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Cricut, Inc. Reports First Quarter 2024 Financial Results

Paid subscribers of approximately 2.8 million, up 3% over Q1 2023

Q1 2024 revenue of $167.4 million, 8% decline compared to Q1 2023

Delivered 21st consecutive quarter of profitability with net income of $19.6 million, up 116% over Q1 2023

Board authorizes three capital allocation items

SOUTH JORDAN, Utah, May 07, 2024 (GLOBE NEWSWIRE) -- Cricut, Inc. ("Cricut") (NASDAQ:CRCT), the creative technology company that has brought a connected platform for making to millions of users worldwide, today announced financial results for its first quarter ended March 31, 2024.

"Q1 2024 played out largely as expected. Operating margin dollars grew significantly by 139% or $15 million, driven by lower inventory write-offs, an increase in paid subscribers and higher sales of connected machines despite an 8% year-over-year drop in overall sales. We are encouraged by our Platform revenue, which grew 3% year over year. The Cricut platform now has over 5.95 million Active Users and this creates a tremendous opportunity for us to build deeper user engagement on our platform by helping them discover inspiration, design then make their projects and share them on our platform," said Ashish Arora, Chief Executive Officer of Cricut.

First Quarter 2024 Financial Results

  • Revenue was $167.4 million, down 8% from Q1 2023.
  • Platform revenue was $78.3 million, up 3% over Q1 2023.
  • Products revenue was $89.1 million, down 15% from Q1 2023.
  • International revenue decreased by 3% over Q1 2023 and was 19% of total revenue, up from 18% of total revenue in Q1 2023.
  • Gross margin was 54.7%, up from 42.3% in Q1 2023.
  • Operating income was $25.2 million, or 15.1% of total revenue compared to $10.5 million, or 5.8% of revenue in Q1 2023.
  • Net income was $19.6 million, or 11.7% of revenue, and up 116% from Q1 2023. Net income in Q1 2023 was $9.1 million, or 5.0% of revenue.
  • Diluted earnings per share was $0.09 up from $0.04 per share in Q1 2023.
  • Generated $56.7 million in Cash from Operations in Q1. Used $10.8 million to repurchase 1,697 thousand shares of our common stock in Q1.

"Given the confidence in the sustainability of our profitable operations, the board of directors approved three capital allocation items: a special dividend of $0.40 per share, a recurring semi-annual dividend of $0.10 per share, and another $50 million stock repurchase program." said Kimball Shill, Chief Financial Officer of Cricut. "We delivered our 21st consecutive quarter of positive net income and continue to generate healthy cash flow. In Q1 2024, we generated $57 million in cash from operations, ended the quarter with $282 million in cash and cash equivalents, and we remain debt free. We remain committed to our long-term operating margin targets of 15-19%. Our proven model has demonstrated that when we operate at scale and drive top line growth, these margins are achievable."

Recent Business Highlights

  • Three capital allocation items approved by the Board of Directors through its audit committee:
    • A special dividend of $0.40 per share payable on July 19 to shareholders of record on July 2**
    • Recurring semi-annual dividends of $0.10 per share, the initial one is payable on July 19 to shareholders of record on July 2**
    • $50 million stock repurchase approval, which follows the recently completed $50 million stock repurchase that was authorized in August 2022.
  • Paid Subscribers of approximately 2.8 million by the end of Q1, up 3% year over year.
  • Towards the end of Q1, we launched Cricut Value Materials online. Designed to deliver maximum performance at a great price, this new offering was aimed to compete effectively with online marketplaces, which are more price competitive and require hitting the right price points with shipping economics to compete more effectively. This is accomplished through re-engineered product, re-engineered packaging and improving supply chain efficiencies.

** Both dividends are to the Company's Class A and Class B Common Stockholders. In addition, holders of restricted stock units that are unvested on the record date will be credited with a dividend equivalent based on the value of the per share dividend pursuant to the terms of the Company's equity incentive documents. The dividend equivalent will entitle such holders to receive additional shares upon vesting of the corresponding restricted stock units. The board of directors views this level of capital allocation, both stock repurchases and dividends, as appropriate given the company's operating and financial plans and will continue to evaluate capital allocation on a regular basis.

