Cricut Inc.
03/04/2026 | Press release | Distributed by Public on 03/04/2026 05:02
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Annual Report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from these forward-looking statements as a result of many factors, including those discussed in the sections titled "Risk Factors" and "Note Regarding Forward-Looking Statements."
A discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K filed on March 5, 2025, which is hereby incorporated by reference herein.
Overview of Our Business and History
At Cricut, our mission is to help people lead creative lives. We have designed and built a creativity platform that enables our engaged and loyal community of nearly 5.9 million Active Users to turn ideas into professional-looking handmade goods. We define "Active User" as a registered user of at least one registered connected machine who has utilized their connected machine to create a project in the last 365 days. With our highly versatile Design Space Platform and our products, including our connected machines and accessories and materials, our users create everything from personalized birthday cards, mugs and T-shirts, to large-scale interior decorations. Our users' journeys typically begin with the purchase of a connected machine. We currently sell a portfolio of connected machines that cut, write, score and create other decorative effects using a wide variety of materials including paper, adhesive vinyl, iron-on vinyl, pens, and more. Our connected machines are designed in a variety of sizes for a wide range of uses and are available at a variety of price points and in a variety of bundles with accessories and materials, or with accessories and materials plus subscription.
Our platform integrates our design apps and connected machines, allowing our users to create and share seamlessly. Our software is cloud-based, meaning that users can access and work on their projects anywhere, at any time, across desktops or mobile devices. We enable our users to be inspired, to create and share projects with the Cricut community and to follow others doing the same. On our platform, users can find inspiration, purchase or upload content like fonts and images, design a project from scratch or find a vast array of ready-to-make projects. Users can leverage the full power of our platform by using our connected machines together with our free design apps, in-app purchases and subscription offerings to design and complete projects. All users can access a select number of free images, fonts and projects from our design apps or upload their own. In addition, we offer a wider selection of images, fonts and projects for purchase à la carte, including licensed content from partners with well-known brands and characters, like major motion picture studios. We also have two subscription offerings:
•Cricut Access: Provides 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. Cricut Access is billed monthly for $9.99 per month or annually for $95.88 per year.
•Cricut Access Premium: Includes all of the benefits of Cricut Access as well as additional discounts and preferred shipping and is billed annually for $119.88 per year.
As of December 31, 2025, we had just over 3.09 million Paid Subscribers to Cricut Access and Cricut Access Premium.
We design and develop our software and hardware products, and we work with third-party contract manufacturers to source components and finished goods and with third-party logistics companies to warehouse and distribute our products.
We sell our connected machines and accessories and materials through our brick-and-mortar and online retail partners, as well as through our website at Cricut.com. Our partners include Amazon, Hobby Lobby, HSN, Michaels, Target, Walmart and many others. We also sell our products, including subscriptions to Cricut Access and Cricut Access Premium, on Cricut.com. In 2023, 2024 and 2025, 38%, 35%, and 31% of our revenue was generated through brick-and-mortar sales, respectively. In 2023, 2024 and 2025, 62%, 65%, and 69% of our revenue was generated through online channels, respectively.
For the years ended December 31, 2023, 2024 and 2025, we generated:
•Total revenue of $765.1 million, $712.5 million and $708.8 million, respectively, representing (14)%, (7)% and (1)% year-over-year growth, respectively
•Net income of $53.6 million, $62.8 million and $76.7 million, respectively, representing (12)%, 17% and 22% year-over-year growth, respectively
Our Business Model
Our business model thrives because our products unlock creativity, which then in turn drives the engagement of our users. Our nearly 5.9 million Active Users' journeys typically begin with the purchase of a connected machine and expand across our family of products as users harness the power of our platform. Our business model is characterized by strong engagement and diversified sales across product categories. This engagement has led to rapid growth and strong profitability.
Attracting and Engaging New Users through Connected Machine Sales
Since launching our first connected machine in 2014, we have built a loyal and growing community of users that has reached substantial scale. As of December 31, 2023, 2024 and 2025, we had nearly 5.9 million, 5.9 million and nearly 5.9 million Active Users, respectively, representing 2%, (1)% and 0% year-over-year growth, respectively. See the section titled "Key Business Metrics" for the definition of Active Users. We believe we are in the early stages of our growth and that we have a significant untapped opportunity in the United States and Canada, as well as globally.
