Good morning, and welcome to Audity's second quarter 2026 Earnings Conference call. Today's call is being recorded, and we have a lot of time for prepared remarks and Q&A. At this time, I would like to turn the conference over to me, Maria Likouris, Investor Relations for Odyssey. Thank you. You may begin. Thank you, Operator. I'm joined by Ron Holtzman, Audity co-founder and CEO, and Lindsay Druckerman, Oddity's Global CFO. Niv Price, Oddities' CTO, will also be available for the question and answer session. As a reminder, management's remarks on this call do not concern past events or forward-looking statements. These may include predictions, expectations, or estimates, including statements about Oddities business strategy, market opportunity, future financial performance, customer acquisition costs, and potential long-term success. Forward-looking statements involve risks and uncertainties, and actual results could differ materially due to a variety of factors. These factors are described under forward-looking statement in our earnings press release issued earlier today and in our most recent annual report on Form 20F filed with the Securities and Exchange Commission on March 17, 2026. We do not undertake any obligation to update forward-thinking statements, which speak only as of today. Finally, during this call, we will discuss certain non-GAAP financial measures, which we believe are useful supplemental measures for understanding our business. Additional information about these non-GAP financial mesures, including their definitions, are included in our earnings press release, which we issued today. I'll now hand the call over to Aram. Thank you, everyone, for joining our call today. While we continue to work through the ad account dislocation at Il Makiage, I'm pleased to report progress in our business that hopefully position us for recovery in 2027 and beyond. Spoilchild had a good quarter and a strong year-to-date 2026 overall, and it's on track to grow at least 35% this year and approach $350 million of net revenue in 2026. Methodic is showing great promise after launching only several months ago. We expect the brand to deliver first-year revenue ahead of Spoil child's first year and with huge potential for the future. Both Spoil Child and Methodic are building an ambitious plan for 2027, and we will update you in coming months. For Ilmakiage, we continue to work extremely hard with our main ad partner to solve the algorithm dislocation and remain hopeful that we are on path to normalization. We work day and night to solve algorithm dislocations and we continue to believe, based on data that we see, that it's technically nature, solvable, and has nothing to do with the brand runway. Big picture, we remain bullish on Odyssey's future despite our recent customer acquisition cost challenges. We are working tirelessly to to strengthen our business, move past the dislocation, and return to playing offense in what we see is one of the most attractive markets in the world. Beauty and wellness has long been a large, resilient, and highly profitable growth market. We see the category in an exciting period of transformation today, with consumer demand for channel and product creating major shifts. Putting the current technical problem we face aside, we believe we are positioning our business to win in this moment and lead the next phase of growth. With over 70 million users on our direct consumer platform, we believe we have a clearer view than others on where demand is and how to best serve the customer. Consumers are smarter than ever before. They have more information ready at their fingertips, and they demand more from their products, more efficacy, more personalization. The appetite for beauty and medicine is converging as a result. ConsumERS want real solutions to their pain points from the inside out. They are taking control into their own hands. A lot of that is happening online, outside of traditional channels like store or medical office. ODT's portfolio of trusted brands today is built to serve consumers across a full range of needs, spanning categories and product types. From beauty to wellness to medical grade, from cosmetics to OTC to prescription products, the goal is to reduce friction and deliver unmatched experience, best-in-class products and precise treatment protocols that truly solve consumer pain points. Let's look at hyperpigmentation as an example of how our integrated platform works and how we are building a moat with vision technology, personalized treatment regimens, and ODT labs. Hyperpigmentation is a big success story for Methodix, showing higher customer satisfaction and retention signals, which is the best indicator for us that we are on to something great. Our plans for this market began with ODT's user data, which showed us how much demand our user had for addressing dark spots and uneven skin tone, and also how unhappy they were with the current solution. With this insight, we made deliberate push into upper pigmentation and deliver something better. We built one-of-a-kind user experience at Methodic, includes computer vision assessment that identifies dark spots on the skin. The relevant data analysts are then passes to Methodic provider who issues personalized treatment plan aimed at maximized efficacy and minimize side effects. It might be prescription or non-prescription or both and can involve sequencing different products across several months to optimize for the best outcome. The entire experience is designed to mimic and improve upon a high-touch experience at the doctor's office, but with incredible convenience. One of Methodix's hyperpigmentation hero products is Melanex 509, powered by Oditi 1007 Oditi Love Spotted Molecule combination. It targets visible discoloration of the skin with reduced side effects. This is just the beginning of what we think Audit T Labs can do in