Q1 2024 The Honest Company Inc Earnings Call
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Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Honest Company's first quarter 2024 earnings call. At this time, our participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would like to hand the conference call over to Ms. Elizabeth Bouchard, Senior Director of Best Relations at the Honest Company. Please go ahead.
Ladies and gentlemen, thank you for standing by and welcome to the honest company first quarter 2024 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session. Please be advised that today's conference is being recorded I would like to hand the conference call.
Elizabeth Bouchard: Over to Ms Elizabeth.
Elizabeth Bouchard: Senior director of Investor Relations at the honest company. Please go ahead.
Elizabeth Bouchard: Good afternoon, everyone. Thank you for joining our first quarter 2024 conference call. Joining me today are Carla Vernon, our Chief Executive Officer, and Dave Loretta, our Chief Financial Officer. Before we start, I would like to remind you that we will make certain statements today that are forward-looking within the meaning of the federal securities laws, including statements about the outlook of our business and other matters referenced in our earnings release issued today.
Elizabeth Bouchard: Good afternoon, everyone. Thank you for joining our first quarter 2024 conference call. Joining me today are Carla burn on our Chief Executive Officer, and Dave Loretta, Our Chief Financial Officer before we start I would like to remind you that we will make certain statements today.
Elizabeth Bouchard: That are forward looking within the meaning of the federal securities laws, including statements about the outlook of our business and other matters referenced in our earnings release issued today.
Elizabeth Bouchard: These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our earnings release issued today, as well as our SEC filings, for a more detailed description of the risk factors that may affect our results. Please also note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events, except as required by law.
Elizabeth Bouchard: These forward looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our earnings release issued today as well as our SEC filings for a more detailed description of the risk factors that may affect our results.
Elizabeth Bouchard: Please also note that these forward looking statements reflect our opinions only as of the date of this call and we undertake no obligation to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events.
Elizabeth Bouchard: As required by law.
Elizabeth Bouchard: Also, during this call, we will discuss non-GAAP financial measures that adjust our GAAP results to eliminate the impact of certain items. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures in the financial results section of today's earnings release. A live broadcast of this call is also available on the Investor Relations section of our website at investors.honest.com. And with that, I'll turn it over to Carla.
Elizabeth Bouchard: Also during this call, we will discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items.
Carla: You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures in the financial results section of today's earnings release, a live broadcast of this call is also available on the Investor Relations section of our website at investors Dot honest.
Carla: Dot com.
Elizabeth Bouchard: And with that I'll turn it over to Carla.
Carla Vernon: Elizabeth, good afternoon everyone, and thank you for joining us today. As we kick off the first quarter of 2024, I'm pleased to share that we achieved another quarter of improved financial results and solid growth momentum. As you recall, during our last earnings call in March, I shared several new achievements and announcements. These included key financial milestones we achieved as a management team in 2023, a new long-range financial algorithm, and an updated strategic plan detailing our key drivers for long-term growth. We also reiterated our new operating mindset, focused on our transformation pillars.
Carla: Thanks, Elizabeth Good afternoon, everyone and thank you for joining us today as we kick off the first quarter of 2024 I'm pleased to share that we achieved another quarter of improved financial results and solid growth momentum.
Carla Vernon: As you recall during our last earnings call in March I shared several new achievements and announcements. These included key financial milestones, we achieved as a management team in 2023, a new long range financial algorithm and an updated strategic plan detailing our key draw.
Carla Vernon: <unk> for long term growth.
Carla Vernon: We also reiterated our new operating mindset focused on our transformation pillars.
Carla Vernon: These pillars, brand maximization, margin enhancement, and operating discipline, are deeply rooted in our enterprise practices, and they will remain an enduring strategic component of building a stronger financial foundation and unleashing the full potential of the honest brand. These pillars have enabled us to strengthen our business performance, our operating culture, and our financial results. This quarter's notable financial achievements include delivering a second consecutive quarter of positive adjusted EBITDA and reaching revenue growth in line with our outlook, marking our eighth consecutive quarter of positive year-over-year revenue growth.
Carla Vernon: These pillars brand maximization margin enhancement and operating discipline are deeply rooted in our enterprise practices and they will remain an enduring strategic component of building a stronger financial foundation and unleashing the full potential of the honest Brad.
Carla Vernon: <unk>.
Carla Vernon: These pillars have enabled us to strengthen our business performance, our operating culture and our financial results.
Carla Vernon: This quarter's notable financial achievements include delivering a second consecutive quarter of positive adjusted EBITDA and reaching revenue growth in line with our outlook, marking our eighth consecutive quarter of positive year over year revenue growth.
Carla Vernon: We also achieved a gross margin of 37 percent, which is a record high for our time as a public company and is an improvement of nearly 1,300 basis points year over year. In addition to these financial highlights, our brand continues to grow in the number of homes and people we are reaching. Our last 52-week household penetration is 6%, which is up 18 basis points year over year.
Carla Vernon: We also achieved a gross margin of 37%, which is a record high for our time as a public company and is an improvement of nearly 1300 basis points year over year.
Carla Vernon: In addition to these financial highlights our brand continues to grow in the number of homes and people. We are reaching our last 52 week household penetration is 6%, which is up 18 basis points year over a year.
Carla Vernon: As we begin on the path of executing our long-range strategic plan, our growth with new consumers and new households is delivered through a blend of increasing availability, maximizing our hero products, and delivering meaningful new product innovation. Our WIPES portfolio is emblematic of the strategic building blocks that will drive our long-range growth strategy. Our wipes business grew 44% in consumption in 2023. We're pleased this growth was driven by a combination of strong performance across our core items and successful innovation launches, including flushable wipes.
Carla Vernon: As we begin on the path of executing our long range strategic plan, our growth with new consumers and new households is delivered through a blend of increasing availability maximizing our hero products and delivering meaningful new product innovation.
Carla Vernon: Our wipes portfolio is emblematic of the strategic building blocks that will drive our long range growth strategy.
Carla Vernon: Our wipes business grew 44% in consumption in 2023. We're pleased this growth was driven by a combination of strong performance across our core items and successful innovation launches, including flexible wipes.
Carla Vernon: Our early indicators of our successful launch into flushable wipes underscore an important principle of our long-range strategic growth plan; we continue to see that the Honest brand can successfully travel across consumer age groups, usage occasions, and even parts of the home. As I look out to 2024 and beyond, I continue to remain confident in our ability to further amplify the distinctive elements of the Honest brand and meet the growing consumer demand for a higher standard of clean ingredients in baby and personal care products.
Carla Vernon: Our early indicators of our successful launch into flexible wipes underscore an important principle of our long range strategic growth plan.
Carla Vernon: We continue to see that the honest brand can successfully travel across consumer age groups usage occasions, and even parts of the home.
