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United States securities and exchange commission logo
March 2, 2022
Oran Holtzman
Chief Executive Officer
ODDITY Tech Ltd.
8 Haharash Street
Tel Aviv-Jaffa, 6761304, Israel
Re: ODDITY Tech Ltd.
Draft Registration
Statement on Form F-1
Submitted February
1, 2022
CIK No. 0001907085
Dear Mr. Holtzman:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form F-1
Market and Industry Data, page ii
1. We note your statement
that you have not independently verified information from third
party sources and that
the accuracy and completeness of such information is not
guaranteed. This
statement may imply an inappropriate disclaimer of responsibility with
respect to such
information. Please either delete this statement or specifically state that
you are liable for such
information that appears in the prospectus.
Founder's Letter, page iii
2. We refer to the letter
from your co-founder. Please revise your presentation so that the
letter does not appear
in the forepart of the registration statement prior to the Summary.
Oran Holtzman
FirstName LastNameOran Holtzman
ODDITY Tech Ltd.
Comapany
March NameODDITY Tech Ltd.
2, 2022
March2 2, 2022 Page 2
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FirstName LastName
3. Please revise here and throughout your registration statement to
provide the bases for your
claims that your physical beauty and wellness products deliver
"best-in-class performance
and functionality," that your product offerings are "best-in-class,"
and that your digital
marketing and user acquisition are "best-in-class." In that regard and
with reference to
your disclosure on page 103, we note that you do not appear to create
your own products.
To the extent that you source your products from suppliers that also
provide raw materials,
packaging, and/or assembly services to other companies within the
beauty and wellness
industry, please tell us why it is appropriate to refer to your
products as "best-in-class."
Prospectus Summary, page 1
4. Your prospectus summary should include a balanced discussion of your
company and
your business, including any associated weaknesses and challenges you
currently face and
may face in the future. Please balance your discussion of your
advantages and
competitive strengths with an equally prominent discussion of any
detriments. For
example, we note your disclosures elsewhere in the prospectus
regarding (i) the fact that
certain of your manufacturers have experienced delays and shutdowns
due to the COVID-
19 pandemic; (ii) your experience of supply chain disruptions due to
factors such as
fulfillment center disruption and limited shipping capacity; (iii)
your reliance on third-
party data for your AI models; (iv) your receipt of complaints
regarding your products,
including complaints alleging adverse side effects; and (v) your lack
of full compliance
with applicable data privacy protection regulations.
5. Please revise throughout your Prospectus Summary and Business sections
to avoid
unnecessary repetition. By way of example only, we note that you cite
(i) that your tech
team comprises over 40% of your headcount four times in each section
and (ii) your 25
million users six separate times in the Summary. Please note that
these examples are not
exhaustive.
Who We Are, page 1
6. We note your statement that you have a platform of over 25 million
users that you have
direct access to and have generated over 1 billion unique data points.
Please revise your
disclosure here and throughout to clarify (i) how the terms "users"
and "data points" are
defined and (ii) whether you generate revenue from these users. To the
extent you do not
generate revenue from your users, please disclose your number of
active customers with
equal prominence.
The ODDITY Platform is Unlocking Distribution for Beauty and Wellness Online,
page 5
7. We note your statement that SpoiledChild has "sustainability at the
center of its purpose"
and features refillable packaging and a "sustainable mindset." Please
revise your
disclosure here and on page 141 to clarify what is meant by having
"sustainability at the
center of its purpose" and a "sustainable mindset." In your revisions,
please clarify
whether SpoiledChild has additional sustainability features or
characteristics beyond
Oran Holtzman
FirstName LastNameOran Holtzman
ODDITY Tech Ltd.
Comapany
March NameODDITY Tech Ltd.
2, 2022
March3 2, 2022 Page 3
Page
FirstName LastName
refillable packaging.
