Cricut Inc
For the period ended Sep 30, 2024. Filed Nov 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 6, 2024
CRCT$8.78-5.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001828962-24-000102
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0001828962-24-000122
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 105 previous paragraphs and 105 current paragraphs.
72 unchanged; 26 reworded; 7 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Products revenue decreased by $7.2 million, or 7%, to $90.2 million for the three months ended September 30, 2024 from $97.5 million for the three months ended September 30, 2023. The decrease was primarily driven by increased promotional activity on similar gross sales.
Current report
Nine Months Ended September 30, 2024 and 2023
Current report
Nine Months Ended September 30, 2024 and 2023
Current report
General and administrative expenses increased by $2.3 million, or 16%, to $16.2 million for the three months ended September 30, 2024 from $14.0 million for the three months ended September 30, 2023. The increase was primarily driven by a $4.5 million net reversal of bad debt expense in Q3 2023. This was partially offset by a loss on foreign currency translation and decreases in impairment of unused equipment, software, and inventory.
Current report
Other income, net increased by $2.2 million or 28% to $10.0 million for the nine months ended September 30, 2024 from $7.8 million for the nine months ended September 30, 2023. The increase was primarily driven by an increase in interest income due to an increase in maturities of marketable securities in 2024.
Current report
Provision for income taxes decreased by $5.6 million, or 68%, to $2.7 million for the three months ended September 30, 2024 from $8.3 million for the three months ended September 30, 2023. The decrease was primarily due to a reduction in unfavorable prior-period adjustments due to the filing of the prior-year tax returns in Q3, increases in the foreign derived intangible income deduction, and a decrease from discrete items related to stock-based compensation.
Current report
The change in net cash flows from operating activities for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 is primarily due to a decrease in the provision for obsolete inventory, a smaller reduction in accounts receivable in 2024 compared to 2023, an increase in prepaid balances due to estimated tax payments made in 2024, and a decrease in accounts payable driven by a decrease in foreign trade payables due to lower inventory purchases in 2024, offset by a decrease in inventory from current year sales and the inventory replenishment rate decreasing as the Company works to reduce inventory levels and an increase in accrued liabilities related to income taxes payable.
Removed paragraphs (7)
Previous report
Six Months Ended June 30, 2024 and 2023
Previous report
Products revenue decreased by $26.0 million, or 13%, to $179.4 million for the six months ended June 30, 2024 from $205.4 million for the six months ended June 30, 2023. The decrease was primarily driven by fewer units of Accessories & Materials sold during the period, partially offset by an increase in Connected Machine units sold during the period.
Previous report
Six Months Ended June 30, 2024 and 2023
Previous report
General and administrative expenses decreased by $7.1 million, or 17%, to $34.2 million for the six months ended June 30, 2024 from $41.4 million for the six months ended June 30, 2023. The decrease was primarily due to a $7.3 million decrease in bad debt expense.
Previous report
Other income, net decreased by $0.3 million or 9% to $3.4 million for the three months ended June 30, 2024 from $3.7 million for the three months ended June 30, 2023. The decrease was due to a decrease in interest income.
Previous report
Provision for income taxes increased by $8.0 million, or 75%, to $18.7 million for the six months ended June 30, 2024 from $10.7 million for the six months ended June 30, 2023. The increase was primarily due to a decrease in the foreign derived intangible income deduction, an increase in stock-based compensation difference due to the decrease in stock price upon vesting versus the stock price at the grant date, and a decrease to the Research and Development credit. This resulted in an effective tax rate of 32.1% and 29.8% for the six months ended June 30, 2024 and 2023, respectively.
Previous report
The change in net cash flows from operating activities for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 is primarily due to a decrease in accounts payable due to higher payments to inventory vendors in 2024 and a reduction in cash received from accounts receivable in 2024 compared to 2023. In addition, extension tax payments had a negative impact on cash.
Reworded paragraphs (26)
Previous wording
At Cricut, our mission is to help people lead creative lives. We have designed and built a creativity platform that enables our engaged and loyal community of 5.9 million Active Users to turn ideas into professional-looking handmade goods. We define “Active User” as a registered user of at least one registered connected machine who has utilized their connected machine to create a project in the last 365 days. With our highly versatile Design Space Platform and our products, including our connected machines and accessories and materials, our users create everything from personalized birthday cards, mugs and T-shirts, to large-scale interior decorations.
Current wording
At Cricut, our mission is to help people lead creative lives. We have designed and built a creativity platform that enables our engaged and loyal community of nearly 5.9 million Active Users to turn ideas into professional-looking handmade goods. We define “Active User” as a registered user of at least one registered connected machine who has utilized their connected machine to create a project in the last 365 days. With our highly versatile Design Space Platform and our products, including our connected machines and accessories and materials, our users create everything from personalized birthday cards, mugs and T-shirts, to large-scale interior decorations.
