The Honest Company’s underlying consumer demand significantly outpaced its reported revenue performance during the second quarter of 2026, with tracked-channel consumption increasing 7.7% compared with 2.3% growth across the categories in which it competes.
Organic Revenue increased 6.7% to $80.2 million, driven by growth in wipes and personal care products, partially offset by lower diaper revenue. Reported revenue declined 10.9% to $83.3 million because of strategic exits under the company’s Powering Honest Growth program and weaker diaper sales.
Profitability also improved substantially. Gross margin expanded 800 basis points to 48.4%, while Underlying Adjusted Gross Margin, which excludes restructuring impacts, tariff refunds and apparel liquidation effects, increased 340 basis points to 43.8%.
Tariff refunds contributed materially to the reported margin expansion. The company recognized $6.6 million of tariff refunds, which represented approximately 790 basis points of gross-margin benefit.
Operating expenses declined by $4.1 million to $30.8 million even as Honest increased marketing investment behind its faster-growing wipes and personal care platforms. SG&A as a percentage of revenue declined approximately 380 basis points.
GAAP net income increased by $6.8 million to $10.7 million. Adjusted EBITDA reached $14.5 million, while Underlying Adjusted EBITDA excluding tariff refunds was $7.8 million, representing a 9.8% margin.
The balance sheet also strengthened. Honest ended June with no debt and $105.9 million of cash and equivalents, up $33.8 million. First-half operating cash flow was $37.8 million compared with a $3.7 million outflow a year earlier, while the company repurchased approximately 5.6 million shares for $18.7 million.
Following the quarter, Honest raised its full-year revenue outlook to $319 million to $325 million from $306 million to $312 million. Organic Revenue growth is now expected at 5% to 7%, while Adjusted EBITDA is expected at $23 million to $25 million.
KEY QUOTES:
“For the second quarter we delivered accelerated Organic Revenue growth of 7% and record underlying margins. With consumption growth of nearly 8%, we believe the momentum across our fastest-growing, most profitable platforms is proving to be durable.”
“We are now well-positioned to thoughtfully deploy additional investments to expand household penetration and drive operational excellence of The Honest Company.”
Carla Vernón, Chief Executive Officer of The Honest Company
