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Cricut, Inc. (CRCT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered a clear beat vs Wall Street: revenue $170.4M vs $156.7M consensus and diluted EPS $0.10 vs $0.04 consensus; EBITDA also beat ($28.7M vs $18.6M). Bold beat driven by mix toward platform, higher product margins, and lower reserves. Values retrieved from S&P Global.*
  • Gross margin expanded to 55.2% (from 46.1% YoY), operating margin to 13.3% (from 6.3% YoY), and net margin to 12.0% (from 6.8% YoY), reflecting stronger subscription share and monetization of previously reserved inventory .
  • Platform revenue rose 7% YoY to $82.8M and paid subscribers grew 6% to just over 3.0M; engagement remains a headwind with 90-day engaged users down 3% YoY and accessories & materials down 17% YoY .
  • Management guided to profitability in Q4 and “significant positive cash flow” for the year, but highlighted rising tariff costs as a margin headwind in Q4 and accelerating into 2026 .
  • Capital allocation: board authorized a recurring semi-annual $0.10 dividend payable Jan 20, 2026; $46.9M remains on the $50M buyback program; stock repurchases of $2.3M in Q3 .

What Went Well and What Went Wrong

What Went Well

  • Platform strength: Platform revenue grew 7% YoY to $82.8M; ARPU increased 4% YoY to $54.96, and paid subscribers topped 3.0M (+6% YoY) . “We posted solid results in Q3. Sales grew 2%, operating income grew 114%, EPS grew 100%, and paid subscribers grew 6%” — Ashish Arora, CEO .
  • Margin expansion and profitability: Gross margin 55.2% (vs 46.1% YoY); product GM improved to 23.1% (from 10.7%), with operating income up 114% YoY to $22.7M and net income up 79% to $20.5M .
  • International momentum: Q3 international revenue $40.5M (+5% YoY) and 24% of total (vs 23% LY); green shoots in U.K./Western Europe and nascent India/Japan; Australia stabilizing .

What Went Wrong

  • Engagement softness: 90-day engaged users fell 3% YoY to 3,419K; active users flat YoY at 5,874K; management acknowledges need to “reverse weakening engagement trends” .
  • Accessories & materials pressure: Revenue down 17% YoY; competitive intensity from white-label/retailer brands and online marketplaces; Q2 pull-forward normalized lower in Q3 .
  • Tariffs: CFO warned higher tariff costs will negatively impact margins in Q4 and accelerate in 2026; exposure across Malaysia, South Korea, Thailand, and some China finished goods; average tariff framework ~20% applied to ~75% of COGS (timing impact as inventory turns) .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$167.9 $172.1 $170.4
Diluted EPS ($)$0.05 $0.11 $0.10
Gross Margin %46.1% 59.0% 55.2%
Operating Income ($USD Millions)$10.6 $30.1 $22.7
Operating Margin %6.3% 17.5% 13.3%
Net Income ($USD Millions)$11.5 $24.5 $20.5
Net Income Margin %6.8% 14.2% 12.0%
Segment MetricQ3 2024Q2 2025Q3 2025
Platform Revenue ($USD Millions)$77.7 $80.7 $82.8
Products Revenue ($USD Millions)$90.2 $91.4 $87.7
Platform ARPU ($)$52.86 $53.84 $54.96
Paid Subscribers (000s)2,838 3,010 3,004
Active Users (000s)5,894 5,901 5,874
90-Day Engaged Users (000s)3,532 3,482 3,419
Geography MetricQ3 2024Q2 2025Q3 2025
International Revenue ($USD Millions)—$36.3 $40.5
International Revenue % of Total23% 21% 24%

Estimate Comparison and Forward Consensus (S&P Global)*

MetricQ3 2025Q4 2025
Revenue Consensus Mean ($USD Millions)$156.7* vs Actual $170.4 $202.5*
Primary EPS Consensus Mean ($)$0.04* vs Actual $0.10 $0.02*
EBITDA Consensus Mean ($USD Millions)$18.6* vs Actual $28.7*$18.6*
Primary EPS - # of Estimates (#)4*3*
Revenue - # of Estimates (#)2*2*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Platform SalesQ4 2025 and FY 2025“Expect platform sales to increase year-on-year on paid subscriber growth” (Q2 call) “Expect platform sales to increase sequentially year-on-year in Q4 and for the full year” Maintained/clarified
ProfitabilityQ4 2025 / FY 2025“Expect to be profitable each quarter and generate significant positive cash flow during 2025” “Expect to be profitable in Q4 and generate significant positive cash flow for the year” Maintained
Margins (Tariffs)Q4 2025 → 2026“No longer providing margin color; Q2 shipment benefits not expected to recur” “Higher tariff costs will negatively impact margins in Q4; headwind accelerates in 2026” Lowered (due to tariffs)
Marketing Spend2H 2025/Q4“Lean in during second half; data-driven” “Continue to lean in through holiday; data-driven” Maintained
DividendJan 2026Special $0.75 and recurring $0.10 paid in July 2025 Recurring semi-annual $0.10 payable Jan 20, 2026 (record Jan 6, 2026) Maintained cadence
Share RepurchaseOngoing$49M remaining on $50M program (post-Q2) $46.9M remaining; $2.3M repurchased in Q3 Decreased remaining balance