Previous wording
Users can leverage the full power of our platform by using our connected machines together with our free design apps, in-app purchases and subscription offerings to design and complete projects. All users can access a select number of free images, fonts and projects from our design apps or upload their own. In addition, we offer a wider selection of images, fonts and projects for purchase à la carte, including licensed content from partners with well-known brands and characters, like major motion picture studio[s. We also have two subscription offerings:
Current wording
Users can leverage the full power of our platform by using our connected machines together with our free design apps, in-app purchases and subscription offerings to design and complete projects. All users can access a select number of free images, fonts and projects from our design apps or upload their own. In addition, we offer a wider selection of images, fonts and projects for purchase à la carte, including licensed content from partners with well-known brands and characters, like major motion picture studios. We also have two subscription offerings:
Previous wording
As of June 30, 2024, we had 2.8 million Paid Subscribers to Cricut Access and Cricut Access Premium.
Current wording
As of September 30, 2024, we had over 2.8 million Paid Subscribers to Cricut Access and Cricut Access Premium.
Previous wording
Comparison of the Three and Six Months Ended June 30, 2024 and 2023
Current wording
Comparison of the Three and Nine Months Ended September 30, 2024 and 2023
Previous wording
Platform revenue increased by $0.3 million, or 0%, to $77.6 million for the three months ended June 30, 2024 from $77.4 million for the three months ended June 30, 2023. The increase was driven by an increase in the number of paid subscribers which increased from 2.7 million as of June 30, 2023 to 2.8 million as of June 30, 2024.
Current wording
Platform revenue increased by $0.2 million, or 0%, to $77.7 million for the three months ended September 30, 2024 from $77.5 million for the three months ended September 30, 2023. The increase was driven by an increase in the number of paid subscribers which increased from 2.7 million as of September 30, 2023 to 2.8 million as of September 30, 2024.
Previous wording
Platform revenue increased by $2.3 million, or 2%, to $155.9 million for the six months ended June 30, 2024 from $153.6 million for the six months ended June 30, 2023. The increase was driven by an increase in the number of paid subscribers which increased from 2.7 million as of June 30, 2023 to 2.8 million as of June 30, 2024.
Current wording
Platform revenue increased by $2.5 million, or 1%, to $233.6 million for the nine months ended September 30, 2024 from $231.1 million for the nine months ended September 30, 2023. The increase was driven by an increase in the number of paid subscribers which increased from 2.7 million as of September 30, 2023 to 2.8 million as of September 30, 2024.
Previous wording
Products revenue decreased by $10.1 million, or 10%, to $90.3 million for the three months ended June 30, 2024 from $100.4 million for the three months ended June 30, 2023. The decrease was primarily driven by fewer units of Accessories & Materials sold during the period, partially offset by an increase in Connected Machine units sold during the period.
Current wording
Products revenue decreased by $33.2 million, or 11%, to $269.6 million for the nine months ended September 30, 2024 from $302.8 million for the nine months ended September 30, 2023. The decrease was primarily driven by fewer units of Accessories & Materials sold and increased promotional activity during the period.
Previous wording
Platform cost of revenue increased by $1.9 million, or 12%, to $17.6 million for the six months ended June 30, 2024 from $15.8 million for the six months ended June 30, 2023. The increase was primarily driven by an increase in the amortization of capitalized software costs.
Current wording
Platform cost of revenue increased by $1.7 million, or 21%, to $10.0 million for the three months ended September 30, 2024 from $8.3 million for the three months ended September 30, 2023. The increase was primarily driven by increases in hosting fees, external digital content costs, and software development expenses.
Previous wording
Gross margin for Platform was 89% for thethree months ended June 30, 2024 and 90% for the three months ended June 30, 2023. The decrease was primarily driven by an increase in the amortization of capitalized software costs.
Current wording
Gross margin for Platform was 87% for thethree months ended September 30, 2024 and 89% for the three months ended September 30, 2023. The decrease was primarily driven by increases in hosting fees, external digital content costs, and software development expenses.
Previous wording
Products cost of revenue decreased by $12.9 million, or 16%, to $69.2 million for the three months ended June 30, 2024 from $82.1 million for the three months ended June 30, 2023. The decrease was primarily driven by a reduction in inventory impairment charges compared to prior year and fewer unit sales of Accessories & Materials.
Current wording
Products cost of revenue decreased by $4.2 million, or 5%, to $80.5 million for the three months ended September 30, 2024 from $84.7 million for the three months ended September 30, 2023. The decrease was primarily driven by a reduction in inventory impairment charges compared to prior year.
