Cricut, Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm ( BDO USA, P.C. ; Salt Lake City, Utah ; PCAOB ID# 243 ) 81 Consolidated Balance Sheets 84 Consolidated Statements of Operations and Comprehensive Income 85 Consolidated Statements of Stockholders’ Equity 86 Consolidated Statements of Cash Flows 87 Notes to Consolidated Financial Statements 89 80 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Cricut, Inc. South Jordan, Utah Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Cricut, Inc. (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 3, 2026 expressed an unqualified opinion thereon. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. 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 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. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (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 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 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. At December 31, 2025, the Company had inventories of $113.5 million, net of $29.3 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 81 Table of Contents 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: • 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. We have served as the Company's auditor since 2012. Salt Lake City, Utah March 3, 2026 82 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Cricut, Inc. South Jordan, Utah Opinion on Internal Control over Financial Reporting We have audited Cricut, Inc.’s (the “Company’s”) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated March 3, 2026 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ BDO USA, P.C. Salt Lake City, Utah March 3, 2026 83 Table of Contents Cricut, Inc. Consolidated Balance Sheets (in thousands, except share and per share amounts) As of December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 256,216 $ 232,140 Marketable securities 19,434 104,774 Accounts receivable, net 92,011 101,980 Inventories 102,664 115,255 Prepaid expenses and other current assets 29,266 26,065 Total current assets 499,591 580,214 Property and equipment, net 40,260 37,546 Operating lease right-of-use assets 10,880 13,958 Deferred tax assets 13,210 39,186 Other assets 16,865 22,131 Total assets $ 580,806 $ 693,035 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 71,553 $ 53,373 Accrued expenses and other current liabilities 71,146 76,274 Deferred revenue, current portion 50,409 45,427 Operating lease liabilities, current portion 3,606 3,899 Dividends payable, current portion 24,361 24,401 Total current liabilities 221,075 203,374 Operating lease liabilities, net of current portion 8,018 11,310 Deferred revenue, net of current portion 2,872 2,826 Other non-current liabilities 5,280 8,764 Total liabilities 237,245 226,274 Commitments and contingencies (Note 12) Stockholders’ equity: Preferred stock, par value $ 0.001 per share, 100,000,000 shares authorized, and no shares issued and outstanding as of December 31, 2025 and December 31, 2024. — — Common stock, par value $ 0.001 per share, 1,250,000,000 shares authorized as of December 31, 2025, 211,336,284 and 213,295,922 shares issued and outstanding as of December 31, 2025 and 2024, respectively. 211 213 Additional paid-in capital 339,224 466,554 Retained earnings 3,960 — Accumulated other comprehensive income (loss) 166 ( 6 ) Total stockholders’ equity 343,561 466,761 Total liabilities and stockholders’ equity $ 580,806 $ 693,035 See accompanying notes to these consolidated financial statements. 84 Table of Contents Cricut, Inc. Consolidated Statements of Operations and Comprehensive Income (in thousands, except share and per share amounts) Year Ended December 31, 2025 2024 2023 Revenue: Platform $ 327,399 $ 312,976 $ 309,012 Products 381,381 399,562 456,135 Total revenue 708,780 712,538 765,147 Cost of revenue: Platform 35,990 37,288 32,804 Products 282,359 322,462 389,050 Total cost of revenue 318,349 359,750 421,854 Gross profit 390,431 352,788 343,293 Operating expenses: Research and development 66,522 60,399 65,048 Sales and marketing 159,412 143,294 123,169 General and administrative 68,464 72,985 85,091 Total operating expenses 294,398 276,678 273,308 Income from operations 96,033 76,110 69,985 Other income (expense): Interest income 11,389 11,016 7,976 Interest expense ( 567 ) ( 326 ) ( 323 ) Other income 1,038 2,077 2,145 Total other income, net 11,860 12,767 9,798 Income before provision for income taxes 107,893 88,877 79,783 Provision for income taxes 31,188 26,047 26,147 Net income $ 76,705 $ 62,830 $ 53,636 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, net of tax 423 ( 147 ) 41 Comprehensive income $ 76,877 $ 62,547 $ 54,388 Earnings per share, basic $ 0.36 $ 0.29 $ 0.25 Earnings per share, diluted $ 0.35 $ 0.29 $ 0.24 Weighted-average common shares outstanding, basic 215,183,706 215,105,815 216,892,525 Weighted-average common shares outstanding, diluted 217,309,035 215,645,506 219,722,063 See accompanying notes to these consolidated financial statements. 85 Table of Contents Cricut, Inc. Consolidated Statements of Stockholders’ Equity (in thousands, except share amounts) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Shares Amount Balance as of December 31, 2022 219,656,587 $ 220 $ 672,990 $ — $ ( 475 ) $ 672,735 Net Income — — — 53,636 — 53,636 Issuance of common stock upon vesting or exercise of stock-based awards, net of withholding tax 1,125,568 1 ( 6,853 ) — — ( 6,852 ) Forfeiture of unvested common stock and dividend equivalents ( 317,549 ) — 403 — — 403 Repurchases of common stock ( 2,548,893 ) ( 3 ) ( 20,329 ) — — ( 20,332 ) Dividends declared and dividend equivalents issued — — ( 190,333 ) ( 25,122 ) — ( 215,455 ) Stock-based compensation — — 49,986 — — 49,986 Other comprehensive income — — — — 752 752 Balance as of December 31, 2023 217,915,713 $ 218 $ 505,864 $ 28,514 $ 277 $ 534,873 Net income — — — 62,830 — 62,830 Issuance of common stock upon vesting or exercise of stock-based awards, net of withholding tax 1,720,088 2 ( 7,982 ) — — ( 7,980 ) Forfeiture of unvested common stock and dividend equivalents ( 92,704 ) — 132 — — 132 Repurchases of common stock ( 6,247,175 ) ( 7 ) ( 38,486 ) — — ( 38,493 ) Dividends declared and dividend equivalents issued — — ( 40,834 ) ( 91,344 ) — ( 132,178 ) Stock-based compensation — — 47,860 — — 47,860 Other comprehensive loss — — — — ( 283 ) ( 283 ) Balance as of December 31, 2024 213,295,922 $ 213 $ 466,554 $ — $ ( 6 ) $ 466,761 Net income — — — 76,705 — $ 76,705 Issuance of common stock upon vesting or exercise of stock-based awards, net of withholding tax 2,618,255 2 ( 10,396 ) — — $ ( 10,394 ) Repurchases of common stock ( 4,577,893 ) ( 4 ) ( 24,744 ) — — $ ( 24,748 ) Dividends declared and dividend equivalents issued — — ( 129,304 ) ( 72,745 ) — $ ( 202,049 ) Stock-based compensation — — 37,114 — — $ 37,114 Other comprehensive income — — — — 172 $ 172 Balance as of December 31, 2025 211,336,284 $ 211 $ 339,224 $ 3,960 $ 166 $ 343,561 See accompanying notes to these consolidated financial statements. 86 Table of Contents Cricut, Inc. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income $ 76,705 $ 62,830 $ 53,636 Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: Depreciation and amortization (including amortization of debt issuance costs) 24,439 29,006 30,039 Bad debt expense/(recoveries, net) ( 1,695 ) 3,285 1,720 Impairments 642 486 9,953 Stock-based compensation 34,791 45,067 47,326 Deferred income tax 26,117 ( 4,378 ) ( 11,238 ) Non-cash lease expense 3,460 4,811 4,987 Provision for inventory obsolescence, net ( 19,706 ) ( 5,401 ) 26,330 Unrealized foreign currency (gain) / loss ( 1,077 ) 1,047 88 Other ( 714 ) ( 1,816 ) ( 2,143 ) Changes in operating assets and liabilities: Accounts receivable 12,618 4,888 23,500 Inventories 41,161 149,965 78,376 Prepaid expenses and other current assets ( 2,429 ) ( 7,221 ) 4,204 Other assets ( 3,223 ) ( 1,119 ) 869 Accounts payable 16,854 ( 23,120 ) 13,535 Accrued expenses, other current liabilities and other non-current liabilities ( 8,774 ) 6,985 7,761 Operating lease liabilities ( 3,968 ) ( 5,365 ) ( 5,423 ) Deferred revenue 5,029 5,018 4,577 Net cash and cash equivalents provided by operating activities 200,230 264,968 288,097 Cash flows from investing activities: Purchase of marketable securities — ( 110,521 ) ( 63,451 ) Proceeds from maturities of marketable securities 85,074 110,527 38,390 Purchases of property and equipment, including capitalized software development costs ( 24,417 ) ( 18,334 ) ( 23,717 ) Net cash and cash equivalents provided by (used in) investing activities 60,657 ( 18,328 ) ( 48,778 ) Cash flows from financing activities: Repurchases of common stock ( 24,748 ) ( 38,493 ) ( 20,332 ) Proceeds from exercise of stock options — — 383 Employee tax withholding payments on stock-based awards ( 10,594 ) ( 7,970 ) ( 8,106 ) Cash dividend ( 202,103 ) ( 109,972 ) ( 294,130 ) 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 Net increase (decrease) in cash and cash equivalents 24,076 89,953 ( 82,756 ) Cash and cash equivalents at beginning of period 232,140 142,187 224,943 Cash and cash equivalents at end of period $ 256,216 $ 232,140 $ 142,187 Supplemental disclosures of cash flow information: Cash paid during the period for income taxes $ 15,349 $ 43,596 $ 24,072 See accompanying notes to these consolidated financial statements. 87 Table of Contents Cricut, Inc. Consolidated Statements of Cash Flows (continued) (in thousands) Year Ended December 31, 2025 2024 2023 Supplemental disclosures of non-cash investing and financing activities: Right-of-use assets obtained in exchange for new operating lease liabilities $ 371 $ 6,417 $ 280 Property and equipment included in accounts payable, accrued expenses and other current liabilities $ 3,460 $ 2,050 $ 2,824 Tax withholdings on stock-based awards included in accrued expenses and other current liabilities $ 652 $ 463 $ 451 Stock-based compensation capitalized for software development costs $ 1,634 $ 1,509 $ 1,960 Dividends declared but unpaid $ 24,361 $ 24,413 $ 2,342 See accompanying notes to these consolidated financial statements. 88 Table of Contents Cricut, Inc. Notes to Consolidated Financial Statements 1. Description of Business and Basis of Presentation Nature of Business Cricut, Inc. (“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 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 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. The Company organizes its business into the following two reportable segments: Platform and Products. See Note 16 for further discussion of the Company’s segment reporting structure. Basis of Presentation and Consolidation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of Cricut, Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. For revenue recognition, examples of estimates and judgments include: determining the nature and timing of satisfaction of performance obligations, determining the standalone selling price (“SSP”) of performance obligations, estimating variable consideration such as customer rebates and product returns. 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. 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. Actual results could differ from these estimates. Foreign Currency Transactions The Company translates assets and liabilities of foreign subsidiaries from functional currencies into United States dollars (“USD”) at exchange rates in effect at the balance sheet dates, and related revenues and expenses are translated into USD at average exchange rates in effect during each period. Net foreign currency gains and losses resulting from the translation of assets and liabilities of foreign operations into USD are reported as a separate component of other comprehensive income in the consolidated statements of comprehensive income. Realized and unrealized foreign currency transaction gains and losses included in net income are recorded primarily within general and administrative expenses. 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. 89 Table of Contents Comprehensive Income Comprehensive income consists of two components: net income and other comprehensive income (loss). 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 USD as their functional currency. Cash and 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. The Company also classifies amounts in transit from payment processors for credit card and debit card transactions as cash equivalents. Marketable Securities The Company designates investments in debt securities as available-for-sale. Available-for-sale debt securities with original maturities of three months or less from the date of purchase are classified within cash and cash equivalents. Available-for-sale debt securities with original maturities longer than three months are available to fund current operations and are classified as marketable securities, within current assets on the consolidated balance sheets. Available-for-sale debt securities are reported at fair value with the related unrealized gains and losses included in accumulated other comprehensive income (loss), a component of stockholders’ equity, net of tax. Realized gains and losses on the sale of marketable securities are determined using the average cost method on a first-in, first-out basis and recorded in total other income (expense), net in the consolidated statements of operations and comprehensive income. The available-for-sale debt securities are subject to a periodic impairment review. For investments in an unrealized loss position, the Company writes down the amortized cost basis of the investment if it is more likely than not that the Company will be required or will intend to sell the investment before recovery of its amortized cost basis. For investments not likely to be sold before recovery of the amortized cost basis, the Company determines whether a credit loss exists by considering information about the collectability of the instrument, current market conditions, and reasonable and supportable forecasts of economic conditions. The Company recognizes an allowance for credit losses up to the amount of the unrealized loss when appropriate. Allowances for credit losses and write-downs are recognized in total other income (expense), net, and unrealized losses not related to credit losses are recognized in accumulated other comprehensive income (loss). There are no allowances for credit losses recorded for the periods presented. As of December 31, 2025 and 2024, 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 receivable. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. As of January 1, 2024, the Company had an accounts receivable balance of $ 111.2 million. Accounts receivable consist of the following: December 31, 2025 2024 (in thousands) Trade accounts receivable $ 82,125 $ 90,665 Credit card and other receivables 11,614 13,932 Less: allowance for credit losses ( 1,728 ) ( 2,617 ) Total accounts receivable, net $ 92,011 $ 101,980 90 Table of Contents The following table summarizes changes in the allowance for credit losses: December 31, 2025 2024 (in thousands) Beginning balance $ ( 2,617 ) $ ( 1,950 ) 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 ) Concentration of Credit Risk The Company maintains cash and cash equivalents in deposit accounts at financial institutions that, at times, may significantly exceed federally insured limits. Historically, the Company has not experienced any losses related to such accounts. The Company’s non-interest bearing cash balances at December 31, 2025 and 2024 were fully insured up to $250,000 per depositor at each financial institution. Balances held at the institutions may significantly exceed federally insured limits. Financial instruments, which potentially subject the Company to concentrations of credit risk, include trade receivables. In the normal course of business, the Company provides credit terms to its customers. Accordingly, the Company performs ongoing credit evaluations of its customers, generally does not require collateral and considers the credit risk profile of the customer from which the receivable is due in further evaluating collection risk. The Company maintains allowances for possible losses which, when realized, have been within the range of management’s expectations. If one or more of the Company’s significant customers were to become insolvent or were otherwise unable to pay for product purchased, it would have a material adverse effect on the Company’s financial condition and results of consolidated operations. Customers that accounted for 10% or greater of accounts receivable, net as of December 31, 2025 and 2024 were as follows: December 31, 2025 2024 Customer A 23 % 25 % Customer B 15 % 16 % Customer C 15 % 12 % As of December 31, 2025, 2024 and 2023, no customers accounted for more than 10% of revenue. Supplier Concentration The Company relies on third parties for the supply and manufacture of its products, as well as third-party logistics providers. In instances where these parties fail to perform their obligations, the Company may be unable to find alternative suppliers or satisfactorily deliver its products to its customers on time, if at all. Substantially all of the Company’s products are manufactured by outsourcing partners that are located primarily in Asia. We rely on single source, or a small number of suppliers. For the years ended December 31, 2025, 2024, and 2023, the Company’s top two vendors accounted for approximately 66 %, 69 %, and 59 % of total finished goods purchases, respectively. Inventories Inventories (current and non-current), which consist of finished goods and raw materials, are valued at the lower of average cost or net realizable value. 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 91 Table of Contents 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. Once established, the original cost of the inventory less the related inventory reserve represents the new cost basis of such products. 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. 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. 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. 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. We classify such raw materials that we do not expect to consume within our normal operating cycle as non-current within other assets. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization. Major additions and improvements are capitalized, while minor repairs and maintenance costs are expensed when incurred. Manufacturing tools include tools and molds used in the production process. 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 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. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the related assets. The Company uses the following estimated useful lives: Computer software, software development costs and equipment 3 - 5 years Furniture and fixtures 5 - 7 years Manufacturing tools and equipment 3 - 5 years Leasehold improvements Shorter of lease term or remaining life of the asset Cloud Computing Arrangement Implementation Costs The Company incurs costs to implement cloud computing arrangements that are hosted by third-party vendors. 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 and comprehensive income. To date, these costs primarily relate to new website hosting services. During the years ended December 31, 2025, 2024, and 2023, the Company recorded amortization expense of $ 0.3 million, $ 0.4 million, and $ 1.0 million respectively, for these implementation costs. Gross capitalized costs were $ 4.6 million and $ 3.7 million as of December 31, 2025 and 2024, respectively, with accumulated amortization of $ 2.5 million and $ 2.2 million, respectively. Capitalized costs are reported as a component of other assets on the Company's consolidated balance sheets. Leases The Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. 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 92 Table of Contents 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. The Company gives consideration to its credit risk, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental borrowing rates. The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. 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. The Company’s office leases typically include non-lease components such as common-area maintenance costs. The Company has also elected to not apply the recognition requirement to any leases within its existing classes of assets with a term of 12 months or less. Legal Contingencies Liabilities for legal contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. If a loss is reasonably possible and the loss or range of loss can be reasonably estimated, the Company discloses the possible loss or states that such an estimate cannot be made. See Note 12. Debt Issuance Costs Costs incurred and paid to the lender or third parties for the revolver credit facility are recorded as other assets and amortized over the term of the revolver using the straight-line method. Impairment of Long-lived Assets The Company assesses potential impairments to its long-lived assets, including intangible assets subject to amortization, on an annual basis or when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. The Company regularly evaluates whether events or circumstances have occurred that indicate possible impairment and relies on a number of factors, including results of operations, business plans, economic projections and anticipated future cash flows. An impairment loss is recognized when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. 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, 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. 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, 2025, and 2024, 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 The Company measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. 93 Table of Contents Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. Fair value is affected by a number of factors, including the type of asset or liability, the characteristics specific to the asset or liability and the state of the marketplace including the existence and transparency of transactions between market participants. The Company estimates fair value for the assets and liabilities measured and reported at fair value on a recurring or non-recurring basis by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. • Level I – Quoted prices are available in active markets for identical assets and liabilities as of the reporting date. • Level II – Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable, such as interest rate and yield curves and market-corroborated inputs). Pricing inputs are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. • Level III – Pricing inputs are unobservable for the assets and liabilities and includes situations where there is little, if any, market activity for the assets and liabilities. The inputs into the determination of fair value require significant management judgment or estimation. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company’s non-financial assets and liabilities, which include intangible assets and property and equipment, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur such that a non-financial instrument is required to be evaluated for impairment, based upon a comparison of the non-financial instrument’s fair value to its carrying value, an impairment is recorded to reduce the carrying value to the fair value, if the carrying value exceeds the fair value. The inputs for fair value calculations of intangible assets and property and equipment, are based on Level 3 inputs as data used for such fair value calculations would be based on discounted cash flows that are not observable from the market, directly or indirectly. The key variables that drive the discounted cash flow analysis are estimated revenue growth rates, levels of profitability, the terminal value growth rate assumptions and the weighted average cost of capital rate applied, among others. Money market funds are highly liquid investments and are actively traded. The pricing information for these assets is readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy. Marketable securities which include U.S. Treasury securities are valued using observable inputs from similar assets, or from observable data in markets that are not active; these assets are classified as Level 2 of the fair value hierarchy. There were no liabilities measured at fair value on a recurring basis as of December 31, 2025 and December 31, 2024. Earnings Per Share Earnings per share is computed using the two-class method required for multiple classes of common stock and participating securities. The rights, including the liquidation and dividend rights and sharing of losses, of the Class A common stock and Class B common stock are identical, other than voting rights. As the liquidation and dividend rights and sharing of profits are identical, the undistributed earnings are allocated on a proportionate basis and the resulting net income per share will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis. Basic earnings per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted earnings per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential shares of common stock outstanding during the period. 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. 94 Table of Contents 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, Design Space, and third-party supported applications. The Company determines revenue recognition through the following steps: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, the Company satisfies a performance obligation. Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Revenue is recorded at the net sales price, which includes estimates of variable consideration such as product returns, volume rebates and customer rebates or discounts. The estimates of variable consideration are based on historical return experience, historical and projected sales data and current contract terms. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenue. The Company accounts for shipping and handling activities performed after a customer obtains control of the goods as activities to fulfill the promise to transfer the good. All incremental costs of obtaining a contract with a customer are expensed as incurred if the expected amortization period of the asset that would have been recognized is one year or less. The Company does not have any material contract cost assets. 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. Platform 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. Products 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 95 Table of Contents 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 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. Payment for sale of products online through the online channel at Cricut.com is collected at point of sale in advance of shipping the products. The Company’s contracts with customers for a connected machine contain multiple promises that include hardware, software, unspecified future upgrades and enhancements related to the software and access to the Company’s cloud-based services. Determining whether the hardware, software, unspecified future upgrades, enhancements and cloud-based services are considered distinct performance obligations requires significant judgment. The Company’s software used to design, cut and complete projects can be accessed offline or with the cloud-based services at no charge. When accessed with the cloud-based services, users are also able to sync projects across various devices. The connected machines are not able to function without the software, inclusive of firmware and the downloadable software. 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. 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. The Company estimates the service period since it is not contractually stated. In developing the estimated period of providing future services, the Company considers past history, plans to continue to provide services, expected technological developments, obsolescence, competition and other factors. The estimated service period may change in the future in response to competition, technology developments and the Company’s business strategy. Judgment is required to determine the SSP for each distinct performance obligation related to sales of connected machines and the allocation of the transaction price to each of those performance obligations. The Company estimates SSP for performance obligations that are not sold separately, which include the connected machines and related software, unspecified future upgrades and enhancements and cloud-based services using information that may include the range of prices for the bundle of products and services and the cost of providing the products or services plus a reasonable margin. In developing SSP estimates, the Company also considers the nature of the products and services and the expected level of future services. 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. Accessories and materials 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. Payment by traditional brick-and-mortar retail partners, including their online channels, is due under customary fixed payment terms. Payment for sale of accessories and materials through the online channel at Cricut.com is collected at point of sale in advance of shipping the products. Cost of Revenue Platform Cost of revenue related to Platform consists primarily of hosting fees, digital content costs, amortization of capitalized software development costs and software maintenance costs. Products 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. 96 Table of Contents Customer Rebates The Company recognizes revenue at the net sales price, which at times includes certain contractual discounts or estimates for variable consideration related to customer rebates with our key brick-and-mortar and online retail partners. These promotional programs are designed to enhance the sale of the Company’s products and consist of incentives to the Company’s customers. The promotional programs include advertising and product damage allowances, volume/growth and business development incentives and point-of-sale support. The Company estimates certain customer rebates using either the expected value method or most likely amount, based upon the nature of the incentive. Sales are reduced by the cost of these promotional and rebate programs and the Company records a related customer rebate liability in its consolidated balance sheets at the date of the transaction. Certain customer rebate programs are estimates at period end due to the nature of the incentives or expected and yet-to-be announced incentive programs that apply to current period revenue transactions. These estimates are based on the Company’s incentive program experience, historical and projected sales data and current contractual terms. The remaining portion of this liability is based on contractual amounts