What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-04 compared with 2025-03-05 · 143 added, 113 removed, 913 unchanged (22% of the section changed)

33 unchanged sentences

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.

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

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

102 unchanged sentences

Net income $ 76,705 $ 62,830 $ 53,636

Other comprehensive income (losses):

Other comprehensive income (loss):

Change in net unrealized gains (losses) on marketable securities, net of tax ( 251 ) ( 136 ) 711

Change in foreign currency translation adjustment ( 147 ) 41 ( 120 )

Change in foreign currency translation adjustment, net of tax 423 ( 147 ) 41

Comprehensive income $ 76,877 $ 62,547 $ 54,388

7 unchanged sentences

Common Stock Additional

Capital Retained Earnings (Accumulated

Deficit) Accumulated Other

Capital Retained Earnings Accumulated Other

Comprehensive

5 unchanged sentences

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 ) — — — — —

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

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

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

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

5 unchanged sentences

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

1 unchanged sentence

Issuance of common stock upon vesting or exercise of stock-based awards, net of withholding tax 2,618,255 2 ( 10,396 ) — — $ ( 10,394 )

Forfeiture of unvested common stock and dividend equivalents ( 92,704 ) — 132 — — $ 132

Repurchases of common stock ( 4,577,893 ) ( 4 ) ( 24,744 ) — — $ ( 24,748 )

1 unchanged sentence

Stock-based compensation — — 37,114 — — $ 37,114

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

Other comprehensive income — — — — 172 $ 172

Balance as of December 31, 2025 211,336,284 $ 211 $ 339,224 $ 3,960 $ 166 $ 343,561

9 unchanged sentences

24,439 29,006 30,039

Bad debt expense 3,285 1,720 ( 64 )

Bad debt expense/(recoveries, net) ( 1,695 ) 3,285 1,720

Impairments 642 486 9,953

11 unchanged sentences

Accounts payable 16,854 ( 23,120 ) 13,535

Accrued expenses and other current liabilities and other non-current liabilities

Accrued expenses, other current liabilities and other non-current liabilities

( 8,774 ) 6,985 7,761

6 unchanged sentences

Proceeds from maturities of marketable securities 85,074 110,527 38,390

Proceeds from sales of marketable securities — — 84,621

Purchases of property and equipment, including capitalized software development costs

( 24,417 ) ( 18,334 ) ( 23,717 )

Net cash and cash equivalents used in investing activities ( 18,328 ) ( 48,778 ) ( 107,869 )

Net cash and cash equivalents provided by (used in) investing activities 60,657 ( 18,328 ) ( 48,778 )

Cash flows from financing activities:

2 unchanged sentences

Employee tax withholding payments on stock-based awards ( 10,594 ) ( 7,970 ) ( 8,106 )

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

Cash dividend ( 202,103 ) ( 109,972 ) ( 294,130 )

Other financing activities, net — — ( 14 )

Net cash and cash equivalents provided by used in financing activities ( 156,435 ) ( 322,185 ) ( 26,247 )

Net cash and cash equivalents used in financing activities ( 237,445 ) ( 156,435 ) ( 322,185 )

Effect of exchange rate on changes on cash and cash equivalents 634 ( 252 ) 110

3 unchanged sentences

Supplemental disclosures of cash flow information:

Cash paid during the period for interest $ — $ — $ —

Cash paid during the period for income taxes $ 15,349 $ 43,596 $ 24,072

6 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease liabilities $ 371 $ 6,417 $ 280

Property and equipment included in accounts payable and accrued expenses and other current liabilities

Property and equipment included in accounts payable, accrued expenses and other current liabilities

$ 3,460 $ 2,050 $ 2,824

1 unchanged sentence

Stock-based compensation capitalized for software development costs $ 1,634 $ 1,509 $ 1,960

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

Dividends declared but unpaid $ 24,361 $ 24,413 $ 2,342

23 unchanged sentences

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

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

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

6 unchanged sentences

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 $ 2.7 million, $ 1.3 million, and $ 1.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Foreign currency transaction gains/(losses) totaled $ 0.1 million, $( 2.7 ) million, and $( 1.3 ) million for the years ended December 31, 2025, 2024, and 2023, respectively.

