Financial Data and Key Metrics Changes - The Honest Company achieved its highest quarterly revenue in history with $99 million in sales, representing a 15% year-over-year increase [7][26] - Gross margin expanded to 39%, an increase of 710 basis points compared to the same period last year [7][30] - Adjusted EBITDA was $7 million, marking the fourth consecutive quarter of positive adjusted EBITDA [8][35] Business Line Data and Key Metrics Changes - Strong performance was noted in the baby products and wipes portfolios, contributing to the overall revenue growth [26] - Retail tracked channel consumption grew 9% year-over-year, while Amazon consumption increased by 19% [9][26] Market Data and Key Metrics Changes - Honest's portfolio outperformed the personal care sector, which saw a 2% decline in consumption [9] - Household penetration among Honest users reached 6.7%, an increase of 23 basis points year-over-year [18] Company Strategy and Development Direction - The company focuses on brand maximization, margin enhancement, and operating discipline as transformation pillars [7] - There is a strategic intent to expand distribution, particularly in the dollar store segment, where Honest currently has no presence [55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of consumption trends, supported by strong household penetration and repeat purchase rates [64][66] - The company raised its full-year revenue guidance to high single-digit percentage growth and adjusted EBITDA guidance to $20 million to $22 million [38][40] Other Important Information - The company is actively monitoring potential tariff impacts on its wipes sourced from China and is preparing for diversification of sourcing [76][78] - Marketing expenses increased to $13 million, reflecting a balanced approach to brand awareness and consumer engagement [34] Q&A Session Summary Question: Impact of shipment benefits on the quarter - Management indicated that approximately 3 to 4 percentage points of revenue growth were attributed to inventory supplied for retail events [46] Question: Confidence in marketing investments for growth - Management expressed comfort in increasing marketing spend to drive brand awareness and trial, noting positive results in household penetration [50] Question: Opportunity in the Dollar Store segment - Management highlighted a growth strategy focused on distribution, noting that there is significant runway for expansion in the dollar channel [55] Question: Sustainability of consumption trends - Management indicated strong underlying fundamentals for consumption, driven by unit growth and increased basket sizes [64][66] Question: Gross margin sustainability - Management confirmed that gross margin improvements are structural and sustainable, with ongoing efforts to reduce product costs [67][69] Question: Amazon Prime Day effectiveness - Management noted that Prime Day attracts both loyal customers and new-to-brand shoppers, enhancing brand awareness [72][74] Question: Exposure to China sourcing - Management is actively working on plans for diversification and cost reductions in response to potential tariffs on wipes sourced from China [76][78] Question: Gross margin lift from price mix benefits - Management clarified that the gross margin increase was primarily due to cost savings rather than pricing [81]

Honest (HNST) reported break-even quarterly earnings per share versus the Zacks Consensus Estimate of a loss of $0.03. This compares to loss of $0.09 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 100%. A quarter ago, it was expected that this consumer products company would post a loss of $0.05 per share when it actually produced a loss of $0.04, delivering a surprise of 20%.Over the last four quarters, the company has surpa ...

Core Insights - The Honest Company reported record revenue of $99 million for Q3 2024, a 15% increase from $86 million in Q3 2023, driven by strong performance in baby products and wipes [1][3] - The company achieved positive net income of $165 thousand, an increase of $8 million from a net loss of $8 million in the prior year quarter [1][6] - Gross margin expanded by 710 basis points to 38.7% compared to 31.6% in the previous year, attributed to cost efficiencies in supply chain and product costs [1][4] - The company raised its full-year 2024 revenue and adjusted EBITDA outlook based on strong performance in the first three quarters [1][10] Financial Performance - Revenue for the three months ended September 30, 2024, was $99,237 thousand, up from $86,169 thousand in the same period last year, reflecting a 15.2% increase [3] - Gross margin for Q3 2024 was 38.7%, compared to 31.6% in Q3 2023, marking a significant improvement of 710 basis points [3][4] - Operating expenses increased by $3 million to $38,339 thousand, but as a percentage of revenue, they decreased by 221 basis points [5] - Adjusted EBITDA was positive at $7,079 thousand compared to a negative $1,056 thousand in Q3 2023, indicating the fourth consecutive quarter of positive adjusted EBITDA [8] Outlook - The company anticipates high single-digit percentage growth in revenue for the full year 2024, an increase from the previous mid-to-high single-digit growth forecast [7] - Adjusted EBITDA outlook for 2024 has been raised to a range of $20 million to $22 million, up from the previous range of $15 million to $18 million [7] Balance Sheet and Cash Flow - As of September 30, 2024, the company had $53 million in cash and cash equivalents, a sequential increase of $17 million from Q2 2024 and an increase of $30 million compared to Q3 2023 [9] - The company reported net cash provided by operating activities of $18 million for the first nine months of 2024, compared to $9 million in the prior year period [9]

