Cricut, Inc.

Good day and thank you for standing by. Welcome to the Cricket Q1 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Jessica Barker, Investor Relations at Blue Shirt Group. Ms. Jessica, please go ahead.

Thank you, operator, and good afternoon, everyone. Thank you for joining us on Cricket's first quarter 2021 earnings call. Please note that today's call is being webcast 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, prepared remarks and accompanying slides used on today's call have been also posted to the investor relations section of the company's website, investor.cricket.com. Joining me today on the call are Ashish Arora, Chief Executive Officer, and Marty Peterson, Chief Financial Officer. 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 in response to our 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 risks and uncertainties, including those identified in the risk factor section of Cricket's most recently filed Form 10-Q and S-1 registration statement. Actual events or results could differ materially. All non-GAAP numbers referenced in today's call are reconciled in the press release or the slide presentation on our investor relations website. This call also contains time-sensitive information that is accurate only as the date of this broadcast, May 13, 2021. Cricket assumes no obligation to update any forward-looking statement projection that may be made in today's release or call. I will now turn the call over to Ashish to begin.

Thank you, Jessie. Welcome to our first earnings call as a public company. I want to start off by thanking all those that have supported us over the years, our passionate community of users around the world, my special thanks to the Perot family and their investment organization, Petros Asset Management, for their early investment and continued support, and most importantly, our entire Cricket team for their hard work and continued dedication to our mission and our culture. In March, we completed our IPO, and I want to welcome our new shareholders. We look forward to sharing our journey with you as we continue to grow and fulfill our mission to help people lead creative lives. While the IPO will help support growth across multiple strategic initiatives, we will continue to be very disciplined in our investment approach. We've had a long history of delivering solid growth. In 2020, in addition to COVID, we saw growth because of international expansion, the introduction of the Cricket Joy product family. Cricket Joy helped us expand our retail footprint, acquire more beginner users, and broaden our penetration. I'd like to start by sharing a few highlights from the quarter. And then I'm going to spend a few minutes talking about the power of our platform and business model, our passionate community, as well as our growth drivers going forward. QO is a continuation of growth in 2020. as we acquired new users efficiently and drove engagement. Revenue in the first quarter was $324 billion, or 125% growth over Q1 of last year, putting us at a trailing 12-month run rate in excess of $1 billion. EBITDA was $68.6 million in the first quarter, a 232% increase over the first quarter of last year. We experienced a significant increase in user growth in the first quarter, growing 76% year over year, bringing our total users to just under 5 million, all this while we faced connected machine shortages. For the large influx of users that we acquired in 2020, we benefited from monetizing those users with accessories, materials, and subscriptions. User acquisition is just the start of a user's journey with Cricket. Keeping them engaged and creating is one of the most important ways via fuel user acquisition and monetization flywheel. The more users are engaged, the more they are talking about Cricut and sharing projects with friends and family. As of the end of Q1 2021, 62% of our users created with their Cricut machines over the trailing 90-day period, up from 60% in Q1 2020. As our users create with their connected machines, we have an opportunity to drive revenues across our accessories and materials as well as subscriptions that are recurring in nature. Ending paid subscribers grew 118% year over year. Let me talk about the platform. We built a platform of software and products that accompany a user from inspiration to a finished project. We define our platform to include our highly versatile connected machines, design apps to discover and create projects, as well as hundreds of different types of accessories and materials that are designed to seamlessly work across our connected machines. For those new to the Cricket story, let me reinforce some of the key trends that shape our business and a typical user journey. We are benefiting from major long-term secular trends that include personalization, digitization of tools, technology enabling a new generation of entrepreneurs and the proliferation of social media. Our user journey typically starts with the purchase of one of our connected machines. From the time the user opens the box, registers on our platform, and makes their first project, design plays a key role in that journey. Our goal is to wow our users at every touchpoint. Every user gets free design apps on PC, Mac, iOS, and Android. And because we are cloud-based, a user can start a project on one device and pick it up on another. Users can access a selection of images, fonts, and ready-to-make projects, some free and some for purchase, as well as upload their own images. We have two subscription offerings, Cricut Access and Cricut Access Premium. Through these subscriptions, users get access to our content library of over 140,000 images, as well as discounts on Cricket.com and Priority Member Care. As of the end of Q1 2021, nearly 33% of our users were subscribed to Cricket Access. Our platform offers several community features which allow users to follow each other in the Cricket community, share projects, and create projects that other users have shared. The data from our users' contribution on the platform gives us valuable insights into their preferences and behaviors. Many of our users share a love for our brand, products, and our mission. Our users