Thank you everyone for attending our conference today. I'm Susan Anderson, one of Canaccord Genuity's consumer analysts, and we're very pleased to have with us Olaplex, and in particular, Amanda Baldwin, CEO of Olaplex. Amanda, so you joined Olaplex back in December of 2023 from Supergoop! So you've been in the role about seven months now, I would say. Can you maybe talk about your observations of the business, what your priorities have been, and how you're progressing against those priorities?
Of course. Well, first of all, thank you so much for having us.
Yeah.
It's great to be here on a beautiful Boston day. So yes, I've been in the role for about seven months now, and I think everything that I hoped would be true is true. And that really comes down to the incredibly powerful foundation that this business has. First and foremost, beginning with the power of its product and power of innovation. Not a day goes by where I don't talk to someone who really is so profoundly impacted by what the product can do-
Mm-hmm
... whether that's a pro or a consumer, and I think that really gets to the heart of what this business is all about is scientific innovation. So that to me is where the journey always starts. The second thing is that sort of there's a lot of excitement for this product and interest in what we're gonna do next.
Mm-hmm.
Like, I feel like we have a really excited audience, which is something that is really, as a marketer and a brand builder, something that's very powerful to me. The third is really the power of scale, and that this business remains one of the top players in its industry. It has a lot of the 4 or 5- 4 out of 5 of the top SKUs in the U.S. haircare market, according to Circana, that it is a powerful partner to all of the folks that are so important to our journey ahead of us. Like, that gives us a lot to work with.
Mm-hmm.
You know, all those things to me were really what inspired me to join this company seven months ago. My background is really as a brand builder and as a business builder, and I always look for things that have great fundamentals, but an incredible journey ahead of them, where the story is not fully told yet.
Yeah.
And that's really where we're beginning our transformation. And the three things that I've really been focused on over the first seven months were kind of what I walked in the door knowing needed to happen. And the first was really around the marketing, the sales, the education, the product, right? The science is there, the innovation is there, but do we have a powerful engine that's telling that story?
Mm-hmm.
The answer was not yet. The beginning of it is happening, certainly. I'm very proud of the progress that we've made so far in this business, but we really need an engine that helps us tell that story. We have a new CMO who started about a month ago, and she's off to the races, and a lot of really great talent, and again, a lot of interest from the pro and an interest from the consumer. The other aspect of that, that marketing education, was really reconnecting with our heritage of the pro.
Mm-hmm.
I really believe that one's future is somehow written in the origin story of a business, and that in addition to the science and the innovation, was really the power of the pro. So I've spent a lot of time in a lot of hair salons talking to a lot of people. It's kind of a super fun part of the job, and really reconnecting and understanding what it means to be a pro, what they need from us, and really just kind of getting their point of view, and I've been just incredibly blown away by this community.
Mm
... their passion for the product, their passion for their clients, and the impact that they have on the people around them, and it's certainly been incredibly inspiring. The second thing that's really important is to build an infrastructure that supports a business of our scale, and will c-
Mm-hmm
... will support further growth. This is a story of a business that grew really, really fast, and didn't have all the pieces of the puzzle that really support. I've always believed that what the consumer does not see is as important as what they do.
Mm-hmm.
And so making sure that we have the right transformation priorities in place, that are gonna build the operational, the financial infrastructure, all the reporting, everything that we need to run a really powerful business. And the last, but certainly not least, is what's the vision for the future?
Mm-hmm.
And that these things are, you know, sitting in my seat really over the course of the last seven months, has been toggling between: How can I make today better, but how am I also building for the future? And we're excited that we're well on our way of having that point of view and bringing it when we're ready to, for everyone to hear it.
Great, that sounds exciting. Maybe if we can move on to product innovation, as you mentioned. So it's been a while, I think, before a new hair line or new hair product came out. You had the BrowBond earlier this year-
Mm
... which complemented the LashBond, but we have No.10 rolling out-
Mm-hmm
... which focuses on curly hair. I guess maybe if you could talk about that, how big you think that could be. Is there anything you can compare that to? And then I think you have a couple more products rolling out later this year, which maybe you, you can't talk about, but, you know, just kind of talk about that innovation pipeline and-
Yeah
... and how you see that.