We have been able to efficiently acquire new users and drive sales of our products because of the powerful network effects of our community. To date, word-of-mouth referrals, as well as effective use of low-cost marketing channels like social media, have driven our success. In 2025, 35% of new users first heard about Cricut through friends and family. Sales and marketing expenses represented 16%, 20% and 22% of revenue in 2023, 2024 and 2025, respectively.
Once we acquire a user, we often see strong engagement with them over time. We drive engagement through a highly interactive and fulfilling product experience and the strength of our community. We continuously innovate and improve our connected machines, design apps and accessories and materials, giving our users more to create. Once they have purchased connected machines, users inspire one another to create and use more of our digital content, subscriptions and accessories and materials. In turn, we learn from our users' creativity, and may launch new products to help expand their creative horizons. We measure engagement by the number of Active Users and 90-Day Engaged Users interacting with our Platform. See the section titled "Key Business Metrics" for the definitions of Active Users and 90-Day Engaged Users and for information regarding those metrics over the last three years.
The table below shows the number of Active Users and 90-Day Engaged Users for the periods indicated.
| 2023 | 2024 | 2025 | ||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||||||||||||||||||||||
| Active Users (in Thousands) | 5,943 | 5,912 | 5,929 | 5,935 | 5,952 | 5,918 | 5,894 | 5,892 | 5,926 | 5,901 | 5,874 | 5,871 | ||||||||||||||||||||||||||
| 90-Day Engaged Users (in Thousands) | 3,710 | 3,652 | 3,641 | 3,932 | 3,527 | 3,541 | 3,532 | 3,812 | 3,372 | 3,482 | 3,419 | 3,695 | ||||||||||||||||||||||||||
Growing With Users Over Time
Many of our users choose to pay for our subscription offerings which include a subscription to images, fonts and projects as well as other member benefits, including exclusive software features and functionality, discounts, priority Cricut Member Care, and, in the case of Cricut Access Premium, preferred shipping. By subscribing to our offerings, users have access to a curated and growing design library of over 1.6 million images, thousands of templates, thousands of ready-to-make projects and over a thousand fonts. We believe that the number of Paid Subscribers is an indicator of the depth of our users' engagement. See the section titled "Key Business Metrics" for the definition of Paid Subscribers and for information regarding that metric over the last three years. As of December 31, 2025, we had just over 3.09 million Paid Subscribers, representing 4% year-over-year growth. We aim to increase the number of our users that are Paid Subscribers over time.
We review Platform ARPU as an indicator of the monetization of our Active Users. We define Platform ARPU as Platform revenue in a 12-month period divided by Active Users. Platform ARPU allows us to forecast Platform revenue over time and is an indicator of our ability to expand with users and of user engagement with our subscription offerings. See the section titled "Key Business Metrics" for the definition of Platform ARPU and for information regarding that metric over the last three years.
| 2023 | 2024 | 2025 | ||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||||||||||||||||||||||
| Paid Subscribers (in thousands) | 2,715 | 2,722 | 2,699 | 2,770 | 2,797 | 2,813 | 2,838 | 2,959 | 2,974 | 3,010 | 3,004 | 3,091 | ||||||||||||||||||||||||||
| Platform ARPU | $48.51 | $50.13 | $51.20 | $52.07 | $52.26 | $52.61 | $52.86 | $53.12 | $53.10 | $53.84 | $54.96 | $55.77 | ||||||||||||||||||||||||||
Factors Affecting Our Performance
Our financial condition and results of operations have been, and will continue to be, affected by a number of factors, including the following:
Attracting New Users and Driving Connected Machine Sales
Our growth depends in part on our ability to drive continued growth in users and connected machine sales. We believe we are in the early stages of growth in our addressable market. We have been successful in attracting new users by delivering positive product experiences and due to the powerful network effects associated with our large and loyal user community. We plan to continue to grow our number of users through word-of-mouth referrals, by investing in sales and marketing initiatives and by broadening our partnerships with new and existing brick-and-mortar and online retail partners and distributors. Our efforts to attract new users outside of the United States and Canada will require us to spend additional resources, particularly in marketing. If we cannot attract new users, our results of operations would be adversely affected.
