GlobeNewswire Inc | Aug 12, 2021 04:05PM EDT

August 12, 2021

Revenue grew 42% over Q2 2020

Total users climb to 5.4 million and paid subscribers grew 77% over Q2 2020 to 1.8 million

Delivered 10th consecutive quarter of profitability with net income of $49.1M; Delivered $68.5M of EBITDA

SOUTH JORDAN, Utah, Aug. 12, 2021 (GLOBE NEWSWIRE) -- Cricut, Inc. (Cricut) (NASDAQ: CRCT), the creative technology company that has brought a connected platform for making to millions of users worldwide, today announced financial results for its second quarter ended June30, 2021.

Our second quarter performance delivered strong results across the business, driven by new users and continued healthy engagement levels, said Ashish Arora, Chief Executive Officer of Cricut. We successfully launched two new connected machines, a new line of Smart Materials, added new features and functionality to our software platform, and saw strong growth from our top international markets. I want to thank our passionate community of users worldwide and believe there is even greater opportunity for creatives everywhere to join the Cricut platform.

Second Quarter 2021 Financial Results

-- Revenue was $334.5 million, up 42.1% over Q2 2020 -- Connected machine revenue was $146.3 million, up 29.0% over Q2 2020 -- Subscriptions revenue was $50.7million, up 110.9% over Q2 2020 -- Accessories and materials revenue was $137.5million, up 40.4% over Q2 2020 -- Gross margin was 39.0%, up from 31.1% over Q2 2020 -- Net income was $49.1 million, up 40.8% over Q2 2020, and was 14.7% of revenue, compared to $34.9 million, or 14.8% of revenue in Q2 2020 -- Diluted earnings per share was $0.22 -- EBITDA, was $68.5 million, or 20.5% of revenue, compared to $49.2 million, or 20.9% of revenue in Q2 2020, and included $8.1 million of stock-based compensation expense -- International revenue grew 179.5% over Q2 2020 and was 8.5% of total revenue, up from 4.3% of total revenue in Q2 2020

EBITDA and EBITDA margin are non-GAAP measures and are reconciled to the corresponding GAAP measures at the end of this release.

Our second quarters performance was driven by a strong diversified revenue stream and community of engaged users who fuel our viral marketing engine, said Marty Petersen, Chief Financial Officer of Cricut. The large pull forward of users from 2020 and the first half of 2021 provide a powerful flywheel effect to our business with long-term monetization opportunities.

Second Quarter 2021 Business Highlights

-- Launched Cricut Explore 3 and Cricut Maker 3, which included new physical hardware, software features, and content. Designed to cut up to twice as fast, users can also cut longer runs of materials, up to 12 feet in length. -- Launched a new line of Smart Materials, engineered to keep materials perfectly aligned and on track from start to finish without a cutting mat. These new Smart Materials are designed to increase use cases and provide an overall customer experience not achieved by generic materials today. -- Added new software features and improved user experiences to help drive user engagement in our cloud-based software. Design Space now includes a new kerning feature that enhances font usage while saving time and increasing use cases. Also introduced new ways for users to more easily organize their personal library of projects with redesigned bookmark features and on-going search optimization efforts. Our subscription service, Cricut Access, now has over 175,000 images available, an increase of over 40% from Q2 2020. -- International markets remain a key strategic focus area. Launched new direct-to-consumer ecommerce site in the UK and added first sales team members in Italy and Mexico. Continued retailer footprint expansion in Germany, France, Spain, South Africa, and Southeast Asia. -- Tenth consecutive quarter of net income profitability; EBITDA profitable every year since 2014.

Key Performance Metrics and Non-GAAP Financial Measures

As of June 30, 2021 2020 Users (in thousands) 5,373 3,274 Percentage of Users Creating in Trailing 90 Days 59 % 63 % Paid Subscribers (in thousands) 1,765 996

For the Three Months Ended June 30, 2021 2020 Subscription ARPU $ 9.83 $ 7.91 Accessories and Materials ARPU $ 26.67 $ 32.23 EBITDA (in millions) $ 68.5 $ 49.2

EBITDA includes stock-based compensation expense.

Webcast and Conference Call Information

Cricut management will host a conference call and webcast to discuss the results today, Thursday, August 12, 2021 at 3:00 p.m. Mountain Time (5:00 p.m. Eastern Time).

