[Note Regarding Forward-Looking Statements](index=3&type=section&id=NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section contains forward-looking statements, subject to substantial risks and uncertainties, cautioning against future predictions - This section contains forward-looking statements subject to substantial risks and uncertainties, primarily related to future events or financial/operating performance[8](index=8&type=chunk)[10](index=10&type=chunk)[12](index=12&type=chunk) - Investors are cautioned not to rely on these as predictions of future events, as actual results may differ materially due to various factors including those discussed in 'Risk Factors'[8](index=8&type=chunk)[10](index=10&type=chunk)[12](index=12&type=chunk) Part I. Financial Information [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) This section presents Cricut, Inc.'s unaudited condensed consolidated financial statements, covering balance sheets, operations, and cash flows [Condensed Consolidated Balance Sheets (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28unaudited%29) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | As of June 30, 2025 | As of December 31, 2024 | Change (vs. Dec 31, 2024) | | :--------------------------------- | :------------------- | :---------------------- | :------------------------ | | Cash and cash equivalents | $298,057 | $232,140 | +$65,917 | | Marketable securities | $78,884 | $104,774 | -$25,890 | | Accounts receivable, net | $81,990 | $101,980 | -$19,990 | | Inventories | $124,796 | $115,255 | +$9,541 | | Total current assets | $599,186 | $580,214 | +$18,972 | | Total assets | $721,511 | $693,035 | +$28,476 | | Accounts payable | $71,977 | $53,373 | +$18,604 | | Accrued expenses and other current liabilities | $61,657 | $76,274 | -$14,617 | | Deferred revenue, current portion | $51,047 | $45,427 | +$5,620 | | Dividends payable, current portion | $204,814 | $24,401 | +$180,413 | | Total current liabilities | $393,104 | $203,374 | +$189,730 | | Total liabilities | $412,574 | $226,274 | +$186,300 | | Total stockholders' equity | $308,937 | $466,761 | -$157,824 | [Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28unaudited%29) Condensed Consolidated Statements of Operations and Comprehensive Income Highlights (in thousands, except per share) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :--------------------------------- | :--------------------------- | :--------------------------- | :---------------- | :--------------------------- | :--------------------------- | :---------------- | | Total revenue | $172,112 | $167,947 | +2.5% | $334,746 | $335,339 | -0.2% | | Total cost of revenue | $70,573 | $78,107 | -9.7% | $134,859 | $153,905 | -12.4% | | Gross profit | $101,539 | $89,840 | +13.0% | $199,887 | $181,434 | +10.2% | | Total operating expenses | $71,434 | $63,408 | +12.7% | $140,441 | $129,797 | +8.2% | | Income from operations | $30,105 | $26,432 | +13.9% | $59,446 | $51,637 | +15.1% | | Net income | $24,488 | $19,769 | +23.9% | $48,402 | $39,416 | +22.8% | | Earnings per share, basic | $0.12 | $0.09 | +33.3% | $0.23 | $0.18 | +27.8% | | Earnings per share, diluted | $0.11 | $0.09 | +22.2% | $0.23 | $0.18 | +27.8% | [Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20%28unaudited%29) - Total stockholders' equity **decreased from $466,761 thousand** as of December 31, 2024, to **$308,937 thousand** as of June 30, 2025[18](index=18&type=chunk)[22](index=22&type=chunk)[24](index=24&type=chunk) - This was primarily due to significant **dividends declared ($204,782 thousand)** and **common stock repurchases ($16,741 thousand)** for the six months ended June 30, 2025[18](index=18&type=chunk)[22](index=22&type=chunk)[24](index=24&type=chunk) - The decrease was partially offset by **net income ($48,402 thousand)** and **stock-based compensation ($21,351 thousand)** for the six months ended June 30, 2025[18](index=18&type=chunk)[22](index=22&type=chunk)[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28unaudited%29) Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Net cash provided by operating activities | $97,323 | $91,648 | +$5,675 | | Net cash provided by (used in) investing activities | $15,520 | ($9,965) | +$25,485 | | Net cash used in financing activities | ($47,549) | ($28,191) | -$19,358 | | Net increase in cash and cash equivalents | $65,917 | $53,365 | +$12,552 | | Cash and cash equivalents at end of period | $298,057 | $195,552 | +$102,505 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Description of Business and Basis of Presentation](index=9&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) - Cricut, Inc. designs and markets a creativity platform, including connected machines, accessories, materials, and subscription services, enabling users to create handmade goods[27](index=27&type=chunk)[28](index=28&type=chunk) - The company operates in two reportable segments: Platform and Products[27](index=27&type=chunk)[28](index=28&type=chunk) - The condensed consolidated financial statements are prepared in conformity with GAAP and SEC rules for interim reporting, consolidating Cricut, Inc. and its wholly-owned subsidiaries[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=10&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) - The preparation of financial statements requires management to make estimates and assumptions, particularly for revenue recognition, warranty reserves, credit losses, inventory reserves, and income taxes[34](index=34&type=chunk) - Financial instruments are measured at fair value using a hierarchy, with money market funds classified as Level 1 and U.S. Treasury securities as Level 2[35](index=35&type=chunk)[36](index=36&type=chunk) Accounts Receivable and Allowance for Credit Losses (in millions) | Metric | As of June 30, 2025 | As of December 31, 2024 | As of January 1, 2024 | | :----------------------------- | :------------------ | :---------------------- | :-------------------- | | Net accounts receivable | $82.0 | $102.0 | $111.2 | | Allowance for credit losses | $1.6 | $2.6 | N/A | [Note 3. Revenue and Deferred Revenue](index=11&type=section&id=Note%203.