Honest (HNST) Q4 2025 Earnings Call Transcript

The Motley Fool

by newsfeedback@fool.com (Motley Fool Transcribing)

February 25, 2026

AI-Generated Deep Dive Summary

Honest (HNST) reported its Q4 2025 earnings call, highlighting mixed financial results amid significant strategic shifts. While organic revenue grew 5.3% to $294 million, driven by strong performance in wipes and personal care products, the company faced challenges in the diaper category, which saw double-digit consumption declines. Adjusted gross margins improved to 38.7%, up 50 basis points year over year, reflecting favorable product mix and efficiency gains. However, reported revenue fell 1.9% to $371.3 million due to deliberate strategic exits, including the apparel category and Canadian business. The company’s wipes portfolio outperformed expectations, with a 30% consumption growth, six times faster than the category average. Personal care products also showed strong momentum, growing 12%, supported by new product launches and expanded retail partnerships. Notably, wipes contributed significantly to revenue, capturing the largest dollar share gain among competitors. However, the diaper category faced headwinds from retail assortment shifts, promotional event lapses, and increased price sensitivity, ceding its position as the largest category. Despite these challenges, Honest demonstrated financial resilience. Adjusted EBITDA reached $22 million for the year, within guidance range, while free cash flow improved by $12.6 million to $13.6 million, driven by working capital improvements. The company ended the year with $89.6 million in cash and no debt, enabling strategic investments and share repurchases. A new $25 million share repurchase program was announced, signaling confidence in its transformation strategy. Looking ahead, Honest expects reported revenue to decline 18%-16% in 2026 due to ongoing strategic exits, though organic revenue growth is targeted at 4%-6%. Adjusted EBITDA is forecasted between $20 million and $23 million, with adjusted gross margins expected to remain in the low 40s. The company is also pursuing operational efficiencies through a planned consolidation of its fulfillment centers into a single Las Vegas location by mid-2026, aiming to unlock further

Verticals

financeinvesting

Originally published on The Motley Fool on 2/25/2026