The Honest Company (HNST) Q2 2025 Earnings Call August 06, 2025 04:45 PM ET Speaker0Ladies and gentlemen, thank you for standing by and welcome to the Honest Company's Second Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone. Please be advised that today's conference is being recorded.I would now lik ...

Investor Strategic Update 2025 As of August 6, 2025 Forward Looking Statements This presentation contains certain forward-looking statements within the meaning of the federal securities laws, including statements about the outlook of our business and industry and other matters referenced in our earnings release and SEC filings. All statements other than statements of historical fact contained in this presentation, including statements on our business strategy, plans, objectives, financial results, operating ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-40378 The Honest Company, Inc. (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdiction of (I.R.S. Empl ...

Exhibit 99.1 The Honest Company Reports Second Quarter 2025 Results Transformation Pillars Continue to Drive Profitability Improvement, Gross Margin Expansion and Revenue Growth Delivers Net Income of $4 Million and Gross Margin of 40.4%, Expansion of 210 Basis Points Reaffirms Full Year 2025 Financial Outlook LOS ANGELES, Calif. – August 6, 2025 – The Honest Company (NASDAQ: HNST), a personal care company dedicated to creating cleanly-formulated and sustainably-designed products, today reported financial r ...

Transformation Pillars Continue to Drive Profitability Improvement, Gross Margin Expansion and Revenue GrowthDelivers Net Income of $4 Million and Gross Margin of 40.4%, Expansion of 210 Basis PointsReaffirms Full Year 2025 Financial Outlook LOS ANGELES, Aug. 06, 2025 (GLOBE NEWSWIRE) -- The Honest Company (NASDAQ: HNST), a personal care company dedicated to creating cleanly-formulated and sustainably-designed products, today reported financial results for the three and six months ended June 30, 2025. Secon ...

Core Viewpoint - The Honest Company will report its second quarter 2025 financial results on August 6, 2025, after market close [1] Group 1: Financial Reporting - The company will host an investor conference call and webcast to discuss the financial results at 1:45 PM PT/4:45 PM ET on the same day [2] - A live webcast of the conference call will be available on the company's investor website [2] - Participants are encouraged to join the call fifteen minutes early to avoid delays [2] Group 2: Company Overview - The Honest Company is dedicated to creating cleanly-formulated and sustainably-designed personal care products across various categories including diapers, wipes, beauty, and household care [3] - Founded in 2012, the company aims to challenge industry standards through its Honest brand and mission [3]

Core Insights - The Honest Company has launched the new and improved Clean Conscious Diapers, emphasizing enhanced leak protection and comfort for babies [2][3][4] - The redesign was influenced by parent feedback, showcasing the company's commitment to addressing customer needs [5][6] - The new diapers feature a plant-based inner liner, breathable outer layer, and rigorous testing for harmful chemicals, ensuring safety and quality [4][10] Product Features - The Clean Conscious Diapers offer up to 100% leak protection with Comfort Dry Technology, designed for delicate skin [4][10] - Stage-specific features include a belly button cutout for Newborn and Size 1, double poo pockets for Sizes 1-2, and stretchy sides for active toddlers in Sizes 3-7 [7] - The diapers are hypoallergenic, fragrance-free, and made without elemental chlorine, parabens, and natural rubber latex [10] Availability and Pricing - The new diapers will be available nationwide starting July 15, 2025, with prices ranging from $12.99 to $49.99 [8] - They can be purchased online at honest.com and at leading retailers across the U.S. [8] Company Overview - The Honest Company, founded in 2012, focuses on creating cleanly-formulated and sustainably-designed personal care products across various categories [9] - The company aims to challenge industry standards through its Honest Standard, which guides product innovation and development [9]

Core Viewpoint - Honest (HNST) shares have increased by 14.5% in the past four weeks, closing at $5.07, with a potential upside indicated by Wall Street analysts' mean price target of $7.14, suggesting a 40.8% increase from the current price [1] Price Targets and Analyst Estimates - The mean estimate consists of seven short-term price targets with a standard deviation of $0.85, where the lowest estimate is $5.50 (8.5% increase) and the highest is $8 (57.8% increase) [2] - A low standard deviation indicates a high degree of agreement among analysts regarding the stock's price movement, which can serve as a starting point for further research [9] Earnings Estimates and Analyst Optimism - Analysts are optimistic about HNST's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which has shown a strong correlation with near-term stock price movements [11] - The Zacks Consensus Estimate for the current year has risen by 47.6% over the past month, with two estimates increasing and no negative revisions [12] - HNST holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates, indicating strong potential for upside [13]