and does not require estimation. In limited cases where the customer rebate is specifically for co-operative marketing or advertising campaigns, the Company classifies these expenditures as selling and marketing expenses only if they meet the criteria of being a distinct good or service, are distinct within the context of the contract and the fair value is readily estimable. Sales Refund Liability The Company provides its customers a limited right of return with the sale of its products. The Company estimates sales returns and records reserves at the time the related sales are recorded based on historical data and current economic trends. Actual sales returns could differ from these estimates. The Company regularly assesses and adjusts the estimate of accrued sales returns by updating the return rates for actual trends and projected costs. The Company classifies the estimated sales returns as a current liability as they are expected to be paid out in less than one year using the expected-value method. The estimated sales returns are recorded as a reduction of revenue at the time of sale and recorded as a liability on the consolidated balance sheets. At the same time this is recorded, a right of recovery asset is also recorded within inventory. Changes in the reserve for sales refunds were as follows: December 31, 2025 2024 (in thousands) Balance at beginning of period $ 2,809 $ 3,267 Additions that reduced net revenue 7,486 9,202 Deductions from reserves for current year returns ( 7,925 ) ( 9,660 ) Balance at end of period $ 2,370 $ 2,809 Warranty Reserves The Company provides an assurance-type limited warranty on most of the products sold. The estimated warranty costs, which are expensed at the time of sale and included in cost of revenue, are based on the results of product testing, industry and historical trends and warranty claim rates incurred and are adjusted for any current or expected trends as appropriate. Actual warranty claim costs could differ from these estimates. The Company regularly assesses and adjusts the estimate of accrued warranty claims by updating claims rates for actual trends and projected claim costs. 97 Table of Contents Changes in the reserve for product warranties were as follows: December 31, 2025 2024 (in thousands) Balance at beginning of period $ 1,641 $ 1,812 Additions charged to cost of revenue 1,289 2,859 Repairs and replacement costs incurred ( 1,644 ) ( 3,030 ) Balance at end of period $ 1,286 $ 1,641 Income Taxes The Company uses the asset and liability method of accounting for income taxes. The Company recognizes deferred tax liabilities and assets for the expected future income tax consequences of events that have been recognized in the Company’s consolidated financial statements. As such, deferred tax assets and liabilities are determined based on temporary differences between the financial carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. On a periodic basis, the Company assesses the probability that its deferred tax assets, if any, will be recovered. 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. 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. The Company recognizes a liability for each uncertain tax position at the amount estimated to be required to settle the issues. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. For the years ended December 31, 2025, 2024 and 2023, interest or penalties related to income tax matters included in the provision for income taxes have not been material. Sales Taxes The Company is required by certain governmental authorities to collect sales taxes on certain transactions. The Company currently collects and reports on sales tax in all states in which it does business. However, the application of existing, new or revised taxes on our business, in particular, sales taxes, VAT and similar taxes would likely increase the cost of doing business online and decrease the attractiveness of selling products over the Internet. The application of these taxes on our business could also create significant increases in internal costs necessary to capture data and collect and remit taxes. There have been, and will continue to be, substantial ongoing costs associated with complying with the various indirect tax requirements in the numerous markets in which we conduct or will conduct business. The Company conducts ongoing analysis on state sales tax nexus regulations to determine where collection is necessary. The Company accounts for sales taxes as part of accrued expenses and excludes them from revenue. Stock-Based and Stock-Equivalent Compensation The Company records compensation expense for all stock-based awards granted based on the fair value of the award at the time of the grant. Stock-based compensation costs are recognized as expense over the requisite service period, which is generally the vesting period, on a straight-line basis for awards with only a service condition. The graded vesting method is used for awards that have service and other conditions. For awards subject to performance vesting conditions, expense is recognized for the awards if it is probable the performance conditions will be met. Forfeitures are accounted for as they occur. 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 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. No stock option awards were granted during the years ended 2025 or 2024. 98 Table of Contents Dividends 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 Shipping and handling revenue for orders placed by customers is recognized at the time of the sale. Shipping and handling expenses incurred by the Company related to these sales are considered fulfillment costs and reported as costs of revenue at the time of the sale. Advertising Costs The Company incurs advertising costs associated with print, digital and other related broadcast advertisements. Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2025, 2024 and 2023 was $ 59.8 million, $ 46.8 million, and $ 32.2 million respectively. Advertising costs include expenditures for shared advertising costs that the Company incurs under its co-operative advertising programs to the extent the fair value of the distinct good or service can reasonably be estimated. Research and Development (“R&D”) R&D expense consists of costs associated primarily with engineering, product development, quality assurance, service fees incurred by contracting with vendors and allocated overhead costs. R&D costs are expensed as incurred. Recently Adopted Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . This ASU establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation. They must also further disaggregate income taxes paid. Public business entities must apply the ASU’s guidance to annual periods beginning after December 15, 2024 (2025 for calendar-year-end Public business entities). The Company 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 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 99 Table of Contents 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. 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 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. 3. Revenue and Deferred Revenue Deferred revenue relates to performance obligations for which payments have been received from the customer prior to revenue recognition. 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. Contract costs consist of amounts paid to obtain contracts with customers in connection with sales of subscriptions through third-party apps. Contract costs are amortized over the subscription term. During the twelve months ended December 31, 2025, the Company capitalized $ 2.7 million of contract costs, and as of December 31, 2025 the unamortized balance was $ 1.1 million, included in prepaid and other current assets on our consolidated balance sheets. 