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Cricut, Inc. (CRCT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $162.6M, down 3% YoY, with diluted EPS of $0.11; gross margin expanded sharply to 60.5% and operating margin reached 18.0% .
  • Results were a significant beat vs S&P Global consensus: EPS $0.11 vs $0.071* and revenue $162.6M vs $154.7M*; management highlighted one-time items that boosted margins and withdrew prior operating margin color due to tariff uncertainty, while still expecting quarterly profitability and strong cash generation .
  • The Board authorized a $0.75 special dividend, a $0.10 recurring semi-annual dividend (both payable July 21, 2025), and replenished the stock repurchase program to $50M .
  • Strategic positives: paid subscribers rose 6% YoY to ~2.97M; international revenue grew 8% YoY to 22% of total; Connected Machines revenue grew 4% while Accessories & Materials fell 15% (benefited ~5 pts by one-time items) .
  • Management flagged tariffs as a key uncertainty and removed operating margin outlook; they expect sales to decline YoY in H1 2025 but at a slower rate than H1 2024, with platform revenue up YoY and continued strong cash flow .

What Went Well and What Went Wrong

What Went Well

  • Paid subscribers increased 6% YoY to just over 2.97M; ARPU rose 2% to $53.10, supporting platform revenue growth (+2% YoY to $80.0M) .
  • Gross margin expanded to 60.5% (from 54.7% YoY) and operating income rose 16% YoY to $29.3M (18.0% margin), aided by selling previously reserved inventory and duty drawback; platform gross margin was ~89% .
  • International momentum: revenue +8% YoY, now 22% of total (with ~$35.1M in Q1), strength in U.K., Germany, META and Latin America .

What Went Wrong

  • Accessories & Materials revenue declined 15% YoY despite ~5 pts benefit from one-time items; management admitted share losses to private label brands and pressure from lower engagement .
  • Engagement headwinds persisted: Active Users ~5.926M (-0.4% YoY) and 90-Day Engaged Users ~3.372M (-4% YoY), pressured by large 2020–2021 cohorts aging and lighter usage among newer mainstream users .
  • Guidance clarity reduced: management withdrew operating margin color due to tariff uncertainty, signaling potential pricing actions (less deep promotions, targeted increases) and measured marketing spend .

Financial Results

Quarterly Performance vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$167.9 $209.3 $162.6
Gross Margin %46.1% 44.9% 60.5%
Operating Income ($USD Millions)$10.6 $13.9 $29.3
Operating Margin %6.3% 6.6% 18.0%
Net Income ($USD Millions)$11.5 $11.9 $23.9
Net Income Margin %6.8% 5.7% 14.7%
Diluted EPS ($USD)$0.05 $0.06 $0.11

Segment Revenue

SegmentQ3 2024Q4 2024Q1 2025
Platform ($USD Millions)$77.7 $79.4 $80.0
Products ($USD Millions)$90.2 $129.9 $82.6

Segment Margins (from earnings call)

SegmentQ1 2025 Gross Margin %
Platform89.2%
Products32.7%

KPIs

KPIQ3 2024Q4 2024Q1 2025
Active Users (000s)5,894 5,892 5,926
90-Day Engaged Users (000s)3,532 3,812 3,372
Paid Subscribers (000s)2,838 2,959 2,974
Platform ARPU ($)$52.86 $53.12 $53.10

Actual vs Consensus (Q1 2025)

MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD)$154.7M*$162.6M
Diluted EPS ($)$0.071*$0.11
# of Estimates (Revenue / EPS)2 / 4*—

Values retrieved from S&P Global.*

Cash Flow and Balance Sheet Highlights

Metric (Q1 2025)Value
Cash from Operations ($USD Millions)$61.2
Cash & Equivalents ($USD Millions)$252.1
Marketable Securities ($USD Millions)$104.5
Cash + Securities ($USD Millions)~$356.7 (sum for context)

Note: Management referenced “cash and cash equivalents of $357M” on the call, which aligns with cash plus marketable securities on the balance sheet .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Company SalesH1 2025 vs H1 2024Decline YoY, less severe than H1’24 Decline YoY, less severe than H1’24 Maintained
Platform SalesFY 2025Increase YoY on subscriber growth Increase YoY; subscriber growth seasonality (Q1/Q4 up, Q2/Q3 flat/declining) Maintained with added detail
Operating Margin ColorFY 2025Down ~2–3 pts vs 2024 due to higher OpEx No longer providing operating margin color; expect profitability each quarter and significant positive cash flow Withdrawn
DividendsPayable July 21, 2025Semi-annual $0.10 (paid Jan 21, 2025) Special $0.75 and semi-annual $0.10; record date July 7, 2025 Raised (special) + Maintained (recurring)
Share RepurchaseOngoing~$22.9M remaining as of year-end 2024 Program replenished to $50M; $12M used in Q1 (2.1M shares) Increased authorization