Engaging and Expanding With our Existing Users
An important part of our success is driven by engagement of our users, as well as our ability to sell additional products to our users after their first connected machine purchase. Our users are engaged when they create with connected machines, design apps and accessories and materials. It is therefore important that users find our products intuitive and easy to use. As users create on their connected machines, they are more likely to purchase subscriptions and accessories and materials. Historically we find that our users continue to be engaged over time. As of December 31, 2025, nearly 5.9 million Active Users created on their connected machines in the last 365 days. This durable relationship is motivated by new software and products that we launch to expand the capabilities of existing connected machines as well as through the inspiration derived from our large and passionate community. If our users engage with their connected machines less over time, the overall growth in our business may slow.
Scaling our Hardware and Software Product Offerings
We have historically enjoyed strong demand for our products, both physical and digital, driving methodical growth. Our growth depends in part on our ability to design and introduce new products and enhance existing products that meet the preferences of our users. We must also carefully manage any changes to our product offerings so that we do not harm our brand or our relationships with our users. To continue to grow, we must employ the right personnel to execute our product roadmap and effectively work with third-party suppliers and manufacturers. If we fail to expand our products or maintain high quality standards in our products, our brand, business and results of operations will be adversely affected.
Managing our Supply Chain
We rely on third-party suppliers, contract manufacturers and third-party logistics partners to produce and distribute our products. Our ability to grow depends largely on the ability of these third-party companies to scale with us, provide high quality services and deliver components and finished products on time and at reasonable costs. We rely on three contract manufacturers to build our connected machines. For a limited number of our products, which collectively constitute a small portion of our revenue, a particular contract manufacturer is the sole source of the finished product. Our concentration of suppliers could lead to supply shortages, long lead times for components and supply changes. Much of our supply chain originates in Malaysia and China. We expect to pursue additional geographic diversification in our supply chain to mitigate tariffs and other supply chain challenges. We must
continue to build relationships with strong third-party suppliers, contract manufacturers and third-party logistics companies and continue to diversify our supply chain to improve operational results. We manage our inventory levels to account for the complexity of our supply chain, resulting in a variety of risks.
Driving Innovation
We focus on understanding our users and their needs. We engage with our users through our customer service channels, as well as through regularly conducted surveys, ethnographies and focus groups. Social media serves as an additional conversational channel where we learn from our users. We then seek to methodically translate these insights into elegant solutions that serve the needs of our users, including through new products and enhancements to existing products. In particular, we are continually driving innovation in our software, connected machines, design apps, accessories and materials. While all of these offerings are designed to work seamlessly with each other, they each require significantly different strengths and talents, and so we have built our research and development teams with the unique needs of each offering in mind. Improving our software, expanding the capabilities of our connected machines and subscriptions and releasing new accessories and materials will require continued investment and expenses. As a result, our reported capital expenditures and research and development expenses should be viewed in tandem to understand our investments in innovation.
Balancing Operating Discipline and Investment for Growth
We seek to balance investments for long-term growth with operating discipline and the profitability of our business. We have been net income profitable every year since 2017. See the section titled "Key Business Metrics" for information regarding our net income and net income margin over the last three years. We expect net income margin to fluctuate as a percentage of revenue in the near term and long term. We have a strong focus on the unit economics of each of our products and consistency in how we operate the business. We will continue to prioritize our investments in technology innovation including software and hardware development, content and accessories and materials. In addition, we are investing in sales and marketing and operations as appropriate to support our growth. Our expenses may also increase as we hire additional personnel and continue to attract technical talent. While we expect to continue or increase our investments on these items in the future, we cannot be certain they will result in the growth of our number of users or increase engagement with existing users.
Growing Internationally
Expanding internationally, including by entering new geographic markets and increasing our sales in markets that we have already entered, requires us to invest in sales and marketing, distribution partnerships, infrastructure and personnel. Our international growth will depend on our ability to create brand awareness, attract new users, develop retail and distribution partnerships and sell connected machines, subscriptions and accessories and materials. Our international expansion has resulted in, and will continue to result in, increased costs and is subject to a variety of risks, including content localization, multilingual customer support, potentially complex delivery logistics and compliance with foreign laws and regulations.