Carla Vernon: As I look out to 2024 and beyond I continue to remain confident in our ability to further amplify the distinctive elements of the honest brand and meet the growing consumer demand for a higher standard of clean ingredients in baby and personal care products.
Carla Vernon: With a clear vision for the future, we will continue to advance and scale Honest's trusted products and our business model through the power of our brand, our team, and our Honest standards. Now, I will turn it over to Dave to share the financial details of our first quarter and outlook.
Carla Vernon: With a clear vision for the future, we will continue to advance and scale honest trusted products and our business model through the power of our brand our team and our honest standard and now I'll turn it over to Dave to share the financial details of our first quarter.
Dave: And the outlook.
David Loretta: Thank you, and welcome, everyone. As Carla noted, we are off to a solid start in the first quarter, giving us confidence in our newly articulated strategy moving forward. We have continued to make progress on improving profitability while maintaining revenue growth. The significant expansion in operating margin is the result of two drivers.
Dave: Thank you and welcome everyone.
David Loretta: As Carlin noted we're off to a solid start in the first quarter.
David Loretta: Giving us confidence in our newly articulated strategy moving forward.
David Loretta: We have continued to make progress on improving profitability, while maintaining revenue growth.
David Loretta: The significant expansion in operating margin is the result of two drivers.
David Loretta: Meaningful improvement in gross margin of 37% this quarter and 2. Diligent management of operating costs, which leveraged 810 basis points over Q1 of last year. We remain confident in delivering the stated results for 2024 and executing our long-term strategy with a clear focus on building a stronger financial foundation.
David Loretta: One meaningful improvement in gross margin of 37% this quarter.
David Loretta: To diligent management of operating expenses, which leverage 810 basis points over Q1 of last year.
David Loretta: We remain confident in delivering the stated results for 2024 and executing our long term strategy with a clear focus on building a stronger financial foundation.
David Loretta: Before I dive into financial results, however, I wanted to address the changes we made in our revenue reporting structure. We have transitioned away from our prior disaggregated revenue categories and channels to align our reporting structure with how we operate the business and what impacts the timing of our cash flow. We will continue to provide the percentage of revenue from Honest.com in our 10Q, given the difference in cash flow timing versus our third-party channel. Now, let me dive deeper into our first quarter results.
David Loretta: Before I dive into financial results. However, I wanted to address the changes we made in our revenue reporting structure.
David Loretta: We have transitioned away from our prior disaggregated revenue categories and channels to align our reporting structure with how we operate the business and what impacts the timing of our cash flows.
David Loretta: We will continue to provide the percentage of revenue from honest dot com and our 10-Q, given the difference in cash flow timing versus our third party channels.
David Loretta: Now, let me dive deeper into our first quarter results.
David Loretta: This quarter, through our Brand Maximization Pillar, we delivered revenue of $86 million, up 3% driven by distribution gains and strong velocity across a number of key products, specifically baby apparel, wipes, and baby personal care. We continue to grow the Honest brand through balanced revenue growth of unit volume and price. Notably, our Total Honest Company ACV, or All Commodity Volume, increased to 85% versus 78% a year ago. Additionally, our baby business demonstrated strength across two key areas this quarter: baby apparel and baby personal care.
David Loretta: This quarter through our brand maximization pillar, we delivered revenue of $86 million up 3% driven by distribution gains and strong velocities across a number of key products, specifically baby apparel wipes and baby personal care.
David Loretta: We continue to grow the honest brand through balanced revenue growth of unit volume and pricing.
David Loretta: Notably our total honest company HCV or all commodity volume increased to 85% versus 78% a year ago.
David Loretta: Our baby business demonstrated strength across two key areas this quarter baby apparel and baby personal care.
David Loretta: First, our baby apparel business has emerged as a key growth driver as a result of distribution expansion in brick-and-mortar stores, along with consumption growth of 41% at our leading online retail customers. Second, we are pleased with the growth of our baby personal care portfolio, which has now become the leading baby personal care brand in our largest brick-and-mortar retail stores.
David Loretta: First our baby apparel business has emerged as a key growth driver as a result of distribution expansion and brick and mortar stores, along with consumption growth of 41% at our leading online retail customer.
David Loretta: Second we are pleased with the growth of our baby personal care portfolio that has now become the leading baby personal care brand in our largest brick and mortar retail customer.
David Loretta: Turning to our second pillar of margin enhancement, gross margin in the first quarter was 37%, up 1,275 basis points from last year and up 350 basis points sequentially. Key gross margin drivers included product and supply chain cost savings, pricing, and Trade Promotion Efficiency.
David Loretta: Turning to our second pillar of margin enhancement.
David Loretta: Gross margin in the first quarter was 37% up 275 basis points from last year and up 350 basis points sequentially.
David Loretta: Key gross margin drivers included product and supply chain cost savings pricing and trade promotion efficiency.
David Loretta: With our continuous improvement mindset, we realize savings across product costs, logistics, and fulfillment. As a reminder, the sizable gross margin improvement includes certain one-time inventory write-offs related to the Transformation Initiative in 2023 that amounted to roughly 400 basis points. The remainder of gross margin improvement included approximately 600 basis points in cost savings, mostly as a result of renegotiated product and logistics contracts, and 275 basis points in price. Operating expenses decreased $6 million in the first quarter compared to last year, reflecting lower SG&A expenses and improved marketing efficiency.
David Loretta: With our continuous improvement mindset, we realized savings across product cost logistics and fulfillment.
David Loretta: As a reminder, the sizable gross margin improvement includes certain one time inventory write offs related to the transformation initiative and 2023 that amounted to roughly 400 basis points.
David Loretta: The remainder of gross margin improvement included approximately 600 basis points and cost savings, mostly as a result of renegotiated product and logistics contracts.
David Loretta: And 275 basis points and pricing.
David Loretta: Operating expenses decreased $6 million in the first quarter compared to last year, reflecting lower SG&A expenses and improved marketing efficiency.
David Loretta: SG&A as a percentage of revenue declined 500 basis points compared to last year as we remain focused on ongoing expense management. Our Operating Discipline Pillar represents our commitment to generating improved bottom-line results and continued strengthening of our balance sheet. Adjusted EBITDA for the first quarter was positive $3 million compared to negative $10 million last year.
David Loretta: SG&A as a percentage of revenue declined 500 basis points compared to last year as we remain focused on ongoing expense management.
David Loretta: Our operating discipline pillar represents our commitment to generating improved bottomline results and continued strengthening of our balance sheet.
David Loretta: Adjusted EBITDA for the first quarter was positive $3 million compared.
David Loretta: Compared to negative $10 million last year.
David Loretta: This is our second consecutive quarter of reporting positive adjusted EBITDA and supports our path to profitability as we have now achieved positive adjusted EBITDA for a trailing 12-month. On the balance sheet, we ended the quarter with $34 million in cash, an increase of $22 million versus last year, and zero debt outstanding. This represents our fourth consecutive quarter of positive operating cash flow. Our cash position continues to benefit from a capital-light business model and diligent management of working capital.