... So, you know, like I said, your future is always written somewhere in the innovation-
Mm-hmm
and then the story of the past. And so product and the power of product is always something that I'll come back to, and I could not be more excited and proud by the Bond Shaping launch. So it's actually, it starts with an in-salon treatment.
Mm-hmm.
This was also something, you know, I've been talking a lot about the importance of the Pro. There's nothing better and more rewarding than to say the first major launch of your time in a seat that I now have is focused on the Pro.
Mm-hmm.
So, No. 10 is a take-home product, is a complement to a three-step in-salon service. And so that I've actually spent a lot of time over the last couple of weeks. We debuted the product at Cosmoprof in July, and it will actually be available in salons in September. Just watching, pros get trained, influencers experience it for the first time, consumers experience it. We have lots of people and lots of momentum around really making sure we're educating on this-
Mm-hmm
... because it's a very unique process.
Okay.
This is you know, this is Olaplex innovation at its best, right? This is a truly new, brand-new technology, separate from, from where we've been in the past-
Mm-hmm
... which I think is also really interesting. So, two seconds on the science is really actually, if you, if you have curly hair-
Mm-hmm
... which, you know, many, many people do, there's a huge consumer movement that I think is incredibly important about embracing your natural curl confidence, as we talk about it. This is technology that really allows you to do that. So it's a, it's an in-salon service that actually repairs the bonds of your curly hair, which are very different-
Mm-hmm
... than if you have straight hair. If you think about kind of how a curl actually comes out of-
Mm-hmm
... out of the, out of the scalp, that's quite different, and it's actually more delicate. So that's another thing, that if you think about the shape, so it needs even more TLC.
Mm-hmm.
One of the things that we've heard from consumers is, "I want my curls to look the best." The interesting thing about the pro is that it can be a little bit intimidating if you're not an expert in curls.
Mm-hmm.
So there's a huge range of sort of curl confidence, not just within the consumer, but also within the pro, and knowing how to actually handle and treat and make curls look their best. So I've just had it, you know, it's really something that, that is the reason that I get up in the morning, is to watch the impact that hair has on the pro and their confidence in servicing the client, and then how the client literally walks out the door, and I've been watching a lot of this. So very excited about what this can be, and the, and the beginning, and, and certainly a, an important statement for us of, of what we want to be all about.
Great. And then maybe, I guess we could just move on to the professional channel.
Mm-hmm.
You've talked about how important it is to the Olaplex brand. Maybe if you could talk about how you're thinking about that channel in terms of partnering with them, which you've talked about, but then also, you know, the front-of-the-store sales-
Mm
... and how those have proceeded and maybe the competition that they're seeing there as well.
Yeah, I think that the pro, we would not be where we are without the pro, right? So it's got to be at the centerpiece of our strategy, both in terms of where we can sell product, where we have a service, but also the inspiration for everything that we do-
Mm-hmm
... whether a product is sold there. And I certainly believe in a pro-first mentality, but also a multi-channel approach.
Yeah.
So it's really finding that right balance. And so the things that we've really heard from them is the importance of showing up-
Mm-hmm
... importance of being in the right, being in the salon, being at the big events, being, you know, being great educators, helping them do their jobs more effectively. And it also comes from product. So again, going back to Bond Shaper, making sure that we're giving them reasons and how to build a healthy business, right? They're craftsmen, they're chemists, they're artists, and they're entrepreneurs all rolled into one, which is sort of an incredible combination. And so making sure there are certain macro trends around how frequently salon visits are occurring-
Mm-hmm
... as well as the sort of what's happening at the front of stores. There's more choices of where I buy product, not just for Olaplex-
Yeah
... but for the industry in general. So how do we help them be successful within that environment?
Yeah.
I think is an important part of how we're thinking about it.
