Honest Company Q2 revenue at $93 mln, net income $4 mln, gross margin 40.4% expands.

• The Honest Company reports Q2 2025 revenue of $93mln, up 0.4% YoY. • Gross margin reaches 40.4%, a 210-basis point expansion. • Net income reaches $4mln, up $8mln YoY. • Adjusted EBITDA increases by $22,000 to $8mln. • Company reaffirms full-year 2025 financial outlook.

The Honest Company (NASDAQ: HNST) has reported strong financial results for the second quarter of 2025, marking its second consecutive quarter of profitability. Revenue increased by 0.4% year-over-year (YoY) to $93.5 million, while gross margin expanded by 210 basis points to 40.4%. The company achieved net income of $4 million, representing an $8 million improvement from the previous year's loss. Adjusted EBITDA increased by $22,000 to $8 million. The Honest Company has reaffirmed its full-year 2025 financial outlook, projecting 4-6% revenue growth and adjusted EBITDA between $27-30 million [2].

Key highlights of the second quarter 2025 financial results include:
- Revenue Growth: Revenue increased by 0.4% YoY to $93.5 million, primarily driven by an increase in retail revenue, partially offset by a decline in Honest.com revenue.
- Gross Margin Expansion: Gross margin expanded by 210 basis points to 40.4%, driven by changes in inventory reserves and partially offset by tariff costs.
- Operating Expenses: Operating expenses decreased by $5 million to $35 million, primarily due to a decrease in selling, general & administrative expenses.
- Net Income: Net income increased by approximately $8 million to $4 million, representing the company's second consecutive quarter of positive net income.
- Adjusted EBITDA: Adjusted EBITDA increased by $22,000 to $7.62 million, marking the company's seventh consecutive quarter of positive adjusted EBITDA.
- Cash and Balance Sheet: The company ended the quarter with $72 million in cash and cash equivalents, up $35 million YoY, and no debt on its balance sheet.

The Honest Company's transformation strategy, focusing on brand maximization, margin enhancement, and operating discipline, continues to drive profitability improvement and gross margin expansion. Despite minimal revenue growth, the company's tracked channel consumption grew by 6%, outperforming comparative categories, and consumption at its largest digital customer increased by 26%. However, the company's operating cash flow turned negative at -$4 million compared to +$3 million in the prior year period, which warrants monitoring.

The Honest Company's reaffirmed full-year 2025 outlook suggests confidence in the continued execution of its transformation strategy, despite macroeconomic challenges including tariffs. The company's strong balance sheet, with $72 million in cash and zero debt, supports this outlook.

References:
[1] https://finance.yahoo.com/news/expect-honest-company-hnst-q2-031558735.html
[2] https://www.stocktitan.net/news/HNST/the-honest-company-reports-second-quarter-2025-lun3xq1a8zbd.html