Cricut, Inc. (NASDAQ:CRCT) Q1 2023 Results Conference Call May 9, 2023 5:00 PM ET Company Participants Jim Suva - Senior Vice President of Finance Ashish Arora - Chief Executive Officer Kimball Shill - Chief Financial Officer Conference Call Participants Mark Altschwager - Baird Operator Good day, and thank you for standing by. Welcome to the Circuit Q1 Earnings Conference Call [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to turn it over to our spea ...

Digital content is an important element of the overall content that we make available to our users. To secure the rights to use certain fonts, images, ready-to-make projects, patterns and other digital contents that are used on or with our products and services, we enter into agreements to obtain licenses from rights holders such as copyright owners or their agents. We pay royalties to such parties or their agents around the world. In other instances, we enter into agreements with various third parties to p ...

Revenue Performance - Revenue for the year ended December 31, 2022, decreased to $886.3 million, down 32% from $1,306.2 million in 2021[210] - Accessories and materials revenue decreased by $190.8 million, or 35%, to $361.4 million for the year ended December 31, 2022, from $552.2 million in 2021[190] - Connected machine revenue decreased by $295.6 million, or 54%, to $252.6 million for the year ended December 31, 2022, from $548.2 million in 2021[213] - The company is experiencing declining revenue growth rates compared to the COVID-19 pandemic years of 2020 and 2021, with current economic conditions adversely affecting demand for its products[274] Subscriber and User Engagement - The number of paid subscribers could remain flat or decline in the short term due to declining user engagement[186] - Subscription ARPU and Accessories and Materials ARPU have declined in recent periods and may continue to decline, adversely affecting revenue[186] - The company regularly reviews user metrics, including the number of active users and paid subscribers, to evaluate engagement and growth trends[272] - As of December 31, 2022, Cricut had 2.6 million paid subscribers, representing approximately 33% of its total users[377] Market and Competitive Landscape - The top seven brick-and-mortar and online retail partners accounted for 37% of total revenue for the year ended December 31, 2022, down from 52% in 2021[217] - The company faces competitive risks in attracting and engaging users, which could adversely affect growth rates[184] - The company aims to tap into a large untapped market opportunity beyond its current user base, emphasizing inclusivity in creativity[380] Operational Risks - The company relies on Amazon Web Services for a substantial portion of its services, and any disruption could adversely affect its financial condition[203] - The company relies on a limited number of distributors for domestic sales, which could adversely affect operations if key distributors are lost or unable to meet demand[222] - The company relies primarily on a single contract manufacturer, Intretech, for the production of connected machines, which poses risks if manufacturing is disrupted[285] - The company is vulnerable to economic downturns, which may reduce consumer discretionary spending on its products and subscriptions[242] Supply Chain and Manufacturing Challenges - Manufacturing operations are significantly affected by social, political, and economic developments in Malaysia and China, potentially impacting revenue and gross margins[289] - The company faces supply chain risks due to reliance on a limited number of suppliers, which may lead to shortages and increased lead times[290] - There are ongoing shortages in global electronic component supply, which could materially affect the performance of connected machines[293] - Increased shipping costs and potential disruptions in logistics could adversely affect the company's financial results[298] Financial and Credit Risks - The company's debt is secured by a substantial portion of its assets, and variable interest rates could increase financial costs in a rising rate environment[244] - The New Credit Agreement may limit the company's ability to obtain additional financing and could expose it to risks associated with increasing interest rates[245] - The company is subject to financial covenants under the New Credit Agreement, which may restrict its operational flexibility and ability to respond to changes in the business environment[276] Regulatory and Compliance Issues - Compliance with new privacy laws, such as the CCPA and CPRA, may require the company to incur substantial costs and modify data processing practices[348] - The GDPR imposes penalties of up to €20 million or 4% of annual global revenue for noncompliance, affecting the company's operations in the EU[360] - The company is subject to numerous federal, state, local, and international laws regarding privacy and data protection, which are subject to change and could create compliance challenges[359] Brand and Reputation Risks - The company's brand value is crucial for maintaining a loyal user community, and failure to protect it could lead to decreased user engagement and revenue[226] - Negative publicity regarding suppliers or labor practices could harm the company's reputation and user loyalty, potentially resulting in decreased revenue[227] Management and Leadership - The company relies heavily on the services of its CEO, Ashish Arora, for strategic direction and future vision, which is critical for business growth[256] - The management team has limited experience managing a publicly traded company, which may affect the company's ability to comply with regulatory obligations[281] Product and Service Offerings - Cricut offers a subscription service, Cricut Access, which includes a library of over 300,000 images and thousands of ready-to-make projects[377] - Cricut's products empower users to create professional-looking homemade goods, expanding opportunities beyond the traditional craft market[382] - Approximately 25% of Cricut users create projects to sell, indicating a significant entrepreneurial engagement within the user base[379]

