Achieves Record Revenue of $99 million, an Increase of 15% from Prior Year Quarter
Delivers Positive Net Income, an Increase of $8 million from Prior Year Quarter
Expands Gross Margin 710 Basis Points to 39% Versus Prior Year Quarter
Raises Full Year 2024 Revenue and Adjusted EBITDA Outlook
LOS ANGELES, Nov. 12, 2024 (GLOBE NEWSWIRE) -- The Honest Company (NASDAQ: HNST), a personal care company dedicated to creating cleanly-formulated and sustainably-designed products, today reported financial results for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023.
"Our strong third quarter results are a clear reflection of the power of the Honest brand and the strength of the Honest team that has executed our strategy and Transformation Initiative with discipline and excellence. Our ability to grow profitably is evidenced in our results -- with double digit revenue growth reaching an all-time high, significant expansion in gross margin, and positive net income for the period,” said Chief Executive Officer, Carla Vernón. "We are confident that our long-term growth strategy will continue to allow us to scale across our categories, meeting the growing consumer demand for cleanly-formulated and sustainably-designed products across our portfolio. With our recent performance, continued positive momentum, and overall strength of the Honest brand going into the final quarter of the year, we are again raising our full year financial outlook.”
Third Quarter Results
(All comparisons are versus the third quarter of 2023)
| For the three months ended September 30, | ||||||||||
| 2024 | 2023 | Change | ||||||||
| (In thousands, except percentages) | ||||||||||
| Revenue | $ | 99,237 | $ | 86,169 | 15.2 | % | ||||
| Gross margin | 38.7 | % | 31.6 | % | 710 | bps | ||||
| Operating expenses | $ | 38,339 | $ | 35,197 | $ | 3,142 | ||||
| Net income (loss) | $ | 165 | $ | (8,098 | ) | $ | 8,263 | |||
| Adjusted EBITDA(1) | $ | 7,079 | $ | (1,056 | ) | $ | 8,135 | |||
| Net income margin | 0.2 | % | NM | NM | ||||||
| Adjusted EBITDA Margin(1) | 7.1 | % | NM | NM | ||||||
______________
(1) See the reconciliation of adjusted EBITDA and adjusted EBITDA Margin, a non-GAAP financial measure, to net income (loss) in the table under "Use of Non-GAAP Financial Measures” below in this press release.
(2) According to Circana, Inc. tracked channel consumption data. Reflects consumption for diapers, wipes, baby personal care, skin care and cosmetics items for the latest 13 weeks ended September 29, 2024.
(3) According to Fuelcomm, Inc. ("Stackline”) consumption data for our largest digital customer for the 13 weeks ended September 28, 2024.
Gross margin expanded 710 basis points to 38.7% compared to 31.6%. This growth was primarily driven by improvements across most of the cost structure, including supply chain and product cost efficiencies, as well as efficient trade spend.
Operating expenses increased $3 million to $38 million, reflecting a decrease of 221 basis points, as a percentage of revenue. The Company continues to maintain expense discipline across the enterprise with selling, general & administrative expenses as a percentage of revenue decreasing 441 basis points, partially offset by increased investment in retail marketing to drive our Brand Maximization pillar.
Net income increased $8 million to $165 thousand compared to a net loss of $8 million. Increased net revenue and expansion in gross margin more than offset increased operating expenses to deliver positive net income in the quarter.
Adjusted EBITDA(1) was positive $7 million compared to negative $1 million. This represents the Company's fourth consecutive quarter of positive adjusted EBITDA.
________________
(1) See the reconciliation of adjusted EBITDA and Adjusted EBITDA Margin, a non-GAAP financial measure, to net income (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 third quarter of 2024 with $53 million in cash and cash equivalents, a sequential increase of $17 million from the second quarter of 2024 and an increase of $30 million compared to the third quarter of 2023. The Company had no debt on its balance sheet as of September 30, 2024.
Net cash provided by operating activities was $18 million for the first nine months of 2024, compared to $9 million in the prior year period.
Updated Full Year 2024 Outlook
Based on strong performance in the first three quarters of the year, we are increasing our full year 2024 outlook for both revenue and Adjusted EBITDA.
| Current Outlook | Prior Outlook (as of Q2 2024) | |||
| Revenue | High Single Digit percentage growth
(versus Full Year 2023) | Mid-to-High Single Digit percentage growth (versus Full Year 2023) | ||
| Adjusted EBITDA(1) | $20 million to $22 million range | $15 million to $18 million range |
(1) We do not provide guidance for the most directly comparable GAAP measure, net income (loss), and similarly cannot provide a reconciliation between our adjusted EBITDA outlook and net income (loss) without unreasonable effort due to the unavailability of reliable estimates for certain components of net income (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.
