Honest Company, Inc.HNST

Honest Company, Inc. PP&E Disclosure

10-KFiled Feb 25, 20262 min read
Depreciation and amortization are recorded using the straight-line method over the estimated useful lives of the assets as follows:
Machinery and equipment
3-20 years
Computer and office equipment
3-5 years
Capitalized software and website development costs
1-5 years
Furniture and fixtures
3-5 years
Building
40 years
Leasehold improvementsLesser of the estimated useful life or the remaining lease term
Property and equipment consisted of the following:
As of December 31,
20252024
(in thousands)
Machinery and equipment(1)
$8,832 $12,885 
Computer and office equipment
1,236 1,189 
Capitalized software
5,308 5,238 
Furniture and fixtures
4,253 4,259 
Leasehold improvements
15,418 15,761 
Subtotal35,047 39,332 
Accumulated depreciation and amortization(1)(2)
(27,570)(27,938)
Total property and equipment, net
$7,477 $11,394 
________
(1) In connection with Powering Honest Growth, machinery and equipment write-offs were $2.5 million related to exiting Honest.com fulfillment. These charges are included in cost of revenue in the accompanying consolidated statements of comprehensive loss.
(2) The Company recorded accelerated depreciation of $0.4 million, which represents the remaining net book value of affected fixed assets depreciated over their revised estimated service periods. These charges are included in cost of revenue in the accompanying consolidated statements of comprehensive loss.

Total depreciation and amortization expense for property and equipment consisted of the following:

For the year ended December 31,
202520242023
(In thousands)
Cost of revenues$1,178 $1,048 $931 
Selling, general and administrative1,464 1,495 1,515 
Research and development188 225 223 
Total depreciation and amortization expense(1)
$2,830 $2,768 $2,669 
_______________
(1) Refer to footnotes in the above table for more information.

Historical Timeline

Fiscal YearFiled
2025Feb 25, 2026Showing above
2024Feb 26, 2025
2023Mar 8, 2024
2022Mar 16, 2023
2021Mar 28, 2022

About PP&E Disclosures

The PP&E disclosure details a company's physical asset base — land, buildings, machinery, and equipment — along with the depreciation methods and useful life assumptions that determine how these costs flow through the income statement. Capitalization policy thresholds reveal management's judgment on the boundary between expense and asset, directly affecting both reported earnings and asset values.

Key signals: changes in estimated useful lives or depreciation methods can materially shift reported earnings without any operational change. Compare capital expenditures against depreciation expense — when capex consistently trails depreciation, the asset base may be aging and underinvested. Watch for large asset impairments or write-downs that signal overvalued carrying amounts. Asset retirement obligations reveal future environmental or decommissioning costs that are often underappreciated. Compare PP&E intensity (PP&E-to-revenue) against industry peers to assess capital efficiency and competitive positioning.

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