Olaplex reports rising income and revenue in first post-IPO earnings report
The Montecito-based hair care products company Olaplex released what it called a “strong” third-quarter earnings report on Nov. 10, its first quarterly report since the company’s initial public offering in September.
Olaplex was founded in Santa Barbara using technology developed by UC Santa Barbara chemists and went public on Sept. 30, the same day its third fiscal quarter ended. Net sales for the quarter were $161.6 million, an increase of 81% compared to the third quarter of 2020.
Net income increased 99.9% year-over-year to $56.6 million, or 8 cents per diluted share. The company said its adjusted net income rose to $74.4 million, or 11 cents per diluted share, up from of $45.8 million, or 7 cents per diluted share, in last year’s third quarter.
Olaplex attributed the rise in sales to growth across all channels of distribution, driven by increased velocity of existing products, favorable response to the launch of products, as well as the addition of new customers in the United States and internationally.
“This growth comes on top of already a very strong growth in the third quarter of last year,” Olaplex CEO JuE Wong said during the company’s earnings call. “Our margins remain strong in this third quarter of 2021.”
Olaplex shares closed at $26.60 on Nov. 10, before the earnings announcement, and were up 1.5%, to $27, in after-hours trading.
Wong also noted the company’s gross profit rose 103% to $127.5 million, from $62.8 million in the third quarter of 2020.
Olaplex began trading on the Nasdaq on Sept. 30 and soon completed an initial public offering of 73.7 million shares of its common stock. All shares in the IPO were sold by existing stockholders of the company — primarily its majority owner, Advent International — at a public offering price of $21 per share, so Olaplex did not raise any money through the offering.
The selling stockholders received net proceeds of about $1.5 billion, after deducting underwriting discounts and commissions, Olaplex said.
The company expects that 85.4 million of its shares, including certain shares underlying vested stock options, will become eligible for sale in the public market at the open of trading on Nov. 15.
Olaplex had 82 full-time employees, as of June 30. The workforce is completely remote, and was before the pandemic began last year, so it does not have a physical headquarters. Its official headquarters on U.S. Securities and Exchange Commission filings is an address on Coast Village Road in Montecito.
“Overall, I’m extremely proud of our passionate and dedicated team that contributed to our strong performance this quarter, and believe we are well-positioned to continue our success for the benefit of all Olaplex stakeholders,” Wong said during the earnings call. “As we look ahead, we remain excited about our business prospects, and expect our positive momentum to continue in the near and long-term.”
Olaplex offers hair care shampoos and conditioners. Products are sold through professional hair salons, retailers and direct-to-consumer channels.
Wong described Olaplex as “a science-enabled, technology-driven beauty company, so for us, the technology piece is very important.”
Dean and Darcy Christal of Santa Barbara founded Olaplex in 2014. UC Santa Barbara chemistry professor Craig Hawker and his former graduate student, Eric Pressly, developed the technology for the company’s hair care products and are co-founders of the company.
Officials believe Olaplex can expand its “loyal base” of users globally, and continue to launch new products “supported by a robust innovation pipeline that’s focused on solving real consumer problems,” Wong said.
The company is positioned for “consistent, strong growth at robust margins that we believe are among the best in our industry,” Wong said.
For the fiscal year 2021, Olaplex is expecting net sales in the range of $580 million to $588 million, according to CFO Eric Tiziani.
“Based on the mid-point of this range, this is a 107% growth versus full-year 2020,” Tiziani said during the earnings call, adding that the 2021 outlook reflects Olaplex’s plans for growth with existing and new distribution opportunities.
Olaplex officials are “very pleased” with the latest financial results and the “positive momentum of our business, which is reflected in full-year 2021 outlook,” Tiziani said. “We believe that our disruptive business model is working, and our competitive advantages have us poised to continue delivering strong results.”
As of Sept. 30, Olaplex had $121.5 million of cash and cash equivalents, a slight decrease from $121.6 million a year earlier.