What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-06 compared with 2023-03-13 · 189 added, 179 removed, 967 unchanged (28% of the section changed)

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm ( BDO USA, LLP ;

Report of Independent Registered Public Accounting Firm ( BDO USA, P.C.

Salt Lake City, Utah ;

29 unchanged sentences

Variable Consideration Related to Customer Rebate Liabilities

As described in Note 2 to the consolidated financial statements, the Company recognizes revenue for physical goods at the net sales price, which includes certain estimates for variable consideration related to customer rebates.

The reserves for variable consideration related to customer rebates are recorded as a liability in the consolidated balance sheets and totaled $36 million as of December 31, 2022.

While a portion of this liability is based on contractual terms and does not require estimation, certain customer rebates are estimates at period end due to the nature of the rebates.

We identified the auditing of certain inputs in estimating variable consideration related to the customer rebate liabilities as a critical audit matter.

Estimating variable consideration for specific customer rebates reflects certain management inputs including sell through data.

Auditing the sell through data involved especially challenging and complex auditor judgment due to the nature and extent of audit effort required.

As described in Notes 2 and 8 to the consolidated financial statements, the Company recognizes revenue for physical goods at the net sales price, which includes certain estimates for variable consideration related to customer rebates with certain retail partners.

These estimates are based on the Company’s incentive program experience, historical and projected sales data and current contractual terms.

The reserves for variable consideration related to customer rebates are recorded as a liability in the consolidated balance sheets and totaled approximately $30 million as of December 31, 2023.

While a portion of this liability is based on contractual terms and does not require estimation, certain customer rebates are estimated at period end due to the nature of the rebates.

We identified the auditing of projected sales data used in estimating variable consideration related to the customer rebate liabilities as a critical audit matter.

Auditing the projected sales data involved especially challenging auditor judgment due to the nature and extent of audit effort required to address this matter.

The primary procedures we performed to address this critical audit matter included:

• Evaluating whether customer related information, including sell through data used in estimating rebates, was reasonable by selecting a sample of period end liabilities.

• Assessing management’s ability to accurately determine certain inputs, including sell through data, used in calculating customer rebates by performing a retrospective review for a sample of customer rebates.

/s/ BDO USA, LLP

• Evaluating the projected sales data for reasonableness by comparing with subsequent customer claims activities, actual sales data, as well as approved program terms for a sample of period end liabilities.

• Assessing management’s ability to accurately determine projected sales data used in calculating customer rebates by performing a retrospective review for a sample of customer rebates.

/s/ BDO USA, P.C.

We have served as the Company's auditor since 2012.

25 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ BDO USA, LLP

/s/ BDO USA, P.C.

Salt Lake City, Utah

25 unchanged sentences

Operating lease liabilities, net of current portion

13,935 15,780

Deferred revenue, net of current portion 2,931 3,789

6 unchanged sentences

Additional paid-in capital 505,864 672,990

Accumulated deficit — ( 43,560 )

Retained earnings 28,514 —

Accumulated other comprehensive income (loss) 277 ( 475 )

22 unchanged sentences

Income from operations 69,985 79,953 192,405

Other income (expense):

Interest income 7,976 1,809 181

Interest expense ( 323 ) ( 289 ) ( 298 )

Other income 2,145 508 85

Total other income (expense), net 9,798 2,028 ( 32 )

23 unchanged sentences

Capital contributions — — 200 — — 200

Stock-based compensation — — 4,956 — — 4,956

Compensatory units repurchased — — ( 3,038 ) — — ( 3,038 )

Cash dividend — — ( 51,202 ) — — ( 51,202 )

Other comprehensive income — — — — 37 37

Balance as of December 31, 2020 208,116,104 $ 208 $ 412,741 $ ( 184,033 ) $ 9 $ 228,925

Net income — — — 140,473 — 140,473

Capital contributions — — 200 — — 200

Initial public offering, net of offering costs 14,218,815 14 260,675 — — 260,689

16 unchanged sentences

Balance as of December 31, 2022 219,656,587 $ 220 $ 672,990 $ — $ ( 475 ) $ 672,735

Net income — — — 53,636 — $ 53,636

Issuance of common stock upon vesting or exercise of stock-based awards, net of withholding tax 1,125,568 1 ( 6,853 ) — — $ ( 6,852 )

Forfeiture of unvested common stock and dividend equivalents ( 317,549 ) — 403 — — $ 403

Repurchases of common stock ( 2,548,893 ) ( 3 ) ( 20,329 ) — — $ ( 20,332 )

Dividends declared and dividend equivalents issued — — ( 190,333 ) ( 25,122 ) — $ ( 215,455 )

Stock-based compensation — — 49,986 — — $ 49,986

Other comprehensive income — — — — 752 $ 752

Balance as of December 31, 2023 217,915,713 $ 218 $ 505,864 $ 28,514 $ 277 $ 534,873

See accompanying notes to these consolidated financial statements.

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30,039 26,957 19,388

Bad debt expense 1,720 ( 64 ) 1,096

Impairments 9,953 2,922 —

3 unchanged sentences

Provision for inventory obsolescence 26,330 11,466 5,070

Loss on extinguishment of debt — — 162

Unrealized foreign currency (gain) loss 88 ( 1,040 ) —

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Repurchases of common stock ( 20,332 ) ( 18,580 ) —

Repurchase of compensatory units ( 14 ) ( 170 ) ( 3,038 )

Proceeds from exercise of stock options 383 31 272

Employee tax withholding payments on stock-based awards ( 8,106 ) ( 6,384 ) ( 2,017 )

Payments on term loan — — ( 22,917 )

Drawdowns on revolving loan — — 228,269

Payments on revolving loan — — ( 260,862 )

Payments on capital leases — — ( 81 )

Payments for debt issuance costs — ( 1,300 ) —

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Stock-based compensation capitalized for software development costs $ 1,960 $ 2,321 $ 1,607

Deferred offering costs in accounts payable and accrued expenses and other current liabilities

$ — $ — $ 623

Reclassification of liability awards to equity upon modification $ — $ — $ 10,784

Leasehold improvements acquired through tenant allowances $ — $ 859 $ —

Purchased unit equivalents issued in settlement of bonus $ — $ — $ 1,364

Dividends declared but unpaid $ 2,342 $ 81,420 $ —

14 unchanged sentences

The par value per share was not adjusted as a result of the forward stock split.

All authorized, issued and outstanding shares of common stock, additional paid in capital and the related per share amounts contained in the consolidated financial statements have been retroactively adjusted to reflect the forward stock split for all prior periods presented.

All authorized, issued and outstanding shares of common stock, additional paid in capital and the related per share amounts contained in the consolidated financial statements were retroactively adjusted to reflect the forward stock split for all prior periods presented.