Financial Data and Key Metrics Changes - The company reported revenue of $97 million for Q1 2025, representing a 13% year-over-year growth [10][28] - Gross margin increased by 170 basis points to 39% [11][30] - Positive net income of $3 million was achieved, marking an increase of $5 million from the previous year [32] - Adjusted EBITDA margin improved to 7%, up from 3% in the prior year [33] Business Line Data and Key Metrics Changes - The wipes portfolio and baby personal care collection were highlighted as strong performers, with wipes consumption growth exceeding 40% [14][18] - The sensitive skin portfolio grew by 35% year-over-year, driven by new product launches [14] - Diaper performance faced headwinds due to distribution changes at a key retailer, impacting overall growth [19][58] Market Data and Key Metrics Changes - The Honest brand's household penetration increased to 7.3%, a growth of 55 basis points year-over-year [12] - Competitive categories experienced a decline of 1% in the same period, indicating Honest's outperformance [12][61] - The diaper category remains under pressure, with modest declines observed [58][92] Company Strategy and Development Direction - The company is focused on three transformation pillars: brand maximization, margin enhancement, and operating discipline [10][25] - A comprehensive approach to managing tariffs has been established, including inventory management and cost savings initiatives [22][36] - The company aims to continue investing in marketing and innovation to support brand growth [50][51] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious confidence in navigating the evolving economic landscape while reaffirming the 2025 financial outlook [26][35] - The company anticipates a first half growth rate within the range of its annual revenue outlook, despite expected headwinds in the diaper business [29][35] - Management acknowledged the importance of consumer sentiment and potential changes in shopping behavior [37][61] Other Important Information - Curtis Bruce has been appointed as the new Chief Financial Officer, succeeding David Loretta [6][9] - The company ended the quarter with $73 million in cash and no debt outstanding, providing financial flexibility [34] Q&A Session Summary Question: Can you quantify the shipping impact in Q1 and its reversal in Q2? - Management noted that the pull forward of shipments in Q1 was approximately five percentage points, which will reverse in Q2 [46] Question: What are the marketing plans for 2025? - The company plans to continue strong investments in marketing, particularly for the new diaper launch and expanding wipes into new retailers [50][51] Question: What factors contributed to the deceleration in consumption? - The deceleration was primarily isolated to the Target channel, particularly in the diaper category, while other markets showed strong growth [58][92] Question: How is the company managing tariff impacts? - The company has a three-pronged strategy to mitigate tariff impacts, focusing on agile planning, inventory management, and supplier partnerships [36][78] Question: What are the long-term margin opportunities? - Management believes there are still opportunities to expand margins, particularly through supply chain efficiencies [92]

Financial Data and Key Metrics Changes - The company reported revenue of $97 million for Q1 2025, reflecting a 13% year-over-year growth [10][28] - Gross margin increased by 170 basis points to 39% [11][30] - Positive net income of $3 million was achieved, marking a $5 million increase from the previous year [32] - Adjusted EBITDA margin improved to 7%, up from 3% in the prior year [33] Business Line Data and Key Metrics Changes - The wipes portfolio and baby personal care collection were highlighted as strong performers, with wipes consumption growth exceeding 40% [14][18] - The sensitive skin portfolio grew by 35% year-over-year, driven by new product launches [14] - Diaper performance faced headwinds due to distribution changes at a key retailer, impacting overall growth [19][56] Market Data and Key Metrics Changes - The Honest brand's consumption growth of 8% outpaced the competitive categories, which declined by 1% [12][60] - Household penetration increased to 7.3%, a growth of 55 basis points year-over-year [12] - The diaper category remains under pressure, with a modest decline observed [56][90] Company Strategy and Development Direction - The company is focused on three transformation pillars: brand maximization, margin enhancement, and operating discipline [10][25] - A comprehensive approach to managing tariffs has been established, including inventory management and cost savings initiatives [22][36] - The company aims to continue investing in marketing and innovation to support brand growth [50][51] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious confidence in navigating the evolving economic landscape while reaffirming the 2025 financial outlook [26][37] - The company anticipates a first half growth rate within the range of its annual revenue outlook, despite expected headwinds in the diaper business [29][35] - Management emphasized the importance of consumer trust in their products, particularly for sensitive skin needs [13][61] Other Important Information - Curtis Bruce has been appointed as the new Chief Financial Officer, succeeding David Loretta [6][9] - The company ended the quarter with $73 million in cash and no debt outstanding, providing financial flexibility [34] Q&A Session Questions and Answers Question: Can you quantify the shipping impact in Q1 and how it affects Q2? - Management noted that the pull forward of shipments in Q1 was approximately five percentage points, which will reverse in Q2 [46] Question: What are the marketing plans for 2025? - The company plans to continue strong investments in marketing, particularly for the new diaper launch and expanding wipes into new retailers [50][51] Question: What factors contributed to the deceleration in Q2? - The deceleration was primarily isolated to the Target channel, particularly in the diaper category, while other markets showed strong growth [56][90] Question: How is the company managing tariff impacts? - The company has a three-pronged strategy to mitigate tariff impacts, focusing on agile planning, inventory management, and supplier partnerships [36][79] Question: Are there margin opportunities despite current challenges? - Management believes there are still opportunities to expand margins, particularly through supply chain efficiencies [90]