Comprehensive Income

35 unchanged sentences

Beginning balance $ ( 2,617 ) $ ( 1,950 )

Provision for expected losses ( 3,285 ) ( 1,720 )

Reversal of (provision for) expected losses 1,695 ( 3,285 )

Write-offs 1,581 2,618

Recoveries ( 2,387 ) —

Ending balance $ ( 1,728 ) $ ( 2,617 )

13 unchanged sentences

Customer C 15 % 12 %

Customer D — % 17 %

* Accounts Receivable was less than 10%

As of December 31, 2025, 2024 and 2023, no customers accounted for more than 10% of revenue.

7 unchanged sentences

Net realizable value is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.

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.

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

the inventories to their present condition and location.

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.

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.

1 unchanged sentence

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.

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 in our consolidated statements of operations and comprehensive income.

When our expectations indicate that average cost of inventory may exceed its net realizable value, we write down our inventory to establish a new cost basis.

The write-down is recorded as a net charge to cost of revenue in our consolidated statements of operations and comprehensive income.

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.

5 unchanged sentences

Expenditures for tools and molds are capitalized and depreciated over the estimated useful lives of the assets.

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”.

We capitalize certain software development costs in the application development stage and upon the establishment of technological feasibility for a product.

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 and comprehensive income.

15 unchanged sentences

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.

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.

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

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.

As the implicit rate in the Company's leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments.

17 unchanged sentences

Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value and is recorded as a reduction in the carrying value of the related asset and a charge to the consolidated statement of operations.

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, 2025, 2024 and 2023, the Company recorded impairment charges of $ 0.6 million and $ 0.5 million, and $ 10.0 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.

31 unchanged sentences

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

27 unchanged sentences

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;

Our connected machines portfolio consists of machines in four

product families:

Cricut Maker, which includes Maker, Maker 3 and Maker 4;

Cricut Explore, which includes Explore Air 2, Explore 3 and Explore 4;

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.

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

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

21 unchanged sentences

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

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 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

38 unchanged sentences

If after evaluating all of the positive and negative evidence, a conclusion is made that it is more likely than not that some portion or all of the deferred tax assets will not be recovered, a valuation allowance is provided by a charge to tax expense to reserve the portion of the deferred tax assets which are not expected to be realized.

Under literature related to uncertain tax provisions, the Company reviews its filing positions for all open tax years in all U.S.

The Company reviews its filing positions for all open tax years in all U.S.

federal and state jurisdictions where the Company is required to file.

35 unchanged sentences

R&D costs are expensed as incurred.

Recently Issued Accounting Pronouncements

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.

Recently Adopted Accounting Pronouncements

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

4 unchanged sentences

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 adopted ASU 2023-09 on a retrospective basis during the year ended December 31, 2025, see Note 9 for further discussion.

The adoption did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software, which removes all references to software development project stages.

The ASU requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable that the project will be completed and the software will be used for its intended purpose.

This ASU is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted.

Upon adoption, the guidance can be applied prospectively, retrospectively, or with a modified transition approach.

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.

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

In August 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Trade Receivables and Contract Assets.

This ASU provides a practical expedient and accounting policy election to allow entities to measure expected credit losses on certain trade receivables and contract assets using a provision matrix approach.

ASU 2025-05 is effective for annual periods beginning after

December 15, 2025, and interim periods within those fiscal years, with early adoption permitted.

The Company is currently evaluating the potential effect of this ASU on its credit loss estimation methodology.

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 annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, early adoption is permitted.

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.

Revenue and Deferred Revenue

1 unchanged sentence

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.

