The Honest Company released its third‑quarter 2025 financial results on November 5, 2025, reporting earnings per share of $0.01 that beat consensus of –$0.01, while revenue fell to $93 million, missing the $99.42 million estimate.
Revenue declined 6.7% year‑over‑year, driven by weaker diaper and apparel categories, while wipes and retail segments provided modest growth. The company’s Transformation 2.0 initiative, which exited 22% of revenue from non‑core categories, contributed to the shortfall.
Gross margin contracted to 37.3% from 38.7% in Q3 2024, a 140‑basis‑point drop, due to lower volume and higher tariff costs. Adjusted EBITDA fell to $4 million from $7 million, but net income rose to $1 million, reflecting disciplined cost management.
Management lowered full‑year revenue guidance to a range of $3.3 billion to $3.4 billion, down from the previous $3.5 billion to $3.6 billion, and adjusted EBITDA guidance to $21–$23 million, a reduction from $27–$30 million. The shift signals caution amid macro uncertainty and the ongoing transformation.
CEO Carla Vernón said the company’s disciplined execution delivered profitability despite softer revenue, and CFO Curtiss Bruce highlighted retail revenue gains offsetting declines in e‑commerce. The company remains focused on core high‑margin products and cost discipline.
Analysts noted the EPS beat but expressed concern over the revenue miss and lower guidance, leading to a muted market response. The company’s strategic pivot under Transformation 2.0 is under scrutiny as investors assess its long‑term impact.
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