Information about Cricuts financial results, including a link to the live and archived webcast of the conference call, will be made available on Cricuts investor relations website at https://investor.cricut.com. The live call may also be accessed via telephone at (833) 398-1017 toll-free domestically and at (914) 987-7715 internationally. Please reference conference ID: 2162797. A transcript of the prepared remarks will also be available following the conference call.

About Cricut, Inc.

Cricut, Inc. is a creative technology platform company dedicated to encouraging new ways for people to experience making at home. Cricuts mission is to unleash the creative potential of its users with innovations that bring ideas to life in the form of professional-looking, personalized handmade projects. Cricuts industry-leading products include its flagship line of smart cutting machines the Cricut Maker family, the Cricut Explore family, and Cricut Joy accompanied by other unique tools like Cricut EasyPress, the Infusible Ink system, and a diverse collection of materials. In addition to Cricuts core offerings, the brand also fosters a thriving community of millions of dedicated users worldwide.

Cricut has used, and intends to continue using, its investor relations website and the Cricut News Blog ( https://inspiration.cricut.com/news/) to disclose material non-public information and to comply with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website and the Cricut News Blog in addition to following our press releases, SEC filings and public conference calls and webcasts.

Source: Cricut, Inc.

Key Performance Metrics

In addition to the measures presented in our consolidated financial statements, we use the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. We believe these metrics are useful to investors because they can help in monitoring the long-term health of our business. Our determination and presentation of these metrics may differ from that of other companies. The presentation of these metrics is meant to be considered in addition to, not as a substitute for or in isolation from, our financial measures prepared in accordance with GAAP.

Glossary of Terms

Users: We define a User as a registered user of at least one registered connected machine as of the end of a period. One user may own multiple registered connected machines, but is only counted once if that user registers those connected machines by using the same email address.

Percentage of Users Creating in Trailing 90 Days: We define the Percentage of Users Creating in Trailing 90 Days as the percentage of users who have used a connected machine for any activity, such as cutting, writing or any other activity enabled by our connected machines, in the past 90 days.

Paid Subscribers: We define Paid Subscribers as the number of users with a subscription to Cricut Access or Cricut Access Premium, excluding cancelled, unpaid or free trial subscriptions, as of the end of a period.

Subscription ARPU: We define Subscription ARPU as Subscriptions revenue divided by average users in a period.

Accessories and Materials ARPU: We define Accessories and Materials ARPU as Accessories and Materials revenue divided by average users in a period. Accessories and Materials ARPU fluctuates over time as we introduce new accessories and materials at various price points and as the volume and mix of accessories and materials purchased changes.

Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended (the Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These statements include, but are not limited to, quotations from management, business outlook, strategies, market size and growth opportunities. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as anticipates, believes, targets, potential, estimates, expects, intends, plans, projects, may or similar terminology. In particular, statements, express or implied, concerning future actions, conditions or events, future results of operations or the ability to generate revenues, income or cash flow are forward-looking statements. These statements are based on and reflect our current expectations, estimates, assumptions and/ or projections and our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions, many of which are beyond our control, that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections will prove to be correct or that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this press release are only made as of the date indicated on the relevant materials and are based on our estimates and opinions at the time the statements are made. We disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances or changes in opinion, except as required by law.

Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements including, but not limited to, risks and uncertainties associated with: our ability to attract and engage with our users; competitive risks; supply chain, manufacturing, distribution and fulfillment risks; international risks, including regulation and tariffs that have materially increased our costs and the potential for further trade barriers or disruptions; 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; 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; risks related to product quality, safety and warranty claims and returns; risks related to the fluctuation of our quarterly results of operations and other operating metrics; risks related to intellectual property, cybersecurity and potential data breaches; risks related to our dependence on our Chief Executive Officer; risks related to our status as a controlled company; and the impact of economic and geopolitical events, natural disasters and actual or threatened public health emergencies, such as the ongoing COVID-19 pandemic and any resulting economic slowdown, governmental action, stay-at-home order or other resulting interruption to our operations. These risks and uncertainties are described in greater detail under the heading Risk Factors in the most recent form 10-Q that we have filed with the Securities and Exchange Commission (SEC).