Seasonality
Historically, we have experienced the highest revenue levels in the fourth quarter of the year, coinciding with the holiday shopping season in the United States. For example, in 2023, 2024 and 2025, our fourth quarter represented 30%, 29% and 29% of total revenue for the year, respectively. Our promotional discounting activity is higher in the fourth quarter as well, which negatively impacts gross margin during this period. For example, gross margin in the fourth quarter of 2025 was 47%, compared to gross margin of 55% for all of 2025. Additionally, sales of accessories and materials typically rise and fall with seasonal holiday crafting periods. As we continue to grow internationally, we expect we may experience seasonality in additional markets, which may differ from the seasonality experienced in the United States.
Business Environment
Beginning in 2025, the U.S. government implemented a series of tariffs affecting a broad range of products manufactured outside the United States. Since that time, tariff measures have continued to evolve, including the imposition of additional tariffs, temporary pauses, modifications, and product or country-specific exclusions. The U.S. government has also indicated that it is engaged in, or may engage in, bilateral or multilateral negotiations that could result in further changes to applicable tariff rates, scope, or enforcement. Approximately one-half of Cricut's revenue is derived from platform, which is not subject to these tariffs. In addition, of the physical products manufactured outside the United States, approximately 20% are sold outside the United States, and therefore are
not subject to U.S. import tariffs. Notwithstanding these mitigating factors, tariffs may continue to have a significant impact on our cost structure and results of operations due to our global manufacturing footprint across multiple Asian countries. While the majority of our manufacturing currently occurs in Malaysia, we also source products from South Korea, Thailand, China, and other Asian jurisdictions, each of which may be subject to different tariff regimes, changes in trade policy, or future restrictions.
We continue to actively monitor developments in the trade, regulatory, and consumer environment and may adjust our sourcing, pricing, promotional, and operational strategies as appropriate. The combined impact of existing and potential future tariffs, shifts in sourcing strategies, pricing or promotional actions, changes in consumer demand or behavior, and other related factors could materially adversely affect our sales, margins, cash flows, and results of operations in future periods.
Key Business Metrics
In addition to the measures presented in our consolidated financial statements, we use the following key metrics to evaluate our business, measure our performance, identify trends and make strategic decisions.
| As of December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Active Users (in thousands) | 5,871 | 5,892 | 5,935 | ||||||||||||||
| 90-Day Engaged Users (in thousands) | 3,695 | 3,812 | 3,932 | ||||||||||||||
| Paid Subscribers (in thousands) | 3,091 | 2,959 | 2,770 | ||||||||||||||
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Platform ARPU | $55.77 | $53.12 | $52.07 | ||||||||||||||
Active Users
We define Active Users as registered users of at least one registered connected machine who have utilized their connected machine to create a project in the last 365 days. One user may own multiple registered connected machines but is only counted once if that user registers those connected machines by using the same email address. If possession of a connected machine is transferred to a new owner and registered by that new owner, the new owner is added to the total Active Users and the prior owner is removed from the total Active Users if the prior owner does not own any other registered connected machines. Active Users is a key indicator of the health of our business, because changes in the number of Active Users excludes non-users to better represent opportunities for us to drive additional platform and accessories and materials revenue.
90-Day Engaged Users
We define 90-Day Engaged Users as registered users of at least one registered connected machine who have utilized their connected machine to create a project in the last 90 days. One user may own multiple registered connected machines but is only counted once if that user registers those connected machines by using the same email address. If possession of a connected machine is transferred to a new owner and registered by that new owner, the new owner is added to the total 90-Day Engaged Users and the prior owner is removed from the total 90-Day Engaged Users if the prior owner does not own any other registered connected machines. 90-Day Engaged Users excludes non-users to better represent opportunities for us to drive additional platform and accessories and materials revenue.
Paid Subscribers
We define Paid Subscribers as the number of users with a subscription to Cricut Access or Cricut Access Premium, excluding cancelled, unpaid, paused, or free trial subscriptions, as of the end of a period. Paid Subscribers is a key metric to track growth in our Platform revenue and potential leverage in our gross margin.
Platform ARPU
We define Platform ARPU as Platform revenue in a 12-month period divided by Active Users. Platform ARPU allows us to forecast Platform revenue over time and is an indicator of our ability to expand with users and of user engagement with our subscription offerings.
Components of our Results of Operations
We operate and manage our business in two reportable segments: Platform and Products. We identify our reportable segments based on the information used by management to monitor performance and make operating decisions. See Note 16 to our audited consolidated financial statements included elsewhere in this filing for additional information regarding our reportable segments.