The Company organizes its business into the following three reportable segments:

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Cricut Holdings ceased to exist following this transaction.

In connection with the Corporate Reorganization the outstanding stock-based compensation awards issued by Cricut Holdings were modified or settled as described in Note 12 below.

In connection with the Corporate Reorganization the outstanding stock-based compensation awards issued by Cricut Holdings were modified or settled as described in Note 12.

Upon filing the amended and restated certificate of incorporation, all of the Company’s historical Common Stock converted to Class B common stock.

10 unchanged sentences

For revenue recognition, examples of estimates and judgments include:

determining the nature and timing of satisfaction of performance obligations, determining the standalone selling price (“SSP”) of performance obligations, estimating variable consideration such as sales incentives and product returns.

Other estimates include the warranty reserve, allowance for credit losses, inventory reserve, intangible assets and other long-lived assets valuation, legal contingencies, stock-based compensation, income taxes, deferred tax assets valuation and developed software, among others.

6 unchanged sentences

Net foreign currency gains and losses resulting from the translation of assets and liabilities of foreign operations into USD are reported as a separate component of other comprehensive income in the consolidated statements of comprehensive income.

Realized and unrealized foreign currency transaction gains and losses included in net income are recorded within operating expenses.

Foreign currency transaction gains (losses) totaled $( 1.0 ) million, $( 0.9 ) million, and $( 0.3 ) million for the years ended December 31, 2022, 2021, and 2020, respectively.

Realized and unrealized foreign currency transaction gains and losses included in net income are recorded primarily within general and administrative expenses.

Foreign currency transaction losses totaled $ 1.3 million, $ 1.0 million, and $ 0.9 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Comprehensive Income

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There are no allowances for credit losses recorded for the periods presented.

As of December 31, 2023, the Company’s available-for-sale debt securities were in an unrealized gain position.

As of December 31, 2022, the gross unrealized losses on available-for-sale debt securities are related to market interest rate changes and not attributable to credit.

4 unchanged sentences

Recoveries of accounts receivable previously written off are recorded when received.

As of January 1, 2021, the Company had an accounts receivable balance of $ 199.5 million.

Accounts receivable consist of the following:

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Trade accounts receivable $ 100,070 $ 128,437

Other receivables 8,550 6,205

Credit card and other receivables 13,127 8,550

allowance for credit losses ( 1,950 ) ( 448 )

Total accounts receivable, net $ 111,247 $ 136,539

During the year ended December 31, 2021, the Company recorded a provision for credit losses of $ 1.1 million related to a single customer.

The full amount of $ 0.9 million was written off during the year ended December 31, 2022, net of $ 0.2 million in unrealized foreign currency losses.

Other activity related to the allowance for credit losses was not significant for any of the periods presented.

The following table summarizes changes in the allowance for credit losses:

(in thousands)

Beginning balance $ ( 448 ) $ ( 1,454 )

Provision for expected losses ( 1,720 ) 64

Write-offs 218 942

Ending balance $ ( 1,950 ) $ ( 448 )

Concentration of Credit Risk

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Accordingly, the Company performs ongoing credit evaluations of its customers, generally does not require collateral and considers the credit risk profile of the customer from which the receivable is due in further evaluating collection risk.

The Company maintains allowances for possible losses which, when realized, have been within the range of

management’s expectations.

The Company maintains allowances for possible losses which, when realized, have been within the range of management’s expectations.

If one or more of the Company’s significant customers were to become insolvent or were otherwise unable to pay for product purchased, it would have a material adverse effect on the Company’s financial condition and results of consolidated operations.

2 unchanged sentences

Customer B 11 % 12 %

Customers with revenue equal to or greater than 10% of total revenue for the periods indicated were as follows:

Customer A 11 % *

Customer B * 11 %

Customer C 17 % *

Customer D 12 % *

* Revenue was less than 10%.

* Accounts Receivable was less than 10%

As of December 31, 2023 and 2022, no customers accounted for more than 10% of revenue.

As of December 31, 2021, three customers accounted for equal to or greater than 10% of total revenue, totaling 10 %, 11 % and 14 %, respectively.

The revenue from these customers is associated with the Connected Machines and Accessories and Materials segments.

As of December 31, 2022, no customers accounted for more than 10% of revenue.

Supplier Concentration

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Once established, the original cost of the inventory less the related inventory reserve represents the new cost basis of such products.

As needed, we complete strategic and market beneficial purchases of critical raw materials that are used in our core production process (such as microchips) in quantities that exceed anticipated consumption within our normal operating cycle, which is 12 months.

normal operating cycle, which is 12 months.

We classify such raw materials that we do not expect to consume within our normal operating cycle as non-current within Other assets.

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Implementation costs incurred during the application development stage are capitalized until the software is ready for its intended use.

The costs are then amortized on a straight-line basis over the term of the associated hosting arrangement and are recognized as an operating expense within the consolidated statements of operations.

The costs are then amortized on a straight-line basis over the term of the associated hosting arrangement and are recognized primarily as general and administrative expense within the consolidated statements of operations.

To date, these costs primarily relate to new website hosting services.

During the years ended December 31, 2022, and 2021, the Company recorded amortization expense of $ 0.7 million and $ 0.1 million, respectively, for these implementation costs.

During the years ended December 31, 2023, 2022, and 2021, the Company recorded amortization expense of $ 1.0 million, $ 0.7 million, and $ 0.1 million respectively, for these implementation costs.

Gross capitalized costs were $ 2.2 million and $ 2.2 million as of December 31, 2023 and 2022, respectively, with accumulated amortization of $ 1.8 million and $ 0.8 million, respectively.

8 unchanged sentences

Lease costs for the Company's operating leases are recognized on a straight-line basis within operating expenses and cost of revenue over the reasonably assured lease term.

The Company has elected to not separate lease and non-lease components for leases of office space and, as a result, accounts for any lease and non-lease components for office space as a single lease component, to the extent they are fixed.

extent they are fixed.

Non-lease components that are not fixed are expensed as incurred as variable lease payments.

13 unchanged sentences

During the years ended December 31, 2023, 2022, and 2021, the Company recorded no impairments relating to amortized intangible assets.

During the year ended December 31, 2022, the Company recorded impairments of $ 2.9 million for equipment purchased to manufacture products the Company no longer plans to commercialize.

During the years ended December 31, 2023 and 2022, the Company recorded an impairment charge of $ 10.0 million and $ 2.9 million, respectively, primarily related to computer software and software development costs and manufacturing tools and equipment from products that the Company no longer plans to commercialize.

These impairment charges were recorded primarily within general and administrative expense in the consolidated statements of operations.