%20Revenue%20and%20Deferred%20Revenue) - Deferred revenue primarily consists of deferred subscription-based services and amounts allocated from connected machine sales for future upgrades and cloud services[41](index=41&type=chunk) - Capitalized contract costs were **$1.5 million** as of June 30, 2025, up from **$1.2 million** as of December 31, 2024[41](index=41&type=chunk) Deferred Revenue Changes (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :--------------------------- | :--------------------------- | | Deferred revenue, beginning of period | $48,253 | $43,235 | | Recognition of revenue included in beginning of period deferred revenue | ($35,372) | ($31,834) | | Revenue deferred, net of revenue recognized on contracts in the respective period | $40,751 | $35,724 | | Deferred revenue, end of period | $53,632 | $47,125 | Total Revenue by Geography (in thousands) | Geography | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :---------------- | :--------------------------- | :--------------------------- | :---------------- | :--------------------------- | :--------------------------- | :---------------- | | North America | $135,825 | $134,415 | +1.0% | $263,394 | $269,250 | -2.2% | | International | $36,287 | $33,532 | +8.2% | $71,352 | $66,089 | +7.9% | | Total revenue | $172,112 | $167,947 | +2.5% | $334,746 | $335,339 | -0.2% | Total Revenue by Source (in thousands) | Source | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :------------------ | :--------------------------- | :--------------------------- | :---------------- | :--------------------------- | :--------------------------- | :---------------- | | Platform | $80,697 | $77,649 | +3.9% | $160,683 | $155,935 | +3.0% | | Connected machines | $39,430 | $43,970 | -10.4% | $77,892 | $80,918 | -3.7% | | Accessories and materials | $51,985 | $46,328 | +12.2% | $96,171 | $98,486 | -2.4% | | Total revenue | $172,112 | $167,947 | +2.5% | $334,746 | $335,339 | -0.2% | [Note 4. Cash, Cash Equivalents, and Financial Instruments](index=12&type=section&id=Note%204.%20Cash%2C%20Cash%20Equivalents%2C%20and%20Financial%20Instruments) Cash, Cash Equivalents, and Marketable Securities (in thousands) | Category | As of June 30, 2025 (Fair Value) | As of December 31, 2024 (Fair Value) | | :-------------------- | :------------------------------- | :----------------------------------- | | Cash | $222,258 | $161,248 | | Money market funds | $75,799 | $70,892 | | U.S. treasury securities | $78,884 | $104,774 | | Total | $376,941 | $336,914 | | Cash and cash equivalents | $298,057 | $232,140 | | Marketable securities | $78,884 | $104,774 | - Marketable securities held as of June 30, 2025, generally mature over the next **24 months** and were all in an unrealized gain position[46](index=46&type=chunk) - No allowance for credit losses was deemed necessary[46](index=46&type=chunk) [Note 5. Inventories](index=13&type=section&id=Note%205.%20Inventories) Inventory Composition (in thousands) | Category | As of June 30, 2025 | As of December 31, 2024 | | :------------------------------------ | :------------------ | :---------------------- | | Raw materials | $30,917 | $38,652 | | Finished goods | $147,941 | $144,630 | | Total inventories | $178,858 | $183,282 | | Less: reserves | ($37,934) | ($49,015) | | Total inventories, net | $140,924 | $134,267 | - As of June 30, 2025, inventory reserves included **$2.2 million** for excess connected machines, **$30.5 million** for excess accessories and materials, and **$5.2 million** for raw materials components[47](index=47&type=chunk) - Amounts charged to the reserve are primarily recorded in cost of revenues[47](index=47&type=chunk) [Note 6. Accrued Expenses and Other Current Liabilities](index=13&type=section&id=Note%206.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued Expenses and Other Current Liabilities (in thousands) | Category | As of June 30, 2025 | As of December 31, 2024 | | :------------------------------------ | :------------------ | :---------------------- | | Customer rebates | $24,208 | $38,756 | | Other accrued liabilities and other current liabilities | $37,449 | $37,518 | | Total accrued expenses | $61,657 | $76,274 | [Note 7. Revolving Credit Facility](index=13&type=section&id=Note%207.%20Revolving%20Credit%20Facility) - Cricut has a five-year revolving credit facility of up to **$300.0 million**, maturing on August 4, 2027, with an option to increase by an additional **$150.0 million**[49](index=49&type=chunk) - The unused fee rate is **0.175%** per annum[49](index=49&type=chunk) - As of June 30, 2025, and December 31, 2024, no amounts were outstanding under the Credit Agreement, and available borrowings were **$300.0 million**[51](index=51&type=chunk) - The company was in compliance with all financial and non-financial debt covenants[51](index=51&type=chunk) [Note 8. Income Taxes](index=14&type=section&id=Note%208.%20Income%20Taxes) Estimated Effective Tax Rate and Provision for Income Taxes (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Estimated effective tax rate | 27.6% | 33.6% | 27.2% | 32.1% | | Provision for income taxes | $9,355 | $10,023 | $18,062 | $18,666 | - The decrease in the effective tax rate and provision for income taxes was primarily due to a decrease in stock-based compensation difference attributable to the decrease in stock price upon vesting versus the stock price at the grant date[54](index=54&type=chunk) - The 'One Big Beautiful Bill Act' (OBBBA) was enacted on July 4, 2025, which includes corporate tax provisions like restoration of **100% bonus depreciation** and immediate expensing for R&D[56](index=56&type=chunk) - The company is evaluating its financial impact[56](index=56&type=chunk) [Note 9. Capital Structure](index=14&type=section&id=Note%209.%20Capital%20Structure) - As of June 30, 2025, Cricut had **53,976,481 shares** of Class A Common Stock and **158,489,920 shares** of Class B Common Stock outstanding[57](index=57&type=chunk) - Class B shares have **five votes per share** and are convertible to Class A[57](index=57&type=chunk) - The Board approved replenishing the common stock repurchase program by **$50 million** on May 2, 2025[58](index=58&type=chunk) - During the six months ended June 30, 2025, the company repurchased **3,043,806 shares** of Class A common stock for **$16.7 million**[59](index=59&type=chunk) - On May 2, 2025, a special dividend of **$0.75 per share** and a recurring semi-annual dividend of **$0.10 per share** were declared, totaling **$0.85 per share**, payable on July 21, 2025[60](index=60&type=chunk)[61](index=61&type=chunk) - The aggregate dividend of **$204.8 million** is to be satisfied in cash (**$180.6 million**) and dividend equivalents to RSU/PRSU holders (**$24.2 million**)[60](index=60&type=chunk)[61](index=61&type=chunk) [Note 10. Stock-Based Compensation](index=15&type=section&id=Note%2010.