Q4 2025 The Honest Co Inc Earnings Call

February 25, 2026

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The Honest Company's Q4 and full year 2025 Earnings Call. At this time, all 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 now like to hand the conference call over to Chris Mandeville, Interim Head of Investor Relations at The Honest Company. Please go ahead.

Speaker #1: After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference call over to Chris Mandeville, Interim Head of Investor Relations at The Honest Company.

Speaker #1: Please go ahead.

Chris Mandeville: Good afternoon, thank you for joining our Q4 and full year 2025 Conference Call. With me today are Carla Vernón, our Chief Executive Officer, and Curtiss Bruce, our Chief Financial Officer. Before we begin, I will remind you that our remarks today include forward-looking statements subject to risks and uncertainties. We do not undertake any obligation to update these statements, and actual results may differ materially. For a detailed discussion of these factors, please refer to our safe harbor statements in today's earnings materials in our recent SEC filings. We will also discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are included in our earnings release and accompanying presentation, which are available at investors.honest.com.

Speaker #2: quarter and full year 2025 conference call. With me today are Carla Vernon, our Chief Executive Officer, and Curtiss Bruce, our Chief Financial Officer. Before we begin, I will remind you that our remarks today include forward-looking statements subject to risks and uncertainties.

Speaker #2: We do not undertake any obligation to update these statements, and actual results may differ materially. For a detailed discussion of these factors, please refer to our Safe Harbor statements in today's earnings materials and our recent SEC filings.

Speaker #2: We will also discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are included in our earnings release, and accompanying presentation, which are available at investors.honest.com.

Speaker #2: Finally, please note that all consumption data, included in our discussion today, unless otherwise noted, will reflect Sir Connor Mulo Plus measured channel data with 52 weeks ended January 4th, 2026, as compared to the prior year.

Chris Mandeville: Finally, please note that all consumption data included in our discussion today, unless otherwise noted, will reflect Circana MULO Plus measured channel data, with 52 weeks ended 4 January 2026, as compared to the prior year. With that, I'll turn the call over to Carla.

Speaker #2: With that, I'll turn the call over to Carla.

Speaker #3: Thank you, Chris, and hello to everyone joining the call. Honest enters 2026 as a more focused and agile organization. Over the last several months, we've moved assertively to execute the powering honest growth transformation we laid out last November.

Carla Vernón: Thank you, Chris. Hello to everyone joining the call. Honest enters 2026 as a more focused and agile organization. Over the last several months, we've moved assertively to execute the Powering Honest Growth transformation we laid out last November. By exiting honest.com as a direct fulfillment website, the apparel category, and our Canadian business, we've successfully narrowed our focus to our right to win core of wipes, personal care, and diapers. With these exits, we've also right-sized SG&A in line with this more focused revenue base. Later in the year, we expect additional financial efficiency as we consolidate our warehouse footprint. As a result of these actions, we begin 2026 with a leaner, higher-margin operating model poised for growth.

Speaker #3: By exiting honest.com as a direct fulfillment website, the apparel category and our Canadian business, we've successfully narrowed our focus to our right-to-win core of wipes, personal care, and diapers.

Speaker #3: With these exits, we've also right-sized SG&A in line with this more focused revenue base. Later in the year, we expect additional financial efficiency as we consolidate our warehouse footprint.

Speaker #3: As a result of these actions, we begin 2026 with a leaner, higher-margin operating model poised for growth. Today, my discussion will be focused on the organic view of the product and channel mix that defines the resulting businesses after the strategic exits from powering honest growth.

Carla Vernón: Today, my discussion will be focused on the organic view of the product and channel mix that defines the resulting businesses after the strategic exits from Powering Honest Growth. As a reminder, organic excludes the impact of the exits of apparel, Canada, and honest.com fulfillment. Our execution in Q4 enabled Honest to deliver on our revised guidance for the year. In 2025, Honest delivered organic revenue of $294 million, up 5.3% versus last year, and squarely in line with our long-term algorithm. Consumption growth of 5%, driven by double-digit growth in unit sales, was in line with organic revenue growth and materially outpaced our comparative category growth of 2%. In 2025, our wipes and personal care portfolios delivered strong performance, with consumption growth of 30% and 12%, respectively, which drove market share gains for both.

Speaker #3: As a reminder, organic excludes the impact of the exits of apparel, Canada, and honest.com fulfillment. Our execution in Q4 enabled honest to deliver on our revised guidance for the year.

Speaker #3: In 2025, honest delivered organic revenue of $294 million, up 5.3% versus last year, and squarely in line with our long-term algorithm. Consumption growth of 5%, driven by double-digit growth in unit sales, was in line with organic revenue growth and materially outpaced our comparative category growth of 2%.

Speaker #3: In 2025, our wipes and personal care portfolios delivered strong performance, with consumption growth of 30% and 12%, respectively, which drove market share gains for both.

Speaker #3: This strength in momentum offset the softness in diaper performance. In 2026, we expect the growth on wipes and personal care to continue offsetting weakness in diapers.

Carla Vernón: This strength and momentum offset the softness in diaper performance. In 2026, we expect the growth on wipes and personal care to continue offsetting weakness in diapers. I will share more on our diaper performance in a few moments. Despite the volatile tariff environment, adjusted gross margins were 38.7%, an improvement of 50 basis points year-over-year, largely due to favorable product mix. Our 2025 adjusted EBITDA of $21.8 million was in line with our most recent guidance. We also closed out 2025 with a strengthened balance sheet, ending with $90 million cash on hand and no debt. I'm confident in the strength of our business, the discipline of our asset-light model, and our anticipated future cash generation. Based on that foundation, our board of directors has authorized a $25 million share repurchase program.

Speaker #3: I will share more on our diaper performance in a few moments. Despite the volatile tariff environment, adjusted gross margins were 38.7%, an improvement of 50 basis points year over year, largely due to favorable product mix.

Speaker #3: Our 2025 adjusted EBITDA of $21.8 million was in line with our most recent guidance. We also closed out 2025 with a strengthened balance sheet, ending with $90 million cash on hand and no debt.

Speaker #3: I'm confident in the strength of our business, the discipline of our asset-light model, and our anticipated future cash generation. Based on that foundation, our Board of Directors has authorized a $25 million share repurchase program.

Speaker #3: This authorization reflects deep confidence in our strategy and our commitment to delivering long-term value for our shareholders. Looking back on 2025 performance in more detail, we're particularly encouraged that momentum improved across the second half of the year, with Q4 organic revenue improving by 6 percentage points, over the Q3 decline and returning the business to top-line growth of 1% in Q4.

Carla Vernón: This authorization reflects deep confidence in our strategy and our commitment to delivering long-term value for our shareholders. Looking back on 2025 performance in more detail, we're particularly encouraged that momentum improved across the second half of the year, with Q4 organic revenue improving by 6 percentage points over the Q3 decline and returning the business to top-line growth of 1% in Q4. This inflection in revenue quarter-over-quarter was largely because we lapped two retailer-specific activations in 2024 that were mostly contained to Q3. Additionally, our total consumption improved by nearly 200 basis points quarter-over-quarter, driven by our higher-margin wipes and personal care portfolios. Taken together, these drivers allowed our underlying strength to resurface in Q4. We're proud that this momentum is also reflected in our all-time highest household penetration of 7.6% at year-end.

Speaker #3: This inflection in revenue quarter over quarter was largely because we lapped two retailer-specific activations in 2024 that were mostly contained to Q3. Additionally, our total consumption improved by nearly 200 basis points quarter over quarter, driven by our higher margin wipes and personal care portfolios.

Speaker #3: Taken together, these drivers allowed our underlying strength to resurface in the fourth quarter. We're proud that this momentum is also reflected in our all-time highest household penetration of 7.6% at year-end.

Speaker #3: This penetration growth represents an increase of 1.7 million households versus the prior year, proving that the honest brand continues to resonate with a widening audience.

Carla Vernón: This penetration growth represents an increase of 1.7 million households versus the prior year, proving that the Honest brand continues to resonate with a widening audience. Now, turning to 2026. For the full year 2026, we expect to deliver organic revenue growth in the range of 4% to 6%, while also driving margin expansion due to our more efficient operating model. This dual focus on top-line leadership and bottom-line health is central to our value creation thesis. As a reminder, we continue to drive our strategy through the 3 strategic pillars that guide every piece of our work: brand maximization, margin enhancement, and operating discipline. This will be evident in our 3 growth drivers for 2026. Our first 2 drivers support our goal of brand maximization, which is how we scale the Honest brand.

Speaker #3: And now, turning to 2026. For the full year 2026, we expect to deliver organic revenue growth in the range of 4 to 6 percent, while also driving margin expansion due to our more efficient operating model.

Speaker #3: This dual focus on top-line leadership and bottom-line health is central to our value creation thesis. As a reminder, we continue to drive our strategy through the three strategic pillars that guide every piece of our work.

Speaker #3: Brand maximization, margin enhancement, and operating discipline. This will be evident in our three growth drivers for 2026. Our first two drivers support our goal of brand maximization, which is how we scale the Honest brand.

Speaker #3: Driver number one is our continued growth and leadership in the baby category. Driver number two is our plan to accelerate our growth in households beyond those with babies.

Carla Vernón: Driver number one is our continued growth and leadership in the baby category. Driver number two is our plan to accelerate our growth in households beyond those with babies. In addition to being a top baby brand, Honest also performs quite well in households beyond baby. In the US, 89% of households do not have any children under the age of six. This includes the 75% of households that have no children at all. To complement our strategy of broadening the Honest brand, our third driver of 2026 is grounded in our margin enhancement and operating discipline pillars, which allow us to make continued progress on strengthening our financial profile and operational excellence. Let me begin with our brand maximization drivers. The Honest brand is unique in its ability to travel seamlessly across categories, aisles, and demographics.