Earnings Call Themes & Trends

TopicQ1 2025 (Prior-2)Q2 2025 (Prior-1)Q3 2025 (Current)Trend
AI/Technology InitiativesARPU up; investments in engagement; no explicit Create AI launch in PR Rolling beta of generative “Create AI” for Access; AI in search; off-platform engagement marketing Create AI moved to production; AI-generated vector images; AI in search/content and dev efficiency Building features; commercialization underway
Supply ChainMajority finished goods spend moved outside China; competitive advantage Diversified across Malaysia, South Korea, Thailand; retailer pull-forward due to uncertainty Nimble execution; exposure to Asian tariffs; average ~20% framework discussed Diversification helpful; tariffs rising
Tariffs/MacroUncertainty acknowledged Timing shift benefited Q2; margin caution; removed margin outlook Margin headwind in Q4 and more in 2026; consumer concern emerging in surveys Worsening headwind
Product PerformanceProducts -7% YoY Accessories & materials +12% (pull-forward); connected machines -10% Connected machines +12%; accessories & materials -17% YoY Machines improving; accessories under pressure
Regional TrendsInternational +8% YoY; 22% of revenue International $36.3M; 21% of revenue; softness in Australia International $40.5M; 24% of revenue; U.K./W. Europe positive; India/Japan green shoots; Australia stabilizing Improving mix outside U.S.
R&D/UX ExecutionFocus on simplifying user experience; margin expansion Guided flows in beta; onboarding improvements; more projects in first 30 days for new users Guided flows in production; further beta use cases; simplifying intent-driven flows Continues to execute

Management Commentary

  • “We are pleased with our second consecutive quarter of sales growth in Q3… accelerating investments that will help drive future revenue growth… even as we navigate the uncertainty introduced by tariffs.” — Ashish Arora, CEO .
  • “Gross margin… improvement reflects higher product gross margins and a higher amount of subscription revenue… with higher platform margins… less reserves compared to last year, selling of previously reserved excess and obsolete products, and more favorable mix toward newer products.” — Kimball Shill, CFO .
  • “We ended Q3 with cash and cash equivalents of $207 million and remain debt free.” — Kimball Shill, CFO . Note: Balance sheet shows cash & equivalents $187.9M and marketable securities $19.2M, totaling ~$207.1M .
  • “Higher tariff costs will have a negative impact on margins in Q4, and this headwind will accelerate in 2026.” — Kimball Shill, CFO .

Q&A Highlights

  • Seasonality and holiday outlook: Management expects Q4 to be the highest engagement quarter, with sellout units up year-to-date; caution on consumer concern about tariffs impacting household spend .
  • Tariff framework and margin path: CFO outlined exposure to Malaysia, South Korea, Thailand, and China; average ~20% tariff assumption impacting ~75% of COGS, flowing through P&L with inventory turns; margin pressure intensifies in 2026 .
  • AI strategy and subscriber value: Create AI produces ready-to-cut vector images; AI embedded in search/content merchandising; may modestly pressure platform margins as adoption grows, but helps subscriber acquisition/retention .
  • Channel inventory and Q2 pull-forward: Inventory viewed as balanced entering holiday; Q2 pull-forward largely absorbed; accessories & materials business remains under pressure on normalized basis .
  • Operating margin 2026: Expect absorption to gross margins due to tariffs; mitigation via pricing/promotions and supply chain cost-reduction, but margin pressure likely persists .

Estimates Context

  • Q3 2025 beat vs consensus: Revenue $170.4M vs $156.7M*, EPS $0.10 vs $0.04*, EBITDA $28.7M vs $18.6M*. Bold beats reflect higher platform mix and product margin improvements; subscription revenue growth aided ARPU uplift. Values retrieved from S&P Global.*
  • Q4 2025 outlook (consensus): Revenue $202.5M*, EPS $0.02*, EBITDA $18.6M*; management expects profitability but flagged gross margin pressure from tariffs and heightened promotions . Values retrieved from S&P Global.*
  • Implication: Street likely to raise near-term EPS/EBITDA for Q3 actuals, but may temper Q4/2026 margin assumptions given explicit tariff headwinds .

Key Takeaways for Investors

  • Quality beat on revenue/EPS/EBITDA driven by platform strength and improved product margins; subscription flywheel (ARPU +4% YoY, paid subs +6% YoY) remains a key support to profitability .
  • Engagement is the swing factor: active users flat and 90-day engaged down 3% YoY underscore the importance of guided flows and AI features to reaccelerate usage; watch for early signs of stabilization/improvement in Q4 cohorts .
  • Accessories & materials execution is critical: -17% YoY in Q3 after Q2 pull-forward; competitive intensity persists; management’s “value line” and new SKUs plus promotions aim to reclaim share — track holiday sell-through vs normalized run-rate .
  • Tariffs introduce measurable margin headwind: expect gross margin compression in Q4 and more in 2026; mitigation via mix, pricing/promo, and supply chain cost actions will determine the slope of margin trajectory .
  • International mix improving: revenue +5% YoY in Q3 and 24% of total; momentum in U.K./W. Europe and green shoots in India/Japan offer medium-term diversification .
  • Capital returns remain active: recurring $0.10 dividend authorized for Jan 2026; $46.9M buyback capacity remaining; balance sheet liquidity strong (cash & equivalents plus marketable securities ~ $207M) .
  • Trading setup: Near-term positive on beat and platform resilience, but cautious on Q4/2026 margin headwinds from tariffs/promotions; watch management commentary at upcoming conferences for tariff updates and holiday performance .
Note: All consensus estimate and target price values marked with * are values retrieved from S&P Global.