Cricut (CRCT) 9 Nov 222022 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Cricut Q3 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. to of conference The like Clements, to now Relations Investor Blueshirt would hand over the Stacie I Group. Please go ahead.

Thank Thank replay webcast available you Relations section third good of webcast and afternoon, the us is the the today's and today's call. following Cricut's Investor on that earnings quarter you, on be XXXX company's being will note call of also recorded for call. operator, joining Please everyone. website. A

with used section slides data on website, accompanying a reference, along to relations supplemental have call, investor investor.cricut.com. your of posted been For sheet, today's company's the the

Joining host Chief me call Financial live Q&A. Ashish Ashish been are Shill, prepared Executive Today's which Arora, have remarks Chief on the Officer. recorded Kimball will Officer, Kimball and after today and

These date to XXXX. Cricut now or may will November Ashish. time-sensitive in contains identified remind no information expenses, of call. X, guarantee upon events additional filed Form them. that do or including questions. section that involve placed forward-looking release operations, are over accurate on based results statements our like begin, be remarks to any not the statements the prepared this XX-Q. company's would those including be also business, of and is expectations of forward-looking uncertainties, today's projection management call as statements, turn in make and current future to in therefore, Actual Before broadcast, we assumes This obligation strategies, and and reliance inherent materially. results Factors we Risk may and our everyone not Cricut's the of update These that made management your of response call statements the most-recently undue regarding to could only forward-looking should differ statements contain risks performance, I

and Thank you, everyone. Stacie, welcome

investments as with million, the work focused business retailers and third down macro from expected, ended XXth Revenue consecutive demonstrating the navigating once our I inventory. durable quarter, environment $XXX the is Underpinning momentum encouraged while record fundamentals in by on for was track of our high quarter net challenging others. confident income last am slightly the again in profitability. the our through business some sustainable initiatives. resilience of third their generated more healthier impact quarter the in inventory. As challenges We quarter, and continued channel proven we this in model in to positive areas

believe have to new we that domestically we of millions users internationally. acquire First, strongly and

stronger. Our have user been never communities

sales continues Cricut-related TikTok. X top billion the garnered hash saw Cricut. strong And we market in the point is Amazon on Prime tags over in Brand Our indicates is with three and Search views confidence on success healthy. category. have familiarity to in These us opportunity that funnel give July interest interest trends with our and October expand overall expanded to What Days our

for We long-term, will the health. category brand and to run continue ensuring business the

us. healthy, is ahead large funnel a of opportunity and Our have market we

was channel. wants quarter inventory the compared while in XX% new to given environment. the that down machine connected through the they last a have are continues qualitative Our a longer threshold purchase to higher us strong convert decision, be but they and needs tells to prioritize over customers research interest users economic moved current were Net revenue before that year, their XX%, added down taking indicating as make

million, $X.X our up pace at our point than from consumers more this suggests. create to nearly subscribers. in $X.X experience base our our particularly Highlighting last we year-over-year the valuable XX% purchase a million So, user the to healthier revenue same continue products is year. growth quarter for Cricut as with growth to a subscription we're the pleased seeing our services, I'm Access in richer, continue

quarters. on growth user XX consecutive New subscriber outpaced has growth percentage a for basis

margin high to the attach mid-XXXX's drive strength of pre-pandemic. rates XX%, around to revenue compared platform continue our now and leverage consistently with We

also a all fosters valuable which both and broader our users making projects, tools. these design suite using connect platform images, are profile, extremely that new insight interactions, of can inspires create us create preferences. and Cricut use, community, including follow Space with to our platform outside software in experience into cannot users supports create, to through design something existing users an platform a of integrated and designing we're be and fonts provides transferred a Space projects, or they their community. with thus one, ecosystem, can and providing and connected an They platform, discover other easily they later an for a personal Our designs ideas, stored Once Design bookmark is making. our Because easily want Design modify sticky.

