What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-05 compared with 2024-03-06 · 176 added, 306 removed, 850 unchanged (36% of the section changed)

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Report of Independent Registered Public Accounting Firm

Stockholders and Board of Directors

Shareholders and Board of Directors

South Jordan, Utah

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Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Variable Consideration Related to Customer Rebate Liabilities

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 communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Inventory – Valuation

As described in Notes 2 and 5 to the consolidated financial statements, the Company’s inventories consist of raw materials and finished goods.

Inventories are valued at the lower of average cost or net realizable value, inclusive of adjustments for excess and obsolescence.

At December 31, 2024, the Company had inventories of $134.3 million, net of $49.0 million in reserves, including reserves for excess and obsolescence.

We identified the auditing of certain inputs to the reserves for excess and obsolescence, which include SKU quantities and first sold date, historical sales and usage data, as well as assumptions over product life and customer

demand as a critical audit matter.

Auditing these inputs and assumptions 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 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.

• Testing the completeness and accuracy of underlying data inputs utilized in the reserves.

• Evaluating the reasonableness of management’s assumptions through obtaining supporting documentation, performing inquiries, and assessing customer demand using historical results.

• Testing the mathematical accuracy of the reserves.

• Evaluating the reasonableness of the assumptions used in calculating the reserves by performing a retrospective comparison of prior estimates over product life and customer demand to actuals .

/s/ BDO USA, P.C.

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Report of Independent Registered Public Accounting Firm

Stockholders and Board of Directors

Shareholders and Board of Directors

South Jordan, Utah

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Operating lease right-of-use assets 13,958 12,353

Intangible assets, net — 760

Deferred tax assets 39,186 34,823

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2024 2023 2022

Connected machines $ 198,312 $ 252,563 $ 548,205

Subscriptions 303,989 272,344 205,858

Accessories and materials 262,846 361,389 552,164

Platform $ 312,976 $ 309,012 $ 278,646

Products 399,562 456,135 607,650

Total revenue 712,538 765,147 886,296

Cost of revenue:

Connected machines 172,571 244,260 484,025

Subscriptions 32,346 26,375 21,961

Accessories and materials 216,937 265,768 342,791

Platform 37,288 32,804 26,676

Products 322,462 389,050 509,727

Total cost of revenue 359,750 421,854 536,403

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Other income 2,077 2,145 508

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

Total other income, net 12,767 9,798 2,028

Income before provision for income taxes 88,877 79,783 81,981

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Net income $ 62,830 $ 53,636 $ 60,666

Other comprehensive income (loss):

Other comprehensive income (losses):

Change in net unrealized gains (losses) on marketable securities, net of tax ( 136 ) 711 ( 300 )

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Net Income — — — 60,666 — 60,666

Capital contributions — — 200 — — 200

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

Issuance of common stock upon vesting or exercise of stock-based awards, net of withholding tax 620,611 — ( 6,815 ) — — ( 6,815 )

Forfeiture of unvested common stock ( 528,002 ) — — — — —

Repurchase upon Corporate Reorganization ( 524 ) — ( 10 ) — — ( 10 )

Extinguishment of liability awards to equity — — 10,784 — — 10,784

Repurchase of common stock ( 2,349,581 ) ( 2 ) ( 18,578 ) — — ( 18,580 )

Dividends declared — — ( 64,314 ) ( 17,106 ) — ( 81,420 )

Stock-based compensation — — 45,342 — — 45,342

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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 ( 528,002 ) — — — — —

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 — — ( 64,314 ) ( 17,106 ) — ( 81,420 )

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

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

Compensatory units repurchased — — ( 14 ) — — ( 14 )

Other comprehensive loss — — — — ( 420 ) ( 420 )

Other comprehensive income — — — — 752 752

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

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Stock-based compensation — — 47,860 — — $ 47,860

Other comprehensive income — — — — 752 $ 752

Other comprehensive loss — — — — ( 283 ) $ ( 283 )

Balance as of December 31, 2024 213,295,922 $ 213 $ 466,554 $ — $ ( 6 ) $ 466,761

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Net income $ 62,830 $ 53,636 $ 60,666

Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities:

Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:

Depreciation and amortization (including amortization of debt issuance costs)

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Non-cash lease expense 4,811 4,987 4,845

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

Provision for inventory obsolescence, net ( 5,401 ) 26,330 11,466

Unrealized foreign currency (gain) loss 1,047 88 ( 1,040 )

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Deferred revenue 5,018 4,577 3,252

Net cash and cash equivalents provided by (used in) operating activities

Net cash and cash equivalents provided by operating activities

264,968 288,097 117,683

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Cash flows from financing activities:

Proceeds from capital contributions — — 200

Proceeds from issuance of common stock upon initial public offering, net of offering costs — — 262,007

Repurchases of common stock ( 38,493 ) ( 20,332 ) ( 18,580 )

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Effect of exchange rate on changes on cash and cash equivalents ( 252 ) 110 ( 221 )

Net (decrease) increase in cash and cash equivalents ( 82,756 ) ( 16,654 ) 119,382

Net increase (decrease) in cash and cash equivalents 89,953 ( 82,756 ) ( 16,654 )

Cash and cash equivalents at beginning of period 142,187 224,943 241,597

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Stock-based compensation capitalized for software development costs $ 1,509 $ 1,960 $ 2,321

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

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

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(“Cricut” or the “Company”) is a designer and marketer of a creativity platform that enables users to turn ideas into professional-looking handmade goods.

