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

    المصدر: Nasdaq GlobeNewswire / 05 مارس 2024 15:05:36   America/Chicago

    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  


     As of December 31,
     2023  2022 
    Users (in thousands)8,944  7,893 
    Percentage of Users Creating in Trailing 90 Days44% 51%
    Number of Users Creating in Trailing 90 Days3,932  4,050 
    Paid Subscribers (in thousands)2,770  2,609 


     Three Months Ended December 31, Twelve Months Ended December 31,
      2023  2022  2023  2022
    Subscription ARPU$8.70 $9.26 $36.11 $38.09
    Accessories and Materials ARPU$8.80 $13.99 $31.22 $50.54


    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”).


    Cricut, Inc.
    Condensed Consolidated Statements of Operations and Comprehensive Income
    (in thousands, except share and per share amounts)

      Three Months Ended December 31, Year Ended December 31,
       2023   2022   2023   2022 
    Revenue:        
    Connected machines $77,402  $102,314  $198,312  $252,563 
    Subscriptions  76,512   71,097   303,989   272,344 
    Accessories and materials  77,332   107,349   262,846   361,389 
    Total revenue  231,246   280,760   765,147   886,296 
    Cost of revenue:        
    Connected machines  64,127   99,425   172,571   244,260 
    Subscriptions  8,651   7,442   32,346   26,375 
    Accessories and materials  61,430   90,282   216,937   265,768 
    Total cost of revenue  134,208   197,149   421,854   536,403 
    Gross profit  97,038   83,611   343,293   349,893 
    Operating expenses:        
    Research and development  14,991   17,582   65,048   76,914 
    Sales and marketing  35,771   36,909   123,169   130,379 
    General and administrative  29,757   18,024   85,091   62,647 
    Total operating expenses  80,519   72,515   273,308   269,940 
    Income from operations  16,519   11,096   69,985   79,953 
    Other income (expense):        
    Interest income  1,756   933   7,976   1,809 
    Interest expense  (82)  (81)  (323)  (289)
    Other income  290   658   2,145   508 
    Total other income, net  1,964   1,510   9,798   2,028 
    Income before provision for income taxes  18,483   12,606   79,783   81,981 
    Provision for income taxes  7,195   1,715   26,147   21,315 
    Net income $11,288  $10,891  $53,636  $60,666 
    Other comprehensive income (loss):        
    Change in net unrealized gains (losses) on marketable securities, net of tax  765   (228)  711   (300)
    Change in foreign currency translation adjustment, net of tax  129   122   41   (120)
    Comprehensive income $12,182  $10,785  $54,388  $60,246 
    Earnings per share, basic $0.05  $0.05  $0.25  $0.28 
    Earnings per share, diluted $0.05  $0.05  $0.24  $0.28 
    Weighted-average common shares outstanding, basic  217,252,985   215,658,921   216,892,525   214,458,284 
    Weighted-average common shares outstanding, diluted  218,671,797   219,710,235   219,722,063   220,588,789 

       


    Cricut, Inc.
    Condensed Consolidated Balance Sheets
    (in thousands, except share and per share amounts)

     As of December 31,
      2023  2022 
    Assets   
    Current assets:   
    Cash and cash equivalents$ 142,187 $224,943 
    Marketable securities 102,952  74,256 
    Accounts receivable, net 111,247  136,539 
    Inventories 244,469  351,682 
    Prepaid expenses and other current assets 19,114  23,842 
    Total current assets 619,969  811,262 
    Property and equipment, net 47,614  63,407 
    Operating lease right-of-use assets 12,353  17,078 
    Intangible assets, net   760 
    Deferred tax assets 34,823  23,819 
    Other assets 35,363  33,301 
    Total assets$750,122 $949,627 
    Liabilities and Stockholders’ Equity   
    Current liabilities:   
    Accounts payable$76,860 $63,195 
    Accrued expenses and other current liabilities 71,933  69,775 
    Deferred revenue, current portion 40,304  34,869 
    Operating lease liabilities, current portion 5,230  5,436 
    Dividends payable, current portion 2,137  80,781 
    Total current liabilities 196,464  254,056 
    Operating lease liabilities, net of current portion
    Operating lease liabilities, net of current portion
     8,938  13,935 
    Deferred revenue, net of current portion 2,931  3,789 
    Other non-current liabilities  6,916  5,112 
    Total liabilities 215,249  276,892 
    Commitments and contingencies   
    Stockholders’ equity:   
    Preferred stock, par value $0.001 per share, 100,000,000 shares authorized, and no shares issued and outstanding as of December 31, 2023 and December 31, 2022.    
    Common stock, par value $0.001 per share, 1,250,000,000 shares authorized as of December 31, 2023, 217,915,713 and 219,656,587 shares issued and outstanding as of December 31, 2023 and 2022, respectively. 218  220 
    Additional paid-in capital 505,864  672,990 
    Retained earnings 28,514   
    Accumulated other comprehensive income (loss) 277  (475)
    Total stockholders’ equity 534,873  672,735 
    Total liabilities and stockholders’ equity$750,122 $949,627 