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design We continue some tools, discoverability invest the and be to which only content, to will inspiration, Cricut diverse of improve subscribers. in more to and community provide Access platform available features,

advertising are increased Design subscribers. more Space in monetization We and to creating touchpoints drive

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subscriber-only, in tools. Cricut design to upsell Aside significant the journey, from Access at general key touchpoints user's touchpoints content advertising and include premium

efforts, XX,XXX face new expected net QX, of in approximately which of user result demand was better these we machine subscribers growth. a than slower added and As in the

features marketing capabilities platform. and enrich of We have a to solid the data-driven further roadmap

Cricut create, and we lessons. running, Just Design for more. guides gets to they step-by-step the primarily virtual user how Center, and series more out in Most over up lifecycle. online a how and a a the focused importantly, machine, as basics Design their to Space, that rolled and into projects. their of our simple users specific invest of onboarding through around an continue recently, lessons faster materials, to use we Space teach was connected entire Last These fun integrated Learning users walks we and Plan which We share the initiatives. that engage, Learning know year,

users can on confidence specific which addition, take that Learning their designs their tools to to materials provide Cricut.com, and and users Kits our In crafting of enable projects our complete advantage build in efforts.

in past in of user users, cutting many by the half XX days, that platform mind users on our how base almost year-over-year. engaged actually have X.X cut project. Keep million are users engaged XX% have these total our a with nearly We defined up

of of space doesn't daily that are of users the account of cutting actions. hundreds taking definition a take thousands aren't design coming Our into current variety but engaged user into

come and to express give desire and compelling projects, so. to into users X have if with can since them often For motivated this Space to added that have XX% browse machines in often are we doing the week. the QX. get can we strong bookmarks and of more we of over right in accelerating days, million faster We them their come believe million over be we given The and day the projects, Cricut cut Design to bookmarked and users find on idea use and make with more to nearly and majority machines XXX cutting inspired, week engage. users make up it any reasons users see easier over of each and who who example, XX being middle not end their these next When in interest ask a images these

even for action it's five work. a key role the to platform engagement, play project making of community have and users moments apps or for some notifications frictionless for mobile a it discovery, a design experience creative Our easier on our checking briefest spare minutes whether take in

and who users platform, device. one on we that cut. more Space using The Design monetize and time Space shows those Access ultimately data significantly use likely device have to than one cut more to spend the more are likely opportunities only and Our subscribe much to users to are in use more the Design Cricut than more

Accessories platform. we our seeing exist to materials especially as our opportunities ways uniquely as quarter that our that retail Materials innovate placement competitive well we we in are monetization and Additional channels. noted where business in competition, within online, continue Last more of leverage

seamlessly work machines materials with more users and price they our our Cricut are have that realize members our been. ever sensitive While software, than

making promotions affordability promotions. and plan to on focus channel QX affordable reductions inventory. running our continue cost help and to additional we through to products more began We improve right-size During help

Brush also items Glow in Materials that consumables. making, In and a other items helping will Accessories we sets, early & the range easier. show continue these and people driving These Markers We several personalization. labeling, additional QX, dark cards, quicker and sales On, Iron The use new results do Smart Watercolor of and launched card and Labels, wide included into projects to expand for of vinyl are cases. and

ecosystem priority. machines warehouse our us experience. research and a internationally shows remains to In propensity the improve allow our and a true QX, business compatibility lean will driven those story, retailers between The will that important trends customer International local almost we Cricut XXXX Cricut we materials. help model executed that crafting. have an which facility, showcasing Finally, tell also since universal for into go-to-market entire Australia, in an deploying hold new

in distribution continue to Europe, with France expanded and and especially continental awareness. strides make Germany We

in Editable will Arabia, play investments, key We in and platform Program such as Artists Saudi South the Images, expansion markets. launched Japan, India imminent Our with role into our launches in Contributing and Korea, Taiwan. new international existing and a recently

for Polish, summary, operating In new Thai. macro it, Finnish, challenging, versions with we Danish, of than has and ever Hungarian, Czech, Design and in stronger but focus in Additionally, we localized been before. nine discipline greater languages; Space I Norwegian, believe this are Romanian, Swedish, environment