During the years ended December 31, 2021 and 2020, the Company recorded no impairments of property and equipment (see Note 6).

During the year ended December 31, 2021, the Company recorded no impairments of property and equipment.

Fair Value of Financial Instruments

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However, if certain triggering events occur such that a non-financial instrument is required to be evaluated for impairment, based upon a comparison of the non-financial instrument’s fair value to its carrying value, an impairment is recorded to reduce the carrying value to the fair value, if the carrying value exceeds the fair value.

The inputs for fair value calculations of intangible assets and property and equipment, would be based on Level 3 inputs as data used for such fair value calculations would be based on discounted cash flows that are not observable from the market, directly or indirectly.

The inputs for fair value calculations of intangible assets and property and equipment, are based on Level 3 inputs as data used for such fair value calculations would be based on discounted cash flows that are not observable from the market, directly or indirectly.

The key variables that drive the discounted cash flow analysis are estimated revenue growth rates, levels of profitability, the terminal value growth rate assumptions and the weighted average cost of capital rate applied, among others.

3 unchanged sentences

This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

Marketable securities such as U.S.

Marketable securities which include U.S.

Treasury securities are valued using observable inputs from similar assets, or from observable data in markets that are not active;

1 unchanged sentence

There were no transfers between Levels 1, 2 or 3 for any of the periods presented.

There were no liabilities measured at fair value on a recurring basis as of December 31, 2022 and December 31, 2021 other than stock-based awards discussed in Note 12 below.

There were no liabilities measured at fair value on a recurring basis as of December 31, 2023 and December 31, 2022 other than liability classified stock-based awards discussed in Note 12.

Earnings Per Share

3 unchanged sentences

Basic earnings per share is computed using the weighted-average number of outstanding shares of common stock during the period.

Diluted earnings per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential shares of common stock outstanding during the period are determined under the treasury stock method.

Diluted earnings per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential shares of common stock outstanding during the period.

Stock-based awards subject to conditions other than service conditions are considered contingently issuable shares and are included in basic EPS based on the number of awards that would be issuable if the reporting date were the end of the contingency period.

Revenue Recognition

8 unchanged sentences

Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

Revenue is recorded at the net sales price, which includes estimates of variable consideration such as product returns, volume rebates and sales incentives or discounts.

Revenue is recorded at the net sales price, which includes estimates of variable consideration such as product returns, volume rebates and customer rebates or discounts.

The estimates of variable consideration are based on historical return experience, historical and projected sales data and current contract terms.

5 unchanged sentences

Connected Machines

Connected machines include the Cricut Joy, Cricut Explore and Cricut Maker machine architectures.

Connected machines include the Cricut Joy, Cricut Explore, Cricut Maker and Cricut Venture machine architectures.

Payment by traditional brick-and-mortar retail partners, including their online channels, is due under customary fixed payment terms.

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Payments for subscription services are due month-to-month or annually in advance.

Cricut Access and Cricut Access Premium are generally sold in standalone contracts and reallocations are not required

other than allocations to customer options that were determined to be material rights related to incremental discounts on purchases of physical products that paid subscribers receive.

Cricut Access and Cricut Access Premium are generally sold in standalone contracts and reallocations are not required other than allocations to customer options that were determined to be material rights related to incremental discounts on purchases of physical products that paid subscribers receive.

The transaction price is allocated between the subscription and material right based on the relative standalone selling prices of the subscription and material right.

17 unchanged sentences

The promotional programs include advertising and product damage allowances, volume/growth and business development incentives and point-of-sale support.

The Company estimates certain consumer rebates or sales incentives using either the expected value method or most likely amount, based upon the nature of the incentive.

The Company estimates certain customer rebates using either the expected value method or most likely amount, based upon the nature of the incentive.

Sales are reduced by the cost of these promotional and rebate programs and the Company records a related customer rebate liability in its consolidated balance sheets at the date of the transaction.

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Forfeitures are accounted for as they occur.

The Company estimates the fair value of awards with time-based or performance-based vesting provisions using the Black-Scholes method.

The Company estimates the fair value of stock option awards with time-based or performance-based vesting provisions using the Black-Scholes method.

For restricted stock units, the fair value is based on the closing price of our common stock on the grant date.

The fair value of awards subject to market conditions prior to the Corporate Reorganization was estimated using a Monte Carlo Simulation.

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Likelihood of termination for the Monte Carlo Simulation was estimated based upon both historical turnover and anticipated turnover based upon Company or market pressures.

Prior to the Corporate Reorganization, the Company’s former parent Cricut Holdings issued stock-based awards to employees of the Company.

Prior to the Corporate Reorganization in March 2021, the Company’s former parent Cricut Holdings issued stock-based awards to employees of the Company.

As the awards were issued by Cricut Holdings, the Company recorded a capital contribution from Cricut Holdings commensurate with the amount of compensation expense recognized in relation to the awards.

Incentive unit equivalents (phantom units) granted by Cricut Holdings prior to the Corporate Reorganization to the Company’s employees entitled the recipient to future compensation based upon satisfaction of service conditions and were liability classified.

Incentive unit equivalents (phantom units) granted by Cricut Holdings prior to the Corporate Reorganization in March 2021 to the Company’s employees entitled the recipient to future compensation based upon satisfaction of service conditions and were liability classified.

The amount of compensation was determined by the change in the underlying value of Cricut Holdings common units.

Since the awards also had a market condition, the Company recorded stock-based compensation expense over the requisite service period using the graded vesting method.

Since the awards also had a market condition, the Company

recorded stock-based compensation expense over the requisite service period using the graded vesting method.

The incentive unit equivalent awards were recorded at fair value and re-measured at fair value at each reporting period during the period from the date of grant through the settlement date.

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R&D costs are expensed as incurred.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses, and is effective for fiscal years beginning after December 15, 2023 on a retrospective basis.

The Company is currently evaluating the impact of this standard on the consolidated financial statements.

In December, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

This ASU establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements.

Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation.

They must also further disaggregate income taxes paid.

Public business entities must apply the ASU’s guidance to annual periods beginning after December 15, 2024 (2025 for calendar-year-end Public business entities).

The Company is currently evaluating the impact of this standard on the consolidated financial statements.

Revenue and Deferred Revenue

1 unchanged sentence

Deferred revenue primarily consists of deferred subscription-based services.

Deferred revenue also includes amounts allocated to the unspecified upgrades and enhancements and the Company’s cloud-based services.

The Company had no material contract assets.

Deferred revenue also includes amounts allocated from the sale of a connected machine to the unspecified upgrades and enhancements and the Company’s cloud-based services.

