The Honest Company Inc. Overview
The FY2023 and FY2024 counts come from aggregator profiles (Alphaspread, Robinhood) that mirror earlier 10-K disclosures [S]. FY2025 is from the 10-K [P].
The Honest Company is a US-centric, asset-light, single-brand personal care company. It has rebuilt itself around three "right-to-win" platforms: wipes, personal care, and diapers. The brand was founded on clean formulation, governed by the "Honest Standard" and a NO List™ of more than 3,500 excluded chemicals.
Honest began as a celebrity-led direct-to-consumer subscription business. It has since become a wholesale brand that sells almost entirely through Amazon, Target, Walmart and other retailers. The three largest retailers accounted for 75% of FY2025 revenue.
Under CEO Carla Vernón, the 2023 Transformation Initiative and the 2025–26 "Powering Honest Growth" programme removed roughly USD 77M of low-margin revenue. The exits were Honest.com fulfilment, apparel and Canada.
The result is a smaller company: FY2026 guidance is USD 319–325M of revenue. It is more profitable: underlying adjusted gross margin reached a record 43.8% in Q2 2026. It has no debt and USD 106M of cash. Honest competes against Kimberly-Clark, P&G and Edgewell, and it grows mainly by taking wipes and baby personal care share while its diaper business declines.
Company's own description (paraphrased from 10-K FY2025 [P])
Honest describes itself as a personal care company that makes cleanly-formulated, sustainably-designed products for everyone from babies to adults. It pairs thoughtful design with science-based innovation, and its categories span wipes, personal care, diapers and beauty.
Its product range has three parts:
Wipes: all-purpose baby wipes; flushable wipes in toddler and adult versions; sanitizing wipes; make-up remover wipes. The Clean Conscious® wipes are plant-based, compostable and made with more than 99% water.
Personal care: a baby-to-adult collection, many items certified by bodies such as the National Eczema Association. All formulas are audited by a toxicologist.
Diapers: built on responsibly sourced, plant-based fluff pulp, with a redesigned format that uses less material.
The company's stated aim is to meet consumers wherever they shop. It frames its multi-retailer distribution as the engine of growth for a trusted, award-winning, multi-category brand.
Business model and revenue model
| Revenue model element | Description | FY2025 status | FY2026 status |
|---|---|---|---|
| Product sales to retailers and third-party e-commerce (wholesale) | Finished goods shipped to Amazon, Target, Walmart, Kroger, H-E-B, CVS and others. Revenue is recognised on shipment or delivery. Payment terms are typically 30–45 days | About 91% of FY2025 revenue | About 100% of product revenue |
| Direct-to-consumer (Honest.com, including subscriptions) | One-off and subscription orders shipped to consumers | About 9% of FY2025 revenue (11% in H1 2025) | Exited 31 Dec 2025; zero revenue in H1 2026 |
| Licensing / royalties | Outbound trademark licence to O5-MD LLC / O5 North ULC (apparel, accessories, bath and bedding, footwear) signed 1 Jun 2026; runs to 31 Dec 2030 with two 5-year renewals | — | Royalty revenue starts later in 2026; immaterial in FY2026 |
| One-time inventory liquidation | USD 10.0M sale of remaining apparel inventory to O5, recognised at zero gross profit | — | USD 3.1M recognised in Q2 2026; about USD 10M in FY2026 guidance |
| Non-monetary trade credits | Historic swaps of excess inventory for marketing and transport credits | Minor | USD 1.5M write-off in Q2 2026 reduced revenue |
Revenue model mix:
Sources: 10-K FY2025; 10-Q Q2 FY2026; Q2 2026 call highlights [P/S].
Value-chain position
Honest is a brand owner and marketer. It does not own manufacturing.
Sourcing: finished goods come from third-party contract manufacturers in the United States, Mexico and China [P].
Key inputs: plant-based fluff pulp for diapers and plant-based substrate for wipes [P].
Logistics: after 30 Jun 2026, one Las Vegas, Nevada warehouse leased by Honest and operated by NFI (National Distribution Centers, LLC). The Pennsylvania GEODIS site closed [P].
In-house capabilities: R&D (chemists, a toxicologist and an eco-toxicologist), quality audits of contract manufacturers, demand planning, brand marketing, and retailer sales [P].
Customer types and end-markets
Direct customers are mass, club, grocery, drug and e-commerce retailers. In FY2025:
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Amazon: 39% of revenue
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Target: 28%
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Walmart: 8%
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Others: Kroger, H-E-B, CVS (feminine care aisle placement for flushable wipes in 2026), and others [P].
End consumers are US households with babies and young children. Through flushable and sanitizing wipes and Disney/Pixar kids' personal care, the base is widening to big-kid and no-kid households.
End-markets are US baby wipes, adult and toddler flushable wipes, baby and kids personal care (bath, lotion, OTC diaper-rash and eczema care), disposable diapers, and adult facial care and cosmetics (Honest Beauty).
Independent characterisation
Honest is a sub-scale, premium-positioned challenger brand in large, oligopolistic US categories. Its economics are now driven by three things:
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Mix. Wipes and personal care carry higher margins and are growing double digits. Diapers carry lower margins and are declining double digits.
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Retailer concentration. Three accounts make up three-quarters of sales, so distribution decisions by one or two buyers swing results. The 2024–25 diaper SKU losses show this.
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Operating leverage on a small base. SG&A was cut from USD 99M in FY2024 to USD 80M in FY2025 and is running about 18% of revenue in H1 2026. Marketing has been reinvested.
The business has moved from a "lifestyle brand plus DTC" model to a focused "wholesale CPG brand" model. Its strategic logic now looks like a mid-cap CPG turnaround, not a growth story. A credible margin path and a clean balance sheet make it a natural candidate for strategic interest. That is analyst inference, and no transaction is reported.