Core Insights - The Honest Company achieved record revenue of $93 million in Q2 2024, representing a 10% increase compared to Q2 2023, driven by strong performance in baby products and wipes [1][3][9] - The company reported a gross margin of 38.3%, an increase of 1,120 basis points from 27.1% in the same quarter last year, attributed to improvements in cost structure and pricing strategies [4][5] - The company has raised its full-year 2024 revenue and adjusted EBITDA outlook based on better-than-expected performance in the first half of the year [9][10] Financial Performance - Revenue for Q2 2024 was $93,049 thousand, up from $84,544 thousand in Q2 2023, marking an increase of $8,505 thousand [3] - Gross profit for Q2 2024 was $35,612 thousand, compared to $22,898 thousand in Q2 2023 [18] - Operating expenses increased to $39,657 thousand from $36,285 thousand year-over-year, but as a percentage of revenue, they decreased by 30 basis points [5][19] - The net loss for Q2 2024 was $4,077 thousand, significantly improved from a net loss of $13,416 thousand in Q2 2023 [5][18] Adjusted EBITDA - Adjusted EBITDA for Q2 2024 was $7,595 thousand, a turnaround from a negative $4,099 thousand in Q2 2023, marking the third consecutive quarter of positive adjusted EBITDA [6][31] - The company expects adjusted EBITDA for the full year 2024 to be in the range of $15 million to $18 million, an increase from previous expectations [7][9] Balance Sheet and Cash Flow - As of June 30, 2024, the company had $37 million in cash and cash equivalents, an increase of $19 million compared to the same period in 2023, with no debt on the balance sheet [8][21] - Net cash provided by operating activities was $3 million for Q2 2024, slightly down from $4 million in Q2 2023 [8][26] Market Position and Strategy - The Honest Company focuses on clean and sustainably-designed personal care products, with a commitment to brand maximization, margin enhancement, and operating discipline [2][17] - The company has seen a 7% growth in tracked channel consumption, while comparative categories experienced a decline of 0.3% [3][4]

For Immediate Release Industry: Consumer Discretionary Chicago, IL – June 14, 2024 – Today, Zacks Equity Research discusses Reynolds Consumer Products Inc. (REYN) , Central Garden & Pet Co. (CENT) , The Honest Company, Inc. (HNST) and Lifetime Brands, Inc. (LCUT) . Link: https://www.zacks.com/commentary/2287761/4-stocks-to-watch-in-a-promising-consumer-productsdiscretionary-industry The Consumer Products-Discretionary industry looks promising amid gradually easing inflation and evolving consumer preferences ...

Shares of Honest (HNST) have been struggling lately and have lost 8.8% over the past week. However, a hammer chart pattern was formed in its last trading session, which could mean that the stock found support with bulls being able to counteract the bears. So, it could witness a trend reversal down the road. The formation of a hammer pattern is considered a technical indication of nearing a bottom with likely subsiding of selling pressure. But this is not the only factor that makes a bullish case for the sto ...

Honest (HNST) came out with a quarterly loss of $0.01 per share versus the Zacks Consensus Estimate of a loss of $0.08. This compares to loss of $0.19 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 87.50%. A quarter ago, it was expected that this consumer products company would post a loss of $0.08 per share when it actually produced earnings of $0.01, delivering a surprise of 112.50%.Over the last four quarters, the company ...

Updated Post Q1 2024 Earnings You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this presentation primarily on our current expectations and projections about future events and trends that we believe may impact our business, financial condition and operating results. Please note that these forward-looking statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise ...

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 March 31, 2024 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. Emp ...