Using the Company’s versatile connected machines, design apps and accessories and materials, users create everything from personalized birthday cards, mugs and T-shirts to large-scale interior decorations.

The Company’s connected machines and related accessories and materials and subscription services are primarily marketed under the Cricut brand in the United States, as well as Europe and other countries of the world.

Using the Company’s platform, versatile connected machines, and accessories and materials, users create everything from personalized birthday cards, mugs and T-shirts to large-scale interior decorations.

The Company’s subscription services, connected machines and related accessories and materials are primarily marketed under the Cricut brand in the United States, as well as Europe and other countries around the world.

Headquartered in South Jordan, Utah, the Company is an innovator in its industry, focused on bringing innovative technology (automation and consumerization of industrial tools) to the craft, DIY and home décor categories.

The Company’s consolidated financial statements include the operations of its wholly owned subsidiaries, which are located throughout Europe and in the Asia-Pacific region.

The Company designs, markets and distributes the Cricut family of products, including connected machines, design apps and accessories and materials.

The Company designs, markets and distributes the Cricut family of products, including the platform, connected machines, and accessories and materials.

In addition, Cricut sells a broad line of images, fonts and projects for purchase à la carte.

On September 2, 2020, Cricut converted from a Utah corporation to a Delaware corporation.

In connection with such conversion, each share of Class A common stock, par value $ 0.01 , of the Utah corporation was exchanged for one share of common stock of the Delaware corporation, par value $ 0.001 .

On March 11, 2021, the Company filed an Amended and Restated Certificate of Incorporation to effect a 64.2645654 -for-1 forward stock split of its outstanding common stock.

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 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:

Connected Machines, Subscriptions and Accessories and Materials.

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

Platform and Products.

See Note 18 for further discussion of the Company’s segment reporting structure.

Initial Public Offering and Corporate Reorganization

The Company’s registration statement on Form S-1 related to its initial public offering (“IPO”) was declared effective on March 24, 2021 by the SEC, and the Company’s Class A common stock began trading on the Nasdaq Global Select Market on March 25, 202 1.

On March 29, 2021, the Company closed its IPO, in which the Company sold 13,250,000 shares of Class A common stock and the selling stockholders sold an additional 2,064,903 shares of Class A common stock at a price to the public of $ 20.00 per share.

The Company received aggregate net proceeds of $ 242.7 million after deducting offering costs, underwriting discounts and commissions of $ 22.3 million.

On April 28, 2021, the Company sold an additional 968,815 shares of Class A common stock and the selling stockholders sold an additional 150,984 shares of Class A common stock pursuant to the partial exercise of the underwriters’ option to purchase additional shares which generated net proceeds of $ 18.0 million after deducting for underwriting discounts and commissions of $ 1.4 million.

Immediately prior to the IPO, the Company engaged in a series of related Corporate Reorganization transactions as follows:

• Cricut, Inc.

filed an amended and restated certificate of incorporation;

• Cricut Holdings, LLC, or Cricut Holdings, dissolved and liquidated in accordance with the terms and conditions of its then existing limited liability company agreement, pursuant to which the holders of existing units in Cricut Holdings (including holders of purchased units, incentive units, zero strike price incentive units, certain phantom units and options), or the Existing Unitholders, received 100 % of the capital stock of Cricut, Inc., its sole asset, at the time of the liquidation with a value implied by the initial public offering price of the shares of Class A common stock to be sold in this offering.

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.

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

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

Each share of Class B common stock is entitled to five votes per share and is convertible at any time into one share of Class A common stock.

Basis of Presentation and Consolidation

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These estimates and assumptions are based on the Company’s best estimates and judgment.

Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including any effects of the pandemic and the economic environment, which management believes to be reasonable under the circumstances.

Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including any effects of the economic environment, which management believes to be reasonable under the circumstances.

Management adjusts such estimates and assumptions when facts and circumstances dictate.

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Other comprehensive income (loss) refers to net gains and losses that are recorded as an element of stockholders’ equity but are excluded from net income.

The Company’s other comprehensive income (loss) consists of unrealized gains and losses on marketable securities as well as foreign currency translation adjustments from those subsidiaries not using the U.S.

dollar as their functional currency.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Cash and cash equivalents include money market funds and are stated at fair value.

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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.

As of December 31, 2024 and 2023, the Company’s available-for-sale debt securities were in an unrealized gain position.

Accounts Receivable

Accounts receivable are recorded at original invoice amounts less estimates for credit losses.

Management determines the allowance for credit losses by specifically identifying troubled accounts and by using historical write off experience, adjusted for current market conditions and reasonable supportable forecasts of future economic conditions, applied to an aging of all other accounts.

Accounts receivable are written off when deemed uncollectible.

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As of December 31, 2024, 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.

Supplier Concentration

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Assessments to value the inventory at the lower of the average cost to purchase the inventory, or the net realizable value of the inventory, are based upon assumptions about future demand, physical deterioration, changes in price levels and market conditions.

As a result of the Company’s assessments, when the net realizable value of inventory is less than the carrying value, the inventory cost is written down to the net realizable value and the write down is recorded as a charge to cost of revenue.

Inventories include indirect acquisition and production costs that are incurred to bring the inventories to their present condition and location.

Inventories include indirect acquisition and production costs that are incurred to bring

the inventories to their present condition and location.

Inventories are recorded net of reserves for obsolescence.

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.