Speaker #3: In addition to being a top baby brand, honest also performs quite well in households beyond baby. And in the US, 89% of households do not have any children under the age of six.

Speaker #3: This includes the 75% of households that have no children at all. To complement our strategy of broadening the honest brand, our third driver of 2026 is grounded in our margin enhancement and operating discipline pillars, which allow us to make continued progress on strengthening our financial profile and operational excellence.

Speaker #3: Let me begin with our brand maximization drivers. The Honest brand is unique in its ability to travel seamlessly across categories, aisles, and demographics. This was evident in our household penetration growth in 2025, which was balanced across households with no kids and households with kids.

Carla Vernón: This was evident in our household penetration growth in 2025, which was balanced across households with no kids and households with kids. Even as we embrace this expanded approach to growth, our story always begins with babies. We believe there is no higher bar than the standard of care a parent gives to their precious babies. According to the National Institutes of Health, 42% of all parents and 49% of all first-time parents are concerned that their children have sensitive skin. This is why our Honest Standard, our rigorous set of guiding principles that help shape every step of product development, including our commitment to formulating without the use of more than 3,500 ingredients of concern, resonates so strongly with our community. Honest is trusted by parents who demand a high standard of clean and refuse to compromise on safety or performance.

Speaker #3: Even as we embrace this expanded approach to growth, our story always begins with babies. We believe there is no higher bar than the standard of care a parent gives to their precious babies.

Speaker #3: According to the National Institutes of Health, 42% of all parents and 49% of all first-time parents are concerned that their children have sensitive skin.

Speaker #3: This is why our honest standard, our rigorous set of guiding principles that help shape every step of product development, including our commitment to formulating without the use of more than 3,500 ingredients of concern, resonates so strongly with our community.

Speaker #3: Honest is trusted by parents who demand a high standard of clean and refuse to compromise on safety or performance. Let me spend a moment addressing our diaper performance in 2025.

Carla Vernón: Let me spend a moment addressing our diaper performance in 2025. The double-digit consumption declines on our diaper business had a dampening effect on the otherwise strong growth of our wipes and personal care collections. While diapers are no longer our largest category, they are an important way to introduce the brand to the 11% of US households with kids ages six or under. Our diaper declines were largely driven by retail assortment shifts at select brick-and-mortar retailers, the lapping of two large promotional events, which I discussed earlier, and macroeconomic pressures driving consumers towards lower-priced items. Because today's parents expect a value equation that balances price with performance and safety, we're strengthening that equation for our diaper business through thoughtful investment in pricing and improvements to price pack architecture, while continuing to deliver the quality materials, fit, and style that we are known for.

Speaker #3: The double-digit consumption declines on our diaper business had a dampening effect on the otherwise strong growth of our wipes and personal care collections. And while diapers are no longer our largest category, they are an important way to introduce the brand to the 11% of US households with kids ages 6 or under.

Speaker #3: Our diaper declines were largely driven by retail assortment shifts at select brick-and-mortar retailers, the lapping of two large promotional events, which I discussed earlier, and macroeconomic pressures driving consumers toward lower-priced items.

Speaker #3: Because today's parents expect a value equation that balances price with performance and safety, we're strengthening that equation for our diaper business through thoughtful investment in pricing and improvements to price pack architecture, while continuing to deliver the quality materials, fit, and style that we are known for.

Speaker #3: Now, turning to baby wipes and personal care. We are confident that our 2026 baby growth plan will deliver ongoing strong momentum for our core products, along with a robust lineup of baby-focused innovation, much of which is rolling out this quarter.

Carla Vernón: Now, turning to baby wipes and personal care. We are confident that our 2026 baby growth plan will deliver the ongoing strong momentum of our core products, along with a robust lineup of baby-focused innovation, much of which is rolling out this quarter. In 2025, our total Honest wipes portfolio delivered remarkable growth, with consumption up more than 30%, which is 6 times faster than the comparative categories. A standout performer was our all-purpose baby wipes collection, which grew consumption by 25%, materially outpaced the category, and delivered the largest dollar share growth of any all-purpose baby wipes brand. One of the key drivers in this growth was trade up to larger sizes. In response to the demand for value and convenience, we're launching our largest baby wipes configuration to date, with 16 of our full-size packages for what we call our Mega Pack.

Speaker #3: In 2025, our total Honest wipes portfolio delivered remarkable growth, with consumption up more than 30%, which is six times faster than the comparative categories.

Speaker #3: A standout performer was our all-purpose baby wipes collection, which grew consumption by 25%, materially outpaced the category, and delivered the largest dollar share growth of any all-purpose baby wipes brand.

Speaker #3: One of the key drivers in this growth was trade-up to larger sizes. In response to the demand for value and convenience, we're launching our largest baby wipes configuration to date.

Speaker #3: With 16 of our full-size packages for what we call our mega pack. Our baby personal care success is driven by the same demand for clean, safe ingredients we see across the honest portfolio.

Carla Vernón: Our baby personal care success is driven by the same demand for clean, safe ingredients we see across the Honest portfolio. With 12% consumption growth in 2025, we're building on this momentum with a strong innovation lineup in 2026. On the heels of the successful launch of our first partnership with Disney, we're expanding our Mickey and Friends bath time and bedtime items into additional retailers this year. Our baby personal care portfolio also focuses on bringing the sustainability and value that today's parents are seeking. This quarter, we're adding a new item to our collection of milk carton-style 32-ounce refills with the addition of our fragrance-free shampoo and body wash. This gable top packaging, which is our largest size offering, uses 89% less plastic than our standard 10-ounce bottle.

Speaker #3: With 12% consumption growth in 2025, we're building on this momentum with a strong innovation lineup in 2026. On the heels of the successful launch of our first partnership with Disney, we're expanding our Mickey and Friends bath time and bedtime items into additional retailers this year.

Speaker #3: Our baby personal care portfolio also focuses on bringing the sustainability and value that today's parents are seeking. This quarter, we're adding a new item to our collection of milk carton-style 32-ounce refills, with the addition of our fragrance-free shampoo and body wash.

Speaker #3: This gable top packaging, which is our largest size offering, uses 89% less plastic bottle. And earlier this month, we launched our fragrance-free sensitive rich cream moisturizer, with a beautifully light and creamy texture that is clinically proven to deliver 48-hour moisturization for babies' delicate skin.

Carla Vernón: Earlier this month, we launched our fragrance-free Sensitive Rich Cream Moisturizer, with a beautifully light and creamy texture that is clinically proven to deliver 48-hour moisturization for babies' delicate skin. As I shared earlier, in addition to growing with baby households in 2026, we will also bring intention and focus to our growth of Honest in households with bigger kids and no kids at all. This leverages momentum that has been quietly building. According to Numerator data, 54% of current Honest buyers are in no-kid households, and we have a history of appealing to those households in several ways. Many families who trusted Honest for their babies stick with us even after the kids grow up.

Speaker #3: As I shared earlier, in addition to growing with baby households in 2026, we will also bring intention and focus to our growth of honest in-households with bigger kids and no kids at all.

Speaker #3: This leverages momentum that has been quietly building. According to numerator data, 54% of current honest buyers are in no-kid households, and we have a history of appealing to those households in several ways.

Speaker #3: Many families who trusted Honest for their babies stick with us even after the kids grow up. Some of our most popular items from the baby aisle, like our shampoo and body wash, body lotion, or our conditioners and detanglers, are favorites among households that don't have babies anymore.

Carla Vernón: Some of our most popular items from the baby aisle, like our shampoo and body wash, body lotion, or our conditioners and detanglers, are favorites among households that don't have babies anymore. These are also households that discover Honest through products like our sanitizing wipes or our adult flushable wipes. Regardless of the reason, we have big plans to unlock more growth in households where the kids are older or where there may be no kids at all. The next natural step in this journey is our expansion into the section of the store dedicated to products for big kids. We know that as kids grow, they want things that show they are growing up, but that doesn't mean they lose the need for the gentle and clean formulations we bring.

Speaker #3: These are also households that discover honest through products like our sanitizing wipes or our adult flushable wipes. Regardless of the reason, we have big plans to unlock more growth in households where the kids are older or where there may be no kids at all.

Speaker #3: The next natural step in this journey is our expansion into the section of the store dedicated to products for big kids. We know that as kids grow, they want things that show they are growing up.

Speaker #3: But that doesn't mean they lose the need for the gentle and clean formulations we bring. So we're practically cartwheeling with glee at our first launch into the big kid aisle in partnership with Disney Pixar's Toy Story.

Carla Vernón: We're practically cartwheeling with glee at our first launch into the big kid aisle in partnership with Disney Pixar's Toy Story. We're now taking bath time to infinity and beyond, with a lineup of 6 items that add Woody, Buzz, Jesse, and more Toy Story friends to the Honest family. The collection launched this month online and in stores at Walmart, and will roll out at additional retailers ahead of the Toy Story 5 release this summer. In 2026, we are also poised to continue our growth in the 75% of US households that don't have any babies or little kids. We have a 2-prong approach for growing with these no-kid households. In many instances, we have seen that our existing items are already a great solution for these households.

Speaker #3: We're now taking bath time to infinity and beyond, with a lineup of six items that add Woody, Buzz, Jessie, and more Toy Story friends to the Honest family.

