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Cricut, Inc. (CRCT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue fell 9% year over year to $209.3M, with Platform up 2% and Products down 15%; gross margin improved to 44.9% (+290 bps YoY) while diluted EPS rose to $0.06 from $0.05 .
  • Management launched next-gen machines (Explore 4/Maker 4) at lower price points with faster speeds and improved out-of-box experience; early feedback cited as positive and positioned as H2 2025 growth catalyst .
  • 2025 outlook: no detailed guidance, but management expects H1 sales to decline YoY (less than H1’24 rates), potential H2 inflection, Platform to grow YoY, and operating margin down ~200–300 bps in 2025 on higher marketing, R&D and IP protection costs; profitable each quarter with significant positive cash flow .
  • KPIs mixed: Paid subscribers up 7% YoY to 2.96M; Active Users and 90-day Engaged Users modestly down YoY; A&M revenue remains the key drag amid private-label pressure; value materials line expansion and promotions aim to stabilize share .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expansion: Q4 GM 44.9% vs 42.0% YoY; FY GM 49.5% vs 44.9% on lower inventory charges and higher product margins, partially offset by higher hosting/software costs .
  • Subscription momentum: Paid subscribers reached 2.96M (+7% YoY); Platform revenue grew 2% YoY in Q4 with ARPU up for FY; management cites improved onboarding and win-backs .
  • New product catalysts: Explore 4/Maker 4 launched at lower MSRPs with faster cutting and richer starter materials; CEO calls early retailer/user feedback positive and sees potential H2 inflection .

What Went Wrong

  • Top-line declines persist: Q4 revenue -9% YoY; Products -15% (Connected Machines -13%, A&M -18%) as promotions and softer units weigh; operating margin compressed YoY .
  • Engagement softness: Active Users and 90-day Engaged Users both down YoY; management cited slower post-COVID cohorts and lower project cutting from newer users .
  • Accessories & Materials share loss: A&M -20% for FY amid private label competition; company expects near-term margin pressure from price competitiveness and promotions while it pursues IP enforcement .

Financial Results

Q4 YoY comparison (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($M)$231.2 $209.3
Platform Revenue ($M)$77.9 $79.4
Products Revenue ($M)$153.3 $129.9
Gross Margin (%)42.0% 44.9%
Operating Income ($M)$16.5 $13.9
Operating Margin (%)7.1% 6.6%
Net Income ($M)$11.3 $11.9
Diluted EPS ($)$0.05 $0.06
International (% of rev)22% 25%

Sequential trend (Q2 2024 → Q3 2024 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($M)$167.9 $167.9 $209.3
Platform Revenue ($M)$77.6 $77.7 $79.4
Products Revenue ($M)$90.3 $90.2 $129.9
Gross Margin (%)53.5% 46.1% 44.9%
Operating Income ($M)$26.4 $10.6 $13.9
Operating Margin (%)15.7% 6.3% 6.6%
Net Income ($M)$19.8 $11.5 $11.9
Diluted EPS ($)$0.09 $0.05 $0.06
International (% of rev)20% 23% 25%

Segment/KPI detail

  • Product subcategories (YoY, Q4): Connected Machines -13%; Accessories & Materials -18% .
  • International revenue: +3% YoY in Q4; 25% of mix (vs 22% prior-year) .
KPIQ2 2024Q3 2024Q4 2024
Active Users (k)5,918 5,894 5,892
90-Day Engaged Users (k)3,541 3,532 3,812
Paid Subscribers (k)2,813 2,838 2,959
Platform ARPU ($)52.61 52.86 53.12 (TTM)

Notes: Platform ARPU is defined as Platform revenue over a 12-month period divided by Active Users .

Guidance Changes

Metric/TopicPeriodPrevious GuidanceCurrent CommentaryChange
Total Company Sales1H 2025n/aExpect YoY decline, but at a lower rate than 1H 2024; optimistic for H2 inflection .New qualitative outlook (decline then potential H2 inflection)
Platform RevenueFY 2025n/aExpected to increase YoY on paid subscriber growth; seasonality may show Q1/Q4 up, Q2/Q3 flat-to-down sequentially .New qualitative outlook (increase)
Operating MarginFY 2025Implied stable/improving in prior commentaryDown ~200–300 bps vs 2024 due to higher marketing, R&D, and IP protection costs; margins to improve in subsequent years .Lowered
ProfitabilityFY 2025n/aProfitable each quarter .Affirmation
Cash FlowFY 2025n/aGenerate significant positive cash flow .Affirmation
Capital ReturnsFY 2025$50M buyback authorized$22.9M remaining; expect to remain active .Ongoing
DividendJan 21, 2025Semi-annual $0.10/share announced in Q3Paid ~ $21M post Q4 for $0.10/share dividend .Executed