Okay, great. And then maybe if you could talk about the other two channels as well-
Mm-hmm
... your DTC channel and then also the specialty retail channel, and how you see those growing over time?
Mm-hmm.
Do you see one channel, you know, potentially growing faster than the other?
Yeah. So I've been in the beauty industry for about 20 years now, and I've watched the evolution of the channel strategy, of a business change dramatically.
Mm-hmm.
I think what it's always been led by is, where is the consumer?
Mm-hmm.
I always think about, okay, but what is, you know, even my own behavior, and how is the consumer evolving? In order to be successful, if you look at the history of brands in this industry, the ones that sustain over time are the ones that sort of understand where the consumer is shopping next and are happy to be there. I think we've seen a huge evolution, right, from department stores-
Mm-hmm
... to the specialty retailers coming on the scene, and now Amazon is a big player, DTC-
Yeah
... right? So really, I've always sort of felt like we need to build a brand and a business that lives above any specific channel-
Mm-hmm
... but also supports the ones where the consumer is. And so I think that really does require, in today's world, a very, you know, multi-channel approach.
Mm-hmm.
But that doesn't mean it's one size fits all, right?
Yeah.
So what makes the most sense for the pro and how we really help support their businesses is gonna be very different than why someone might come and shop on our own DTC channel. It's gonna be different than why they'd go to Sephora. It's different than they go to Ulta. And so a lot of the work that we're doing about, you know, the long-term planning of the business is how do you effectively balance all those-
Mm-hmm
... and create product marketing and distribution strategies that support each of them? And that kind of dynamic replicates itself across the world, maybe with different nameplates, but similar dynamic.
Okay, great. And then maybe if we can move on to just the geographic penetration, so the international business, maybe if you could talk about how big that is now. What are the opportunities there? What geographies do you see potential to expand into?
... Yeah, one of the things that, again, in the list of things that excited me about this business was its geographic scope.
Mm-hmm.
Because I think to have a product that resonates in 100 countries is something pretty powerful.
Mm-hmm.
And I, one of my favorite things is getting a picture of some corner of the world where you couldn't imagine that, that you would have Olaplex, and, and there it is. And that says, again, something about what the product does, right?
Yeah.
So there's salons around the world where the pros are saying, "I can't do my job without Olaplex." And that was really some of the thing that really was pretty incredible about the early stage of this business, was the amount of pull there was for the product around the world, and that is truly a testament to its efficacy. Where I see the business opportunity for us going forward is going deeper and really building out the brand in,
Mm
... those geographic locations. Now, obviously, you can't do 100 countries all at once.
Yeah.
So a lot of the strategy is about making sure we're going deeper and picking the places where we really want to focus and taking it one step at a time.
Okay, great. Then maybe just looking at the Prestige haircare category in general, it seems like, you know, it's obviously been a nice category for growth, and we've seen a lot of new players kind of jump into it for that reason, I guess. So maybe if you could just talk about the competitive landscape and how you see that evolving, and how that's, you know, kind of-
Mm
... impacted Olaplex and how you're thinking about the business.
I'm excited about the future of the Prestige haircare industry. I think that we are at the beginning-
Mm
... of what this category can be. You know, again, I always look for fundamentals and kind of really understanding the consumer, where is the consumer going, and how can I make my career part of that, right?
Mm-hmm.
Really, I think what's happening in the haircare industry is, if you think about it, the power of hair is pretty fundamental, right?
Yeah.
And yet, the prestige haircare industry is the smallest within the prestige beauty industry overall.
Yeah
... those two facts-
Yeah
... to me are where the opportunity lies, right? And, and how do you get at that opportunity? You create an incredible product-
Mm
... and an incredible brand that, you know, and the product has to come first, right?
Mm-hmm.
You have to do something that says it's worth paying $30 for a shampoo and $30 for a conditioner. Like, that's not a-
Mm-hmm
... a small amount, so if... But if I can deliver something that has me feeling great about my hair, that's a really powerful proposition.
Yeah.
That's really what I think is most exciting, is that we are in the very early stages of this.