Contract costs consist of amounts paid to obtain contracts with customers in connection with sales of subscriptions through third-party apps.

Contract costs are amortized over the subscription term.

During the twelve months ended December 31, 2023, the Company capitalized $ 1.7 million of contract costs, and as of December 31, 2023 the unamortized balance was $ 0.9 million, included in prepaid and other current assets on our consolidated balance sheets.

There were no capitalized costs during the year ended December 31, 2022.

The Company has recognized no contract assets for any of the periods presented.

The following table summarizes the changes in the deferred revenue balance for the periods indicated:

2023 2022 2021

(in thousands)

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The Company’s revenue from contracts with customers disaggregated by major product lines, excluding sales-based taxes, are included in Note 19.

Revenue recognized during the year ended December 31, 2022 related to performance obligations satisfied or partially satisfied in prior periods was $ 1.7 million.

Revenue recognized during the years ended December 31, 2023, 2022, and 2021, related to performance obligations satisfied or partially satisfied in prior periods was $ 3.2 million, $ 1.7 million and $ 2.3 million, respectively.

The following table presents the total revenue by geography based on the ship-to address for the periods indicated:

19 unchanged sentences

Total $ 244,598 $ — $ 541 $ — $ 245,139 $ 142,187 $ 102,952

Marketable securities held as of December 31, 2022 generally mature over the next 9 months to 21 months.

As of December 31, 2021 the Company had cash and cash equivalents of $ 241.6 million including $ 197.8 million in money market funds with no unrealized gains or losses.

Inventories of finished goods are comprised of the following:

The following table shows the Company’s cash, cash equivalents, and marketable securities by significant investment category as of December 31, 2022:

As of December 31, 2022

Adjusted Cost Allowance for Credit Losses Total Unrealized Gains Total Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities

(in thousands)

Cash $ 155,459 $ — $ — $ — $ 155,459 $ 155,459 $ —

Money market funds 69,484 — — — 69,484 69,484 —

Subtotal 69,484 — — — 69,484 69,484 —

treasury securities 74,659 — — ( 403 ) 74,256 — 74,256

Subtotal 74,659 — — ( 403 ) 74,256 — 74,256

Total $ 299,602 $ — $ — $ ( 403 ) $ 299,199 $ 224,943 $ 74,256

Marketable securities held as of December 31, 2023 generally mature over the next 9 months.

The Company evaluates whether the decline in fair value of the available-for-sale securities below their amortized cost basis is related to credit losses or other factors.

Based on this evaluation, we determined that unrealized losses of the above securities were primarily attributable to changes in interest rates and non credit-related factors.

Accordingly, we determined that an allowance for credit losses was unnecessary as of December 31, 2022 .

Inventories are comprised of the following:

(in thousands)

Raw materials $ 44,935 $ 40,911

1 unchanged sentence

Total inventories $ 331,923 $ 409,555

reserves ( 54,416 ) ( 28,087 )

Total inventories, net $ 277,507 $ 381,468

Inventories current $ 244,469 $ 351,682

Inventories non-current (included in Other assets) $ 33,038 $ 29,786

The Company has included $ 4.5 million in finished goods for connected machines that are currently undergoing rework prior to being in a sellable condition.

As of the years ended December 31, 2023 and 2022, the Company had $ 0.1 million and $ 4.5 million in finished goods for connected machines that were undergoing rework prior to being in a sellable condition.

The Company’s recorded inventory reserves as of December 31, 2023 consisted of $ 4.6 million related to excess connected machine inventory that the Company does not expect to sell, $ 46.5 million related to excess accessories and materials inventory, and $ 3.3 million related to raw material components.

Amounts charged to the reserve account are recorded primarily in cost of revenues.

Property and Equipment

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Property and equipment, net $ 47,614 $ 63,407

Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was $ 25.9 million, $ 18.3 million and $ 13.2 million, respectively.

Property and equipment, along with all other Company assets are pledged as collateral on the New Credit Agreement (see Note 9).

During the twelve months ended December 31, 2023, the Company recorded an impairment charge of $ 10.0 million, including $ 4.2 million for computer software and software development costs and $ 5.8 million for manufacturing tools and equipment from products the Company no longer plans to commercialize.

These impairment charges were recorded primarily within general and administrative expense in the consolidated statements of operations.

Total depreciation and amortization expense for the years ended December 31, 2023, 2022 and 2021 was $ 29.0 million, $ 25.9 million and $ 18.3 million, respectively.

Amortization of computer software, software development costs and equipment for the years ended December 31, 2023, 2022 and 2021 was $ 20.1 million, $ 16.8 million and $ 12.2 million, respectively.

Property and equipment, along with all other Company assets are pledged as collateral on the Credit Agreement (see Note 9).

Intangible Assets, Net

11 unchanged sentences

The Company’s trade names and trademarks have useful lives ranging from 11 to 15 years.

Amortization is expensed on a straight-line basis for all intangible assets, as this is the Company’s best estimate of the period of economic benefit to be received.

Amortization was expensed on a straight-line basis for all intangible assets, as this was the Company’s best estimate of the period of economic benefit.

Amortization expense of intangible assets totaled $ 0.8 million for each of the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2022, estimated future amortization is $ 0.8 million in 2023.

Accrued Expenses and Other Current Liabilities

1 unchanged sentence

(in thousands)

Sales incentives and rebates $ 35,552 $ 36,969

Customer rebates $ 30,479 $ 35,552

Other accrued liabilities and other current liabilities 41,454 34,223

10 unchanged sentences

2022 Credit Agreement

On August 4, 2022, the Company entered into a credit agreement (the “New Credit Agreement”) with JPMorgan Chase Bank, N.A, Citigroup N.A., PNC Bank, N.A., KeyBank, N.A., and other parties.

The New Credit Agreement replaces the Company’s prior asset-based Credit Agreement with JPMorgan Chase Bank, N.A., Citigroup N.A., and Origin Bank.

The New Credit Agreement provides for a five-year revolving credit facility (the “Credit Facility”) of up to $ 300.0 million, maturing on August 4, 2027.

In addition, during the term of the New Credit Agreement, the Company may increase the aggregate amount of the Credit Facility by up to an additional $ 150.0 million, (for maximum aggregate lender commitments of up to $ 450.0 million), subject to customary conditions under the New Credit Agreement, including obtaining a consent from participating lenders (or another lender, if applicable) to such increase.

On August 4, 2022, the Company entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A, Citigroup N.A., PNC Bank, N.A., KeyBank, N.A., and other parties.

The Credit Agreement

replaced the Company’s prior asset-based Credit Agreement with JPMorgan Chase Bank, N.A., Citigroup N.A., and Origin Bank.