Management does not provide detailed quarterly or annual revenue/EPS guidance .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Marketing & PromotionsIncreased marketing spend; deeper promotions driving Connected Machines growth (Q2); continued elevated spend (Q3) .Continue higher marketing; even more promotional in 2025; marketing uplift seen in machine sell-out .Sustained investment; intensifying promotions
New Product Launchesn/aExplore 4/Maker 4 launched at lower price points; faster speeds; richer OOB experience; positive early feedback .New catalysts added
User EngagementEarly onboarding improvements; higher first-day and first-week project completion rates (Q3) .Engagement remains under pressure; focus on onboarders, workflow simplification, lifecycle campaigns (push/email/SMS) .Strategy refined; execution acceleration
Accessories & MaterialsValue line launched (H1), A&M pressured by private label; plan to compete on price (Q2/Q3) .FY A&M -20%; more value SKUs, >100 new SKUs in 1H25; price competitiveness may pressure margins near term .Share defense with value/pricing; IP actions
InternationalQ2: +3% YoY, 20% mix; Q3: +2% YoY, 23% mix .Q4: +3% YoY, 25% mix; strength in France/MESA/LatAm, improvement in UK; softness Australia .Gradual mix shift up; mixed country trends
IP Protectionn/a (prior)ITC and district court actions vs infringers; higher G&A in 2025 .Heightened enforcement
Cash/InventoryQ3: strong CFO, buyback ongoing; dividends paid .FY CFO $265M; inventory down $129M YoY; cash $337M; ongoing buyback/dividend framework .Balance sheet strength maintained

Management Commentary

  • CEO on growth and execution: “We are disappointed with our inability to execute... we are working with tremendous urgency... We can achieve this potential by driving a mass market experience, accelerating our development cycles, and competing better.” .
  • Product launch conviction: “We launched the next generation… Explore 4 and Maker 4… initial feedback is positive from both retailers and end users.” .
  • Engagement plan: “Focus on onboarders… implement user workflows… ramp lifecycle campaigns (push, email, SMS)… Design Space will meet users where they are and guide them” .
  • Subscriptions: “Paid subscribers… increased 189,000 YoY and 121,000 sequentially in Q4… positive trends on win backs… promotional offers reducing cancellations” .
  • Accessories & Materials: “We have lost significant share in retail to private label brands… focused on being more cost competitive… will continue promotional cadence… initiated litigation to protect our IP” .
  • CFO on 2025 margins: “Operating income margin… lower in 2025 by ~2 to 3 percentage points as we increase operating expenses… expect incremental improvement in subsequent years” .

Q&A Highlights

  • Engagement skepticism addressed: Management attributed pressure to COVID cohorts normalizing and lower cutting intensity among newer users; emphasized faster execution on onboarding workflows and personalized triggers to re-engage users .
  • H2 inflection framing: Not calling for full-year growth; confidence stems from Platform growth, new machine launches, marketing uplift, and A&M product/pricing actions .
  • International outlook: Growth in France, MESA, LatAm; UK improved; Australia remains challenged; focus on building awareness in key markets .
  • Connected Machines ROI vs promotions: Confidence grounded in marketing mix modeling, new machine launches, and affordability initiatives; aim to turn tide despite Q4 decline .
  • Op margin headwinds: Four drivers—higher marketing, accelerated R&D, platform enhancements, and elevated IP enforcement costs; benefits to phase in across 2025–2026 .
  • Capital allocation: Inventory normalized; maintain buyback, recurring dividend, and potential specials at Board discretion; keep dry powder for strategic opportunities .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q4 2024 and next quarter but could not due to a daily request limit error, so comparisons vs estimates are not available at this time (Values retrieved from S&P Global).*

Key Takeaways for Investors

  • Gross margin execution remains a bright spot (Q4 +290 bps YoY; FY +460 bps), providing downside protection while top-line normalizes; continued mix and lower inventory charges are supportive .
  • The 2025 playbook trades near-term margin for growth: heavier marketing, faster product cycles, and platform simplification—expect ~200–300 bps operating margin compression in 2025 with potential improvement thereafter .
  • New machines at lower price points plus richer OOB experience can re-accelerate machine adoption and expand TAM; early feedback is positive, framing a potential H2 catalyst if sell-through sustains .
  • Subscription flywheel is intact: Paid subs +7% YoY and ARPU up; lifecycle marketing and onboarding improvements aim to convert and retain more users, underpinning Platform revenue growth in 2025 .
  • A&M remains the swing factor: private label pressure and lower engagement weigh; management is leaning on value SKUs, >100 new SKUs in 1H25, promotions, and IP enforcement—execution here can materially influence 2H trajectory .
  • International mix rising (25% in Q4) with pockets of strength offsetting Australia softness; sustained awareness investments could provide incremental growth vectors outside the U.S. .
  • Balance sheet strength (cash $337M; debt-free; robust CFO) supports sustained investment and capital returns during the transition year, reducing downside risk while awaiting growth inflection .

Appendix: Additional Data (FY 2024)

MetricFY 2023FY 2024
Revenue ($M)$765.1 $712.5
Platform Revenue ($M)$309.0 $313.0
Products Revenue ($M)$456.1 $399.6
Gross Margin (%)44.9% 49.5%
Operating Income ($M)$70.0 $76.1
Operating Margin (%)9.1% 10.7%
Net Income ($M)$53.6 $62.8
Diluted EPS ($)$0.24 $0.29
Cash from Operations ($M)$288.1 $265.0
Cash & Equivalents ($M, YE)$142.2 $232.1
Marketable Securities ($M, YE)$103.0 $104.8
Inventory ($M, YE)$244.5 $115.3
International (% of rev)20% 22%