Key Performance Metrics

In addition to the measures presented in our condensed consolidated financial statements, we use the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. We believe these metrics are useful to investors because they can help in monitoring the long-term health of our business. Our determination and presentation of these metrics may differ from that of other companies. The presentation of these metrics is meant to be considered in addition to, not as a substitute for or in isolation from, our financial measures prepared in accordance with GAAP.

  As of March 31,
  2024   2023
Active Users (in thousands) 5,952   5,943
90-Day Engaged Users (in thousands) 3,527   3,710
Paid Subscribers (in thousands) 2,797   2,715


  Three Months Ended March 31,
  2024   2023
Platform ARPU $ 52.26   $ 48.51
           

Glossary of Terms

Active Users

We define Active Users as registered users of at least one registered connected machine who have utilized their connected machine to create a project in the last 365 days. One user may own multiple registered connected machines but is only counted once if that user registers those connected machines by using the same email address. If possession of a connected machine is transferred to a new owner and registered by that new owner, the new owner is added to the total Active Users and the prior owner is removed from the total Active Users if the prior owner does not own any other registered connected machines. Active Users is a key indicator of the health of our business, because changes in the number of Active Users excludes non-users to better represent opportunities for us to drive additional platform and accessories and materials revenue.

90-Day Engaged Users

We define 90-Day Engaged Users as registered users of at least one registered connected machine who have utilized their connected machine to create a project in the last 90 days. One user may own multiple registered connected machines but is only counted once if that user registers those connected machines by using the same email address. If possession of a connected machine is transferred to a new owner and registered by that new owner, the new owner is added to the total 90-Day Engaged Users and the prior owner is removed from the total 90-Day Engaged Users if the prior owner does not own any other registered connected machines. 90-Day Engaged Users excludes non-users to better represent opportunities for us to drive additional platform and accessories and materials revenue.

Paid Subscribers

We define Paid Subscribers as the number of users with a subscription to Cricut Access or Cricut Access Premium, excluding cancelled, unpaid or free trial subscriptions, as of the end of a period. Paid Subscribers is a key metric to track growth in our Platform revenue and potential leverage in our gross margin.

Platform ARPU

We define Platform ARPU as Platform in a 12-month period revenue divided by Active Users. Platform ARPU allows us to forecast Platform revenue over time and is an indicator of our ability to expand with users and of user engagement with our subscription offerings.

Webcast and Conference Call Information

Cricut management will host a conference call and webcast to discuss the results today, Tuesday, May 7, 2024 at 3:00 p.m. Mountain Time (5:00 p.m. Eastern Time). Information about Cricut's financial results, including a link to the live and archived webcast of the conference call, will be made available on Cricut's investor relations website at https://investor.cricut.com/.

The live call may also be accessed via telephone. Please pre-register using this link: https://register.vevent.com/register/BIa396d96ccfcf4c86b93c6b69fe20e9fd. After registering, a confirmation will be sent via email and will include dial-in details and a unique PIN code for entry to the call. To avoid long wait times, we suggest registering at minimum 15 minutes before the start of the call to receive your unique PIN code.

About Cricut, Inc.

Cricut, Inc. is a creative technology company that helps people lead creative lives. Cricut hardware and design software work together as a connected platform for consumers to make beautiful, high-quality DIY projects quickly and easily. These industry-leading products include a flagship line of smart cutting machines — the Cricut Maker® series, the Cricut Explore® series, Cricut Joy series, and Cricut Venture — accompanied by other unique tools like Cricut EasyPress®, the Infusible Ink system, and a diverse collection of materials. In addition to providing tools and materials, Cricut fosters a thriving community of millions of dedicated users worldwide.

Cricut has used, and intends to continue using, its investor relations website and the Cricut News Blog (https://cricut.com/blog/news/) to disclose material non-public information and to comply with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website and the Cricut News Blog in addition to following our press releases, SEC filings and public conference calls and webcasts.