We also periodically assess the value of our on-hand inventory for potential excess and/or obsolete inventory and when necessary, will write-down the value to account for estimated excess and/or obsolete inventory.

We determine excess or obsolete inventory based on market conditions, age of inventory, an estimate of the future demand for our products within a specified time horizon, generally the greater of 24 months or remaining life of the product, and product life cycle status.

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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We capitalize certain software development costs in the application development stage in accordance with Accounting Standards Codification (“ASC”) 350-40, “Accounting for Costs of Computer Software Developed or Obtained for Internal Use” and upon the establishment of technological feasibility for a product in accordance with ASC 985-20, “Software to Be Sold, Leased or Otherwise Marketed”.

When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the consolidated statements of operations.

Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the related 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 primarily as general and administrative expense within the consolidated statements of operations.

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

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Right-of-use (ROU) assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease.

Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term.

Lease liabilities are recognized

at the lease commencement date based on the present value of future lease payments over the lease term.

ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable.

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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.

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

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During the years ended December 31, 2024, 2023, and 2022, the Company recorded no impairments relating to amortized intangible assets.

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

During the years ended December 31, 2024, 2023 and 2022, the Company recorded impairment charges of $ 0.5 million and $ 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 and comprehensive income.

Fair Value of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, marketable securities, accounts receivable, and accounts payable.

At December 31, 2023, and 2022, the carrying amounts of cash, accounts receivable, and accounts payable approximate fair values because of the short-term nature of these instruments.

At December 31, 2024, and 2023, the carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair values because of the short-term nature of these instruments.

Fair Value Measurement

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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.

No long-lived assets were measured at fair value on a recurring basis as of December 31, 2023 and 2022.

Money market funds are highly liquid investments and are actively traded.

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these assets are classified as Level 2 of the fair value hierarchy.

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, 2023 and December 31, 2022 other than liability classified stock-based awards discussed in Note 12.

There were no liabilities measured at fair value on a recurring basis as of December 31, 2024 and December 31, 2023.

Earnings Per Share

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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.

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

The Company derives the majority of its revenue from the sale of connected machines, digital content subscriptions and accessories and materials.

The Company markets and sells its products to customers, which include brick-and-mortar and online retail partners as well as users that purchase from the Company’s website at cricut.com.

The Company markets and sells its products to customers, which include brick-and-mortar and online retail partners as well as users that purchase from the Company’s website at cricut.com, Design Space, and third-party supported applications.

The Company determines revenue recognition through the following steps:

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The following describes the nature of the Company’s primary types of revenue and the revenue recognition policies and significant payment terms as they pertain to the types of transactions with its customers.

Connected Machines

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

We generate Platform revenue primarily from sales of subscriptions to Cricut Access and Cricut Access Premium, digital content, and a minimal amount of revenue allocated to the unspecified future upgrades and enhancements related to the essential software and access to our cloud-based services.

For a monthly or annual subscription fee, Cricut Access includes a subscription to images, fonts and projects as well as other member benefits, including exclusive software features and functionality, discounts, and priority Cricut Member Care.

For our annual subscription fee, Cricut Access Premium includes all the benefits of Cricut Access as well as additional discounts and preferred shipping.

Digital content includes à la carte digital content purchases, including fonts, images and projects.

Platform revenue is recognized on a ratable basis over time, during the subscription term for subscriptions, and at the point in time when control is transferred for à la carte digital content.

The paid subscription services are offered on a month-to-month or annual basis.

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.

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

Revenue related to the material right is recognized as accessories and materials revenue upon redemption or expiration of the material right.

Revenue related to subscriptions is recognized ratably over the length of the subscription using a time-based output measure as the customer consumes the benefit of the service each day.

We generate Products revenue from sales of connected machines and ancillary products, net of sales discounts, incentives and returns, and includes amounts allocated to the material right for discounts on materials and accessories available only to Paid Subscribers.

Our connected machines portfolio consists of machines in four product families:

Cricut Maker, which includes Maker and Maker 3;

Cricut Explore, which includes Explore Air 2 and Explore 3;

Cricut Joy, which includes Joy and Joy Xtra;

and Cricut Venture.

Our ancillary products include Cricut EasyPress, Cricut MugPress, hand tools, machine replacement tools and blades, and project materials such as vinyl and iron-on.

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

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Together the hardware and software are inputs into providing the essential functionality of the connected machines and are accounted for as a single performance obligation.

Revenue is recognized for the single performance obligation of hardware with essential software at a point-in-time when control is transferred, which is either upon shipment or delivery of goods, in accordance with the terms of each contract with the customer.

Product revenue is recognized for the single performance obligation of hardware with essential software at a point-in-time when control is transferred, which is either upon shipment or delivery of goods, in accordance with the terms of each contract with the customer.

The promise to provide the customer with unspecified future upgrades and enhancements related to the essential software and the promise to provide access to the Company’s cloud-based services are both distinct performance obligations that provide incremental benefits to the connected machines and are recognized using a time-based output measure over the service period as the customer consumes the benefit of the service each day.

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SSP of the hardware and essential software reflects the Company’s best estimate of the selling price if it was sold regularly on a standalone basis and comprises the majority of the contract value.

Subscriptions

The Company’s paid subscription services relate to Cricut Access and Cricut Access Premium which provide users access to images, fonts and projects.

The paid subscription is separate from our free of charge service to provide unspecified future upgrades and enhancements related to the essential software and access to the Company’s cloud-based services as described above.