    Cricut, Inc.
    Condensed Consolidated Statements of Cash Flows
    (in thousands)

     Year Ended December 31,
      2023   2022 
    Cash flows from operating activities:   
    Net income$53,636  $60,666 
    Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities:   
    Depreciation and amortization (including amortization of debt issuance costs) 30,039   26,957 
    Bad debt expense 1,720   (64)
    Impairments 9,953   2,922 
    Stock-based compensation 47,326   41,121 
    Deferred income tax (11,238)  (20,461)
    Non-cash lease expense 4,987   4,845 
    Provision for inventory obsolescence 26,330   11,466 
    Unrealized foreign currency (gain) loss 88   (1,040)
    Other (2,143)  (440)
    Changes in operating assets and liabilities:   
    Accounts receivable 23,500   63,696 
    Inventories 78,376   63,085 
    Prepaid expenses and other current assets 4,204   8,807 
    Other assets 869   (51)
    Accounts payable 13,535   (139,845)
    Accrued expenses and other current liabilities and other non-current liabilities 7,761   (2,137)
    Operating lease liabilities (5,423)  (5,096)
    Deferred revenue 4,577   3,252 
    Net cash and cash equivalents provided by operating activities 288,097   117,683 
    Cash flows from investing activities:   
    Purchase of marketable securities (63,451)  (180,112)
    Proceeds from maturities of marketable securities 38,390   21,393 
    Proceeds from sales of marketable securities    84,621 
    Purchases of property and equipment, including capitalized software development costs (23,717)  (33,771)
    Net cash and cash equivalents used in investing activities (48,778)  (107,869)
    Cash flows from financing activities:   
    Repurchases of common stock (20,332)  (18,580)
    Proceeds from exercise of stock options 383   31 
    Employee tax withholding payments on stock-based awards (8,106)  (6,384)
    Payments for debt issuance costs    (1,300)
    Cash dividend (294,130)   
    Other financing activities, net    (14)
    Net cash and cash equivalents used in financing activities (322,185)  (26,247)
    Effect of exchange rate on changes on cash and cash equivalents 110   (221)
    Net decrease in cash and cash equivalents (82,756)  (16,654)
    Cash and cash equivalents at beginning of period 224,943   241,597 
    Cash and cash equivalents at end of period$142,187  $224,943 
    Supplemental disclosures of cash flow information:   
    Cash paid during the period for interest$  $ 
    Cash paid during the period for income taxes$24,072  $28,916 


    Cricut, Inc.
    Condensed Consolidated Statements of Cash Flows (continued)
    (in thousands)

     Year Ended December 31,
      2023  2022
    Supplemental disclosures of non-cash investing and financing activities:   
    Right-of-use assets obtained in exchange for new operating lease liabilities$280 $4,285
    Property and equipment included in accounts payable and accrued expenses and other current liabilities$2,824 $4,410
    Tax withholdings on stock-based awards included in accrued expenses and other current liabilities$451 $1,324
    Stock-based compensation capitalized for software development costs$1,960 $2,321
    Leasehold improvements acquired through tenant allowances$ $859
    Dividends declared but unpaid$2,342 $81,420


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