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Jun 30, 2022
Honest Co Q2 2022 Earnings Report
Revenue exceeded expectations, and growth initiatives remained on track.
Key Takeaways
The Honest Company reported a 5% increase in revenue for the second quarter of 2022, driven by strong performance in Diapers and Wipes and Household and Wellness, while updating the full year outlook for cost pressures.
Second quarter revenue growth of 5%, led by a 9% increase in diapers and wipes.
Strategic initiatives remain on track for execution of innovation, new retail distribution and pricing.
Maintains full year 2022 revenue outlook, reflecting mid-single digit growth for the remainder of the year.
Updates full year gross margin outlook, which reflects sequential improvement in the second half of 2022.
Honest Co
Honest Co
Forward Guidance
Full year 2022 revenue outlook remains unchanged and is expected to be approximately flat compared to 2021. Full year 2022 Adjusted EBITDA outlook reflects higher cost pressures and is now expected to be a loss in the range of negative $10 million to negative $20 million, with the Company anticipating sequential improvement over the second half of 2022, and positive Adjusted EBITDA in the fourth quarter.
Positive Outlook
- Revenue outlook reflects mid-single digit growth over the remainder of the year compared to 2021, with the fourth quarter expected to outpace the third quarter
- Benefit of price increases executed in June and earlier increases in January of this year
- Recent innovation, including our concealer, mascara, wellness supplements, and clearing skin line launches
- Expanded distribution in Walmart, Ulta, GNC, and SuperOrdinary
- Growth in core product categories – Diapers and Wipes, and Skin and Personal Care – is expected to be mid- to high-single digits for the remainder of 2022
Challenges Ahead
- Full year 2022 Adjusted EBITDA outlook reflects higher cost pressures
- Adjusted EBITDA is expected to be a loss in the range of negative $10 million to negative $20 million
- Continue to employ cost mitigation initiatives to address cost pressures, including price increases and productivity improvements, as well as recognizing the benefit of a growing revenue base.
- Continue to invest in our digital platform, particularly in the consumer-facing areas of Honest.com and personalization and loyalty programs, as well as new product innovation.
- Due to continued rising inflationary pressures, we are updating our outlook for full year gross margin and Adjusted EBITDA.