%20Stock-Based%20Compensation) Stock-Based Compensation Cost by Award Type (in thousands) | Award Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Restricted stock units | $10,231 | $10,027 | $21,019 | $19,824 | | Stock options | $0 | $244 | $0 | $680 | | Class B common stock | $58 | $1,034 | $321 | $2,273 | | Liability-classified awards | $9 | $12 | $11 | $20 | | Total stock-based compensation | $10,298 | $11,317 | $21,351 | $22,797 | Total Stock-Based Compensation Cost by Functional Area (in thousands) | Functional Area | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Cost of revenue | $282 | $465 | $555 | $888 | | Research and development | $3,359 | $3,540 | $6,796 | $7,253 | | Sales and marketing | $2,737 | $2,988 | $5,851 | $5,924 | | General and administrative | $3,310 | $3,626 | $6,936 | $7,311 | | Total stock-based compensation expense | $9,688 | $10,619 | $20,138 | $21,376 | | Capitalized for software development costs | $425 | $365 | $848 | $695 | | Capitalized to inventories | $185 | $333 | $365 | $726 | | Total stock-based compensation | $10,298 | $11,317 | $21,351 | $22,797 | - As of June 30, 2025, there was **$65.4 million** of unrecognized stock-based compensation cost for service-based awards (weighted-average period of **2.6 years**)[67](index=67&type=chunk)[72](index=72&type=chunk) - Unrecognized compensation for PRSUs not probable of vesting was **$190.8 million**[67](index=67&type=chunk)[72](index=72&type=chunk) [Note 11. Commitments and Contingencies](index=18&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) - Cricut is subject to various claims and litigation in the ordinary course of business[79](index=79&type=chunk) - Management does not believe any current contingencies will have a material effect on its financial position, results of operations, or liquidity[79](index=79&type=chunk) [Note 12. Leases](index=18&type=section&id=Note%2012.%20Leases) - The company leases office space under operating leases with terms ranging from **one to six years**[80](index=80&type=chunk)[81](index=81&type=chunk) - Operating lease costs were **$1.1 million** for Q2 2025 and **$2.2 million** for H1 2025[80](index=80&type=chunk)[81](index=81&type=chunk) Operating Lease Liabilities Maturities (in thousands) | Year Ended December 31, | Operating Leases | | :---------------------- | :--------------- | | 2025 (remainder of year) | $2,106 | | 2026 | $4,128 | | 2027 | $2,869 | | 2028 | $4,023 | | 2029 | $1,693 | | Total lease payments | $14,819 | | Present value of operating lease liabilities | $13,393 | - As of June 30, 2025, the weighted-average remaining operating lease term was **3.8 years**, and the weighted-average discount rate was **5.4%**[82](index=82&type=chunk) [Note 13. Employee Benefit Plan](index=19&type=section&id=Note%2013.%20Employee%20Benefit%20Plan) - Cricut sponsors a 401(k) plan, matching **50%** of the first **12%** of an employee's salary[83](index=83&type=chunk) - Contributions were **$0.7 million** for Q2 2025 and **$1.5 million** for H1 2025[83](index=83&type=chunk) [Note 14. Net Income Per Share](index=20&type=section&id=Note%2014.%20Net%20Income%20Per%20Share) Net Income Per Share (except share and per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $24,488 | $19,769 | $48,402 | $39,416 | | Basic EPS | $0.12 | $0.09 | $0.23 | $0.18 | | Diluted EPS | $0.11 | $0.09 | $0.23 | $0.18 | | Weighted-average common shares outstanding, basic | 211,865,363 | 216,422,513 | 212,514,662 | 215,986,713 | | Diluted weighted-average common shares outstanding | 214,529,726 | 217,501,646 | 214,649,931 | 217,390,891 | - Potentially dilutive shares excluded from diluted EPS computation due to anti-dilutive effect for the three months ended June 30, 2025, included **3,126,575 employee stock options** and **16,408 unvested Class B common stock**[84](index=84&type=chunk) [Note 15. Segment Information](index=20&type=section&id=Note%2015.%20Segment%20Information) - Cricut operates in two reportable segments: Platform and Products[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - The Platform segment generates revenue from subscriptions and digital content, while the Products segment derives revenue from connected machine hardware and craft/DIY products[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) Segment Financial Performance (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :-------------------- | :--------------------------- | :--------------------------- | :---------------- | :--------------------------- | :--------------------------- | :---------------- | | **Platform Revenue** | $80,697 | $77,649 | +3.9% | $160,683 | $155,935 | +3.0% | | Platform Cost of Revenue | $8,816 | $8,888 | -0.8% | $17,484 | $17,647 | -0.9% | | Platform Gross Profit | $71,881 | $68,761 | +4.5% | $143,199 | $138,288 | +3.5% | | Platform Gross Margin | 89% | 89% | 0 pp | 89% | 89% | 0 pp | | **Products Revenue** | $91,415 | $90,298 | +1.2% | $174,063 | $179,404 | -3.0% | | Products Cost of Revenue | $61,757 | $69,219 | -10.8% | $117,375 | $136,258 | -13.8% | | Products Gross Profit | $29,658 | $21,079 | +40.7% | $56,688 | $43,146 | +31.4% | | Products Gross Margin | 32% | 23% | +9 pp | 33% | 24% | +9 pp | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Cricut's financial condition and results of operations, covering business overview, key metrics, and cash flows [Overview of Our Business and History](index=21&type=section&id=Overview%20of%20Our%20Business%20and%20History) - Cricut's mission is to help people lead creative lives through its creativity platform, which includes Design Space, connected machines (Cricut Joy, Explore, Maker, Venture families), and accessories/materials[90](index=90&type=chunk)[92](index=92&type=chunk) - The platform offers two subscription services: Cricut Access (images, fonts, projects, software features, discounts) and Cricut Access Premium (additional discounts, preferred shipping)[91](index=91&type=chunk)[98](index=98&type=chunk) - Products are sold through brick-and-mortar/online retail partners (e.g., Amazon, Michaels, Walmart) and cricut.com[94](index=94&type=chunk)[95](index=95&type=chunk) - The company historically experiences highest revenue in the fourth quarter due to holiday shopping[94](index=94&type=chunk)[95](index=95&type=chunk) [Key Business Metrics](index=23&type=section&id=Key%20Business%20Metrics) Key Business Metrics (in thousands, except ARPU) | Metric | As of June 30, 2025 | As of June 30, 2024 | YoY Change | | :------------------------ | :------------------ | :------------------ | :--------- | | Active