Cricut, Inc. Reports Fourth Quarter and Full Year 2023 Financial Results

Delivered 7th consecutive year of profitability with net income of $53.6 million, or 7.0% margin

Generated $288.1 million in Cash from Operations in 2023

Total users grew to over 8.9 million, up 13% over FY 2022

Paid subscribers increased to 2.77 million, up 6% over FY 2022

Delivered FY 2023 revenue of $765.1 million, 14% decline compared to FY 2022

66% of total users cut on their Connected Machine in 2023

SOUTH JORDAN, Utah, March 05, 2024 (GLOBE NEWSWIRE) -- Cricut, Inc. (“Cricut”) (NASDAQ: CRCT), the creative technology company that has brought a connected platform for making to millions of users worldwide, today announced financial results for its fourth quarter and full year ended December 31, 2023.

“We moved through 2023 focused on profitability even as we navigated a dynamic consumer discretionary environment. We are encouraged by our 49% operating income increase in Q4 year over year and the positive uplift from our promotions in Q4. However, we were disappointed that sales fell in the quarter and full year by 18% and 14%, respectively. Our promotions uplift was smaller than we expected and is attributable in part to lower retailer inventory, but in hindsight, we could have conducted more aggressive marketing and promotions,” Cricut's Chief Executive Officer, Ashish Arora, said. “We intend to boost our marketing efforts and spending in 2024 to generate more interest and demand throughout the funnel. We will continue our deeper promotional strategy while focusing on maintaining great pricing discipline. We will keep concentrating on acquiring new users and enhancing their engagement and revenue generation.”

Fourth Quarter 2023 Financial Results

• Revenue was $231.2 million compared to $280.8 million in Q4 2022.
• Connected machine revenue was $77.4 million compared to $102.3 million in Q4 2022.
• Subscriptions revenue was $76.5 million up from to $71.1 million in Q4 2022.
• Accessories and materials revenue was $77.3 million compared to $107.3 million in Q4 2022.
• Gross margin was 42.0%, compared to 29.8% in Q4 2022.
• Operating income was $16.5 million, or 7.1% of total revenue, compared to $11.1 million, or 4.0% of revenue in Q4 2022.
• Net income was $11.3 million or 4.9% of revenue, compared to $10.9 million or 3.9% of revenue in Q4 2022.
• Diluted earnings per share was flat year over year at $0.05.
• International revenue decreased by 5% over Q4 2022 and was 22% of total revenue, up from 19% of total revenue in Q4 2022.

Full Year 2023 Financial Results

• Revenue was $765.1 million compared to $886.3 million in FY 2022.
• Connected machine revenue was $198.3 million compared to $252.6 million in FY 2022.
• Subscriptions revenue was $304.0 million, up from $272.3 million in FY 2022.
• Accessories and materials revenue was $262.8 million, compared to $361.4 million in FY 2022.
• Gross margin was 44.9%, up from 39.5% in FY 2022.
• Operating income was $70.0 million, or 9.1% of total revenue, compared to $80.0 million, or 9.0% of revenue in FY 2022.
• Net income was $53.6 million, or 7.0% of revenue, compared to $60.7 million, or 6.8% of revenue in FY 2022.
• Diluted earnings per share was $0.24 compared to $0.28 in FY 2022.
• International revenue was $155.2 million, or 20% of total revenue, compared to $142.3 million or 16% of total revenue in FY 2022.
• Generated $288.1 million in cash from operations.

"Although sales were below expectations and the baseline run rate outside of promotional periods continues to be softer than we would have expected, I am encouraged by operating income, which rose 49% in Q4, and we achieved our 20th consecutive quarter of positive net income. We continue to produce strong cash flow on a yearly basis, which supports inventory needs and investments for long-term growth. In 2023, we generated $288 million in cash from operations, compared to $118 million in 2022. We closed 2023 with a cash and cash equivalents balance of $245 million. We have no debt," said Kimball Shill, Chief Financial Officer. "During Q4, we spent $15.7 million of cash to buy back 2.1 million shares of our stock. After the quarter ended and through March 1, we spent $10.8 million of cash to buy back 1.7 million more shares of our stock, which effectively finishes our $50 million approved stock repurchase program that was authorized in August 2022. After three years of business evolution, we are planning to change some parts of our quarterly information package for 2024. We increasingly see Cricut as a platform business with physical products. Going forward, we are changing how we report our segments to be Platform and Products. We will also update our public KPIs to focus on the most relevant indicators for our current and future operations."     
  

2023 Business Highlights

• Total user base grew to over 8.9 million, or 13% over 2022. Growth in our top 6 markets indicate 7% market penetration of our serviceable addressable market, up from 5% two years ago.
• Paid subscribers grew to 2.77 million, up 6% over 2022. Attach rates decreased to 31% compared to 33% in 2022.
• Ended 2023 with 3.9 million Engaged Users, down 3% over 2022. In Q4 2023, 44% of total users cut on the Cricut platform over the past 90 days. 66% of total users cut on their connected machines in 2023.
• Launched two new machines: Cricut Joy Xtra and Cricut Venture.