The paid subscription services are offered on a month-to-month or annual basis.

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

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

Revenue related to the material right is recognized as accessories and materials revenue upon redemption or expiration of the material right.

Revenue related to subscriptions is recognized ratably over the length of the subscription using a time-based output measure as the customer consumes the benefit of the service each day.

Accessories and Materials

The Company also sells accessories and materials (both physical and digital) which generally consist of a single performance obligation and reallocations are not required.

Revenue from accessories and materials is recognized at a point-in-time when control is transferred, either upon shipment or delivery of goods, in accordance with the terms of each contract with the customer, or in the case of digital goods, at a point-in-time when the goods are made available to the customer.

Accessories and materials generally consist of a single performance obligation and reallocations are not required.

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

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Cost of Revenue

Connected Machines

Cost of revenue related to Connected Machines consists of product costs, including costs of components, costs of contract manufacturers for production, inspecting and packaging, shipping, receiving, handling, warehousing and fulfillment, duties and other applicable importing costs, warranty replacement, excess and obsolete inventory write-downs, tooling and equipment depreciation and royalties.

Subscriptions

Cost of revenue related to Subscriptions consists primarily of hosting fees, digital content costs, amortization of capitalized software development costs and software maintenance costs.

Accessories and Materials

Costs of revenue related to Accessories and Materials consists of product costs, including costs of components, costs of contract manufacturers for production, inspecting and packaging, shipping, receiving, handling, warehousing and fulfillment, duties and other applicable importing costs, warranty replacement, excess and obsolete inventory write-downs, tooling and equipment depreciation and royalties.

Cost of revenue related to Platform consists primarily of hosting fees, digital content costs, amortization of capitalized software development costs and software maintenance costs.

Cost of revenue related to Products consists of product costs, including costs of components, cost of contract manufacturers for production, inspecting and packaging, shipping, receiving, handling, warehousing and fulfillment,

duties and other applicable importing costs, warranty replacement, excess and obsolete inventory write-downs, tooling and equipment depreciation and royalties.

Customer Rebates

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Forfeitures are accounted for as they occur.

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

The Company estimated 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.

The determination of the grant date fair value of the awards issued is affected by a number of variables, including the fair value of the underlying shares or units, the expected price volatility over the expected life of the awards, the expected term of the award, risk-free interest rates, the expected dividend yield of the underlying shares or units and the likelihood of termination.

The Company has limited publicly available stock information and therefore, used the historical volatility of the stock price of similar publicly traded peer companies prior to its IPO in March 2021, and the historical volatility of the Company's stock price or a blended average of average historical stock volatilities of peer companies and historical volatility of the Company's stock price for valuations subsequent to the IPO.

The Company estimates the expected term using the simplified method for “plain vanilla” stock option awards or based on the expected time to a liquidation event or other transaction that would result in settlement of other awards.

The risk-free interest rate is based on the U.S.

Treasury yield curve in effect at the time of grant.

Expected dividend yield is 0.0 % as the Company does not anticipate paying dividends, and the Company and its former parent, Cricut Holdings, have not paid dividends other than special dividends declared in 2020, 2022 and 2023, and the Company does not expect to pay regular dividends in the future.

See Note 11 for further discussion of the Company’s dividends.

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 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 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.

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.

The impact of fair value re-measurement was recognized as compensation cost over the requisite service period.

No stock option awards were granted during the years ended 2024 or 2023.

We have not adopted a dividend policy.

Any determination to pay dividends on our common stock is at the discretion of our board of directors subject to applicable laws, and depends upon, among other factors, our results of operations, financial condition, contractual restrictions and capital requirements.

Our ability to pay cash dividends on our capital stock are limited by the terms of our Credit Agreement.

On the payment date, a portion of the dividend is settled in cash, and pursuant to the underlying award agreements, holders of restricted stock units and performance-based restricted stock units receive a dividend equivalent per unit in the form of additional restricted stock units and performance-based restricted stock units subject to the same vesting conditions as the original awards.

In addition, there is a delayed cash payment to the holders of the unvested shares of common stock.

Shipping and Handling Revenue and Expenses

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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 November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), expanding disclosure requirements related to certain income statement expenses.

The amendments require tabular disclosure of certain operating expenses disaggregated into categories, such as purchases of inventory, employee compensation, and depreciation.

The amendments are effective for our fiscal year ending December 31, 2027, and may be applied retrospectively.

The Company is still evaluating the specific impacts and adoption method, we do anticipate this guidance will have a significant impact on our consolidated financial statement disclosures.

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

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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.

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

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

Improvements to Reportable Segment Disclosures.

The Company adopted ASU 2023-07 during the year ended December 31, 2024, see Note 18 for further detail.

Revenue and Deferred Revenue

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Deferred revenue primarily consists of deferred subscription-based services.

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.

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.

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During the twelve months ended December 31, 2024, the Company capitalized $ 2.7 million of contract costs, and as of December 31, 2024 the unamortized balance was $ 1.2 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.

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.

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

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Revenue expected to be recognized $ 45,427 $ 2,069 $ 757 $ 48,253

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 years ended December 31, 2024, 2023, and 2022, related to performance obligations satisfied or partially satisfied in prior periods was $ 5.7 million, $ 3.2 million and $ 1.7 million, respectively.

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United States represents 95 %, 95 %, and 95 % of North America revenue for the years ended December 31, 2024, 2023, and 2022, respectively.