hyperpigmentation. We have additional molecules in development and we are making good progress finding new pathways that we believe will help us tackle hyperpigmitation from multiple angles at once. This is an example of how Audit's integrated platform is meeting unmet demand, and we're just at the beginning. The strong start of Methodic has increased our conviction in the medical-grade space. We are acquiring a more determined customer with attractive LTVs and good cross-sector characteristics. Acquisition costs are higher as compared to makeup, but we believe the AOV retention as a result of expected paybacks justify the cost. Consumers are increasingly comfortable getting medical care online and looking to brands like Methodic for innovation and upgrading offerings to meet their needs. We are positioning Methodic to be a leader in this backdrop and launching new categories and products across 2027. This will build on our infrastructure of prescription and pharmacy fulfillment to better serve existing customers and also reach new audiences. The opportunity set is large and we are moving quickly. We plan to have more updates on this expansion in the coming months. Turning to Spoiled Child, we launched Spoiled child around four and a half years ago as a multi-category wellness brand. It has scaled faster than our expectation and on track to approach $350 million of net revenue in 2026, which will put it more than a year ahead of the time it took Il Makiage to hit that milestone. SpoilChat continues to deliver very strong customer cohorts metrics like AOV and repeated scale. 12 months net revenue repeat rates for the brand are well in excess of 100% today. As we said in prior calls, we believe SpoilCha is being impacted by the algorithm dislocation issues Il Mikiage is facing, but to a lesser degree, and this has allowed us to continue scaling the brand. We are hopeful that as we work through the acquisition cost challenges with Il Makiage, we will then be able to deliver efficiencies also for Spoiled Child. The strong consumer metrics we see in Spoiled child give us confidence in the brand's future potential. We plan to continue to invest in the base direct-to-consumer business while adding new growth levers in 2027. Moving to Ilmakiyaj, where we continue to work on resolving our account dislocation with our largest advertising partner and returning to normalize audience and CPA. We continue to walk very closely with this ad partner to fix the problem, and while we are not there yet, every day that passes is helping us get to fixing the issue. We and the ad partner are in intensive testing mode, and those tests are very important for solving the algorithm dislocation. Moving ahead on Audity level, we are hopeful the worst is behind us. As our guidance indicates, we have seen sequential improvement in the rate of the year-over-year revenue decline at Audity, and we expect U3 net revenue will decline approximately 5% year- over-year. While Audity's revenue decline was severely impacted by the algorithm's dislocation, we are seeing relatively stable trends in other parts of the business that are less correlated to the acquisition spend. We continue to work hard on other advertising channels as well. Our goal for 2027 is for Ilmak Yash to return to growth. We have an amazing pipeline of new products ready to support the brand once acquisition costs recover. We'll continue to work 24-7 until this technical problem is fixed. We remain hopeful that the amount of resources and time we spend on it will lead to a resolution like any other big problem we faced since I started the business 14 years ago. Full power, non-stop hard work until fixing the problem no other way. With that, I will hand it over to Lindsay. Thank you. Thanks, Aran. Let's turn to our Q2 results, which I'll refer to on an adjusted basis. You can find the full reconciliation to GAP in our press release. Net revenue declined 25% versus the prior year to $181 million at the favorable end of our guidance for net revenue to decline between 25% and 30%. The decline was driven by a year-over-year reduction in sales of Il Makiage, which continues to be adversely impacted by a dislocation in its ad account with its largest advertising partner. This dislocation continues to impact Il Makiage's ability to reach the right audience and is driving sharply higher CPA. It is impacting acquisition revenue, most notably in first orders, but also in the portion of repeat orders that are sensitive to acquisition spend. For example, existing customers that see an ad and are motivated to buy again. We're also now seeing the compounding impact of lost repeat sales that would have naturally flowed through from customers making first order purchases early in the year. Specifically, auditing net revenue from first orders declined approximately 40% in the second quarter versus the prior year, driven by ill maquillage. Net revenue from repeat orders declined approximately 20% in a quarter from the prior-year period. AOV declined by approximately 8% in second quarter versus prior year largely driven by a decline in ill maquiage AOV. The decline in ill maquillage AOV was driven by the above-mentioned reduction in first orders, which carry higher AOV than repeat. It was additionally impacted by product mix shift away from ill maqillage skin. Gross margin was 68.7% in the quarter compared to 72.3% in the prior year. Gross Margin compressed approximately 360 basis points year-over-year, driven in part by the decline in AOV. We delivered adjusted EBITDA of $13 million ahead of our outlook for adjusted EBITDA of $8 to $10 million. The year-over-year decline versus the prior year was largely driven by the ill-maquillage algorithm dislocation, which has two primary impacts on our P&L. First, significantly higher CPA versus the prior year. Second, the decline in revenue and resulting deleverage on