Key Performance Metrics  

Webcast and Conference Call Information

Cricut management will host a conference call and webcast to discuss the results today, Tuesday, March 5, 2024 at 3:00 p.m. Mountain Time (5:00 p.m. Eastern Time). Information about Cricut’s financial results, including a link to the live and archived webcast of the conference call, will be made available on Cricut’s investor relations website at https://investor.cricut.com/.

The live call may also be accessed via telephone. Please pre-register using this link: Cricut Q4 2023 Earnings Pre-Registration. After registering, a confirmation will be sent via email and will include dial-in details and a unique PIN code for entry to the call. To avoid long wait times, we suggest registering at minimum 15 minutes before the start of the call to receive your unique PIN code.

About Cricut, Inc.

Cricut, Inc. is a creative technology company that helps people lead creative lives. Cricut hardware and design software work together as a connected platform for consumers to make beautiful, high-quality DIY projects quickly and easily. These industry-leading products include a flagship line of smart cutting machines — the Cricut Maker^® series, the Cricut Explore^® series, and Cricut Joy^® series, and Cricit Venture^® series — accompanied by other unique tools like Cricut EasyPress^®, the Infusible Ink^™ system, and a diverse collection of materials. In addition to providing tools and materials, Cricut fosters a thriving community of millions of dedicated users worldwide.

Cricut has used, and intends to continue using, its investor relations website and the Cricut News Blog (https://cricut.com/blog/news/) to disclose material non-public information and to comply with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website and the Cricut News Blog in addition to following our press releases, SEC filings and public conference calls and webcasts.

Media Contact:
Nadia Romero
pr@cricut.com

Investor Contact:
Jim Suva
investors@cricut.com

Source: Cricut, Inc.

Key Performance Metrics

In addition to the measures presented in our consolidated financial statements, we use the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. We believe these metrics are useful to investors because they can help in monitoring the long-term health of our business. Our determination and presentation of these metrics may differ from that of other companies. The presentation of these metrics is meant to be considered in addition to, not as a substitute for or in isolation from, our financial measures prepared in accordance with GAAP.

Glossary of Terms

Users: We define a User as a registered user of at least one registered connected machine as of the end of a period. One user may own multiple registered connected machines, but is only counted once if that user registers those connected machines by using the same email address.

Engaged Users: We define the Engaged Users as users who have used a connected machine for any activity, such as cutting, writing or any other activity enabled by our connected machines, in the past 90 days.

Percentage of Users Creating in Trailing 90 Days: We define the Percentage of Users Creating in Trailing 90 Days (Engaged Users) as the percentage of users who have used a connected machine for any activity, such as cutting, writing or any other activity enabled by our connected machines, in the past 90 days. We calculate the percentage by dividing the number of Engaged Users in the period by the total user base.

Paid Subscribers: We define Paid Subscribers as the number of users with a subscription to Cricut Access or Cricut Access Premium, excluding cancelled, unpaid or free trial subscriptions, as of the end of a period.

Subscription ARPU: We define Subscription ARPU as Subscriptions revenue divided by average users in a period.

Accessories and Materials ARPU: We define Accessories and Materials ARPU as Accessories and Materials revenue divided by average users in a period. Accessories and Materials ARPU fluctuates over time as we introduce new accessories and materials at various price points and as the volume and mix of accessories and materials purchased changes.

Cautionary Statement Regarding Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 as amended (the “Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements include, but are not limited to, quotations from management, business outlook, strategies, market size and growth opportunities. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as “anticipates,” “believes,” “targets,” “potential,” “estimates,” “expects,” “intends,” “plans,” “projects,” “may” or similar terminology. In particular, statements, express or implied, concerning future actions, conditions or events, future results of operations or the ability to generate revenues, income or cash flow are forward-looking statements. These statements are based on and reflect our current expectations, estimates, assumptions and/ or projections and our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions, many of which are beyond our control, that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections will prove to be correct or that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this press release are only made as of the date indicated on the relevant materials and are based on our estimates and opinions at the time the statements are made. We disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances or changes in opinion, except as required by law.

Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements including, but not limited to, risks and uncertainties associated with: our ability to attract and engage with our users; competitive risks; supply chain, manufacturing, distribution and fulfillment risks; international risks, including regulation and tariffs that have materially increased our costs and the potential for further trade barriers or disruptions; sales and marketing risks, including our dependence on sales to brick-and-mortar and online retail partners and our need to continue to grow online sales; risks relating to the complexity of our business, which includes connected machines, custom tools, hundreds of materials, design apps, e-commerce software, subscriptions, content, international production, direct sales and retail distribution; risks related to product quality, safety and warranty claims and returns; risks related to the fluctuation of our quarterly results of operations and other operating metrics; risks related to intellectual property, cybersecurity and potential data breaches; risks related to our dependence on our Chief Executive Officer; risks related to our status as a “controlled company”; and the impact of economic and geopolitical events, natural disasters and actual or threatened public health emergencies, current recessionary pressures and any resulting economic slowdown from any of these events, or other resulting interruption to our operations. These risks and uncertainties are described in greater detail under the heading “Risk Factors” in the most recent form 10-Q that we have filed with the Securities and Exchange Commission (“SEC”).