The following table presents the total revenue by source for the periods indicated:

Year Ended December 31,

2024 2023 2022

(in thousands)

$ 312,976 $ 309,012 $ 278,646

Connected machines

192,439 198,312 252,563

Accessories and materials

207,123 257,823 355,087

Total revenue $ 712,538 $ 765,147 $ 886,296

Cash, Cash Equivalents, and Financial Instruments

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As of December 31, 2024

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

Adjusted Cost Total Unrealized Gains Fair Value Cash and Cash Equivalents Marketable Securities

(in thousands)

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Money market funds 70,892 — 70,892 70,892 —

Subtotal 97,378 — — — 97,378 97,378 —

treasury securities 104,413 361 104,774 — 104,774

Subtotal 102,411 — 541 — 102,952 — 102,952

Total $ 336,553 $ 361 $ 336,914 $ 232,140 $ 104,774

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As of December 31, 2023

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

Adjusted Cost Total Unrealized Gains Fair Value Cash and Cash Equivalents Marketable Securities

(in thousands)

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Money market funds 97,378 — 97,378 97,378 —

Subtotal 69,484 — — — 69,484 69,484 —

treasury securities 102,411 541 102,952 — 102,952

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

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

Marketable securities held as of December 31, 2024 generally mature over the next 24 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 .

All securities were in an unrealized gain position as of December 31, 2024 and 2023.

We determined that an allowance for credit loss was unnecessary for any of the periods presented.

Inventories are comprised of the following:

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Inventories non-current (included in Other assets) $ 19,012 $ 33,038

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.

As of the years ended December 31, 2024 and 2023, the Company had zero and $ 0.1 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, 2024 consisted of $ 3.2 million related to excess connected machine inventory that the Company does not expect to sell, $ 38.3 million related to excess accessories and materials inventory, and $ 7.6 million related to raw material components.

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Property and equipment, net $ 37,546 $ 47,614

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.

During the twelve months ended December 31, 2024, the Company recorded an impairment charge of $ 0.5 million for computer software and software development costs.

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

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Property and equipment, along with all other Company assets are pledged as collateral on the Credit Agreement (see Note 8).

Intangible Assets, Net

The following is a summary of the Company’s intangible assets:

December 31, 2023

Gross Carrying Amount Accumulated Amortization and Impairment Net

(in thousands)

Trade names and trademarks $ 42,301 $ ( 42,301 ) $ —

Total intangible asset $ 42,301 $ ( 42,301 ) $ —

December 31, 2022

Gross Carrying Amount Accumulated Amortization and Impairment Net

(in thousands)

Trade names and trademarks $ 42,301 $ ( 41,541 ) $ 760

Total intangible asset $ 42,301 $ ( 41,541 ) $ 760

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

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.

Accrued Expenses and Other Current Liabilities

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(in thousands)

Customer rebates $ 30,479 $ 35,552

Customer incentives $ 38,756 $ 30,479

Other accrued liabilities and other current liabilities 37,518 41,454

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2022 Credit Agreement

In September 2020, the Company entered into a credit agreement ( the “2020 Credit Agreement”) with JPMorgan Chase Bank, N.A., Citibank, N.A.

and Origin Bank.

The 2020 Credit Agreement provided for a three-year asset-based senior secured revolving credit facility of up to $ 150.0 million, maturing on September 4, 2023.

The amount that could be borrowed under the 2020 Credit Agreement was limited to the lesser of (a) the borrowing base minus the aggregate revolving exposure or (b) aggregate lender commitments at any given time.

The borrowing base was determined according to certain percentages of eligible accounts receivable and eligible inventory, subject to reserves determined by the administrative agent.

As disclosed below, the 2020 Credit Agreement was replaced on August 4, 2022.

At that time, no amount was outstanding under the 2020 Credit Agreement, available borrowings were $ 150.0 million, and the Company was in compliance with all financial and non-financial debt covenants.

2022 Credit Agreement

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 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.

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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.

As of December 31, 2024 and 2023, total unamortized debt issuance costs were $ 0.8 million and $ 1.2 million, respectively, and were included in other assets on our consolidated balance sheets.

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.

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Stock-based compensation 8.0 8.2 7.1

Non-deductible executive compensation 1.1 — —

Foreign derived intangible income deduction ( 2.8 ) ( 2.5 ) ( 3.2 )

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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:

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As of December 31, 2024, 2023, and 2022, $ 6.4 million, $ 7.1 million and $ 4.0 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, 2023 and 2022, resulted primarily from research and development credits, foreign derived intangible income differences and inventory basis differences.

The total balance of unrecognized gross tax benefits for the years ended December 31, 2024 and 2023, resulted primarily from research and development credits, foreign derived intangible income differences, inventory basis differences and the release of reserves due to the expiration of statutes of limitation.

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

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During the years ended December 31, 2024 and 2023, the Company repurchased and retired 6,247,175 and 2,548,893 shares of our Class A common stock, respectively, for $ 38.4 million and $ 20.3 million, respectively, under this program.

On November 01, 2024, the Company declared a recurring semi-annual dividend of $ 0.10 per share on its Class A and Class B common stock, payable on January 21, 2025 to shareholders of record as of January 07, 2025.

As part of the dividends, and pursuant to the underlying award agreements, holders of restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”) received a dividend equivalent of $ 0.10 per unit in the form of additional RSUs or PRSUs subject to the same vesting conditions as the original awards.