[Executive Summary and Q1 2024 Highlights](index=1&type=section&id=Executive%20Summary%20and%20Q1%202024%20Highlights) The Honest Company delivered strong Q1 2024 results, driven by strategic transformation, achieving revenue growth, significant gross margin expansion, and reaffirming its full-year outlook [First Quarter 2024 Performance Overview](index=1&type=section&id=First%20Quarter%20Results%20Overview) The Honest Company reported a strong start to 2024, driven by its Transformation Pillars, achieving revenue growth and significant gross margin expansion, and reaffirming its full-year financial outlook - The Honest Company reported strong Q1 2024 results, with **revenue growth** and **record gross margin**, reaffirming its full-year financial outlook[1](index=1&type=chunk)[2](index=2&type=chunk) Q1 2024 Key Financial Highlights (YoY Change): | Metric | 2024 (in thousands) | 2023 (in thousands) | Change | Change (%) | | :----- | :------------------ | :------------------ | :----- | :--------- | | Revenue | $86,217 | $83,388 | $2,829 | 3% | | Gross margin | 37.0% | 24.2% | 12.8% | 1275 bps | | Operating expenses | $33,197 | $38,860 | $(5,663) | -14.6% | | Net loss | $(1,403) | $(18,867) | $17,464 | -92.6% | | Adjusted EBITDA | $2,642 | $(10,334) | $12,976 | N/A (swing to positive) | [Strategic Transformation Pillars](index=1&type=section&id=Transformation%20Pillars) The company's 'Transformation Pillars' – Brand Maximization, Margin Enhancement, and Operating Discipline – were key drivers for Q1 2024 results, contributing to revenue growth, gross margin expansion, and reduced operating expenses - Transformation Pillars (Brand Maximization, Margin Enhancement, Operating Discipline) are deeply rooted in operating practices and supported **Q1 revenue growth** and **cost structure improvements**[2](index=2&type=chunk)[3](index=3&type=chunk) - Brand Maximization drove distribution gains and strong velocities, leading to **7% growth in total tracked channel consumption** for the Company, against a 1% decline in categories[4](index=4&type=chunk)[5](index=5&type=chunk) - Margin Enhancement led to a **1,275 basis point increase in gross margin** due to lower transportation costs, price increases, efficient trade spending, and reduced product and fulfillment costs[6](index=6&type=chunk) - Operating Discipline resulted in a **$6 million decrease in operating expenses** and an **810 basis point reduction** as a percentage of revenue[7](index=7&type=chunk) [First Quarter 2024 Financial Results](index=1&type=section&id=First%20Quarter%20Results) The Honest Company achieved a 3% revenue increase, significant gross margin expansion, and substantially reduced its net loss, while turning Adjusted EBITDA positive [Key Financial Metrics](index=1&type=section&id=Key%20Financial%20Metrics) The Honest Company achieved a 3% increase in revenue, a significant 12.8 percentage point expansion in gross margin to 37.0%, and substantially reduced its net loss to $1.4 million, while turning Adjusted EBITDA positive for the second consecutive quarter Q1 2024 vs Q1 2023 Financial Performance: | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Change | | :----- | :------------------- | :------------------- | :----- | | Revenue | $86,217 | $83,388 | +$2,829 | | Cost of revenue | $54,335 | $63,186 | -$8,851 | | Gross profit | $31,882 | $20,202 | +$11,680 | | Operating loss | $(1,315) | $(18,658) | +$17,343 | | Net loss | $(1,403) | $(18,867) | +$17,464 | | Basic and diluted net loss per share | $(0.01) | $(0.20) | +$0.19 | - Revenue growth was primarily driven by increases in baby apparel, wipes, and baby personal care[4](index=4&type=chunk) - Adjusted EBITDA turned positive at **$2.6 million**, compared to a negative **$10.3 million** in Q1 2023, marking the second consecutive quarter of positive Adjusted EBITDA[4](index=4&type=chunk)[8](index=8&type=chunk) [Balance Sheet and Cash Flow](index=2&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) The company ended Q1 2024 with a stronger cash position and no debt, demonstrating improved working capital management and a positive shift in operating cash flow Q1 2024 Balance Sheet and Cash Flow Highlights: | Metric | March 31, 2024 (in thousands) | March 31, 2023 (in thousands) | Change | | :----- | :---------------------------- | :---------------------------- | :----- | | Cash, cash equivalents and short-term investments | $34,000 (approx) | $12,000 (approx) | +$22,000 | | Net cash provided by operating activities | $336 | $(3,000) (approx) | +$3,336 | - The Company had **no debt** on the balance sheet as of March 31, 2024[10](index=10&type=chunk) - Net cash provided by operating activities was **$336 thousand**, a