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]