our fixed costs. EBITD was also negatively impacted by our decision to ramp acquisition spend for Spoiled Child in support a faster revenue growth, where our upfront investments support attractive 12-month contribution margins. On operating expense, as discussed on prior calls, our approach is to balance sustained growth investments with finding cost efficiencies to support the bottom line. This is translated into continued investments in areas like Audity Labs and our technology infrastructure, with some greater filtering and prioritization around projects where we see nearer-term payback potential. We remain bullish about the potential for Audity labs to provide real differentiation in product efficacy and experience with many applications in our portfolio. And the hyperpigmentation example from Iran is just one area. We also continue to invest in areas like aging, where our molecules have shown early in vitro promise in increasing collagen synthesis and reducing aging markers. Moving down to P&L, adjusted diluted earnings per share was 20 cents for the quarter. Free cash flow increased by $14 million in the quarter and decreased by $8 million in the first half of the year. Our inventory investments year-to-date include purchase commitments made last year in anticipation of much stronger revenue results for Il Makiage, as well as inventory purchase to support growth in Spoiled Child and Methodic. Il Mikiage today continues to work through excess inventory, and we plan to be in better balance in 2027. We exited the quarter in a strong liquidity position with $561 million dollars of cash, cash equivalents, and investments on our balance sheet. Our $350 million in credit facilities remain undrawn. During the quarter, we continue to act on what we believe is an attractive price for our shares. We were purchased 5.6 million shares in the period for $80 million. This brings our total year-to-date repurchase amount to 11.7 million shares for $163 million, dollars, which reduced our ordinary shares outstanding by approximately 20%. Approximately $87 million remains outstanding on our $200 million buyback authorization. Separately, in March, 857,000 shares were removed from our public float to Oron Holtzman's open market purchases. In June, we repurchased $50 million face value of our zero-coupon June 2030 exchangeable notes at a discounted price of $35 million. We will continue to be opportunistic in managing our capital structure in order to drive shareholder value. Turning to our outlook, for the third quarter, we expect net revenue to decline approximately 5% year over year, a meaningful sequential improvement versus the first half, as we believe the worst of the acquisition-driven revenue pressure is behind us. We expect adjusted EBITDA to be between $18 and $20 million. For the full year, we expect net revenue to decline approximately 19% year over year, driven by the decline in net revenue in the first half. And we expect adjusted EBITDA will be between $30 and $32 million. And with that, I'll turn the call back to the operator for questions. Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue, and for a participant using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit to one question. Our first question is from Dara Moseyan with Morgan Stanley. Please proceed. Hi, good morning. So, Oron, it sounds like you feel comfortable. we're moving towards solving the ad dislocation issue here in 2026. Just if we assume the problems are resolved by year end, any thoughts around ability to grow the old maquillage brand in 2027? Should we anticipate a more typical revenue growth year based on the normalized factors behind the brand or does some of this issue potentially linger or compound in 27? And then The second, just Spoiled Child continues to grow at a strong pace. You mentioned you're ramping up spending for the brand. Can you just touch on international plans for that brand over time, line of sight to making a broader international push in your decision process there now that the brand has scaled so nicely? Thanks. Yes, good morning. We believe that once we solve the problem, we plan to continue to go back to growth with El Makiage. We have amazing products. in the pipeline. We are not there yet. We didn't solve it yet, but we believe that we are closer than before because from all the data that we see so far in terms of the root cause of what happened, it looks like there is an audience drift from the algorithm and we are trying to retrain it. Once it's behind us, we are back to growth. As I mentioned, we have an amazing plan that we didn't execute because of this problem and they are ready to play. As for Spoiled Child, Spoiled child showed great demand and as you can see by the numbers, we'll continue to expand it internationally. And that's it. We have amazing modern aid products and categories for next year for Spoilt Child, so we are very bullish. Our next question is from Brian Tranquillit with Jefferies. Please proceed. Hey. Good morning, guys, and congrats on the inflection here in the business. So, maybe, Lindsay, as I think about the EBITDA guidance, how do we think about your assumptions on, number one, the seasonality, because typically I think Q4 is up sequentially in revenue versus Q3. So curious what's driving that. And then when we think about repeat revenue rates versus historical trend, I mean, what is that assumption or maybe even versus what we saw in the first half of the year? What's that assumption embedded in the back half guidance? Thanks. Thanks for that question, Brian. As we think about the sequential dynamic and the seasonality of the business, there's really no broad strokes change to how we think about the business. The first half of the year tends to be stronger for us for acquisition, and then we allow repeat to flow through in the second half. Obviously, this is a unique year because