The Honest Company (HNST) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue was $83.3 million, down 10.9% year-over-year, but organic revenue grew 6.7% due to strength in wipes and personal care, offsetting declines from strategic exits and diapers.

• Achieved record-high gross margins and profitability, with net income rising to $10.7 million, driven by tariff refunds, cost reductions, and improved product mix.

• Raised full-year 2026 outlook for revenue, gross margin, and adjusted EBITDA, reflecting confidence in continued momentum and strategic reinvestment.

• Continued executing the Powering Honest Growth transformation, focusing on brand maximization, margin enhancement, and operating discipline.

Financial highlights

• Organic revenue increased 6.7% to $80.2 million; reported revenue was $83.3 million, down 10.9% year-over-year.

• Gross margin reached 48.4% (+800 bps); adjusted gross margin was 50.1% (+970 bps); underlying adjusted gross margin was 43.8% (+340 bps).

• Net income was $10.7 million; adjusted net income (excluding Powering Honest Growth) was $11.7 million; underlying adjusted net income (excluding tariff refunds) was $5.1 million.

• Adjusted EBITDA was $14.5 million (17.3% margin); underlying adjusted EBITDA was $7.8 million (9.8% margin).

• Free cash flow for H1 2026 was $35.3 million, up from negative $3.8 million prior year; cash and cash equivalents rose to $105.9 million.

Outlook and guidance

• Full-year 2026 revenue outlook raised to $319–$325 million (from $306–$312 million), including $10 million from apparel liquidation.

• Organic revenue growth guidance increased to 5–7% (from 4–6%).

• Adjusted gross margin forecasted in the mid-40% range; adjusted EBITDA guidance raised to $23–$25 million.

• Powering Honest Growth restructuring expected to be substantially completed by year-end 2026, with total costs of $28–31 million and annualized benefits of $14–17 million.

• New apparel licensing agreement expected to be immaterial for 2026 results.