Strategy
Stated strategy (paraphrased themes; 10-K FY2025 and FY2025 shareholder letter [P])
Three Transformation Pillars: Brand Maximisation, Margin Enhancement and Operating Discipline have been the framework since 2023.
"Right-to-win" focus: Concentrate resources on wipes, personal care and diapers. Diapers are kept mainly as the brand's entry point for new families.
Grow physical and digital availability: More stores, doors, aisles, shelves and facings. Management says Honest is still under-indexed versus competitors: rivals have 2–6x Honest's household penetration in baby personal care and 5–7x in all-purpose wipes (Q1 2026 call).
Expand the household base: Move beyond baby homes to "big kid" and "no kid" homes through adult flushable wipes, kids personal care and Disney/Pixar licences. The company added 1.6M new households over the year to Q1 2026.
Purpose-led, data-driven marketing: Social and influencer-heavy, with strategic paid media.
Asset-light model: Contract manufacturing, outbound licensing of apparel, and a single warehouse node.
Long-term algorithm: Revenue growth of 4–6% a year with continued adjusted EBITDA margin expansion.
Strategic initiatives in the last 24 months (Oct 2024 – Oct 2026)
| Initiative | Announced | Scope | Targets / financials | Status |
|---|---|---|---|---|
| Transformation 2.0: Powering Honest Growth | Board approval 30 Oct 2025; announced 5 Nov 2025 | Exit Honest.com fulfilment, apparel (as a seller) and Canada; rightsize SG&A; supply-chain efficiencies, including warehouse consolidation | One-time costs USD 25–35M; recurring savings USD 8–15M a year; exits about 20% of revenue (USD 77.2M in FY2025) | Exits completed 31 Dec 2025; PA warehouse closed 30 Jun 2026; programme to be substantially complete by 31 Dec 2026. H1 2026 charges USD 2.3M; accrued restructuring USD 3.8M |
| Disney licensed personal care | 8 Sep 2025 | Disney Comfort Sweet Cream collection plus limited gift sets | — | Live; extended in Feb 2026 |
| Disney and Pixar Toy Story Kids Personal Care | 5 Feb 2026 | First kids line, exclusive to Walmart | — | Live |
| Flushable wipes brand campaign ("It's Time to Get Honest") | 2,026 | Adult flushables; CVS feminine care aisle | More than 3 billion impressions | Ongoing |
| Wipes packaging redesign and hand sanitizing wipes refresh | Q1 2026 | Shelf visibility | — | Done |
| Inaugural share buyback | 20 Feb 2026 | USD 25M | About 5.6M shares at an average USD 3.35 by 30 Jun; fully used by 5 Aug 2026 | Complete |
| Revolver amendment | Mar 2026 | USD 35M plus USD 35M accordion, to 31 Mar 2029 | Liquidity backstop | Undrawn |
| Apparel outbound licence (O5) | 1 Jun 2026 | Apparel, accessories, bath and bedding, footwear licence through 2030 | Royalty income; USD 10M inventory sale; margin-accretive but immaterial in 2026 | Live |
| Warehouse consolidation | Dec 2025 notice; live by Q2 2026 | One automated Las Vegas node | Savings within USD 8–15M programme | Delivering savings |
| New HQ lease | 14 Jun 2026 | 10-year office lease from 2027 | About USD 30.7M base rent; USD 6.9M tenant improvement allowance | Signed |
| Reinvestment in marketing, technology and supply chain | Aug 2026 (Q2 call) | Higher brand and capability spend | Embedded in raised outlook | In progress |
| AI and data-analytics adoption | FY2025 10-K disclosure | Operations and commercial insights | Not quantified | Disclosed as a strategic risk and opportunity |
| ESG: Clean Conscious products, Baby2Baby, March of Dimes | Ongoing | Product sustainability and social impact | See Section 20 | Ongoing |
Guidance history
| Guidance item | Original FY2025 (Feb 2025) | Revised FY2025 (Nov 2025) | FY2025 actual | Initial FY2026 (Feb 2026) | Raised FY2026 (5 Aug 2026) |
|---|---|---|---|---|---|
| Reported revenue | +4% to +6% | -3% to flat | -1.9% (USD 371.3M) | -16% to -18% | USD 319–325M (includes about USD 10M apparel liquidation) |
| Organic revenue growth | — | +4% to +6% | +5.3% | +4% to +6% | +5% to +7% |
| Adjusted gross margin | — | — | 38.7% | Low 40s % | Raised; includes tariff refund benefit and apparel liquidation drag |
| Adjusted EBITDA | USD 27–30M | USD 21–23M | USD 21.8M | USD 20–23M | USD 23–25M |
Sources: 8-K FY2024 Q4, Q3 FY2025, Q4 FY2025 and Q2 FY2026 releases; call summaries [P/S].
Products & Services
Honest markets one master brand ("Honest" / "The Honest Co."), with "Honest Baby" and "Honest Beauty" sub-brands and licensed Disney and Pixar co-branding. Individual SKU prices are set by retailers; Honest sells at wholesale. Where shelf prices are cited, they are retailer listings.