Users | 5,901 | 5,918 | -0.3% | | 90-Day Engaged Users | 3,482 | 3,541 | -1.7% | | Paid Subscribers | 3,010 | 2,813 | +7.0% | | Platform ARPU | $53.84 | $52.00 | +3.5% | - Active Users are registered users of at least one connected machine who have created a project in the last **365 days**[101](index=101&type=chunk)[103](index=103&type=chunk) - Paid Subscribers are users with a Cricut Access or Premium subscription, excluding cancelled, unpaid, or free trials[101](index=101&type=chunk)[103](index=103&type=chunk) [Components of our Results of Operations](index=23&type=section&id=Components%20of%20our%20Results%20of%20Operations) - Platform revenue is primarily from subscriptions (Cricut Access, Cricut Access Premium) and digital content, recognized ratably over the subscription term or at point of transfer for à la carte content[106](index=106&type=chunk) - Products revenue comes from sales of connected machines (Maker, Explore, Joy, Venture families) and ancillary products (heat presses, tools, materials), recognized at the point of control transfer (shipment or delivery)[107](index=107&type=chunk) - Cost of revenue for Platform includes hosting fees, digital content, software amortization, and royalties[108](index=108&type=chunk)[109](index=109&type=chunk) - For Products, cost of revenue includes product costs, manufacturing, shipping, warehousing, duties, warranty, and inventory write-downs[108](index=108&type=chunk)[109](index=109&type=chunk) - Operating expenses include Research and Development (product development, personnel), Sales and Marketing (advertising, payment processing, personnel, rebates), and General and Administrative (finance, legal, HR, IT, professional services)[110](index=110&type=chunk)[111](index=111&type=chunk)[113](index=113&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) [Revenue](index=26&type=section&id=Revenue) Revenue Performance (in thousands) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :-------------- | :--------------------------- | :--------------------------- | :---------------- | :--------------------------- | :--------------------------- | :---------------- | | Platform | $80,697 | $77,649 | +3.9% | $160,683 | $155,935 | +3.0% | | Products | $91,415 | $90,298 | +1.2% | $174,063 | $179,404 | -3.0% | | Total revenue | $172,112 | $167,947 | +2.5% | $334,746 | $335,339 | -0.2% | - Platform revenue increased by **4%** for the three months and **3%** for the six months ended June 30, 2025, driven by an increase in paid subscribers from **2.8 million to 3.0 million**[119](index=119&type=chunk)[121](index=121&type=chunk) - Products revenue increased by **1%** for the three months due to more accessories/materials sold at higher prices (accelerated by tariff uncertainty)[120](index=120&type=chunk)[122](index=122&type=chunk) - Products revenue decreased by **3%** for the six months due to fewer connected machines and accessories/materials sold at lower average prices[120](index=120&type=chunk)[122](index=122&type=chunk) [Cost of Revenue, Gross Profit and Gross Margin](index=27&type=section&id=Cost%20of%20Revenue%2C%20Gross%20Profit%20and%20Gross%20Margin) Cost of Revenue, Gross Profit, and Gross Margin Performance (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :-------------------------- | :--------------------------- | :--------------------------- | :---------------- | :--------------------------- | :--------------------------- | :---------------- | | Platform Cost of Revenue | $8,816 | $8,888 | -0.8% | $17,484 | $17,647 | -0.9% | | Platform Gross Profit | $71,881 | $68,761 | +4.5% | $143,199 | $138,288 | +3.5% | | Platform Gross Margin | 89% | 89% | 0 pp | 89% | 89% | 0 pp | | Products Cost of Revenue | $61,757 | $69,219 | -10.8% | $117,375 | $136,258 | -13.8% | | Products Gross Profit | $29,658 | $21,079 | +40.7% | $56,688 | $43,146 | +31.4% | | Products Gross Margin | 32% | 23% | +9 pp | 33% | 24% | +9 pp | | Total Gross Profit | $101,539 | $89,840 | +13.0% | $199,887 | $181,434 | +10.2% | - Platform cost of revenue decreased slightly due to lower software amortization[125](index=125&type=chunk)[126](index=126&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - Products cost of revenue decreased significantly due to fewer connected machines sold, lower procurement costs, and reduced inventory impairment charges[125](index=125&type=chunk)[126](index=126&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - Products gross margin improved by **9 percentage points** for both the three and six months ended June 30, 2025, driven by lower inventory procurement costs, reduced impairment charges, and improved product margins[127](index=127&type=chunk)[130](index=130&type=chunk) [Operating Expenses](index=28&type=section&id=Operating%20Expenses) [Research and Development](index=28&type=section&id=Research%20and%20Development) Research and Development Expenses (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :-------------------------- | :--------------------------- | :--------------------------- | :---------------- | :--------------------------- | :--------------------------- | :---------------- | | R&D Expenses | $16,762 | $14,315 | +17.1% | $32,419 | $29,168 | +11.1% | | As a percentage of total revenue | 10% | 9% | +1 pp | 10% | 9% | +1 pp | - The increase in R&D expenses was primarily due to higher product development expense, personnel-related expense, and professional services expense[131](index=131&type=chunk)[132](index=132&type=chunk) [Sales and Marketing](index=28&type=section&id=Sales%20and%20Marketing) Sales and Marketing Expenses (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :-------------------------- | :--------------------------- | :--------------------------- | :---------------- | :--------------------------- | :--------------------------- | :---------------- | | S&M Expenses | $35,877 | $33,354 | +7.6% | $72,562 | $66,384 | +9.3% | | As a percentage of total revenue | 21% | 20% | +1 pp | 22% | 20% | +2 pp | - The increase in sales and marketing expenses was primarily driven by higher advertising and other marketing costs[133](index=133&type=chunk)[134](index=134&type=chunk) [General and Administrative](index=28&type=section&id=General%20and%20Administrative) General and Administrative Expenses (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :-------------------------- | :--------------------------- | :--------------------------- | :---------------- | :--------------------------- | :--------------------------- | :---------------- | | G&A Expenses | $18,795 | $15,739 | +19.4% | $35,460 | $34,245 | +3.5% | | As a percentage of total revenue | 11% | 9% | +2 pp | 11% | 10% | +1 pp | - The increase in G&A expenses for the three months was due to a **$1.7 million** net reversal of bad debt expense in Q2 2024 and a **$1.5 million** increase in professional services[135](index=135&type=chunk)[136](index=136&type=chunk) - For the six months, it was driven by a **$3.2 million** increase in professional services, offset by foreign currency transaction losses and a bad debt reversal[135](index=135&type=chunk)[136](index=136&type=chunk) [Other Income, Net](index=29&type=section&id=Other%20Income%2C%20Net) Other Income, Net (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :---------------- | :--------------------------- | :--------------------------- | :---------------- | :--------------------------- | :--------------------------- | :---------------- | | Other income, net | $3,738 | $3,360 | +11.2% | $7,018 | $6,445 | +8.9% | - The increase in other income, net, for both periods was primarily driven by an increase in interest income[137](index=137&type=chunk)[138](index=138&type=chunk) [Provision for Income Taxes](index=29&type=section&id=Provision%20for%20Income%20Taxes) Provision for Income Taxes (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :-------------------------- | :--------------------------- | :--------------------------- | :---------------- | :--------------------------- | :--------------------------- | :---------------- | | Provision for income taxes | $9,355 | $10,023 | -6.7% | $18,062 | $18,666 | -3.2% | - The decrease in provision for income taxes was primarily due to a decrease in stock-based compensation difference attributable to the decrease in stock price upon vesting versus the stock price at the grant date[139](index=139&type=chunk)[140](index=140&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) - Cricut believes its cash and cash equivalents (**$298.1 million**), marketable securities (**$78.9 million**) as of June 30, 2025, forecasted operating cash flow, and **$300.0 million** available credit facility are sufficient to meet cash requirements for the next **12 months** and beyond[141](index=141&type=chunk) - During the six months ended June 30, 2025, the company paid **$21.5 million** in dividends[142](index=142&type=chunk) - An additional **$180.6 million** dividend was paid on July 21, 2025[142](index=142&type=chunk) [Cash Flows](index=30&type=section&id=Cash%20Flows) Net Cash Flows by Activity (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Net cash provided by operating activities | $97,323 | $91,648 | +$5,675 | | Net cash provided by (used in) investing activities | $15,520 | ($9,965) | +$25,485 | | Net cash used in financing activities | ($47,549) | ($28,191) | -$19,358 | - Operating cash flows increased due to a net increase in operating assets and liabilities and higher net income, partially offset by reduced non-cash adjustments[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - Investing cash flows improved significantly due to a decrease in marketable securities purchases[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - Financing cash flows increased outflows primarily due to higher dividend payments[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) [Critical Accounting Estimates](index=30&type=section&id=Critical%20Accounting%20Estimates) - Management's discussion and analysis relies on critical accounting policies and estimates detailed in Note 2 of the financial statements and the Annual Report, which involve significant judgments and assumptions[148](index=148&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states no material changes to the company's market risk disclosures have occurred since its Annual Report - No material changes to the Company's market risk disclosures have occurred during the three and six months ended June 30, 2025, as referenced in the Annual Report[149](index=149&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of disclosure controls and internal control over financial reporting, concluding on their effectiveness [Evaluation of Disclosure Controls and Procedures](index=30&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The Chief Executive Officer and Chief Financial Officer concluded that Cricut's disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[150](index=150&type=chunk)[151](index=151&type=chunk) [Changes in Internal Control over Financial Reporting](index=31&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No changes in internal control over financial reporting occurred during the period that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[152](index=152&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=31&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) - Management acknowledges that control systems provide only reasonable, not absolute, assurance and have inherent limitations, meaning errors or fraud may occur and not be detected due to resource constraints, faulty judgments, circumvention, or deterioration over time[153](index=153&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms Cricut is not involved in material pending legal proceedings, though subject to routine claims - Cricut is not a party to any material pending legal proceedings but is subject to ordinary course claims and litigation, the resolution of which cannot be predicted with certainty[156](index=156&type=chunk)[157](index=157&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section refers to previously disclosed risk factors in the Annual Report and prior Quarterly Report, with no material changes - No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K (December 31, 2024) and Quarterly Report on Form 10-Q (March 31, 2025) have occurred[158](index=158&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on equity security transactions, noting no unregistered sales and detailing common stock repurchases [Sales of Unregistered Securities](index=32&type=section&id=Sales%20of%20Unregistered%20Securities) - There were no unregistered sales of equity securities during the period[159](index=159&type=chunk) [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=32&type=section&id=Purchases%20of%20Equity%20Securities%20by%20the%20Issuer%20and%20Affiliated%20Purchasers) Common Stock Repurchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in thousands) | | :-------------------------------- | :----------------------------- | :--------------------------- | :------------------------------------------------------------------------------------------------ | | April 1, 2025 through April 30, 2025 | 801,296 | $4.97 | $6,912 | | May 1 through May 31, 2025 | — | $— | $50,000 | | June 1, 2025 through June 30, 2025 | 116,046 | $6.30 | $49,269 | | Total | 917,342 | $5.14 | $49,269 | - On May 2, 2025, the Board of Directors approved replenishing the share repurchase program by **$50 million** for Class A common stock[160](index=160&type=chunk) [Item 3. Default Upon Senior Securities](index=32&type=section&id=Item%203.