Cricut, Inc.

Hey, everyone, and welcome to Cricut fourth quarter 2025 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 participate, you will need to press star 1 1 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 1 1 again. Please note, this conference is being recorded. Now it's my pleasure to turn the call over to the Senior Vice President and Head of Investor Relations, Jim Subba. Please proceed.

Thank you, Operator, and good afternoon, everyone. Thank you for joining us on Cricket's fourth quarter 2025 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.cricket.com. Joining me on the call today are Ashish Arora, Chief Executive Officer, and Kimball Schill, Chief Financial Officer. Today's prepared remarks have been recorded, after which Ashish and Kimball will host 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 risks and uncertainties, including those identified in the risk factor 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, March 3rd, 2026. Cricket 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, Jim. While we are pleased with increased profitability and growth in paid subscribers and global machine sellout units, we are disappointed in the lack of total company sales growth for both Q4 and 2025. We are working with tremendous urgency and focus to drive a mass market experience, accelerate our development cycles, and compete better. I would like to look back on 2025 on what went well, what we could do better, and our priorities for 2026. Kimball will go through much of the financial details and how we look at 2026. We are pleased with our increased profitability and the over 4% increase in paid subscribers in 2025. along with positive machine sellout units. This was our ninth consecutive year of positive net income as we generated $76.7 million of net income, which increased 22% or $13.9 million compared to 2024. In 2025, we launched two new cutting machines, a new mini heat press, several new materials, including greatly enhancing our cricket value lines. and significant improvements in our software platform that includes compelling AI offerings and easy-to-use project-guided flows. We are disappointed we did not post positive full-year revenue growth. Total company sales decreased less than 1% for the full year and decreased 3% year-over-year in Q4. We believe Cricket is a growth business, and we are intent on proving it. Last year, I mentioned we were fundamentally simplifying our user experience. We are delivering on this commitment with our new project guided flows, which are in the process of being rolled out to our entire user base. While it is still early, we are pleased with the initial results and feedback. We are relentlessly focused on increasing our speed of execution and on accelerating investments that will help drive future revenue growth. These accelerated investments are in hardware product development, materials, and engagement. You can see the early fruits of these efforts from our 2025 launches that I summarized above. Thus far in 2026, we have already launched two next-generation cutting machines, new heat presses, a new direct-to-film or DTF service, and I'm excited about our future roadmap. We will continue a similar cadence of marketing and promotional spend as the prior year. We are focused on four main priorities. new user acquisition, user engagement, subscriptions, and accessories and materials. We continue to focus on new user acquisition and engagement growth on our platform, which ultimately drives our monetization flywheel. In Q4, we amplified our marketing reach by strengthening our visibility during this key shopping period. We continued with increased marketing investment and activated several high-profile partnerships, alongside new advertising opportunities. These efforts led to increased marketing engagement and an increase in Google searches for what is cricket, which we have historically watched as a leading indicator. We believe these efforts will continue to bear fruit in 2026. While we did not grow revenue in the quarter, we did see a continued improvement in sellout of connected machines, which we believe is a result of our ongoing marketing efforts. Quoted to date in 2026, we continue to see positive connected machines set up. In 2026, we are leading even more into our bundle-first strategy with a cohesive out-of-box experience that includes tools and materials with the machine along with a tightly integrated guided software flow. With that, we are excited to announce the introduction of two next-generation cutting machines with all new architectures, Cricut Joy 2 and Cricut Explore 5. The overall consumer experience embedded in these new machine bundles represent the start of a new era at Cricut. Recall, last year, I mentioned we would fundamentally simplify our user experience. We delivered on this commitment as we introduced guided project flows for our most popular use cases. These include vinyl decals, iron-on t-shirts, folded cards, cardstock cutouts, insert cards, and stickers and labels. While it is too early to see a material change in engagement from these improvements, as they were only recently rolled out, we are pleased with early feedback, especially for onboarders. Engagement erosion continues to moderate as we held active users about flat for the year at just under 5.9 million active users. 