Cricut (NASDAQ:CRCT) executives used their appearance at the Morgan Stanley TMT Conference to outline recent product and platform initiatives, discuss promotional and international strategies, and frame how they want investors to view the company’s business model.
Simplifying the user experience and moving to “bundle first”
Chief Financial Officer Kimball Shill said the company delivered on a 2025 commitment to “fundamentally simplify” the Cricut user experience with the launch of “Guided Flows.” The company has launched six Guided Flows, including examples for making T-shirts, folding cards, and stickers, which Shill said are designed to make the platform easier for new or non-expert users.
On affordability, Shill said consumer research shows cost is the single biggest objection to entering the crafting category. He said Cricut has driven costs out of its next-generation machines while making them more capable, enabling the company to include more items in the box while maintaining what he described as compelling opening price points and value propositions across larger bundles.
Direct to Film launch and platform monetization beyond cutting machines
Shill highlighted Cricut’s launch of a Direct to Film (DTF) service as an example of leveraging platform infrastructure developed over the last several years. He said the DTF service uses the same Guided Flow created for T-shirts: users can either make a T-shirt on their Cricut machine or upload an image to Cricut’s service to receive a full-color print they can apply to a T-shirt or other substrate.
Shill characterized DTF as an early step in monetizing the platform outside of traditional cutting machines, noting that Cricut has millions of users with creative hobbies that don’t necessarily involve cutting. He said the DTF offering is currently available only on the desktop app and only in North America, with plans to expand the platform and geography over time as the company learns and experiments.
New machines, accessories strategy, and competition
Asked about newly launched machines, Shill said the next-generation products use an all-new architecture. He noted that the Cricut Explore platform had been on the same architecture since its 2014 launch, while the Cricut Joy line is newer but also moved to a new architecture. Shill said the new designs are “dramatically lower cost to produce” while being more capable than predecessors, which supports the bundle-first strategy.
The company also discussed updates in heat press products. Shill said new launches in the heat press line help improve margins and competitiveness, and described the segment as an area where Cricut has been “fighting to regain share” over the past 18 to 24 months. He said the company expects to make progress in 2025 and continue that progress through 2026.
On accessories and materials amid competition from “white label” competitors, Shill outlined three priorities:
- Bundles, which he said improve the starter experience by providing everything users need without having to figure out additional purchases.
- Right products and channels, including a value line of materials engineered to compete in online marketplaces, which Shill said is accelerating globally and helping Cricut win share.
- Competitiveness in commodity categories, where Shill said there is not always IP differentiation, so the company focuses on competitive pricing and costing.
Demand trends, promotions, and subscription drivers
Shill said machine sellout rose for the full year, strengthened in the last few months of the year, and accelerated further in the first quarter to date. He said machine sellout is “the beginning of our flywheel,” creating opportunities to monetize users through subscriptions and accessories/materials. Shill tied momentum to increased marketing investment and said retailers are also supporting the category with marketing efforts.
Shill and Suva also addressed elevated promotional activity. Shill said promotions serve two purposes: driving consumer excitement and improving affordability, particularly as Cricut’s average customer resembles the average U.S. household and those earning under $100,000 are “stretched.” He added that Cricut has emphasized driving costs out of the supply chain and discussed potential margin impacts, but said the company has not been talking about raising prices amid tariff uncertainty.
On subscriptions, Shill said Cricut has delivered its fourth consecutive year of subscriber growth and has grown subscribers year over year since going public. He described three areas of investment supporting the subscription value proposition:
- AI, including improvements to search and a generative AI solution optimized for “cut-ready” images; Shill said AI could modestly pressure platform margins over time and early data suggests it helps acquire new subscriptions.
- Guided Flows, positioned as a major platform investment that improves ease of use and makes subscriptions more compelling.
- Improved messaging and engagement, including marketing that deep links users from social platforms into Design Space and better in-app communication of features to convert non-subscribers and re-engage former subscribers.
Margins, cash priorities, and how management wants the business viewed
Treasurer and SVP of Finance and IR Jim Suva urged investors to separate the model into two reporting segments: platform and products. He said platform gross margins have been “extremely consistent” in the high 80% range and that the company sees no reason they wouldn’t remain in the 80% range, while acknowledging AI initiatives could create some pressure.
On product margins, Suva pointed to one-time items disclosed in Cricut’s Form 10-K. He said Cricut released reserves of about $20 million in 2025 and had about $24 million of benefit to 2025 product margins from lower reserves and monetizing excess and obsolescence (E&O), which he said the company does not anticipate repeating going forward. He suggested looking at averages across 2024 and 2025, or comparing to 2023, for modeling product gross margins without those unique items.
Suva also said the company has reported GAAP profitability for nine consecutive years. Shill added that the company expects to be profitable every quarter, calling it a firm statement made in the prior night’s earnings discussion.
Regarding cash and capital allocation, Suva said inventory has been worked down for several years following elevated orders during COVID-era long lead times, and is now just above $100 million, which the company views as adequate at its current run rate. He said inventory would be expected to rise with sales growth.
Suva outlined a cash deployment framework:
- First priority: organic growth investments, including R&D, marketing, and funding the business.
- Second priority: M&A, though he said the company has not done any deals under Shill’s tenure and hasn’t found opportunities that fit to accelerate growth or engagement.
- Third priority: returning cash to shareholders via a semi-annual dividend (historically $0.10 per share paid in January and July), special dividends funded largely by excess cash from inventory reductions, and share repurchases. Suva noted the company has just over $40 million remaining on its current $50 million repurchase authorization and said management believes the stock is undervalued, with Shill expecting the company to be active in buybacks.
In closing remarks, both executives said Cricut is often misunderstood as a hardware company rather than a platform company. Shill emphasized the consistency of platform growth and the profitability it drives, while pointing to future product roadmap plans and the DTF service as examples of how platform investments could open new monetization avenues beyond cutting machines.
About Cricut (NASDAQ:CRCT)
Cricut, Inc (NASDAQ: CRCT) is a U.S.-based technology company specializing in personal and small-business crafting solutions. The company designs and markets a family of cutting machines that leverage computer-aided design to precisely cut a wide range of materials, including paper, vinyl, fabric and leather. Complementing its hardware offerings, Cricut provides proprietary software and mobile applications that enable users to create custom artwork, import graphics and access a vast library of pre-designed projects and fonts through a subscription service.
Founded as a division of Provo Craft & Novelty in 2005, Cricut emerged as an independent public company in March 2021.