7 unchanged sentences

Deferred revenue, beginning of period $ 48,253 $ 43,235 $ 38,658

Recognition of revenue for amounts included in beginning of period

Recognition of revenue included in beginning of period

deferred revenue

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Inventories non-current (included in Other assets) $ 10,862 $ 19,012

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, 2025 consisted of $ 3.2 million related to excess connected machine inventory that the Company does not expect to sell, $ 19.0 million related to excess accessories and materials inventory, and $ 7.1 million related to raw material components.

11 unchanged sentences

Property and equipment, net $ 40,260 $ 37,546

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.

During the twelve months ended December 31, 2025, the Company recorded an impairment charge of $ 0.6 million related to manufacturing tools and equipment.

These impairment charges were recorded within cost of revenue in the consolidated statements of operations.

Total depreciation and amortization expense for the years ended December 31, 2025, 2024 and 2023 was $ 24.1 million, $ 29.0 million and $ 29.0 million, respectively.

4 unchanged sentences

(in thousands)

Customer incentives $ 38,756 $ 30,479

Customer rebates $ 37,627 $ 38,756

Other accrued liabilities and other current liabilities 33,519 37,518

9 unchanged sentences

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 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.

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, 2025 and 2024, total unamortized debt issuance costs were $ 0.5 million and $ 0.8 million, respectively, and were included in other assets on our consolidated balance sheets.

6 unchanged sentences

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 $ 88.9 million, $ 79.8 million, and $ 82.0 million during the years ended December 31, 2024, 2023, and 2022, respectively, consisted of $ 87.1 million, $ 78.4 million, and $ 81.0 million of income earned in the United States.

The remaining amount was earned in foreign jurisdictions.

The reconciliation of income tax computed at the U.S.

1 unchanged sentence

Year Ended December 31,

(in thousands) 2025 2024 2023

Amount Percent Amount Percent Amount Percent

federal statutory tax rate $ 22,658 21.0 % $ 18,664 21.0 % $ 16,755 21.0 %

State and local income taxes, net of federal income tax effect (a)

3,957 3.7 3,463 3.9 2,639 3.3

Income tax provision at statutory rate 21.0 % 21.0 % 21.0 %

State taxes, net 4.6 4.8 5.6

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 )

Tax credits ( 4.0 ) ( 5.0 ) ( 8.7 )

Foreign tax effects 83 0.1 54 0.1 293 0.4

Effect of cross-border tax laws

Foreign derived intangible income ( 699 ) ( 0.7 ) ( 2,448 ) ( 2.8 ) ( 1,987 ) ( 2.5 )

Other 153 0.1 150 0.2 0 —

Research and development tax credits ( 2,296 ) ( 2.1 ) ( 2,065 ) ( 2.3 ) ( 2,480 ) ( 3.1 )

Foreign tax credits ( 24 ) — 0 — 0 —

Nontaxable or nondeductible items

Share-based payment awards 3,998 3.7 7,098 8.0 6,544 8.2

Nondeductible executive compensation 1,712 1.6 1,018 1.1 710 0.9

Return to provision adjustments 2,994 2.8 822 0.9 3,288 4.1

Uncertain tax positions ( 0.9 ) 2.6 —

Other ( 170 ) ( 0.2 ) 264 0.3 56 0.1

Total provision for income taxes 29.3 % 32.8 % 26.0 %

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.

Changes in unrecognized tax benefits ( 1,178 ) ( 1.1 ) ( 973 ) ( 1.1 ) 329 0.4

Effective income tax rate $ 31,188 28.9 % $ 26,047 29.3 % $ 26,147 32.8 %

(a) State taxes in California, Pennsylvania and Utah made up the majority (greater than 50 percent) of the tax effect in this category for the years ended December 31, 2025 and 2023.

California and Utah made up the majority (greater than 50 percent) of the tax effect in this category for the year ended December 31, 2024.

Differences between the Company’s effective tax rate and the statutory tax rate relate primarily to state income taxes, stock-based compensation, tax credits, prior year return to provision adjustments 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.