are passionate about sharing cricket tips, tricks, personal stories, and more. All of this helps foster a loyal community of users who are deeply engaged with cricket. Our community creates a reinforcing network effect. As the number of our users grows, so does the number of projects made and shared physically or digitally. This generates even more shared projects and word of mouth that, in turn, helps to grow our community. This community network effect has allowed us to efficiently acquire new users and drive sales by word of mouth referrals, complemented by our targeted sales and marketing efforts. We have over 5 million followers across relevant social media platforms. I encourage you all to visit our social media pages where we regularly showcase the creativity of our users. We also have over 2 billion views on hashtag cricket on TikTok, which are almost entirely organic. We also have a deep focus on creating a diverse community of users and improving the breadth and depth of content we offer. We are constantly offering new styles, genres, seasonal content, and content that supports causes, all with the goal of inspiring creative needs. For example, in February, during Black History Month, we celebrated creators within our community and shared some of our favorite projects. We also plan to further expand the content in design space to reflect the interests of our diverse community. Finally, 29% of our users used their machine to create projects to sell, and many have created their own businesses. We believe we have a huge opportunity to continue to scale our user base. We measure our opportunity in terms of a serviceable addressable market, or SAM. Our SAM includes active creatives who have created at least one project in the last 12 months in categories that we already address with our existing product portfolio. We estimate that our SAM in the US and Canada is roughly 85 million individuals. Combined with our international opportunity in our four top international markets alone, Australia, France, Germany, and UK, our total SAM is about 130 million individuals. With a user base of approximately 5 million, we have penetrated less than 4% of our SAM. As we continue to grow and become more mainstream, The opportunity to expand beyond our SAM is significant. Fundamentally, we believe that everyone is innately creative and anyone can be a part of the Cricket community. As we make new products and expand our reach, we believe there is an even greater opportunity for creatives and potential creators anywhere to join the Cricket platform. We also believe there is a significant opportunity for Cricket to grow internationally. We began our international expansion by launching in Australia, Canada, France, Germany, and United Kingdom. We've also localized our design apps in several languages such as French, German, Portuguese, and Spanish. We will continue to pursue a disciplined international expansion by targeting countries with large populations of active creatives where we believe the Cricket Value proposition will resonate. International revenue grew We believe that trends that help drive user acquisition and growth in North America are truly global in nature. In addition, we are seeing similar network effects and a passionate community of users in each of the markets we have launched. In the future, we expect to expand into new emerging markets strategically to continue to drive growth. Our cloud-based software enables us to update the functionality and features of existing physical and digital products and to release new products that seamlessly integrate with our platform. Our platform is extensible, alive for innovation and growth from new products, tools, accessories, increased content, and greater functionality available through our software and apps. For example, in Q1, we launched the Cricut MugPress. a machine accessory that allows our users to create easily professional-looking personalized mugs for personal use, for gifting, and for selling. Users can now get peel-proof dishwasher-safe results with our infusible ink materials. As part of this launch, we added new designs in our library for mugs and coupled that with new software capabilities, infusible ink transfer sheets, and infusible ink-compatible mug blanks. These mugs are designed with a special coating that makes it possible for the infusible ink transfers. They can also use our infusible ink pens to make customized mugs that have handwritten notes and drawings on these mugs. The mug press launch is a great example of the extensibility of our platform. Our users are being inspired with new mugs and gift ideas every time they use our apps and cloud-based software. It has been amazing to see our users' creativity, not only in the mugs they are making, but also in the occasions and friends they are making gifts for. We've been pleased with the sales so far. We spent a lot of time listening to our users, adding greater functionality to our software, and improving the user experience. We added some great educational tutorials and step-by-step how-tos, built right inside Design Space to increase ease of use and help drive engagement. We also enhanced our search functionality, added project collections to help users organize their creative work, and launched the highly requested offset feature, which allows users to add decorative outlines and shadowing to shape, text, groups of images to make their designs pop. Software is core to our platform, and you will see us continue to invest in this area going forward. We have a proven ability to drive profitable growth, which we believe positions us well to keep innovating and delivering great experiences for our users over the long term. I'm extremely humbled by what our teams have been able to accomplish and how we've been able to enrich the lives of so many community users over the years. With continued strong demand, we enter the second quarter with positive momentum. Although we are taking a judicious approach to the medium term, we are very long-term focused on executing well and continuing to build our platform and enriching our community. I'll now turn the call over to Marty for more details on the financials.