Cricut, Inc.Condensed Consolidated Balance Sheets(in thousands, except share and per share amounts)



As of June As of 30, 2021 December 31, 2020 (unaudited) Assets Current assets: Cash and cash equivalents $ 314,080 $ 122,215 Accounts receivable, net 163,700 162,931 Inventories 426,901 248,745 Prepaid expenses and other current assets 20,267 4,916 Total current assets 924,948 538,807 Property and equipment, net 42,974 33,441 Intangible assets, net 1,900 2,280 Deferred tax assets 3,119 3,119 Other assets 1,361 3,753 Total assets $ 974,302 $ 581,400 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 280,295 $ 251,658 Accrued expenses and other current liabilities 46,583 71,324 Deferred revenue, current portion 26,329 23,518 Total current liabilities 353,207 346,500 Deferred revenue, net of current portion 4,072 2,758 Other non-current liabilities 3,411 3,217 Total liabilities 360,690 352,475 Commitments and contingencies (Note 9) Stockholders? equity: Preferred stock, par value $0.001 per share,100,000,000 shares authorized, no shares issued andoutstanding as of June30, 2021. No shares issued, ? ? authorized or outstanding as of December31,2020.Common stock, par value $0.001 per share,1,250,000,000 shares authorized as of June30, 2021,222,253,059 shares issued and outstanding as of 222 208 June30, 2021; 257,058,262 shares authorized asof December31, 2020, 208,116,104 shares issued andoutstanding as of December31, 2020Additional paid-in capital 698,879 412,741 Accumulated deficit (85,489 ) (184,033 )Accumulated other comprehensive income (loss) ? 9 Total stockholders? equity 613,612 228,925 Total liabilities and stockholders? equity $ 974,302 $ 581,400

Cricut, Inc.Condensed Consolidated Statements of Operations and Comprehensive Income(unaudited)(in thousands, except share and per share amounts)



Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020Revenue: Connected $ 146,326 $ 113,388 $ 287,646 $ 170,276 machinesSubscriptions 50,673 24,028 96,812 43,208 Accessories and 137,494 97,920 273,857 165,575 materialsTotal revenue 334,493 235,336 658,315 379,059 Cost of revenue: Connected 116,217 95,543 235,909 147,120 machinesSubscriptions 5,285 3,122 9,583 5,963 Accessories and 82,696 63,364 162,258 107,901 materialsTotal cost of 204,198 162,029 407,750 260,984 revenueGross profit 130,295 73,307 250,565 118,075 Operating expenses:Research and 20,606 8,636 36,304 17,807 developmentSales and 33,030 13,437 60,519 25,884 marketingGeneral and 12,507 5,473 24,926 11,173 administrativeTotal operating 66,143 27,546 121,749 54,864 expensesIncome from 64,152 45,761 128,816 63,211 operationsOther income 14 (368 ) (15 ) (942 )(expense), netIncome beforeprovision for 64,166 45,393 128,801 62,269 income taxesProvision for 15,040 10,514 30,257 14,350 income taxesNet income $ 49,126 $ 34,879 $ 98,544 $ 47,919 Othercomprehensive income (loss):Foreign currencytranslation 4 (33 ) (9 ) 65 adjustmentComprehensive 49,130 34,846 98,535 47,984 incomeNet income $ 49,126 $ 34,879 $ 98,544 $ 47,919 Earnings per $ 0.24 $ 0.17 $ 0.47 $ 0.23 share, basicEarnings per $ 0.22 $ 0.17 $ 0.46 $ 0.23 share, dilutedWeighted-averagecommon shares 208,205,162 208,116,104 207,760,027 208,116,104 outstanding,basicWeighted-averagecommon shares 222,947,030 208,116,104 216,403,427 208,116,104 outstanding,diluted

Cricut, Inc.Condensed Consolidated Statements of Cash Flows(unaudited)(in thousands)