David Loretta: This is our second consecutive quarter of reporting positive adjusted EBITDA and supports our path to profitability as we have now achieved positive adjusted EBITDA on a trailing 12 month basis.
David Loretta: On the balance sheet, we ended the quarter with $34 million in cash an increase of $22 million versus last year and zero debt outstanding.
David Loretta: This represents our fourth consecutive quarter of positive operating cash flow.
David Loretta: Our cash position continues to benefit from our capital light business model and diligent management of working capital.
David Loretta: Overall, our first quarter financial results support our continued confidence in our long-term strategic plan and our outlook for 2024. Therefore, we are reaffirming our full year 2024 financial outlook, which includes Net Revenue Growth of Low to Mid-Single-Digit Percentage and Positive Adjusted EBITDA in the low-single-digit to mid-single-digit millions range. The combination of the strength of our team, our focus on operating discipline, and healthy Q1 results gives us growing confidence in the mid-single-digit portion of our range in both revenue and adjusted EBITDA.
David Loretta: Overall, our first quarter financial results support our continued confidence in our long term strategic plan and our outlook for 2024.
David Loretta: Therefore, we are reaffirming our full year 2024 financial outlook that includes <unk>.
David Loretta: Net revenue growth of low to mid single digit percentage.
David Loretta: Positive adjusted EBITDA in the low single digit to mid single digit millions range.
David Loretta: The combination of the strength of our team our focus on operating discipline and healthy Q1 results gives us growing confidence in the mid single digit portion of our range in both revenue and adjusted EBITDA.
David Loretta: We will continue to closely monitor and react to any changes in the macroeconomic or consumer environment. We are pleased that these three transformation pillars provide us with a clear framework for defining and measuring our growth roadmap. Along with our strategic growth plan, they define and guide our building blocks for growth and our operating approach. Together, they enable us to deliver improved financial results and long-term shareholder value creation through a stronger and more scaled Honest brand and company. And with that, I will turn the call over to the operator.
David Loretta: We will continue to closely monitor and react to any changes in the macro economic or consumer environment.
David Loretta: We are pleased that these three transformation pillars provide us a clear framework for defining and measuring our growth roadmap.
David Loretta: Along with our strategic growth plan, they define and guide our building blocks for growth and our operating approach.
David Loretta: Together, they enabled us to deliver improved financial results and long term shareholder value creation through a stronger and more scaled honest brand and company.
Speaker Change: And with that I will turn the call over to the operator.
Operator: And thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster, and we ask that you limit yourself to one question and one follow-up. Again, that's one question and one follow-up. And bear with me for one moment for our first question. And our first question comes from Dara Mohsenian from Morgan Stanley. Your line is now open.
Speaker Change: And thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby we compile the Q&A roster and we ask that you limit yourself to one question and one follow up again, that's one question and one follow up.
Dara Warren Mohsenian: And bear with me one moment for our first question.
Dara Warren Mohsenian: And our first question comes from Dara <unk> from Morgan Stanley. Your line is now open.
Dara Warren Mohsenian: Hey, guys. First, just a clarification question. Why maintain full-year guidance given the Q1 upside? To some extent, that applies to revenues, but particularly the DA, given the strong profitability in Q1. Is that just conservatism?
Operator: Okay.
Dara Warren Mohsenian: Hey, guys.
Dara Warren Mohsenian: First just a clarity question why maintained full year guidance, given the Q1 upside to some extent that applies to revenues, but particularly EBITDA given the strong profitability. In Q1 is that just conservatism is it early in the year or is there something about Q1 that that comes out of the balance of the year.
Carla Vernon: Is it early in the year? Is there something about Q1 that comes out of the balance of the year? And then, Carla, maybe just given an uncertain consumer environment, can you discuss if you think you're seeing any impact on consumption for your products from any consumer pressure or trade-down impacts on your business? And perhaps give us an update on how things are trending so far in Q2. Thanks.
Carla Vernon: And then karla, maybe just given an uncertain consumer environment can you discuss if you think youre seeing any impact on consumption for your products from.
Carla Vernon: Any consumer pressure trade down impact on your business and perhaps give us an update for how things are trending so far in Q2.
David Loretta: Hi Dara, Dave here. Thanks for the question. And, you know, certainly we're pleased with the first quarter results. We're off to a strong start this year, both pleased with the top line, but even the margin expansion was, you know, all kinds of elements working together as we brought forward. So, pleased with that.
Carla Vernon: Yeah, Hi.
Dave: Dave here.
Speaker Change: Thanks for the question.
David Loretta: Certainly we're pleased with.
David Loretta: First quarter results were off to a strong start this year.
David Loretta: Both pleased with the top line, but about even the margin expansion was.
David Loretta: All kind of elements working together as we.
David Loretta: Now, looking at the balance of the year, certainly, we want to be a little bit cautious about any uncertainties out there. And it's early. It is really just a function of it being early in the year, and we're cautiously confident that the range is the appropriate range, as I did highlight in my prepared remarks. You know, leaning towards the mid side of that range is where we're gaining confidence that the next couple quarters really will give us a clear road map there. But I am so we'll come back at the next next quarter to update any changes. Hi Dara, this is
David Loretta: As we brought forward so pleased with that now looking at the balance of the year.
David Loretta: Certainly we want to be.
David Loretta: A little bit cautious.
David Loretta: Any uncertainties out there and it's early it is really just a function of it's early in the year.
Dara: And we're cautiously confident back.
David Loretta: The range is the appropriate range as I did highlight in my prepared remarks.
David Loretta: Leading towards the mid side of that of that range is where we're gaining confidence in the next couple of quarters really well will give us a clear road.
David Loretta: The roadmap here, but I am.
Dara: So we'll come back at the next next quarter or two to update on any changes in guidance.
Carla Vernon: Hi Dara, this is Carla. It's good to hear your voice. Thank you for joining us on our call.
Carla Vernon: Sarah This is Carlos good to hear your voice. Thank you for joining our call.
Carla Vernon: Your question for me was really, what am I seeing in the landscape of the categories we play in? Do I feel like there's indicators from any of the external trends or consumer indicators that concern me? And I will say that the results you're seeing are driven by uniformly strong consumption for us across our category portfolio. The real confidence builder for us in the quarter is that, if you look at the way our growth shaped up, we were able to actually grow year over year on a combination of unit volume and pricing, as Dave covered in his remarks.
Carla Vernon: Your question for me was really what am I seeing the landscape of the categories. We play in.
Carla Vernon: Do I feel like Theres indicators from any of the external trend.
Carla Vernon: Trends, our consumer indicators that concern me and I will say that.
Carla Vernon: This the results you're seeing are driven by uniformly strong consumption for us across our category portfolio.
Carla Vernon: The.