The Credit Agreement provides for a five-year revolving credit facility (the “Credit Facility”) of up to $ 300.0 million, maturing on August 4, 2027.

In addition, during the term of the Credit Agreement, the Company may increase the aggregate amount of the Credit Facility by up to an additional $ 150.0 million, (for maximum aggregate lender commitments of up to $ 450.0 million), subject to customary conditions under the Credit Agreement, including obtaining a consent from participating lenders (or another lender, if applicable) to such increase.

The Credit Facility may be used to issue letters of credit and for other business purposes, including working capital needs.

1 unchanged sentence

The Company accounted for the Credit Agreement as a modification of the 2020 Credit Agreement in accordance with ASC 470-50 Modification and Extinguishments .

In connection with the New Credit Agreement, the Company incurred and capitalized $ 1.3 million of debt issuance costs in addition to $ 0.3 million of existing unamortized debt issuance costs with the 2020 Credit Agreement which remained deferred, resulting a total deferral of debt issuance costs of $ 1.6 million as of the date of the New Credit Agreement.

As of December 31, 2022, total unamortized debt issuance costs were $ 1.5 million.

The New Credit Agreement is collateralized by substantially all of the Company’s assets and contains affirmative and negative covenants, representations and warranties, events of default and other terms customary for loans of this nature.

In particular, the New Credit Agreement will not permit the leverage ratio to be greater than 3.0 to 1.0, measured on the last day of any fiscal quarter.

In addition, the New Credit Agreement will not permit the interest coverage ratio to be less than 3.0 to 1.0, for any period of four consecutive quarters, measured on the last day of any fiscal quarter.

In connection with the Credit Agreement, the Company incurred and capitalized $ 1.3 million of debt issuance costs in addition to $ 0.3 million of existing unamortized debt issuance costs with the 2020 Credit Agreement which remained deferred, resulting a total deferral of debt issuance costs of $ 1.6 million as of the date of the Credit Agreement.

As of December 31, 2023 and 2022, total unamortized debt issuance costs were $ 1.2 million and $ 1.5 million, respectively.

The Credit Agreement is collateralized by substantially all of the Company’s assets and contains affirmative and negative covenants, representations and warranties, events of default and other terms customary for loans of this nature.

In particular, the Credit Agreement will not permit the leverage ratio to be greater than 3.0 to 1.0, measured on the last day of any fiscal quarter.

In addition, the Credit Agreement will not permit the interest coverage ratio to be less than 3.0 to 1.0, for any period of four consecutive quarters, measured on the last day of any fiscal quarter.

Management has determined that the Company was in compliance with all financial and non-financial debt covenants as of December 31, 2023.

As of December 31, 2022, no amount was outstanding under the New Credit Agreement and available borrowings were $ 300.0 million

Generally, borrowings under the New Credit Agreement bear interest at a rate based on an alternative base rate (“ABR”), plus, in each case, an applicable margin.

The applicable margin will range from (a) borrowings bearing interest at the ABR 2.00 %, and (b) borrowings bearing interest at the Adjusted Term Secured Overnight Financing

Rate, the Adjusted Australian Dollar Rate, the Adjusted Canadian Dollar Offered Rate or the Adjusted New Zealand Dollar Rate, as applicable for the interest period in effect for such borrowing plus the applicable rate.

As of December 31, 2023, no amount was outstanding under the Credit Agreement and available borrowings were $ 300.0 million

Generally, borrowings under the Credit Agreement bear interest at a rate based on an alternative base rate (“ABR”), plus, in each case, an applicable margin.

The applicable margin will range from (a) borrowings bearing interest at the ABR 2.00 %, and (b) borrowings bearing interest at the Adjusted Term Secured Overnight Financing Rate, the Adjusted Australian Dollar Rate, the Adjusted Canadian Dollar Offered Rate or the Adjusted New Zealand Dollar Rate, as applicable for the interest period in effect for such borrowing plus the applicable rate.

The Company’s income before income taxes of $ 79.8 million, $ 82.0 million, and $ 192.4 million during the years ended December 31, 2023, 2022, and 2021, respectively, consisted of $ 78.4 million, $ 81.0 million, and $ 191.5 million of income earned in the United States.

10 unchanged sentences

Return to provision adjustments 1.4 1.5 2.3

Uncertain tax positions 2.6 — —

Other 2.3 2.7 1.2

1 unchanged sentence

Differences between the Company’s effective tax rate and the statutory tax rate relate primarily to state income taxes, stock-based compensation, tax credits and changes in unrecognized tax benefits during the period.

Deferred taxes reflect the net tax effects of the temporary differences between the carrying amount of assets and liabilities for financial reporting and the amount used for income tax purposes.

Deferred taxes reflect the net tax effects of the temporary differences between the carrying amount of assets and

liabilities for financial reporting and the amount used for income tax purposes.

Significant components of the Company’s net deferred tax assets are comprised of the following:

35 unchanged sentences

Accordingly, the Company has not recorded a valuation allowance against net deferred tax assets for the years ended December 31, 2023 and 2022.

As of December 31, 2023, the Company has not recorded incremental income taxes for outside basis differences in our investments in foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations.

The undistributed earnings of the Company’s foreign subsidiaries that meet the indefinite reversal criteria amounted to $ 1.1 million.

As of December 31, 2023, 2022, and 2021, $ 7.8 million, $ 4.1 million and $ 2.8 million, respectively, of unrecognized tax benefits would affect our effective tax rate if recognized.

The total balance of unrecognized gross tax benefits for the years ended December 31, 2022 and 2021, resulted primarily from research and development credits and inventory basis differences.

The total balance of unrecognized gross tax benefits for the years ended December 31, 2023 and 2022, resulted primarily from research and development credits, foreign derived intangible income differences and inventory basis differences.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

Year Ended December 31,

2023 2022 2021

(in thousands)

16 unchanged sentences

During the year ended December 31, 2023, 9,214,127 shares of Class B common stock were converted to Class A common stock.

As of December 31, 2022, the Company had 1,000,000,000 shares of Class A common stock and 250,000,000 shares of Class B common stock authorized and 43,623,797 shares of

Class A common stock and 176,032,790 shares of Class B common stock issued and outstanding.

As of December 31, 2023, the Company had 1,000,000,000 shares of Class A common stock and 250,000,000 shares of Class B common stock authorized and 51,414,599 shares of Class A common stock and 166,501,114 shares of Class B common stock issued and outstanding.

Each share of Class A common stock is entitled to one vote per share.

3 unchanged sentences

The share repurchase program may be suspended or discontinued at any time and does not have a predetermined expiration date.

During the year ended December 31, 2022, the Company repurchased and retired 2,349,581 shares of our Class A common stock for $ 18.5 million under this authorization.