significant improvement from net cash used of **$2.761 million** for the first quarter of 2023[10](index=10&type=chunk)[27](index=27&type=chunk) [2024 Financial Outlook and Long-Term Strategy](index=2&type=section&id=2024%20Financial%20Outlook) The company reaffirmed its 2024 financial outlook for revenue growth and positive Adjusted EBITDA, while outlining long-term strategic goals for sustained growth and margin expansion [Reaffirmed 2024 Outlook](index=2&type=section&id=Reaffirms%202024%20Financial%20Outlook) The Honest Company reaffirmed its full fiscal year 2024 financial outlook, expecting low-to-mid single-digit percentage net revenue growth and positive Adjusted EBITDA in the low-single digit to mid-single digit millions range - Reaffirmed full fiscal year 2024 financial outlook for revenue and Adjusted EBITDA[2](index=2&type=chunk)[11](index=11&type=chunk) - Net revenue growth of low-to-mid single digit percentage[15](index=15&type=chunk) - Positive Adjusted EBITDA in the low-single digit to mid-single digit millions range[15](index=15&type=chunk) [Long-Term Strategic Goals](index=2&type=section&id=Long-Term%20Strategy) Beyond 2024, the company remains confident in its long-term strategy targeting 4% to 6% annual revenue growth and continued Adjusted EBITDA margin expansion - Long-term strategy beyond 2024 targets **4% to 6% annual revenue growth** and continued Adjusted EBITDA margin expansion[11](index=11&type=chunk) - Additional strategic plan information is available in the Investor Presentation on the Company's Investor Relations website[11](index=11&type=chunk) [Additional Information](index=2&type=section&id=Additional%20Information) This section provides details on the Q1 2024 webcast, forward-looking statement disclaimers, company overview, and contact information [Webcast and Conference Call](index=2&type=section&id=Webcast%20and%20Conference%20Call%20Information) The company scheduled a webcast and conference call for May 8, 2024, to discuss Q1 2024 results, with replay available online - A webcast and conference call for Q1 2024 results was scheduled for May 8, 2024, at 1:30 p.m. Pacific time/4:30 p.m. Eastern time[12](index=12&type=chunk) - A replay of the webcast will be available on the Company's website for one year[12](index=12&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements regarding future financial performance, strategic initiatives, and operations, which are subject to substantial risks and uncertainties detailed in SEC filings - This press release contains forward-looking statements about future financial performance, liquidity, strategic initiatives, and operations, identifiable by words like 'anticipate,' 'expect,' 'plan,' etc[13](index=13&type=chunk) - Forward-looking statements are subject to risks and uncertainties described in the Annual Report on Form 10-K for the year ended December 31, 2023, and subsequent SEC filings[15](index=15&type=chunk) - Investors should not unduly rely on these statements as actual results may differ materially[16](index=16&type=chunk)[18](index=18&type=chunk) [About The Honest Company](index=3&type=section&id=About%20The%20Honest%20Company) The Honest Company, founded in 2012, is a personal care company offering clean- and sustainably-designed products across various categories, available online and in approximately 49,000 retail locations in the US and Canada - The Honest Company (NASDAQ: HNST) is a personal care company founded in 2012, focused on clean- and sustainably-designed products[19](index=19&type=chunk) - Product categories include diapers, wipes, baby personal care, beauty, apparel, household care, and wellness[19](index=19&type=chunk) - Products are available via Honest.com, leading online retailers, and approximately **49,000 retail locations** across the United States and Canada[19](index=19&type=chunk) [Contacts](index=3&type=section&id=Investor%20Contacts) Contact information for investor relations and media inquiries is provided - Investor Contacts: Elizabeth Bouquard (ebouquard@thehonestcompany.com), investors@thehonestcompany.com[20](index=20&type=chunk) - Media Contact: Jennifer Kroog Rosenberg (jrosenberg@thehonestcompany.com)[20](index=20&type=chunk) [Condensed Consolidated Financial Statements](index=4&type=section&id=Financial%20Statements) This section presents the company's Q1 2024 comprehensive loss, balance sheets, and cash flow statements, highlighting improved financial health [Statements of Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) The condensed consolidated statements of comprehensive loss show a significant reduction in net loss from $18.9 million in Q1 2023 to $1.4 million in Q1 2024, driven by increased gross