Investors bullish on The Honest Company after a “beat-and-raise quarter”

13 Aug 2024 --- Shares in The Honest Company leaped 24.5% following the personal care brand’s financial results from its second quarter and first half of the year. Quarterly revenue rose 10% to US$93 million, driven by “strong performance” in its baby products and wipes portfolios. 

The Honest Company’s stock is up nearly 15% year-to-date, but remains notably lower than its all-time high reached in March 2024, currently sitting 21.7% below that peak.

In light of these results, the brand has adjusted its full-year revenue growth guidance to the “mid to high single-digit” percentage range, against previous guidance of “low to mid-single-digit.”

The Honest Company also raised its full-year 2024 Adjusted EBITDA forecast to US$15 million to US$18 million, versus previous guidance of a “low single-digit” to “mid-single-digit” million range.

“In addition to delivering our highest quarterly revenue of US$93 million in the second quarter, we continued to increase profitability and achieved a gross margin of 38%. This strong performance and momentum give us confidence to raise our financial outlook for the full year,” says CEO 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.”

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, price increases and efficient trade spending.

Meanwhile, operating expenses increased US$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 and administrative expenses as a percentage of revenue decreased 120 basis points compared to the second quarter of 2023.

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

Adjusted EBITDA was positive US$8 million compared to negative US$4 million in the second quarter of 2023. This represents the company’s third consecutive quarter of positive adjusted EBITDA.