The Honest Company Reports $371.3 Million Revenue for Fiscal Year 2025, Down 1.9%

The Honest Company, Inc. reported a revenue of $371.3 million for the fiscal year ending December 31, 2025, a decrease of 1.9% from $378.3 million in 2024. The decline was primarily attributed to strategic exits related to the company's "Powering Honest Growth" initiative, which accounted for a revenue loss of approximately $21.9 million. This included a $13.2 million decrease in direct-to-consumer sales, a $7.7 million drop in apparel revenue, and a $1.0 million reduction in sales from Canadian operations. However, retail customer revenue, excluding these exits, increased by $14.9 million, driven by a rise in wipes and baby personal care product sales.

The company's cost of revenue rose to $247.6 million, up 5.9% from $233.7 million in the previous year, largely due to a discrete inventory write-down of $15.9 million related to the exit of its apparel line. As a result, gross profit fell to $123.8 million, a 14.4% decrease from $144.7 million in 2024. The gross margin also declined, reflecting the impact of increased costs and the strategic decisions made under the Powering Honest Growth initiative.

In terms of operational changes, Honest has undergone significant restructuring as part of its transformation strategy, which aims to enhance profitability and streamline operations. The company recognized $24.0 million in costs associated with this initiative in 2025, including $4.2 million in restructuring costs. The restructuring is expected to yield annualized benefits of approximately $10.0 million to $15.0 million, with the company anticipating to see these benefits starting in 2026. The total employee headcount as of December 31, 2025 was 174, reflecting the company's focus on optimizing its workforce in line with its strategic goals.

Looking ahead, Honest Company aims to achieve annual revenue growth of 4% to 6% and continue expanding its Adjusted EBITDA margin. The company is focused on increasing its market presence through enhanced distribution strategies and product innovation, particularly in higher-margin categories. However, it also faces challenges from macroeconomic factors, including inflation and supply chain disruptions, which could impact its financial performance. The company has also initiated a share repurchase program of up to $25 million, which it plans to fund through existing cash and cash flows from operations, although it does not anticipate paying dividends in the near future.