Cricut Inc (CRCT) Q4 2024 Earnings Call Highlights: Navigating Revenue Declines with Strategic ...

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Wed, Mar 5, 2025, 12:10 AM 4 min read

Revenue: Q4 2024 revenue of $209.3 million, a 9% decline year-on-year; full year 2024 revenue of $712.5 million, a 7% decline over 2023.
Net Income: Q4 2024 net income of $11.9 million; full year 2024 net income of $62.8 million, up 17% from 2023.
Diluted EPS: Full year 2024 diluted earnings per share of $0.29, up from $0.24 in 2023.
Gross Margin: Q4 2024 gross margin of 44.9%, up from 42% in Q4 2023; full year 2024 gross margin of 49.5%, up from 44.9% in 2023.
Paid Subscribers: Ended 2024 with 2.96 million paid subscribers, a 7% increase year-on-year.
Cash Flow: Generated $265 million in cash from operations in 2024, compared to $288 million in 2023.
Cash and Cash Equivalents: Ended 2024 with $337 million in cash and cash equivalents.
Stock Repurchase Program: $22.9 million remains in the approved $50 million stock repurchase program.
Operating Income: Q4 2024 operating income of $13.9 million; full year 2024 operating income of $76.1 million, up 9% from 2023.
International Revenue: Q4 2024 international revenue of $52.9 million, a 3% increase year-on-year.
Accessories and Materials Sales: Declined 20% for the full year 2024.

Warning! GuruFocus has detected 3 Warning Signs with CRCT.

Release Date: March 04, 2025

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

Positive Points

Cricut Inc (NASDAQ:CRCT) achieved its eighth consecutive year of positive net income, with a 17% increase in net income to $62.8 million for 2024.
The company reported a 7% increase in paid subscribers, reaching 2.96 million by the end of 2024.
Cricut Inc (NASDAQ:CRCT) launched new cutting machines, Cricut Explore 4 and Cricut Maker 4, which are faster and have received positive initial feedback.
International sales increased by 1% for the full year, with notable strength in markets like France and Latin America.
Gross margin improved to 49.5% for 2024, up from 44.9% in 2023, driven by higher subscription revenue and improved product gross margins.

Negative Points

Total company sales declined by 7% in 2024, with a significant 20% drop in Accessories and Materials sales.
Engagement metrics showed softness, with a 0.7% decline in active users and a 3.1% decline in 90-day engaged users year-on-year.
Operating income is expected to decline in 2025 due to increased investments in R&D, marketing, and IP protection.
The company faces challenges in reversing weakening engagement trends and attracting new users who cut fewer projects.
Cricut Inc (NASDAQ:CRCT) anticipates continued sales pressure in the first half of 2025, particularly in Accessories and Materials.

Q & A Highlights

Q: Engagement metrics have been declining. Can you provide more details on why this is happening and how you plan to improve them? A: Ashish Arora, CEO: The pressure on engagement comes from users acquired in 2020 and 2021 who are now less active, and new users tend to cut fewer projects. We are focusing on improving the onboarding experience and implementing user workflows to enhance engagement. Additionally, we are ramping up our marketing platform to send personalized triggers to bring users back to Design Space.

Q: You mentioned an inflection point in the second half of the year. Can you clarify what this means and what gives you confidence in this projection? A: Kimball Shill, CFO: We are not projecting full-year growth but expect an inflection point in the second half due to our efforts in marketing, new product launches, and promotional activities. We are seeing positive trends in machine sales and have over 100 new SKUs launching, which should help drive growth.

Q: International sales were up. Can you explain what's driving this growth and how you see it evolving? A: Kimball Shill, CFO: We have seen growth in international markets like France and MESA, while markets like Australia remain challenged. We are focusing on increasing brand awareness in key international markets to drive further growth.

Q: The decline in Connected Machines seems to be accelerating. How do you plan to generate positive ROI from deeper promotions? A: Kimball Shill, CFO: Our confidence comes from our marketing spend, which includes deeper promotions and awareness marketing. We are seeing positive impacts from these efforts and believe our new machine launches and focus on affordability will help turn the tide.

Q: How are you approaching capital allocation given the current cash position and market conditions? A: Kimball Shill, CFO: We are focused on maintaining sufficient inventory, investing for the medium and long term, and keeping some cash for potential strategic acquisitions. We also return capital to shareholders through buybacks, dividends, and special dividends.

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

This article first appeared on GuruFocus.

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