so much of our acquisition activity was, you know, that moment of time was spent towards testing. So the seasonality for this year will be a little bit different, and it's too soon for us to tell you what seasonality will look like on a go-forward basis. As it relates to repeat trends, we continue to be very strong as a company level. We remain well in excess of 100% net revenue repeat rate over 12 months. And despite some of the challenges with ill maquillage, we do continue to see strong repeat flow through, which is part of why we're expecting the sequential improvement in the second half of the year relative to the first half of the year. And in addition, we get very strong repeat from spoiled child. Our next question is from Anna Lazul with Bank of America. Please proceed. Hi, good morning. Thank you so much for the question. I was wondering if you could elaborate a little bit more on any learnings that you had from this process as you went through the remediation and anything where you've learned about your business model a bit more, about what's more resilient, flexible, anything that might need to change going forward now that you went through this process? Thanks. Yes. First of all, we learned a lot. The past few months was very intense in terms of media buying world. I must say that we thought that we know a lot, but now after those months, we are very deep in the details and learning every day better how those algorithms work. We increase our efforts both to fix the problem, but to make the business more resilient moving forward, including more distribution and more channels. We have nothing yet to announce, but once we have, we will. We believe that the key of the business is data, and in order to continue to have that ability, we need to remain a big part of the Business Ambassador remain D2C. That's our strength, and we need to continue the work with those ad partners. By the way, the way that we work now with the ad partner And their commitment, like, it's unbelievable. We are very happy for that, and we trust their team to help us and navigate and solve this problem, and that's it. So we continue to work on both, fixing the problem and expanding our distribution and channels. I just had one more thing. Like, you can see the resiliency of our model today and the fact that we have a lot of great things to talk about with respect to spoiled child and methodic, even though we do navigate these challenges with ill maquillage. So relative to when we first came public or even started building the business, we have way more brands, categories, and products for the business to rely on than in the past, and that will continue to grow. Our next question is from Yousef Squally with Truist Securities. Please proceed. Great. Thank you. Good morning. Lindsay, your annual revenue growth guide for negative 19% implies Q4 growth, I think, of negative 10% to 11%, which is quite a deterioration from the negative 5% you're guiding to for Q3. So what accounts for that deterioration? Is it just conservatism and lack of visibility, or are you seeing something in Q3 that's not sustainable necessarily in Q4. And then on the other revenue line, it was up 8%. That was a bit of a surprise. I know it's small, but what were the drivers for that and how sustainable is it? Thanks, Jesus. So on revenue, we are for Q3 guiding to a 20-point sequential improvement relative to where we were in Q2 in the first half of the year. And that's because we believe the worst of the acquisition-driven dislocation is behind us, and we are seeing the benefit of more repeat in our base business in the first half of the year, and also spoiled child has been strong. As it relates to the fourth quarter, we want to be conservative since we don't know yet how we wantto allocate our spending budget, how much goes towards testing, for example, which is inefficient for revenue generation, so we're leaving some room for the Q4 pace to slow to Q3. I would note this is a real outlook for us. There's a lot of unknowns still as opposed to a sandbagging story, but that's generally the approach here. Other is Israel, and that market has been volatile, as you know, given some of the dynamics with the war there and our store base there. Got it. Thank you. Our next question is from Scott Schoenhals with KeyBank Capital Markets. Please proceed. Hey guys, thanks for taking my question. You know, traditionally I thought of your business model as ill maquillage, funneling in new customers to support growth in Spoiled Child. But clearly you're seeing a lot of growth without that. Can you talk to us about your marketing strategy here in customer acquisitions, how that's changed since the disruption with Spoiled child? And then on Methodique, Yeah, Methodique, could you talk more about the investments needed here and maybe what you're planning on for the 2027 selling season here with these new products? You talked about pigmentation, hyperpigmentation, but also clearly going into more acute areas. Maybe talk to us what kind of investments you need and what kindof growth you're targeting. Thanks. Sure. I'll start with Spoiled Child. We saw great demand despite the fact that we believe that this location is having some impact but less a degree than Il Makiage. Even so, we're still generating nice returns on the spend and have been able to scale materially. As for Methodic, we launched it less than a year. We are very happy from the beginning of the brand, from how it started. We expect the brand to deliver higher revenue than Spoiled Child did in its first year, although Spoiled child was unbelievably strong in its first year. We launched Methodic with 30 products with a great range of products for medical grade makeup to specialized prescription protocols. One thing that surprised us out of the gate is our ability to drive demand for both personalized prescription and non-prescription