Cricut(US:CRCT)2022-05-15 03:29Financial Data and Key Metrics Changes - Revenue in Q1 2022 was $244.8 million, a decline of 24% year-over-year, but up 70% compared to Q1 2020 [23][24] - Operating income for Q1 was $31.4 million, or 12.8% of revenue, down from $64.7 million or 20% in Q1 2021 [39] - Net income in Q1 was $23.5 million, down from $49.4 million in Q1 2021, with diluted earnings per share at $0.11 compared to $0.24 in the prior year [40] Business Line Data and Key Metrics Changes - Revenue from Connected Machines was $62.4 million, down 56% year-over-year, but grew nearly 10% on a 2-year basis [27] - Subscription revenue was $64.8 million, up 40% year-over-year and nearly 238% on a 2-year basis [27] - Revenue from Accessories and Materials was $117.6 million, down 14% year-over-year, but grew 74% compared to Q1 2020 [27] Market Data and Key Metrics Changes - International markets represented 15% of total revenues, up from 10% in Q1 of the prior year, with a 9% year-over-year increase in international revenues [28] - User engagement was 54% in Q1, down from 62% in the prior year, with 3.7 million engaged users [29][33] Company Strategy and Development Direction - The company is focused on long-term growth and profitability, emphasizing user engagement and onboarding processes [8][19] - Plans to expand into international markets, including recent launches in Turkey and upcoming launches in Japan and South Korea [13] - The product roadmap includes enhancements to subscription offerings and new tools to improve user experience [11][17] Management's Comments on Operating Environment and Future Outlook - Management noted pressures from slowing consumer demand and macroeconomic factors, but remains confident in long-term growth opportunities [19][42] - The company anticipates challenges in reaching its target of 8 million users by year-end due to current market conditions [42] - Management emphasized the importance of maintaining profitability while investing in user engagement and product development [45] Other Important Information - The company added over 495,000 new users in Q1, ending with nearly 7 million total users [9][29] - Gross margin improved to 40.5%, up from 37% in Q1 last year, driven by diverse revenue streams [34] - Operating expenses were $67.6 million, reflecting continued investments in the business [38] Q&A Session Summary Question: User engagement and project types - Management explained that engagement is calculated based on users who have cut in the last 90 days, with a typical seasonal slowdown expected [47] Question: Customer response to inflationary pressures - Management noted a focus on attracting beginner crafters and simplifying projects to accommodate new users [48] Question: Product roadmap excitement - Management highlighted upcoming product launches and enhancements to the Cricut platform, focusing on user onboarding and engagement [51][54] Question: Consumer demand and revenue expectations - Management indicated that while new user growth remains healthy, a slowdown in machine sell-through is expected to impact Q2 and Q3 [69] Question: Subscriber growth outlook - Management clarified that subscriber growth may be flat or decline in the short term due to lower consumer demand, but expects a return to growth in Q4 [61][63]