Financial Data and Key Metrics Changes - Total revenue for Q2 2021 was $334.5 million, an increase of 42% compared to Q2 2020 [6][21] - EBITDA for Q2 2021 was $68.5 million, a 39% increase from the previous year [6][33] - Net income for Q2 2021 was $49.1 million, up 41% from the same period last year, with diluted earnings per share at $0.22 [32] Business Line Data and Key Metrics Changes - Revenue from connected machines grew 29% year-over-year, driven by the launch of new machines [22] - Subscription revenue increased by 111% year-over-year, while accessories and materials revenue grew by 40% [22] - The number of Cricut Access subscribers rose to nearly 1.8 million, up from 1.6 million in Q1 2021 [9] Market Data and Key Metrics Changes - International revenue grew 179% year-over-year, representing 8.5% of total revenue in Q2 2021, up from 4.3% in Q2 2020 [23] - The user base reached nearly 5.4 million, reflecting a 64% year-over-year growth [25] Company Strategy and Development Direction - The company is focusing on international expansion, with plans to launch more direct-to-consumer sites in various geographies [10][11] - New product launches, including Cricut Explore 3 and Cricut Maker 3, are aimed at enhancing user experience and driving long-term growth [12][13] - The company plans to increase investments in sales and marketing, particularly in international markets [11] Management's Comments on Operating Environment and Future Outlook - Management noted that engagement levels have slightly declined due to seasonal factors and pandemic reopenings, but they are implementing strategies to boost engagement [41][42] - The company anticipates some margin pressure in the second half of the year due to increased operational spending and supply chain challenges [44][30] Other Important Information - The gross margin for Q2 2021 was 39%, up from 31% in Q2 2020, benefiting from lower tariffs and a favorable product mix [27] - The company ended the quarter with $314 million in cash and cash equivalents, with a credit line of $150 million remaining untapped [34] Q&A Session Summary Question: Engagement numbers and user behavior insights - Management acknowledged a decline in engagement percentage due to seasonal factors and changing user behavior as people return to outdoor activities [41][42] Question: Margin pressure and operational spending - Management indicated that while gross margins may hold steady, operating expenses are expected to increase due to investments in operations [44][45] Question: Inventory levels and channel fill impact - Management confirmed that channel inventories have been replenished to healthy levels, with an estimated 8% to 10% of Q2 revenue attributable to channel fill from new product launches [48][49] Question: ARPU sustainability and outlook - Management expressed confidence in the current ARPU of $26.67, noting it is higher than pre-pandemic levels and reflects a growing user base [66] Question: Chip supply and inventory management - Management reported that they have secured chip supplies up to 52 weeks in advance, mitigating risks associated with supply chain challenges [75][76] Question: Promotional activity and holiday season strategy - Management indicated that promotional strategies will be employed as part of the typical seasonal approach, aimed at user acquisition and maintaining price structure [78][79]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-40257 Cricut, Inc. (Exact name of Registrant as specified in its charter) Delaware 87-0282025 (State or other jurisdiction of incorporation or o ...

Financial Data and Key Metrics Changes - Revenue in Q1 2021 was $324 million, representing a 125% increase year-over-year, leading to a trailing 12-month run rate exceeding $1 billion [7][21] - EBITDA for Q1 2021 was $68.6 million, a 232% increase compared to Q1 2020 [7][27] - Net income for Q1 2021 was $49.4 million, up 279% from the same period last year, with diluted earnings per share at $0.24 [26] Business Line Data and Key Metrics Changes - Revenue from Connected Machines grew 148% year-over-year [21] - Subscription revenue increased by 141%, while revenue from Accessories and Materials grew by 102% [21] - Ending paid subscribers reached 1.6 million, up 118% year-over-year [23] Market Data and Key Metrics Changes - International revenue grew 253% in Q1 2021, representing 10.3% of total revenue, up from 7.4% in 2020 [21] - User growth was 76% year-over-year, bringing total users to just under 5 million [8][23] Company Strategy and Development Direction - The company aims to continue disciplined investment in growth initiatives while expanding internationally [6][15] - Cricut is focusing on enhancing its platform with new products and software capabilities, such as the Cricut Mug Press [16][17] - The company is targeting a serviceable addressable market (SAM) of approximately 130 million individuals, with less than 4% penetration currently [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining user growth and engagement despite potential normalization post-COVID [29][30] - The company is monitoring engagement metrics closely, anticipating shifts in user behavior as restrictions ease [65] - Management highlighted the importance of community engagement and user creativity as key drivers for future growth [11][30] Other Important Information - The company has a strong focus on maintaining profitability while investing in R&D and marketing [25][26] - Gross margin improved to 37% in Q1 2021, up from 31% in Q1 2020, primarily due to lower tariffs from shifting production to Malaysia [24][26] Q&A Session Summary Question: User growth expectations and seasonal trends - Management expects to match or exceed the number of new users added in 2020, despite typical seasonal declines in Q2 [34][35] Question: Incremental revenue drivers - Incremental revenue growth was attributed to channel fill of machines, strong demand, and the successful launch of the Mug Press [42][43] Question: Supply chain and inventory levels - Supply chain constraints are expected to persist through the end of the year, but the company is working to mitigate these issues [50][51] Question: Engagement trends post-COVID - Engagement has remained strong, with management noting that while some projects may decline, others will increase, such as those related to events and holidays [65][66] Question: Cost pressures from raw materials - The company is experiencing rising commodity prices but believes these impacts will be transitory [52][53]

NASDAQ : CRCT Q1 2021 Financial Results 1 Financial Results Q1 2021 May 13, 2021 ed [ 0 ] [ ] [ ] [ ] [ ] ] [ Safe Harbor Statement This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the ...