Our Competitive Strengths, page 6
8. We note your disclosure here and on page 82 stating that "in 2020",
you achieved 3.1x 12-
month LTV to CAC. We further note your disclosure on pages 93 and 102
stating that
"by 2021" you achieved 3.1x 12-month LTV to CAC. Please revise your
disclosure to
clearly state (i) which customer cohorts were included in this
analysis and (ii) how you
calculate customer lifetime value and customer acquisition cost.
Please also revise your disclosure within Management's Discussion and
Analysis of
Financial Condition and Results of Operations to present LTV and CAC
calculations for
recent periods.
9. Please define the term "active customers" the first time it is used.
Please also disclose
your active customer retention rate.
10. We note your statements here and elsewhere in the prospectus that you
have developed
and scaled transformative brands. However, based on the disclosure
throughout the
prospectus, you had one brand prior to February 2022: IL MAKIAGE.
Please explain to
us the basis for your statements that you have developed, launched,
and scaled multiple
transformative brands. Alternatively, please revise your disclosure.
Risk Factors
If our products are found to be or are perceived to be defective or unsafe...,
page 38
11. Please provide further detail about the complaints you have received
alleging adverse side
effects. Alternatively, please tell us why this information would not
be material.
Changes in data privacy and security laws, rules, regulations, and
standards..., page 47
12. We note your disclosure that you have not "fully complied with the
foregoing regulations
with regard to the prohibition of transfer by the data importer to
third-parties[.]" Please
revise to describe (i) the scope of your non-compliance and (ii) the
consequences you may
face as a result of your non-compliance.
We rely significantly on the use of information technology, including
technology provided by
third-party service providers..., page 49
13. We note your disclosure that "[s]ecurity incidents compromising the
confidentiality,
integrity, and availability of [y]our confidential or personal
information and [y]our and
[y]our third-party service providers' information technology systems
have occurred in the
past and may occur in the future." Please provide further disclosure
regarding the types of
security incidents that have occurred in your business. In your
revisions, please clarify
whether any user and/or customer personal data was compromised.
Oran Holtzman
FirstName LastNameOran Holtzman
ODDITY Tech Ltd.
Comapany
March NameODDITY Tech Ltd.
2, 2022
March4 2, 2022 Page 4
Page
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Driving Customer Acquisition, Retention, and Repeat Purchases, page 82
14. Please revise your disclosure in this section to define organic
revenue and explain how it
differs from revenue from repeat orders and users who are converted
into customers
through unpaid retargeting.
Business, page 92
15. Please revise your Business section to provide additional details
regarding your products,
including the types of products you sell, which products are your key
products, product
trends, and a description of the marketing channels you use. Please
also include
additional details regarding how you produce, distribute and deliver
your physical
products to consumers. In your revisions, please clarify whether you
develop or produce
your products internally or whether you rely on external suppliers and
partners for these
services. For guidance, please refer to Item 4.B. of Form 20-F
(incorporated into Form F-
1).
16. Please revise the Business section, where appropriate, to describe the
material terms of
your acquisition of Voyage 81 Ltd. referenced on page F-23. In your
revisions, please
include a description of the terms of the Redeemable Ordinary A Shares
issued to the
sellers. Please also file the stock purchase agreement referenced on
page 134 and the
holdback agreement with Niv Price referenced on page 135 as exhibits
to your registration
statement.
The Scarce Combination of Scale, Growth, and Profitability, page 92
17. Please revise your disclosure to provide the basis for your belief
that you have "achieved
leading profitability in record time relative to other DTC
businesses."
An Expansive Customer Demographic, page 96
18. Please revise the graphics that appear on page 96 to include the
percentages associated
with each data point.
Supply Chain, page 103
19. Please disclose whether the prices of the principal raw materials that
you require are
volatile and, to the extent there is pricing volatility, describe how
you manage pricing
fluctuations. Refer to Item 4.B.4. of Form 20-F (incorporated into
Form F-1).