Wipes platform (about 44% of H1 FY2026 revenue; fastest-growing)
| Product | Description and specifications | Target customer | Launch / latest | Notes |
|---|---|---|---|---|
| Clean Conscious® Baby Wipes (all-purpose) | Plant-based, compostable substrate; more than 99% water; for delicate skin | Parents of infants and toddlers | Core since launch [U]; new bolder package design in Q1 2026 [P] | Highest share growth of any all-purpose baby wipes brand per Q4 2025 call [P] |
| Toddler Flushable Wipes | Flushable format meeting the IWSFG flushability standard | Potty-training households | Before 2025 [U] | Part of the wipes consumption growth (about 30% in FY2025; 26% in Q2 2026) [P] |
| Adult Flushable Wipes | Flushable wipes for adults; "It's Time to Get Honest" 2026 campaign generated more than 3 billion media impressions; placed in CVS feminine care aisle | Adults, including no-kid households | Campaign in 2026 [P] | Main lever for expanding beyond baby households [P] |
| Hand Sanitizing Wipes | Sanitizing wipes for hands | Families on the go | Range refreshed in Q1 2026 [P] | Low-margin bulk cleaning and sanitisation was exited in 2023; hand wipes retained [P] |
| Makeup Remover Wipes | Facial wipes for removing cosmetics | Adult beauty consumers | Before 2025 [U] | Overlaps with Honest Beauty |
| Milk-carton-style wipes packs | Distinctive carton-style packaging; a new item added in Q1 2026 | Gifting and design-led consumers | Q1 2026 addition [P] | Item details not disclosed |
Personal care platform (about 29% of H1 FY2026 revenue)
| Product | Description and specifications | Target customer | Launch / latest | Pricing (shelf) |
|---|---|---|---|---|
| 2-in-1 Cleansing Shampoo + Body Wash | Tear-free, hypoallergenic, dermatologist-tested; made without phthalates, parabens, dyes, synthetic fragrance, formaldehyde donors or SLS/SLES. Scents: Lavender, Citrus Vanilla, Sweet Cream (Disney), Fragrance-Free | Babies to adults | Core [U]; Disney variant from Sep 2025 [P] | About USD 10.96 per 10 fl oz at Walmart [S] |
| Bubble Bath | Clean bath formula | Babies and kids | Core; Disney Sweet Cream variant in 2025 [P] | — |
| Face + Body Lotion | Daily moisturiser | Babies to adults | Core; Disney Sweet Cream variant in 2025 [P] | — |
| Conditioner | Gentle conditioner | Babies and kids | Disney Sweet Cream variant in 2025 [P] | — |
| Diaper rash and soothing products (OTC) | OTC drug products under the FDA monograph | Infants | Core [P] | — |
| Colloidal oatmeal skin care (OTC) | Eczema-prone skin care; several items carry the National Eczema Association Seal of Acceptance | Infants and sensitive skin | Core [P] | — |
| Disney Comfort: Sweet Cream collection (permanent) | Shampoo + Body Wash, Bubble Bath, Face + Body Lotion, Conditioner with Mickey & Friends packaging | Baby households | 8–9 Sep 2025 [P] | — |
| Disney Bathtime Gift Sets and Duos (limited edition) | Mickey Mouse Lavender set and Winnie the Pooh Sensitive Fragrance-Free set, including konjac sponges | Gifting | Sep 2025; Amazon and Walmart [P/S] | — |
| Disney and Pixar Toy Story Kids Personal Care | Honest's first kids personal care range, with Toy Story packaging | Kids aged about 3 and up ("big kid" households) | 5 Feb 2026, Walmart [P] | — |
Position: Honest says it became the #2 brand in total US baby personal care, up from #4 (Q1 2026 call), and the leading natural baby personal care brand (FY2025 annual letter) [P].
Diapers platform (about 25% of H1 FY2026 revenue; declining)
| Product | Description and specifications | Target customer | Launch / latest | Notes |
|---|---|---|---|---|
| Clean Conscious® Diapers | Responsibly sourced, plant-based fluff pulp; redesigned in 2025 to use less material; print-led design | Newborn to toddler households | Renovation in 2025, with a USD 3.0M write-down of old diaper inventory in Q1 2025 [P] | Consumption down 15% in FY2025 vs category -1% [P]. Lost SKU distribution at two large retailers in 2024–25 [P]. Management calls diapers a brand "entry point" for new families [P] |
| Other diaper formats (e.g. overnight, training pants) | — | — | — | — |
Beauty and adult skincare (Honest Beauty)
| Product | Description | Status |
|---|---|---|
| Adult facial skin care (e.g. Daily Green Juice Antioxidant Super Serum, launched Q1 2023) | Clean facial care for a range of skin types | Revenue declining: -5.7M in FY2025 and -4.5M in FY2024 [P] |
| Color cosmetics | Clean makeup | Declining; social reach fell after Alba's departure [P] |
Exited, licensed-out and discontinued lines
| Line | Status | Detail |
|---|---|---|
| Honest Baby apparel, bedding and accessories | Exited as a merchandise seller on 31 Dec 2025; licensed out from 1 Jun 2026 | USD 15.9M apparel inventory write-down in FY2025. O5-MD / O5 North hold an exclusive licence in the US, Canada, Mexico and some international club and off-price accounts, through 2030 [P] |
| Honest.com DTC and subscriptions | Exited 31 Dec 2025 | 11% of revenue in H1 2025; the site is now an education and retailer-locator hub [P] |
| Canada retail and online | Exited 31 Dec 2025 | FY2025 Canada revenue fell USD 1.0M before exit; exact level not disclosed [P] |
| Household cleaning and sanitisation (low-margin elements) | Exited 2023 | Post-COVID demand collapse [P] |
| Wellness (vitamins and supplements) | Current status not specified | FDA-regulated food category still listed in regulatory disclosures [P] |
Financial Narrative
All figures are USD millions unless stated, for fiscal years ended 31 December.