PART I. FINANCIAL INFORMATION This section presents the company's unaudited financial statements, management's analysis of financial performance, market risk exposures, and internal controls [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) The company reported significant growth in the first quarter of 2021, with total revenue increasing 125% year-over-year to $323.8 million and net income rising 279% to $49.4 million. This performance was driven by strong sales across all segments: Connected Machines, Subscriptions, and Accessories & Materials. The balance sheet was substantially strengthened by $242.7 million in net proceeds from the company's Initial Public Offering (IPO) in March 2021, increasing cash and cash equivalents to $337.5 million [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2021, the company's total assets grew to $840.2 million from $581.4 million at the end of 2020, primarily driven by a significant increase in cash and cash equivalents to $337.5 million following the IPO. Total liabilities decreased to $301.7 million from $352.5 million, while total stockholders' equity surged to $538.4 million from $228.9 million, reflecting the IPO proceeds and net income Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $337,472 | $122,215 | | Inventories | $301,776 | $248,745 | | Total current assets | $795,829 | $538,807 | | Total assets | $840,187 | $581,400 | | **Liabilities & Stockholders' Equity** | | | | Accounts payable | $203,828 | $251,658 | | Total current liabilities | $294,788 | $346,500 | | Total liabilities | $301,740 | $352,475 | | Total stockholders' equity | $538,447 | $228,925 | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) For the three months ended March 31, 2021, Cricut reported total revenue of $323.8 million, a 125% increase from $143.7 million in the same period of 2020. Net income grew significantly to $49.4 million from $13.0 million year-over-year, resulting in a diluted EPS of $0.24, up from $0.06. The growth was broad-based, with substantial increases in revenue from Connected Machines, Subscriptions, and Accessories & Materials Q1 2021 vs Q1 2020 Performance (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Revenue** | | | | Connected machines | $141,320 | $56,888 | | Subscriptions | $46,139 | $19,180 | | Accessories and materials | $136,363 | $67,655 | | **Total revenue** | **$323,822** | **$143,723** | | Gross profit | $120,270 | $44,768 | | Income from operations | $64,664 | $17,450 | | **Net income** | **$49,418** | **$13,040** | | **Earnings per share, diluted** | **$0.24** | **$0.06** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first quarter of 2021, net cash used in operating activities was $22.0 million, primarily due to a significant increase in inventories. Net cash used in investing activities was $7.8 million for property and equipment. Net cash provided by financing activities was a substantial $245.1 million, driven by proceeds from the IPO. This resulted in a net increase in cash and cash equivalents of $215.3 million for the period Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(21,963) | $6,437 | | Net cash used in investing activities | $(7,839) | $(7,753) | | Net cash provided by financing activities | $245,098 | $36,710 | | **Net increase in cash and cash equivalents** | **$215,257** | **$35,477** | - The primary source of financing cash flow in Q1 2021 was **$245.1 million** in net proceeds from the issuance of common stock upon the initial public offering[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business structure, recent IPO, accounting policies, and segment performance. Key events include the IPO on March 29, 2021, which raised $242.7 million in net proceeds. The company operates in three segments: Connected Machines, Subscriptions, and Accessories and Materials, all of which saw significant revenue growth. The notes also cover stock-based compensation modifications related to the corporate reorganization and IPO, and confirm compliance with debt covenants under the new credit facility - The company closed its IPO on March 29, 2021, selling **13,250,000 shares** of Class A common stock and receiving aggregate net proceeds of **$242.7 million** after costs[30](index=30&type=chunk) - In connection with its IPO, the company underwent a Corporate Reorganization, converting all historical Common Stock to Class B common stock, which holds **five votes per share** compared to **one vote** for Class A common stock[31](index=31&type=chunk)[34](index=34&type=chunk) Revenue by Geography (in thousands) | Region | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | North America | $290,337 | $134,248 | | International | $33,485 | $9,475 | | **Total** | **$323,822** | **$143,723** | Segment Revenue and Gross Profit (in thousands) | Segment | Q1 2021 Revenue | Q1 2020 Revenue | Q1 2021 Gross Profit | Q1 2020 Gross Profit | | :--- | :--- | :--- | :--- | :--- | | Connected Machines | $141,320 | $56,888 | $21,628 | $5,311 | | Subscriptions | $46,139 | $19,180 | $41,841 | $16,339 | | Accessories and Materials | $136,363 | $67,655 | $56,801 | $23,118 | | **Consolidated** | **$323,822** | **$143,723** | **$120,270** | **$44,768** | - Subsequent to the quarter's end, on April 28, 2021, the company sold an additional **968,815 shares** of