Financial Data and Key Metrics Changes - Full year revenue was $886.3 million, a 32% decline over 2021, primarily due to the high growth in 2021 during the pandemic [101] - Net income for the year was $60.7 million, or $0.28 per diluted share, compared to $140.5 million, or $0.64 per diluted share in 2021 [104] - Operating income for the year was $80 million, or 9% of revenue, reflecting lower revenues compared to 2021 of $192.4 million, or 14.7% of revenue [20] Business Line Data and Key Metrics Changes - Subscriptions revenue for the year was $272.3 million, a 32% increase over 2021, driven by targeted investments in Cricut Access [4] - Revenue from Accessories and Materials for the year was $361.4 million, down 35% over 2021, influenced by heavy channel inventory and lower engagement [18] - Gross margin from Accessories and Materials was 26.5%, compared to 37.9% in 2021, impacted by increased promotions and fixed operating costs [5] Market Data and Key Metrics Changes - International revenue was $142.3 million, compared to $148.5 million in 2021, representing 16% of total revenue, up from 11% in 2021 [4] - The company ended the year with nearly 7.9 million total users, a 23% growth over 2021, with 2.6 million paid subscribers, up 28% year-over-year [75][69] - The number of engaged users who cut on the platform increased sequentially in Q4, with over 4 million users cutting a project within the last 90 days [75] Company Strategy and Development Direction - The company plans to focus on acquiring new users globally, driving increased engagement and subscriptions, and structuring the Accessories and Materials business for long-term success [100] - A two-year journey is anticipated to re-accelerate growth in Accessories and Materials, with strategies to drive engagement and subscriptions [16][91] - The company is increasing its focus on accessories and materials, believing it has the right to play and win in this segment [41] Management's Comments on Operating Environment and Future Outlook - Management expects softer consumer spending patterns in 2023 and is taking a conservative approach in planning, anticipating small incremental operating margin improvements [21][22] - The company entered 2023 with healthier channel inventory levels, expecting revenue to be more directly linked to consumer demand [7] - Management acknowledged that Q1 2023 will be a tough year-over-year comparison, with expectations for improvement starting in Q2 [7][128] Other Important Information - The company generated $117.7 million in cash from operations, ending with a balance of $299.2 million, allowing for flexible capital allocation [6] - The gross margin for subscriptions for the full year was 90.3%, up slightly from 89.3% in 2021 [42] - The company repurchased 2.35 million shares at a cost of $18.5 million and paid a special shareholder dividend of $77 million [77] Q&A Session Summary Question: What is the outlook for gross margin compression in the Machine and Accessories segments? - Management indicated that compression is influenced by cost inflation and promotional strategies, with expectations to rebase gross margin expectations for the medium to long term [8] Question: Can subscription attachment rates continue to increase with more beginner crafters entering the platform? - Management expressed optimism that subscription attachment rates could edge higher as more beginner crafters engage with the platform [10] Question: What changes are being made to the supply chain? - Management clarified that changes involve reconfiguring product bundles and distribution strategies to better serve the market and reduce inventory [30][37] Question: How is the company managing cash flow and inventory? - Management confirmed that they are working through inventory levels and expect to be cash flow accretive for the year [38] Question: What is the company's strategy for user engagement? - Management highlighted the importance of increasing user engagement through community projects and improved onboarding processes [95][123]

NASDAQ : CRCT Results cricut. Safe Harbor Statement Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements including, but not limited to, risks and uncertainties associated with: our ability to attract and engage with our users; competitive risks; supply chain, manufacturing, distribution and fulfillment risks; international risks, including regulation and tariffs that have materially increased our costs and the potential ...

