The Honest Posts 9.2% Organic Growth, Raises Annual Outlook and Approves $30 Million Buyback
Key Facts
The Honest said organic revenue increased 9.2% to $79.3 million in the third quarter of 2026, driven by growth in wipes and personal care sales, according to a company filing with the U.S. Securities and Exchange Commission. The growth came despite a decline in diaper sales, while the company said overall revenue was also affected by exiting certain categories as part of its “Powering Honest Growth” initiative. On profitability, core adjusted gross margin was 48.9%, up 1,160 basis points year over year. GAAP gross margin was 45.0%, up 770 basis points from the same quarter in 2025. The board approved a share repurchase program of up to $30 million on October 30, as the company raised its financial outlook for the year.
The margin improvement was driven, according to the company, by favorable supply chain conditions and product mix, along with improvements related to the strategic exit from certain businesses. The company said these factors helped expand margins compared with the prior year. At the same time, it increased marketing spending to support its wipes and personal care platforms. That priority aligns with growth in consumption across those two categories, which the company said outperformed its other products. The exit from specific categories was part of the Powering Honest Growth initiative and affected overall revenue, according to its filing.
Consumption data in the channels tracked by the company showed a more mixed picture between its overall portfolio and its faster-growing categories. But combined consumption of wipes and personal care products rose 13.2% over the same period, exceeding the 3.3% growth in their respective categories. This divergence puts organic revenue growth in the context of performance concentrated in certain categories, while diapers remained a headwind, according to the company. Organic revenue had increased 6.7% to $80.2 million in the second quarter of 2026, while overall revenue at the time fell 10.9% to $83.3 million.
The Honest raised its fiscal 2026 outlook, setting revenue at $322 million to $325 million and organic revenue growth at 6% to 7%. It also expects adjusted gross margin of 45.5% to 46.5% and adjusted earnings before interest, taxes, depreciation and amortization of $25.0 million to $26.0 million. These estimates provide an annual framework for assessing third-quarter results, with the divergence seen in previous quarters between overall revenue and organic revenue continuing. The company said a call and webcast to discuss third-quarter results are scheduled for November 5, 2026, at 1:45 p.m. Pacific time, or 4:45 p.m. Eastern time. HNST shares closed at $4.44 on November 4, 2026, according to EL7 data.
The buyback program authorizes the board to purchase up to $30 million of outstanding shares, but it is discretionary and does not obligate the company to make any purchases. The company did not set an expiration date for the program. This means the announcement sets a ceiling for the authorization, while the decision to make any actual purchases remains at the company’s discretion. The program was approved on October 30, ahead of the announced call to discuss results. The filing did not include a separate date for the start of repurchases.