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Revenue by Segment and Revenue by Segment (%)
| Category (legacy) | FY2022 | FY2023 |
|---|---|---|
Diapers and Wipes revenue (USD Mn) | 200.4 | 218.3 |
Skin and Personal Care revenue (USD Mn) | 89.3 | 88.1 |
Household and Wellness revenue (USD Mn) | 23.9 | 38.0 |
Total revenue (USD Mn) | 313.7 | 344.4 |
Diapers and Wipes share of revenue (%) | 63.9 | 63.4 |
Skin and Personal Care share of revenue (%) | 28.5 | 25.6 |
Household and Wellness share of revenue (%) | 7.6 | 11.0 |
Diapers and Wipes YoY growth (%) | — | 8.9 |
Skin and Personal Care YoY growth (%) | — | -1.4 |
Household and Wellness YoY growth (%) | — | 59.0 |
Revenue by Segment and Segment Margins & Growth (%)
| Metric | FY2024 | FY2025 |
|---|---|---|
Reported revenue (USD Mn) | 378.3 | 371.3 |
Organic revenue, excluding Powering Honest Growth exits (USD Mn) | 279.3 | 294.1 |
Exited businesses revenue: Honest.com, apparel, Canada (USD Mn) | 99.1 | 77.2 |
Organic revenue YoY growth (%) | — | 5.3 |
Exited share of reported revenue (%) | 26.2 | 20.8 |
Revenue by Segment and Segment Margins & Growth (%) (Half-Yearly)
| Category (current) | H1 FY2025 | H1 FY2026 |
|---|---|---|
Wipes revenue (USD Mn) | 56.4 | 70.8 |
Personal Care and Other revenue (USD Mn) | 42.5 | 46.4 |
Diapers revenue (USD Mn) | 51.4 | 41.0 |
Honest.com, Apparel and Canada revenue (USD Mn) | 40.4 | 3.1 |
Total revenue (USD Mn) | 190.7 | 161.4 |
Wipes YoY growth (%) | — | 25.5 |
Personal Care and Other YoY growth (%) | — | 9.3 |
Diapers YoY growth (%) | — | -20.1 |
Wipes share of revenue (%) | 29.6 | 43.9 |
Personal Care and Other share of revenue (%) | 22.3 | 28.8 |
Diapers share of revenue (%) | 26.9 | 25.4 |
Results by Segment and Segment Margins & Growth (%)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Segment operating income (USD Mn) | -36.8 | -49.9 | -38.9 | -6.3 | -18.5 |
Segment operating margin (%) | -11.6 | -15.9 | -11.3 | -1.7 | -5.0 |
Income Statement and Margin Analysis (%)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Revenue (USD Mn) | 318.6 | 313.7 | 344.4 | 378.3 | 371.3 |
Revenue growth YoY (%) | 6.0 | -1.6 | 9.8 | 9.9 | -1.9 |
Cost of revenue (USD Mn) | 209.5 | 221.3 | 243.8 | 233.7 | 247.7 |
Gross profit (USD Mn) | 109.2 | 92.3 | 100.5 | 144.7 | 123.6 |
SG&A (USD Mn) | 84 | 87 | 95 | 99 | 80 |
Marketing (USD Mn) | 54 | 48 | 36 | 45 | 51 |
Research and development (USD Mn) | 7.7 | 7.0 | 6.2 | 6.9 | 7.3 |
Restructuring (USD Mn) | 0.0 | 0.0 | 2.2 | 0.0 | 4.2 |
Operating income, GAAP (USD Mn) | -36.8 | -49.9 | -38.9 | -6.3 | -18.5 |
EBITDA, GAAP-derived (USD Mn) | -32.7 | -47.1 | -36.2 | -3.5 | -15.6 |
Adjusted EBITDA, company-defined (USD Mn) | -3.5 | -22.5 | -11.0 | 25.9 | 21.8 |
Interest and other income, net (USD Mn) | -1.8 | 0.9 | -0.3 | 0.3 | 3.0 |
Pre-tax income (USD Mn) | -38.6 | -48.9 | -39.2 | -6.0 | -15.5 |
Net income (USD Mn) | -38.7 | -49.0 | -39.2 | -6.1 | -15.7 |
EPS basic (USD) | -0.55 | -0.53 | -0.41 | -0.06 | -0.14 |
EPS diluted (USD) | -0.55 | -0.53 | -0.41 | -0.06 | -0.14 |
Dividends per share (USD) | 0 | 0 | 0 | 0 | 0 |
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View Subscription PlansMargin Analysis (%)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Gross margin GAAP (%) | 34.3 | 29.4 | 29.2 | 38.2 | 33.3 |
Adjusted gross margin (%) | — | — | — | 38.2 | 38.7 |
Operating margin GAAP (%) | -11.6 | -15.9 | -11.3 | -1.7 | -5.0 |
EBITDA margin GAAP-derived (%) | -10.3 | -15.0 | -10.5 | -0.9 | -4.2 |
Adjusted EBITDA margin (%) | -1.1 | -7.2 | -3.2 | 6.8 | 5.9 |
Net margin (%) | -12.1 | -15.6 | -11.4 | -1.6 | -4.2 |
Marketing as % of revenue (%) | 16.9 | 15.3 | 10.5 | 11.9 | 13.7 |
SG&A as % of revenue (%) | 26.4 | 27.7 | 27.6 | 26.2 | 21.5 |
Balance Sheet and Share Count (M)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Total assets (USD Mn) | 272.6 | 240.6 | 201.6 | 247.4 | 225.4 |
Cash and equivalents (USD Mn) | 50.8 | 9.5 | 32.8 | 75.4 | 89.6 |
Short-term investments (USD Mn) | 42.4 | 5.7 | 0.0 | 0.0 | 0.0 |
Accounts receivable (USD Mn) | 31.8 | 42.3 | 43.1 | 43.5 | 33.8 |
Inventories (USD Mn) | 75.7 | 115.7 | 73.5 | 85.3 | 72.5 |
Total current assets (USD Mn) | 213.8 | 189.2 | 157.8 | 213.9 | 202.4 |
Total current liabilities (USD Mn) | 48.5 | 63.6 | 56.7 | 59.9 | 50.8 |
Financial debt, short-term (USD Mn) | 0 | 0 | 0 | 0 | 0 |
Financial debt, long-term (USD Mn) | 0 | 0 | 0 | 0 | 0 |
Operating lease liabilities, total (USD Mn) | 37.5 | 37.6 | 29.9 | 21.7 | 14.0 |
Net debt, financial, negative = net cash (USD Mn) | -93.2 | -15.2 | -32.8 | -75.4 | -89.6 |
Shareholders' equity (USD Mn) | 179.1 | 146.4 | 123.1 | 174.3 | 169.7 |