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24 and Q4’24)Current Period (Q1’25)Trend
Tariffs/MacroGrowing risk; diversified supply chain; maintained marketing and promotions; expected H1’25 sales decline less severe vs H1’24 Supply chain largely outside China (machines in Malaysia; consumables in SK/TH/China mix); likely higher consumer prices via less deep promos and targeted increases; removed margin color Heightened uncertainty
New Product PerformanceExplore 4/Maker 4 launched late Feb; early positive feedback Well received by retailers/consumers; stock available; Connected Machines revenue +4% Improving
EngagementOngoing erosion from 2020/21 cohorts and lighter usage by new users; retention marketing platform initiated Personalization via push/e-mail scaling; platform UX re-architecture to simplify use cases; still pressured Mixed (work-in-progress)
SubscriptionsPaid subs +7% in FY’24 to 2.96M; promo-driven win-backs; ARPU +2% Paid subs +6% YoY to ~2.97M; ARPU +2%; seasonality expected (Q1/Q4 up, Q2/Q3 flat/down) Positive, tempered by seasonality
Accessories & MaterialsDown 20% FY’24; value line expanded; more promotions; IP actions initiated Down 15% in Q1 (with ~5 pts one-time help); accelerating value line (+100 SKUs) and pricing competitiveness Stabilization efforts
InternationalStrength in France/MESA/LatAm; U.K. improved; Australia soft +8% YoY; 22% of revenue; strength in U.K., Germany, META, LatAm; Australia soft Improving selectively

Management Commentary

  • “We are pleased with the increase in paid subscribers in Q1 up 6% year-over-year, the continuation of positive International sales growth up 8% year-over-year and strong profitability.” — Ashish Arora, CEO .
  • “Total gross margin in Q1 was 60.5%… product gross margins benefited from selling previously reserved inventory and duty drawback and more favorable product mix.” — Kimball Shill, CFO .
  • “Given the uncertainty surrounding tariffs, our prior guidance for operating margins can no longer be relied upon… We expect to be profitable each quarter and generate significant positive cash flow during 2025.” — Kimball Shill, CFO .
  • “We need to reignite our top line… attract more new users… reverse weakening engagement trends… take back our share in accessories and materials.” — Ashish Arora, CEO .

Q&A Highlights

  • Tariff mitigation: diversified manufacturing (machines in Malaysia; consumables largely outside China), disciplined pricing/promotions, and potential for share gains as some partners slow receipts from China; margins uncertain, hence withdrawn guidance .
  • Engagement timeline: onboarding UX overhaul, personalized lifecycle campaigns (push/e-mail/SMS/social), and use-case-led design simplification expected to lift engagement as execution accelerates in 2025 .
  • Inflection confidence: improving machines sell-in/out, expanding value line materials (+100 SKUs), and supply chain advantage with retail partners; note ~4 pts one-time help to operating margin in Q1 .
  • New machines uptake: Maker 4/Explore 4 well received; ample stock; flexibility greatest in consumables for incremental shelf placement and marketing .
  • Value line trajectory: engineered for online marketplaces, profitable configurations, expanding SKUs and affordability focus to regain share over time .

Estimates Context

  • Q1 2025 EPS: Actual $0.11 vs Consensus $0.071* — significant beat.
  • Q1 2025 Revenue: Actual $162.6M vs Consensus $154.7M* — significant beat.
  • Estimate counts: Revenue (2); EPS (4).

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Margin-rich platform continues to underpin profitability; Q1 gross margin 60.5% and operating margin 18%, aided by one-time items — expect normalization but structurally supported by subscription mix .
  • The $0.75 special dividend and $0.10 recurring dividend plus replenished $50M buyback provide tangible capital return catalysts near term (July 21 payable) .
  • Machines show early signs of recovery (sell-in/out up; Connected Machines +4%) supported by new launches; watch for sustained momentum into Q2/Q3 amid tariff backdrop .
  • Engagement remains the swing factor; execution on onboarding UX, personalization, and use-case flows is key to stabilizing materials and driving subscription retention .
  • International growth (+8% YoY; 22% mix) diversifies revenue; continued investment in awareness in select markets could expand share despite Australia softness .
  • Guidance caution: operating margin outlook withdrawn due to tariffs; company still expects profitability each quarter and strong cash generation in 2025 — pricing/promotions likely tighten .
  • Near-term trading lens: strong Q1 beat and capital return announcements are positives; watch for updates on tariff impacts, materials share gains, and engagement KPIs as key narrative drivers .