ODDITY’s stock plunged 26.7% following earnings as investors reacted to a significant guidance cut and sharp deceleration driven by a technical issue that caused a doubling of customer acquisition costs (CPA), severely impacting sales and margins in Q1 and the first half of 2026.
- Q1 sales declined 26% year-over-year due to a technical disruption with ODDITY’s largest advertising partner, slightly better than the previously guided 30% decline.
- CPA for IL MAKIAGE spiked up to 2x expected levels, compressing unit economics and forcing reduced acquisition spend.
- Management attributes the CPA spike to algorithm issues causing lower quality audiences and rising bounce rates across multiple major markets simultaneously.
- The company has started remediation efforts, including shifting 40% of Try Before You Buy acquisition revenue to a standard Buy model with no immediate unit economics damage.
- Outlook remains cautious, with normalization and recovery of 40%-60% CPA expected only in the back half of 2026; thus, meaningful H1 headwinds and margin pressure persist.
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