Goodwill and intangibles (USD Mn) | 2.7 | 2.6 | 2.5 | 2.5 | 2.4 |
Working capital (USD Mn) | 165.3 | 125.6 | 101.1 | 154.0 | 151.6 |
Shares outstanding, year-end (M) | 91.5 | 92.9 | 95.9 | 109.2 | 112.8 |
Cash Flow
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Operating cash flow (USD Mn) | -38.2 | -76.3 | 19.4 | 1.5 | 15.1 |
Capital expenditure, outflow (USD Mn) | 0.2 | 1.6 | 1.8 | 0.5 | 1.5 |
Free cash flow (USD Mn) | -38.4 | -77.9 | 17.5 | 1.0 | 13.6 |
Stock-based compensation (USD Mn) | 16.9 | 15.1 | 15.8 | 15.7 | 10.5 |
Dividends paid (USD Mn) | — | 0 | 0 | 0 | 0 |
Share buybacks (USD Mn) | 0.6 | 0.0 | 0 | 0 | 0 |
Proceeds from stock option exercises (USD Mn) | 5.7 | 0.1 | 0.0 | 41.0 | 0.4 |
Returns & Leverage Ratios (%) and Financial Ratios (x)
| Ratio | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Return on equity (%) | -21.6 | -30.1 | -29.1 | -4.1 | -9.1 |
Return on assets (%) | -14.2 | -19.1 | -17.7 | -2.7 | -6.6 |
ROIC, pre-tax operating basis (%) | -42.8 | -38.0 | -43.1 | -6.4 | -23.1 |
Current ratio (x) | 4.41 | 2.97 | 2.78 | 3.57 | 3.98 |
Financial debt to equity (x) | 0 | 0 | 0 | 0 | 0 |
Lease liabilities to equity (x) | 0.21 | 0.26 | 0.24 | 0.12 | 0.08 |
Asset turnover (x) | 1.17 | 1.22 | 1.56 | 1.69 | 1.57 |
Days sales outstanding (days) | 36.4 | 49.2 | 45.7 | 42.0 | 33.2 |
Days inventory outstanding (days) | 131.9 | 190.8 | 110.0 | 133.2 | 106.8 |
Days payables outstanding (days) | 50.0 | 40.9 | 33.4 | 35.6 | 22.3 |
Cash conversion cycle (days) | 118.3 | 199.1 | 122.3 | 139.6 | 117.7 |
Revenue by Region (%)
| Metric | FY2023 | FY2024 | FY2025 | H1 FY2026 |
|---|---|---|---|---|
Revenue from US customers, share of total (%) | 100 | 100 | 100 | 100 |
Revenue from Canada and other international (USD Mn) | — | — | — | 0 |
Revenue by Region (%) (Half-Yearly)
| Metric | FY2025 | H1 FY2025 | H1 FY2026 |
|---|---|---|---|
Retail and third-party e-commerce share of revenue (%) | 91 | 89 | 100 |
Honest.com DTC share of revenue (%) | 9 | 11 | 0 |
Amazon share of revenue (%) | 39 | — | — |
Target share of revenue (%) | 28 | — | — |
Walmart share of revenue (%) | 8 | — | — |
Top-3 retailer concentration (%) | 75 | — | — |
Data Point Details
| Data point | Value | Source |
|---|---|---|
IPO price (5 May 2021) | USD 16.00 | [S] |
Close, 31 Dec 2025 | USD 2.58 | DEF 14A 2026 [P] |
52-week low (late 2025) | About USD 2.07 | [S] |
Recent high | About USD 5.95 (4 Sep 2026) | MarketChameleon [S] |
Latest verified close | USD 5.32 (17 Sep 2026) | StockAnalysis [S] |
Shares outstanding | 107.28M (31 Jul 2026) | 10-Q [P] |
Market capitalisation | About USD 571M | [A] |
Enterprise value | About USD 471M (cash of about USD 99.6M = 30 Jun cash of 105.9M less about 6.3M of later buybacks; no debt) | [A] |
Beta | About 2.1 | [S] |
1-year price return | About +50% (to 4 Sep 2026) vs S&P 500 about +20% | MarketChameleon [S] |
Year-to-date 2026 return | About +106% (USD 2.58 to USD 5.32) | [A] |
3-year and 5-year price returns | Price is down about 67% from the IPO price | [A] |
Price vs IPO | -66.8% | [A] |
Share Count (M) and Valuation Multiples (x)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Shares outstanding, year-end (M) | 91.5 | 92.9 | 95.9 | 109.2 | 112.8 |
Price-to-sales at fiscal year-end (x) | 2.31 | 0.89 | 0.92 | 1.85 | 0.78 |
Dividends per share (USD) | 0 | 0 | 0 | 0 | 0 |
Share buybacks (USD Mn) | 0.6 | 0.0 | 0 | 0 | 0 |
Book value per share (USD) | 1.96 | 1.58 | 1.28 | 1.60 | 1.50 |
Valuation Multiples
| Multiple | HNST |
|---|---|
P/E, trailing (x) | Not meaningful (TTM net loss of USD 12.2M) |
Forward P/E (x) | About 147 (S&P consensus) [S] |
EV / Sales, TTM (x) | 1.38 |
EV / Sales, FY2026 guidance midpoint USD 322M (x) | 1.46 |
EV / Adjusted EBITDA, FY2026 guidance midpoint USD 24M (x) | 19.6 |
P / Book (x) | 3.42 |
P / FCF, TTM (x) | 10.8 [S] |
Firm Details
| Firm | Analyst | Latest action | Rating | Price target (USD) |
|---|---|---|---|---|
Morgan Stanley | Dara Mohsenian | 13 Aug 2026 PT raise | Equal-Weight | 6 (from 3) |
Telsey Advisory | Dana Telsey | 6 Aug 2026 PT raise | Market Perform | 5 (from 4) |
Loop Capital | Laura Champine | Last seen 13 Nov 2024 | Not current | 7 (stale) |
Others asking questions on calls | Alliance Global Partners (Aaron Grey); B. Riley (Anna Glaessgen); Northland (Owen Rickert); JPMorgan (Andrea Teixeira); Lake Street (Ryan Meyers) | — | — | — |
Analyst Conclusions
Management guidance (FY2026, as raised on 5 Aug 2026 [P/S])
-
Reported revenue of USD 319–325M, including about USD 10M of zero-margin apparel liquidation. That is roughly -12% to -14% vs FY2025.
