Cricut, Inc. Class A Common Stock 2026 Q2 Earnings Call

Please go ahead. Thank you, operator.

Good afternoon, everyone. Thank you for joining us on Cricut's second quarter 2026 earnings call. Please note that today's call is being webcast and recorded on the investor relations section of the company's website. A replay of the webcast will also be available following today's call. For your reference, accompanying slides used on today's call, along with a supplemental data sheet, have been posted to the investor relations section of the company's website, investor.cricut.com. Joining me on the call today are Ashish Arora, Chief Executive Officer, and Kimball Shill, Chief Financial Officer. Today's prepared remarks have been recorded, after which Ashish and Kimball will host a live Q&A.

Before we begin, we would like to remind everyone that our prepared remarks contain forward-looking statements, and management may make additional forward-looking statements, including statements regarding our strategies, business, expenses, tariffs, capital allocation, and results of operations in response to your questions. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them. These statements are based on current expectations of the company's management and involve inherent risk and uncertainties, including those identified in the Risk Factors section of Cricut's most recently filed Form 10-K or Form 10-Q that we have filed with the Securities and Exchange Commission. Actual events or results could differ materially. This call also contains time-sensitive information that is accurate only as of the date of this broadcast, August 4th, 2026. Cricut assumes no obligation to update any forward-looking projection that may be made in today's release or call.

I will now turn the call over to Ashish.

Thank you, Chris. In Q2, we continued to see benefits from our platform-first strategy aimed at creating a simpler, more compelling user experience. As highlighted last quarter, broadening awareness and relevance among new consumers is a critical driver of new user acquisition. This is the foundation of our new brand anthem, "Think it, make it, Cricut." We saw double-digit cutting machine sell-out growth in the quarter, positive trends in user engagement, and subscriptions were just over $3.1 million. During Q2, we continued to see strong profitability driven by continued strength in our platform business and some unique items like IEEPA tariff refunds. Platform revenue grew just over 5% in the quarter to $85 million. Overall, company sales declined approximately 9% in the quarter. Recall, it was against a difficult year-over-year comp where we benefited from the pull forward in Q2 2025 related to potential tariff impacts.

The foundational work to create a more compelling mass market experience is in place, and we are focused on translating that investment into stronger execution. We remain committed to increasing the pace of innovation by accelerating our development cycles, expanding awareness of our platform, and strengthening our competitive position. As we execute these priorities, we expect to deliver a more compelling experience for our customers while positioning the business for stronger long-term growth. We are increasingly positioned to deliver the right message to the right consumer about the right product at the right price. Today, I will share the progress we've made to strengthen the business, encouraging signs from the first half of 2026, and how this reinforces our confidence in building on this momentum through the second half. Kimball will cover the financial details and our outlook for the remainder of 2026.

We remain focused on acquiring new users and increasing engagement across our platform, which together drive a monetization flywheel of subscriptions in accessories and materials. We believe the investments we are making today position Cricut for a return to sustainable, profitable growth. Let me talk about our priorities. In Q2, we launched our global marketing campaign, "Think it, make it, Cricut." The message is simple: Cricut is for anyone who wants to create. The campaign highlights how our platform, powered by Design Space, helps people easily turn ideas into meaningful, personalized projects. Our aim is to expand our base beyond identified crafters. Early results show a meaningful increase in traffic to cricut.com compared with prior campaigns as more consumers engage with the brand and learn about our platform.

The campaign will continue rolling out globally and is being integrated across key marketing touchpoints, including our website, user-generated content, and influencer partnerships. Connected machine unit sales were strong in the first half, boosted by the success of the new Joy 2 and Explore 5 bundles, with year-to-date connected machine sales in units up double digits. Connected machine sell-out performance was also strong, up double digits, benefiting from an earlier Prime Day. Sales out is a key measure of consumer demand and our marketing success. Joy 2 and Explore 5 bundles were key drivers of this growth, giving us confidence that our bundle-only strategy is appealing for consumers. We also made important progress in innovation in the first half. Since launch in Q1, our next generation cutting machines, Cricut Joy 2 and Cricut Explore 5, have performed well.

Our direct to film, or DTF service, is still in its infancy, but reinforces the opportunity to expand Cricut beyond hardware into value-added services, deepening engagement with our most loyal users. Given that most orders come from existing subscribers, we believe the service is enhancing the value of our ecosystem. While still in its early stages, we are excited about the long-term opportunity and will continue experimenting and investing to expand the platform's capabilities and support the growth of the services business. We continue to make meaningful progress in stabilizing engagement across our platform. Active users grew 1% year-over-year and remained flat sequentially, marking the first time this KPI has stabilized in a second quarter since 2022. Recall, we have a seasonal business, and engagement tends to be softer in summer months.

90-day engaged users were also stable year-over-year, another important milestone that reflects the progress we are making. We believe these results are driven in part by the cumulative impact of our efforts to simplify the user experience, improve onboarding, and strengthen new user acquisition. Improving onboarding remains one of our highest priorities. We know the earliest experiences on our platform have an outsized impact on long-term engagement. We are also making Design Space faster, simpler, and more intuitive for our returning users, reducing friction throughout the creative process so users can spend more time making and less time navigating the platform. AI continues to be an important differentiator for Cricut. During the quarter, we introduced new agentic AI features purpose-built for creating with Cricut. By understanding our machines, materials, and project workflows, our AI helps users create designs that are more likely to translate successfully into physical projects.

As we enter the second half of 2026, we are encouraged by the stabilization and improving trajectory across our engagement metrics. While there is still work to do, we believe our continued investments in simplifying the user experience, strengthening onboarding, and embedding AI throughout our platform are building a stronger foundation for sustainable engagement and long-term growth. Our platform business continued to perform well in the second quarter. Paid subscribers increased by 93,000 or more than 3% year-over-year to just over 3.1 million, contributing to just over 5% growth in platform revenue to $85 million. Sequentially, we added 25,000 paid subscribers during the quarter as we continued to enhance the value of our subscriptions offering through new AI-powered capabilities, clearer communication of subscriber benefits, and targeted promotional offers. We also made meaningful progress expanding our premium subscriptions tier.

Following successful initial testing, we saw strong adoption of our premium plan, which starts from $14.99 per month among new subscribers. The offering is now available across both our desktop and mobile applications, and we will continue expanding availability across our purchase channels throughout the year. We also continue to test new plan formats and pricing tiers on an ongoing basis. Enhancing the value of Cricut subscriptions remains a strategic priority. During the quarter, we introduced several AI-powered Cricut Creative Labs experiences that enable subscribers to transform personal photos into personalized projects, including coloring pages and photo art. Early engagement with these new experiences is encouraging and reinforces the opportunity to deliver value across a wide range of creative interests. Looking ahead, we see significant opportunity to further differentiate our subscriptions offering by combining AI innovation with our growing library of curated content.

Our accessories and materials business remains a challenge. We continue to work our plan to strengthen our product portfolio and improve our competitive position. While the category remains highly competitive, we continue to gain share in some major categories, including printables and Cricut accessories. During the first half of the year, we introduced new SKUs in conjunction with major retailer resets, significantly expanding our assortment with a focus on innovation, value, and better meeting the needs of both new and existing Cricut users. We are particularly encouraged by the early consumer response to these new products. Printables are our fastest-growing materials category as consumers increasingly personalize stickers, labels, photos, and gifts. We also refreshed our hand tools portfolio with new configurations and differentiated designs with additional innovation planned for the second half of the year.