Cricut, Inc. Q4 FY2025 earnings call

Ashish mentioned they are pleased with increased profitability and growth in paid subscribers and global machine sellout units but disappointed in lack of total company sales growth. In 2025, they launched two new cutting machines, a new mini heat press, several new materials, and made significant software platform improvements. They are focused on four main priorities: new user acquisition, user engagement, subscriptions, and accessories and materials. In 2026, they've launched two next - generation cutting machines, new heat presses, and a direct - to - film service. They continue to work on simplifying user experience with project - guided flows. Engagement erosion is moderating, and they've seen improvements in platform performance and reliability. Net Promoter Score has improved. Paid subscribers increased in Q4. They've made progress in regaining share in certain product areas and driving costs out of the supply chain. Kimball went through financial details, breaking down revenue by platform and products, discussing gross margin, operating expenses, and balance sheet/cash flow.

In Q4 2025, revenue was $203.6 million, a 3% decline year - on - year. Full - year 2025 revenue was $708.8 million, less than a 1% decline. Platform revenue in Q4 2025 was $83.9 million, up 6% year - on - year. Full - year platform revenue was up 5%. Q4 2025 product revenue was $119.7 million, down 8% year - on - year. Connected machines revenue in Q4 decreased 4% year - on - year, driven by lower average selling prices. Accessories and materials in Q4 decreased 13% year - on - year, and full - year accessories and materials declined 9%. International sales in Q4 2025 were $57.8 million, an increase of 9% compared to Q4 2024, and represented 28% of total revenue. Full - year international sales increased 8% and were 24% of total company revenues. Paid subscribers in Q4 2025 increased by over 4% year - on - year to just over 3.09 million. Platform gross margin in Q4 was 88.6%, an increase from 87.9% a year ago. Full - year platform gross margin was 89%, up from 88.1% in 2024. Products gross margin in Q4 was 18.4% compared to 18.7% in Q4 a year ago. Full - year products gross margin was 26% in 2025, up from 19.3% in 2024.

They are focused on accelerating investments in R&D, new product launches, and marketing, including international markets, and continuing promotional strategy to drive affordability. They expect to be profitable each quarter and generate cash flow from operations for 2026. They also expect to continue active use of the $50 million stock repurchase program with $41.3 million remaining. They are not providing guidance on margin impact due to the recent Supreme Court ruling overturning IEPA tariffs.

The statements contain forward - looking statements which involve inherent risks and uncertainties, including those identified in the risk factor section of Cricut's most recently filed Form 10 - K or Form 10 - Q. Tariff uncertainty is a reality, although the recent Supreme Court ruling may impact margin, but no specific margin impact guidance is provided.

Q: With the shift toward bundles, are retailers needing to make any changes to shelf space or in - store merchandising, and how are retailers responding to the bundle offering?

A: Retailers haven't seen impact to their merchandising or shelf strategy. They understand the bundle first strategy, and both consumers and retailers have received it positively. Initial results of guided flows have been positive.

Q: How should we think about the role of DTF longer term, primarily incremental usage from existing users or attracting new consumers to the platform?

A: DTF is initially focused on existing users in North America, initially available on desktop. It's a way to monetize the platform outside of traditional cutting machines, leveraging existing infrastructure and guided flows.

Q: Can you talk about some of the key learnings so far as you continue to roll out AI - driven features and products and how it informs your priorities for go - to - market strategy?

A: AI fits well with content strategy. Create AI is a generative AI offering that helps users generate images and modify them into projects. It's a good acquisition tool for attracting new subscribers and is complementary to the existing image library. It may introduce some gross margin pressure as it's ramped up, but is an important aspect of improving the overall customer experience.