Speaker #3: The collection launched this month online and in stores at Walmart, and will roll out at additional retailers ahead of the Toy Story 5 release this summer.

Speaker #3: In 2026, we're also poised to continue our growth in the 75% of U.S. households that don't have any babies or little kids. We have a two-prong approach for growing with these no-kid households.

Speaker #3: In many instances, we have seen that our existing items are already a great solution for these households. So in 2025, we began evolving our marketing messages to introduce these older households to our personal care items and wipes.

Carla Vernón: In 2025, we began evolving our marketing messages to introduce these older households to our personal care items and wipes. We are also designing new items specifically with this broader set of households in mind. A great example of this success is our beautiful countertop-friendly adult flushable wipes collection, which grew consumption by 175% in 2025, and has ascended to the top 5 in Amazon's personal cleansing wipes set. Following our 2025 launch into brick-and-mortar retailers, including H-E-B and Target, we are striking while the iron is hot as we rolled out our flushable wipes into Walmart stores earlier this month. Also, in addition to our successful fragrance-free offering, we expanded the range of our sanitizing wipes by adding full-size packs in two new scents, grapefruit and lavender, alongside convenient pocket packs for on-the-go occasions. These are rolling into market as we speak.

Speaker #3: We're also designing new items specifically with this broader set of households in mind. A great example of this success is our beautiful countertop-friendly adult flushable wipes collection, which grew consumption by 175% in 2025 and has ascended to the top five in Amazon's personal cleansing wipes set.

Speaker #3: Following our 2025 launch into brick-and-mortar retailers, including HEB and Target, we are striking while the iron is hot as we rolled out our flushable wipes into Walmart stores earlier this month.

Speaker #3: Also, in addition to our successful fragrance-free offering, we expanded the range of our sanitizing wipes by adding full-size packs in two new scents, Grapefruit and Lavender, alongside convenient pocket packs for on-the-go occasions.

Speaker #3: These are rolling into market as we speak. This strategy to grow across demographics is not a pivot. It's an advancement of what's working. Our community has spoken, the honest brand, and the honest standard are for everyone, from babies and kids to kids at heart.

Carla Vernón: This strategy to grow across demographics is not a pivot, it's an advancement of what's working. Our community has spoken. The Honest brand and the Honest Standard are for everyone, from babies and kids to kids at heart. Finally, we are also driving value creation through our focus on margin enhancement and operating discipline. Now that we've exited our lower margin and less strategically aligned categories and channels, we will be able to deliver end-to-end efficiencies in our supply chain, along with improvements to inventory management and reductions in SG&A. With these Powering Honest Growth actions in place, we expect to deliver gross margins in the low 40s in 2026. We have strengthened our balance sheet, lowered our cost structure, and have clear momentum in our right to win categories.

Speaker #3: And finally, we're also driving value creation through our focus on margin enhancement and operating discipline. Now that we've exited our lower margin and less strategically aligned categories and channels, we will be able to deliver end-to-end efficiencies in our supply chain, along with improvements to inventory management and reductions in SG&A.

Speaker #3: And with these powering honest growth actions in place, we expect to deliver gross margins in the low 40s in 2026. We have strengthened our balance sheet, lowered our cost structure, and have clear momentum in our right-to-win categories.

Speaker #3: And today, we believe Honest is better positioned than ever to deliver long-term value to our shareholders while building a stronger, bigger Honest. With that, I'll now turn things over to Curtiss to provide more detail on our Q4 and full-year 2025-2026 outlook.

Carla Vernón: Today, we believe Honest is better positioned than ever to deliver long-term value to our shareholders while building a stronger, bigger, Honest. With that, I'll now turn things over to Curtiss to provide more detail on our Q4 and full year 2025 performance, as well as our 2026 outlook.

Speaker #2: Thank you, Carla. And good afternoon, everyone. The financial results we are sharing today represent the conclusion of a necessary and decisive chapter for The Honest Company.

Curtiss Bruce: Thank you, Carla. Good afternoon, everyone. The financial results we are sharing today represent the conclusion of a necessary and decisive chapter for The Honest Company. While our headline numbers for 2025 reflect the deliberate streamlining of our portfolio, the underlying metrics reveal a business that is fundamentally stronger than it was a year ago. Through Powering Honest Growth, we have built a stronger financial foundation specifically designed to power our future expansion. This program is expected to deliver between $10 million and $15 million in annualized savings, serving as a direct catalyst for margin expansion, while at the same time providing us with the fuel to reinvest and drive growth in our highest-margin portfolios. To that end, our execution is moving at pace.

Speaker #2: While our headline numbers for 2025 reflect the deliberate streamlining of our portfolio, the underlying metrics reveal a business that is fundamentally stronger than it was a year ago.

Speaker #2: Through powering honest growth, we have built a stronger financial foundation specifically designed to power our future expansion. This program is expected to deliver between $10 million and $15 million in annualized savings serving as a direct catalyst for margin expansion.

Speaker #2: While at the same time providing us with the fuel to reinvest and drive growth in our highest margin portfolios, to that end, our execution is moving at pace.

Speaker #2: Since our announcement in November, we have seamlessly exited non-strategic channels and categories taking actions to right-size our SG&A and initiated plans to consolidate our footprint that will deliver structural improvements and efficiencies in 2026 that will endure well beyond this year.

Curtiss Bruce: Since our announcement in November, we have seamlessly exited non-strategic channels and categories, taking actions to rightsize our SG&A and initiated plans to consolidate our footprint that will deliver structural improvements and efficiencies in 2026 that will endure well beyond this year. The performance and guidance I will detail today provide evidence of this continued scale for Honest. Beginning with our Q4 results, revenue was $88 million, down 11.8% year-over-year. This decline primarily reflects the deliberate impact of our strategic exits. These headwinds were partially offset by the continued momentum Carla detailed in our total wipes and baby personal care collections. On an organic basis, revenue grew 0.7% to $71.3 million, reflecting continued momentum in our total wipes and personal care categories, largely offset by ongoing diaper sales declines.

Speaker #2: The performance and guidance I will detail today provide evidence of this continued scale for honest. Beginning with our fourth-quarter results, revenue was $88 million, down 11.8% year over year.

Speaker #2: This decline primarily reflects the deliberate impact of our strategic exits. These headwinds were partially offset by the continued momentum Carla detailed in our total wipes and baby personal care collections.

Speaker #2: On an organic basis, revenue grew 0.7% to $71.3 million, reflecting continued momentum in our total wipes and personal care categories. Largely offset by ongoing diaper sales declines.

Curtiss Bruce: Importantly, this was a significant inflection from our Q3 performance as we lapped select merchandise and headwinds, observed continued strength in our wipes and personal care portfolios, and executed on targeted investments. Gross margin was 15.7%, compared to 38.8% in the prior year period. This was primarily related to a discrete inventory write-down on apparel as we finalized our exit of this lower-margin portfolio. Additionally, an increase in tariff costs was also a slight hit when compared to the prior year period. These pressures were partially mitigated by favorable product mix as we shift toward our higher-margin wipes and personal care portfolios and a decrease in fulfillment costs. On an adjusted basis, our gross margin was 38.3% and generally in line with the prior year period. Operating expenses increased $2 million year-over-year.

Speaker #2: Importantly, this was a significant inflection from our third-quarter performance, as we lapped select merchandising headwinds, observed continued strength in our wipes and personal care portfolios, and executed on targeted investments.

Speaker #2: Gross margin was 15.7% compared to 38.8% in the prior year period. This was primarily related to a discrete inventory write-down on apparel as we finalized our exit of this lower margin portfolio.

Speaker #2: Additionally, an increase in tariff costs was also a slight hit when compared to the prior-year period. These pressures were partially mitigated by favorable product mix, as we shift toward our higher-margin wipes and personal care portfolios, and a decrease in fulfillment costs.

Speaker #2: On an adjusted basis, our gross margin was 38.3% and generally in line with the prior year period. Operating expenses increased $2 million year over year.

Speaker #2: This reflected 4.2 million of the total restructuring costs we expect to realize from powering honest growth. This was partially mitigated by lower year-over-year SG&A primarily reflecting a reduction in legal expenses.

Curtiss Bruce: This reflected $4.2 million of the total restructuring costs we expect to realize from Powering Honest Growth. This was partially mitigated by lower year-over-year SG&A, primarily reflecting a reduction in legal expenses. Q4 marketing expenses were consistent with the prior year period. In the quarter, the company reported a net loss of $23.6 million, primarily related to the one-time costs associated with Powering Honest Growth. Adjusted EBITDA for Q4 was $3.8 million, down $4.8 million versus last year, largely due to lower revenue. Adjusted EBITDA margin was 4.3%. Turning to our full year 2025 results, revenue was $371.3 million, representing a 1.9% decrease compared to the prior year. This top-line performance primarily reflects the intentional impact of our strategic exits under Powering Honest Growth.

Speaker #2: Q4 marketing expenses were consistent with the prior year period. In the quarter, the company reported a net loss of $23.6 million, primarily related to the one-time costs associated with powering honest growth.

Speaker #2: Adjusted EBITDA for the fourth quarter was 3.8 million. Down 4.8 million versus last year, largely due to lower revenue. Adjusted EBITDA margin was 4.3%.

Speaker #2: Turning to our full-year 2025 results, revenue was $371.3 million, representing a 1.9% decrease compared to the prior year. This top-line performance primarily reflects the intentional impact of our strategic exits under powering honest growth.

Speaker #2: On an organic basis, full-year revenue increased 5.3%, landing squarely within our long-term algorithm and highlighting the underlying strength in our core wipes and personal care portfolios.