During the years ended December 31, 2023 and 2022, the Company repurchased and retired 2,548,893 and 2,349,581 shares of our Class A common stock, respectively, for $ 20.3 million and $ 18.5 million, respectively, under this program.

On May 18, 2023, the Company declared a special dividend of $ 1.00 per share on its Class A and Class B common stock, payable on July 17, 2023 to shareholders of record as of July 3, 2023.

As part of the dividend, and pursuant to the underlying award agreements, holders of restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”) received dividend equivalents of $ 1.00 per unit in the form of additional RSUs or PRSUs subject to the same vesting conditions as the original awards.

The aggregate dividend of $ 234.6 million was to be satisfied in cash of $ 219.8 million payable to holders of Class A and Class B common stock with the remaining

$ 14.8 million satisfied on the payment date in the form of dividend equivalents to RSU or PRSU holders prior to any subsequent forfeitures.

On December 21, 2022, the Company declared a special dividend of $ 0.35 per share on its Class A and Class B common stock, payable on February 15, 2023 to shareholders of record as of February 1, 2023.

As part of the dividend, and pursuant to the underlying award agreements, holders of restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”) will receive a dividend equivalent of $ 0.35 per unit in the form of additional RSUs or PRSUs subject to the same vesting conditions as the original awards.

The aggregate dividend of $ 81.4 million will be satisfied in cash of $ 76.9 million payable to holders of Class A and Class B common stock with the remaining $ 4.5 million satisfied on the payment date in the form of dividend equivalents to RSU or PRSU holders.

Of the cash amount, $ 0.6 million of the dividend is classified as non-current and presented in other non-current liabilities on the consolidated balance sheets due to vesting conditions.

As part of the dividend, and pursuant to the underlying award agreements, holders of RSU and PRSUs received a dividend equivalent of $ 0.35 per unit in the form of additional RSUs or PRSUs subject to the same vesting conditions as the original awards.

The aggregate dividend of $ 81.4 million was to be satisfied in cash of $ 76.9 million payable to holders of Class A and Class B common stock with the remaining $ 4.5 million satisfied on the payment date in the form of dividend equivalents to RSU or PRSU holders prior to any subsequent forfeitures.

During the twelve months ended December 31, 2023, an aggregate of $ 294.1 million was paid in cash, and $ 19.2 million was satisfied in the form of dividend equivalents to RSU or PRSU holders.

Dividends payable includes dividends declared but not yet paid and prior dividends on unvested shares of Class A common stock payable upon future vesting.

$ 0.2 million of the cash dividend is classified as non-current and presented in other non-current liabilities on the consolidated balance sheets due to vesting conditions.

Stock-Based Compensation

8 unchanged sentences

Class B common stock 6,504 9,321 15,200

Incentive unit awards — — 4,956

Liability-classified awards 44 ( 54 ) 6,447

17 unchanged sentences

As of December 31, 2023, there was $ 94.2 million of unrecognized stock-based compensation cost related to service-based awards, which is expected to be recognized over a weighted-average period of 2.3 years.

The total unrecognized compensation expense related to unvested PRSUs was $ 146.8 million as of December 31, 2022.

The total unrecognized compensation expense related to unvested PRSUs that are not probable of vesting was

$ 157.8 million as of December 31, 2023.

The tax benefit from stock-based compensation cost during the years ended December 31, 2023, 2022 and 2021, was $ 9.3 million, $ 8.2 million, and $ 5.8 million, respectively.

Corporate Reorganization and Stock-Based Compensation Modifications

23 unchanged sentences

Granted 4,342,919 $ 10.42

Dividend equivalent grants 594,486 $ —

Vested ( 1,997,154 ) $ 18.77

1 unchanged sentence

Outstanding at December 31, 2023 8,893,831 $ 14.38

The total fair value of RSUs vested as of the vesting dates during the years ended December 31, 2023, 2022 and 2021, was $ 17.1 million, $ 13.0 million, and $ 6.1 million, respectively.

In 2022, the Company granted PRSUs under the 2021 Equity Incentive Plan to certain employees that represent shares potentially issuable in the future.

3 unchanged sentences

Outstanding at December 31, 2022 6,295,000 $ 23.32

Granted 6,655,000 $ 23.31

Dividend equivalent grants 710,033 $ —

Forfeited / cancelled ( 239,032 ) $ 23.37

2 unchanged sentences

The expense recognized each period for these PRSUs is primarily dependent upon the Company’s estimate of the probability of achieving the performance targets during the performance period.

At December 31, 2022, the Company determined it was not probable any performance conditions would be achieved, so no stock-based compensation was recorded for these PRSUs during the year ended December 31, 2022.

At December 31, 2023, the Company determined it was not probable any performance conditions would be achieved, so no stock-based compensation has been recorded for these PRSUs during the years ended December 31, 2023 and 2022.

Options under the 2021 Equity Incentive Plan have a contractual term of 10 years.

5 unchanged sentences

Outstanding at December 31, 2022 3,142,911 $ 20.00 4.6 $ —

Exercised ( 1,535 ) 20.00

Forfeited/cancelled ( 143,826 ) 20.00

Outstanding at December 31, 2022 3,142,911 $ 20.00 4.6 $ —

Outstanding and expected to vest at December 31, 2023

2,999,085 $ 18.65 3.5 $ —

Vested and exercisable at December 31, 2023 2,526,813 $ 18.65 3.4 $ —

For the year ended December 31, 2022, no options were granted and the total intrinsic value of options exercised was immaterial.

For the years ended December 31, 2023 and 2022, no options were granted and the total intrinsic value of options exercised was immaterial.

The weighted-average grant date fair value of options granted during the year ended December 31, 2021 was $ 8.79 per share and the total intrinsic value of options exercised was $ 0.1 million.

15 unchanged sentences

Granted 3,500 $ —

Vested ( 2,173 ) $ —

Forfeited/cancelled — $ —

Outstanding at December 31, 2023 6,173 $ 11.52 $ 38

The weighted-average fair value of RSU equivalents granted under the 2021 Equity Incentive Plan during the year ended December 31, 2021 was $ 7.57 per share based on the following weighted-average assumptions:

Year Ended December 31, 2021

Expected volatility 80.5 %

Risk-free interest rate 0.4 %

Expected term (in years) 1.0

Expected dividend — %

Unvested Class B Common Stock

The Company’s unvested Class B common stock resulted from the Corporate Reorganization and is not part of the 2021 Equity Incentive Plan.

Dividends declared on unvested Class B common stock are subject to vesting and are forfeited if the underlying stock does not vest.

Dividends declared on unvested Class B common stock are subject to vesting

and are forfeited if the underlying stock does not vest.