32 unchanged sentences

Income tax provision $ 31,188 $ 26,047 $ 26,147

Income taxes paid (net of refunds) are comprised of the following:

Year Ended December 31,

2025 2024 2023

(in thousands)

Federal $ 9,962 $ 40,464 $ 21,100

California 1,000 * *

Utah ( 3,585 ) * *

Other states 2,484 2,781 2,614

Foreign 594 626 297

Total $ 10,455 $ 43,871 $ 24,011

* The amount of income taxes paid during the years ended December 31, 2024 and 2023 does not meet the 5% disaggregation threshold.

Income and expense from continuing operations are comprised of the following:

Year Ended December 31,

(in thousands) 2025 2024 2023

Pretax income:

Domestic $ 105,817 $ 87,050 $ 78,392

Foreign 2,076 1,827 1,391

Total $ 107,893 $ 88,877 $ 79,783

Year Ended December 31,

(in thousands) 2025 2024 2023

Income tax expense:

Federal $ 25,907 $ 21,162 $ 22,580

State 4,818 4,527 2,982

Foreign 463 358 585

Total $ 31,188 $ 26,047 $ 26,147

There are immaterial foreign net operating loss carryforwards set to expire in 2026.

3 unchanged sentences

As of December 31, 2025, 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 $ 3.3 million.

As of December 31, 2025, 2024, and 2023, $ 5.7 million, $ 6.4 million and $ 7.1 million, respectively, of unrecognized tax benefits would affect our effective tax rate if recognized.

13 unchanged sentences

For the years ended December 31, 2025 and 2024, interest or penalties related to income tax matters included in the provision for income taxes have not been material.

In January 2021, the IRS completed its examination of the Company’s 2017 tax year.

No material adjustments resulted from this examination.

The Company is subject to U.S.

federal and state income tax examination for tax years 2018 and forward.

The Company is subject to taxation in the U.S.

and various state and foreign jurisdictions.

The Company is no longer subject to U.S.

federal and state income tax examinations for tax years prior to 2022.

Capital Structure

In connection with the corporate reorganization prior to the IPO, the Company filed an amended and restated certification of incorporation which authorized 100,000,000 shares of preferred stock, par value $ 0.001 per share, and 1,250,000,000 shares of common stock, par value $ 0.001 per share, which was divided between two series Class A common stock and Class B common stock.

All previously outstanding common stock was reclassified as Class B common stock.

The Company has authorized 100,000,000 shares of preferred stock, par value $ 0.001 per share, and 1,250,000,000 shares of common stock, par value $ 0.001 per share, which is divided between two series Class A common stock and Class B common stock.

During the year ended December 31, 2025, 4,911,815 shares of Class B common stock were converted to Class A common stock.

3 unchanged sentences

Stock Repurchase Program

On July 19, 2022, the Company’s Board of Directors approved a common stock repurchase program under which the Company may repurchase shares of its outstanding Class A common stock up to an aggregate transactional value of $ 50 million, depending on the Company’s continuing analysis of market, financial, and other factors.

On May 2, 2025, the board of directors approved replenishing the repurchase program up to an aggregate transactional value of $ 50 million to purchase shares of its outstanding Class A common stock, depending on the Company’s continuing analysis of market, financial, and other factors.

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

During the years ended December 31, 2025 and 2024, the Company repurchased and retired 4,577,893 and 6,247,175 shares of our Class A common stock, respectively, for $ 24.6 million and $ 38.4 million, respectively, under this program.

On October 31, 2025, 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 20, 2026 to shareholders of record as of January 6, 2026.

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 $ 24.3 million was to be satisfied in cash of $ 21.1 million payable to holders of Class A and Class B common stock with the remaining $ 3.2 million satisfied on the payment date in the form of dividend equivalents to RSU or PRSU holders prior to any subsequent forfeitures.

On May 2, 2025, the Company declared a special dividend of $ 0.75 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 21, 2025 to shareholders of record as of July 7, 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 $ 0.85 per unit in the form of additional RSUs or PRSUs subject to the same vesting conditions as the original awards.