Previous wording
Gross marginfor Products was 23% for the three months ended June 30, 2024 and 18% for the three months ended June 30, 2023. The increase was primarily driven by a reduction in inventory impairment charges partially offset by higher inventory procurement costs and more promotional activity.
Current wording
Gross marginfor Products was 11% for the three months ended September 30, 2024 and 13% for the three months ended September 30, 2023. The decrease was primarily driven by increased promotional activity, partially offset by a reduction in inventory impairment charges compared to prior year.
Previous wording
Platform cost of revenue increased by $0.9 million, or 11%, to $8.9 million for the three months ended June 30, 2024 from $8.0 million for the three months ended June 30, 2023. The increase was primarily driven by an increase in the amortization of capitalized software costs.
Current wording
Platform cost of revenue increased by $3.6 million, or 15%, to $27.6 million for the nine months ended September 30, 2024 from $24.0 million for the nine months ended September 30, 2023. The increase was primarily driven by increases in amortization of capitalized software costs, software development expenses, and hosting fees.
Previous wording
Gross margin for Platform was 89% for thesix months ended June 30, 2024 and 90% for thesix months ended June 30, 2023. The decrease was primarily driven by an increase in the amortization of capitalized software costs.
Current wording
Gross margin for Platform was 88% for thenine months ended September 30, 2024 and 90% for thenine months ended September 30, 2023. The decrease was primarily driven by increases in amortization of capitalized software costs and software development expenses.
Previous wording
Products cost of revenue decreased by $42.6 million, or 24%, to $136.3 million for the six months ended June 30, 2024 from $178.9 million for the six months ended June 30, 2023. The decrease was primarily driven by a reduction in inventory impairment charges compared to prior year and fewer units of Accessories & Materials sold during the period.
Current wording
Products cost of revenue decreased by $46.8 million, or 18%, to $216.8 million for the nine months ended September 30, 2024 from $263.6 million for the nine months ended September 30, 2023. The decrease was primarily driven by a reduction in inventory impairment charges compared to prior year and fewer units of Accessories & Materials sold during the period.
Previous wording
Gross marginfor Products was 24% for thesix months ended June 30, 2024 and 13% for thesix months ended June 30, 2023. The increase was primarily driven a reduction in inventory impairment charges compared to prior year.
Current wording
Gross marginfor Products was 20% for thenine months ended September 30, 2024 and 13% for thenine months ended September 30, 2023. The increase was primarily driven by a reduction in inventory impairment charges compared to prior year, partially offset by increased promotional activity.
Previous wording
Research and development expenses decreased by $2.0 million, or 12%, to $14.3 million for the three months ended June 30, 2024 from $16.3 million for the three months ended June 30, 2023. The decrease was primarily due to a $2.0 million decrease in personnel-related expense.
Current wording
Research and development expenses decreased by $0.7 million, or 4%, to $15.2 million for the three months ended September 30, 2024 from $15.9 million for the three months ended September 30, 2023. The decrease was primarily due to a $1.1 million decrease in personnel-related expense, partially offset by an increase in professional services expense.
Previous wording
Research and development expenses decreased by $5.0 million, or 15%, to $29.2 million for the six months ended June 30, 2024 from $34.1 million for the six months ended June 30, 2023. The decrease was primarily due to a $3.3 million decrease in personnel-related expense, a $1.4 million decrease in product development expenses for future products, and a $0.4 million decrease in professional services.
Current wording
Research and development expenses decreased by $5.6 million, or 11%, to $44.4 million for the nine months ended September 30, 2024 from $50.1 million for the nine months ended September 30, 2023. The decrease was primarily due to a $4.2 million decrease in personnel-related expense and a $1.6 million decrease in product development expenses for future products.
Previous wording
Sales and marketing expenses increased by $3.9 million, or 13%, to $33.4 million for the three months ended June 30, 2024 from $29.4 million for the three months ended June 30, 2023. The increase was primarily due to a $3.0 million increase in advertising and other marketing costs and a $1.1 million increase in personnel-related expense.
Current wording
Sales and marketing expenses increased by $6.9 million, or 24%, to $35.3 million for the three months ended September 30, 2024 from $28.4 million for the three months ended September 30, 2023. The increase was primarily due to a $5.7 million increase in advertising and other marketing costs and a $1.7 million increase in personnel-related expense, partially offset by a decrease in software and website subscriptions expense.
Previous wording
Sales and marketing expenses increased by $7.4 million, or 12%, to $66.4 million for the six months ended June 30, 2024 from $59.0 million for the six months ended June 30, 2023. The increase was primarily due to a $5.6 million increase in advertising and other marketing costs and a $1.9 million increase in personnel-related expense.