Curtiss Bruce: On an organic basis, full-year revenue increased 5.3%, landing squarely within our long-term algorithm and highlighting the underlying strength in our core wipes and personal care portfolios. Our GAAP gross margin for the year was 33.3%, compared to 38.2% in 2024. This contraction was driven largely by a discrete inventory write-down on apparel and a headwind from increased tariff costs. These factors were partially offset by more favorable product mix. On an adjusted basis, gross margin was 38.7%, an increase of 50 basis points over the prior year, highlighting the underlying health of our core business. Total operating expenses decreased by $9 million or 5.8%, primarily driven by a reduction in SG&A related to lower legal and stock-based compensation expense compared to the prior year.

Speaker #2: Our gap gross margin for the year was 33.3%, compared to 38.2% in 2024. This contraction was driven largely by a discrete inventory write-down on apparel and a headwind from increased tariff costs.

Speaker #2: These factors were partially offset by more favorable product mix. On an adjusted basis, gross margin was 38.7%, an increase of 50 basis points over the prior year.

Speaker #2: Highlighting the underlying health of our core business. Total operating expenses decreased by $9 million, or 5.8%. This was primarily driven by a reduction in SG&A related to lower legal and stock-based compensation expense compared to the prior year.

Speaker #2: This was partially offset by the aforementioned discrete restructuring costs and a strategic increase in marketing to support our growth. For the full year, we reported a net loss of $15.7 million.

Curtiss Bruce: This was partially offset by the aforementioned discrete restructuring costs and a strategic increase in marketing to support our growth. For the full year, we reported a net loss of $15.7 million, compared to a loss of $6.1 million in 2024, with the variance almost entirely attributable to the discrete costs associated with our transformation. On an adjusted basis, net income was $8.3 million. Finally, adjusted EBITDA was $22 million, which landed within our updated outlook range and compared to $25.9 million in 2024. Now turning to our cash flow and balance sheet for the year. We generated free cash flow of $13.6 million, a substantial improvement compared to the $1 million in the prior year.

Speaker #2: Compared to a loss of $6.1 million in 2024, with the variance almost entirely attributable to the discrete costs associated with our transformation. On an adjusted basis, net income was $8.3 million.

Speaker #2: Finally, adjusted EBITDA was 22 million, which landed within our updated outlook range and compared to 25.9 million in 2024. Now turning to our cash flow and balance sheet for the year, we generated free cash flow of $13.6 million, a substantial improvement compared to the $1 million in the prior year.

Speaker #2: This strength was driven by significant working capital improvements stemming from our focus on operating discipline. Our balance sheet ended the year in an exceptionally strong position, with $89.6 million in cash and cash equivalents and zero debt.

Curtiss Bruce: This strength was driven by significant working capital improvements stemming from our focus on operating discipline. Our balance sheet ended the year in an exceptionally strong position, with $89.6 million in cash and cash equivalents and zero debt. This capital position, coupled with our asset-light operating model, provides us with significant financial flexibility. As Carla shared earlier, with this strength as the backdrop, our board of directors has authorized our inaugural share repurchase program of up to $25 million, effective immediately. This decision is a direct reflection of our confidence in Powering Honest Growth and the substantial near and long-term benefits we expect this transformation to deliver.

Speaker #2: This capital position, coupled with our asset-light operating model, provides us with significant financial flexibility. As Carla shared earlier, with this strength as the backdrop, our board of directors has authorized our inaugural share repurchase program of up to $25 million, effective immediately.

Speaker #2: This decision is a direct reflection of our confidence in powering honest growth and the substantial near- and long-term benefits we expect this transformation to deliver.

Speaker #2: We believe our current valuation does not fully reflect the structural improvements we are making to our operating model, and this program underscores our commitment to a disciplined capital allocation strategy.

Curtiss Bruce: We believe our current valuation does not fully reflect the structural improvements we are making to our operating model. This program underscores our commitment to a disciplined capital allocation strategy, one that balances reinvestment in our growth initiatives with a clear focus on returning value to our shareholders. As we look ahead, the decisive actions we've taken to optimize our portfolio have created a much stronger foundation for profitable growth. We have effectively shifted our resources toward the categories where Honest has the clearest competitive advantage. Our 2026 framework reflects the early returns of that discipline. For 2026, we expect the following: Reported revenue declines of 18% to 16% due to our strategic exits. Organic revenue growth of 4% to 6%, in line with our long-term algorithm.

Speaker #2: One that balances reinvestment in our growth initiatives with a clear focus on returning value to our shareholders. As we look ahead, the decisive actions we've taken to optimize our portfolio have created a much stronger foundation for profitable growth.

Speaker #2: We have effectively shifted our resources toward the categories where Honest has the clearest competitive advantage, and our 2026 framework reflects the early returns of that discipline.

Speaker #2: For 2026, we expect the following: reported revenue declines of 18% to 16% due to our strategic exits; organic revenue growth of 4% to 6% in line with our long-term algorithm; adjusted gross margins in the low 40s; and adjusted EBITDA of $20 million to $23 million.

Curtiss Bruce: Adjusted gross margins in the low 40s, and adjusted EBITDA of $20 million to $23 million. To provide greater color on these figures, we anticipate sequential improvement in our organic growth throughout the year. While we face difficult comparisons in the first half of 2026, particularly in Q1, due to last year's retailer inventory buildup ahead of tariffs, our momentum will be driven by a robust pipeline of innovation and significant distribution gains established early in the year that will build throughout the remainder of 2026. For modeling purposes, it is also important to account for a high teens percentage headwind to reported sales resulting from the strategic business exits we finalized in 2025. While this impacts the reported top line, it effectively concentrates our resources on our most profitable categories.

Speaker #2: To provide greater color on these figures, we anticipate sequential improvement in our organic growth throughout the year. While we face difficult comparisons in the first half of 2026, particularly in Q1 due to last year's retailer inventory buildup ahead of tariffs, our momentum will be driven by a robust pipeline of innovation and significant distribution gains established early in the year that will build throughout the remainder of 2026.

Speaker #2: For modeling purposes, it is also important to account for a high-teens percentage headwind to reported sales resulting from the strategic business exits we finalized in 2025.

Speaker #2: While this impacts the reported top line, it effectively concentrates our resources on our most profitable categories. Our adjusted gross margin expectations reflect continued success and the ongoing shift in our revenue base toward our higher growth, higher margin wipes and personal care portfolios.

Curtiss Bruce: Our adjusted gross margin expectations reflect the continued success and ongoing shift in our revenue base toward our higher growth, higher-margin wipes and personal care portfolios. As these categories represent an increasing share of our total business, we expect a consistent mixed benefit to our consolidated margin profile. However, tariffs will remain a year-over-year headwind until they enter the base period beginning in Q2. Regarding supply chain efficiencies realization under Powering Honest Growth, we expect these savings to materialize in the second half of the year as we move past the implementation phase of our footprint optimization. Specifically, we are consolidating from two fulfillment centers into our state-of-the-art facility in Las Vegas, with a focus on automated, large-scale retail fulfillment. We are executing against a comprehensive project plan designed to ensure the continuity and stability of our operations.

Speaker #2: As these categories represent an increasing share of our total business, we expect a consistent mixed benefit to our consolidated margin profile. However, tariffs will remain a year-over-year headwind until the end of the base period beginning in Q2.

Speaker #2: Regarding supply chain efficiencies, realization underpowering honest growth, we expect these savings to materialize in the second half of the year as we move past the implementation phase of our footprint optimization.

Speaker #2: Specifically, we are consolidating from two fulfillment centers into our state-of-the-art facility in Las Vegas, with a focus on automated large-scale retail fulfillment. We are executing against a comprehensive project plan designed to ensure the continuity and stability of our operations.

Speaker #2: By applying our core principle of operating discipline to this move, we are focused on maintaining strong service levels for our retail partners and consumers throughout the process.

Curtiss Bruce: By applying our core principle of operating discipline to this move, we are focused on maintaining strong service levels for our retail partners and consumers throughout the process. Finally, our adjusted EBITDA expectations reflect the operational leverage inherent in our leaner business model. To fully appreciate the significance of our profitability outlook, it is important to look beyond the absolute dollars. While we expect our adjusted EBITDA performance to be consistent with the prior year, it is being generated off a materially lower reported sales base. The fact that we are maintaining our profit levels while intentionally shedding nearly a fifth of our top line, is a testament to the fundamental improvement in our business model. In terms of shape of the year for adjusted EBITDA, we expect performance to strengthen as the year progresses, mirroring the cadence of our organic growth and gross margin profile.

Speaker #2: Finally, our adjusted EBITDA expectations reflect the operational leverage inherent in our leaner business model. To fully appreciate the significance of our profitability outlook, it is important to look beyond the absolute dollars.

Speaker #2: While we expect our adjusted EBITDA performance to be consistent with the prior year, it is being generated off a materially lower reported sales base, the fact that we are maintaining our profit levels while intentionally shedding nearly a fifth of our top line is a testament to the fundamental improvement in our business model.

Speaker #2: In terms of shape of the year for adjusted EBITDA, we expect performance to strengthen as the year progresses, mirroring the cadence of our organic growth and gross margin profile.

Speaker #2: When we look at the long-term earnings power of the honest company, we see a business that has moved past the era of structural complexity and into a phase of structural leverage.

