The Honest Company (NASDAQ:HNST) swung to a profit in Q4 on a 10% increase in sales, both of which topped Street estimates and drove shares more than 26% higher in after-hours trading.
“Our fourth quarter results demonstrate the benefit that our Transformation Initiative has had on the business,” said Honest CEO Carla Vernon. The progress resulted in double-digit revenue growth, higher gross margin and lower operating expenses.
“Our 2024 outlook emphasizes profitable growth and showcases the confidence we have in the long-term strategy and financial future of Honest,” CFO Dave Loretta added.
Led by gains in the digital channel, Honest (HNST) earned a profit of a penny per share versus a loss of $0.14 per share on $90M in sales. Gross margin expanded to 33.5% versus 27.5% year-over-year driven by cost savings and price increases. Operating expenses were down $6M and adjusted EBITDA increased to $4M including $200K in costs associated with the Transformation Initiative.
On the balance sheet, cash and cash equivalents swelled by $18M to $33M and inventory was reduced by 36% from 2022.
For 2024, The Honest Company (HNST) expects revenue growth of low-to-mid single digit percentage with the first half of 2024 expected to be softer than the first half. Positive adjusted EBITDA is expected to be in the low-single digit to mid-single digit millions range.
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