products and treatment plans. For example, a methodical product is hyperpigmentation with series of prescription and non-prescription products. And the non-prescription product is OET Lab, which is very encouraging for us. Looking forward, we have a consistent framework for the category expansion, big markets where we see meaningful demand and where we can see that we can win. One category we are particularly excited about for next year is longevity and metabolic health. As a first step, we plan to deliver legally available prescription injectable and peptide therapies, and we are very bullish about that. That's it. We spent more than three years on building that growth engine, and we're very bullish on its potential. Our next question is from Andrew Boone with Citizens. Please proceed. Hi, guys. Thanks so much for taking the question. And it sounds like you have Spoiled Child and Methodic that are both doing well. Can we just step back and think about the progression of the business beyond this near-term marketing hiccup? How do we think about what you guys are doing for brand four? And then can you just talk about AI's progress within Audity Labs? Understood that is a step function change in terms of molecule development. What are you guys seeing there, and how do we think about the benefits of just new technology and the evolution of molecules and how that's related to the business? Thank you. The first one was on the evolution of our growth trajectory as we go forward now that's Boyle-Children. Brand 4. Okay. Yeah, brand four. So we continue to grow both Spoiled Child and Methodic Spoiled Child, as I mentioned, as an amazing pipeline ready to launch for next year in new categories. And brand four, we plan to launch in 2027, also next year. As for Audity Labs, we continue to have great progress there. It's also an area that we invested a lot in the past three years. And as you mentioned, you know, as you think about AI, of course, we can leverage it materially, and it can speed up our processes and our molecule discovery there. We have a team that this is what they do in labs, and we are very bullish about the potential and the speed that it can bring to the business. Our next question is from Ryan McDonald with Needham and Company. Please proceed. Thanks for taking my questions. Aran, I think in the past, if I recall correctly, when you went from year one to year two on Spoiled Child, there was quite the large revenue jump in the business. And I think you talked about that it was a little bit faster of a pace than what you wanted initially when you were thinking about the scaling of that. As we're getting in towards the end of year one with Methodic here, and heading into year two, I guess, what did you learn from spoiled child's ramping and how is that informing your view for methodic and the strategy there? And I guess is it too early to see trends in repeat rates for methodics or what are you seeing there and how does that kind of build into informing that view for year two? Thanks. For us, always the first few months is testing and trying to find the right audience and then fixing unit economics and then scaling. That's what we did with Spoiled Child, and that's what мы планируем делать с Methodic. Basically, there are fewer constraints с точки зрения развития в первые два года. Я могу напомнить вам, что в Spoiled Children, в третий год, мы решили spend less и иметь ограничения на зарплате. Мы не планировали иметь границы с Methodics в следующем году. But keep in mind that the first few years of any brand, there is a cost, and we need to take it into consideration while we are building budget, and that's what we are planning to do. Our next question is from Georgia Anderson with Evercore ISI. Please proceed. All right. Thanks for the question. And I guess thinking about the business model of try before you buy, I think you shifted kind of around 40% of acquisition revenue out of try-before-you-buy in Q1. I'm wondering kind of where that mixes today and if the kind of gross margin compression we saw in Q2, you know, is that kind of structural or recoverable? Yeah, so I'm going to declare that would be great. Sure. As you know, a focus area for us has been remediating some of the signal distortion from try before you buy. And as part of that, we have shifted part of our acquisition away from try and towards buy, and we were able to do this without any notable impact on our unit economics. We believe in our current state we can move 50% or more of our acquisitions to buy from try at a minimum. That said, we love the model. We have no plans to eliminate it. We think it offers a great value to consumers. So our focus is really on remediation and rebalancing as needed. On the gross margin question, we've always talked about our long-term gross margin expectations to be in sort of the high 60s, without gross margin being a real target KPI for us. The target KBI for us is DC margin, contribution margin, gross margin after media spend. But just based on the range of products and brands, high 60s is kind of how we've pointed everyone to. That said, this year we did get a lot of deleverage based on the lower AOV, and we do not see that as structural. Once we have improvement in our acquisition dislocation, we'll be able to go back to optimizing for AOV. Remember, we've removed all of those efforts, and so we'll be able to optimize better for AOV, which support our gross margin on a like-for-like basis. And we didn't optimize yet methodic gross margin since it's early. So we expect to have meaningful improvement also there. Thank you. This will now conclude our question and answer session. I would like to turn the floor back over to Mr. Holtzman for closing remarks. Thank you very much, guys. See you next quarter. This will conclude today's conference. You may disconnect at this time and thank you for your participation.