profit and reduced operating expenses Condensed Consolidated Statements of Comprehensive Loss (Q1 2024 vs Q1 2023): | (in thousands) | 2024 | 2023 | | :------------- | :--- | :--- | | Revenue | $86,217 | $83,388 | | Cost of revenue | $54,335 | $63,186 | | Gross profit | $31,882 | $20,202 | | Total operating expenses | $33,197 | $38,860 | | Operating loss | $(1,315) | $(18,658) | | Net loss | $(1,403) | $(18,867) | | Basic and diluted net loss per share | $(0.01) | $(0.20) | [Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2024, shows total assets of $198.1 million and total liabilities of $73.3 million, with a slight decrease in total assets from December 31, 2023, and no long-term debt Condensed Consolidated Balance Sheets (March 31, 2024 vs Dec 31, 2023): | (in thousands) | March 31, 2024 | December 31, 2023 | | :------------- | :------------- | :---------------- | | Total current assets | $156,364 | $157,772 | | Total assets | $198,071 | $201,621 | | Total current liabilities | $53,662 | $56,710 | | Total liabilities | $73,304 | $78,482 | | Total stockholders' equity | $124,767 | $123,139 | - Cash and cash equivalents increased to **$33.6 million** from **$32.8 million** at year-end 2023[25](index=25&type=chunk) - No preferred stock issued or outstanding, and common stock shares increased to **97.2 million** from **95.9 million**[25](index=25&type=chunk) [Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statement indicates a positive net cash flow from operating activities of $336 thousand in Q1 2024, a significant improvement from a net cash outflow in the prior year, contributing to an overall increase in cash and cash equivalents Condensed Consolidated Statements of Cash Flows (Q1 2024 vs Q1 2023): | (in thousands) | 2024 | 2023 | | :------------- | :--- | :--- | | Net cash provided by (used in) operating activities | $336 | $(2,761) | | Net cash (used in) provided by investing activities | $(76) | $2,480 | | Net cash provided by (used in) financing activities | $498 | $(15) | | Net increase (decrease) in cash and cash equivalents | $758 | $(296) | | Cash and cash equivalents, end of period | $33,585 | $9,221 | - The positive shift in operating cash flow was partly due to changes in accounts receivable and inventories[27](index=27&type=chunk) [Use of Non-GAAP Financial Measures](index=7&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the definition and reconciliation of Adjusted EBITDA, a non-GAAP measure used to assess the company's operational performance [Explanation of Adjusted EBITDA](index=7&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) Adjusted EBITDA is presented as a non-GAAP financial measure to provide additional insight into operating performance by excluding certain non-recurring or non-cash items, though it has limitations and should be considered alongside GAAP results - Adjusted EBITDA is a non-GAAP financial measure used by management to evaluate performance, determine incentive compensation, and for internal planning[29](index=29&type=chunk)[31](index=31&type=chunk) - It excludes interest, income tax, depreciation, amortization, stock-based compensation, litigation fees, CEO/Founder transition expenses, and restructuring expenses[30](index=30&type=chunk) - Adjusted EBITDA has limitations, such as not reflecting capital commitments, tax payments, or certain non-ordinary cash expenses, and may not be comparable to other companies' measures[32](index=32&type=chunk) [Reconciliation to Net Loss](index=8&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20EBITDA) The reconciliation table details the adjustments made to net loss to arrive at Adjusted EBITDA, showing a significant improvement from a negative $10.3 million in Q1 2023 to a positive $2.6 million in Q1 2024 Reconciliation of Net Loss to Adjusted EBITDA (Q1 2024 vs Q1 2023): | (in thousands) | 2024 | 2023 | | :------------- | :--- | :--- | | Net loss | $(1,403) | $(18,867) | | Interest and other (income) expense, net | $63 | $189 | | Income tax provision | $25 | $20 | | Depreciation and amortization | $717 | $668 | | Stock-based compensation | $2,523 | $3,772 | | Securities litigation expense | $402 | $1,178 | | CEO and Founder transition expense | $158 | $1,277 | | Restructuring costs | $— | $1,350 | | Payroll tax expense related to stock-based compensation | $157 | $79 | | **Adjusted EBITDA** | **$2,642** | **$(10,334)** | - Adjustments for Q1 2024 primarily included **stock-based compensation ($2.5M)**, **depreciation and amortization ($0.7M)**, and **securities litigation expense ($0.4M)**[34](index=34&type=chunk) - Restructuring costs, which were **$1.35 million** in Q1 2023, were **zero** in Q1 2024[34](index=34&type=chunk)