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Free cash flow surged to a robust $31.5M in 2026Q2, representing a 37.8% margin, driven by a $14.7M positive working capital release and minimal capital expenditures of just 0.9% of revenue.
The Honest Company, Inc. (HNST) cash flow statement — 7-year operating, investing & financing cash flows
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 |
|---|
| Cash from Operations | 56.57M | 15.12M | 1.54M | 19.35M | -76.28M | -38.15M | -12.07M | -19.99M |
| Operating CF Margin % | - | 4.07% | 0.41% | 5.62% | -24.32% | -11.97% | -4.01% | -8.49% |
| Operating CF Growth % | 4827.82% | 881.25% | -92.04% | 125.37% | -99.91% | -216.21% | 39.65% | - |
| Net Income | -12.17M | -15.69M | -6.12M | -39.24M | -49.02M | -38.68M | -14.47M | -31.08M |
| Depreciation & Amortization | 6.14M | 9.55M | 9.29M | 9M | 8.93M | 4.15M | 4.85M | 7.67M |
| Stock-Based Compensation | 10.86M | 10.51M | 15.68M | 15.8M | 15.08M | 16.85M | 7.91M | 8.38M |
| Deferred Taxes | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Non-Cash Items | 27.83M | 24.95M | 746K | -1.37M | -558K | 311K | 166K | -156K |
| Working Capital Changes | 23.9M | -14.21M | -18.04M | 35.16M | -50.71M | -20.78M | -10.53M | -4.8M |
| Change in Receivables | 7.42M | 10.2M | -378K | -682K | -10.84M | -8.99M | 1.46M | -2.46M |
| Change in Inventory | 26.93M | -7.46M | -10.93M | 43.48M | -38.99M | 1M | -24.13M | 4.65M |
| Change in Payables | -5.04M | -11.18M | 3.81M | -9.35M | 10.4M | -6.69M | 13.75M | -5.16M |
| Cash from Investing | -3.87M | -1.51M | -530K | 3.83M | 34.96M | -8.62M | 36.7M | 11.01M |
| Capital Expenditures | -3.87M | -1.51M | -530K | -1.84M | -1.62M | -220K | -200K | -661K |
| CapEx % of Revenue | 1.13% | 0.41% | 0.14% | 0.53% | 0.52% | 0.07% | 0.07% | 0.28% |
| Acquisitions | 0 | 0 | 0 | 0 | 0 | 8.4M | 0 | 0 |
| Investments | - | - | - | - | - | - | - | - |
| Other Investing | 0 | 0 | 0 | -10K | 0 | -8.4M | 0 | 0 |
| Cash from Financing | -18.89M | 535K | 41.6M | 122K | 38K | 60.37M | -973K | -305K |
| Debt Issued (Net) | 0 | -1K | -19K | -58K | -303K | -1.13M | -1.01M | -272K |
| Equity Issued (Net) | -19.15M | 384K | 41.45M | 180K | 378K | 96.52M | 0 | -285K |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | -35M | 0 | 0 |
| Share Repurchases | -19.06M | 0 | 0 | 0 | 0 | 0 | 0 | -285K |
| Other Financing | 260K | 152K | 163K | 0 | -37K | -23K | 41K | 252K |
| Net Change in Cash | 33.82M | 14.15M | 42.61M | 23.31M | -41.27M | 13.59M | 23.66M | -9.29M |
| Free Cash Flow | 52.71M | 13.61M | 1.01M | 17.5M | -77.89M | -38.37M | -12.27M | -20.65M |
| FCF Margin % | 15.41% | 3.67% | 0.27% | 5.08% | -24.83% | -12.04% | -4.08% | -8.77% |
| FCF Growth % | 977.74% | 1246.29% | -94.22% | 122.47% | -102.98% | -212.85% | 40.61% | - |
| FCF per Share | 0.47 | 0.12 | 0.01 | 0.19 | -0.84 | -0.54 | -0.14 | -0.23 |
| FCF Conversion (FCF/Net Income) | -4.33x | -0.96x | -0.25x | -0.49x | 1.56x | 0.99x | 0.83x | 0.64x |
| Interest Paid | 0 | 0 | 0 | 1K | 8K | 1.8M | 1.84M | 1.72M |
| Taxes Paid | 0 | 0 | 89K | 116K | 101K | 76K | 102K | 75K |
Quick answers to the most common questions about buying HNST stock.
The Honest Company, Inc. (HNST) generated $15.1M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
The Honest Company, Inc. (HNST) generated $13.6M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
The Honest Company, Inc. (HNST) spent $1.5M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
Key Metrics
Top Statement Risk
Revenue contraction undermining cash generation
Metrics are mathematically derived from official filings.
Earnings Quality Volatile, Cash Conversion Strong
Operating cash flow significantly exceeded net income in recent quarters, with a 3.02x conversion ratio in 2026Q2, suggesting strong underlying cash generation despite volatile reported earnings.
The stark divergence between net income and operating cash flow, particularly the $32.2M OCF versus $10.7M net income in 2026Q2, indicates that non-cash charges and working capital benefits are heavily influencing profitability metrics. This pattern suggests the core business may be generating more cash than the bottom line implies, but the volatility in the conversion ratio (from negative to over 3x) warrants caution about the sustainability of this cash generation.
FCF Inflection to Strong Positive Territory
Free cash flow swung to a robust $31.5M in 2026Q2, representing a 37.8% margin, a dramatic reversal from the negative FCF trend observed throughout 2025.
The company's FCF trajectory shows a sharp inflection point, moving from consistent quarterly cash burn in 2025 to significant positive generation in 2026. This improvement appears driven by a combination of operating cash flow recovery and minimal capital expenditure requirements, with CapEx consistently below 2.5% of revenue. However, the sustainability of this FCF surge is questionable given the concurrent revenue contraction, suggesting it may be driven by one-time working capital releases rather than operational growth.
Working Capital Release Driving Cash Surge
A $14.7M positive working capital change in 2026Q2 was a primary driver of operating cash flow, following a period of significant working capital consumption in 2025.
The working capital dynamics reveal a critical shift: after consuming $12.1M in 2025Q1 and $10.8M in 2025Q2, the company generated $14.7M in 2026Q2. This swing suggests aggressive inventory reduction or receivables collection, which may be masking underlying operational weakness. The pattern indicates the company is liquidating assets to generate cash, a strategy that cannot be sustained indefinitely and may signal distress in the core business operations.
Share Repurchases Resume Amid Cash Recovery
The company resumed share repurchases with $16.1M spent in 2026Q2, representing a significant capital allocation shift after four quarters of no buyback activity.
The resumption of share repurchases during a period of revenue contraction suggests management believes the stock is undervalued, but this allocation decision appears questionable given the business's operational challenges. The $16.1M buyback in 2026Q2 consumed over half of the quarter's free cash flow, potentially limiting financial flexibility for necessary investments in a shrinking business. This capital deployment strategy warrants scrutiny as it may prioritize shareholder returns over business sustainability.
Cash Flow Quality Masked by Working Capital
The impressive cash flow metrics may be overstated, as working capital releases and minimal CapEx could be masking the true cash generation capability of the shrinking revenue base.
While the headline cash flow numbers appear strong, several factors suggest caution: the company's capital intensity is extremely low (CapEx/Rev consistently below 2.5%), which may indicate underinvestment in the business. The working capital swings are volatile and appear driven by balance sheet liquidation rather than operational efficiency. Furthermore, the $5.5M stock-based compensation in 2026Q2 represents a non-cash expense that inflates operating cash flow relative to true economic earnings, suggesting the cash generation may not be as robust as it appears.