The aggregate dividend of $ 24.2 million is to be satisfied in cash of $ 21.3 million payable to holders of Class A and Class B common stock with the remaining $ 2.9 million satisfied on the payment date in the form of dividend equivalents to RSU or PRSU holders prior to any subsequent forfeitures.

On May 6, 2024, the Company declared a special dividend of $ 0.40 per share and a recurring semi-annual dividend of $ 0.10 per share on its Class A and Class B common stock, payable on July 19, 2024 to shareholders of record as of July 02, 2024.

As part of the dividends, and pursuant to the underlying award agreements, holders of RSUs and PRSUs received a dividend equivalent of $0.50 per unit in the form of additional RSUs or PRSUs subject to the same vesting conditions as the original awards.

The aggregate dividend of $ 121.7 million was to be satisfied in cash of $ 108.2 million payable to holders of Class A and Class B common stock with the remaining $ 13.5 million satisfied on the payment date in the form of dividend equivalents to RSU or PRSU holders prior to any subsequent forfeitures.

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.

As part of the dividend, and pursuant to the underlying award agreements, holders of RSUs and 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.

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During the twelve months ended December 31, 2024, an aggregate of $ 110.0 million was paid in cash, and $ 13.5 million was satisfied in the form of dividend equivalents to RSU or PRSU holders.

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

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Cost of revenue

Connected machines $ 700 $ 288 $ 34

Subscriptions 926 443 219

Accessories and materials 805 199 —

Platform 1,192 926 443

Products 712 1,505 487

Total cost of revenue 1,904 2,431 930

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As of December 31, 2024, there was $ 67.5 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 that are not probable of vesting was

$ 157.8 million as of December 31, 2023.

The total unrecognized compensation expense related to unvested PRSUs that are not probable of vesting was $ 202.2 million as of December 31, 2024.

The tax benefit from stock-based compensation cost during the years ended December 31, 2024, 2023 and 2022, was $ 9.2 million, $ 9.3 million, and $ 8.2 million, respectively.

Corporate Reorganization and Stock-Based Compensation Modifications

In connection with the Corporate Reorganization in 2021, all outstanding awards issued under the Incentive Unit Plan discussed below were modified by exchanging the outstanding awards of Cricut Holdings for awards of the Company.

All service based vesting conditions were unaffected by the modification.

As described below, the vesting conditions were modified for certain awards which previously had both service and market based vesting conditions.

All vested equity classified awards were settled in shares of the Company’s Class B common stock previously held by Cricut Holdings.

Unvested equity classified awards were converted to unvested shares of the Company’s Class B common stock subject to future vesting, or in the case of options were converted into options to purchase the Company’s Class B common stock.

All vested liability classified awards converted into either shares of Class B common stock to the extent permitted in each applicable jurisdiction or settled in cash.

All unvested liability classified awards converted into restricted stock units under the 2021 Equity Incentive Plan that will vest into shares of Class A common stock of Cricut, Inc.

to the extent permitted in each applicable jurisdiction or into restricted stock unit equivalents which will be settled in cash upon vesting as described below.

In connection with the Corporate Reorganization and modification, the Company granted options under the 2021 Equity Incentive Plan to certain employees.

The number of options was calculated based on the number of outstanding incentive units or incentive unit equivalents prior to the modification and the participation threshold of such awards.

The vesting terms of the options are also based on the vesting terms of the original award.

Therefore, the Company considered the exchange of the original award for the unvested shares or RSUs plus the options to be a single modification and began recognizing the incremental compensation cost of $ 14.5 million beginning in March 2021 over the vesting term, including a cumulative adjustment in March 2021 to recognize the incremental compensation cost associated with historical vesting.

As part of the modification of outstanding awards in connection with the Corporate Reorganization, awards issued under the Incentive Unit Plan which included both service and market conditions were modified to remove the market vesting condition and to increase the participation threshold of the award to the price specified in the former market condition.

In total, 3.0 million, 3.0 million, 1.0 million and 1.0 million awards which previously had a participation threshold of $ 2.00 , $ 2.00 , $ 5.00 and $ 5.00 per share, respectively, were modified to have a participation threshold of $ 3.00 , $ 4.00 , $ 6.00 and $ 7.00 per share, respectively.

Incremental compensation cost associated with these awards is included in the total incremental compensation cost associated with the issuance of additional options to employees described above as this change was part of a single modification.

2021 Equity Incentive Plan

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The 2021 Equity Incentive Plan provides for the grant of incentive stock options to employees and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and our parent and subsidiary corporations’ employees and consultants.

Outstanding restricted stock units and performance units are entitled to dividend equivalents in the form of additional unvested restricted stock units or unvested performance units equal in value to the amount of any declared dividend based on the closing price of the Company’s class A stock on the dividend payment date.

declared dividend based on the closing price of the Company’s class A stock on the dividend payment date.

Dividend equivalents are forfeited if the underlying award does not vest.

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The total fair value of RSUs vested as of the vesting dates during the years ended December 31, 2024, 2023 and 2022, was $ 19.0 million, $ 17.1 million, and $ 13.0 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.

The PRSUs vest in two equal tranches subject to the Company achieving cumulative adjusted earnings per share over eight quarters of $ 4.93 share and $ 6.16 per share, respectively, at any point during the 5.0 years performance period, subject to employees remaining with the Company through the vesting date.

Adjusted earnings per share means GAAP net income adjusted to exclude income tax expenses, as well as stock-based compensation expense and payroll tax expense specifically related to the PRSU awards.