we more out will inventory aligned. we anticipate XXXX, and sell we us, to and channel behind closely enter be As believe imbalance be sell mostly in

with We large than opportunity from have us long-term. engagement penetration Design our serviceable to will We market, to sales over a platform, machines drive continue less and growth and and Space benefit user addressable new user drive the XX% significant monetization. we giving

signs have success, will today of for already Some the showing I'll on doing growth. that investments building of details for financials. our confidence over more turn to long-term lasting the are Kimball call impacts now what we're

good everyone. afternoon, Thank and you, Ashish

retailers a continue as softer cautious worked are levels. the at than season, see than Retailers' orders September started demand of for channel consumer levels on positions. to although previous historical inventory effects as a approach holiday We in little taking environment. In macro a years, lower through orders trends to retailers have would inventory were to October, see we indicated softer

connected down million, tightly from XX% revenue was continued year-over-year, and machines our revenue for $XX.X we the sell-in dynamic, Breaking income. $XX.X replenishment cutting generation of next XX% within comps down continue million, million net against what in orders. generated related control. further, decline is difficult compared to QX XXXX, prior third we we and revenue $XXX machines year this quarter, a Given to managing generated In of QX,

only that to spending, out end indicating retailers consumers as period, XX% New were work inventory. for through lower level, same as continue down at a user consumers, a proxy sell for adds, albeit the machine

expected higher-than-normal believe quarter, the channel healthier, needing inventory while As managing with you'll strong. to We recall, at holding Exiting remains we demand most seasonally orders much positions, holiday we some to the lower targets. same entered QX place capture retailers to inventory positions retailer believe new third demand. inventory are retailers time, holiday fully with

where are We needed channels, to to demand. well with closely inventory retail more as working our as meet our flexible partners, consumer place leveraging to sales direct

performance. subscription from our subscriptions sequentially. XX% Revenue We X% proud last year up was over are of $XX.X million, and

the XX% Cricut fill our durability machines, Materials several Accessories focus from Access higher Revenue continued Our of and mentioned. the we've as over continued when related generation improvements expansive quarters engagement on validates made cutting of from and the and to Smart business benefited over channel was $XX.X million, last year replenishment we've placed the Ashish the next model highlights trends. Materials down and launch orders, last we of success

some Let Materials. Accessories me around context and provide

mostly from revenue derives into including been the behavior competition, be this in see favorable and the parity gains when is have closer Materials with most price multiple Our influenced segment Accessories continues and our selling such segment we promotional the and as share are to competition. buying to with promotional products competition. and more retailers factors loading, consumer currency. pantry by Further, activity,

XX.X% international representing sequentially. of grew total of up to QX of the prior again as percentage terms of breakdown, a geographic million, was QX, year business, XX% total $XX.X International the revenue, and In in down from year. revenue prior XX.X% compared XX.X%

we last total users The to million, this X.X from who meaning similar nearly as is on for scale XX% in XX% for number percent total a cut QX X.X engaged the of period the least We users X.X what saw is period users to XX-day QX our of and quarter historically over and was year. September once those lowest to Turning at mind that engagement. from ending users, platform, XX, million XX% last Engagement the up engagement last drop quarter with up nearly million users this year-over-year. Keep year. of quarter. the seasonal dropped to summer ended

we up the holidays. expected, into As we as engagement pick seeing are head

are about, As basis. number more on weekly with at talked that looking Design Space starting a interacting and of holistic we users level, in Ashish are the engagement increasingly daily on a

on the slightly content, from their high basis $X.XX, to with nearly We user community, to QX Paid ARPU and average user in inspiration quarter dividing mobile was on a user will Accessories quarter XX,XXX users monetization X.X XXX,XXX per for over continue subscriptions cutting sequentially, remained invest subscriptions the year-over-year focus software move more by We measure XX%. with features ending the segments through million. grew through and approximately from time. in to subscribers a specific journey Attach than and by revenue both revenue at in Materials those base. by period rate XXXX. for entire and in in third our down $X.XX

to factors growing three quarter in from next, variability explain are For context, rates generally subscription ARPU attach subscribers one high. and when the remain