90-day engaged users who cut during the quarter declined 3% year-on-year. Our ability to hold active users above flat is the result of multiple efforts. The performance and reliability of our platform continue to increase, which made this holiday-making season a more frictionless experience for our users. We've introduced several improvements to the core functionality of our design experience. Our AI-driven features, both user-facing such as Create AI or behind-the-scenes such as search algorithms, continue to drive positive impact. For example, Create AI lets users take their personal images, easily add complementary text, and choose an output style to create unique designs ready to cut, draw, or print. This dramatically improves the likelihood of user success. Create AI lets users generate ready-to-make images using credits as part of their subscription plan and is an acquisition driver to attract non-subscribers to sign up for Cricut Access. We see the use of AI-assisted images and project creation as complementary to our growing image library from our contributing artist program and our curated guided flows and associated templates for the most common project types. Beyond these continued improvements within our app, we have continued to improve our engagement marketing efforts to drive returning visits to Design Space. As a result of all our efforts, we have seen our Net Promoter Score improved meaningfully in the past 12 months. Despite the continued pressure on our engagement metrics, we are confident in our efforts to simplify our design experience by assisting users based on their project intent, selling more of our connected machines in bundles, configured to work seamlessly with these new guided flows, and continuing to grow the number of images, fonts, editable templates, and AI features available to users. We look forward to 2026, which will be the first year of our cohesive consumer experience that integrates our bundle-first strategy, coupled with our new simplified project workflows that leverage AI throughout the making experience. In Q4, our paid subscribers increased by over 4% year-on-year to just over 3.09 million. Paid subscribers continue to be a big positive for us and increase 132,000 year-on-year in Q4. We are also seeing positive trends on win backs where our promotional offers are driving increased signups from prior subscribers. We believe our new platform enhancements, including new project guided flows, templates, and create AI enhancements will continue to provide benefits and value to our subscribers. We have a rich roadmap to continually increase the value proposition for subscribers. As I previously mentioned, We launched Create AI for our Cricut Access subscribers, and we will continue to introduce more AI-driven features. Our goal is to make it incredibly compelling to be a subscriber to leverage our content and software tools. Accessories and materials sales decreased 13% year-on-year in Q4 and declined 9% for the full year. We realized that over the last several years, we have lost ground in competition in material types where there are low barriers to entry. we continue to see competitive pressure increase manifesting in white label brands and retailers, as well as new entrants in online marketplaces and in retail. We have embraced the challenge of providing refreshed and cost-competitive materials and accessories offerings. As these offerings continue to roll out, we intend to reclaim market share, and by doing so, enhance the making experience of our users. I'm pleased to report that we have seen share improvements globally within online channels and at select large retailers across the category. For example, we see our value line continue to accelerate in online marketplaces, we continue to regain share in heat presses, and we continue to make progress with driving costs out of our supply chain as we fight to counteract tariffs and address affordability for our consumers. In Q4, we launched a new EasyPress Mini LT that addresses affordability concerns and is available in four attractive colors. During Q1, we launched our new heat press, Cricut EasyPress SE, which comes in two sizes and a variety of colors. These machines provide a professional quality heat transfer experience without the complexity or large size of an industrial press. They support a wide range of materials, including iron-on, infusible ink, sublimation, and DTF. I'm also excited to share that in Q1, we launched a DTF service. DTF lets users create in Design Space vibrant, full-color, personalized artwork that is printed onto a special film, coated with adhesive powder, and then pressed onto fabric or other substrates. DTF gives us the opportunity to leverage our design space platform and guided flows that we have been investing in over the past year. This is an example of new opportunities we are exploring to monetize our platform and content beyond cutting machines. As you can see, our team has been very busy with R&D, innovation, and new products. We are not done, and we have a great line of new products on our future roadmap. We also continue in our relentless focus to drive costs out of this business. We are intensely focused on the overall customer experience. It's our fundamental belief that when we give people more reasons and inspiration to make things easily and affordably, we will see a lift in materials consumption. We are driven to continue to innovate while exhibiting both long-term focus and current discipline. With that, I'll turn the call over to Kimball.