Carla Vernon: Real confidence builder for us in the quarter is that as you look at the way our gross shape job, we were able to actually grow year over year on a combination of unit volume and pricing as Dave covered in his remarks. So I think what that really shows us is that the honest.
Carla Vernon: So I think what that really shows us is that the Honest brand is very strong and responsive, even in these times, because the benefits we offer for clean personal care and baby have such meaning and our brand is such a demonstrated leader in this area. On top of really strong execution by the team, knowing how we need to deploy the way we support the brand is working very well for us.
Carla Vernon: <unk> is very strong and resident even in these times because the benefits we offer <unk> personal care and baby have such a meaning and our brand is such a demonstrated leader in this area on top of really strong execution by the team knowing how we need to deploy the way we support the brand is working very well for us.
Dara Warren Mohsenian: Great. And then, Dave, if I can slip in one follow-up question, just the gross margins were obviously very strong in the quarter, well above what the street expected. It sounded like most of the drivers you mentioned year over year were more sustainable. So maybe can you just talk about that gross margin line and how sustainable the Q1 level is as you think about going forward over the next few quarters here? Thanks. Yeah.
Speaker Change: Okay, Great and then.
Dara Warren Mohsenian: Dave if I can slip in one follow up just the gross margins were obviously very strong in the quarter well above what the street expected.
Dara Warren Mohsenian: Like most of the drivers you mentioned year over year were more sustainable. So maybe can you just talk about that gross margin line and how sustainable the Q1 level as you think about.
Dara Warren Mohsenian: The go forward over the next few quarters here. Thanks.
David Loretta: Yeah, certainly, you know, as you said, gross margin drivers were a big element of what we saw in the improvement this quarter. And we did call out that improvement over last year, you know, benefited from the prior year's write-off due to the transformation initiative.
Speaker Change: Yes, certainly.
Dave: As he said that the gross margin drivers.
David Loretta: We're.
Dave: A big element of what we saw the improvement this quarter end and we did call out that improvement over last year.
Dave: Benefited from the prior year's write offs due to the transformation initiatives, so roughly 400 basis points.
David Loretta: So roughly four hundred basis points benefit there. But the remaining amount is a function of cost. Cost Management, On Product, Fulfillment, Logistics, and the Benefit of Pricing. And so, if you think about our outlook and, you know, driving earnings growth, it will come from a combination of increased revenue and also the expansion of gross margin. And Q4, our 35% was related to a pretty healthy increase, and Q1, 37%. So, we're comfortable within this range and see that, for the balance of the year, we'll still see meaningful improvement over the prior year, which gets, you know, sequentially, you know, more, tougher with the cops, but we're comfortable in the range that we're at.
David Loretta: Benefit there, but the remaining amount.
David Loretta: As a function of cost.
David Loretta: Cost management is on product fulfillment logistics and the benefit of pricing.
David Loretta: And so if you think about.
David Loretta: Our outlook.
David Loretta: Yes.
David Loretta: And driving.
David Loretta: Earnings growth.
David Loretta: Then it will come from a combination of.
David Loretta: Increased revenue, but also the expansion of.
David Loretta: Of gross margin.
David Loretta: In Q.
David Loretta: Q4.
David Loretta: 35% related to a pretty healthy increase in Q1, 37%. So we're comfortable within this range.
David Loretta: And see that that's.
David Loretta: We're for the balance of the year, we'll we'll still see meaningful improvement over the prior year, which gets.
David Loretta: Sequentially.
David Loretta: Right.
David Loretta: Tougher with the comps, but we're comfortable in the range that we're at.
Dara Warren Mohsenian: Great. That's very helpful. Thank you.
Speaker Change: Okay. That's helpful. Thank you.
Dara Warren Mohsenian: Yes.
Speaker Change: And thank you.
Operator: and thank you. And one moment for our next question, and our next question comes from Dana Telsey from the Telsey Group. Your line is now open.
Speaker Change: And one moment our next question.
Operator: And our next question comes from Dana Telsey from Telsey Group. Your line is now open fiscal 'twenty Hi, good morning, good afternoon, everyone.
Dana Lauren Telsey: Hi, good morning, and good afternoon everyone. As Carla said, as you think about the distribution channels and your categories, what changes are you seeing in distribution channels? What changes are you seeing in orders? And then if you think about pricing going forward, what lever on the gross margin does that play going forward as compared to what happened this quarter? Thank you.
Dana Lauren Telsey: As you think about the distribution channels in your categories. What changes are you seeing in distribution channels, what changes that you're seeing in orders and then as you think about pricing Gulf go forward what lever on the gross margin does that play going forward as compared to what happened in this quarter. Thank you.
Carla Vernon: Hi Dana, nice to be with you today. Thanks for joining the call. So, as far as distribution is concerned, as you pointed out, distribution is such an important part of our overall roadmap for growth. We articulated in our recent investor presentation these three pillars, brand maximization, margin enhancement, and operating discipline. And that distribution piece really lives for us in that brand maximization pillar, and it's actually been a very strong driver for us. As you may recall, we moved from 78 ACV into the mid 80s this year.
Speaker Change: Hi, Dana nice to be with you today, thanks for joining the call.
Carla Vernon: So.
Carla Vernon: As far as distribution as you pointed out distribution is such an important part of our overall.
Carla Vernon: Roadmap for growth, we articulated in our recent investor presentation. These three pillars brand maximization margin enhancement and operating discipline and that distribution piece really lift for us in that brand maximization pillar and its actually been a very strong driver for us as you may recall we.
Carla Vernon: Moving from 78 ACB into the mid <unk> this year and our distribution growth in the quarter. We also grew 9% within the quarter and distributions. So we're very pleased at the early stages of really delivering on our overall distribution strategy, which.
Carla Vernon: And our distribution growth in the quarter; we also grew 9% within the quarter in distribution. So we're very pleased at the early stages of really delivering on our overall distribution strategy, which internally we have this shorthand. We call it our FACES, PLACES, and SPACES strategy because there is so much fundamental growth for us available in distribution. That distribution is actually driven not only by getting into a new door but by increasing the product offerings available in our hero portfolio.
Carla Vernon: Internally, we have this short hand, we call it our faces places and spaces strategy. Because there is so much fundamental growth available on distribution that distribution is actually driven not only by getting into a new door, but by increasing the product offerings available in our <unk>.
Carla Vernon: So, for example, this year, we executed a couple of really strong sizing strategy launches. We launched our Gable Top refills for our very top selling baby personal care body wash and shampoo line. We also launched a large size of our healing ointment.
Carla Vernon: Zero portfolio.
Carla Vernon: For example, this year, we executed a couple of really strong sizing strategy launches, we launched our gable top refills for our very.
Carla Vernon: Selling baby personal care body wash and shampoo line. We also launched the large size of our ceiling appointment by being able to bring our hero items or in larger sizes, we're really able to bring distribution on proven hits to to our retail channels and our current aisle. So we're very pleased about the <unk>.
