The Honest Company held its second quarter 2026 earnings call on August 5, reporting strong operational performance and raising its full-year outlook. The company achieved organic revenue growth of 6.7% on reported revenue of $83.3 million, which reflected a 10.9% decline when including the impact of diaper category headwinds and the strategic wind-down of apparel operations.
The company’s wipes portfolio delivered particularly robust results, with consumption growth of 26% compared to category growth of 2%. Within this segment, flushable wipes grew more than 200%, making Honest the fastest-growing branded player in that category. The personal care portfolio also performed well, growing 19% and outpacing category growth of 5%. These two categories now represent over 70% of total revenue, reflecting the company’s strategic shift toward higher-margin businesses. The company emphasized household penetration as a key metric, noting that overall brand penetration reached 8.1%, up 100 basis points year-over-year, with more than two-thirds of that growth coming from households without children.
From a profitability perspective, the company achieved its highest adjusted gross margin on record at 43.8% on an underlying basis, with adjusted EBITDA margins of 9.8%. Management highlighted supply chain efficiencies and favorable product mix as drivers of margin expansion. The company ended the quarter with $105.9 million in cash and zero debt, generating free cash flow of $35.3 million for the first half of the year.
Looking ahead, the company raised its full-year 2026 guidance for reported revenue to a range of $319 million to $325 million, organic revenue growth to 5% to 7%, and adjusted EBITDA to $23 million to $25 million. Management indicated that incremental investments in the second half would focus on marketing for wipes and personal care platforms, as well as operational capabilities to support scaling. The company also announced a new licensing agreement for baby apparel, transitioning from direct operations to an asset-light model. Management acknowledged structural headwinds in the diaper category affecting most national brands but noted the offsetting strength in other product lines.
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