wednesday, Sept. 9.
The beauty and wellness technology company had reported a massive earnings miss in the previous quarter due to a technical disruption in its advertising account that caused CPA (cost per acquisition) to surge to roughly double the historical levels.
Oddity Tech’s focus during the upcoming earnings release would be on "proving that the CPA disruption is temporary, with early signs of normalization providing a path back to growth," according to Needham.
The Oddity Tech Analyst: Analyst Ryan MacDonald maintained a Hold rating on the stock.
The Oddity Tech Thesis: The Q2 results are likely to reflect continued pressure from elevated acquisition costs and the "downstream impact of lower first orders, MacDonald said in the note.
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Oddity Tech had guided to a 25%-30% revenue decline and adjusted EBITDA of $8-$10 million and is likely to report results broadly in line with this, he added.
The analyst said there are encouraging signs of an early inflection, with a 28% sequential improvement in IL MAKIAGE CPA from April to May.
The successful migration of around 40% of acquisition volume away from TBYB (try before you buy) provides "initial evidence that remediation efforts are gaining traction," he wrote.
MacDonald noted other positives as:
- Repeat purchase behavior remaining resilient
- METHODIQ offering additional support to the underlying growth algorithm
Management continues to believe that Oddity Tech’s largest advertising partner "could ultimately restore 40%-60% of lost efficiency," the analyst wrote.
The Key Debate: MacDonald said concerns center on the speed and durability of recovery, rather than the health of Oddity Tech’s underlying brands.
"Management continues to characterize the CPA dislocation as technical and is actively working with its advertising partner on remediation, while the shift toward a standard purchase model has preserved unit economics and repeat purchasing remains resilient," the analyst wrote.
He added, however, that the second-quarter results could still reflect "significant acquisition headwinds" and management has projected only a gradual recovery in the back half of 2026.
MacDonald further said that 2026 is being considered a transition year and investors are likely to focus on:
- Incremental CPA trends
- Evidence that acquisition efficiency is normalizing
ODD Price Action: Shares of Oddity Tech had declined by 2.11% to $13.46 at the time of publication on Tuesday.
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