Revenue
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, templates, 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.
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 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. Products revenue is recognized at the point in time when control is transferred, which is either upon shipment or delivery to the customer in accordance with the terms of each customer contract.
Cost of Revenue
Platform
Cost of revenue related to Platform consists primarily of hosting fees, digital content costs, amortization of capitalized software development costs, software maintenance costs, and royalties. We expect our cost of revenue related to Platform as a percentage of revenue to fluctuate in the near term as we expand our content offerings, including localized content for international target markets, and decrease over time as we drive greater scale and efficiency in our business.
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. We expect our cost of revenue related to Products as a percentage of revenue to fluctuate in the near term as we continue selling through end of life machines, address global supply chain challenges and continue to invest in the growth of our business and decrease over the long term as we drive greater scale and efficiency in our business.
Operating Expenses
Research and Development
Research and development expenses consist primarily of costs associated with the development of our connected machines, software and accessories and materials, including personnel-related expenses for engineering, product development and quality assurance, as well as prototype costs, service fees incurred by contracting with vendors and allocated overhead. We expect our research and development expenses to increase in the near term as we refine our product roadmaps.
Sales and Marketing
Sales and marketing expenses consist primarily of the advertising and marketing of our products, third-party payment processing fees, personnel-related expenses, including salaries and bonuses, benefits and stock-based compensation expense, as well as customer rebates, professional services, promotional items, and allocated overhead costs. We expect our sales and marketing expenses as a percentage of revenue to fluctuate in the near term.
General and Administrative
General and administrative expenses consist of personnel-related expenses for our finance, legal, human resources and administrative personnel, including salaries and bonuses, benefits and stock-based compensation expense, as well as the costs of professional services, any allocated overhead, information technology, impairment charges of unused equipment, and other administrative expenses. We expect our general and administrative expenses as a percentage of revenue to increase in the near term as we expand our operations, invest in systems enhancements, and incur expenses required of a public company.
Other Income
Other income, net consists primarily of interest income from our investments in marketable securities, offset by interest expense associated with our debt financing arrangements and amortization of debt issuance costs.
Provision for Income Taxes
Provision for income taxes consists of income taxes in the United States and certain state and foreign jurisdictions in which we conduct business. We have not recorded a valuation allowance against our deferred tax assets as we have concluded that it is more likely than not that the deferred tax assets will be realized.
We do not record a U.S. deferred tax liability for the excess of the book basis over the tax basis of our investments in foreign corporations to the extent that the basis difference results from earnings that meet the indefinite reversal criteria. These criteria are met if the foreign subsidiary has been invested, or will invest, the undistributed earnings indefinitely. The decision as to the amount of undistributed earnings that we intend to maintain in non-U.S. subsidiaries considers items including, but not limited to, forecasts and budgets of financial needs of cash for working capital, liquidity plans, and capital improvement programs. We also evaluate our expected cash requirements in the United States. Other factors that can influence that determination are local restrictions on remittances (for example, in some countries a central bank application and approval are required in order for our local country subsidiary to pay a dividend), economic stability and asset risk. See Note 9 to our audited consolidated financial statements.
The Organization for Economic Co-operation and Development ("OECD") Pillar Two Model Rules ("Pillar Two") for a global 15% minimum tax are in the process of being adopted in a number of jurisdictions in which we operate. Pillar Two is applicable to us beginning January 1, 2024. Of the jurisdictions where Pillar Two has been adopted, the only jurisdictions where the top-up tax is applicable are Switzerland and Singapore and the estimated tax is immaterial.
The One Big Beautiful Bill Act was enacted on July 4, 2025. The Act permits taxpayers to deduct any previously unamortized domestic Section 174 research and experimental ("R&E") expenditures either entirely in the 2025 tax year or ratably over a two-year period. The Company elected to deduct the full amount of its previously unamortized Section 174 R&E expenditures in 2025. On an after-tax basis, this election resulted in an approximate $20 million reduction to deferred tax assets, which primarily accounts for the decrease in capitalized research expenditures.