Activity related to Class B common stock subject to future vesting for the year ended December 31, 2023 is as follows:

5 unchanged sentences

Outstanding at December 31, 2023 1,656,679 $ 20.00

The total fair value of Class B common stock vested as of the vesting dates during the years ended December 31, 2023, 2022 and 2021, was $ 27.1 million, $ 73.9 million, and $ 69.7 million, respectively.

Options to Purchase Class B Common Stock

5 unchanged sentences

Outstanding at December 31, 2022 358,000 $ 9.04 2.8 $ 82

Exercised ( 40,575 ) $ 9.04

Forfeited / Cancelled ( 58,000 ) $ 8.80

Outstanding at December 31, 2023 259,425 $ 7.69 1.9 $ —

Vested at December 31, 2022 — $ — N/A $ —

Vested at December 31, 2023 259,425 $ 7.69 1.9 $ —

The weighted-average grant date fair value of options to purchase Class B common stock during the year ended December 31, 2021 was $ 13.42 per share based on the following weighted-average assumptions:

23 unchanged sentences

Upon the liquidation of Cricut Holdings all outstanding awards were settled or modified as described above.

Accordingly, no CIUs were granted during the year ended December 31, 2022.

The weighted-average grant date fair value of equity classified incentive units granted during the years ended December 31, 2021 and 2020 was $ 9.06 and $ 1.27 , respectively.

The total intrinsic value of equity classified incentive units exercised during the years ended December 31, 2021 and 2020 was nil and $ 2.8 million, respectively.

The total fair value of equity classified incentive units vested during the years ended December 31, 2021 and 2020 was $ 3.2 million, and $ 3.1 million, respectively.

Accordingly, no CIUs were granted during the years ended December 31, 2023 and 2022.

The weighted-average grant date fair value of equity classified incentive units granted during the year ended December 31, 2021 was $ 9.06 .

The total intrinsic value of equity classified incentive units exercised during the year ended December 31, 2021 was nil .

The total fair value of equity classified incentive units vested during the year ended December 31, 2021 was $ 3.2 million.

The grant date fair value of CIUs granted during the year ended December 31, 2021 was equal to the estimated fair value of Cricut Holdings’ common units on the date of the grant as all CIUs had no participation threshold.

The fair value of CIUs granted during the year ended December 31, 2020 was estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions:

Year Ended December 31, 2020

Fair value of common unit $ 2.77

Expected life (in years) 3.2

Expected volatility 50.0 %

Risk-free rate 0.6 %

Expected dividend yield — %

During the year ended December 31, 2020, the Company issued service and market-based incentive units to an employee under the Plan.

The recipient was awarded three million incentive equity units comprised of three distinct tranches each containing one million units.

The first tranche was subject to service conditions wherein vesting of the award is ratable over four years .

The second and third tranches were subject to the same service vesting conditions as tranche one;

however, they were also subject to a market vesting condition wherein the fair

value of the Cricut Holdings common units was required to exceed a determined price threshold for two consecutive board meetings or for 100 out of 120 consecutive trading days if the Company became public traded.

In the absence of a public trading market, the fair value of a common unit was derived through a valuation technique allowed under ASC 718.

The determined price thresholds were $ 6.00 and $ 7.00 for the second and third tranches, respectively.

The units did not participate in distributions until the sum of distributions and capital appreciation of the common units from the date of grant of the incentive units equaled $ 5.00 per unit.

On the date of grant, the Company determined the fair value of this award to be $ 2.3 million based upon a Monte Carlo Simulation.

The significant assumptions used in the Monte Carlo Simulation were as follows:

Fair value of common unit $ 2.95

Participation Threshold $ 5.00

Expected volatility 51.1 %

Risk-free rate 0.24 %

Timing of liquidity event 2 - 6 years

Fair value thresholds $ 6.00 - 7.00

Likelihood of termination 10.0 %

As described above, in connection with the Corporate Reorganization, these incentive equity units were modified to remove the market vesting condition and to increase the participation threshold to the applicable fair value threshold.

The modified awards were then converted into shares of the Company’s class B common stock subject to the same service vesting conditions.

Equity Classified Options

3 unchanged sentences

in connection with the Corporate Reorganization.

The weighted-average grant date fair value of options granted during the years ended December 31, 2021 and 2020 was $ 4.45 and $ 3.01 per share, respectively, and were estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions for the periods indicated:

The weighted-average grant date fair value of options granted during the year ended December 31, 2021 was $ 4.45 per share, and were estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions for the periods indicated:

Years Ended December 31.

8 unchanged sentences

In addition, the units did not participate until the sum of distributions and capital appreciation of the common units from the date of grant of the incentive units equaled a specified participation threshold per unit.

The incentive unit equivalents did not represent any kind of legal equity interest in the Company or the former parent Company and required cash settlement.

The incentive unit equivalents did not represent any kind of legal equity interest in the Company or the former parent Company and required cash

Accordingly, the incentive unit equivalent awards were accounted for as liability classified awards and required initial and subsequent measurement at fair value.

Initially, during the year ended December 31, 2020, these awards generally vested 12.5 % annually for each of the first four years of service and 50 % after the fifth year of service.

Following the amendment of these awards in January 2020 and through the Corporate Reorganization in 2021, these awards vested 25 % annually over four

years of service.

Following the amendment of these awards in January 2020 and through the Corporate Reorganization in 2021, these awards vested 25 % annually over four years of service.

All liability classified incentive units had indefinite contract terms and, once vested, remained outstanding until liquidation of Cricut Holdings or until repurchased by Cricut Holdings.

Upon the liquidation of Cricut Holdings in the Corporate Reorganization all outstanding awards were settled or modified as described above.

The weighted-average grant date fair value of liability classified incentive units granted during the years ended December 31, 2021 and 2020 was $ 8.19 and $ 2.01 , respectively.

The Company estimated the fair value of liability classified incentive units at each reporting period using the Monte Carlo Simulation.

The significant assumptions used in the Monte Carlo Simulation for the periods indicated were as follows:

Year Ended December 31, 2020

Fair value of common units $ 7.40

Expected life (in years) 0.3 - 5.0

Expected Volatility 51.1 %

Risk-free rate 0.2 %

Expected dividend yield — %

Likelihood of termination 10.0 %

The weighted-average grant date fair value of liability classified incentive units granted during the year ended December 31, 2021 was $ 8.19 .

For the year end December 31, 2021, the Company estimated the fair value of liability classified incentive unit equivalents upon the modification or settlement as part of the Corporate Reorganization based on the estimated fair value of the awards received to settle the liability.

