Cricut 2025 Q1 Earnings Mixed Performance with 22% Net Income Growth

Cricut (CRCT) reported its fiscal 2025 Q1 earnings on May 07th, 2025. Despite a 3% drop in revenue, Cricut's net income surged by 22% to $23.9 million, surpassing the Zacks Consensus Estimate of $0.08 per share with actual earnings of $0.11 per share. This marks an earnings surprise of 37.50%. Cricut also announced a special dividend of $0.75 per share, reflecting its confidence in sustained profitable operations. However, revenue guidance remains in line with previous projections, with no significant adjustments.

Revenue

Cricut's total revenue fell by 2.8% in Q1 2025, amounting to $162.63 million compared to $167.39 million in Q1 2024. Revenue from the Platform segment reached $79.99 million, reflecting a modest increase, while the Products segment experienced a decrease, contributing $82.65 million to the total. This shift highlights the company's evolving focus towards higher-margin, subscription-based revenue streams.

Earnings/Net Income

Cricut experienced a 22.2% increase in EPS, rising to $0.11 from $0.09 in Q1 2024, alongside a net income increase of 21.7% to $23.91 million. This reflects strong earnings growth and improved profitability.

Price Action

The stock price of Cricut surged by 13.17% during the latest trading day, with a notable increase of 22.49% over the past trading week and 24.87% month-to-date.

Post-Earnings Price Action Review

Over the past five years, a strategy of purchasing Cricut shares after a quarter with a revenue drop and holding for 30 days has yielded a 17.72% return, though it underperformed the benchmark by 19.41%. While offering some positive returns, the approach presents a challenging risk-return profile, evidenced by a Sharpe ratio of 0.29 and a maximum drawdown of -19.60%. Volatility stood at 14.13%, highlighting inherent risks. Investors considering this strategy should be mindful of the associated risks and evaluate it in the context of their broader investment strategy.

CEO Commentary

"We are pleased with the increase in paid subscribers in Q1 up 6% year-over-year, the continuation of positive International sales growth up 8% year-over-year, and strong profitability," said Ashish Arora, Chief Executive Officer of Cricut. He acknowledged the challenges posed by tariffs but emphasized the strategic advantage gained by relocating production outside China. Arora highlighted the company's focus on accelerating investments in hardware development, materials, and user engagement to drive future revenue growth, maintaining a commitment to navigate uncertainties while enhancing execution speed.

Guidance

The company expresses confidence in sustaining profitable operations, indicating that accelerated investments will contribute to future growth. The board has approved a special dividend of $0.75 per share, a recurring semi-annual dividend of $0.10 per share, and stock repurchases up to $50 million. Cricut aims to leverage its robust cash flow, with $61.2 million generated from operations, to support these initiatives. The outlook suggests a focus on long-term growth while continuing to evaluate capital allocation regularly.

Additional News

Cricut recently announced the launch of its next-generation cutting machines, the Cricut Explore 4 and Cricut Maker 4, expanding its product lineup. Additionally, the company appointed Heidi Zak as an independent board member, reflecting a strategic move to strengthen its governance. In a continued effort to enhance shareholder value, Cricut's board authorized a $50 million stock repurchase program, alongside its special and semi-annual dividends. These actions underscore the company's commitment to returning value to shareholders while positioning itself for future growth.