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. The Company has recognized no contract assets for any of the periods presented. The following table summarizes the changes in the deferred revenue balance for the periods indicated: December 31, 2025 2024 2023 (in thousands) Deferred revenue, beginning of period $ 48,253 $ 43,235 $ 38,658 Recognition of revenue included in beginning of period deferred revenue ( 45,482 ) ( 40,304 ) ( 34,869 ) Revenue deferred, net of revenue recognized on contracts in the respective period 50,510 45,322 39,446 Deferred revenue, end of period $ 53,281 $ 48,253 $ 43,235 As of December 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was equal to the deferred revenue balance. The Company expects the following recognition of deferred revenue as of December 31, 2025: Year Ended December 31, 2026 2027 2028 Total (in thousands) Revenue expected to be recognized $ 50,409 $ 2,097 $ 775 $ 53,281 Revenue recognized during the years ended December 31, 2025, 2024, and 2023, related to performance obligations satisfied or partially satisfied in prior periods was $ 8.7 million, $ 5.7 million and $ 3.2 million, respectively. 100 Table of Contents The following table presents the total revenue by geography based on the ship-to address for the periods indicated: Year Ended December 31, 2025 2024 2023 (in thousands) North America $ 539,082 $ 555,052 $ 609,933 International 169,698 157,486 155,214 Total revenue $ 708,780 $ 712,538 $ 765,147 North America revenue consists of revenues from the United States and Canada. United States represents 96 %, 95 %, and 95 % of North America revenue for the years ended December 31, 2025, 2024, and 2023, respectively. The following table presents the total revenue by source for the periods indicated: Year Ended December 31, 2025 2024 2023 (in thousands) Platform $ 327,399 $ 312,976 $ 309,012 Connected machines 192,444 192,439 198,312 Accessories and materials 188,937 207,123 257,823 Total revenue $ 708,780 $ 712,538 $ 765,147 4. Cash, Cash Equivalents, and Financial Instruments The following table shows the Company’s cash, cash equivalents, and marketable securities by significant investment category as of December 31, 2025: As of December 31, 2025 Adjusted Cost Total Unrealized Gains Fair Value Cash and Cash Equivalents Marketable Securities (in thousands) Cash $ 194,182 $ — $ 194,182 $ 194,182 $ — Level 1: Money market funds 62,034 — 62,034 62,034 — Level 2: U.S. treasury securities 19,405 29 19,434 — 19,434 Total $ 275,621 $ 29 $ 275,650 $ 256,216 $ 19,434 101 Table of Contents The following table shows the Company’s cash, cash equivalents, and marketable securities by significant investment category as of December 31, 2024: As of December 31, 2024 Adjusted Cost Total Unrealized Gains Fair Value Cash and Cash Equivalents Marketable Securities (in thousands) Cash $ 161,248 $ — $ 161,248 $ 161,248 $ — Level 1: Money market funds 70,892 — 70,892 70,892 — Level 2: U.S. treasury securities 104,413 361 104,774 — 104,774 Total $ 336,553 $ 361 $ 336,914 $ 232,140 $ 104,774 Marketable securities held as of December 31, 2025 generally mature over the next 12 months. All securities were in an unrealized gain position as of December 31, 2025 and 2024. We determined that an allowance for credit loss was unnecessary for any of the periods presented. 5. Inventories Inventories are comprised of the following: December 31, 2025 2024 (in thousands) Raw materials $ 25,650 $ 38,652 Finished goods 117,185 144,630 Total inventories $ 142,835 $ 183,282 Less: reserves ( 29,309 ) ( 49,015 ) Total inventories, net $ 113,526 $ 134,267 Inventories current $ 102,664 $ 115,255 Inventories non-current (included in Other assets) $ 10,862 $ 19,012 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. Amounts charged to the reserve account are recorded primarily in cost of revenues. 102 Table of Contents 6. Property and Equipment The composition of property and equipment is as follows: December 31, 2025 2024 (in thousands) Computer software, software development costs and equipment $ 137,565 $ 116,939 Furniture and fixtures 1,916 1,930 Leasehold improvements 5,111 5,073 Manufacturing tools and equipment 28,877 35,723 Assets under construction 5,270 1,528 Total cost of property and equipment 178,739 161,193 Less: accumulated depreciation ( 138,479 ) ( 123,647 ) Property and equipment, net $ 40,260 $ 37,546 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. Amortization of computer software, software development costs and equipment for the years ended December 31, 2025, 2024 and 2023 was $ 19.6 million, $ 22.2 million and $ 20.1 million, respectively. Property and equipment, along with all other Company assets are pledged as collateral on the Credit Agreement (see Note 8). 7. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following: December 31, 2025 2024 (in thousands) Customer rebates $ 37,627 $ 38,756 Other accrued liabilities and other current liabilities 33,519 37,518 Total accrued expenses $ 71,146 $ 76,274 8. Revolving Credit Facility 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 provides for a five-year revolving credit facility (the “Credit Facility”) of up to $ 300.0 million, maturing on August 4, 2027. In addition, during the term of the Credit Agreement, the Company may increase the aggregate amount of the Credit Facility by up to an additional $ 150.0 million, (for maximum aggregate lender commitments of up to $ 450.0 million), subject to customary conditions under the Credit Agreement, including obtaining a consent from participating lenders (or another lender, if applicable) to such increase. The Credit Facility may be used to issue letters of credit and for other business purposes, including working capital needs. The current unused fee rate is 0.175 % on per annum basis. 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 103 Table of Contents 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. The Credit Agreement is collateralized by substantially all of the Company’s assets and contains affirmative and negative covenants, representations and warranties, events of default and other terms customary for loans of this nature. In particular, the Credit Agreement will not permit the leverage ratio to be greater than 3.0 to 1.0, measured on the last day of any fiscal quarter. In addition, the Credit Agreement will not permit the interest coverage ratio to be less than 3.0 to 1.0, for any period of four consecutive quarters, measured on the last day of any fiscal quarter. Management has determined that the Company was in compliance with all financial and non-financial debt covenants as of December 31, 2025. As of December 31, 2025, no amount was outstanding under the Credit Agreement and available borrowings were $ 300.0 million. Generally, borrowings under the Credit Agreement bear interest at a rate based on an alternative base rate (“ABR”), plus, in each case, an applicable margin. The applicable margin will range from (a) borrowings bearing interest at the ABR 2.00 %, and (b) borrowings bearing interest at the Adjusted Term Secured Overnight Financing Rate, the Adjusted Australian Dollar Rate, the Adjusted Canadian Dollar Offered Rate or the Adjusted New Zealand Dollar Rate, as applicable for the interest period in effect for such borrowing plus the applicable rate. 9. Income Taxes The reconciliation of income tax computed at the U.S. federal statutory tax rate to our effective income tax rate is as follows: Year Ended December 31, (in thousands) 2025 2024 2023 Amount Percent Amount Percent Amount Percent U.S. 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 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 — Tax credits 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 Other ( 170 ) ( 0.2 ) 264 0.3 56 0.1 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. 