Oddity Sees Light at End of Tunnel as Q1 2026 Earnings Call Hints at Recovery
Despite facing unprecedented account dislocation with its largest advertising partner, Oddity remains hopeful that normalization will return in the second half of this year. As reported during their first quarter 2026 earnings conference call on June 2nd, the company saw a meaningful improvement in IL MAKIAGE's cost-per-acquisition (CPA) in May, which declined an estimated 28% from April.
This positive trend is a welcome respite after months of negative growth. Oddity has been working closely with its advertising partner to fix the issue and has heard that they estimate they can recover 40%-60% of CPA based on their system alone. If achieved, this would signal a return to health for the business and position it for growth and profitability.
Oddity's CEO, Oran Holtzman, emphasized during the call that if they had planned for this level of CPA in 2026, they would have guided to a normal earnings view of 20% revenue growth and 20% adjusted EBITDA margin. The company wants to share more data and context for the anomaly experienced.
In the past, Oddity's CPA was very stable, with steady and consistent mid-teen increases every year. However, in 2026, levels of CPA were seen that were 2x higher than what they were expecting and what they see in other competitors. The data indicates that the issue is technical, not brand or saturation-related.
The breakdown occurred suddenly and simultaneously across different IL MAKIAGE ad accounts, different markets (U.S., Canada, U.K., Australia, and Israel), which suggests it has nothing to do with the brand. Furthermore, the company believes a significant driver of the break comes from spiking bounce rates, suggesting the issue is with lower quality audiences being served with their ads by this algorithm.
Oddity's fundamental brand health is confirmed by behavior among existing customers, including strong net revenue repeat on 12-month basis cohorts. The company supports its 12-month contribution margins and has been successful in remediation of its Try Before You Buy model.