The Company has granted PRSUs under the 2021 Equity Incentive Plan to certain employees of the Company that represent shares potentially issuable in the future.

In July 2024, the Company granted PRSUs by which the first tranche of 30% and the second tranche of 70% will vest upon the Company achieving certain adjusted operating income targets during any four consecutive quarters of the respective performance periods, subject to employees remaining with the Company through the vesting date.

The performance periods for the first and second tranches is 4 and 5 years, respectively.

At grant date, adjusted operating income was defined as GAAP operating income and was subsequently amended to be GAAP operating income adjusted to exclude stock-based compensation expense and payroll expense specifically related to these PRSU awards.

This change resulted in a modification whereby additional stock-based compensation of approximately $5.9 million could be recorded if the Company determines it is probable the performance targets will be achieved.

In 2022, the Company granted PRSUs that vest in two equal tranches subject to the Company achieving certain cumulative adjusted earnings per share over eight quarters at any point during the 5-year performance period, subject to employees remaining with the Company through the vesting date.

Adjusted earnings per share means GAAP net income adjusted to exclude income tax expenses, as well as stock-based compensation expense and payroll tax expense specifically related to these PRSU awards.

A summary of the Company’s PRSU activity under the 2021 Equity Incentive Plan is as follows:

Outstanding at December 31, 2023 6,766,001 $ 23.32

Granted 9,808,000 $ 5.55

Dividend equivalent grants 1,366,343 $ —

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For the years ended December 31, 2024, 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.

The Company used the following weighted-average assumptions in determining the grant date fair value of options granted:

Year Ended December 31, 2021

Expected volatility 51.6 %

Risk-free interest rate 0.8 %

Expected term (in years) 4.9

Expected dividend — %

In connection with the Corporate Reorganization, certain employees received restricted stock unit equivalents (“RSU equivalents”).

Upon vesting, these awards are settled for a cash payment equal to the intrinsic value of the award on the date of the Corporate Reorganization plus the difference between the Company’s stock price on the vesting date less the base price specified at the time of the grant.

If the base price exceeds the Company’s stock price on the vesting date, the stock-based award is considered cancelled.

Certain employees received restricted stock unit equivalents (“RSU equivalents”) which upon vesting are settled for a cash payment equal to the difference between the Company’s stock price on the vesting date less the base price specified at the time of the grant.

Due to the cash settlement feature, these awards are liability classified awards and require initial and subsequent measurement at fair value.

As of December 31, 2023, the total recognized liability for the unvested awards was not material.

A summary of the RSU equivalent activity under the 2021 Equity Incentive Plan is as follows:

RSU Equivalents

(in thousands)

Outstanding at December 31, 2022 4,846 $ 15.87 $ 86

Granted 3,500 $ —

Vested ( 2,173 ) $ —

Forfeited/cancelled — $ —

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

As of December 31, 2024 and 2023, the total recognized liability for the unvested awards was not material and the number of awards was not material.

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.

The Company’s unvested Class B common stock resulted from the corporate reorganization in March 2021 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.

Activity related to Class B common stock subject to future vesting for the year ended December 31, 2024 is as follows:

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Options to Purchase Class B Common Stock

The Company’s options to purchase Class B common stock resulted from the Corporate Reorganization and are not part of the 2021 Equity Incentive Plan.

The Company’s options to purchase Class B common stock resulted from the corporate reorganization in March 2021 and are not part of the 2021 Equity Incentive Plan.

A summary of the Company stock option activity for the options to purchase shares of Class B common stock is as follows:

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

Exercised ( 40,575 ) $ 9.04

Forfeited / Cancelled ( 62,000 ) $ 7.55

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Vested at December 31, 2024 197,425 $ 7.29 0.9 $ —

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:

Year Ended December 31, 2021

Expected volatility 51.4 %

Risk-free interest rate 0.8 %

Expected term (in years) 5.5

Expected dividend — %

2021 Employee Stock Purchase Plan

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If the administrator authorizes an offering period under the 2021 ESPP, the administrator will establish the duration of offering periods and purchase periods, including the starting and ending dates of offering periods and purchase periods, provided that no offering period may have a duration exceeding 27 months.

Incentive Unit Plan

Prior to the Corporate Reorganization which occurred in 2021, the Company’s former parent, Cricut Holdings, had authorized an Incentive Unit Compensation Plan (the “IU Plan”) that allowed for issuances of common incentive units (“CIUs”).

The participation threshold of the awards granted under the IU Plan was typically equal to the fair market value of Cricut Holdings’ membership units at the date of the grant, except zero strike price incentive unit awards which have no participation threshold.

Except as noted below, all awards issued under the IU Plan only had service-based conditions.

Per unit amounts in the activity below are based on the value of Cricut Holdings’ units.

Upon the Corporate Reorganization Cricut Holdings, was liquidated and all outstanding awards were settled or modified as described above.

Equity Classified Units

The Company’s former parent, Cricut Holdings, granted CIUs to employees of the Company.

These awards vested 25 % annually over four years of service.

The Company’s former parent also granted a performance-based incentive unit, which are discussed later.

These awards are collectively referred to as equity classified incentive units.

Once vested, all equity classified incentive units remained outstanding until the liquidation of Cricut Holdings or until repurchased by Cricut Holdings.

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

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.

Equity Classified Options

The Company’s former parent, Cricut Holdings, granted employees of the Company options to purchase zero strike price incentive units.