Our People and Culture, page 104
20. We note your disclosure that as of December 31, 2021, you had 237
"employees and
entrepreneurs across [y]our corporate offices." Please clarify the
difference between an
employee and an "entrepreneur" and, if possible, please provide a
breakdown of persons
employed by main category of activity and geographic location.
Oran Holtzman
FirstName LastNameOran Holtzman
ODDITY Tech Ltd.
Comapany
March NameODDITY Tech Ltd.
2, 2022
March5 2, 2022 Page 5
Page
FirstName LastName
Management
Incentive Plans with Respect to SpoiledChild, page 127
21. Please describe the revenue thresholds associated with the incentive
bonuses described in
this section. Alternatively, please tell us why this would not be
required.
2022 Equity Incentive Plan, page 130
22. When available, please describe the terms of your 2022 equity
incentive plan.
Certain Relationships and Related Party Transactions
Indemnification and Expense Agreement with Catteron Management Company, L.L.C.,
page
133
23. We note your disclosure that you "undertook to pay all reasonable
expenses incurred by or
on behalf of Catterton Management or its affiliates in connection with
any services
provided to [you] by Catterton Management or its affiliates." Please
disclose the types of
services provided to you by Catterton Management, whether your
indemnification
obligations pursuant to the agreement are capped and whether this
agreement is
anticipated to remain in effect following the consummation of the
offering.
Registration Rights, page 133
24. Please revise to disclose the number of shares that will be entitled
to registration rights.
Description of Share Capital and Articles of Association, page 136
25. Please revise your disclosure to describe the permitted transferees of
Class B ordinary
shares for transfers of Class B ordinary shares that will not cause
the shares to
automatically convert into Class A ordinary shares. Please also
disclose whether the
holders of Class B ordinary shares have optional conversion rights and
whether the
Company has any ability to mandate a conversion of Class B ordinary
shares if certain
conditions are met, including whether the Class B ordinary shares have
any time-based
sunset provisions.
Note 2- Significant Accounting Policies
r. Revenue recognition, page F-12
26. You state on page F-13 that you record a reserve for estimated product
returns in each
reporting period. Please address the following:
Please tell us why presentation of Returns on the face of the
financial statements is
consistent with ASC 606. In this regard, it would appear that
returns would be
considered variable consideration and included in the Revenue line
item.
Provide us a detailed analysis of how you account for items
shipped under your "Try
Before You Buy" program in which customers choose several similar
products for a
trial and initially pay only shipping costs, paying only for the
products they keep after
Oran Holtzman
ODDITY Tech Ltd.
March 2, 2022
Page 6
the trial period.
Provide additional disclosure in the notes to the financial
statements with respect to
your accounting treatment for the "Try Before You Buy" program.
Note 2: Significant Accounting Policies
v. Basic and diluted income per share, page F-14
27. Please explain why the options outstanding have been excluded from the
calculation of the
diluted net income per share when you have reported net income for the
year ended
December 31, 2020 or revise accordingly.
w. Operating Segments, page F-14
28. Please provide the disclosures required by ASC 280-10-50-40 or explain
why this
information is not available. If providing the information is
impracticable, that fact shall
be disclosed.
Note 13. Subsequent Events, page F-23
29. Please tell us your consideration to provide the financial statements and
related pro forma
financial information for Voyage81, which was acquired July 9, 2021.
General
30. Please provide us with copies of all written communications, as defined
in Rule 405 under
the Securities Act, that you, or anyone authorized to do so on your
behalf, present to
potential investors in reliance on Section 5(d) of the Securities Act,
whether or not they
retain copies of the communications.
You may contact Sasha Parikh at 202-551-3627 or Mary Mast at
202-551-3613 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Joshua Gorsky at 202-551-7836 or Alan Campbell at 202-551-4224 with any
other
questions.
Sincerely,
FirstName LastNameOran Holtzman
Division of
Corporation Finance
Comapany NameODDITY Tech Ltd.
Office of Life
Sciences
March 2, 2022 Page 6
cc: Alison A. Haggerty, Esq.
FirstName LastName