Media Contact:
Nadia Romero
pr@cricut.com

Investor Contact:
Jim Suva
investors@cricut.com

Source: Cricut, Inc.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 as amended (the "Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements include, but are not limited to, quotations from management, business outlook, strategies, capital allocation plans, market size and growth opportunities. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "anticipates," "believes," "targets," "potential," "estimates," "expects," "intends," "plans," "projects," "may" or similar terminology. In particular, statements, express or implied, concerning future actions, conditions or events, future results of operations or the ability to generate revenues, income or cash flow are forward-looking statements. These statements are based on and reflect our current expectations, estimates, assumptions and/ or projections and our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions, many of which are beyond our control, that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections will prove to be correct or that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this press release are only made as of the date indicated on the relevant materials and are based on our estimates and opinions at the time the statements are made. We disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances or changes in opinion, except as required by law.

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 for further trade barriers or disruptions; sales and marketing risks, including our dependence on sales to brick-and-mortar and online retail partners and our need to continue to grow online sales; risks relating to the complexity of our business, which includes connected machines, custom tools, hundreds of materials, design apps, e-commerce software, subscriptions, content, international production, direct sales and retail distribution; risks related to product quality, safety and warranty claims and returns; risks related to the fluctuation of our quarterly results of operations and other operating metrics; risks related to intellectual property, cybersecurity and potential data breaches; risks related to our dependence on our Chief Executive Officer; risks related to our status as a "controlled company"; and the impact of economic and geopolitical events, natural disasters and actual or threatened public health emergencies, current recessionary pressures and any resulting economic slowdown from any of these events, or other resulting interruption to our operations. These risks and uncertainties are described in greater detail under the heading "Risk Factors" in the most recent form 10-Q that we have filed with the Securities and Exchange Commission ("SEC").   

Cricut, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income
(unaudited)
(in thousands, except share and per share amounts)
   