Results of Operations
The following table is presented in thousands:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| 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(1)
|
35,990 | 37,288 | 32,804 | ||||||||||||||
|
Products(1)
|
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(1)
|
66,522 | 60,399 | 65,048 | ||||||||||||||
|
Sales and marketing(1)
|
159,412 | 143,294 | 123,169 | ||||||||||||||
|
General and administrative(1)
|
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 | |||||||||||
(1) Includes stock-based compensation expense as follows:
| 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 | |||||||||||
Comparison of the years ended December 31, 2025 and 2024
Revenue
| Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||||
| Change | Change | ||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | % | 2024 | $ | % | 2023 | |||||||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||||||||||
| Platform | $ | 327,399 | $ | 14,423 | 5 | % | $ | 312,976 | $ | 3,964 | 1 | % | $ | 309,012 | |||||||||||||||||||||||||||
| Products | 381,381 | (18,181) | (5) | % | 399,562 | (56,573) | (12) | % | 456,135 | ||||||||||||||||||||||||||||||||
| Total revenue | $ | 708,780 | $ | (3,758) | (1) | % | $ | 712,538 | $ | (52,609) | (7) | % | $ | 765,147 | |||||||||||||||||||||||||||
Platform revenue increased by $14.4 million, or 5%, to $327.4 million for the year ended December 31, 2025 from $313.0 million for the year ended December 31, 2024. The increase was primarily driven by growth of 4% in the number of Paid Subscribers from 3.0 million as of December 31, 2024 to just over 3.09 million as of December 31, 2025.
Products revenue decreased by $18.2 million, or 5%, to $381.4 million for the year ended December 31, 2025 from $399.6 million for the year ended December 31, 2024. The decrease was primarily driven by fewer units of accessories and materials sold and at a lower average selling price.
Cost of Revenue, Gross Profit and Gross Margin
| Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||||
| Change | Change | ||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | % | 2024 | $ | % | 2023 | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Cost of Revenue: | |||||||||||||||||||||||||||||||||||||||||
| Platform | $ | 35,990 | $ | (1,298) | (3) | % | $ | 37,288 | $ | 4,484 | 14 | % | $ | 32,804 | |||||||||||||||||||||||||||
| Products | 282,359 | (40,103) | (12) | % | 322,462 | (66,588) | (17) | % | 389,050 | ||||||||||||||||||||||||||||||||
| Total cost revenue | $ | 318,349 | $ | (41,401) | (12) | % | $ | 359,750 | $ | (62,104) | (15) | % | $ | 421,854 | |||||||||||||||||||||||||||
| Gross Profit: | |||||||||||||||||||||||||||||||||||||||||
| Platform | $ | 291,409 | $ | 15,721 | 6 | % | $ | 275,688 | $ | (520) | - | % | $ | 276,208 | |||||||||||||||||||||||||||
| Products | 99,022 | 21,922 | 28 | % | 77,100 | 10,015 | 15 | % | 67,085 | ||||||||||||||||||||||||||||||||
| Total gross profit | $ | 390,431 | $ | 37,643 | 11 | % | $ | 352,788 | $ | 9,495 | 3 | % | $ | 343,293 | |||||||||||||||||||||||||||
| Gross Margin | |||||||||||||||||||||||||||||||||||||||||
| Platform | 89 | % | 88 | % | 89 | % | |||||||||||||||||||||||||||||||||||
| Products | 26 | % | 19 | % | 15 | % | |||||||||||||||||||||||||||||||||||
Platform cost of revenue decreased by $1.3 million, or 3%, to $36.0 million for the year ended December 31, 2025 from $37.3 million for the year ended December 31, 2024. The decrease was primarily driven by lower amortization of capitalized software development costs.
Gross margin for Platform increased to 89% for the year ended December 31, 2025 from 88% for the year ended December 31, 2024. The increase was primarily driven by decreases in amortization of capitalized software development costs.
Products cost of revenue decreased by $40.1 million, or 12%, to $282.4 million for the year ended December 31, 2025 from $322.5 million for the year ended December 31, 2024. The decrease was primarily driven by a reduction in net inventory impairment charges and lower inventory procurement costs.
Gross margin for Products increased to 26% for the year ended December 31, 2025 from 19% for the year ended December 31, 2024. The increase was primarily driven by a reduction in net inventory impairment charges and lower inventory procurement costs.
