Cricut (NASDAQ:CRCT) reported fourth-quarter 2025 revenue of $203.6 million, down 3% year-over-year, as platform growth and improving profitability were offset by continued declines in accessories and materials sales. For full-year 2025, revenue totaled $708.8 million, a decrease of less than 1% from 2024. Management said it was “pleased with increased profitability” and subscriber growth, but “disappointed” by the lack of overall sales growth in both the quarter and the year.
CEO Ashish Arora said the company is moving with “tremendous urgency and focus” to improve its mass-market experience, accelerate development cycles, and compete more effectively. The company outlined four main priorities for 2026: new user acquisition, user engagement, subscriptions, and accessories and materials.
Platform growth and subscriber gains remained a bright spot
Arora highlighted new software capabilities, including “project guided flows” and AI-driven features such as Create AI. He said Create AI allows users to combine personal images with text and output styles to generate designs “ready to cut, draw, or print,” and described it as an acquisition driver for Cricut Access subscriptions. CFO Kimball Shill also noted that broader AI adoption could pressure platform gross margin as the company ramps AI features, even as early data suggests the tools can support subscriber acquisition.
Management cautioned that subscriber growth may remain challenging until machine sales and new user acquisition accelerate, and Shill reiterated a potential seasonal pattern: growth in Q1 and Q4, with flat-to-declining quarter-over-quarter subscriber growth in Q2 and Q3 due to attrition dynamics.
Engagement trends moderated as guided flows roll out
Arora said Cricut is delivering on a commitment to simplify the user experience through guided flows for common use cases, including vinyl decals, iron-on t-shirts, folded cards, cardstock cutouts, insert cards, and stickers and labels. While he said it is “too early” to see a material change in engagement metrics because the features were recently rolled out, he cited positive early feedback, particularly among new users.
For 2025, the company held active users “about flat” at just under 5.9 million, while 90-day engaged users who cut during the quarter declined 3% year-over-year. Arora said engagement erosion continues to moderate, and he pointed to improved platform reliability, enhancements to core design functionality, and engagement marketing efforts to drive returning visits. He also said net promoter score improved “meaningfully” over the past 12 months.
Products revenue declined amid promotions and continued materials pressure
Fourth-quarter products revenue was $119.7 million, down 8% year-over-year. Connected machines revenue declined 4%, which Shill attributed primarily to lower average selling prices as the company increased promotions ahead of new product launches in Q1. Accessories and materials revenue fell 13% in the quarter and declined 9% for the full year, which Shill said was the primary driver of a 5% full-year decline in product revenue.
Arora said the company has faced growing competition in materials from private-label brands, retailers, and new entrants in online marketplaces. He said Cricut has responded by refreshing and making materials and accessories more cost competitive, citing progress in global share in online channels and at select large retailers. He also pointed to supply chain cost actions aimed at counteracting tariffs and improving consumer affordability.
On the call, Arora emphasized that materials remain strategically important to the Cricut ecosystem, arguing that compatibility and “peace of mind” are key to the overall customer experience and that engagement initiatives should ultimately support a “monetization flywheel” through subscriptions and materials consumption.
Bundle-first strategy and new launches shape 2026 product approach
Management said Cricut is leaning further into a “bundle-first” strategy in 2026. Arora said the company has introduced two next-generation cutting machines with “all new architectures,” Cricut Joy 2 and Cricut Explore 5, and described them as the start of “a new era” tied to a cohesive out-of-box experience integrating tools, materials, and guided software flows.
Shill said Cricut is shifting to only selling next-generation connected machines bundled with materials. As a result, the company will no longer provide a supplemental revenue breakdown between connected machines and accessories/materials in its SEC filings and data sheet, while continuing to report platform and product revenue and costs in its consolidated statements.
In Q&A, management said retailers have responded positively to the bundle approach and indicated it has not driven major changes to shelf placement or merchandising strategy. The company said bundles were curated based on user studies to improve the initial experience and, in turn, support engagement and repeat material purchases.
In addition to machine and heat press launches, Cricut introduced a direct-to-film (DTF) service in Q1. Shill said the initial DTF rollout is aimed at existing users, primarily in North America, and is currently available only on desktop. Management described DTF as an example of exploring ways to monetize the Design Space platform beyond traditional cutting machines and said it plans to expand audience and geography over time as it learns.
Margins improved and capital returns continued; outlook emphasizes investment
Cricut posted fourth-quarter net income of $7.8 million, or $0.04 per diluted share, compared with $11.9 million, or $0.06 per diluted share, in the prior-year period. Full-year net income rose to $76.7 million, up 22% from $62.8 million in 2024, with diluted EPS of $0.35 versus $0.29.
Gross margin expanded in 2025. Total gross margin was 47.4% in Q4, up from 44.9% a year earlier, while full-year gross margin increased to 55.1% from 49.5%. Platform gross margin was 88.6% in Q4 and 89% for the full year, which Shill attributed primarily to lower amortization of software development costs. Products gross margin was 18.4% in Q4, and for the full year increased to 26% from 19.3%, driven mainly by selling previously reserved inventory and reduced inventory impairments.
Operating expenses totaled $82.5 million in Q4, including $7 million in stock-based compensation, and were up less than 3% year-over-year. Full-year operating expenses increased just over 6% to $294.4 million as the company accelerated investments in hardware development, materials, engagement, and marketing. Operating income was $13.9 million in Q4 and $96 million for the year, up 26% from 2024.
On cash and capital allocation, Cricut generated $200 million in operating cash flow in 2025 and ended the year with $276 million in cash and cash equivalents, remaining debt-free. The company repurchased $5.6 million of stock in Q4 and $24.6 million for the full year, leaving $41.3 million available under its $50 million authorization. Cricut paid $202.1 million in dividends during 2025 and paid about $21 million after quarter-end for its declared $0.10 per share semi-annual dividend on Jan. 20, 2026.
While Cricut did not provide detailed quarterly or annual guidance, Shill said the company expects to be profitable each quarter and generate operating cash flow for full-year 2026. He added that due to tariff uncertainty—citing a “recent Supreme Court ruling overturning IEEPA tariffs and associated dynamics”—the company did not provide guidance on margin impact. Management said it expects to remain active in share repurchases while continuing to invest in R&D, product launches, marketing (including international), and promotions to support affordability.
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.