Cricut, Inc. (NASDAQ:CRCT) Q3 2022 Earnings Conference Call November 8, 2022 5:00 PM ET Company Participants Stacie Clements - IR, The Blueshirt Group Ashish Arora - President and CEO Kimball Shill - CFO Conference Call Participants Mark Altschwager - Baird Jim Suva - Citi Erik Woodring - Morgan Stanley Paul Kearney - Barclays Operator Good day, and thank you for standing by. Welcome to the Cricut Q3 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' ...

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 September 30, 2022 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 organization) ...

Financial Data and Key Metrics Changes - Revenue in Q2 2022 was $183.8 million, a 45% decline compared to Q2 2021, with net income of $13.8 million [31] - Revenue from connected machines was $35.4 million, down 76% year-over-year, while subscription revenue was $67.6 million, up 33% year-over-year [32][35] - Total gross margin in Q2 was 46.5%, an improvement of 7.5 percentage points compared to Q2 2021 [42] Business Line Data and Key Metrics Changes - Subscription revenue increased to $67.6 million, reflecting a strong performance despite challenges in connected machines [35] - Revenue from accessories and materials was $80.7 million, down 41% year-over-year, impacted by increased channel inventory and competition [36] - The number of paid Cricut Access subscribers reached nearly 2.4 million, an increase of over 34% year-over-year [18] Market Data and Key Metrics Changes - International markets represented 13.2% of total revenue, up from 8.5% in Q2 2021, although revenues from international markets decreased by about 14% year-over-year [37] - New user additions were down almost 34% year-over-year, correlating with machine sell-through [34] Company Strategy and Development Direction - The company aims to improve user onboarding and engagement, increase monetization through subscriptions, and expand internationally [14][22] - Cricut is focusing on maintaining pricing stability and avoiding excessive discounting to protect long-term health [10][86] - The strategy includes leveraging the platform for user engagement and monetization, with a focus on innovation and community building [12][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential despite current macroeconomic challenges [29] - The company anticipates a moderate lift in sales towards the end of Q3 and a stronger performance in Q4 as retailers prepare for the holiday season [56] - Management highlighted the importance of maintaining a healthy balance sheet and cash flow to navigate the current environment [53][49] Other Important Information - The company has a strong balance sheet with $231.3 million in cash and marketable securities, and a $300 million untapped credit line [53] - Operating income for Q2 was $20 million, or 10.9% of revenue, down from $64.2 million in Q2 2021 [50] Q&A Session Summary Question: What is the impact of channel destock versus user engagement on accessories revenue? - Management indicated that engagement and macroeconomic conditions significantly impacted accessories revenue, alongside channel inventory issues and competition [61][62] Question: How is the retail channel positioned heading into the back-to-school and holiday season? - Management reported strong retail placement and awareness, with no loss of retail doors compared to the previous year [66][67] Question: What is the current status of excess channel inventory? - Management noted that retailers are working through their inventory positions and expect to reach optimal levels by the end of Q3 [75][76] Question: How is the company preparing for launches in new international markets? - The company is leveraging community engagement and influencer marketing to build brand awareness in new markets [72][73] Question: What is the pricing strategy in light of competitive pressures? - Management emphasized maintaining price stability while being strategically promotional to remain competitive [80][86]

NASDAQ : CRCT Q2 2022 Financial Results 1 Financial Results Q2 2022 August 9, 2022 cricut. 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 fact that they do n ...

