Cricut (CRCT) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $167.9 million, down 6% year-over-year, with net income up 23% to $19.8 million and operating income up 37% to $26.4 million, marking the 22nd consecutive profitable quarter.

• Platform revenue was slightly up at $77.6 million, while products revenue declined 10% to $90.3 million, driven by a 27% drop in accessories and materials but offset by an 18% increase in connected machines revenue.

• Paid subscribers grew 3% to over 2.8 million, and active users reached 5.9 million; international revenue increased 3% and now represents 20% of total revenue.

• Marketing and promotional investments increased, driving higher traffic and new user acquisition, with a focus on user engagement and onboarding.

• Company ended Q2 with $299 million in cash and equivalents, remains debt-free, and continued share repurchases and dividend payments.

Financial highlights

• Gross margin improved to 53.5% from 49.3% a year ago, with platform gross margin at 88.6% and product gross margin at 23.3%.

• Operating margin was 15.7% in Q2 2024, up from 10.8% in Q2 2023; net income margin was 11.8%.

• Platform ARPU increased 5% to $52.61; 90-day engaged users declined 3% to 3.5 million.

• Cash from operations in Q2 was $35 million; cash and equivalents at quarter-end were $299 million.

• Diluted EPS was $0.09, up from $0.07 in Q2 2023.

Outlook and guidance

• Management expects incremental improvement in operating margins for 2024, with long-term annual operating margin target of 15%-19%.

• Total company revenue may decline year-over-year in Q3 and possibly for the full year, with continued pressure in accessories and materials.

• Paid subscriber count and platform revenue expected to grow slightly and become a larger share of sales and profits.

• Increased marketing investment is expected to drive further growth and engagement.

• Profitability and strong cash flow expected each quarter in 2024.