The Honest Company Reports Second Quarter 2024 Results and Raises Full Year Outlook

Achieves Record Revenue of $93 million, up 10%
Improved Profitability with Gross Margin of 38%, a 1,120 Basis Point Increase
Raises Full Year 2024 Revenue and Adjusted EBITDA Outlook

LOS ANGELES, Aug. 08, 2024 (GLOBE NEWSWIRE) The Honest Company (NASDAQ: HNST), a personal care company dedicated to creating clean- and sustainably-designed products, today reported financial results for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023.

“This quarter, it is evident that our team’s commitment to our three Transformation Pillars of Brand Maximization, Margin Enhancement, and Operating Discipline is working, resulting in outstanding performance that has exceeded our expectations. In addition to delivering our highest quarterly revenue of $93 million in the second quarter, we continued to increase profitability and achieved gross margin of 38%. This strong performance and momentum give us confidence to raise our financial outlook for the full year,” said Chief Executive Officer, Carla Vernón. “At Honest, we are a company of builders. And, with a stronger financial foundation in place, this team is fully enrolled in helping to expand and strengthen the Honest brand and the portfolio of products that our community loves and trusts.”

Second Quarter Results
(All comparisons are versus the second quarter of 2023)

Revenue was $93 million, an increase of 10%, compared to the second quarter of 2023 driven by strong performance across our baby products and wipes portfolios. Tracked channel consumption⁽²⁾ for the Company grew 7% compared to the comparative categories which were down 0.3% in the same period.
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(1) See the reconciliation of adjusted EBITDA, a non-GAAP financial measure, to net loss in the table under “Use of Non-GAAP Financial Measures” below in this press release.
(2) According to independent third-party tracked channel consumption data. Reflects consumption for diapers, wipes, baby personal care, skin care and cosmetics items for the latest 12 weeks ended June 16, 2024.

Gross margin was 38.3% compared to 27.1% in the second quarter of 2023. Gross margin increased by 1,120 basis points compared to the second quarter of 2023 driven by improvements across the entire cost structure, including supply chain and product costs, as well as price increases and efficient trade spend.

Operating expenses increased $3 million, driven by deeper investments in marketing, reflecting a decrease of 30 basis points as a percentage of revenue compared to the second quarter of 2023. Selling, general & administrative expenses as a percentage of revenue decreased 120 basis points compared to the second quarter of 2023.

Net loss was $4 million compared to a net loss of $13 million in the second quarter of 2023.

Adjusted EBITDA⁽¹⁾ was positive $8 million compared to negative $4 million in the second quarter of 2023. This represents the Company’s third consecutive quarter of positive adjusted EBITDA.
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(1) See the reconciliation of adjusted EBITDA, a non-GAAP financial measure, to net loss in the table under “Use of Non-GAAP Financial Measures” below in this press release.

Balance Sheet and Cash Flow

The Company ended the second quarter of 2024 with $37 million in cash and cash equivalents, an increase of $19 million as compared to the second quarter of 2023. The Company had no debt on our balance sheet as of June 30, 2024.

Net cash provided by operating activities was $3 million, compared to net cash provided by operating activities of $4 million for the second quarter of 2023.

Updated Full Year 2024 Outlook

Based on better than expected performance in the first half of the year, we are increasing our full year 2024 outlook for both revenue and Adjusted EBITDA.

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(1) We do not provide guidance for the most directly comparable GAAP measure, net loss, and similarly cannot provide a reconciliation between our adjusted EBITDA outlook and net loss without unreasonable effort due to the unavailability of reliable estimates for certain components of net loss, including interest and other (income) expense, net, and the respective reconciliations. These items are not within our control and may vary greatly between periods and could significantly impact our financial results calculated in accordance with GAAP.

About The Honest Company

The Honest Company (NASDAQ: HNST) is a personal care company dedicated to creating clean- and sustainably-designed products spanning categories across diapers, wipes, baby personal care, beauty, apparel, household care and wellness. Founded in 2012, the Company is on a mission to challenge ingredients, ideals, and industries through the power of the Honest brand, the Honest team, and the Honest Standard. Honest products are available via Honest.com, leading online retailers and approximately 50,000 retail locations across the United States and Canada.