Cricut, Inc. Q2 FY2025 earnings call

• Sales grew 2%, operating income grew 14%, EPS grew 22%, and paid subscribers grew 7% to over 3 million. Both Platform and Products segments posted growth of 4% and 1% respectively. • Accelerated shipments of accessories and materials in Q2 helped post positive sales growth sooner than expected. • Increased marketing spend across paid channels, with Q2 exceeding 2x views and engagements vs prior year. • Mother's Day promotion for machines outperformed last year. • Continued efforts to simplify user experience, with beta launches of improved flows and AI features in Design Space. • Subscriptions business crossed 3 million paid subscribers, with 197,000 year-on-year growth. • Accessories and materials sales increased 12% in Q2, with a successful national sales promotion on heat presses.

In Q2 2025, Cricut generated revenue of $172.1 million, a 2% increase year-on-year. Platform revenue was $80.7 million, up 4% YOY. Products revenue was $91.4 million, up 1% YOY. The subscriptions business crossed 3 million paid subscribers, with a 7% year-on-year growth in paid subscribers. Platform gross margin was 89.1% in Q2 2025, up from 88.6% in Q2 2024. Products gross margin was 32.4% in Q2 2025, up from 23.3% in Q2 2024.

• Assessing the impact of accelerated accessories/materials shipments and tariffs on the top-line and bottom-line for the second half of 2025. • Expecting platform sales to increase year-on-year on paid subscriber growth. • No detailed quarterly or annual guidance provided, but expecting to be profitable each quarter and generate significant positive cash flow during 2025. • Not providing color on operating margin expectations due to tariff uncertainty.

• Tariffs in Southeast Asia, including Malaysia, South Korea, and Thailand, introducing uncertainty. • Potential impact of tariffs on consumer discretionary spending. • Continued pressure on engagement metrics despite moderating decline.

Q: On the pull forward of accessories/materials orders ahead of tariffs, can you quantify the impact on top-line and bottom-line and potential demand gap in the second half?

A: Can't give exact amount, but acceleration was due to supply chain strength helping with share gain; monitoring sellout to understand shift from second half to first half. Accessories/materials are higher gross margin products, so accelerating shipments benefited the quarter.

Q: How to size tariff impact and mitigation efforts? Have you raised prices?

A: Most finished goods spend is outside China but still manufacture in Southeast Asia; assessing impact. Focus on providing best value to consumers, watching inflation impact on discretionary spend. Tariff impact will be felt more in Q4 2025 and 2026; assessing options to maintain affordability.

Q: How to consider special dividends going forward?

A: Cricut is a cash-generating business; excess cash from rightsizing inventory post-COVID. Capital allocation focuses on growth, inventory, investments, strategic acquisitions, stock repurchase, recurring dividend, and special dividends based on cash generation beyond normal expectations.

Q: Update on Design Space enhancements and early user feedback?

A: Focus on rearchitecting user experience to uncover project intent. Seeing moderation in engagement decline; new users making more projects in first 30 days. Implementing AI and personalized inspiration tools; multiple initiatives in progress with signs of success.

Q: Pull forward of orders: driven by retailers clearing stocks or stocking up? Trend of retail partners' inventory levels?

A: Driven by retailers' uncertainty on supply chain continuity; relative strength to meet demand. Overall inventory balance is in good balance between sell-in and sellout generally.