Carla Vernon: By being able to bring our hero items forward in larger sizes, we're really able to bring distribution on proven hits to our retail channels and our current aisles. So we're very pleased about the early days in which we're executing our distribution strategy. We continue to expect that to be a leading driver of our scaling of the Honest brand. You know us about pricing. We have seen our pricing be effective in the market that we put in place over the last year, which was broadly across almost all of our categories.
Carla Vernon: Early days in which we are executing our distribution strategy. We continue to expect that to be a leading driver of our scaling of the honest brand you know.
Carla Vernon: Pricing, we have seen our pricing to be effective in market that we that we put in place over the last year, which broadly with across almost all of our categories. As I. Just said for the last 12 weeks our growth is really nicely balanced between unit growth and dollar growth. So we feel comfortable that our pricing is being accepted.
Carla Vernon: As I just said, for the last 12 weeks, our growth has really nicely balanced between unit growth and dollar growth. So we feel comfortable that our pricing is being accepted. And then how pricing plays a role in the future will be something we will always consider based on what we're seeing in our relationship with the categories where we serve a role as a premium brand and what we see as the sort of consumer macroeconomic.
Carla Vernon: And then where place pricing plays a role in the future. It will be something we will always consider based on what we're seeing in our relationship with the categories, where we serve a role as a premium brand and what we see as the sort of consumer macroeconomics.
Carla Vernon: Okay.
Carla Vernon: Okay.
Speaker Change: Thank you.
Operator: And thank you. And one moment for our next question, and our next question comes from Laura Champine from Loop. Your line is now open.
Carla Vernon: Okay.
Laura Allyson Champine: And thank you.
Laura Allyson Champine: Thank you.
Laura Allyson Champine: And one moment our next question.
Operator: And our next question comes from Laura Champine from Loop. Your line is now open.
Laura Allyson Champine: Thanks for taking my question. It's a follow-up and congratulations on especially the EBITDA performance. It does seem like a lot of the improvements you've made on profitability are structural. So, if you were to turn to a negative EBITDA in next quarter or come quarter this year, what would be the most likely drivers of that downturn? Sales decline, what would need to happen for you to dip back into EBITDA, or adjust E
Speaker Change: Thanks for taking my question it's.
Laura Allyson Champine: Follow up and congratulations on the especially the EBITDA performance.
Laura Allyson Champine: It does seem like a lot of the improvements you've made on profitability or structural.
Laura Allyson Champine: If you were to turn to a negative EBITDA in the next quarter or some quarter. This year, what would be the most likely drivers of that downturn would it take.
Laura Allyson Champine: Sales decline what would need to happen for you to get back into EBITDA adjusted EBITDA loss, making.
David Loretta: Hi, I'm Laura. Thanks for the shout out on the progress on EBITDA; we're, we're happy with that. And, and we know that it's kind of a function of executing well across the team on a number of those fronts. So, so structurally, they, you know, they are, really, you know, becoming grounded in the business model success. So, you know, I'd say the guidance that we've given is You know, an adjusted EBITDA of low to mid single digit millions still gives us room to see improvement each quarter.
Speaker Change: Yes, Hi, Laura.
David Loretta: Thanks for the shout out on the progress on EBITDA.
David Loretta: We're happy with that.
David Loretta: And we know that that's kind of a function of executing well across the team.
David Loretta: On a number of those fronts. So so structurally.
David Loretta: They are they are.
David Loretta: Really becoming grounded in the business model success. So.
David Loretta: I'd say the.
David Loretta: The guidance that we've given.
David Loretta: Is.
David Loretta: And on adjusted EBITDA low to mid single digit millions still gives us room to see improvement each quarter.
David Loretta: And, you know, and at this stage, with so much of the balance of the year in front of us, we're just, you know, we're gonna keep working through all of our plans and trying to replicate and, you know, execute as best as we can. I don't, you know, I think I think that's the confidence that we've got, but I'll kind of leave it at that point and, you know, and have us sort of reflect on that.
David Loretta: And.
David Loretta: And at this stage with so much balance of the year in front of us.
David Loretta: We're just we're going to keep working through all of our plans and trying to replicate.
David Loretta: Execute as fast as we can.
David Loretta: <unk>.
David Loretta: I think I think that's that's the confidence that we've got but.
David Loretta: I'll kind of leave it at that point.
David Loretta: And.
David Loretta: Have is sort.
David Loretta: As I reflect on that.
Laura Allyson Champine: Let me try to rephrase it in a way that's a little less guidance and CFO oriented and gives you a bigger picture view. Maybe, Carla, if you think about your business, what are the risks that you're watching out for right now, especially ones that might impact your profitability?
Speaker Change: Let me try to rephrase it in a way that's a little less guidance and CFO oriented.
Laura Allyson Champine: Bigger picture view.
Laura Allyson Champine: Maybe Carlo if you think about your business what are the risks that youre watching out for right now, especially as it might impact your profitability.
Carla Vernon: Hi Laura. It's so good to hear from you. Well, I'm going to be honest with you that we've been on this really consistent path of improving ourselves quarter by quarter, and that strength in performance is really based on our team coming together well over the last year. We've brought people with great expertise, but intentionally a variety of experiences and expertise. And I'm so proud of how we've been executing. And so as we look ahead, I really think we're even continuing to have the discipline internally to make sure that we understand how to deliver on this plan and how to be nimble in the events of change.
Carla Vernon: Hi, Laura so good to hear you.
Carla Vernon: Well I'm going to be honest with you that.
Carla Vernon: We've been on is really consistent path of improving ourselves quarter by quarter and that strength and performance is really based on our.
Carla Vernon: Team coming together well over the last year, we brought people with great expertise, but intentionally a variety of experiences and expertise.
Carla Vernon: I'm so proud of how we've been executing and so as we look ahead I really think we're even continuing to.
Carla Vernon: Have the discipline internally to make sure that we understand how to.
Carla Vernon: To deliver on this plan and how to be nimble in the event of James.
Carla Vernon: However, I would say, you know, the things that we don't control. I really can't kind of even predict or comment on the things we don't control. What I do know is that the plan we have articulated and reaffirmed our guidance for the year is something we feel strong about because of what we know we have in front of us and what we see as our drivers. So I think we all have to be on the lookout for consumer macroeconomic trends or any kind of unpredictability that would probably affect not only us but others in our sector, in our segment, with what was what is within our control. I think the reason we're reporting with feeling confident is because we really like how we're executing.
Laura Allyson Champine: I understand. Thank you so much.
Speaker Change: However, I would say.
Laura Allyson Champine: The things that we don't control I really can't predict or comment on the things. We don't control what I do know is that the plan, we have articulated and reconfirming our guidance for the year is something we feel strong about because of what we know we have it in front of us and what we see as our dry.
Laura Allyson Champine: So I think we all have to be on the lookout for consumer macroeconomic trend.