Six Months Ended June 30, 2021 2020Cash flows from operating activities: Net income $ 98,544 $ 47,919 Adjustments to reconcile net income to net cash andcash equivalents provided by (used in) operating activities:Depreciation and amortization (including amortization 8,317 6,685 of debt issuance costs)Stock-based compensation 19,795 2,774 Provision for inventory obsolescence 1,598 2,815 Provision for doubtful accounts (110 ) 316 Changes in operating assets and liabilities: Accounts receivable (659 ) (57,204 )Inventories (178,527 ) 95,438 Prepaid expenses and other current assets (15,361 ) 550 Other assets 311 116 Accounts payable 28,833 (15,062 )Accrued expenses and other current liabilities and (20,860 ) 27,305 other non-current liabilitiesDeferred revenue 4,124 3,616 Net cash and cash equivalents (used in) provided by (53,995 ) 115,268 operating activitiesCash flows from investing activities: Acquisitions of property and equipment, includingcosts capitalized for (16,124 ) (12,269 )development of internal use softwareNet cash and cash equivalents used in investing (16,124 ) (12,269 )activitiesCash flows from financing activities: Proceeds from capital contributions 200 1,087 Proceeds from issuance of common stock upon initial 262,007 ? public offering, net of offering costsRepurchase of compensatory units (160 ) (2,362 )Repurchase of common stock upon Corporate (10 ) ? ReorganizationPayments on term loan ? (2,500 )Drawdowns on revolving loan ? 228,269 Payments on revolving loan ? (260,862 )Payments on capital leases (24 ) (50 )Net cash provided by financing activities 262,013 (36,468 )Effect of exchange rate on changes on cash and cash (29 ) 60 equivalentsNet increase in cash and cash equivalents 191,865 66,591 Cash and cash equivalents at beginning of period 122,215 6,653 Cash and cash equivalents at end of period $ 314,080 $ 73,244 Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 14 $ 1,128 Cash paid during the period for income taxes $ 52,410 $ 31 Supplemental disclosures of non-cash investing andfinancing activities:Property and equipment included in accounts payableand accrued $ 3,118 $ 1,727 expenses and other current liabilitiesStock-based compensation capitalized for software $ 673 $ 125 development costsDeferred offering costs in accounts payable andaccrued expenses and $ ? $ ? other current liabilitiesReclassification of liability awards to equity upon $ 10,784 $ ? modification

Use of Non-GAAP Financial Measures

EBITDA and EBITDA Margin

We calculate EBITDA as net income adjusted to exclude: interest expense, net; income taxes; and depreciation and amortization expense. Stock-based compensation is included in our EBITDA calculation. EBITDA Margin is calculated by dividing EBITDA by total revenue.

We use EBITDA and EBITDA Margin as a measure of operating in our business. We believe this non-GAAP financial measure is useful to investors for period-to-period comparisons of our business and in understanding and evaluating our results of operations for the following reasons:

-- EBITDA and EBITDA Margin are widely used by investors and securities analysts to measure a companys operating performance without regard to items such as depreciation and amortization expense, interest expense and income taxes that can vary substantially from company to company depending upon their financing and the method by which assets were acquired; -- Our management uses EBITDA and EBITDA Margin in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including the preparation of our annual operating budget, as a measure of our core results of operations and the effectiveness of our business strategy and in evaluating our financial performance; and -- EBITDA and EBITDA Margin provide consistency and comparability with our past financial performance, facilitate period-to-period comparisons of our core results of operations and also facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

Our use of EBITDA and EBITDA Margin has limitations as an analytical tool, and you should not consider these measures in isolation or as substitutes for analysis of our financial results as reported under GAAP. Some of these limitations are, or may in the future be, as follows:

-- Although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA and EBITDA Margin do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; -- EBITDA and EBITDA Margin do not reflect the portion of software development costs that we capitalize under GAAP, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our investment in new products; -- EBITDA and EBITDA Margin do not reflect: (i) changes in, or cash requirements for, our working capital needs, (ii) interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us or (iii) tax payments that may represent a reduction in cash available to us.

Because of these limitations, we believe EBITDA and EBITDA Margin should be considered along with other operating and financial performance measures presented in accordance with GAAP.

The following table presents a reconciliation of EBITDA to net income and EBITDA Margin to net income margin, the most directly comparable financial measures prepared in accordance with GAAP, for each of the periods indicated:

Three Months Ended Six Months Ended June June 30, 30, 2021 2020 2021 2020(in thousands) Net income $ 49,126 $ 34,879 $ 98,544 $ 47,919Net income margin 14.7% 14.8% 15.0% 12.6%Adjusted to exclude the following:Depreciation and amortization $ 4,290 $ 3,430 $ 8,176 $ 6,666expenseInterest expense, net $ 76 $ 367 $ 155 $ 941Corporate income tax expense $ 15,040 $ 10,514 $ 30,257 $ 14,350EBITDA $ 68,532 $ 49,190 $ 137,132 $ 69,876EBITDA margin 20.5% 20.9% 20.8% 18.4%

Note: EBITDA includes stock-based compensation expense of $8.1 million for the three months ended June 30, 2021 and $1.3 million for the three months ended June 30, 2020. EBITDA includes $11.6 million in recurring stock-based compensation expense and $8.2 million in one-time expenses related to the corporate reorganization associated with the IPO in the six months ended June 30, 2021, and $2.8 million in stock-based compensation expense for the six months ended June 30, 2020.

Media Contact:Alexandra Kenwaypr@cricut.com

Investor Contact:Stacie Clementsinvestors@cricut.com