The Honest Company (HNST) Q2 2024 earnings summary

Executive summary

• Achieved record quarterly revenue of $93 million, up 10.1% year-over-year, led by baby personal care, wipes, and baby apparel, partially offset by declines in Honest.com and skincare sales.

• Gross margin improved to 38.3%, up over 1,100 basis points year-over-year, driven by price increases, cost savings, and favorable product mix.

• Net loss narrowed to $4.1 million from $13.4 million year-over-year, reflecting improved operating discipline and margin enhancement.

• Adjusted EBITDA turned positive at $8 million, a significant improvement from negative $4.1 million in the prior year quarter, marking the third consecutive quarter of positive results.

• Raised full-year 2024 revenue and adjusted EBITDA outlook based on strong first-half results.

Financial highlights

• Q2 2024 net revenue was $93 million, up 10% year-over-year, with broad-based growth and strong tracked channel consumption.

• Gross profit increased to $35.6 million, with gross margin at 38.3%, up from 27.1% in Q2 2023.

• Operating expenses rose to $39.7 million, mainly due to higher marketing and stock-based compensation.

• Net loss per share improved to $(0.04) from $(0.14) year-over-year.

• Cash and cash equivalents at quarter-end were $37 million, up $19 million year-over-year, with no debt outstanding.

Outlook and guidance

• Full-year 2024 revenue now expected to grow mid- to high-single digits, up from prior low- to mid-single digit guidance.

• Adjusted EBITDA guidance raised to $15–$18 million, up from prior low- to mid-single digit millions.

• Gross margin for the remainder of the year expected in the 36%–38% range, with increased flexibility in trade promotion spend.

• Marketing spend as a percent of sales expected to increase by 50–100 bps in the second half.

• Management continues to focus on Transformation Pillars: Brand Maximization, Margin Enhancement, and Operating Discipline.