$XX.XX, subscriptions. signups and second, the of in new was and lower of third, QX mix mix ARPU ARPU sell-in to $X.XX, increasing timing First, compared of renewals vs THE quarter; XXXX quarter. international to Accessories during of due subscriptions, the Materials revenue

was of QX increase down year. flat costs from prior Gross lower moving XX.X% to of on of as reflecting with promotions, from basis, margin last an streams. effectively the machines attributable up particularly our a improvement promotions year, highlights operating sequential points life. decline mix. XXX margin was a year older which further; Total margin. reflecting fixed XXXX the as on sequentially was X.X%, Moving X% QX benefit Accessories volumes. Subscriptions margin over The down from XX.X%, of year-over-year margin to compared Materials XX.X% product was at from XX.X%, effectively to to and was gross to end in gross compares percentage and margin of XX.X%. quarter flat in third revenue Breaking in well in increased benefit nearly gross connected last gross as revenue, machines in QX, primarily This a basis an in diverse the

revenue a XXth see long-term. investing Operating quarter, to stock-based was million, down Diluted for revenues income. compensation. million, third the in flat forward, expenses million revenue, million targeted materials of price XX.X% promotions XXXX. year. you compared for operating in Going or by $XX.X our on more maintaining will income million prior long-term Net business, offer $XX.X the while We $XX.X QX quarter market $XX from the This and in earnings on essentially on was million us or in X.X% in third of the with of focus delivered were consecutive Total of quarter and was we investments included share $XX.X QX $XX.X QX Operating million, $X.XX and was sequentially competitive was $X.XX lower in continue per to the as XXXX, our $X.XX XXXX. to net positive compared remaining in income $XX.X income share. impacted growth. QX quarter compared for in

We the short-term navigating while headwinds. long-term, business continue for to manage the

flexibility Our of profitable healthy continue XX%. us XX% as the business our work to range operating and deliver to gives toward target margins long-term model to we invest

sheet Turning balance ended benefit the marketable and untapped. cash remains million cash, now and strong We cash to equivalents, quarter our the flow. million and balance credit from a $XXX with line sheet. securities in $XXX We

we cost quarter, of During repurchased a X.XX million. shares stock million $XX at the our of

reminder, the a us growth. negative QX disciplined for investments approach Cash an QX. flow fosters primary in operations cash we as in capital We inventories of flow source generate with QX seasonal needs be a our generated we It annual sales. cash basis. This in to QX year-to-date and from is and balanced build common the cash is allocation. additional generate to positive funding and for were higher cash annual long-term As inventory and toward on

we see demand look up. expect growth quarter, As picks sequential as we to the to fourth

to approach. We others while seen conservative holiday some inventory ordering retailers taken have meet demand, have appropriately a

reluctance margins healthy orders, of any inventory products, lower anticipate flowing shelves the the of to tied operating revenue Downside as retailer versus through P&L, physical is QX new primarily XXXX and type. spend on dollars higher remaining risks of on levels. include to procurement inventory product Materials. and weighted along to throughout inventory with mix in channel have with and costs QX, Our We be timing reserves, inventory retail holiday some impact goal is the the to possible to enter more Accessories and

to As maintain linear We levels in approach plan sell-out taking sell-in and we more with look planning. between channel anticipate healthy conservative XXXX we XXXX, and relationship to are a entering inventory our a forward. going ahead

profitable able recent the are business success our we to invest Given our and growth. subscriptions drive levels at investments long-term model, most of in consistent to

operating targets expect XX-XX% improvements long-term, of While incremental the to year. we annual goal our that margin committed of the over toward next remain we small end toward

Looking at intact. the long-term, the we eight driven believe that over our last the trends have remain years business

two the in Cricut Cricut and to the opportunity confident unique engagement more have proposition base to are The platform. years and also the brings We world we value of an provides that the significant our millions last in drive to further to monetization. around users user millions bring opportunity growth over the to that