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Organic revenue growth of +5% to +7%, raised from +4% to +6%.
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Adjusted EBITDA of USD 23–25M, raised from USD 20–23M. This includes the tariff refund benefit; the underlying Q2 margin was 9.8%.
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Stepped-up investment in marketing, technology and supply chain.
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Powering Honest Growth to be substantially complete by 31 Dec 2026.
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Long-term algorithm: 4–6% annual revenue growth with adjusted EBITDA margin expansion.
Consensus growth expectations
S&P-sourced consensus implies a forward P/E of about 147x, which signals modest expected FY2026–27 GAAP EPS [S]. Raised price targets after Q2 (USD 5–6) suggest the sell side broadly accepts organic growth of about 5–7% and expanding margins.
Bull case
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Mix-driven margin step-change is structural.
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Wipes plus personal care rose from about 52% of revenue in H1 2025 to about 73% in H1 2026 [A].
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Underlying adjusted gross margin reached 43.8% and underlying adjusted EBITDA margin 9.8%, both records.
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Q2 2026 SG&A was only 18% of revenue.
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Reaching low double-digit EBITDA margins on about USD 330–350M of organic revenue would imply EBITDA of about USD 35–40M by FY2027–28 [A].
-
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Share-taker with penetration runway.
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Consumption outgrew categories by more than 5 points in Q2 2026 (+7.7% vs +2.3%).
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Competitors have 2–7x Honest's household penetration.
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New adult and kids occasions (flushables in the feminine care aisle, Toy Story) widen the funnel.
-
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Cash, optionality and accounting upside.
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USD 106M of cash, no debt, and TTM FCF of USD 52.7M (about 9% FCF yield at USD 571M, though inflated by working-capital release).
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A possible valuation-allowance release would add to book value.
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Strategic M&A appeal amid big-CPG consolidation (Kimberly-Clark/Kenvue).
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Bear case
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Diapers are a drag that may not stop.
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Diaper revenue fell 20% in H1 2026; FY2025 consumption fell 15%.
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Diapers are still about 25% of revenue and the brand's family entry point.
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Further delistings at Amazon, Target or Walmart (75% of revenue together) could overwhelm wipes gains.
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2026 earnings quality is flattered by one-offs.
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Q2 2026 GAAP net income of USD 10.7M included USD 6.6M of tariff refunds.
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H1 FCF benefited from a USD 23M inventory release that will not repeat.
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EV/EBITDA of about 20x on the 2026 guide midpoint is rich for a USD 320M CPG company with a history of GAAP losses.
-
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Scale and cost-of-compliance headwinds.
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Higher marketing reinvestment, the end of EGC status (SOX 404(b), CD&A), new HQ rent from 2027, and Butterblu litigation all pressure the cost base.
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Competing against Kimberly-Clark and P&G on promotions and private label in a weak consumer economy limits pricing power.
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Catalysts and monitorables (next 12 months)
| Catalyst / monitorable | Timing | What to watch |
|---|---|---|
| Q3 FY2026 results | Expected early Nov 2026 (not yet announced) | Organic growth vs 5–7% guide; underlying gross margin of 43% or more; diaper trend |
| Q4 FY2026 / FY2027 guidance | About late Feb 2027 | Algorithm reaffirmation; EBITDA margin trajectory; buyback renewal |
| New buyback authorisation | Any time | Capital allocation signal; the current programme is exhausted |
| Valuation allowance release | Possible at FY2026 year-end | Non-cash tax benefit; signals confidence in sustained profitability |
| Diaper distribution resets (spring and fall shelf resets) | 2026–27 | Any further SKU losses or recoveries at the top-3 retailers |
| Further IEEPA refunds and manufacturer obligations | Ongoing | Size and timing; no receivable is booked |
| Butterblu litigation | Ongoing | Damages exposure or recovery |
| O5 licence royalties | From late 2026 / 2027 | Royalty run-rate disclosure |
| EGC exit (CD&A, say-on-pay, auditor ICFR attestation) | 2027 proxy and FY2026 10-K | Governance and compliance costs |
| Kimberly-Clark / Kenvue integration | 2026–27 | Competitive response in baby personal care |
| New HQ move | From Mar 2027 | Occupancy cost step-up |
Concluding analyst verdict
The Honest Company of late 2026 is not the company that listed at USD 16 in 2021. In three years, management has turned a cash-burning, celebrity-centred DTC lifestyle brand into a focused, debt-free, wholesale CPG brand.
The transformation is real. Revenue fell from USD 378M (FY2024) to about USD 322M (FY2026 guide midpoint). Underlying gross margin rose from 38% to about 44%. SG&A fell by roughly a fifth while marketing grew, and the company now generates meaningful free cash flow. Q2 2026 is the first quarter in which organic growth (+6.7%), record underlying margins and positive GAAP earnings all appeared together.
The quality of the franchise is uneven. Wipes and personal care are clearly winning share; consumption is growing several times faster than their categories. Diapers, still a quarter of sales, are shrinking about 20% a year, and three retailers control three-quarters of revenue.
The valuation has moved ahead of the evidence. The shares rose from USD 2.58 to about USD 5.3 in 2026, and the stock now trades near 20x guided adjusted EBITDA that includes non-recurring tariff refunds. Durability now has to be proven over several quarters.
Balance of evidence:
Positive: a debt-free balance sheet, sector-leading consumption momentum, a credible and experienced CPG management team and board, and genuine strategic optionality.