Curtiss Bruce: When we look at the long-term earnings power of The Honest Company, we see a business that has moved past the era of structural complexity and into a phase of structural leverage. Regarding our top-line potential, our 4% to 6% organic growth algorithm remains the appropriate yardstick for our long-term framework, anchored in our focus on driving sustained market share gains. Just as brand maximization is a catalyst for revenue growth, we see a similarly long runway for continued margin enhancement. As our higher margin, higher velocity products continue to outpace the broader portfolio, we are establishing a new elevated baseline for gross margin. Additionally, the supply chain efficiencies and SG&A right sizing we expect to realize are not one-time wins. We believe they are structural enhancements to our earnings power.

Speaker #2: Regarding our top-line potential, our 4% to 6% organic growth algorithm remains the appropriate yardstick for our long-term framework, anchored in our focus on driving sustained market share gains.

Speaker #2: Just as brand maximization is a catalyst for revenue growth, we see a similarly long runway for continued margin enhancement. As our higher margin, higher velocity products continue to outpace the broader portfolio, we are establishing a new elevated baseline for gross margin.

Speaker #2: Additionally, the supply chain efficiencies and SG&A rightsizing we expect to realize are not one-time wins; we believe they are structural enhancements to our earnings power.

Speaker #2: As I close, I want to express my confidence about 2026 and the great future ahead for honest. We are moving forward with a more productive portfolio, a stronger financial foundation, and clear line of sight towards sustainable, profitable growth.

Curtiss Bruce: As I close, I want to express my confidence about 2026 and the great future ahead for Honest. We're moving forward with a more productive portfolio, a stronger financial foundation, and clear line of sight towards sustainable, profitable growth. We are committed to ensuring that the Honest brand thrives in the modern household for years to come. With that, I turn it over to Carla for final remarks.

Speaker #2: We are committed to ensuring that the honest brand thrives in the modern household for years to come. With that, I turn it over to Carla for final remarks.

Speaker #1: Thank you, Curtis. Powering honest growth was never just about restructuring. It was about unlocking the full potential of the honest business model and brand.

Carla Vernón: Thank you, Curtis. Powering Honest Growth was never just about restructuring. It was about unlocking the full potential of the Honest business model and brand. In 2025, we did the heavy lifting to streamline our portfolio and establish a stronger financial foundation. Now, in 2026, we build on the great momentum of our core products, our strong brand building, and our great innovation lineup. This year, as always, our progress is due to the incredible execution by our team. Curtis and I offer our sincere thanks to our employees, proudly known as our Honest Butterflies, across our LA, Las Vegas, and Minneapolis locations. Their resilience and commitment as a community continues to power our success. We enter 2026 with a high degree of confidence in our ability to deliver sustainable, profitable growth.

Speaker #1: In 2025, we did the heavy lifting to streamline our portfolio and establish a stronger financial foundation. And now, in 2026, we build on the great momentum of our core products, our strong brand building, and our great innovation lineup.

Speaker #1: This year, as always, our progress is due to the incredible execution by our team. Curtis and I offer our sincere thanks to our employees, proudly known as our honest butterflies, across our LA, Las Vegas, and Minneapolis locations.

Speaker #1: Their resilience and commitment as a community continues to power our success. We enter 2026 with a high degree of confidence in our ability to deliver sustainable, profitable growth.

Speaker #1: Thank you for your support as we build a stronger, more focused, and enduring honest. And now, I turn it over to the operator to open the line for questions.

Carla Vernón: Thank you for your support as we build a stronger, more focused and enduring Honest. Now I turn it over to the operator to open the line for questions.

Speaker #2: Thank you. To ask a question, you will need to press star 11 on your telephone. And we ask that you please limit yourself to one question and one follow-up question.

Operator: Thank you. To ask a question, you will need to press star one on your telephone, and we ask that you please limit yourself to one question and one follow-up question. You may then return to the queue. One moment, please. Our first question comes from the line of Owen Rickert with Northland Capital Markets.

Speaker #2: You may then return to the queue. One moment, please. And our first question comes from the line of Owen Rickard with Northland Capital Markets.

Speaker #3: Thank you, guys. Thanks for taking my question. It's great to see the underlying strength of the organic business, with that returning to positive territory.

Owen Rickert: Hey, guys. Thanks for taking my question. It's great to see the underlying strength of the organic business, you know, with that returning to positive territory. You know, with the $25 million share repurchase announcement, signaling confidence from the board here, how should we think more about the cadence of organic growth building throughout 2026?

Speaker #3: With the $25 million share repurchase announcement signaling confidence from the board here, how should we think more about the cadence of organic growth building throughout 2026?

Carla Vernón: Hi, Owen. Carla here. As we exit 2025, we really tried to express and indicate our confidence in the momentum we see as we're exiting the year. We leave Q4 with consumption of north of 3 and a half percent, and that really sets us up well for the strength that you heard about on our wipes and personal care businesses, where we expect to see really continued strong performance in the year. We've got such a lineup of innovation against what we know works on those businesses. In the wipes portfolio, I talked about a bunch of the new products that are already shipping in the quarter. Personal care and entering that kid personal care set for the first time.

Speaker #4: Hi, Owen. Carla here. As we exit 2025, we really tried to express and indicate our confidence in the momentum we see as we're exiting the year.

Speaker #4: We leave Q4 with consumption of north of 3.5% and that really sets us up well for the strength that you heard about on our wipes and personal care businesses, where we expect to see really continued strong performance in the year.

Speaker #4: We've got such a lineup of innovation against what we know works on those businesses. In the wipes portfolio, I talked about a bunch of the new products that are already shipping in the quarter, personal care, entering that kid personal care set for the first time.

Speaker #4: So we're expecting the complement of new product innovation, along with momentum on the core. But we really want to undergird all of that with the strength of our business model through supply chain improvements that we're also going to see across the year.

Carla Vernón: We're expecting the complement of new product innovation along with momentum on the core, but we really wanna undergird all of that with the strength of our business model through supply chain improvements that we're also gonna see across the year. Curtis shared in his remarks that we're gonna be optimizing our fulfillment center footprint. Some of those benefits will happen as the year runs, and our SG&A, really bringing that in line with our new, smaller revenue base, was an important piece of progress we wanted to demonstrate on our transformation, and we'll be doing that over the course of the year. I think Curtis can dive into more of the specifics quarter-over-quarter, but overall, we're really looking forward to seeing that continued strengthening over the course of the year.

Speaker #4: Curtis shared in his remarks that we're going to be optimizing our fulfillment center footprint. Some of those benefits will happen as the year runs, and our SG&A really bringing that in line with our new smaller revenue base was an important piece of progress we wanted to demonstrate on our transformation, and we'll be doing that over the course of the year.

Speaker #4: I think Curtis can dive into more of the specifics quarter over quarter, but overall, we really looking forward to seeing that continued strengthening over the course of the year.

Speaker #5: Yeah, so let me just add the momentum that Carla is talking about that we're exiting the year with gives us a lot of confidence to be able to deliver our guidance of 4 to 6% organic revenue growth for the year.

Curtiss Bruce: Yeah, let me just add the momentum that Carla is talking about that we're exiting the year with, gives us a lot of confidence to be able to deliver our guidance of 4% to 6% organic revenue growth for the year. It's worth noting that that organic growth will, however, represent down 18% to down 16% on a reported basis. In order to help with the modeling, we do have provided the 2025 quarterly organic base that is in the press release. You can also find it on the website in the IR section on our Q4 present. In terms of the phasing from an organic growth perspective by quarter, we do expect to see sequential improvement in our growth rate as we lap the tariff inventory build in Q1 of 2025.

Speaker #5: It's worth noting that that organic growth will, however, represent down 18 to down 16% on a reported basis. In order to help with the modeling we have provided the 2025 quarterly organic base that is in the press release.

Speaker #5: You can also find it on the website in the IR section on our Q4 presentation. In terms of the phasing from an organic growth perspective, by quarter, we do expect to see sequential improvement in our growth rate as we lap the tariff inventory build in Q1 of 2025.

Speaker #5: We are absolutely confident in our ability to deliver our guidance on both the top and bottom line.

Curtiss Bruce: We are absolutely confident in our ability to deliver our guidance on both the top and bottom line.

Speaker #3: Got it. Super helpful, guys. Secondly, for me, with nearly 90 million of cash and no debt, how do you balance buybacks with reinvestment in maybe marketing and innovation going forward, especially with the stated goal of accelerating growth in those core categories?

Owen Rickert: Got it. Super helpful, guys. Secondly, for me, with nearly $90 million of cash and no debt, how do you balance buybacks with reinvestment in maybe marketing and innovation going forward, especially with the stated goal of accelerating growth in those core categories?

Speaker #5: Yeah, so let me start by just saying what a milestone this is for the honest company as a public entity to have our inaugural buyback authorization.

Curtiss Bruce: Yeah. Let me start by just saying, what a milestone this is for The Honest Company as a public entity to have our inaugural buyback authorization. I think that's quite an achievement, quite a milestone for us. As we said in the remarks, it's a reflection of our ability to execute Powering Honest Growth. It's a reflection of, as you just stated, the $90 million we have in cash and zero debt. That $90 million was a significant increase from our balance at the end of Q3. I think that is representative of our ability to execute Powering Honest Growth as we close the year.

Speaker #5: I think that's quite an achievement, quite a milestone for us. And as we said in the remarks, it's a reflection of our ability to execute powering honest growth.

Speaker #5: It's a reflection of, as you just stated, the $90 million we have in cash and zero debt. And that $90 million was a significant increase from our balance at the end of Q3.