Operating Expenses
Research and Development
| Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||||
| Change | Change | ||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | % | 2024 | $ | % | 2023 | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Research and development | $ | 66,522 | $ | 6,123 | 10 | % | $ | 60,399 | $ | (4,649) | (7) | % | $ | 65,048 | |||||||||||||||||||||||||||
| As a percentage of total revenue | 9 | % | 8 | % | 9 | % | |||||||||||||||||||||||||||||||||||
Research and development expenses increased by $6.1 million, or 10%, to $66.5 million for the year ended December 31, 2025 from $60.4 million for the year ended December 31, 2024. The increase was primarily due to a $4.7 million increase in product development expense and a $1.0 million increase primarily from software development contractors.
Sales and Marketing
| Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||||
| Change | Change | ||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | % | 2024 | $ | % | 2023 | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Sales and marketing | $ | 159,412 | $ | 16,118 | 11 | % | $ | 143,294 | $ | 20,125 | 16 | % | $ | 123,169 | |||||||||||||||||||||||||||
| As a percentage of total revenue | 22 | % | 20 | % | 16% | ||||||||||||||||||||||||||||||||||||
Sales and marketing expenses increased by $16.1 million, or 11%, to $159.4 million for the year ended December 31, 2025 from $143.3 million for the year ended December 31, 2024. The increase was primarily due to a $16.0 million increase in advertising and other marketing expense.
General and Administrative
| Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||||
| Change | Change | ||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | % | 2024 | $ | % | 2023 | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| General and administrative | $ | 68,464 | $ | (4,521) | (6) | % | $ | 72,985 | $ | (12,106) | (14) | % | $ | 85,091 | |||||||||||||||||||||||||||
| As a percentage of total revenue | 10 | % | 10 | % | 11% | ||||||||||||||||||||||||||||||||||||
General and administrative expenses decreased by $4.5 million, or 6%, to $68.5 million for the year ended December 31, 2025 from $73.0 million for the year ended December 31, 2024. The decrease was primarily due to a $4.7 million net reversal of bad debt.
Other Income
| Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||||
| Change | Change | ||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | % | 2024 | $ | % | 2023 | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Other income, net | $ | 11,860 | $ | (907) | (7) | % | $ | 12,767 | $ | 2,969 | 30 | % | $ | 9,798 | |||||||||||||||||||||||||||
Other income, net decreased by $0.9 million, or 7%, to $11.9 million for the year ended December 31, 2025 from $12.8 million for the year ended December 31, 2024. The change was primarily related to a decrease in interest from marketable securities due to less favorable rates and lower marketable security balances in 2025.
Provision for Income Taxes
| Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||||
| Change | Change | ||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | % | 2024 | $ | % | 2023 | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | $ | 31,188 | $ | 5,141 | 20 | % | $ | 26,047 | $ | (100) | - | % | $ | 26,147 | |||||||||||||||||||||||||||
Provision for income taxes increased by $5.1 million, or 20%, to $31.2 million for the year ended December 31, 2025 from $26.0 million for the year ended December 31, 2024. This represents an effective tax rate of 28.9% and 29.3% for the years ended December 31, 2025 and 2024, respectively. The decrease in the tax rate is due mainly to a decrease in stock based compensation differences attributable to the decrease in stock price upon vesting versus the stock price at the grant date.
Liquidity and Capital Resources
Our operations during the periods presented have been financed primarily through cash flows from operating activities and the net proceeds from our initial public offering in March of 2021. We believe our balances of cash and cash equivalents, which totaled $256.2 million as of December 31, 2025, along with forecasted cash expected to be generated by ongoing operations and $300.0 million in available borrowings and the option to increase the aggregate amount of our credit facility by up to an additional $150.0 million(see Note 8) will be sufficient to satisfy our cash requirements over the next 12 months and beyond.
Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other growth initiatives, the expansion of sales and marketing activities, the timing of new product introductions, market acceptance of our products and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of debt financing would result in debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. There can be no assurances that we will be able to raise additional capital. The inability to raise capital would adversely affect our ability to achieve our business objectives.
Our material cash requirements include the following contractual and other obligations:
Employee Compensation
Compensation for employees include fixed (salaried and hourly) and variable (commissions, bonuses, etc.) elements as well as the cost of benefits and many fluctuate with sales, financial results, hiring and retention activity and payment of withholding taxes on vested stock-based awards.