The aggregate dividend of $ 204.8 million was to be satisfied in cash of $ 180.6 million payable to holders of Class A and Class B common stock with the remaining $ 24.2 million satisfied on the payment date in the form of dividend equivalents to RSU or PRSU holders prior to any subsequent forfeitures.

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.

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.

The aggregate dividend of $ 24.2 million was 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.

9 unchanged sentences

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.

32 unchanged sentences

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.

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

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.

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

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Vested ( 107,425 ) $ 20.00

Forfeited / Cancelled ( 92,731 ) $ 20.00

Outstanding at December 31, 2025 6,153 $ 20.00

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Outstanding at December 31, 2025 — $ — 0.0 $ —

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

2021 Employee Stock Purchase Plan

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Self-Insurance Liabilities

Starting in 2022, the Company began to self-insure for certain employee medical benefits.

Starting in 2022, the Company began a self-insurance plan for certain employee medical benefits.

The recorded liabilities for self-insured risks are calculated using actuarial methods and are not discounted.

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Certain of these leases also include renewal options at the election of the Company to renew or extend the lease.

In December 2024, the Company amended its operating lease for its corporate headquarters in South Jordan, Utah to extend the term through March 2029 and to reduce the annual rent rate for future periods.

In December 2024, the Company amended its operating lease for its corporate headquarters in South Jordan, Utah to extend the term through May 2029 and to reduce the annual rent rate for future periods.

As a result of this amendment, the Company remeasured the associated operating lease liability and right-of-use asset for this lease.

The Company also leased additional space at its corporate headquarters which commenced in January of 2022 under the same terms as its existing lease.

The Company has determined its leases should be classified as operating leases.

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, 2024, 2023 and 2022, the Company incurred operating lease costs of $ 5.0 million, $ 5.4 million and $ 5.5 million, respectively, and variable lease costs of $ 0.4 million, $ 0.4 million and $ 0.5 million, respectively.

For the years ended December 31, 2025, 2024 and 2023, the Company incurred operating lease costs of $ 4.1

million, $ 5.0 million and $ 5.4 million, respectively, and variable lease costs of $ 0.4 million, $ 0.4 million and $ 0.4 million, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2025, 2024 and 2023 was $ 4.6 million, $ 5.6 million and $ 5.9 million, respectively, and was included in net cash used in operating activities in the Company's consolidated statements of cash flows.

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Weighted-average discount rate of operating leases 5.4 % 5.3 %

Related Party Transactions

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.

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 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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Segment Information

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 Company organizes its business into the following two reportable segments:

Platform and Products.

The chief operating decision makers (“CODM”) review revenue and gross profit for each of the reportable segments.

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 reported measure of segment profit or loss is gross profit, which is defined as revenue less cost of revenue incurred by the segment.

The Company identifies cost of revenue as the significant segment expense category included in each reportable segment.

No other segment-level expense categories are regularly provided to the CODM.

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 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 reportable segments reflect the Company’s strategy to focus on continuing to expand revenue and margin generated from its digital platform and Paid Subscribers and the relative importance of physical products to the platform, including bundles (comprised of several combinations of machines, accessories, and materials).

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.

For the years ended December 31, 2025, 2024 and 2023, upfront digital content revenue comprised approximately 2 %, 1 % and 1 %, respectively, 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.

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, 2025 and 2024, long-lived assets located outside the United States, primarily located in Malaysia and China, were $ 5.2 million and $ 5.1 million.

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

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$ 21.1 million was paid in cash and $ 3.2 million was satisfied in the form of dividend equivalents to RSU or PRSU holders.

Tariff Update

On February 20, 2026, the United States Supreme Court ruled that certain tariffs imposed under IEEPA were invalid.

The availability, timing, and amount of any related refunds remain uncertain and are subject to further legal, regulatory, and administrative developments.

In response, the U.S.

presidential administration announced its intention to rely on alternative statutory authorities to impose tariffs and implemented additional tariffs on imports, creating continued uncertainty regarding future tariff measures and their potential impact on the Company.

The Company continues to monitor and evaluate these developments and assess the potential impact on its business, financial condition, and results of operations.

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