Class A common stock as part of the underwriters' option exercise, generating net proceeds of **$18.1 million**[106](index=106&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the strong Q1 2021 performance to increased consumer demand and successful product launches. Revenue grew 125% YoY, driven by a 148% increase in Connected Machines, 141% in Subscriptions, and 102% in Accessories & Materials. Gross margin improved across all segments. Key business metrics showed strong growth, with Users reaching 4.9 million and Paid Subscribers increasing 118% to 1.6 million. The company's liquidity was significantly enhanced by the IPO, with cash and equivalents reaching $337.5 million. Management expects to continue investing in R&D and international expansion [Overview of Our Business and History](index=24&type=section&id=Overview%20of%20Our%20Business%20and%20History) Cricut operates a creativity platform enabling a community of 4.9 million users to create handmade goods. The ecosystem consists of connected machines (Cricut Joy, Explore, Maker), cloud-based design software, and a wide range of accessories and materials. The company generates revenue from hardware sales, subscriptions (Cricut Access), and consumables, sold through retail partners and directly via cricut.com - Cricut's mission is to help people lead creative lives through its platform of connected machines, design apps, and materials[110](index=110&type=chunk) - As of March 31, 2021, the company had **4.9 million users** and **1.6 million Paid Subscribers** to its Cricut Access and Cricut Access Premium services[110](index=110&type=chunk)[111](index=111&type=chunk) [Key Business Metrics and Non-GAAP Financial Measures](index=25&type=section&id=Key%20Business%20Metrics%20and%20Non-GAAP%20Financial%20Measures) The company tracks several key metrics to evaluate performance, including Users, Paid Subscribers, and ARPU. As of March 31, 2021, Users grew to 4.9 million from 2.8 million a year prior, and Paid Subscribers increased to 1.6 million from 740,000. Both Subscription ARPU and Accessories and Materials ARPU also increased. EBITDA, a non-GAAP measure, grew 232% YoY to $68.6 million Key Business Metrics | Metric | As of/For the Three Months Ended March 31, 2021 | As of/For the Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Users (in thousands) | 4,939 | 2,803 | | Paid Subscribers (in thousands) | 1,614 | 740 | | Subscription ARPU | $9.96 | $7.20 | | Accessories and Materials ARPU | $29.45 | $25.40 | EBITDA Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net income | $49,418 | $13,040 | | Depreciation and amortization | $3,886 | $3,236 | | Interest expense, net | $79 | $574 | | Corporate income tax expense | $15,217 | $3,836 | | **EBITDA** | **$68,600** | **$20,686** | [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Total revenue for Q1 2021 increased 125% YoY to $323.8 million. Connected Machines revenue grew 148% due to strong unit sales of Cricut Maker and Explore Air 2. Subscriptions revenue rose 141%, driven by a 118% increase in Paid Subscribers. Accessories and Materials revenue increased 102%, boosted by strong sales of EasyPress units and the launch of the Mug Press. Gross margin improved from 31% to 37% YoY, reflecting better margins across all segments. Operating expenses increased 104% to $55.6 million, driven by higher stock-based compensation, headcount, and marketing costs Revenue Change by Segment (in thousands) | Segment | Q1 2021 | Q1 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Connected machines | $141,320 | $56,888 | $84,432 | 148% | | Subscriptions | $46,139 | $19,180 | $26,959 | 141% | | Accessories and materials | $136,363 | $67,655 | $68,708 | 102% | | **Total revenue** | **$323,822** | **$143,723** | **$180,099** | **125%** | Gross Margin by Segment | Segment | Q1 2021 Gross Margin | Q1 2020 Gross Margin | | :--- | :--- | :--- | | Connected machines | 15% | 9% | | Subscriptions | 91% | 85% | | Accessories and materials | 42% | 34% | - Operating expenses increased significantly, with R&D up **71%**, Sales & Marketing up **121%**, and G&A up **118%**, primarily due to increased stock-based compensation, higher headcount, and increased marketing and professional services costs[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity position strengthened significantly, with cash and cash equivalents at $337.5 million as of March 31, 2021, largely due to $242.7 million in net proceeds from its IPO. The company has a $150.0 million revolving credit facility, with $137.3 million available as of quarter-end, and was in compliance with all debt covenants. Management believes existing cash and cash flow will be sufficient to meet working capital and capital expenditure needs for at least the next 12 months - The company's primary source of liquidity is cash flow from operations and its credit facility, significantly boosted by **$242.7 million** in net proceeds from its March 2021 IPO[169](index=169&type=chunk) - The company has a three-year, **$150.0 million** asset-based senior secured revolving credit facility, with an option to increase it by an additional **$200.0 million**. As of March 31, 2021, available borrowings were **$137.3 million**[173](index=173&type=chunk)[174](index=174&type=chunk) - Net cash used in operating