Inventory and Supply Chain
We utilize third-party contract manufacturers to source components and finished goods and third-party logistics companies to warehouse and distribute our products. As of December 31, 2025, we had component purchase obligations of $4.9 million, with $2.4 millionpayable within 12 months in addition to ongoing inventory purchases of finished goods from our contract manufacturers. These manufacturing purchase obligations are primarily noncancellable. Actual inventory purchases will vary based on current and forecasted demand for our products. Payments to third-party logistics companies are largely variable and are primarily driven by inventory levels and receiving and shipping activity levels.
Leases
As of December 31, 2025, we had fixed lease payment obligations of $12.7 million, with $4.1 million payable within 12 months primarily for corporate and other office space. See Note 13of the notes to our consolidated financial statements for additional information.
Stock Repurchase Program
On May 2, 2025, the board of directors approved a replenishing of the share repurchase program authorizing the Company to purchase up to an aggregate of $50 million 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 twelve months ended December 31, 2025, we repurchased and retired 4,577,893 shares of our Class A common stock for $24.6 million 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.
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 1, 2024, the board of directors 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 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 $0.10 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 2, 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.
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.
However, we have not adopted a dividend policy. Any future determination to pay dividends on our common stock will be made at the discretion of our board of directors subject to applicable laws, and will depend 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 may also be limited by the terms of our Credit Agreement and the terms of any future debt or preferred securities or future indebtedness.
Cash Flows
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
|
Net cash flows provided by (used in) operating activities
|
$ | 200,230 | $ | 264,968 | $ | 288,097 | |||||||||||
| Net cash flows used in investing activities | 60,657 | (18,328) | (48,778) | ||||||||||||||
|
Net cash flows (used in) provided by financing activities
|
(237,445) | (156,435) | (322,185) | ||||||||||||||
Operating Activities
The change in net cash flows from operating activities for the year ended December 31, 2025 compared to year ended December 31, 2024 is due to a net decrease in operating assets and liabilities of $57.3 million in 2025compared to $130.0 million in 2024, due primarily to a reduction in inventory due to lower inventory purchases in 2025. In addition, there were non-cash adjustments of $66.3 million in 2025 compared to $72.1 million in 2024, due primarily to a decrease in the provision for inventory obsolescence in 2025 and a decrease in stock-based compensation in 2025, offset by an increase in deferred income tax in 2025.
Investing Activities
The change in net cash flows from investing activities for the year ended December 31, 2025 compared to year ended December 31, 2024 was primarily due to proceeds from maturities of marketable securities in 2025 not used to purchase new securities.
Financing Activities
The change in net cash flows from financing activities for the year ended December 31, 2025 compared to year ended December 31, 2024 was primarily due to dividend payments of $202.1 million in 2025 compared to $110.0 million paid in 2024.
Critical Accounting Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles ("GAAP"). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The critical accounting policies that reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements include those described in Note 2 of the notes to our consolidated financial statements in the section titled "-Summary of Significant Accounting Policies" in Item 8 of this Annual Report on Form 10-K.
During the past three fiscal years, we have not made any material changes to the accounting methodologies used to assess the areas discussed below, unless noted otherwise. We believe that our significant accounting estimates involve a higher degree of judgment and/or complexity for the reasons discussed below.
Customer rebates
We recognize revenue at the net sales price, which includes certain 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 our products and consist of incentives to our customers. The promotional programs include advertising allowances, volume and growth incentives, business development, product damage allowances and point-of-sale support. Customer rebates are considered to be variable consideration, which we
estimate using 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 we record a related customer rebate liability in our 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 our 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, we classify 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. While management believes estimated amounts are reasonable, actual results may vary from our estimates due to uncertainty regarding forecasted volume, product damage claims, or qualifying activities by our customers.
Inventories
Inventories consist of finished goods and raw materials, which we purchase from contract manufacturers. We value our inventory at the lower of average cost or net realizable value. 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. We determine excess or obsolete inventory based on market conditions, age of inventory, an estimate of the future demand for our products within a specified time horizon, generally the greater of 24 months or remaining life of the product, and product life cycle status. Inventory write-downs are recorded as a component of cost of revenue in our consolidated statements of operations and comprehensive income. If actual demand is lower than our estimated demand, we could be required to write down the value of additional inventory, which would have a negative effect on our gross profit.
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