The Honest Company (NASDAQ:HNST) Delivers Impressive Q1, Stock Soars
Is now the time to buy The Honest Company? Find out in our full research report.
The Honest Company (HNST) Q1 CY2025 Highlights:
Revenue: $97.25 million vs analyst estimates of $91.97 million (12.8% year-on-year growth, 5.7% beat)
EPS (GAAP): $0.03 vs analyst estimates of $0 ($0.03 beat)
Adjusted EBITDA: $6.93 million vs analyst estimates of $4.94 million (7.1% margin, 40.2% beat)
EBITDA guidance for the full year is $28.5 million at the midpoint, in line with analyst expectations
Operating Margin: 2.6%, up from -1.5% in the same quarter last year
Free Cash Flow was -$3 million, down from $260,000 in the same quarter last year
Market Capitalization: $546.7 million
'Our first quarter results demonstrate our solid start to 2025, with double-digit revenue growth, gross margin expansion, and positive net income in the period reflecting the continued strength of our strategy and disciplined execution of our team,' said Chief Executive Officer, Carla Vernón.
Company Overview
Co-founded by actress Jessica Alba, The Honest Company (NASDAQ:HNST) sells diapers and wipes, skin care products, and household cleaning products.
Sales Growth
Reviewing a company's long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $389.4 million in revenue over the past 12 months, The Honest Company is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers. On the bright side, it can grow faster because it has a longer list of untapped store chains to sell into.
As you can see below, The Honest Company grew its sales at a decent 8.3% compounded annual growth rate over the last three years. This shows its offerings generated slightly more demand than the average consumer staples company, a useful starting point for our analysis.
The Honest Company Quarterly Revenue
This quarter, The Honest Company reported year-on-year revenue growth of 12.8%, and its $97.25 million of revenue exceeded Wall Street's estimates by 5.7%.
Looking ahead, sell-side analysts expect revenue to grow 3.3% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and indicates its products will face some demand challenges.
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