These options generally vested on a cliff basis upon completion of the service period specified for each award.

All outstanding options of Cricut Holdings were exchanged for options to purchase class B common stock of Cricut Inc.

in connection with the Corporate Reorganization.

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.

Fair value of common unit $ 8.99

Expected life (in years) 5.0

Expected volatility 50.9 %

Risk-free rate 0.6 %

Expected dividend yield — %

Liability Classified Incentive Unit Equivalents

Prior to the Corporate Reorganization which occurred in 2021, the Company’s former parent issued incentive unit equivalents (phantom units) to various employees under the Incentive Unit Plan.

The incentive unit equivalents paid out upon the occurrence of a liquidation event such as a change in control transaction.

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

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.

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 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.

Commitments and Contingencies

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Related Party Transactions

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 10.

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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.

During the years ended December 31, 2024 and 2023, the Company undertook restructuring plans to improve efficiency and streamline operations.

During the year ended December 31, 2024, the Company recognized $ 0.9 million of severance costs of which $ 0.4 million, $ 0.4 million and $ 0.1 million, were recorded within research and development, selling and marketing, and general and administrative expense, respectively.

During the year ended December 31, 2023, $ 1.2 million of severance costs of which $ 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

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

The Company contributed $ 2.4 million, $ 2.5 million, and $ 2.5 million during the years ended December 31, 2024, 2023 and 2022, respectively.

Net Income Per Share

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Restricted stock units 254,005 940,469 486,269

Underwriters’ option to purchase additional shares — — 18,798

Diluted weighted-average common shares outstanding 215,645,506 219,722,063 220,588,789

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Segment Information

The Company applies ASC Topic 280, Segment Reporting, in determining reportable segments for its financial statement disclosure.

The Company’s operating segments are generally organized by the type of product or service offered.

Similar operating segments have been aggregated into three reportable segments:

Connected Machines, Subscriptions and Accessories and Materials.

Segment information is presented in the same manner that the Company’s Chief Operating Decision Maker (“CODM”) reviews the results of operations in assessing performance and allocating resources.

The CODM reviews revenue and gross profit for each of the reportable segments.

Gross profit is defined as revenue less cost of revenue incurred by the segment.

In January 2024, the Company reevaluated its operating segments in order to better align with how the chief operating decision makers (“CODM”) evaluate performance and allocate resources.

The CODM consists of the Company’s chief executive officer and chief financial officer.

The key factor evaluated by the Company resulted from the growth and expansion of Design Space, the Company’s digital platform.

Since its initial public offering, the Company’s digital platform has evolved and grown considerably.

Key enhancements to the platform include the size of its images, fonts, and projects library, the introduction of advanced design tools, the software support for several new cutting machines, and the creation of enhanced subscriptions offerings.

The change in operating segments reflects the Company’s strategy to focus on continuing to expand revenue and margin generated from its digital platform and Paid Subscribers.

At the same time, a number of product related factors also contributed to this decision, including the relative importance of physical products to the platform, including bundles (comprised of several combinations of machines, accessories, and materials), and changes in our Accessories and Materials business.

Based on these changes, the Company has determined that it was appropriate to reduce its reportable segments from three to two, combining its Subscriptions and digital content businesses into one Platform segment, and its Connected Machines and Accessories and Materials businesses into one Product segment.

Prior period segment results have been retrospectively recast to reflect the new reportable segments.

The key operating decisions made by the CODM include assessing segment performance and resource allocation.

The CODM primarily focuses on revenue and gross profit of the Platform and Product segments, as well

as consolidated operating results and capital expenditures.

The CODM uses this information to make budgeting and forecasting decisions, including hiring and compensation of certain employees, and allocating financial or capital resources.

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

As of the years ended December 31, 2024 and 2023, long-lived assets located outside the United States, primarily located in Malaysia and China, were $ 5.1 million and $ 8.7 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 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.

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

For the years ended December 31, 2024, 2023 and 2022, upfront digital content revenue comprised approximately 1 % of Platform revenue.

The remaining Platform revenue consists of ratably recognized subscription revenue and revenue related to unspecified future upgrades and enhancements related to the essential software and access to the Company’s cloud-based services, which are recognized over the determined service period.

The Products segment derives revenue primarily from the sale of its connected machine hardware, and sale of craft, DIY, home décor products and extensions.

There are no internal 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:

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(in thousands)

Connected Machines:

Revenue $ 312,976 $ 309,012 $ 278,646

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Gross profit $ 275,688 $ 276,208 $ 251,970

Subscriptions:

Revenue $ 399,562 $ 456,135 $ 607,650

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Gross profit $ 77,100 $ 67,085 $ 97,923

Accessories and Materials:

Revenue $ 262,846 $ 361,389 $ 552,164

Cost of revenue 216,937 265,768 342,791

Gross profit $ 45,909 $ 95,621 $ 209,373

Consolidated:

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Gross profit $ 352,788 $ 343,293 $ 349,893

A reconciliation of our total segment and consolidated gross profit to our income before provision for income taxes is presented in our consolidated statements of operations and comprehensive income.

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.

On January 21, 2025, the Company paid a recurring semi-annual dividend of $ 0.10 per share on its Class A and Class B common stock to shareholders of record as of January 7, 2025.

$ 21.3 million was paid in cash and $ 2.9 million was satisfied in the form of dividend equivalents to RSU or PRSU holders.

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