Laura Allyson Champine: Or any kind of predictability that would probably not only affects us but would affect others in our sector in our segment.
Laura Allyson Champine: What was what is within our control I think the reason we're reporting we feel confident is because we really like how we're executing.
Speaker Change: Understood. Thank you so much.
Speaker Change: And thank you.
Operator: and thank you. In one moment for our next question, and our next question comes from Andrea Teixeira from J.P. Morgan. Your line is now open.
Speaker Change: And one moment our next question.
Andrea Faria Teixeira: And our next.
Andrea Faria Teixeira: Question comes from Andrea <unk> from JP Morgan Your line is now open.
Andrea Faria Teixeira: Thank you, operator, and good afternoon, Carla, Dave, and Elizabeth. So I hope I just wanted to, well, first shout out, hope you're all well and congratulations on the performance.
Andrea Faria Teixeira: Thank you operator, and good afternoon, Carla Dave and Elizabeth.
Andrea Faria Teixeira: Hi.
Andrea Faria Teixeira: I just wanted to well first of all its hope you're all well and congrats on the performance.
Andrea Faria Teixeira: Following up on Dana's question on distribution, I was wondering if you could give us a phasing of the comps of extra distribution, the additional distribution you got last year into this year, and if at all we should be mindful of the lapping of those gains, or are you seeing velocity and innovation offset that? And if you can also comment on what you're making, Dave. You said about being conservative at this point.
Andrea Faria Teixeira: Following up on <unk> question on distribution I was wondering if you can give us the phasing of the comps.
Andrea Faria Teixeira: Extra distribution extra additional distributions.
Andrea Faria Teixeira: Last year and into this year.
Andrea Faria Teixeira: And if at all we should be mindful of the lapping of those gains.
Andrea Faria Teixeira: Or are you seeing velocity and innovation have said that.
Andrea Faria Teixeira: And if you can also comment on what you're making Dave you just said about being conservative at this point are there any investments you may need to make as you get more distribution.
Andrea Faria Teixeira: Are there any reinvestments you may need to make as you get more distribution? Or perhaps, you know, incorporating the changes in the likeness agreement with Jessica Alba or incorporating any end to this chart, as I understand that it would be positive for margins long-term. But if you, is there any short-term impact to adjust to the bid that offsets the strong start of the year? Thank you.
Andrea Faria Teixeira: Or perhaps you know incorporating the changes in the likeness agreement with Jessica Alba or incorporating any.
Andrea Faria Teixeira: This charge was I understand that you would be positive for margins long term, but if you.
Andrea Faria Teixeira: Is that any short term impacts adjusted EBITDA that offset the strong start of the year. Thank you.
Carla Vernon: I think we have a divide and conquer here. Let me start by talking about how our distribution has been kind of our glide path there. And I know you're asking about investments. I would love Dave to talk to you about how we feel about investments and what we think we're going to want to do there.
Speaker Change: I think we have a divide and conquer here I'll, let me start by talking about how our distribution has been kind of a glide path there.
Dave: And I know you are asking about investments I would love to talk to you about how we're feeling about investments and what we think we're going to want to do there.
Carla Vernon: And so what I would say about distribution, and I think it's something we discussed in our previous quarters, we're very successful. As you guys know, the shape of our portfolio is very strongly balanced as a combination of brick and mortar and digital, and we are so pleased with the way we've been able to deliver growth. Oh my, sorry, my kids are texting. They always get through the "do not disturb" message. Let me move my phone off the table.
Carla Vernon: And so what I would say about distribution and I think it's something we've discussed on our previous quarters.
Carla Vernon: We're very successful as you guys know the shape of our portfolio is very strongly balance as a combination of brick and mortar and digital.
Carla Vernon: And we are so pleased with the way we've been able to deliver growth Oh, sorry, My kids are texting they always get through that do not disturb living will have gone off the table sorry about that.
Carla Vernon: Sorry about that. And so we're very balanced between digital and brick and mortar. But brick and mortar is really the distribution that you see show up when you see these big distribution changes for us. And it is also where we are less distributed relative to our competition. And so much of that distribution was actually new in 2022 for us in a big tranche at getting into Walmart. As we saw that those gains happened in 2023, there was a little bit more of a uniform glide path, but I would say that distribution, when you're doing it in a brick-and-mortar context across as many categories as we have, can have periods where there will be strong one-time gains, and then we want to see ourselves settle in and drive velocities from there.
Carla Vernon: And so we're very balanced digitally and brick and mortar, but brick and mortar is really the distribution that you see show up when you see these big distribution changes for us and it is also where we are less distributed relative to our competition and so while much of that.
Carla Vernon: Distribution was actually new in 2022 for us in a big tranche and getting into Walmart as.
Carla Vernon: We saw that those gains happened in 2023, there was a little bit more of a uniform glide path, but I would say that distribution when youre doing it in a brick and mortar context across as many categories. As we have can have periods, where there will be strong onetime gain.
Carla Vernon: <unk> and then we want to see ourselves settle in and drive velocities from there. So it's always going to be a mix, it's not going to be the same rhythm in any given.
Carla Vernon: So it's always going to be a mix. It's not going to be the same rhythm in any given time period, but we know that we've got an enormous runway for growth by being in more doors. Remember, we only got some of our inventory at 50% of the Walmarts, while some of our inventory was at 100% of the Walmarts. We also know that even on our hero items, some of them have distribution as low as 20% and 30% ACV individually.
Carla Vernon: Time periods, but we know that we've got an enormous runway for growth and being in more doors remember, we only got some of our inventory at 50% of the Walmart while some of our inventory was at a 100% of the Walmart.
Carla Vernon: I also know that even our hero items some of them have distribution as low as 20% and 30% ACB individually. So we also know that while we are in some retailers. We are looking to get stronger shoulders. If you will across the board and that that's going to.
Carla Vernon: So we also know that while we are in some retailers, we are looking to get stronger shoulders, if you will, across the board, and that that's going to come at different time periods with the different resets. So it might occasionally be a little bit lumpy, but overall, on a year-by-year basis, we like the outlook.
Carla Vernon: Come at different time periods with the different resets.
Carla Vernon: It might occasionally be a little bit lumpy, but overall on a year by year basis, we like the outlook.
Andrea Faria Teixeira: And, Carly, if I can sneak in just one comment on that, obviously, you've done amazing at both clicks and breaks. It says here that track channel consumption was up to seven. Wondering if you can help us with the non-track. And since you grew sales by three, it kind of implies there was a 400 business points headwind to your revenue. Is there any de-stocking or, and if so, is that over?
Andrea Faria Teixeira: And Karl if I can sneak in just one comment on that so obviously you've done amazing.
Andrea Faria Teixeira: Click on brakes.
Andrea Faria Teixeira: It says here track channel consumption was up seven.
Andrea Faria Teixeira: Wondering if you can help us with the non tracked.