  Three Months Ended March 31,
  2024   2023
Revenue:      
Platform $ 78,286     $ 76,241  
Products   89,106       104,986  
Total revenue   167,392       181,227  
Cost of revenue:      
Platform   8,759       7,761  
Products   67,039       96,800  
Total cost of revenue   75,798       104,561  
Gross profit   91,594       76,666  
Operating expenses:      
Research and development   14,853       17,801  
Sales and marketing   33,030       29,616  
General and administrative   18,506       18,720  
Total operating expenses   66,389       66,137  
Income from operations   25,205       10,529
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The rhetoric of AI empowerment is sheep’s clothing for Silicon Valley wolves who are deliberately nurturing the public’s dependence on their platforms.” Curtailing human independence, then, is not a bug, but a feature of the AI gold rush.Of course, there is an extent to which this nurtured dependence isn’t unique to AI, but is an inevitable by-product of innovation. The broad uptake of any new technology generally atrophies the human skills for the processes that said technology makes more efficient or replaces outright. The advent of the vacuum was no doubt accompanied by a corresponding decline in the average American’s deftness with a broom. The difference between technologies of convenience, like the vacuum or the washing machine, and platforms like Tinder or ChatGPT is that the latter are concerned with atrophying competencies, like romantic socializing or thinking and reflection, that are fundamental to what it is to be a human being.[Read: AI has lost its magic]The response to our algorithmically remade world can’t simply be that algorithms are bad, sensu stricto. Such a stance isn’t just untenable at a practical level—algorithms aren’t going anywhere—but it also undermines unimpeachably positive use cases, such as the employment of AI in cancer diagnosis. Instead, we need to adopt a more sophisticated approach to artificial intelligence, one that allows us to distinguish between uses of AI that legitimately empower human beings and those—like hypothetical AI dating concierges—that wrest core human activities from human control. But making these distinctions requires us to re-embrace an old idea that tends to leave those of us on the left rather squeamish: human nature.Both Western intellectuals and the progressive public tend to be hostile to the idea that there is a universal “human nature,” a phrase that now has right-wing echoes. Instead, those on the left prefer to emphasize the diversity, and equality, of varying human cultural traditions. But this discomfort with adopting a strong definition of human nature compromises our ability to draw red lines in a world where AI encroaches on human territory. If human nature doesn’t exist, and if there is no core set of fundamental human activities, desires, or traits, on what basis can we argue against the outsourcing of those once-human endeavors to machines? We can’t take a stand against the infiltration of algorithms into the human estate if we don’t have a well-developed sense of which activities make humans human, and which activities—like sweeping the floor or detecting pancreatic cancer—can be outsourced to nonhuman surrogates without diminishing our agency. One potential way out of this impasse is offered by the so-called capability approach to human flourishing developed by the philosopher Martha Nussbaum and others. In rejection of the kind of knee-jerk cultural relativism that often prevails in progressive political thought, Nussbaum’s work insists that advocating for the poor or marginalized, at home or abroad, requires us to agree on universal “basic human capabilities” that citizens should be able to develop. Nussbaum includes among these basic capabilities “being able to imagine, to think, and to reason” and “to engage in various forms of familial and social interaction.” A good society, according to the capability approach, is one in which human beings are not just theoretically free to engage in these basic human endeavors, but are actually capable of doing so.As AI is built into an ever-expanding roster of products and services, covering dating, essay writing, and music and recipe recommendations, we need to be able to make granular, rational decisions about which uses of artificial intelligence expand our basic human capabilities, and which cultivate incompetence and incapacity under the guise of empowerment. Disabling algorithms are disabling precisely because they leave us less capable of, and more anxious about, carrying out essential human behaviors.Of course, some will object to the idea that there is any such thing as fundamental human activities. They may even argue that describing behaviors like dating and making friends, critical thinking, or cooking as central to the human condition is ableist or otherwise bigoted. After all, some people are asexual or introverted. Others with mental disabilities might not be adept at reflection, or written or oral communication. Some folks simply do not want to cook, an activity which is historically gendered besides. But this objection relies on a sleight of hand. Identifying certain activities as fundamental to the human enterprise does not require you to believe that those who don’t or can’t engage in them are inhuman, just as embracing the idea that the human species is bipedal does not require you to believe that people born without legs lack full personhood. It only asks that you acknowledge that there are some endeavors that are vital aspects of the human condition, taken in the aggregate, and that a society where people broadly lack these capacities is not a good one.Without some minimal agreement as to what those basic human capabilities are—what activities belong to the jurisdiction of our species, not to be usurped by machines—it becomes difficult to pin down why some uses of artificial intelligence delight and excite, while others leave many of us feeling queasy.What makes many applications of artificial intelligence so disturbing is that they don’t expand our mind’s capacity to think, but outsource it. AI dating concierges would not enhance our ability to make romantic connections with other humans, but obviate it. In this case, technology diminishes us, and that diminishment may well become permanent if left unchecked. Over the long term, human beings in a world suffused with AI-enablers will likely prove less capable of engaging in fundamental human activities: analyzing ideas and communicating them, forging spontaneous connections with others, and the like. While this may not be the terrifying, robot-warring future imagined by the Terminator movies, it would represent another kind of existential catastrophe for humanity.Whether or not the Bumble founder’s dream of artificial-intelligence-induced dalliances ever comes to fruition is an open question, but it is also somewhat beside the point. What should give us real pause is the understanding of AI, now ubiquitous in Big Tech, that underlies her dystopian prognostications. Silicon Valley leaders have helped make a world in which people feel that everyday social interactions, whether dating or making simple phone calls, require expert advice and algorithmic assistance. AI threatens to turbocharge this process. Even if your personalized dating concierge is not here yet, the sales pitch for them has already arrived, and that sales pitch is almost as dangerous as the technology itself: AI will teach you how to be a human.
theatlantic.com
Your toilet seat doesn’t have to look boring. Bailey Hikawa’s designing ones with pizza slices and pearl necklaces
There's something really beautiful that happens when people see a designed object in a space where they don't expect it, like toilet seats.
latimes.com
NYC Museum of Natural History under fire for shuttering Native American exhibit — then abandoning it to gather dust
The 57-year-old exhibit was shut in January, supposedly to speed up "repatriation" of tribal objects but Native leaders say they've heard nothing.
nypost.com
Bill Maher admits he goes hard on fellow liberals — ‘because they got a lot crazier’
"There are a lot of bad ideas on the left," Bill Maher told The Post in an interview about his new book “What This Comedian Said Will Shock You" — before listing them.
nypost.com