Cricut, Inc.

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Summary of Risk Factors

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Investing in our Class A common stock involves a high degree of risk because our business is subject to numerous risks and uncertainties, as described below. The principal factors and uncertainties that make investing in our Class A common stock risky include, among others:

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•risks regarding our ability to attract and engage with our users, including anticipating their product preferences;

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•competitive risks in both of our segments: Platform and Products;

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•supply chain, manufacturing, distribution and fulfillment risks, including our being dependent on three contract manufacturers to produce connected machines, and on limited sources of supply for components, accessories and materials, as well as our ability to forecast demand and manage our inventory;

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•international risks, including regulation, tariffs that have materially increased, and may continue to increase, our costs and the potential for further trade barriers;

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•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;

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•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, particularly for a company of our relative size;

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•risks related to product quality, safety and warranty claims and returns;

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•risks related to protection of our intellectual property, as well as to cybersecurity and potential security breaches and incidents;

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•risks related to general socio-economic and political conditions as well as consumer confidence; and

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•risks related to our dependence on our Chief Executive Officer.

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We may be affected by recent and possible future political, social and economic conditions in China.

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One of the contract manufacturers that produces our connected machines is wholly-owned by a Chinese parent company, and many of the components that go into the manufacturing of our products, including our accessories and materials, are sourced from third-party suppliers in China. Our business therefore could be affected by social, political, regulatory or economic developments in China. For example, since 2018, the U.S. has imposed additional tariffs on many imports into the U.S. of Chinese-origin goods, including communications equipment products and components manufactured in and imported from China and China has also imposed tariffs on imports into China from the United States. (See also our risk factor “Recent and additional changes in U.S. taxes, tariffs, trade restrictions, or other trade policies affecting products produced in other countries, or similar recent or additional retaliatory changes by U.S. trading partners in response to these measures, could adversely affect our business.”) In addition, due to concerns with the security of products and services from certain telecommunications and video providers based in China, the U.S. government has enacted bans on the use of certain Chinese- and Russian-origin components, software, and systems either in items sold to the U.S. government or in the internal networks of government contractors and subcontractors (even if those networks are not used for government-related projects). The U.S. government has already imposed, and it is possible that the U.S. government may in the future take additional measures to impose, (a) stricter export controls on items destined for China; (b) additional restrictions on the import of certain components, software, and/or systems from China; and (c) additional duties on shipments made from China. The likelihood of one or more of these actions occurring has materially increased in light of comments and actions of the new U.S. presidential administration, which has repeatedly communicated an intention to impose additional duties on imports from China (as well as on imports from other countries). Any of these actions could affect the profitability and/or stability of the manufacturing activities conducted by our key third-party manufacturing partners or introduce other risks to our business, including supply chain interruptions, substantially delayed or lost shipments, or increased expenses. In addition, the U.S. government may add additional parties to the Entity List, the List of Specialty Designated Nationals, or other restricted party lists, which could harm our business or increase the cost of conducting our operations in China, and/or result in retaliatory actions against U.S. interests. We also depend on semiconductors made in Taiwan, and a worsening of the geopolitical situation involving China and/or Taiwan could affect our ability to procure these semiconductors. Further, the U.S. government has introduced various regulatory changes to its export contro…

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Recent additional changes in U.S. taxes, tariffs, trade restrictions, or other trade policies affecting products produced in other countries, or similar recent or additional retaliatory changes by U.S. trading partners in response to these measures, could adversely affect our business.

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A predominant portion of the products we sell is originally manufactured in countries other than the United States. Recent or further changes in U.S. laws that result in increased tariffs or other trade restrictions could adversely affect our business, including disruption in and cost increases for sourcing our merchandise and increased uncertainties in planning our sourcing strategies and forecasting our margins. Importing and exporting has involved more risk since the beginning of 2018, as there has been increasing rhetoric, in some cases coupled with legislative or executive action, from several political leaders regarding the imposition of additional or escalated tariffs affecting foreign imports of certain materials. For example, beginning in 2018, the U.S. Trade Representative (the “USTR”) enacted additional tariffs affecting the import of many Chinese products affecting items, with a combined import value of approximately $550 billion. The applicable tariffs on some of these products has increased since these tariffs were originally imposed. More recently, the U.S. government also has begun to impose significant and increasingly large tariffs on a broader range of products imported from China and other countries. In addition, the U.S. Department of Commerce has recently initiated Section 232 investigations into additional products, including processed critical minerals and derivative products, which may lead to additional tariffs on such products once the investigations are complete.

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The U.S. government also has continued to impose stricter export controls on items destined for China In addition, the Bureau of Industry and Security, or BIS, of the Department of Commerce has continued to add certain Chinese entities to U.S. lists of restricted parties including the Entity List, limiting the ability of U.S. companies to do business with those entities. The U.S. government may continue to add additional parties to these restricted parties list, which could harm our business or increase the cost of conducting our operations in China.

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In addition, the U.S. government has exercised additional trade-related powers in a manner that could have a material adverse impact on our business, financial condition or results of operations. For example, on May 15, 2019, then-President Trump issued an executive order that invoked national emergency economic powers to implement a framework to regulate the acquisition or transfer of information communications technology in transactions that imposed undue national security risks. On December 5, 2024, the U.S. Department of Commerce published final rules in the Federal Register, establishing the terms under which the Department of Commerce may investigate transactions involving the use of information communications technology products or services provided by persons owned or controlled by certain nations, including China, and potentially to modify or prohibit those transactions. In addition, the White House, the Department of Commerce and other executive branch agencies have implemented additional restrictions and may implement still further restrictions that would affect conducting business with certain Chinese companies.

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The trade and tariff policies of the U.S. and other countries, including country of origin analysis, are currently fluid and subject to further changes. As a result of tariffs and other trade controls, our cost of goods imported from China increased substantially, and could increase further. Although we continue to work with our vendors to mitigate the impact of current or potential tariffs, there can be no assurance that we will be able to offset any increased costs. Other changes in U.S. tariffs, quotas, trade relationships, tax provisions, or the imposition of retaliatory tariffs on U.S. goods could also reduce the supply of goods available to us or increase our cost of goods. We may fail to effectively adapt to and manage the adjustments in strategy that would be necessary in response to those changes. In addition to the general uncertainty and overall risk from potential changes in the laws and policies of the U.S. or its trading partners, as we make business decisions in the face of such uncertainty, we may incorrectly anticipate the outcomes, miss out on business opportunities or fail to effectively adapt our business strategies and manage the adjustments that are necessary in response to those changes. These risks could adversely affect our revenue, reduce our profitability and negatively impact our business.