We our in call are drive Access and the for on to with Materials turn levels growth fostering the our higher to onboarding, including operator focused Cricut of investing innovating that, improving the engagement, in business. With managing now highest platform questions. our on areas profitability, and impact, while I'll Accessories and over

of question Mark Baird. will Certainly. Instructions] come our And Altschwager [Operator first from

Your line is open.

my for question. Thanks Hi. taking

year? materials inventory, you much has are and related you across First quantify taken machines the and to this place stock able to accessories how believe

to channel right was question one, retailers the if historical called time. think year we a Yes. But with we throughout was changed over in changed COVID. $XX had the what, to the we targets through And we what what their inventory. I'm that that our have been as million thought out end the relative trend heavy. comments of is of taking recall terms what went year we And back you

target of are a was it the so hand, have throughout weeks year. we channel. number we with is on channel confident And by What moving the in

reorders we we the retailers but to have September, close are a holiday. need would most be coming prepared those lighter call expectations, related a a to so And cases in picked reordering a point little different, have October. remarks. targets at expected we up In are in as And, seen those most in we my little my saw but although bit to have orders that than where

But of you to net are couple through a at And, exactly this add points think One quantify. point, for XX%. suggests, Mark, accessories are -- is only as ads, revenues. saw not a of same down new I which which we through -- revenues, machines, article is selling number sell than positive calculation least sell I'll was was, a is thing with revenues that better was look XX%. not than there's just our of to than is in materials the is materials it really still ARPU is, and sell sharing which was our our use in Kimball's much the and that proxy down what bit We accessories, some and of at hard lower data last better if it little year.

we're those, we to with, significant -- correlate. in are quarters like pretty the So will where and sell indicate several fact basically to and we're both line to selling feel that after channel were inventory of able move

Helpful order curious Maybe of market you. what can into been and share And of other I'll the size or users leaning Cricut from the share. Thank in materials frequency basket you. so and have in of your materials you're takeaways That's terms accessories Thank in key so metrics you've some users far? it I'm seeing the promotions, been turn using what of months, versus that some on materials? the you recent with color.

question. Okay. Appreciate the

we're So omnichannel.

own or our share have have specific we have And where retailers competition, data. data. we've where -- of parity more so been The of we promotional. there pick our we some But as get we with we closer up with are to hold the learned price reliable lessons limitations

from our right there's proprietary department, higher dollars the that own consumer for hurdle we consumers And so a research know now. also

to to in promotional consumer, And address being materials. capture market so what you both is also will the continue that to us more but affordability share category, to see from

jump all queue. Thanks in detail. back the I'll the Great. for

Our Instructions] come Suva will Citi. question from of next Jim [Operator

open. is line Your

mostly that on And lower quarter lower retail sell-through? question a that first lead My and recognize on the I due last materials accessories believe retail you. way does And than $X.XX to believe Thank it is the you to one Because Is ago. the and than destocking? is revenues year people being just Because prudent they're the I we're spend at if don't of are it company? lower? this entire wonder, I bottom? just the what more doing Or it activities? actually life with go lower. we've in outdoor could they seen your or more know,

you accessories? So on give can be great. any commentary us the That would

Yes. revenue Jim, you retailers bunch question. And for consumers. our sales the And as sell-through end dynamics largely a to the to segment. revenue pointed It derives out, impacting that then that from are selling of metric. a thanks there in is

And the healthier. so sell-through about ago to be a year. is destocking out, challenge is talked minute -- the a as that has that And just headwind pointed the but we've inventory channel of throughout also, continued we she

perfect Now sell-through. have we on data don't

on that report data is But the healthier have than don't that we much So do sell-through suggests it. we sell-in.

