The Honest Company, Inc. (HNST) Q3 2025 Earnings Call Transcript

Revenue $93 million, down 7% year-over-year. The decline was driven by a decrease in diapers, apparel, and honest.com, as well as lapping the highest growth quarter from last year, which included two large promotional events.

Gross Margin 37%, down 140 basis points year-over-year. The decline was primarily due to tariff costs and the impact of deleverage from lower volume, partially offset by lower trade spend and favorable product mix.

Operating Expenses Decreased by $4 million compared to the prior year quarter, attributed to a $6 million decrease in SG&A expenses, partially offset by a $1.6 million increase in marketing expenses for the new diaper launch.

Net Income Approximately $1 million, positive for the third consecutive quarter.

Adjusted EBITDA $4 million, down $3.5 million year-over-year due to lower year-over-year add-backs. Adjusted EBITDA margin was 4%.

Cash Position $71 million, up from $9 million two and a half years ago, with no debt outstanding.

Free Cash Flow Down year-over-year, largely due to higher inventory levels resulting from tariff mitigation strategies and the transition to new diapers.

Wipes Consumption Growth Up 24% year-over-year, significantly outpacing the category growth of 3%. Year-to-date, flushable wipes consumption grew over 160% versus category growth of 2%.

Baby Personal Care Consumption Growth Up 10% year-over-year, outpacing the category growth of 2%. Sensitive skin collection grew consumption 77% year-to-date.

Diaper Consumption Down double digits year-over-year, driven by assortment simplification at a major retailer, lapping of large promotional events, and macroeconomic pressures leading to shifts in consumer behavior towards lower-priced items.

Household Penetration 7.4%, up 80 basis points year-over-year.

Repeat Rate 32%, up 30 basis points year-over-year.