Cricut (CRCT -2.63%), known for its connected craft cutting machines and creative platform, released its Q2 2025 earnings on August 5, 2025. The company reported GAAP revenue of $172.1 million and diluted GAAP earnings per share of $0.11, outpacing consensus GAAP revenue estimates of $158.6 million. This performance marked a substantial beat versus expectations, with both GAAP EPS and revenue exceeding analyst estimates and included notable improvements in gross margin and GAAP net income compared to prior year results. Despite these advances, user engagement metrics remained flat, and management withheld explicit future margin guidance, citing ongoing tariff risks. Overall, the quarter saw stronger-than-expected profitability, as GAAP EPS of $0.11 exceeded analyst estimates and incremental progress on platform monetization, set against continued headwinds in user activity and external macro challenges.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS | $0.11 | $0.06 | $0.09 | 22.2% |
| Revenue | $172.1 million | $158.6 million | $167.9 million | 2.5% |
| Operating Income | $30.1 million | $26.4 million | 14.0% | |
| Net Income | $24.5 million | $19.8 million | 23.7% | |
| Gross Margin | 59.0% | 53.5% | 5.5 pp |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Cricut produces cutting machines and a digital design platform that enable consumers to create personalized projects at home. The core of its business is the integration of hardware (the cutting machines), a cloud-based design application called Design Space, and a range of consumable materials and accessories. This connected “ecosystem” draws a community of just over 5.9 million active users and over 3.0 million paid software subscribers.
The company’s near-term focus has remained on strengthening platform monetization, driving paid subscriptions, and expanding internationally. Core success factors also include fostering a highly engaged creative community, innovating in both hardware and design tools, and adapting to new market conditions through supply chain flexibility and targeted marketing. Growth in paid subscribers and international sales, coupled with strict cost controls, have stood out as recent strengths. At the same time, new user acquisition and ongoing engagement are persistent challenges.
Quarter Highlights and Financial Trends
Cricut’s top-line GAAP revenue exceeded Wall Street forecasts by $13.5 million. The performance was driven by a 4% increase in Platform revenue and a 1% rise in Products revenue, which includes connected cutting machines and consumable materials. The Platform revenue gains were fueled by growth in paid subscribers, which rose 7% year over year to 3.01 million. The Platform average revenue per user (ARPU) also increased by 2% year-over-year. The Products category was mixed: new machine launches, including the fourth-generation Cricut Maker and Explore cutting machines, were met with positive retailer and user feedback. However, the materials and accessories segment continued to struggle, even as the company tried to combat this weakness by expanding its Value line of lower-cost materials and accessories.
Gross margin, a measure of revenue retained after subtracting product and service costs, expanded to 59.0% from 53.5% compared to Q2 2024. Key drivers of margin improvement included a greater share of high-margin subscription revenue and a favorable hardware sales mix. The operating income margin moved up to 17.5% of revenue, while GAAP net income rose 24% year over year. Operating cash flow reached $36.2 million, with solid free cash flow supporting both capital returns and development investments.
While top and bottom line results showed improvement, Cricut’s active user base stayed essentially flat at 5.9 million, and the metric for 90-day engaged users declined slightly by less than 2%, landing at 3.5 million. This flatness in Active Users partly reflects the natural maturing of earlier user cohorts, particularly those acquired during the sharp growth phase in 2020 and 2021. Engagement initiatives, including personalization and marketing automation, showed some effect—but have yet to drive a clear return to growth in user activity figures.
International revenue provided one of the brighter spots for the period, climbing 8% year-over-year and reaching 21% of company-wide sales. The company has prioritized product localization and region-specific marketing to fuel growth abroad. Despite progress in countries like the UK and Germany, management acknowledged that regional performance remained uneven, and ongoing promotion will be needed to capture wider international share.
Product, Ecosystem, and Segment Performance
The company reported an increase in ARPU to $53.84.
Hardware sales saw an encouraging boost from the introduction of two new connected cutting machines—Cricut Maker 4 and Cricut Explore 4—that debuted at the end of Q1 2025. These launches contributed to improving machine sales growth compared to recent periods. However, consumables and accessories (such as vinyl sheets, iron-on materials, and specialty papers) continued to lag, facing pressure from competitive “white-label” and third-party products in retail and online channels. The Value line, which expanded by over 100 new stock keeping units (SKUs) in late Q1 2025 and April 2025, aims to reclaim share by focusing on affordability and bundle value.
The company also benefited from operational improvements and favorable supply sourcing. The company’s gross profit (GAAP) was $101.5 million, and operating income margin reached 18.0% in Q1 2025.
Management’s focus extended to international expansion, where localization of the software platform and enhanced multilingual content supported overseas revenue. Nevertheless, Growth was uneven by geography, with soft spots remaining in Australia. Cricut’s business model remains fundamentally tied to its large community, where user activity drives not only Platform subscriptions but aftermarket sales of machine-compatible accessories and specialty materials that generate recurring purchases.
Outlook, Guidance, and Capital Returns
The company’s leadership did not offer explicit forward guidance for operating margins or revenue, citing ongoing uncertainty around tariffs and global supply chain costs. In the words of management: "Our prior guidance for operating margins can no longer be relied upon and we are no longer providing any color on our operating margin expectations for the year.". Cricut stated only that it "expects to be profitable each quarter and generate significant positive cash flow during 2025." No quantitative sales forecast for the third quarter or for fiscal 2025 was issued.
In response to strong operating cash flow and a robust, debt-free balance sheet, Cricut authorized and executed significant capital returns. After Q2 2025, the company completed payment of a special $0.75 per share dividend and a recurring semiannual dividend of $0.10 per share. This follows earlier share repurchases of $4.7 million. Cricut’s large dividend and buyback activity signal continued confidence in its long-term profitability and cash generation.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