so better believe the three that sell-through. at really a And And category. activity. promotional the there's kind of influences then One indicator on for health we is that's look of we

those and, do consuming for is is any engagement, at repurchase we And other we and The lowest users needing for that and competition, see into of a materials the increasing those it's that but engagement. year but the And we impact one space, hard each to of proxy of period of know given that do to -- is play. quarter, quantify it's right. competition, we the factors, each summer other the usually and because the impact come our isolate know the

sell-through role think activity. a do has played we so And that in

$X and And cutters are that? are as or Or terrible had way back educate for doing is users vinyls just is realize doing saving our branded to the Or But investors? may dollars like you loud a your accessories, of we've educate a attractive kind maybe using authentic, you they people lower machines? you who to up were, there there brands out out to QR mess way more up Because this. that coded Thank to now there? and a then and supplies ways keep up educate just And company's cricket original it's or such. or follow you. like, equipment from the will about of Cricut gone promotional profitability? $X.XX gummed it and just until family their to Are trying think to quality a the my the from make all trying I'm on it experience eroding seem knockoff

consumers, price to understand that an So Jim, in I That Cricut they work mentioned, think our doing, communicate that of And lot users they experience we've our higher sensitivity. actually been really the rate. our in materials. of benefits says, our as optimized we general, get we just when hard there's use with a materials. research hurdle There's a

sure addressing driving that affordability. been has that promotional our make to we're strategy so And

tell sure in price -- that right getting the continue mind of Even the as story, value to makes we're off that that the we it consumer. trade

the can material space. we competitive that be in So,

clearly, consumer made. add the very And just to points I'll Jim, Kimball's I well. mean, as we discerning know you're really answer. well

help, we are messaging, compatibility. -- to doing the ease retailers, with providing data providing explain are working value are we use we of better and proposition, clearly, that So and seamless the

that they've which we're is really second focused specific the but partner materials, to customer that is the the on, retailers really long-term experience, ultimately people really going right, The think to health with best going good been giving that is the the and machine. best are lead least, that all and continue our be showcase and have the and we not category the also can ultimately I experience across, so engagement that rigorously think settings integrating, for are, free tested be we to which because experience. the and of and, gives that individual a important, compatibility materials last, for because hassle our consumer And software increasingly with inside of will

that agree project an that while frustrating. is materials, anything afterwards. less the doesn't And being alternative we may is an made we ultimately, that you customer experience, So with sell than have not

are down And your calendar that still then accessories still And equilibrium QX, what's and or will we working mid we last question for in or point for machines? my if we hit working we're forecast now you. is, Thank equilibrium? down, that

to position So, that with orders healthier remarks, as they be we channel the we most -- in were exited see. much consider we expect that retailers in that demand to be to our what placing needed QX, capture inventory levels, as to holiday a and we call order in I prepared where

them And course so, were of September. though retailers potential concerned the any we of have some current investing we the a expected being of inventory than in headwinds about pick still, towards they the are up over we're There are type in with bit orders, end October watching terms think seen environment. we of even I little retail in lighter

And so we're and we're year. I to continue But weeks -- generally, be that -- looking that keep they position to channel. exit a healthy And the think challenger keep cautious. in number good and

Okay,

appreciate details. Okay. Thank much. so all the you I

comes Woodring Morgan Stanley. And our question of next from Erik

is line open. Your

something I and today, realized we're micro appreciate there one are from is And Thank my number the play away XX elaborate I afternoon. than guys, Ashish Kimball, of or macro still the kind of holidays cost Hey, the one of you year. are important. you. of questions. taking Maybe for good first guess I incredibly But that at like, a the with end is, either less crosscurrents days

of a what or Thanks. your your kind things, the visibility I end incremental information users of factors revenue the curious, more into about or just kind any XQ, are have any that segments then follow-up? or margins And so most to of limit like ability your of just and I'm significant kind provide by

Yes.