%20Default%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - This item is not applicable[161](index=161&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - This item is not applicable[162](index=162&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) This section reports on director and executive officer trading plans, indicating no new or terminated Rule 10b5-1 arrangements - No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or a 'non-Rule 10b5-1 trading arrangement' during the last fiscal quarter[163](index=163&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all documents filed as exhibits to the Quarterly Report on Form 10-Q, including certifications and XBRL documents - The report includes various exhibits, such as certifications of principal executive and financial officers (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101.INS, 101.SCH, etc.)[164](index=164&type=chunk)[166](index=166&type=chunk) [Signatures](index=34&type=section&id=SIGNATURES)

Financial Performance - Cricut, Inc. reported quarterly earnings of $0.11 per share, exceeding the Zacks Consensus Estimate of $0.06 per share, and up from $0.09 per share a year ago, representing an earnings surprise of +83.33% [1] - The company posted revenues of $172.11 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 9.23%, compared to year-ago revenues of $167.95 million [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.04 on revenues of $164.37 million, and for the current fiscal year, it is $0.22 on revenues of $689.53 million [7] - The estimate revisions trend for Cricut was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Technology Services industry, to which Cricut belongs, is currently in the top 41% of over 250 Zacks industries, suggesting that stocks in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8] - Viant Technology, another company in the same industry, is expected to report quarterly earnings of $0.10 per share, reflecting a year-over-year change of +25%, with revenues anticipated to be $77.8 million, up 87.2% from the previous year [9][10]

Financial Data and Key Metrics Changes - In Q2 2025, the company reported revenue of $172.1 million, a 2% increase year-on-year [24] - Operating income grew 14% to $30.1 million, representing 17.5% of revenue compared to 15.7% in Q2 2024 [30] - Earnings per share (EPS) increased by 22% to $0.11 compared to $0.09 in Q2 2024 [31] - Paid subscribers grew by 197,000 year-on-year, reaching over 3 million, a 7% increase [18][24] Business Line Data and Key Metrics Changes - Revenue from the platform segment was $80.7 million, up 4% year-on-year, while product revenue was $91.4 million, up 1% [24][25] - Accessories and materials sales increased by 12% in Q2, benefiting from earlier shipments [19][26] - Connected machines revenue decreased by 10% due to fewer machine units sold, although year-to-date sales remained positive [25] Market Data and Key Metrics Changes - North American revenue increased in Q2, while international revenue was $36.3 million, an 8% increase year-on-year [26] - International revenue accounted for 21% of total revenue in Q2 2025, up from 20% in Q2 2024 [27] - The company experienced strength in core European markets but faced softness in Australia [27] Company Strategy and Development Direction - The company is focused on new user acquisition, user engagement, subscriptions, and accessories and materials [10] - Investments are being accelerated in hardware product development, materials, engagement, and marketing to drive future revenue growth [8][30] - The company aims to reclaim market share in accessories and materials by providing refreshed and cost-competitive offerings [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty introduced by tariffs and its potential impact on consumer discretionary spending [8][34] - The company expects to be profitable each quarter and generate significant positive cash flow during 2025 despite tariff challenges [34] - Management is optimistic about the performance of the Cricket value line of materials, although it currently represents a small portion of the portfolio [22] Other Important Information - The company ended Q2 with cash and cash equivalents of $377 million and remains debt-free [32] - A special dividend of $0.75 per share was paid in July, along with a recurring semi-annual dividend of $0.10 per share [32] Q&A Session Summary Question: Impact of pull forward on top and bottom line - Management noted that the timing shift helped post positive growth sooner than expected, but quantifying the exact impact is challenging [37][38] Question: Tariff impact and mitigation efforts - Management is assessing the overall impact of tariffs and is focused on maintaining affordability for consumers while navigating uncertainties [39][40] Question: Capital allocation and special dividends - Management indicated that while special dividends have been provided, future capital allocation will focus on inventory sufficiency, growth investments, and efficient capital returns [43][46] Question: Update on design space enhancements - Management reported improvements in user engagement metrics and ongoing efforts to enhance the user experience through AI and personalized marketing [48][52] Question: Retail partners' inventory levels - Management stated that the pull forward was driven by retailers' concerns about supply continuity, and they believe they are in a good balance between sell-in and sell-out [55]

Cricut, Inc. Reports Second Quarter 2025 Financial Results Second Quarter 2025 Financial Results "We continue to generate healthy cash flow on an annual basis, which funds inventory needs and investments for long-term growth. In Q2, we generated $36 million in cash from operations, compared to $35 million a year ago. We ended Q2 with cash and cash equivalents of $377 million and remain debt free," said Kimball Shill, Chief Financial Officer of Cricut. "After the quarter closed, we paid $181 million in divid ...