User Growth - Cricut has nearly 7.2 million users as of June 30, 2022, an increase from 5.37 million users in the same period of 2021, representing a growth of approximately 33.9%[127] - The percentage of users creating in the trailing 90 days decreased to 51% in June 2022 from 59% in June 2021[127] - Cricut had approximately 2.4 million paid subscribers to Cricut Access and Cricut Access Premium as of June 30, 2022, up from 1.77 million in the same period of 2021, indicating a growth of about 34%[127] Revenue Performance - Total revenue decreased by $150.7 million, or 45%, to $183.8 million for the three months ended June 30, 2022, compared to $334.5 million for the same period in 2021[151] - Connected Machines revenue decreased by $110.9 million, or 76%, to $35.4 million for the three months ended June 30, 2022, compared to $146.3 million for the same period in 2021[152] - Subscriptions revenue increased by $16.9 million, or 33%, to $67.6 million for the three months ended June 30, 2022, driven by a 34% increase in Paid Subscribers from 1.8 million to 2.4 million[153] - Accessories and Materials revenue decreased by $56.8 million, or 41%, to $80.7 million for the three months ended June 30, 2022, primarily due to a decline in unit sales of Accessories[154] - Total revenue for the six months ended June 30, 2022, decreased by $229.8 million, or 35%, to $428.5 million compared to $658.3 million for the same period in 2021[151] - Connected Machines revenue decreased by $189.8 million, or 66%, to $97.8 million for the six months ended June 30, 2022, compared to $287.6 million for the same period in 2021[155] - Accessories and Materials revenue decreased by $75.5 million, or 28%, to $198.3 million for the six months ended June 30, 2022, primarily due to a decline in unit sales[157] Profitability Metrics - Gross profit for Connected Machines decreased to $0.6 million for the three months ended June 30, 2022, from $30.1 million in the same period in 2021, reflecting a gross margin decrease to 2%[159][161] - Subscriptions gross profit increased by $16.0 million, or 35%, to $61.4 million for the three months ended June 30, 2022, with a gross margin of 91%[159] - Gross margin for Subscriptions remained stable at 91% for the six months ended June 30, 2022, compared to 90% for the same period in 2021[169] - Gross margin for Accessories and Materials decreased to 31% for the six months ended June 30, 2022 from 41% for the same period in 2021[171] - Gross margin for Connected Machines decreased to 2% for the six months ended June 30, 2022 from 18% for the same period in 2021[167] Expenses Overview - Research and development expenses are expected to increase as a percentage of revenue to support growth from new products and services[141] - Sales and marketing expenses are projected to fluctuate in the near term due to international expansion and new product launches[142] - Research and development expenses increased by $4.3 million, or 12%, to $40.6 million for the six months ended June 30, 2022 from $36.3 million for the same period in 2021[173] - Sales and marketing expenses increased by $3.8 million, or 6%, to $64.3 million for the six months ended June 30, 2022 from $60.5 million for the same period in 2021[177] - General and administrative expenses increased by $3.2 million, or 13%, to $28.1 million for the six months ended June 30, 2022 from $24.9 million for the same period in 2021[179] Cash Flow and Financial Position - Net cash flows provided by operating activities for the six months ended June 30, 2022, were $13,006 thousand, a significant improvement from $(53,995) thousand in the same period of 2021[191] - Net cash flows used in investing activities increased to $(101,569) thousand for the six months ended June 30, 2022, compared to $(16,124) thousand in the prior year[191] - Net cash flows used in financing activities were $(5,031) thousand for the six months ended June 30, 2022, a decrease from $262,013 thousand in the same period of 2021[191] Risk Management - The company has not been exposed to material risks due to changes in interest rates, with a hypothetical 10% change in interest rates having no material impact on financial statements[194] - Foreign currency exchange risks are monitored, with the company not having entered into derivative or hedging transactions due to the immaterial impact of foreign currency exchange rates on operations during 2019-2021[195] Future Outlook - Cricut's revenue is expected to be higher in the second half of the year, historically representing 59% to 60% of total annual revenue[121] - The company anticipates returning to a more normal seasonality pattern as pandemic-related demand stabilizes[121]