Andrea Faria Teixeira: And since you grew sales by three.
Andrea Faria Teixeira: Eddie.
Andrea Faria Teixeira: Kind of implies that was a 400 basis points headwind.
Andrea Faria Teixeira: To your to your revenue is that any destocking or and if so is that over.
David Loretta: Yeah, Andrea, let me just address that last point on the revenue side, the 3% growth over the prior year. You know, we still, as we called out last quarter, there was some shift in order flow into the fourth quarter that accelerated that period's net revenue, which was, you know, 10% higher. Normally, those orders would have been in the first quarter.
Carly: Yes, Andrew let me, maybe just address that last point on.
David Loretta: On the revenue side, the 3% growth over prior year, we still as we called out last quarter. There was some shift in order flow into the fourth quarter of that.
David Loretta: That accelerated that periods.
David Loretta: Net revenue, which was 10% up.
David Loretta: Normally those orders would have been in the in the first quarter.
David Loretta: So, that sort of helps bridge any difference in what you would expect within the track channel progress. But let me kind of revisit EBITDA and the flexibility that we've got there. And this is really the benefit of the business model that we're building here, it's flexible in its nature. It's not encumbered with a lot of fixed overhead and capital expenses.
David Loretta: So so that sort of helps bridge any.
David Loretta: Any difference in what you would expect.
David Loretta: Within the within the tracked channel progress.
David Loretta: But let me.
David Loretta: Kind of revisit the EBITDA and the flexibility that we've got there and this is really the the.
David Loretta: The benefit of the business model that we're building here is.
David Loretta: It's flexible in its nature, we're not encumbered with a lot of fixed.
David Loretta: <unk> fixed overhead and capital.
David Loretta: Yes.
David Loretta: And the flow through, in particular, on revenue down to the bottom line was quite notable once the structural changes in the product costs and the fulfillment and logistics costs were now really working well. But I'll also say part of the EBITDA benefit and the gross margin benefit this quarter was that trade promotions were lighter than we would normally have them in the quarters, and that helps flow through gross revenue to net revenue.
David Loretta: <unk>.
David Loretta: And the flow through in particular on revenue down the bottom line was quite notable.
David Loretta: Once the structural changes in the product cost and fulfillment and logistics costs are now.
David Loretta: Really working and working well.
David Loretta: But also say part of the.
David Loretta: EBITDA benefit in the gross margin benefit this quarter.
David Loretta: Does.
David Loretta: Trade promotions were lighter than we would normally have them in the quarters.
David Loretta: And that helps flow through gross revenue to net revenue. So we will see trade promotion activity and marketing investment and expenses.
David Loretta: So we will see trade promotion activity and marketing investment in expenses flexible in future periods so that we can drive some of the momentum and keep it going through the balance of the year. So maintaining that flexibility on those two fronts is something that we wanna keep in front of us, and we'll use in the right moments to really keep that top line momentum. Hopefully, that helps.
David Loretta: Flexible in future periods that can.
David Loretta: That we can drive some of the momentum and keep it going through the through the balance of the year, so maintaining that flexibility on those two fronts is something that we definitely want to keep in front of us and.
David Loretta: And we will use.
David Loretta: And the right moments to really keep that top line momentum hopefully that helps and I think the question around the Nio.
David Loretta: And I think that the question around the NIL, as we shared, there's a transition plan, but any costs to kind of make adjustments under that separation agreement are fully factored into our outlook. We don't expect any additional expenses beyond our outlook plans for expenses to make that transition. And frankly, the transition sort of has been in motion over the last 12 months anyway. So it is a big impact on the product.
David Loretta: We.
David Loretta: As we shared there's.
David Loretta: A transition plan, but any costs to kind of.
David Loretta: Make adjustments to.
David Loretta: Under the separation agreement are fully factored into our outlook, we don't expect any incremental.
David Loretta: Beyond our outlook plans for expenses to make that transition and frankly, the transition sort of been in motion over the last 12 months anyway. So.
David Loretta: It is a.
David Loretta: A big impact on the product and assortment.
Andrea Faria Teixeira: Great, thank you very much. I'll pass it on. Very helpful.
Speaker Change: Great. Thank you very much I'll pass it on very helpful.
Operator: And thank you. And one moment for our next question. And our next question comes from Aaron Gray from Alliance Global Partners. Your line is now open.
Aaron Gray: And thank you.
Aaron Gray: And one moment for our next question.
Aaron Gray: And our next question comes from Aaron Grey from Alliance Global Partners. Your line is now open.
Aaron Gray: Hi, good evening, and thank you for the questions. So, first question for me: I just want to come off the back of the last one.
Aaron Gray: Hi, good evening and thank you for the questions. So first question for me.
Aaron Gray: And just to get better color in terms of how you're thinking about letting some of the top flow through the bottom, especially in the back half, we're looking for more top line growth. You kind of touched on it there, Dave, in terms of having that lever in terms of trade promotion and marketing. So is it fair to think that maybe you kind of push that lever a little bit more on the marketing and trade in the back half to drive growth longer term rather than let it flow through that bottom line versus letting it flow through maybe coming at the higher end of where guys are today? Just in terms of how you're thinking about that would be helpful.
Aaron Gray: <unk> come off the back of the last one and just to get better color in terms of how you're thinking about.
Aaron Gray: Letting some of the top of that flow through the bottom section in the back half we're looking for more top line growth.
Aaron Gray: Dave in terms of having that lateral in terms of trade promotional marketing. So is it fair to think that maybe you kind of push that lever a little bit more on the marketing and training the back half to drive growth longer term rather than a lot of folks in that bottom line.
Aaron Gray: First of all looking at both of them, maybe coming at the higher end of our guidance today just in terms of how you think about that would be helpful. Thanks.
David Loretta: Yeah, I mean, we've got marketing plans in place today, but there's also a lot of flexibility because so much of what we do spend on the media content side is digital, and that's short term. And so we have the ability to kind of dial it up and dial it down based on return on ad spend. And we like having that flexibility during different periods of events that we've got planned with retail partners and to drive in our digital channels with our online retailers.
Aaron Gray: Sure.
Dave: Yes, I mean, we've got marketing plans in place today, but theres also a lot of.
David Loretta: <unk> flexibility because so much of what we do spend and the media.
David Loretta: Content side is digital and Thats in that short term and so we have the ability to kind of dial it up and dial it down based on return on Ad spend.
David Loretta: And we like having that flexibility.
David Loretta: Different periods.
David Loretta: Events that we've got planned with retail partners.
David Loretta: And to drive.
David Loretta: Our digital channels.
David Loretta: With our online retailers.
David Loretta: So it will be a flexible aspect to the model that we see going forward, but again, fits within the guidance that we've given and even leaning towards the kind of the mid-side of that guidance, as I shared in my remarks. I'm so pleased with the progress we're making to execute on this.
David Loretta: So it will be it will be a flexible.