Core Insights - Cricut, Inc. reported a 2% increase in revenue for Q2 2025, totaling $172.1 million compared to Q2 2024 [1][6] - The company achieved a net income of $24.5 million, reflecting a 24% increase year-over-year [1][6] - Paid subscribers grew by 7% year-over-year, surpassing 3 million [1][7] Financial Performance - Revenue for Q2 2025 was $172.1 million, up 2% from $167.9 million in Q2 2024 [1][6] - Platform revenue reached $80.7 million, a 4% increase from the previous year, while product revenue was $91.4 million, up 1% [6] - Gross margin improved to 59.0%, up from 53.5% in Q2 2024 [6] - Operating income was $30.1 million, representing a 14% increase from $26.4 million in Q2 2024 [6] - Diluted earnings per share increased to $0.11 from $0.09 in Q2 2024 [6] Cash Flow and Capital Allocation - The company generated $36 million in cash from operations, slightly up from $35 million a year ago [4] - Cricut ended Q2 with cash and cash equivalents of $377 million and remains debt-free [4] - A total of $181 million was paid in dividends after the quarter closed, with $49 million remaining on the stock repurchase program [4][8] Subscriber and User Metrics - Paid subscribers increased to over 3 million, marking a 7% growth year-over-year [7] - The average revenue per user (ARPU) for the platform rose to $53.84, a 2% increase from the previous year [7][10] - Active users remained relatively stable at just over 5.9 million, while 90-day engaged users decreased slightly by less than 2% year-over-year [7][10] Business Strategy and Outlook - The CEO emphasized a focus on accelerating investments in hardware product development, materials, engagement, and marketing to drive future revenue growth [2] - The company is navigating uncertainties introduced by tariffs while maintaining a commitment to long-term growth [2]

Core Points - Cricut, Inc. will report its financial results for Q2 2025 on August 5, 2025, after U.S. market close [1] - A conference call and webcast will be held on the same day at 3:00 p.m. Mountain Time [1] - The earnings call will be accessible via Cricut's investor relations website [2] Company Overview - Cricut, Inc. is a creative technology company that provides a connected platform for DIY projects, including smart cutting machines and design software [4] - The company offers a range of products, including the Cricut Maker series, Cricut Explore series, Cricut Joy, and Cricut Venture, along with tools like Cricut EasyPress and Infusible Ink [4] - Cricut fosters a community of millions of users globally, enhancing the creative experience [4] Investor Relations - Cricut will use its investor relations website and Cricut News Blog to disclose material non-public information [5] - Stakeholders are encouraged to monitor these platforms along with press releases and SEC filings for updates [5]

User Metrics - As of March 31, 2025, Cricut has 5.9 million Active Users, a slight decrease from 5.95 million in 2024[88][97] - The number of Paid Subscribers increased to 2.97 million as of March 31, 2025, up from 2.80 million in 2024, representing a growth of approximately 6.3%[97][100] Revenue Performance - Total revenue for the three months ended March 31, 2025, was $162.63 million, a decrease of 2.3% from $167.39 million in the same period of 2024[112] - Platform revenue for the same period was $79.99 million, an increase of 2.2% compared to $78.29 million in 2024[112] - Products revenue decreased to $82.65 million from $89.11 million, reflecting a decline of approximately 7.2% year-over-year[112] - Total revenue for the three months ended March 31, 2025, was $162.6 million, a decrease of $4.8 million or 3% compared to $167.4 million in the same period of 2024[113] - Platform revenue increased by $1.7 million, or 2%, to $80.0 million, driven by an increase in paid subscribers from nearly 2.8 million to nearly 3.0 million[114] - Products revenue decreased by $6.5 million, or 7%, to $82.6 million, primarily due to fewer units sold and increased promotional activity[115] Profitability - Gross profit for the three months ended March 31, 2025, was $98.35 million, compared to $91.59 million in 2024, indicating an increase of about 7.4%[112] - Total gross profit increased by $6.8 million, or 7%, to $98.3 million, with a gross margin of 60.5%[116] - The gross margin for the fourth quarter of 2024 was 45%, down from 50% for the entire year, indicating seasonal impacts on profitability[92][94] Expenses - Operating expenses totaled $69.01 million, up from $66.39 million in the prior year, representing an increase of approximately 2.4%[112] - Research and development expenses increased by $0.8 million, or 5%, to $15.7 million, representing 10% of total revenue[121] - Sales and marketing expenses rose by $3.7 million, or 11%, to $36.7 million, accounting for 23% of total revenue[122] - General and administrative expenses decreased by $1.8 million, or 10%, to $16.7 million, representing 10% of total revenue[123] Net Income and Cash Flow - Net income for the quarter was $23.91 million, an increase of 21.5% from $19.65 million in the same quarter of 2024[112] - Net cash flows provided by operating activities were $61.2 million, an increase from $56.7 million in the prior year[129] - The company paid a dividend of $21.5 million during the three months ended March 31, 2025[127] Future Outlook - Cricut expects to continue investing in research and development, anticipating an increase in related expenses in the near term as product roadmaps are refined[107] - As of March 31, 2025, the company had cash and cash equivalents totaling $252.1 million and marketable securities of $104.5 million[126]