Current wording
Sales and marketing expenses increased by $14.3 million, or 16%, to $101.7 million for the nine months ended September 30, 2024 from $87.4 million for the nine months ended September 30, 2023. The increase was primarily due to a $11.2 million increase in advertising and other marketing costs and a $3.6 million increase in personnel-related expense, partially offset by a decrease in software and website subscriptions expense.
Previous wording
General and administrative expenses decreased by $6.9 million, or 31%, to $15.7 million for the three months ended June 30, 2024 from $22.7 million for the three months ended June 30, 2023. The decrease was primarily due to a $7.2 million decrease in bad debt expense.
Current wording
General and administrative expenses decreased by $4.8 million, or 9%, to $50.5 million for the nine months ended September 30, 2024 from $55.3 million for the nine months ended September 30, 2023. The decrease was primarily due to a $2.8 million decrease in bad debt expense and a $1.6 million decrease in professional services.
Previous wording
Other income, net increased by $0.4 million or 7% to $6.4 million for the six months ended June 30, 2024 from $6.0 million for the six months ended June 30, 2023. The increase was due to an increase in interest income.
Current wording
Other income, net increased by $1.7 million or 95% to $3.6 million for the three months ended September 30, 2024 from $1.8 million for the three months ended September 30, 2023. The increase was primarily driven by an increase in interest income due to an increase in maturities of marketable securities in 2024.
Previous wording
Provision for income taxes increased by $3.1 million, or 45%, to $10.0 million for the three months ended June 30, 2024 from $6.9 million for the three months ended June 30, 2023. The increase was primarily due to an increase in stock-based compensation difference due to the decrease in stock price upon vesting versus the stock price at the grant date, and a decrease to the Research and Development credit. This resulted in an effective tax rate of 33.6% and 30.2% for the three months ended June 30, 2024 and 2023, respectively.
Current wording
Provision for income taxes increased by $2.4 million, or 13%, to $21.3 million for the nine months ended September 30, 2024 from $19.0 million for the nine months ended September 30, 2023. The increase was primarily due to an increase in stock-based compensation difference attributable to the decrease in stock price upon vesting versus the stock price at the grant date, and a decrease to the research and development credit.
Previous wording
Our operations during the periods presented have been financed primarily through cash flow from operating activities. We believe our balances of cash and cash equivalents and marketable securities, which totaled $195.6 million and $103.9 million, respectively, as of June 30, 2024, along with forecasted cash expected to be generated by ongoing operations and $300.0 million in available borrowings and the option to increase the aggregate amount of our credit facility by up to an additional $150.0 million (see Note 7) will be sufficient to satisfy our cash requirements over the next 12 months and beyond. Except for the recently announced special and semi-annual dividends and the new share repurchase program, our cash requirements have not changed materially since our Annual Report.
Current wording
Our operations during the periods presented have been financed primarily through cash flow from operating activities. We believe our balances of cash and cash equivalents and marketable securities, which totaled $142.4 million and $104.6 million, respectively, as of September 30, 2024, along with forecasted cash expected to be generated by ongoing operations and $300.0 million in available borrowings and the option to increase the aggregate amount of our credit facility by up to an additional $150.0 million (see Note 7) will be sufficient to satisfy our cash requirements over the next 12 months and beyond. Except for the dividends announced in May and November 2024 and the share repurchase program announced in May 2024, our cash requirements have not changed materially since our Annual Report.
Previous wording
During the six months ended June 30, 2023, we paid a dividend of $75.8 million to holders of Class A and Class B common stock. After June 30, 2024, we paid a dividend of $107.9 million to holders of Class A and Class B common stock.
Current wording
During the nine months ended September 30, 2024 and 2023, we paid a dividend of $109.8 million and $293.8 million to holders of Class A and Class B common stock, respectively.
Previous wording
The change in net cash flows from investing activities for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was due to lower purchases of property and equipment in 2024.
Current wording
The change in net cash flows from investing activities for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was due to an increase in proceeds from the maturities of marketable securities in 2024.
Previous wording
The change in net cash flows from financing activities for the six months ended June 30, 2024 compared to six months ended June 30, 2023 was primarily due to dividend payments of$75.8 million in 2023 offset by an increase in the repurchase of common stock in 2024.
Current wording
The change in net cash flows from financing activities for the nine months ended September 30, 2024 compared to nine months ended September 30, 2023 was primarily due to dividend payments of$293.8 million in 2023 compared to the dividend payment in 2024 of $109.8 million, offset by an increase in the repurchase of common stock in 2024.