• Revenue: $167.9 million, a 6% decline year-over-year.

• Net Income: $19.8 million, a 23% increase year-over-year.

• Platform Revenue: $77.6 million, slightly up year-over-year.

• Product Revenue: $90.3 million, down 10% year-over-year.

• Gross Margin: 53.5%, up from 49.3% in Q2 2023.

• Operating Income: $26.4 million, or 15.7% of revenue, a 37% increase year-over-year.

• Paid Subscribers: Over 2.8 million, a 3% increase year-over-year.

• International Revenue: $33.5 million, up 3% year-over-year.

• Cash from Operations: $35 million, compared to $64 million a year ago.

• Cash and Cash Equivalents: $299 million, with no debt.

• Inventory: Decreased by $102 million to $192 million.

• Stock Repurchase: $9.3 million used to repurchase 1.5 million shares.

• Dividends Paid: Approximately $108 million in July for special and semiannual dividends.

• Warning! GuruFocus has detected 3 Warning Signs with CRCT.

Release Date: August 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cricut Inc (NASDAQ:CRCT) reported strong Q2 profitability with a significant increase in operating margin dollars, up 37% year-over-year.

• Connected machines revenue grew for the second consecutive quarter, indicating positive momentum in sales to retailers.

• International sales increased by 3% year-over-year, showing growth in global markets.

• Paid subscribers grew by 3% to over 2.8 million, contributing to a slight increase in platform revenues.

• The company successfully expanded its content library, surpassing 1 million high-quality makeable images within Cricut Access.

Negative Points

• Overall sales declined by 6% year-over-year, with a notable 10% drop in product revenues.

• Engagement metrics showed a decline, with 90-day engaged users decreasing by 3% year-over-year.

• Accessories and materials revenue fell by 27% year-over-year, indicating challenges in this segment.

• Retailers held below optimal inventory levels, resulting in missed sales opportunities during key sales events.

• The company anticipates continued sales pressure in the product segment, especially in accessories and materials, potentially leading to a decline in full-year revenue.

Q & A Highlights

Q: Ashish, can you help us understand why and when you believe your efforts to drive customer engagement will begin to materialize? A: Ashish Arora, CEO: Engagement is a priority, and we've seen improving signals. The cohorts from 2020 and 2021 are graduating, putting pressure on engagement. We're focusing on onboarders to ensure they stay engaged, which is a leading indicator for long-term engagement. For existing users, we're working on inspiring them and making it easier to engage. It's hard to pinpoint a timeline, but we're confident in our initiatives.