So the actually, thanks for question.

me some on provide color this. Let

at of kind we we've talked that to that time, people and is one things know look brand done we other higher And at clearly -- pretty the research, and search shed But the have proprietary think so I the this doesn't categories sell-through Google data I right, We've was the funnel, is the we the see actually also interest first XXXX. reflect you is year-on-year, in the or that in with see flat we that exhaustively, mostly Cricut who time qualitative. term, down of we've it yet, the Cricut we XXXX this well some did. and significantly the in see what either for results. when than Trends look that,

happy to make to there's insights to a wasn't basically who've and just research gone them in awareness to people very very, quantitative, share product, but that for threshold it purchase. And the from interested from. some we're So to higher consideration are

the that do we comes Days product both -- we when did that Now, that promote in in. on and see we Prime consumer

healthy a there's in that category believe time feel we focusing long-term, healthy awareness -- the a definitely the as of And demand, us. we of lot we we interest we're there. on So ahead have that

about their will consumer everybody other as getting was category. just I'll just house. and early that spending started last around that given consumer worried in returns, expectation the that point year One is our make, to years, So we've specifically periods promotional the product in come -- is, the the shop the in up couple October on of

So haven't that this gone period in typically promotional kind of we've time we've that of October. done really year, into

factors, research, as some But are interest, internal at we brand awareness, the fundamentals how brand I think seeing that. such funnel the we consumer as healthy. conversions that I a there's make look look the we again overall to waiting And and feel it's of -- as just at -- the external marketing Google is of do So category, spent. Trends, just get

says, just Google And what clarification, flat of point we're year-over-year. in Ashish Trends

year we're matching flat. and essentially XXXX, XXXX. in this interest peaked and interest We're XXXX Our from

Yes.

So in at the most of September. but of flat basically we to year-on-year interest The at the peak in pandemic is up compared have of specifically point XXXX, the was higher brand part in the we're XXXX. and significantly I September, for that XXXX higher, compared to in COVID, XXXX interest, the brought reference brand and terms comping

Okay. then helpful. other color. strategy Thank That guess, Thank was question that you maybe, I really you. one a for modeling question.

new about you that case? or target -- suggest below of guide Thanks. us end a us few ago, to your that's not growth hard you net of kind help total sequential that would can that? the you year and kind users it could in original comments normal you us If But just look can that into be we Should user growth the million at new not think kind guide today. expect of fast X any seasonality why give around user you right the help I would quarters realized historically,

Yes.

to that for I guidance, initial going -- predict. just that, think of Eric, thanks, is hard the So just the basically kind very to reflected details -- after get on. It's definitely given again. We we everything --

of So little that we a kind bit. muted

there's fact such things pent funnel from to the really like sales, as it's the like all right continue demand that healthy. we're get leads, we awareness an given part up big holidays the such is of the there's that standpoint, said, I think right, We -- for just a a believe doing are the especially, to

and that well Now, I and read on guidance give hard the and when customer things of at the as just we in, kind to consumer customer good the to doing do. awareness make jump about think you to purchase. we right this get that we're how sentiment, mean, as point economy any all feel the that actually We

is but I feel December. November is we December, customer depend the November, the happens to decides we and where good spend think what there in that going in a money, going are on and position a into lot to

next correlation inventory, sell-through the The as good fact a we'd channel Yes. is able other sellers through given feel to that, that thing that been that have feel year. work about, we higher talked the between we've we've about we and

Right.

Okay.

Okay.

that And earlier the just of on engaging with users last about you Okay. comment obviously, you've an then a their of And on question hundreds call my the if a thousands you made on Design tiny aren't app. bit performance for ARPU Ashish the machine, is, side, nice interesting had of there's but subscriber really are there. even just the Space pressure necessarily

your the just question is that kind business is there It's that I machine end engagement? see my this you kind opportunity monetize non-connected So is an of to just, of better on guess clearly outperforming.

really And not you instead some Thank in if just engagement to nice machine, have. me. the basis? subscription this actually so that can isn't obviously, you for so all a but wondering And on much. app, even And I'm on monetize subscriptions the if that's are of

so Yes, thanks.

question, I really think that good something that a I'm is about. excited incredibly

that. about talk me let So

the So as a users XXXX, in the our of past the XX% days, we our half engagement the a cutting, users of of year-on-year. way that about on number base, is, right, total like calculate as percentage you reminder, as users cut just right. the metric which is a of cutting XX like machine, since saw number we it, them And almost entire right. And think if user required increase percentage