Webcast and Conference Call Information
A webcast and conference call to discuss third quarter 2024 results is scheduled for today, November 12, 2024, at 1:30 p.m. Pacific time/4:30 p.m. Eastern time. Those interested in participating in the conference call by phone, please go to this link https://register.vevent.com/register/BI05f7626bb1a14d23b819b1fec89c6138 and you will be provided with dial in details. A live webcast of the conference call will be available online at: https://investors.honest.com or https://edge.media-server.com/mmc/p/tt3gkzq2. A replay of the webcast will be available on the Company's website for one year.
Forward-Looking Statements
This press release and earnings call referencing this press release contain forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this press release are forward-looking statements. Such statements may address the Company's expectations regarding revenue, profit margin or other future financial performance and liquidity, other performance measures and cost savings, strategic initiatives and future operations or operating results. In some cases, you can identify forward-looking statements because they contain words such as "anticipate,” "believe,” "contemplate,” "continue,” "could,” "estimate,” "expect,” "intend,” "may,” "plan,” "potential,” "predict,” "project,” "should,” "target,” "will” or "would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning our expectations regarding future results of operations and financial condition, including our revenue and adjusted EBITDA outlook for 2024; our ability to achieve or sustain profitability and generate positive cash flow; continued positive momentum in our business and strength of the Honest brand; our ability to execute on, and the continued benefits of, our Transformation Pillars of Brand Maximization, Margin Enhancement, and our long-term growth strategy and Operating Discipline; and other business strategies, plans and objectives of management for future operations.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this press release and the earnings call referencing this press release primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results.
The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled "Risk Factors” in the Annual Report, on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on March 8, 2024, and subsequent filings with the Securities and Exchange Commission. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this press release or the earnings call referencing this press release. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that contain "we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this press release. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this press release and the earnings call referencing this press release relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.
About The Honest Company
The Honest Company (NASDAQ: HNST) is a personal care company dedicated to creating cleanly-formulated and sustainably-designed products spanning categories across diapers, wipes, baby personal care, beauty, apparel, household care and wellness. Launched 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. For more information about the Honest Standard and the Company, please visit www.honest.com.
Investor Inquiries:
investors@thehonestcompany.com
Media Contact:
Brenna Israel Mast
| The Honest Company, Inc. | ||||||||||||||
| Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| (in thousands, except share and per share amounts) | ||||||||||||||
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| Revenue | $ | 99,237 | $ | 86,169 | $ | 278,503 | $ | 254,101 | ||||||
| Cost of revenue | 60,841 | 58,964 | 172,613 | 183,796 | ||||||||||
| Gross profit | 38,396 | 27,205 | 105,890 | 70,305 | ||||||||||
| Operating expenses | ||||||||||||||
| Selling, general and administrative | 23,427 | 24,146 | 72,277 | 74,995 | ||||||||||
| Marketing | 13,170 | 9,110 | 33,778 | 28,605 | ||||||||||
| Restructuring | - | 357 | - | 2,104 | ||||||||||
| Research and development | 1,742 | 1,584 | 5,137 | 4,638 | ||||||||||
| Total operating expenses | 38,339 | 35,197 | 111,192 | 110,342 | ||||||||||
| Operating income (loss) | 57 | (7,992 | ) | (5,302 | ) | (40,037 | ) | |||||||
| Interest and other income (expense), net | 127 | (71 | ) | 44 | (269 | ) | ||||||||
| Income (loss) before provision for income taxes | 184 | (8,063 | ) | (5,258 | ) | (40,306 | ) | |||||||
| Income tax provision | 19 | 35 | 56 | 75 | ||||||||||
| Net income (loss) | $ | 165 | $ | (8,098 | ) | $ | (5,314 | ) | $ | (40,381 | ) | |||
| Net income (loss) per share attributable to common stockholders: | ||||||||||||||
| Basic | $ | 0.00 | $ | (0.09 | ) | $ | (0.05 | ) | $ | (0.43 | ) | |||
| Diluted | $ | 0.00 | $ | (0.09 | ) | $ | (0.05 | ) | $ | (0.43 | ) | |||
| Weighted-average shares used in computing net income (loss) per share attributable to common stockholders: | ||||||||||||||
| Basic | 100,690,486 | 95,179,604 | 98,688,196 | 94,137,244 | ||||||||||
| Diluted | 104,588,417 | 95,179,604 | 98,688,196 | 94,137,244 | ||||||||||
| Other comprehensive income (loss) | ||||||||||||||
| Unrealized gain (loss) on short-term investments, net of taxes | - | - | - | 33 | ||||||||||
| Comprehensive income (loss) | $ | 165 | $ |
| ||||||||||