Speaker #5: So I think that is representative of our ability to execute powering honest growth as we close the year. It also marks, I think, our confidence in our ability to execute the transformation program, our continued ability to generate cash, and a confidence we have in our ability to deliver on our 2026 guidance.

Curtiss Bruce: It also marks, I think, our confidence in our ability to execute the transformation program, our continued ability to generate cash, and the confidence we have in our ability to deliver on our 2026 guidance. We believe that valuation does not reflect the potential of this business, nor our ability to execute the transformation. What we will continue to do is prioritize investment and growth. We will maintain liquidity to weather any macroeconomic headwinds that could be in front of us, and we'll balance that with returning value to shareholders. That is our capital allocation plan.

Speaker #5: It also we believe that valuation does not reflect the potential of this business, nor our ability to execute the transformation. What we will continue to do is prioritize investment and growth.

Speaker #5: We will maintain liquidity to weather any macroeconomic headwinds that could be in front of us, and we'll balance that with returning value to shareholders.

Speaker #5: That is our capital allocation plan.

Speaker #3: Great. Thanks for the caller.

Owen Rickert: Great. Thanks for the color.

Speaker #2: Thank you. And our next question comes from the line of Aaron Gray with Alliance Global Partners.

Operator: Thank you. Our next question comes from the line of Aaron Gray with Alliance Global Partners.

Speaker #6: Hi, good evening, and thank you very much for the questions. I just wanted to dive a bit deeper in terms of some of the growth opportunities.

Aaron Gray: Hi, good evening, and thank you very much for the questions. Just wanted to dive a bit deeper in terms of some of the growth opportunities. You know, in the past, we've talked about ACV opportunities, both in terms of breadth and depth. You alluded to some of the innovation earlier on the call. Curtis, you also talked about some distribution in terms of the sequencing of the growth. Just want to get some further color in terms of maybe you can size out how much of the growth you're expecting now is from breadth versus depth for the year 2026, and we think about some of the growth opportunities. Thank you.

Speaker #6: In the past, we've talked about ACV opportunities, both in terms of breadth and depth. You alluded to some of the innovation early on the call.

Speaker #6: Curtis, you also talked about some distribution in terms of the sequencing of the growth. So I just want to get some for the call in terms of maybe you can size out how much of the growth you're expecting now is from breadth versus depth for the year 2026, and we think about some of the growth opportunities.

Speaker #6: Thank you.

Speaker #4: Hi, Aaron. Nice to talk to you. As we look at how we've built 2026 with a top-line growth algorithm in the 4 to 6% range, that growth is driven by a really nice balance of things.

Carla Vernón: Hi, Aaron. Nice to talk to you. As we look at how we've built 2026 with a top line growth algorithm in the 4% to 6% range, that growth is driven by a really nice balance of things. I think balance is gonna be such a theme for us. The growth is driven in a very well-balanced way by innovation of core, excuse me, innovation of new product items and gaining distribution through the launch of those new product items. Like we just talked about, entering an entirely new aisle, the kid personal care aisle, is a different part of the store than where we are. It's where you find a lot of bubble baths and stuff. We have an entire new lineup entering that aisle with 6 new items at the launch. Those already rolled out in the year.

Speaker #4: I think balance is such a going to be such a theme for us. So the growth is driven in a very well-balanced way by innovation of core excuse me, innovation of new product items and gaining distribution through the launch of those new product items.

Speaker #4: Like we just talked about entering an entirely new aisle, the kid personal care aisle is a different part of the store than where we are.

Speaker #4: It's where you find a lot of bubble baths and stuff. And so we have an entire new lineup entering that aisle with six new items at the launch.

Speaker #4: Those already rolled out in the year. That's a great example when we say growth driven by distribution of new items. We are also seeing growth and distribution gains on our core items as well.

Carla Vernón: That's a great example when we say, growth driven by distribution of new items. We are also seeing growth and distribution gains on our core items as well. I love talking about, we rolled out our flushable wipes over the last two years, only entering brick-and-mortar for the first time in 2025. This quarter, seeing our first brick-and-mortar launch at Walmart of the flushable wipes. We've got a lot of strength and engine behind core items that still have more distribution upside. That's just one example. We have distribution of the core, we have innovation of new items, we have the momentum and velocity of the core, so the items that we already have in market are doing quite well. For example, our all-purpose baby wipes are doing very well.

Speaker #4: So I love talking about, like, we rolled out our flushable wipes over the last two years, only entering brick and mortar for the first time in 2025.

Speaker #4: This quarter, seeing our first brick-and-mortar launch at Walmart of the flushable wipes. So we've got a lot of strength and engine behind core items that still have more distribution upside—that's just one example.

Speaker #4: So we have distribution of the core. We have innovation of new items. We have the momentum and velocity of the core so the items that we already have in market are doing quite well.

Speaker #4: For example, our all-purpose baby wipes are doing very well. So, as Curtiss talked about, we really want to fuel the growth of our core by making sure we have marketing investment across that as well.

Carla Vernón: As Curtiss talked about, we really wanna fuel the growth of our core by making sure we have marketing investment across that as well. It's really a three-part growth and balance as you see our growth. The other way to think about that, which I talked about today, is we're talking about household types, which is also an important unlock for us. We're also balanced in that regard. Our business is surprising across kid and no-kid households. Today, already, 54% of our revenue is from households with no kids, and our household penetration growth was also very balanced in 2025, with growth coming from no-kid households and growth coming from households with little kids.

Speaker #4: So it's really a three-part growth and balance, as you see our growth. The other way to think about that, which I talked about today, is we're talking about household types.

Speaker #4: Which is also an important unlock for us. We're also balanced in that regard. So our business is surprising across kid and no-kid households. Today, already, 54% of our revenue is from households with no kids.

Speaker #4: And our household penetration growth was also very balanced in 2025, with growth coming from no-kid households and growth coming from households with little kids.

Speaker #4: So as we look at driving that growth, we drive that growth with items created for those different kinds of households, as well as marketing designed to talk to those households and give them the awareness of the product.

Carla Vernón: As we look at driving that growth, we drive that growth with items created for those different kinds of households, as well as marketing designed to talk to those households and give them the awareness of the products.

Speaker #6: Okay, great. Thank you for that color there. Second question for me is just on the cost savings. So moved up again, it was 8 to 15, I believe, last quarter, now 10, 15.

Aaron Gray: Okay, great. Thank you for that color there. Second question for me is just on the cost savings. Moved up again, it was 8 to 15, I believe, last quarter, now 10 to 15. Good to see the lower end of that raised a bit, but want to talk about maybe the sequencing of those savings and when we can expect it to flow through the P&L, and then maybe some color in terms of, you know, what would move that towards the lower and higher end of the range and the key factors there. Thank you.

Speaker #6: So, good to see the lower end of that. Raised a bit, but want to talk about maybe the sequencing of those savings and when we can expect it to flow through the P&L.

Speaker #6: And then maybe some color in terms of what would move that towards the lower and higher end of the range and the key factors there.

Speaker #6: Thank you.

Speaker #5: Yeah. So thank you for the question. I'll just want to jump in here and reiterate the fact that we guided now to a gross margin in the low 40s I am sure you remember back in Q2 when we crossed the 40% gross margin threshold for the first time there was quite a bit of excitement with us on the that achievement.

Curtiss Bruce: Yeah. Thanks for the question. I just want to jump in here and reiterate the fact that we guided now to a gross margin in the low 40s. I'm sure you remember back in Q2, when we crossed the 40% gross margin threshold for the first time, there was quite a bit of excitement with us on that achievement. As we look at 2026 and we talk about the guidance, we did guide to the low 40s on an adjusted basis. Those savings are going to come, or that performance is really connected to a couple of things. Number one is, as we think about the higher margin categories that are driving growth in wipes and baby personal care, we will have a sustaining mix benefit throughout all four quarters related to mix.

Speaker #5: So as we look at 2026 and we talk about the guidance, we did guide to the low 40s on an adjusted basis. Those savings are going to come or that performance is really connected to a couple of things.

Speaker #5: Number one is, as we think about the higher margin categories that are driving growth and wipes and baby personal care, we will have a sustaining mixed benefit throughout all four quarters related to mix.

Speaker #5: The second big driver for that outsized performance will be the transition from two warehouses down to one. And so that execution is planned to start having the benefit in our business in the second half of the year.

Curtiss Bruce: The second big driver for that outsized performance will be the transition from 2 warehouses down to 1. That execution is planned to start having the benefit in our business in the second half of the year. As you think about sort of the range of outcomes, I think the potential for more or less really comes down to the ability of or the impact from a mix perspective. Is there more upside or the higher margin pieces of the business that will drive a higher mix benefit? Related to the timing and the absolute value of the savings related to the warehouse transition.

Speaker #5: We as you think about sort of the range of outcomes, I think the potential for more or less really comes down to the ability of the or the impact from a mixed perspective is there more upside on the higher margin pieces of the business that will drive a higher mixed benefit?

Speaker #5: And then related to the timing and the absolute value of the savings related to the warehouse transition.

Aaron Gray: Okay, great. Appreciate that color. I'll go and jump back in the queue.

Speaker #6: Okay, great. Appreciate that color. I'll go ahead and jump back in with you.

Speaker #7: Thank you. In our next question comes from the line of Shivana Chowdhury with JPMorgan.

Operator: Thank you. Our next question comes from the line of Shovana Chowdhury with J.P. Morgan.

