Honest Raises 2026 Outlook as Q3 Organic Revenue Grows 9.2%

The Honest Company (HNST) raised its full-year 2026 outlook after third-quarter organic revenue increased 9.2% and underlying profitability expanded sharply, supported by growth in its wipes and personal care platforms. The company also announced a new $30 million share repurchase authorization as stronger cash generation and a debt-free balance sheet supported continued investment and capital returns.

For the three months ended September 30, reported revenue fell 8.6% to $84.6 million from $92.6 million a year earlier. Organic revenue, which excludes apparel and certain prior-year revenue from Honest.com and Canada, rose to $79.3 million from $72.6 million.

Gross margin increased 770 basis points to 45.0%. Adjusted gross margin rose 850 basis points to 45.8%, while underlying adjusted gross margin reached 48.9%, up 1,160 basis points. The difference between adjusted and underlying adjusted gross margin reflected a discrete apparel liquidation item.

Adjusted EBITDA increased to $6.3 million from $3.5 million. The underlying adjusted EBITDA margin, calculated against organic revenue, expanded 300 basis points to 7.9%. Adjusted net income rose to $3.1 million from $0.8 million, with the adjusted net income margin reaching 3.8%.

GAAP net income was $91.3 million, compared with $0.8 million a year earlier, but the latest result included an $89.4 million deferred income tax benefit. Adjusted results exclude that benefit along with restructuring-related costs and other specified items.

Wipes and personal care outpace categories

Retail consumption for Honest’s wipes platform grew 15% during the 13 weeks ended September 27, compared with 3% growth for the weighted categories in which it competes, according to the presentation’s MULO+ data. All-purpose wipes increased 4% against 1% category growth, flushable wipes rose 169% compared with 12%, and sanitizing products grew 41% versus 19% for the category.

The personal care platform recorded 11% retail consumption growth, nearly three times the weighted category’s 4% increase. Honest held the No. 2 position in total baby personal care, with more than 10% category share. Its newer kids personal care collection captured more than 2% of that category in under a year.

Management also highlighted room to increase household penetration across all-purpose wipes, baby personal care, sanitization and flushable wipes. The company estimated that each additional percentage point of household penetration could generate $25 million to $30 million in annual retail sales, although the presentation did not provide a timetable for achieving those gains.

Cash generation supports buyback authorization

Free cash flow totaled $30.5 million for the first nine months of 2026, compared with negative $4.5 million in the same period last year. Operating activities generated $33.3 million of cash, while capital expenditures were $2.8 million.

Cash and cash equivalents increased to $103.0 million at the end of the third quarter from $89.6 million at the end of 2025, and the company reported no debt. Honest’s new $30 million share repurchase authorization adds capital returns to its stated priorities alongside brand investment and efforts to expand household penetration.

Full-year outlook raised

Honest now expects full-year 2026 revenue of $322 million to $325 million, compared with its previous range of $319 million to $325 million. The organic revenue growth forecast increased to 6% to 7% from 5% to 7%.

The company projects adjusted gross margin of 45.5% to 46.5%, replacing its prior expectation for a margin in the mid-40% range. Adjusted EBITDA is now expected to be $25 million to $26 million, up from the previous $23 million to $25 million range.

The outlook incorporates assumptions about current tariff levels and the company’s tariff-mitigation measures. Honest cautioned that those assumptions may change with the macroeconomic environment. It also did not provide reconciliations of its adjusted gross margin and adjusted EBITDA forecasts to the most comparable GAAP measures because certain items, including restructuring-related costs and interest and other income or expense, cannot be reliably estimated and may vary significantly between periods.