104 Table of Contents Significant components of the Company’s net deferred tax assets are comprised of the following: December 31, 2025 2024 (in thousands) Deferred tax assets: Inventories $ 7,731 $ 11,457 Lease liability 2,807 3,633 Accounts receivable 422 642 Sales refund liability 579 689 Deferred revenue 701 693 Stock-based compensation 4,919 6,152 Amortization 133 164 Capitalized research expenditures 2,306 22,291 Net operating loss carryforwards 153 130 Capital loss carryforwards 61 102 Tax credits 3,695 3,338 Other ( 166 ) 879 Total deferred tax assets 23,341 50,170 Deferred tax liabilities: Depreciation and amortization ( 7,505 ) ( 7,658 ) ROU lease asset ( 2,626 ) ( 3,326 ) Total deferred tax liabilities ( 10,131 ) ( 10,984 ) Net deferred tax assets $ 13,210 $ 39,186 Year Ended December 31, 2025 2024 2023 (in thousands) Current: Federal $ 3,169 $ 24,854 $ 32,140 State 1,477 5,108 4,695 Foreign 485 403 549 Total current 5,131 30,365 37,384 Deferred: Federal 22,738 ( 3,692 ) ( 9,561 ) State 3,341 ( 581 ) ( 1,713 ) Foreign ( 22 ) ( 45 ) 37 Total deferred 26,057 ( 4,318 ) ( 11,237 ) Income tax provision $ 31,188 $ 26,047 $ 26,147 105 Table of Contents 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 State 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. The Company establishes valuation allowances if it is more likely than not that deferred tax assets will not be realized. The Company believes that it will generate sufficient future taxable income to realize the net operating loss deferred tax asset and other net deferred tax assets recorded in our consolidated financial statements. Accordingly, the Company has not recorded a valuation allowance against net deferred tax assets for the years ended December 31, 2025 and 2024. 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. 106 Table of Contents 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. The total balance of unrecognized gross tax benefits for the years ended December 31, 2025 and 2024, 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: Year Ended December 31, 2025 2024 2023 (in thousands) Unrecognized tax benefits at beginning of year $ 6,376 $ 7,148 $ 3,988 Reductions based on prior year tax positions — — ( 159 ) Additions based on prior year tax provisions 286 159 2,691 Additions based on current year tax provisions 951 921 996 Reductions due to tax authorities’ settlements — ( 98 ) — Reductions due to expirations of statutes of limitation ( 1,873 ) ( 1,754 ) ( 368 ) Unrecognized tax benefits at end of year $ 5,740 $ 6,376 $ 7,148 The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. 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. 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. 10. Capital Structure 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. As of December 31, 2025, the Company had 1,000,000,000 shares of Class A common stock and 250,000,000 shares of Class B common stock authorized and 55,397,876 shares of Class A common stock and 155,938,408 shares of Class B common stock issued and outstanding. Each share 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. Stock Repurchase Program 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. Dividends 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. 107 Table of Contents 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. 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 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. 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 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. As part of the dividend, and pursuant to the underlying award agreements, holders of RSU and PRSUs received a dividend equivalent of $ 0.35 per unit in the form of additional RSUs or PRSUs subject to the same vesting conditions as the original awards. The aggregate dividend of $ 81.4 million was to be satisfied in cash of $ 76.9 million payable to holders of Class A and Class B common stock with the remaining $ 4.5 million satisfied on the payment date in the form of dividend equivalents to RSU or PRSU holders prior to any subsequent forfeitures. During the twelve months ended December 31, 2025, an aggregate of $ 202.1 million was paid in cash, and $ 26.3 million was satisfied in the form of dividend equivalents to RSU or PRSU holders. 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. 11. Stock-Based Compensation Stock-based Compensation Cost The following table shows the stock-based compensation cost by award type for the periods indicated: 108 Table of Contents Year Ended December 31, 2025 2024 2023 (in thousands) Equity classified awards Restricted stock units $ 36,687 $ 43,421 $ 41,094 Stock options — 772 2,388 Class B common stock 427 3,667 6,504 Liability classified awards 26 40 44 Total stock-based compensation $ 37,140 $ 47,900 $ 50,030 The following table sets forth the total stock-based compensation cost included in the Company’s consolidated statements of operations and comprehensive income or capitalized to assets for the periods indicated: Year Ended December 31, 2025 2024 2023 (in thousands) Cost of revenue Platform 1,052 1,192 926 Products 46 712 1,505 Total cost of revenue 1,098 1,904 2,431 Research and development 12,047 15,620 18,169 Sales and marketing 10,065 12,825 12,740 General and administrative 11,581 14,718 13,986 Total stock-based compensation expense $ 34,791 $ 45,067 $ 47,326 Capitalized for software development costs 1,634 1,509 1,960 Capitalized to inventory 715 1,324 744 Total stock-based compensation $ 37,140 $ 47,900 $ 50,030 As of December 31, 2025, there was $ 50.7 million of unrecognized stock-based compensation cost related to service-based awards, which is expected to be recognized over a weighted-average period of 2.4 years. The total unrecognized compensation expense related to unvested PRSUs that are not probable of vesting was $ 94.0 million as of December 31, 2025. The tax benefit from stock-based compensation cost during the years ended December 31, 2025, 2024 and 2023, was $ 7.8 million, $ 9.2 million, and $ 9.3 million, respectively. 2021 Equity Incentive Plan In March 2021, the Company’s 2021 Equity Incentive Plan became effective. 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. Dividend equivalents are forfeited if the underlying award does not vest. As of December 31, 2025, 47,914,984 shares of Class A common stock were reserved for issuance under this plan including shares reserved for previously granted awards discussed below as well as shares reserved for issuance of future awards under the plan. 109 Table of Contents A summary of the Company’s RSU activity under the 2021 Equity Incentive Plan is as follows: Number of RSUs Weighted- Average Grant Date Fair Value (per share) Outstanding at December 31, 2024 11,251,503 $ 9.86 Granted 5,872,136 $ 5.28 Dividend equivalent grants 1,298,567 $ — Vested ( 4,348,993 ) $ 12.76 Forfeited/cancelled ( 1,027,702 ) $ 8.07 Outstanding at December 31, 2025 13,045,511 $ 7.13 The total fair value of RSUs vested as of the vesting dates during the years ended December 31, 2025, 2024 and 2023, was $ 26.1 million, $ 19.0 million, and $ 17.1 million, respectively. 