Three months ago, ODDITY Tech's management argued that the worst of the Il Makiage advertising crisis had passed. It reinstated full-year guidance and promised that third-quarter revenue would fall only about 5%, roughly a 20-point improvement from the first half. The stock has rallied on that story. The report due before the open on November 11 is the first real test of whether the inflection is genuine or simply a function of easier comparisons and a stronger supporting cast.
The Street has largely accepted management's framing. Consensus calls for revenue of $141.3 million, down 4.5% from $147.9 million a year ago and a touch above the company's guide of roughly $140.5 million. Analysts expect non-GAAP earnings of $0.30 per share, up from $0.28 a year earlier, and the whisper number sits slightly higher at $0.32. That spread is modest, but it signals that a merely in-line quarter would probably not satisfy anyone. Earnings growth on shrinking sales is plausible partly because ODDITY has repurchased about 20% of its shares this year, so per-share results benefit even if the underlying business is still contracting.
The heart of the report is Il Makiage. Last quarter, first orders improved to a 40% decline from 50%, but repeat orders slipped to a 20% decline from 15% as lost customer cohorts began to compound. The narrative holds if first-order trends keep improving and repeat-order erosion stabilizes. It weakens if repeat business keeps sliding, because that would suggest the damage is spreading into the customer base faster than new acquisition can repair it. The fix with the company's largest ad partner remains unresolved, and the original target of normalization in the second half of 2026 has already been pushed to a return to growth in 2027. Any further slippage there would undercut the turnaround story more than a small revenue miss.
The supporting brands carry real weight now. Spoiled Child's full-year outlook was lifted to about $350 million, up 35%, and Methodic is expected to beat Spoiled Child's first-year revenue, well ahead of the $25 million management pointed to earlier in the year, helped by its hyperpigmentation product. Confirmation that both remain on pace would show the portfolio is genuinely becoming less dependent on its flagship. Margins deserve equal attention. Gross margin fell to 68.7% last quarter, down 360 basis points year over year, as average order value dropped 8%. Stabilization would support the $30 million to $32 million full-year adjusted EBITDA target, while further erosion would raise questions about the excess Il Makiage inventory that management does not expect to clear until 2027. Cash, which has fallen from $793 million a year ago to $561 million, partly due to buybacks, is another figure to monitor.
Sentiment has swung meaningfully. Going into the last report, the mood was decidedly bearish; it is now mildly bullish. The shares have gained about 21% since the last report while the S&P 500 slipped 1.6%, and at $21.21 the stock sits comfortably above its 200-day average of $17.54, though still about 10% below its post-earnings high of $23.73. The market has paid in advance for the recovery, which raises the bar.
The fourth quarter may matter as much as the third. Management's full-year guide implies a decline of roughly 10% to 11% in the final quarter, a step backward from the third-quarter pace that it attributed to limited visibility. If ODDITY delivers around 5% shrinkage, holds margins and narrows that Q4 gap, the inflection thesis gains credibility. If the year-end outlook stays soft or Il Makiage repeat orders keep eroding, investors may conclude that the worst is not yet behind the company after all.