Negative: scale disadvantage, retailer and diaper risk, and a GAAP earnings base that is still small and flattered by one-offs.
Overall stance: constructive but valuation-sensitive (Hold/Accumulate on pullbacks). Upgrade triggers:
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Q3 and Q4 2026 organic growth above 5% with diaper declines narrowing to single digits.
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Underlying adjusted EBITDA margin sustained above 9% without tariff benefits.
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Renewed capital returns.
Downgrade triggers:
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Further SKU losses at a top-3 retailer.
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Underlying gross margin slipping back below 41%.
Appendix A — Quarterly bridge
| Metric | Q1 FY2025 | Q2 FY2025 | Q3 FY2025 | Q4 FY2025 | Q1 FY2026 | Q2 FY2026 |
|---|---|---|---|---|---|---|
| Revenue (USD M) | 97.3 | 93.5 | 92.6 | 88.0 | 78.1 | 83.3 |
| Organic revenue (USD M) | 75.2 | 75.1 | — | 71.3 | 78.1 | 80.2 |
| Gross margin GAAP (%) | 38.7 | 40.4 | 37.0 | 15.7 | 42.6 | 48.4 |
| Net income (USD M) | 3.3 | 3.9 | 0.8 | -23.6 | 0.0 | 10.7 |
| Adjusted EBITDA (USD M) | 6.9 | — | — | 3.8 | 4.0 | 14.5 |
Notes:
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Q2 FY2025 gross margin [A] from 37.8 / 93.5.
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Q1 FY2025 gross margin [A] from H1 FY2025 gross profit of 75.4M less Q2's 37.8M = 37.7M on 97.3M revenue.
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Q1 FY2026 net loss was USD 0.04M.
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Q2 FY2026 adjusted EBITDA includes the tariff refund; underlying was USD 7.8M.
Appendix B — Methodology and verification limits
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SEC filings: 10-K FY2025 and FY2024; 10-Q Q2 FY2026; DEF 14A 2026; 8-K earnings releases FY2022–Q2 FY2026.
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Company press releases and earnings-call materials.
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Secondary data providers: S&P Global via StockAnalysis; edgar.tools; MarketBeat; Benzinga; Quartr; 13F aggregators; Retail Dive; TechCrunch; Bloomberg Law; License Global; MarketChameleon.
Limitations:
- Analyst calculations [A] use rounded inputs and may differ slightly from company-reported figures.
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View Subscription PlansExecutive Leadership
Executive Leadership Team
| Name | Title | Age | In role since | Prior roles | Education |
|---|---|---|---|---|---|
Carla Vernón | CEO and Director | 55 | 9 Jan 2023 (Board since 25 Jan 2023) | VP Consumables Categories, Amazon (2021–22); 20+ years at General Mills, latest as President of the Natural & Organic operating unit (2017–20; about USD 900M portfolio including Annie's). Director of Hasbro | BA Princeton; MBA Texas McCombs |
Curtiss Bruce | Chief Financial Officer | 53 | Jun 2025 | SVP FP&A and IR, Hain Celestial (2023–25); finance roles at Keurig Dr Pepper, Kellogg, Kraft Heinz, Mars | MBA Penn State; BS Accounting, Millersville |
Dorria L. Ball | Chief People Officer | 64 | Jan 2024 (interim from Aug 2023) | Founder, Global Ballance Group; VP HR, Mondelēz; Kraft | Indiana University |
Etienne von Kunssberg | SVP Supply Chain | 50 | Feb 2025 | Dole Packaged Foods; WWP Beauty; Henkel; P&G; Coty | MBA, Paris School of Business |
Jonathan Mayle | SVP Customer Sales | 35 | Dec 2023 | General Mills sales roles (Walmart, Target, Dollar General) | BS, University of Arizona |
Brendan Sheehey | General Counsel and Corporate Secretary | 48 | Jun 2020 | GC, Targus; Associate GC, Arbonne; Sidley Austin | JD UC Law SF; MA South Carolina; BA UCSB |
Thomas Sternweis | SVP Strategy and Enterprise Development | 44 | Mar 2024 (at Honest since 2018) | Mattel corporate development; BCG | MBA Kellogg; BA Northwestern |
Steve Winchell | Chief Innovation Officer | 51 | Sep 2024 (at Honest since Jun 2022) | The Parent Company; 14 years at Clorox (including Burt's Bees R&D) | BS Chemistry; MS Chemical Engineering, University of Cincinnati |
Directors' Remuneration
| NEO | Year | Salary | Bonus | Stock awards | Non-equity incentive | All other | Total |
|---|---|---|---|---|---|---|---|
Carla Vernón (CEO) | FY2025 | 773,462 | 0 | 3,139,166 | 219,800 | 13,518 | 4,145,946 |
Carla Vernón (CEO) | FY2024 | 725,000 | 0 | 3,683,758 | 884,000 | 9,760 | 5,302,518 |
Curtiss Bruce (CFO, from 2 Jun 2025) | FY2025 | 269,231 | 212,500 | 1,030,630 | 58,000 | 11,484 | 1,581,845 |
Etienne von Kunssberg (SVP Supply Chain, from 24 Feb 2025) | FY2025 | 286,731 | 43,000 | 585,971 | 51,000 | 11,536 | 978,238 |
Board of Directors
| Director | Age | Since | Class / term to | Independent | Committees (fiscal 2025, after the May 2025 rotation) | Background |