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: Number of PRSUs (a) Weighted- Average Grant Date Fair Value (per share) Outstanding at December 31, 2024 17,485,433 $ 13.12 Granted 240,000 $ 6.28 Dividend equivalent grants 2,872,274 $ — Forfeited / cancelled ( 1,612,395 ) $ 12.10 Outstanding at December 31, 2025 18,985,312 $ 13.13 a. Represents the maximum number of PRSUs assuming all performance targets are achieved. The expense recognized each period for these PRSUs is primarily dependent upon the Company’s estimate of the probability of achieving the performance targets during the performance period. At December 31, 2025, the Company determined it was not probable any performance conditions would be achieved, so no stock-based compensation has been recorded for these PRSUs during the years ended December 31, 2025, 2024 and 2023. Options under the 2021 Equity Incentive Plan have a contractual term of 10 years. The exercise price of an incentive stock option and non-qualified stock option shall not be less than 100 % of the fair market value of the shares on the date of grant. 110 Table of Contents A summary of the Company’s stock option activity under the 2021 Equity Incentive Plan is as follows: Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2024 2,750,078 $ 18.25 2.2 $ — Forfeited/cancelled ( 49,167 ) 17.65 Outstanding and expected to vest at December 31, 2025 2,700,911 $ 17.50 1.1 $ — Vested and exercisable at December 31, 2025 2,700,911 $ 17.50 1.1 $ — For the years ended December 31, 2025, 2024 and 2023, no options were granted and the total intrinsic value of options exercised was immaterial. 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, 2025 and 2024, 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 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, 2025 is as follows: Number of Unvested Shares Weighted- Average Grant Date Fair Value (per share) Outstanding at December 31, 2024 113,578 $ 20.00 Vested ( 107,425 ) $ 20.00 Outstanding at December 31, 2025 6,153 $ 20.00 The total fair value of Class B common stock vested as of the vesting dates during the years ended December 31, 2025, 2024 and 2023, was $ 0.8 million, $ 7.8 million, and $ 27.1 million, respectively. 111 Table of Contents Options to Purchase Class B Common Stock 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: Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2024 197,425 $ 7.29 0.9 $ — Forfeited / Cancelled ( 197,425 ) $ 6.58 Outstanding at December 31, 2025 — $ — 0.0 $ — 2021 Employee Stock Purchase Plan In March 2021, the Company’s 2021 Employee Stock Purchase Plan (“2021 ESPP”) became effective. Subject to any limitations contained therein, the 2021 ESPP allows eligible employees to contribute, through payroll deductions, up to 15 % of their eligible compensation to purchase the Company’s Class A common stock at a discounted price per share. As of December 31, 2025, 10,602,602 shares of our Class A common stock were available for sale under the 2021 ESPP. No offerings have been authorized to date by the administrator under the 2021 ESPP. 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. 12. Commitments and Contingencies Litigation The Company is subject to certain outside claims and litigation, as well as regulatory disputes, audits, government inquiries and other proceedings, arising in the ordinary course of business. Management is not aware of any contingencies which it believes will have a material effect on its financial position, results of operations or liquidity. Self-Insurance Liabilities 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. The liabilities include amounts for actual claims and claims incurred but not reported. Actual experience, including claim frequency and severity as well as health care inflation, could result in actual liabilities being more or less than the amounts currently recorded. As of December 31, 2025 and 2024 we have accrued $ 0.6 million and $ 0.5 million, respectively, for employee medical claims. Such amounts are included in accrued expenses and other current liabilities on our consolidated balance sheets. 13. Leases The Company leases office space with original lease terms ranging from 1 to 6 years. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. 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 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 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, 2025, 2024 and 2023, the Company incurred operating lease costs of $ 4.1 112 Table of Contents 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. As of December 31, 2025, the maturities of the Company's operating lease liabilities were as follows: Operating Leases (in thousands) 2026 $ 4,131 2027 2,869 2028 4,023 2029 1,694 Total lease payments $ 12,717 Less: imputed interest $ ( 1,093 ) Present value of operating lease liabilities $ 11,624 Operating lease liabilities, current $ 3,606 Operating lease liabilities, non-current $ 8,018 The weighted average remaining operating lease term and the weighted average discount rate used to determine the operating lease liability were as follows: As of December 31, 2025 As of December 31, 2024 Weighted-average remaining lease term of operating leases 3.3 years 4.2 years Weighted-average discount rate of operating leases 5.4 % 5.3 % 14. Employee Benefit Plan The Company sponsors a 401(k) plan for the benefit of its employees who have attained at least 18 years of age. 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 $ 2.7 million, $ 2.4 million, and $ 2.5 million during the years ended December 31, 2025, 2024 and 2023, respectively. 113 Table of Contents 15. Net Income Per Share The computation of net income per share is as follows: Year Ended December 31, 2025 2024 2023 (in thousands, except share and per share amounts) Basic earnings per share: Net income $ 76,705 $ 62,830 $ 53,636 Shares used in computation: Weighted-average common shares outstanding, basic 215,183,706 215,105,815 216,892,525 Earnings per share, basic $ 0.36 $ 0.29 $ 0.25 Diluted earnings per share: Net income $ 76,705 $ 62,830 $ 53,636 Shares used in computation: Weighted-average common shares outstanding, basic 215,183,706 215,105,815 216,892,525 Weighted-average effect of potentially dilutive securities: Unvested common stock subject to forfeiture 9,265 285,686 1,840,180 Employee stock options — — 48,889 Restricted stock units 2,116,064 254,005 940,469 Diluted weighted-average common shares outstanding 217,309,035 215,645,506 219,722,063 Diluted earnings per share $ 0.35 $ 0.29 $ 0.24 The following potentially dilutive shares were excluded from the computation of diluted earnings per share for the periods presented because including them would have had an anti-dilutive effect: Year Ended December 31, 2025 2024 2023 Employee stock options 2,700,911 2,947,503 2,999,085 Restricted stock units 3,089,647 5,909,923 4,435,957 Unvested Class B common stock subject to forfeiture 6,153 113,578 415,402 16. Segment Information 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 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 uses this information to make budgeting and forecasting decisions, including hiring and compensation of certain employees, and allocating financial or capital resources. 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, 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 114 Table of Contents 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: Year Ended December 31, 2025 2024 2023 (in thousands) Platform: Revenue $ 327,399 $ 312,976 $ 309,012 Cost of revenue 35,990 37,288 32,804 Gross profit $ 291,409 $ 275,688 $ 276,208 Products: Revenue $ 381,381 $ 399,562 $ 456,135 Cost of revenue 282,359 322,462 389,050 Gross profit $ 99,022 $ 77,100 $ 67,085 Consolidated: Revenue $ 708,780 $ 712,538 $ 765,147 Cost of revenue 318,349 359,750 421,854 Gross profit $ 390,431 $ 352,788 $ 343,293 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. 17. Subsequent Events Dividends On January 20, 2026, 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 6, 2025. $ 21.1 million was paid in cash and $ 3.2 million was satisfied in the form of dividend equivalents to RSU or PRSU holders. U.S. 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. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures None. 115 Table of Contents