The Honest pany(HNST) - 2025 Q2 - Quarterly Results

The Honest Company Reports Second Quarter 2025 Results Second Quarter 2025 Financial Highlights The Honest Company achieved its second consecutive profitable quarter with $3.9 million net income, 0.4% revenue growth, and gross margin expansion to 40.4% Q2 2025 Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $93.5M | $93.0M | +0.4% | | Gross Margin | 40.4% | 38.3% | +210 bps | | Net Income (Loss) | $3.9M | ($4.1M) | +$7.9M | | Adjusted EBITDA | $7.6M | $7.6M | +$22k | - The company achieved its second consecutive quarter of positive net income and seventh consecutive quarter of positive adjusted EBITDA[3][8][9] - Revenue growth was driven by retail sales, partially offset by a decline in Honest.com revenue, with shipments trailing consumption which grew 6% in tracked channels[4][5] - Gross margin expansion to 40.4% was primarily driven by a change in inventory reserves, partially offset by tariff costs[6] - The company ended Q2 2025 with $72 million in cash and cash equivalents and no debt on its balance sheet[10] Reaffirmed Full Year 2025 Outlook The Honest Company reaffirms its full fiscal year 2025 outlook, projecting 4-6% revenue growth and Adjusted EBITDA of $27-30 million Full Year 2025 Outlook | Metric | Full Year 2025 Outlook | | :--- | :--- | | Revenue Growth | 4% to 6% | | Adjusted EBITDA | $27 million to $30 million | - The financial outlook is subject to change given the macroeconomic environment and assumes current tariff levels remain in place[12] Consolidated Financial Statements Consolidated financial statements detail a shift to profitability with $7.1 million net income, a healthy balance sheet, and net cash use from operations Condensed Consolidated Statements of Comprehensive Income (Loss) Q2 2025 revenue reached $93.5 million with $3.9 million net income, a significant improvement from prior year, and six-month net income totaled $7.1 million Three Months Ended June 30 (In thousands, except per share data) | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $93,459 | $93,049 | | Gross Profit | $37,752 | $35,612 | | Operating Income (Loss) | $2,888 | ($4,045) | | Net Income (Loss) | $3,870 | ($4,077) | | Diluted EPS | $0.03 | ($0.04) | Six Months Ended June 30 (In thousands, except per share data) | (In thousands, except per share data) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $190,709 | $179,266 | | Gross Profit | $75,422 | $67,494 | | Operating Income (Loss) | $5,395 | ($5,359) | | Net Income (Loss) | $7,123 | ($5,479) | | Diluted EPS | $0.06 | ($0.06) | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets were $249.0 million, including $72.1 million cash, with no debt and increased stockholders' equity As of June 30 (In thousands) | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $72,077 | $75,435 | | Inventories | $95,033 | $85,266 | | Total Assets | $249,028 | $247,393 | | Total Liabilities | $62,000 | $73,086 | | Total Stockholders' Equity | $187,028 | $174,307 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities was $3.7 million, primarily due to working capital changes Six Months Ended June 30 (In thousands) | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($3,683) | $3,281 | | Net cash used in investing activities | ($143) | ($91) | | Net cash provided by financing activities | $468 | $576 | | Net (decrease) increase in cash | ($3,358) | $3,766 | | Cash at end of period | $72,077 | $36,593 | Use of Non-GAAP Financial Measures Adjusted EBITDA, a non-GAAP measure, was $7.6 million for Q2 2025 (8.2% margin) and $14.5 million for the first six months (7.6% margin) - Adjusted EBITDA is calculated by excluding items such as interest, taxes, depreciation, amortization, stock-based compensation, certain litigation fees, and executive transition expenses from net income[34] Three Months Ended June 30 (In thousands) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Income (Loss) | $3,870 | ($4,077) | | Adjusted EBITDA | $7,617 | $7,595 | | Adjusted EBITDA Margin | 8.2% | 8.2% | Six Months Ended June 30 (In thousands) | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Income (Loss) | $7,123 | ($5,479) | | Adjusted EBITDA | $14,545 | $10,239 | | Adjusted EBITDA Margin | 7.6% | 5.7% |