|---|---|---|---|---|---|---|
James D. White | 65 | 2021 (Chair since May 2021) | III / 2027 | Yes | Nominating & Corporate Governance (member) | Ex-Chair and CEO, Jamba; director of Simply Good Foods and CAVA |
Carla Vernón | 55 | 2023 | I / 2028 | No (CEO) | — | See 9.1 |
Jessica Alba | 44 | Co-founder (Chair 2018–21) | II / 2029 if re-elected at the 2026 AGM | No (former CCO) | — | Founder; director of Yahoo and LA28. Attended 5 of 8 Board meetings in 2025 |
Katherine Bayne | 59 | Oct 2018 | III / 2027 | Yes | Audit; NCG Chair | Ex-President North America Brands, Coca-Cola; Guggenheim Securities |
Susan Gentile | 59 | May 2021 | III / 2027 | Yes | Audit Chair (financial expert); Compensation | MD and CFO, Advent International; ex-Clorox |
John R. (Jack) Hartung | 68 | May 2022 | I / 2028 | Yes | Audit (financial expert); Compensation Chair | Ex-CFO and President, Chipotle; director of Tesla and Portillo's |
Michael Barkley | 59 | Dec 2023 | I / 2028 | Yes | Compensation; NCG | Ex-CEO, KIND |
Alissa Hsu Lynch | 57 | Dec 2023 | II / 2029 if re-elected | Yes | Audit; NCG | Ex-Google MedTech lead; 20 years at Johnson & Johnson; director of Topcon |
Andrea A. Turner | 62 | Dec 2023 | II / 2029 if re-elected | Yes | Audit; Compensation | Ex-SVP Global Customer Service & Logistics, Mondelēz; General Mills; Merck |
Board & Management Changes
| Date | Change | Context |
|---|---|---|
9 Jan 2023 | Carla Vernón becomes CEO; Nick Vlahos steps down | Margin turnaround mandate |
Aug 2023 / Jan 2024 | Dorria Ball becomes interim, then permanent, CPO | Organisation reset |
Dec 2023 | Jonathan Mayle promoted to SVP Customer Sales | Retail-led model |
Mar 2024 / Sep 2024 | Sternweis promoted to SVP Strategy; Winchell named Chief Innovation Officer | Innovation pipeline |
Apr 2024 | Jessica Alba exits as CCO; Likeness Agreement terminated | Inventory write-downs of USD 0.8M in 2024 plus later immaterial amounts; loss of founder social reach |
24 Feb 2025 | Etienne von Kunssberg joins as SVP Supply Chain | Supply-chain consolidation |
2 Jun 2025 | Curtiss Bruce replaces David Loretta as CFO | Powering Honest Growth execution |
Major Shareholders
| Holder | Shares | % |
|---|---|---|
Jessica Alba (including Warren Trust; 700k options; RSUs) | 6,161,346 | 5.5 |
BlackRock, Inc. (Schedule 13G as of 30 Sep 2024) | 5,698,570 | 5.1 |
All directors and executive officers as a group (16 persons) | 10,689,620 | 9.4 |
Major Shareholders by Rank
| Rank | Holder | Shares | % of outstanding |
|---|---|---|---|
| 1 | BlackRock, Inc. | 6,560,414 | 6.1 |
| 2 | Vanguard Group Inc | 6,374,635 | 5.9 |
| 3 | MAK Capital One LLC | 4,776,088 | 4.5 |
| 4 | Vanguard Capital Management LLC | 4,248,879 | 4.0 |
| 5 | Portolan Capital Management, LLC | 3,045,834 | 2.8 |
| 6 | ArrowMark Colorado Holdings LLC | 2,548,546 | 2.4 |
| 7 | Geode Capital Management, LLC | 2,414,562 | 2.3 |
| 8 | Citadel Advisors LLC | 1,964,363 | 1.8 |
| 9 | Marshall Wace, LLP | 1,921,143 | 1.8 |
| 10 | State Street Corp | 1,894,719 | 1.8 |
Competitive Landscape
Competitors by Segment
| Category | Competitor (brands) | Relative positioning vs Honest |
|---|---|---|
Wipes | Kimberly-Clark (Huggies wipes, Cottonelle flushables) | Scale leader; 5–7x Honest's household penetration in all-purpose wipes (company data) |
Wipes | Procter & Gamble (Pampers wipes, Charmin flushables) | Scale leader |
Wipes | ZURU Edge Limited (Millie Moon, Rascals) | Value-premium challenger |
Wipes | WaterWipes UC | Direct "purity" competitor (99%+ water positioning) |
Wipes | DUDE Wipes, Inc. | Adult flushable challenger |
Wipes | Edgewell Personal Care (Wet Ones) | Hand and sanitizing wipes leader |
Wipes / all | Retailer private label | Price anchor |
Skin and personal care | Kimberly-Clark (pending acquirer of Kenvue: Johnson's Baby, Aveeno Baby) | Category leaders. |
Skin and personal care | The Clorox Company (Burt's Bees) | Natural-positioned peer |
Skin and personal care | Unilever PLC (SheaMoisture) | Natural/textured peer |
Skin and personal care | Estée Lauder; L'Oréal | Beauty and skin leaders |
Skin and personal care | Pacifica Beauty | Clean beauty peer |
Diapers | Kimberly-Clark (Huggies) | US #1–2 |
Diapers | Procter & Gamble (Pampers, Pampers Pure, Luvs) | US #1–2; Pampers Pure competes directly in clean diapers |
Peer Comparison FY2025
| Metric | Honest (FY2025) | Kimberly-Clark (FY2025) | Edgewell (FY Sep-2025) | Clorox (FY Jun-2026) |
|---|---|---|---|---|
Revenue (USD Mn) | 371.3 | 16,400 | 2,223.5 | 6,720 |
Reported revenue growth (%) | -1.9 | -2.1 | -1.3 | -5.0 |
Organic growth (%) | 5.3 | 1.7 | -1.3 | — |
Gross margin GAAP (%) | 33.3 | 36.0 | 41.6 | 42.3 |
Adjusted gross margin (%) | 38.7 | 37.3 | 42.0 | — |
Operating margin GAAP (%) | -5.0 | 14.6 | 4.3 | — |
Pre-tax margin (%) | -4.2 | — | — | 11.8 |
R&D intensity (% of revenue) | 2.0 | — | — | — |