Mm-hmm.
I really give Olaplex credit for jump-starting my interest in this, right?
Mm-hmm.
Sort of putting it on people... you know, people's radars, for really saying, "Okay, there is the power of technology that can exist in hair-
Mm-hmm
... in the same way it has existed in some other prestige categories," and I think really driven their innovation.
Okay, great. And then maybe moving on to marketing, you've definitely increased marketing spend, quite a bit over the last couple of years. I believe it's about mid-teens% of sales now.
Mm-hmm.
Do you think that's the right level, or is there more room to kind of go up there as you, you know, look to grow the brand more?
Yeah, so I think we're certainly in a marketing evolution and journey in this business-
Mm
... and it has gone from something... It is a new muscle for the organization.
Yeah.
I think it's not just about the money that you spend, but it's how you spend it, and how being the quality of the creative, of knowing where to place the right asset at the right time-
Mm-hmm
... the, you know, creator-led approach I've spoken about before, and so what you're doing. So I'm putting as much emphasis on the what as how, the how much.
Mm-hmm.
More to come on the how much. I think we're, you know, well on our way of a long-range plan that helps us understand what, really what's appropriate.
Yes.
And more to come on that, but I would say it's important to acknowledge it's the dollars, but it's also where they're gonna go.
Okay, great. And then I guess along those lines as well, Olaplex has enjoyed very nice operating margins. I guess, you know, is there a level where you think is kind of where the future should be?
Mm
... in terms of where those margins will be?
Yeah. Yeah, definitely a work in progress. Again, as, you know, we, we talked about on our call, that in early 2025, we'll, we'll make sure that we come to the table with a perspective about that over time.
Mm-hmm.
Because I think it's a fair question that I've certainly been asked.
Mm
... in the last few months. We wanna make sure we give ourselves the time and the rigor to come with a point of view.
Great. And then maybe just thinking about kind of the future product categories for Olaplex. Obviously, you guys compete in prestige hair, but do you think there's opportunity down the road to maybe move into tangential categories, such as skincare or other areas of beauty?
We'll see.
Okay, great. Sounds good. And then I guess maybe just one final question that we're asking all of our guests, and, you know, it doesn't seem like we've seen any weakness in prestige beauty. It's still growing very strong. It seems like we're seeing trade up, and prestige hair is still-
Yeah
... you know, seeing some nice growth. But do you feel like there's been any, you know, consumer slowdown, and how do you feel the health of the consumer is today versus where they were last year? And then, I guess, looking out into the back half and into next year, do you think the consumer will be pulling back on spending at all, and I guess particularly-
Yeah
... for prestige hair or prestige beauty?
Yeah. It's certainly a question that I've been asking myself well before I joined Olaplex. For the last couple of years, I think we've all been saying: "What's the consumer gonna do? What's the consumer gonna do?
Mm-hmm.
And they keep on going. So what I'm seeing in our business today is that the consumer remains healthy, that the Prestige haircare category remains an incredibly significant opportunity, and that what we see in our own consumer research is a continued interest in spending in Prestige hair.
Mm-hmm.
Quite frankly, my focus on our business right now is very internally driven, right?
Mm-hmm.
Really, like, for where we are in our own trajectory as an organization, is we've got to really focus on our own execution.
Yeah.
And that's really where I want our team's heads.
Okay, great. And I guess maybe if I could just throw in one just on the balance sheet and capital allocation-
Mm
... and how you're thinking about deploying investment-
Yeah
... over time and as we look out over the next few years.
Yeah. Yeah, very, very much part of the long-range plan process, right-
Yeah
... is to really make sure that we're taking advantage of, of the cash that we're generating in the right way.
Investing, I guess, is top priority, investing into the business at this point.
Yeah, exactly.
Yeah.
Like, you know, for the first six, seven months, it was just, you know, make sure that we're executing and-
Mm
... and as we develop a long-range plan, that will certainly be part of the planning.
Okay, great. Thanks, Amanda-
Thank you
... for joining us, and Olaplex, and everyone in the audience.