The cumulative adjustment upon settlement or modification is included in stock-based compensation related to liability awards above.

Liability classified incentive unit equivalents were included in accrued expenses and other current liabilities per the Company’s consolidated balance sheets and the rollforward of this liability through settlement in 2021 is as follows:

(in thousands)

Balance at December 31, 2019 $ 360

Stock-based compensation during year $ 5,161

Purchased unit equivalents during year $ 181

Balance at December 31, 2020 $ 5,702

Stock-based compensation during year $ 6,041

Settlement or modification of awards $ ( 11,743 )

Balance at December 31, 2021 $ —

Commitments and Contingencies

The Company is subject to certain outside claims and litigation arising in the ordinary course of business.

The Company is subject to certain outside claims and litigation, as well as regulatory disputes, audits, government inquiries and other proceedings, arising in the ordinary course of business.

Management is not aware of any contingencies which it believes will have a material effect on its financial position, results of operations or liquidity.

4 unchanged sentences

Actual experience, including claim frequency and severity as well as health care inflation, could result in actual liabilities being more or less than the amounts currently recorded.

We have accrued $ 0.7 million for employee medical claims at December 31, 2022.

As of December 31, 2023 and 2022 we have accrued $ 0.8 million and $ 0.7 million, respectively, for employee medical claims.

Such amounts are included in accrued expenses and other current liabilities on our consolidated balance sheets.

7 unchanged sentences

Variable lease costs are comprised primarily of the Company's proportionate share of operating expenses, property taxes, and insurance and are classified as lease cost due to the Company's election to not separate lease and non-lease components.

For the years ended December 31, 2022 and 2021, the Company incurred operating lease costs of $ 5.5 million and $ 4.7 million, respectively, and variable lease costs of $ 0.5 million and $ 0.5 million, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2022 and 2021 was $ 5.8 million and $ 5.1 million, respectively, and was included in net cash used in operating activities in the Company's consolidated statements of cash flows.

For the years ended December 31, 2023, 2022 and 2021, the Company incurred operating lease costs of $ 5.4 million, $ 5.5 million and $ 4.7 million, respectively, and variable lease costs of $ 0.4 million, $ 0.5 million and $ 0.5 million, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2023, 2022 and 2021 was $ 5.9 million, $ 5.8 million and $ 5.1 million, respectively, and was included in net cash used in operating activities in the Company's consolidated statements of cash flows.

As of December 31, 2023, the maturities of the Company's operating lease liabilities were as follows:

6 unchanged sentences

Operating lease liabilities, non-current $ 8,938

T he weighted average remaining operating lease term and the weighted average discount rate used to determine the operating lease liability were as follows:

The weighted average remaining operating lease term and the weighted average discount rate used to determine the operating lease liability were as follows:

As of December 31, 2023 As of December 31, 2022

1 unchanged sentence

Weighted-average discount rate of operating leases 2.5 % 2.6 %

Rent expense totaled $ 4.0 million for the year ended December 31, 2020.

Related Party Transactions

For the years ended December 31, 2022, 2021 and 2020 the Company received nil , $ 0.2 million and $ 2.5 million, respectively, of capital contributions from Cricut Holdings, as a result of additional common units issued by Cricut Holdings at the estimated fair value of the underlying units.

For the year ended December 31, 2021 the Company received $ 0.2 million of capital contributions from Cricut Holdings, as a result of additional common units issued by Cricut Holdings at the estimated fair value of the underlying units.

The equity offering was purchased by a subset of then current common unit holders of Cricut Holdings and employees of the Company.

For the years ended December 31, 2023 and 2022, the Company received zero capital contributions.

The Company has an active common stock repurchase program that allows for the repurchase of common stock in the open market or in private transactions as described in Note 11.

On August 24, 2022 the Company repurchased and retired 250,000 shares of its Class A common stock from a previous executive at a price per share at the market price of $ 6.47 in a private transaction for a total of $ 1.6 million.

Restructuring

During the year ended December 31, 2023, the Company undertook a restructuring plan to improve efficiency and streamline operations.

The Company recognized $ 1.2 million of severance costs which was primarily settled within the three months ended March 31, 2023.

Of this amount, $ 0.7 million, $ 0.3 million, and $ 0.2 million, were recorded within research and development, selling and marketing, and general and administrative expense, respectively.

Employee Benefit Plan

1 unchanged sentence

The Company matches 50 % of the first 12 % of an employee’s salary contributed to the plan on the first day of the month following their hire date.

The Company contributed $ 2.5 million and $ 2.4 million during the years ended December 31, 2022 and 2021, respectively.

The Company contributed $ 2.5 million during both the years ended December 31, 2023 and 2022, respectively, and $ 2.4 million in the year ended December 31, 2021.

Net Income Per Share

24 unchanged sentences

Restricted stock units 4,435,957 5,742,284 786,500

Unvested common stock subject to forfeiture 831,952 — —

Unvested Class B common stock subject to forfeiture 415,402 831,952 —

Segment Information

7 unchanged sentences

The Company does not allocate assets at the reportable segment level as these are managed on an entity wide group basis.

As of December 31, 2022, long-lived assets located outside the United States, primarily located in Malaysia and China, were $ 20.3 million.

As of the years ended December 31, 2023 and 2022, long-lived assets located outside the United States, primarily located in Malaysia and China, were $ 8.7 million and $ 20.3 million.

The Connected Machines segment derives revenue from the sale of its connected machine hardware and related essential software.

The Subscriptions segment derives revenue primarily from monthly and annual subscription fees and a minimal amount of revenue allocated to the unspecified future upgrades and enhancements related to the essential software and access to the Company’s cloud-based services.

The Accessories and Materials segment primarily consists of craft, DIY, home décor products and heat presses including the Cricut Mug Press and Cricut EasyPress.

There are no internal revenue transactions between the Company’s segments.

The Subscriptions segment derives revenue primarily from monthly and annual subscription fees and a portion of revenue allocated to unspecified future upgrades and enhancements related to the essential software and access to the Company’s cloud-based services.

The Accessories and Materials segment primarily consists of craft, DIY, home décor products and heat presses including the Cricut EasyPress, Cricut Mug Press, and Cricut Autopress .

There are no revenue transactions between the Company’s segments.

Key financial performance measures of the segments including revenue, cost of revenue and gross profit are as follows:

18 unchanged sentences

Gross profit $ 343,293 $ 349,893 $ 457,450

Subsequent Events

In January 2024, the Company revised its operating segments to reflect changes in the way the CODM manages and evaluates the business.

Effective in the first quarter ending March 31, 2024, the Company will reduce its reportable segments to two :

one Platform segment and one Products segment which combines our Connected Machines and Accessories and Materials businesses.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data