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likelihood in So Space, our come they're Liking other intent made when people, creating a there's which connecting with to data And from a projects, and remarks. Design in users, that sharing they higher know bookmarks, make prepared we an is that comment that our in to we they're thing. stuff. effectively they're come following back to they're cut. And

machine, even that when get more huge monetizing. do coming Design think So play ultimately when they so -- away that cutting I Space, mobile we not strategy. and going to is, a our think to their into them people convert they're are We how from goal is either

to selling of today, a So, have -- proof not your access, question, that data is point with specifically benefit right. we Cricut seen is which we've that one the point

that do in ad So better, we right. create app, -- and many, are not are actually enhanced significantly impressions and, merchandise to many, also have different many Cricut we more a access we only product, able the places

I on continued getting the is which sorry, defined lots lots and Design we've And in interact. our in a will to adding creating lots where monetize the very users focus lot continued of and we very that that are think value, opportunity users But cutting, think the we Space, time, deriving ways a initiative to to to exciting we're as many every the and So -- proud is activity bringing stages. them that, and And we on team of engagement building value I’m adding focus have is other of early of platform. but in -- value traditionally, also really on ways. in kind platform have we

much Awesome. Thank you Ashish for detail. the so

Kearney comes and moment next Barclays. our from of question Paul One

line is open. Your

some dynamics XXXX -- maybe FY the the the top of our of to channel think parse have that inventory us Thanks. maybe through Hi, of everyone. kind of for half the exiting help and model? of the Thanks goal for taking into my takes for some the backup? are QX, question. Just what hit unhealthy growth you If we can first puts levels the within we line some of of retail,

Yes, so, Paul, the thanks for question.

to have next behind that right. dynamics we're year some are in view significant be to macro that, right. us, taking inventory There had about first channel we'll half we're conservative largely is, now, that when year, right our a we at pockets to next confident consumers, the Given all face spending planning, related what that will the we're look returns going on, that in still especially our confident own had awareness headwinds our understand we consumer like planning -- from Where well the looks are probably about about a we What and Ashish talked funnel current growth. positioned our segment. But year capture A&M next lot we're environment. and of that in

on just Okay, maybe Can for with where a maybe you question. And think And long-term you this maybe just business? just awareness start your levels strategic growth Helpful. us longer-term trajectory what update the can do user you to think activity? and is Do some brand? the the perception promotions? promotional you user Or Thanks. that today is need to the where their with metrics maybe the consumer continue today increased on going is of are

Thanks question, Paul. Yes. the for

cetera. our the is the in mouth, when word et of people continue or term the were and to which want in about is the revenues media, we things to XX%. new category, is that which was brand I the levers use Cricut, I down past, network user Cricut, net we’ve social effects, the we have point type same talked kind Paul, bit what one XX%, in interest that little again, think that a down of So out of growth

our we addressable We a do we awareness -- index lot if service of way? saying, not sample with if large everything a about market to shared what both believe the domestic define get in us awareness, But it, we ahead of we test do that, that study, a broad we this have not provided this by what stress have us. rigorous detail. and we lot we we base markets more have international leads a it one know and in Well, and well, markets

for opportunity. We that awareness. today again, we passion build And, things have create control brand, market large the the are a

even and -- higher, sales a -- of it's get though look numbers and sales of dollar that that the driving down effectiveness that really as that percentage we our awareness believe is that marketing sales funnel low. pretty of marketing have and sales sales We But the to effective. people being because

build research do funnel? we get control lot et through consumer continued continue on are tremendous we So about conversion of to that feel our Now, get to amount of there the really people team will we we ultimately place, research they when is that our they're spending putting the helping get help a is returns, the a the What based build on are of And that for, a in we about are things fundamentals believe the and to we've all in of number into that cetera? user that looking on terms more and things place to that things us of on, initiatives. feel knew how in working we that. good the customer that bring

you. Thank

Thank concludes And conference. this you. participating. ladies today's and for gentlemen, Thank you

disconnect. may now You