David Loretta: Aspect to the model that we see going forward, but again fits within the guidance that we've given.
David Loretta: And and even leaning towards the kind of the mid side of that guidance as I shared on my remarks.
David Loretta: So pleased with with the progress, we're making to execute at this stage.
Aaron Gray: Okay, great. Thanks for that.
Speaker Change: Okay, great. Thanks for that and second question for me just in terms of some another initiatives you have in terms of packaging specifically.
Speaker Change: Can you give us any update in terms of some expectations. There have you guys done any types of pilots or what we could make in terms of some changes on packaging for some of your skus going forward. Thank you.
Aaron Gray: And same question for me. Just in terms of some other issues you have in terms of packaging specifically, can you give us any updates in terms of some expectations there? Have you guys done any types of pilots, or what we could think in terms of some changes in packaging for some of your SKUs going forward? Thank you.
Speaker Change: I Love. This question. So thank you for asking and it's really great to hear from you Aaron So I appreciate that.
Carla Vernon: I love this question, so thank you for asking, and it's really great to hear from you, Aaron, so appreciate that. We packaging is really an important part of our brand maximization pillar. And I am so pleased with the fact that we, you know, we have Kate Barton as our chief growth officer and Jonathan Bailey as our head of sales. Between the two of them, they've been really collaborating strongly on how we update and upgrade our packaging as a key piece of our marketing.
Carla Vernon: Packaging is really an important part of our brand maximization pillar and I am So pleased with the fact that we.
Carla Vernon: We have Kate Barton as our chief growth Officer, and Jonathan <unk>, our head of sales and.
Carla Vernon: Between the two of them they have been really collaborating strongly on how we update and upgrade our packaging is a key piece of our marketing pillars.
Carla Vernon: That uniform packaging update is something that we want to be making sure is strong across our portfolio, and over the last year, the team has been working diligently to iterate on the packaging to conduct both quantitative and in-store physical, in-person qualitative analysis with several rounds. Because, I would say, from those of us that are alumni of some of these great CPGs that we are in, we understand the power of packaging as your lead marketing vehicle, especially for a brand like ours, as well as the importance of getting it right.
Carla Vernon: That uniform packaging update is something that we want to be making sure is strong across our portfolio and over the last year. The team has been working diligently to.
Carla Vernon: Eight or eight on the packaging.
Carla Vernon: Both quantitative and in store physical in person qualitative analysis with several rounds, because I would say from those of US that are alumni of some of these great CPG that we are in we understand the power of packaging as your lead marketing vehicle for especially for a brand like ours.
Carla Vernon: As well as the importance of getting it right. So I would say that I'm unable to talk about it because we have done some of the packaging tests now actually physically in our top brick and mortar retail stores with a b testing in different versions and some of the updates are going to be really fantastic one of them that we've been talking about.
Carla Vernon: So I would say that I'm able to talk about it because we have done some of these packaging tests now actually in our top brick-and-mortar retail stores with A-B testing and different versions. And some of the updates are going to be really fantastic. One of them that we've been talking about a lot is making sure that you know what's inside the boxes from here forward. That's been a key area. There's a very exciting execution that will be introduced into the market. And it's going to, I see it's going to make a big difference in making the products more shoppable for consumers, especially in our skincare, beauty, and beauty care product line.
Carla Vernon: <unk> is making sure that you know what's inside the box it from here.
Carla Vernon: That's been a key area. There is a very exciting execution that will be introduced into the market and it's going to I see it's going to make a big difference and making the products more shopper bolster consumers, especially in our skincare beauty beauty care product lines.
Aaron Gray: Okay, great. Thanks for the call, and I'll go ahead and jump back into the queue.
Speaker Change: Okay, great. Thanks for the color and I'll go and jump back in the queue.
Operator: And thank you. And one moment for our next question. And our next question comes from Ryan Mayers from Lake Street Capital Markets. Your line is now open. Hey guys, thanks for taking my questions.
Speaker Change: And thank you.
Ryan Mayers: And one moment for our next question.
Operator: Okay.
Ryan Robert Meyers: And our next question comes from Ryan Meyers from Lake Street Capital Markets. Your line is now open.
Ryan Mayers: Hey, guys. Thanks for taking my questions Congrats on another solid quarter.
Ryan Mayers: Just wondering if there's any way that you can quantify new customers that you were able to add during the quarter.
Ryan Mayers: We're jumping all over each other to answer that, but you know there are a few ways we think about that. One of them is really recounted in my remarks. So, as I was talking about the success in the quarter, especially the revenue growth that we've seen, that's really driven by expansion with distribution and expansion by our buyer base. The household penetration information that I shared, you may recall in the script. I indicated that this quarter our household penetration was up 18 basis points.
Ryan Mayers: We're jumping all over each other to answer that.
Ryan Mayers: A few ways, we think about that one of them.
Ryan Mayers: Is really recounted in my remarks, so as I was talking about the success in the quarter, especially the revenue growth that we've seen that's really driven by expansion with distribution and expansion by our buyer base that household penetration infill.
Ryan Mayers: <unk> I shared you may recall in the script I indicated that this quarter. Our household penetration was up 18 basis points also if you look to our investor presentation that is on our website, we published a new investor presentation last fiscal quarter.
Ryan Mayers: Also, if you look at our investor presentation that is on our website, we published a new investor presentation last fiscal quarter at investors.honest.com. So, there's some information there that talks about looking at some of the new household growth specifically in our leading digital retailer. I'm really pleased that last quarter we reported that we quadrupled the number of new to brand household users on Amazon for Honest. As a former Amazon alum myself, I can tell you that pulling new people into your order pattern is a really high-traction way to grow. So, we have a lot of indicators that make us feel good about that.
Ryan Mayers: <unk> dot honest dot com there is some information there that talks about looking at some of the new household growth specifically in our leading digital retailer really pleased last quarter, we reported that we quadrupled the new to brand household users on Amazon.
Ryan Mayers: We're on it and is a former Amazon alone myself I can tell you that pulling new people into your order pattern is in really high traction way to grow. So we have a lot of indicators that make us feel good about that.
Speaker Change: Okay. That's helpful. Thank you for taking my question.
Carla Vernon: and thank you. And I am showing no further questions. I would now like to turn the call over to Carla for closing remarks.
Speaker Change: And thank you.
Carla Vernon: And I am showing no further questions I would now like to turn the call over to Carla for closing remarks.
Carla Vernon: Everybody, thank you so much for joining us today. It was a pleasure being with you. We look forward to speaking with you next quarter and can't wait to reconnect.
Carla Vernon: Everybody. Thank you so much for joining in and being with US today. It was a pleasure being with you and we look forward to speaking with you next quarter and can't wait to reconnect. Thank you.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Carla Vernon: This concludes today's conference call. Thank you for participating you may now disconnect.
Operator: Okay.
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Operator: Okay.
Operator: Okay.
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