Shovana Chowdhury: Hi, thanks for taking our question. I wanted to delve a little bit further into the diaper. It's 30% of your sales, and you called out the decline in the diaper revenue. First, wanted to clarify, is this decline mainly due to the gender-neutral print issue with Target, which should not be a headwind this year, or is it really a factor, or like worsened by the fierce competition in the category? What is your expectation for the diaper performance in the future? If you could also give us a sense of, you did mention your prepared remarks about the thoughtful pricing in diapers and improving in price architecture. What is the price gap that you're seeing?

Speaker #8: Hi. Thanks for taking our question. I wanted to delve a little bit further into the diaper. It's 30% of her sales and it called out the decline in the diaper revenue.

Speaker #8: First, wanted to clarify is this decline mainly due to the general neutral print issue with Target, which should not be a headwind this year?

Speaker #8: Or is it really a factor or like worse advice, the fierce competition, the category? And what is your expectation for the diaper performance in the future?

Speaker #8: And if you could also give us a sense of—you did mention in your prepared remarks—the thoughtful pricing in diapers and improvement in our price pack architecture.

Speaker #8: What is the price gap that you're seeing understand you're more premium products there's usually a price gap, but what is this price gap and how much are you willing to close this gap?

Shovana Chowdhury: I understand you are more premium products, there's usually a price gap, but what is this price gap, and how much are you willing to close this gap? If you can just give us, like, some thoughts on the latest trends and market share performance, specifically for your diapers, that would be very appreciated. Thanks.

Speaker #8: And if you can just give us some thoughts on the latest trends and market share performance, specifically for your diapers, that would be very appreciated.

Speaker #8: Thanks. All right. Hi, Shivana. I want to make sure I break apart the difference, the different components of your question and make sure I address them.

Carla Vernón: All right. Hi, Shovana. I want to make sure I break apart the difference, the different components of your question and make sure I address them. Let me start by stepping back and saying that it's been a very volatile year. 2025 was a very volatile year for the diaper category overall, and I know people are probably hearing that, not just from us. The category overall for 2025 was down 1%, and we know that there are a number of drivers that are causing that to happen for the category.

Speaker #8: So let me start by stepping back and saying that it's been a very volatile year. 2025 was a very volatile year for the diaper category overall.

Speaker #8: And I know people are probably hearing that not just from us. The category overall for 2025 was down 1%. And we know that there are a number of drivers that are that are causing that to happen for the category.

Speaker #8: One of the biggest things that we're seeing is that with the economic macroeconomic uncertainty, consumers in the diaper category in particular have been shown to switch to lower-priced diaper items.

Carla Vernón: One of the biggest things that we're seeing is that with the macroeconomic uncertainty, consumers in the diaper category, in particular, have been shown to switch to lower priced diaper items. What we're seeing is the category is just losing $ overall as consumers shift to lower price items. That certainly affects us as well when we see those consumer shifts. We also know that for us, last year, we had that lapping issue that I talked about, that was a real driver of our Q3 diaper declines, was pretty well sort of encapsulated to a Q3 impact. We know that we had the portfolio simplification over the course of the year.

Speaker #8: And what we're seeing is category the category is just losing dollars overall as consumers shift to lower-priced items. And so that certainly affects us as well when we see those consumer shifts.

Speaker #8: We also know that for us last year, we had that lapping issue that I talked about that was a real driver of our Q3 diaper decline but was pretty well sort of encapsulated to a Q3 impact.

Speaker #8: And then we know that we had the portfolio simplification over the course of the year. Some of that portfolio simplification was indeed due to the ones you brought up, Shivana.

Carla Vernón: Some of that portfolio simplification was indeed due to the ones you brought up, Shovana, the loss of the gendered prints at one of our largest retailers. We know that retailers are doing some shifts and simplification of their sets overall. That was among one of the drivers. As we look at the future and what we expect, we do believe that 2026 is likely to be another challenging year for Honest in diapers. That will be driven somewhat by some of the same factors, the macroeconomic uncertainty. We're going to be watching that, just like everyone. I mean, you know, there's a lot, and it's been changing quickly in the category, and there have been some aggressive moves by some of those low price competitors. We'll keep our eye on that.

Speaker #8: The loss of the gendered prints at one of our largest retailers. We know that retailers are doing some shifts and simplification of their sets overall.

Speaker #8: So that was among one of the drivers. As we look at the future and what we expect, we do believe that 2026 is likely to be another challenging year for honest in diapers.

Speaker #8: And we that will be driven somewhat by some of the same factors, the macroeconomic uncertainty, we're going to be watching that just like everyone.

Speaker #8: I mean, there's a lot and it's been changing quickly in the category. And there have been some aggressive moves by some of those low-priced competitors.

Speaker #8: So we'll keep our eye on that. We do believe that the portfolio simplification that we're experiencing will continue into the course of the year.

Carla Vernón: We do believe that the portfolio simplification that we're experiencing will continue into the course of the year. That's already in our guidance, Shivani. What we expect from our diaper business in 2026 is already reflected in this 4% to 6% top line growth algorithm. When we think about how we wanna address it in the future, you are right. We wanna make sure we've got the right price value offering that makes sense for our business, while maintaining our commitment to driving margin expansion as a whole. We wanna do that in the right way and in a way that means so much to our consumers.

Speaker #8: But that's already in our guidance, Shivana. So, what we expect from our diaper business in 2026 is already reflected in this 4% to 6% top-line growth algorithm.

Speaker #8: And when we think about how we want to address it in the future, you are right. We want to make sure we've got the right price value offering that makes sense for our business while maintaining our commitment to driving margin expansion as a whole.

Speaker #8: So, we want to do that in the right way and in the way that means so much to our consumers. But that's also why we need to have a very balanced growth portfolio overall for our baby business in general, because we have a lot of strength.

Carla Vernón: That's also why we need to have a very balanced growth portfolio overall for our baby business in general, because we have a lot of strength we bring to the aisle and a lot of margin strength we bring as a leading baby brand that is not dependent on diapers the way it used to be so much when diapers was a bigger piece of our business. You did ask me about pricing and the price gap. Our average price gap can be anywhere ranging from 20% to 30% of a price premium on an Honest diaper. We do know we develop our diaper to a higher standard of clean, always trying to push the categories that we're in to bring the Honest Standard to life through the offering we bring and with the highest expectations of our sensitive skin consumers.

Speaker #8: We bring to the aisle and a lot of margin strength we bring as a leading baby brand. That is not dependent on diapers the way it used to be so much when diapers was a bigger piece of our business.

Speaker #8: You did ask me about pricing and the price gap. Our average price gap can be anywhere ranging from 20% to 30% of a price premium on an Honest diaper.

Speaker #8: We do know we develop our diaper to a higher standard of clean, always trying to push the categories that we're in to bring the honest standard to life through the offering we bring and with the highest expectations of our sensitive skin consumers.

Speaker #8: So that is something we need to make sure we get right in our cost structure. And that's all been built in as we've already reflected in the guidance for the year.

Carla Vernón: That is something we need to make sure we get right in our cost structure, and that's all been built in as we've already reflected in the guidance for the year.

Dara Mohsenian: Thank you so much. I'll pass it on.

Shovana Chowdhury: Thank you so much. I'll pass it on.

Speaker #8: Thank you so much. I'll pass it on.

Operator: Thank you. Our next question comes from the line of Anna Glaessgen, with B. Riley Securities.

Speaker #7: you. In our next question comes from the line of Anna Glasskin with B Reilly Securities.

Anna Glaessgen: Hi, good afternoon. Thanks for taking my question. I guess I'd like to start as a follow-up to the prior question on diapers. Just curious, especially given the dislocation we've seen this year, given retailer actions in the category. Roughly, how should we think about consumption trends versus the industry? Building off, you know, the prior commentary around the price premium and consumers trading down, I guess, how should we think about returning to consumption and access of the industry in light of those headwinds to premium products? Thanks.

Speaker #8: Hi, good afternoon. Thanks for taking my questions. I guess I'd like to start as a follow-up to the prior question on diapers. Just curious, especially given the dislocation we've seen this year, given retailer actions in the category, roughly how should we think about consumption trends versus the industry?

Speaker #8: And then building off the prior commentary around the price premium and consumers trading down, I guess, how should we think about returning to consumption and excess of the industry in light of those headwinds to premium products?

Speaker #8: Thanks.

Speaker #5: I'm going to speak to the consumption trends. I want to make sure I do totally understand your question, Anna. So if I'm not hitting on it, please let me know with a follow-up.

Carla Vernón: I'm gonna speak to the consumption trends. I wanna make sure I do totally understand your question, Anna. If I'm, you know, not hitting on it, please let me know with a follow-up. For our 2025 performance, as we look at our diaper consumption, we did share that we had double-digit declines in diapers. Now, that's not the same at everywhere. That's what's been very interesting about us and our diaper performance. The category overall was down 1% as a diaper category. When we look at our diaper performance and we take out our performance at Target, our diaper consumption grew 2% for the year last year. We definitely have seen that our diaper dynamics can be different based on the different consumer patterns at the various retailers.

Speaker #5: For our 2025 performance, as we look at our diaper consumption, we did share that we had double-digit declines in diapers. Now, that's not the same everywhere.

Speaker #5: That's what's been very interesting about us and our diaper performance. The category overall was down 1% as a diaper category. When we look at our diaper performance and we take out our performance at Target, our diaper consumption grew 2% for the year last year.

Speaker #5: So we definitely have seen that our diaper dynamics can be different based on the different consumer patterns at the various retailers. But overall, we are certainly experiencing the sort of broad-based challenges and headwinds that the diaper category faces.