Group 1: Earnings Performance - Cricut, Inc. reported quarterly earnings of $0.11 per share, exceeding the Zacks Consensus Estimate of $0.08 per share, and up from $0.09 per share a year ago, representing an earnings surprise of 37.50% [1] - The company posted revenues of $162.63 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.37%, although this is a decline from year-ago revenues of $167.39 million [2] Group 2: Stock Performance and Outlook - Cricut shares have declined approximately 10.9% since the beginning of the year, compared to a decline of 3.9% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $0.06 on revenues of $161.29 million, and for the current fiscal year, it is $0.18 on revenues of $690.92 million [7] Group 3: Industry Context - The Technology Services industry, to which Cricut belongs, is currently ranked in the top 24% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Financial Data and Key Metrics Changes - Total sales in Q1 decreased by 3% year on year, with revenue of $162.6 million [27] - Operating income increased by 16% year on year, reaching $29.3 million or 18% of revenue [27][33] - Net income for Q1 was $23.9 million, or 11¢ per diluted share, compared to $19.6 million or 9¢ per diluted share in Q1 2024 [33] Business Line Data and Key Metrics Changes - Platform revenue increased by 2% year on year to $80 million, driven by paid subscriber growth [27][28] - Products revenue declined by 7% year on year to $82.6 million, with connected machines revenue up by 4% [28][29] - Accessories and materials sales decreased by 15%, impacted by one-time items [21][28] Market Data and Key Metrics Changes - International revenue for the quarter was $35.1 million, an increase of 8% year on year, representing 22% of total revenue [29] - Strength was noted in the UK, Germany, META, and Latin America markets, while Australia showed continued softness [29] Company Strategy and Development Direction - The company is focused on increasing user acquisition, engagement, and subscriptions, with a particular emphasis on new product launches and marketing strategies [12][20] - A new engagement marketing platform was launched to drive user return and project inspiration [18][19] - The company aims to reclaim market share in accessories and materials by enhancing product offerings and competitive pricing [22][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty introduced by tariffs but expressed confidence in the company's supply chain configuration [6][44] - The company expects total sales to decline year on year in the first half of 2025, but at a slower rate than in the first half of 2024 [37][38] - Management is optimistic about the potential for an inflection point in business performance, citing improvements in machine sales and platform growth [59][61] Other Important Information - The board approved a special dividend of $0.75 per share and a recurring semiannual dividend of $0.10 per share [8][35] - The company ended Q1 with cash and cash equivalents of $357 million and remains debt-free [34] Q&A Session Summary Question: What are some of the levers to mitigate tariff-related headwinds? - Management highlighted the diversified supply chain as a key advantage and indicated that pricing strategies would be carefully evaluated [42][44] Question: Can you provide details on engagement trends? - Management acknowledged ongoing challenges with engagement but emphasized efforts to improve onboarding experiences and personalized marketing [49][56] Question: What gives confidence in reaching an inflection point this year? - Management pointed to improvements in machine sales, growth in paid subscriptions, and a strong supply chain as indicators of potential positive change [59][61]

Financial Data and Key Metrics Changes - Total sales in Q1 2025 decreased by 3% year on year, with revenue of $162.6 million [7][27] - Net income for Q1 2025 was $23.9 million, representing 14.7% of total sales, compared to $19.6 million or 9% per diluted share in Q1 2024 [34][27] - Operating income increased to $29.3 million or 18% of revenue, up from $25.2 million or 15.1% of revenue in Q1 2024 [34] - Gross margin improved to 60.5% from 54.7% in Q1 2024, with platform gross margin at 89.2% and product gross margin at 32.7% [31][32] Business Line Data and Key Metrics Changes - Platform revenue increased by 2% year on year to $80 million, driven by paid subscriber growth [27][28] - Product revenue declined by 7% year on year to $82.6 million, with connected machines revenue up by 4% but accessories and materials down by 15% [27][29] - Paid subscribers increased by over 6% year on year to just over 2.97 million, with a sequential increase of 15,000 [20][28] Market Data and Key Metrics Changes - International revenue for Q1 2025 was $35.1 million, an increase of 8% year on year, representing 22% of total revenue compared to 19% in Q1 2024 [30] - Strength was noted in the UK, Germany, META, and Latin America markets, while Australia showed continued softness [30] Company Strategy and Development Direction - The company is focused on increasing user acquisition, engagement, and subscriptions, with a particular emphasis on new product launches and marketing strategies [12][20] - A new engagement marketing platform was launched to drive user return and project inspiration [17][54] - The company aims to reclaim market share in accessories and materials by enhancing product offerings and competitive pricing [22][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty introduced by tariffs but expressed confidence in the company's supply chain configuration and profitability [6][39] - The company expects total sales to decline year on year in the first half of 2025 but anticipates a less severe decline compared to the first half of 2024 [40] - Future marketing investments will be data-driven, considering potential changes in consumer spending due to tariffs [39] Other Important Information - The board approved a special dividend of $0.75 per share and a recurring semiannual dividend of $0.10 per share, payable in July 2025 [36][37] - The company remains debt-free and generated $61.2 million in cash from operations in Q1 2025 [35] Q&A Session Summary Question: What are some of the levers to mitigate tariff-related headwinds? - The company has diversified its supply chain outside of China, with most finished goods now sourced from Malaysia and other countries [44] - Pricing strategies will be deliberate, with expectations of some price increases due to reduced promotions [45] Question: Can you provide details on engagement trends? - Engagement continues to be a challenge due to attrition from large cohorts acquired in previous years and lower project creation from newer users [52] - Initiatives are in place to improve onboarding experiences and enhance user engagement through personalized notifications [54][56] Question: What gives confidence in reaching an inflection point this year? - Signs of improvement in machine sales and platform growth, along with successful new product launches, contribute to this confidence [59][61]