Olaplex (OLPX) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales declined 3.6% year-over-year to $119.1 million, with sequential improvement from Q2 and international business underperforming; direct-to-consumer sales grew 6.8%, while professional and specialty retail channels declined.

• Adjusted EBITDA was $44.6 million with a margin of 37.5%, down from 41.7% in Q3 2023; net income fell to $14.8 million from $20.4 million.

• Gross profit margin improved to 68.6% from 67.6%, and adjusted gross profit margin rose to 70.8% from 69.7%, driven by lower product obsolescence write-offs.

• The company is undergoing a transformation focused on long-term growth, innovation, operational improvements, and international expansion amid a challenging macroeconomic and competitive environment.

• Leadership team strengthened with new COO/CFO, CMO, SVP International, and Interim Chief Accounting Officer; new product launches contributed to offsetting sales declines.

Financial highlights

• Q3 2024 net sales: $119.1 million (down 3.6% year-over-year); U.S. sales down 3.3%, international down 3.9%.

• Adjusted EBITDA: $44.6 million (down 13.4%); margin 37.5% (down from 41.7%).

• Adjusted net income: $28.7 million ($0.04 per diluted share), down from $33.4 million ($0.05 per share) in Q3 2023; net income: $14.8 million.

• Gross profit margin improved to 68.6% from 67.6%; adjusted gross profit margin rose to 70.8% from 69.7%.

• Cash and cash equivalents at quarter-end were $538.8 million, up from $466.4 million at year-end 2023; inventory at $85.9 million, down $10 million since year-end.

Outlook and guidance

• FY2024 net sales guidance lowered to $405–$415 million from $435–$463 million.

• Adjusted EBITDA guidance reduced to $121–$127 million (margin 29.9%–30.6%), down from $143–$159 million (32.8%–34.3%).

• Adjusted net income guidance cut to $67–$73 million (prior: $87–$100 million); adjusted gross margin expected at 70.9%–71.6%.

• Full-year adjusted SG&A expected at $167–$170 million; non-payroll marketing spend at $62–$65 million.

• Lowered outlook reflects weaker international performance, slower demand lift from new investments, and increased holiday promotions.