Carla Vernón: Overall, we are certainly experiencing the sort of broad-based challenges and headwinds that the diaper category faces. I would say that as we have built our 2025 model, we've been very clear-eyed about what we expect from our diaper business and from our consumption. As we look at our expectations to grow consumption overall across our portfolio for the year, our wipes and personal care businesses are performing so strongly, and that's one of the reasons why we are also bullish on our ability to grow with our highest margin businesses, where they can drive the biggest impact on our portfolio and against the households that love what we have and want more of it. That's why we have a very balanced approach to our growth next year.

Speaker #5: Again, I would say that as we have built our 2025 model, we've been very clear-eyed about what we expect from our diaper business and from our consumption.

Speaker #5: And as we look at our expectations to grow consumption overall across our portfolio for the year, our wipes and personal care businesses are performing so strongly.

Speaker #5: And that's one of the reasons why we are also bullish on our ability to grow with our highest margin businesses where they can drive the biggest impact on our portfolio and against the households that love what we have and want more of it.

Speaker #5: So that's why we have a very balanced approach to our growth next year.

Anna Glaessgen: Got it. Thanks, Carla. That's really helpful. It seems to suggest, you know, taking out the noise at that key retailer, underlying share actually, or underlying performance actually exceeded the category.

Speaker #8: Got it. Thanks, Carla. That's really helpful. So it seems to suggest taking out the noise that that key retailer's underlying share, or underlying performance, actually exceeded the category.

Speaker #5: It did.

Carla Vernón: It did.

Speaker #8: Okay. Perfect. And then building on a prior question on the first quarter, the commentary of sequential improvement in organic growth through the year seems to imply that the first quarter is expected to produce year-over-year organic growth.

Anna Glaessgen: Okay, perfect. Building on a prior question on the Q1, you know, the commentary of sequential improvement in organic growth through the year seems to imply that the Q1 is expected to produce year-over-year organic growth. Is that fair?

Speaker #8: Is that fair?

Speaker #6: Yeah, that's very fair. We do expect organic growth in Q1. We expect sequential improvement thereafter. But you heard that correctly.

Curtiss Bruce: Yeah, that's very fair. We do expect organic growth in Q1. We expect sequential improvement thereafter. You heard that correctly.

Speaker #8: Got it. And then just one more, if I could. You're now a couple of quarters into the shift from DTC. Any high-level thoughts on your expectations for transfer of those sales to your retailers, and anything you've seen thus far?

Anna Glaessgen: Got it. Just one more, if I could. I know you're now a couple quarters into the shift from DTC. Any high-level thoughts on your expectations for transfer of those sales to your retailers or anything you've seen thus far? Thanks.

Speaker #8: Thanks.

Speaker #6: Yeah. I think we had a conservative assumption on the flow back to retailers as we exited the fulfillment. What we've seen early days and I think it's very complicated and complex to attribute exactly where it's coming from when you look at the some of the early green shoots that we've seen as we've made that change on some of the retailer.com sites.

Curtiss Bruce: Yeah. I think we had a conservative assumption on the flow back to retailers as we exited the fulfillment. What we've seen early days, and I think it's, you know, very complicated and complex to attribute exactly where it's coming from when you look at some of the early green shoots that we've seen as we've made that change on some of the retailer dot-com sites. It has exceeded our original expectation, and so we're happy with the early, call it, qualitative performance that we've seen.

Speaker #6: But it has exceeded our original expectation. And so we're happy with the early, call it qualitative performance that we've seen.

Speaker #8: Great. Thanks.

Anna Glaessgen: Great. Thanks.

Speaker #7: Thank you. In our next question comes from the line of Dara Mohsanian with Morgan Stanley.

Operator: Thank you. Our next question comes from the line of Dara Mohsenian with Morgan Stanley.

Speaker #9: Hey, guys. Just a couple of follow-ups. A, on the diaper side, you mentioned some investments in value. Can you just give us a sense of some of the adjustments you're making from a promotional cadence standpoint or pricing standpoint in 2026?

Dara Mohsenian: Hey, guys. Just a couple follow-ups. A, on the diaper side, you mentioned some investments in value.... Can you just give us a sense of some of the adjustments you're making from a promotional cadence standpoint, a pricing standpoint in 2026? Is that the most important intervention you're making in diapers, or are there other things that should also drive improved performance? Is there a point where you think you can get back to consistent growth? Just on the share repurchase side, how do you think about repurchases? You mentioned that you see greater value here than perhaps the market is. Do you expect to repurchase aggressively, or is this more a program that's in place for opportune repurchases over time, as opposed to putting the $ to work right away? Thank you.

Speaker #9: Is that the most important intervention you're making in diapers, or are there other things that should also drive improved performance? And is there a point where you think you can get back to consistent growth?

Speaker #9: And then just on the share repurchase side, how do you think about repurchases? You mentioned the UC Greater Value here than perhaps the market is.

Speaker #9: You expect to repurchase aggressively? Or is this more a program that's in place for opportune repurchases over time as opposed to putting the dollars to work right away?

Speaker #9: Thank you.

Speaker #6: Yeah, maybe I'll start with the repurchase, and then we'll pivot to the first part of that question. So, the repurchase authorization of $25 million was open-ended, right?

Curtiss Bruce: Yeah, maybe I'll start with the repurchase, and then we'll pivot to the first part of that question. The repurchase authorization of $25 million was open-ended, right? We've got no specific time horizon that we are executing against. I think when you look at the benchmarks, however, in the industry, it would indicate that most public companies, when they have a authorization program, sort of reach that limit or renew their program over the course of, you know, a 2- or 3-year time horizon. We absolutely believe that the valuation is not fully reflective. We will be opportunistic. I cannot tell you know, specifically when and how much, but we believe that it's undervalued, and we have an opportunity.

Speaker #6: And so we've got no specific time horizon that we are executing against. I think when you look at the benchmarks, however, in the industry, it would indicate that most public companies, when they have an authorization program, sort of reach that limit or renew their program over the course of a two or three-year time horizon.

Speaker #6: We absolutely believe that the valuation is not fully reflective. We will be opportunistic—I cannot tell you specifically when and how much—but we believe that is undervalued and we have an opportunity.

Carla Vernón: Let me hit the diaper. I think you were asking about diaper pricing and diaper value overall. I know you know, but obviously, retailers set the pricing strategy that's in the market, and we don't discuss in advance any of our specific approaches to where we're going to execute and advance merchandising or promotional support against our categories. What I would say is, in this category, in the diaper category right now, we do see that when we look at the overall performance of the category, the observation you can make is that consumers are shifting to lower-priced diaper offerings, many of which are manufactured in China. We can take from that bringing consumers the right value equation is important.

Speaker #5: And let me just hit the—let me hit the diaper. I think you were asking about diaper pricing and diaper value overall. So I know you know, but obviously, retailers set the pricing strategy that's in the market.

Speaker #5: And we don't discuss in advance any of our specific approaches to where we're going to execute and advance merchandising or promotional support against our categories.

Speaker #5: What I would say is, in this category—in the diaper category right now—we do see that, when we look at the overall performance of the category, the observation you can make is that consumers are shifting to lower-priced diaper offerings, many of which are manufactured in China.

Speaker #5: And so we can take from that that bringing consumers the right value equation is important. What we also see is that last year, when we take out the impact of one of our large retailers, our diaper business did grow.

Carla Vernón: What we also see is that last year, when we take out the impact of one of our large retailers, our diaper business did grow. What that tells us is that our diaper business has a good value offering for the people who want the kind of diaper that we offer. What's important as we look ahead is making sure we've always got that right, that we balance benefits and price with our overall responsible business model strategy, and that we also understand that the Honest brand has become very scalable across many categories, that that's one of the reasons why we're shifting towards higher margin, higher growth areas. This business will grow forward with baby households against a very broad array of categories, like baby personal care, like wipes, like lotions.

Speaker #5: So, what that tells us is that our diaper business has a good value offering for the people who want the kind of diaper that we offer.

Speaker #5: What's important, as we look ahead, is making sure we've always got that right. That we balance benefits and price. With our overall responsible business model strategy, and that we also understand that the honest brand has become very scalable across many categories and that that's one of the reasons why we're shifting towards higher margin, higher growth areas, because this business will grow forward with baby households against a very broad array of categories like maybe personal care, like wipes, like lotions.

Speaker #5: So we feel very good about our baby strategy, and we will keep our eye on the right way to manage our diaper business.

Carla Vernón: We feel very good about our baby strategy, and we will keep our eye on the right way to manage our diaper business.

Speaker #6: And if I could just wrap that up, I just want to just reiterate that we have taken modeling several multiple different scenarios on how our diaper business moves or doesn't move throughout 2026.

Curtiss Bruce: If I could just wrap that up, I just wanna reiterate that we have taken modeling several, multiple different scenarios on how our diaper business moves or doesn't move throughout 2026, and all of that is reflected in the guidance that we provided today.

Speaker #6: And all of that is reflected in the guidance that we provided today.

Speaker #9: Great. Thank you, guys.

Dara Mohsenian: Great. Thank you, guys.

Speaker #7: Thank you. I'll now hand the call back over to CEO Carla Burnard for any closing remarks.

Operator: Thank you. I'll now hand the call back over to CEO, Carla Vernón, for any closing remarks.

Speaker #10: I just want to thank everybody for joining us for the call today and giving us the opportunity to tell you about the confidence we have about 2026.

Carla Vernón: I just wanna thank everybody for joining us for the call today and giving us the opportunity to tell you about the confidence we have about 2026. I look forward to talking to you all next quarter.

Speaker #10: I look forward to talking to you all next quarter.

Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you for participating, and you may now disconnect.

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