activities was **$22.0 million**, driven by an **$52.9 million** increase in inventories and a **$48.3 million** decrease in accounts payable[179](index=179&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate risk and foreign currency exchange risk. Interest rate risk exposure is related to its revolving credit facility, but is not considered material. Foreign currency risk arises from transactions in currencies like the Australian Dollar, Canadian Dollar, Euro, and British Pound, but the impact has not been material to date. The company does not currently use derivative or hedging instruments - The company is primarily exposed to interest rate risk from its revolving credit loan, but a hypothetical **10% change** in rates would not have a material impact[189](index=189&type=chunk) - Foreign currency exchange risk exists as the company transacts in multiple currencies, but the impact was not material for the periods presented, and no hedging is currently in place[190](index=190&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2021. There were no material changes to the internal control over financial reporting during the quarter - Management concluded that as of the end of the quarter, the company's disclosure controls and procedures were effective[191](index=191&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[192](index=192&type=chunk) PART II. OTHER INFORMATION This section details legal matters, comprehensive risk factors, equity issuance information, and a list of filed exhibits [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material pending legal proceedings. However, it is subject to ordinary course claims and litigation. Notably, in September 2020, Cricut joined a complaint against the U.S. federal government challenging the legality of tariffs imposed on certain products from China - The company is not presently a party to any material pending legal proceedings[196](index=196&type=chunk) - In September 2020, the company joined a lawsuit against the U.S. government in the Court of International Trade, challenging the lawfulness of Section 301 tariffs on products from China[196](index=196&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) The company identifies numerous risks, with key concerns including its ability to attract and engage users, intense competition, and dependence on a single primary manufacturer in China. Other significant risks involve supply chain disruptions, international expansion challenges, reliance on retail partners, protection of intellectual property, cybersecurity threats, and the concentration of voting power with its principal stockholder, Petrus, due to a dual-class stock structure - Key risks include the ability to attract and engage users, competition, supply chain dependence on a single China-based manufacturer, international risks including tariffs, and reliance on retail partners[198](index=198&type=chunk) - The company's dual-class stock structure concentrates approximately **61.4%** of voting power with its principal stockholder, Petrus, making Cricut a "controlled company" exempt from certain corporate governance requirements[439](index=439&type=chunk)[450](index=450&type=chunk) - The company primarily depends on a single contract manufacturer, Xiamen Intretech, Inc., located in China, for most of its connected machines, creating significant supply chain risk[323](index=323&type=chunk)[324](index=324&type=chunk) - The COVID-19 pandemic has increased demand but also created risks, including supply chain disruptions, longer lead times, and uncertainty about whether demand trends will continue post-pandemic[471](index=471&type=chunk)[473](index=473&type=chunk)[474](index=474&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=89&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Prior to the IPO, in Q1 2021, the company's former parent issued unregistered incentive units and options to employees and service providers, which were exempt from registration under the Securities Act. The company completed its IPO on March 29, 2021, receiving net proceeds of $242.7 million. There has been no material change in the planned use of these proceeds from what was disclosed in the prospectus - In Q1 2021, prior to the IPO, the company's former parent, Cricut Holdings, LLC, issued an aggregate of **1,868,223 incentive units** and an option for **27,027 units** to employees and service providers as unregistered securities[515](index=515&type=chunk) - The company received net proceeds of **$242.7 million** from its IPO on March 29, 2021. The planned use of these proceeds has not materially changed from the prospectus disclosures[517](index=517&type=chunk)[520](index=520&type=chunk) [Item 6. Exhibits](index=91&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including the company's Amended and Restated Certificate of Incorporation and Bylaws, various compensation and employment agreements, and certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act - The report includes key corporate documents such as the Amended and Restated Certificate of Incorporation and Bylaws[529](index=529&type=chunk) - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are filed as exhibits[529](index=529&type=chunk)[531](index=531&type=chunk)[532](index=532&type=chunk)[533](index=533&type=chunk)