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Dec 31, 2021
Honest Co Q4 2021 Earnings Report
Reported ninth consecutive quarter of year-over-year revenue growth.
Key Takeaways
The Honest Company reported a 3% increase in revenue to $80.4 million for Q4 2021 compared to Q4 2020. Core category revenue, which includes Diapers and Wipes, and Skin and Personal Care, increased 19% year-over-year. The company's net loss for the quarter was $9.0 million, compared to a net loss of $12.7 million in the same quarter of the previous year.
Revenue increased 3% to $80.4 million compared to the fourth quarter of 2020.
Core product categories revenue increased 19% compared to the fourth quarter of 2020.
Net loss for the fourth quarter of 2021 was $9.0 million, compared to net loss of $12.7 million during the fourth quarter of 2020.
Ended the quarter with $93.2 million in cash, cash equivalents and short-term investments.
Honest Co
Honest Co
Forward Guidance
The Company projects full year 2022 revenue to be approximately flat versus full year 2021, reflecting a decline in year-over-year revenue in the first quarter of 2022, followed by expected growth in the remaining three quarters of 2022. The Company expects 2022 Adjusted EBITDA to be approximately negative $5 million to negative $10 million.
Positive Outlook
- Growth in the Company’s core product categories - Diapers and Wipes, and Skin and Personal Care – is expected to be in the mid-single digits following the first quarter of 2022, driven by product innovation and distribution gains with a number of new strategic retail partners.
- We plan to pivot toward new margin-accretive innovation in the wellness category, which is expected to be in market mid-year.
- Gross margin is expected to improve over the course of the year due to implementation of mid-single digit price increases across approximately two-thirds of our product portfolio, to help offset inflationary pressures.
- Adjusted EBITDA improvement is anticipated to be weighted towards the second half of the year as a result of price increases, margin-accretive innovation and new distribution.
- The Company plans to continue to support the long-term growth of the business with additional investments in research and development and digital technology, as well as sustained investments in marketing to drive brand awareness and support new distribution gains.
Challenges Ahead
- Full Year 2022 revenue is expected to be approximately flat compared to 2021
- First quarter revenue is expected to decline approximately 15% from first quarter of 2021
- Full year 2022 Adjusted EBITDA is expected to be a loss of approximately negative $5 million to negative $10 million, which includes an expectation of approximately negative $10 million of Adjusted EBITDA in the first quarter.
- The Household and Wellness product category is expected to face continued headwinds due to reduced consumer demand for COVID-related sanitizing and disinfecting products.
- The Company continues to face a volatile input cost environment and expects full year 2022 gross margin to be roughly flat compared to full year 2021.