Cricut (CRCT) Q3 2026 earnings review
Cricut hardware sales jump 17%, but paid subscribers edge down
Cricut, the maker of connected crafting machines and design software, returned to revenue growth as new hardware offset slowing subscriptions. Total sales rose 11% from a year ago and net profit climbed 36%, led by a 17% rebound in Products revenue as chief executive Ashish Arora launched the Maker 5 and StickerPix machines. By our math, the hardware jump leaves the company needing just $185 million of fourth-quarter sales—an 9% drop—to beat last year's second-half revenue.
| Revenue | $188.6M +11% from a year ago |
|---|---|
| Products revenue | $102.7M +17% from a year ago (-22% in Q2) |
| Platform revenue | $85.9M +4% from a year ago (+5% in Q2) |
| Paid subscribers | 3.07M +2% from a year ago (-31K from Q2) |
⚖️ Verdict: 🟢 Bullish
The story got better because the hardware slump reversed without wrecking profitability, and the board backed that recovery with a $0.70 per share special dividend. Even without last quarter's big tariff refund, gross margin expanded by 2.5 percentage points to 58%. One caution: the high-margin Platform business slowed to 4% growth as paid subscribers fell by 31,000 from the second quarter, and quarterly user engagement stayed flat.
The question now is whether Maker 5 and StickerPix are bringing new crafters into the ecosystem or just convincing existing fans to upgrade their hardware. If the machines attract new users, holiday crafting will lift engaged users and paid subscribers; if they only replace old machines, subscription growth will keep fading. Fourth-quarter subscriber additions and 90-day engaged users will settle it.
🐂 Bull Case
New Machines Lifted Hardware Sales by 17%
Cricut's Products division sells connected cutting machines, heat presses and crafting materials. Sales in this hardware business fell 10% in the first quarter and 22% in the second, because cheaper entry-level bundles brought in fewer dollars per box and lapped last year's tariff-driven stockpiling by retailers. Management had promised that new launches would restore growth in the second half of 2026.
The third quarter delivered that rebound. Products revenue rose 17.2% from a year ago to $102.7 million, as the company rolled out its flagship Maker 5 cutter and StickerPix machine. Chief executive Ashish Arora said the launches are "creating new reasons for consumers to make", while earlier initiatives like Direct-to-Film printing and AI design tools received no update in the release.
This jump matters because it nearly secures management's second-half growth target with a quarter to spare. By our math, fourth-quarter Products sales could fall 12.6% from a year ago and the second half would still beat last year's $207.3 million total.
What to watch: fourth-quarter Products revenue during the holiday shopping season. Growth above last year's $119.7 million would show that Maker 5 and StickerPix are driving sustained consumer demand rather than a one-time shipment to stock retail shelves.
Products Gross Margin Rose Without Tariff Refunds
Last quarter's 74.5% gross margin was inflated by one-time legal and tariff refunds, leaving an underlying operating margin of 14.7% that trailed the prior year. Investors needed to see where profitability would settle once those refunds faded and the company absorbed residual tariffs and shipping costs.
In the third quarter, total gross margin reached 57.7%, up 2.5 percentage points from a year ago, and operating margin climbed 4.7 percentage points to 18.0%. By our math, gross margin in the Products segment jumped 7.7 percentage points to 30.8%, as the cost of making hardware and materials fell as a share of sales. Overhead and research costs also shrank by 2.0 percentage points of revenue combined.
What to watch: Products gross margin in the fourth quarter, which is always the company's most promotional period. Holding above last year's 18.4% fourth-quarter hardware margin would confirm that higher-priced Maker 5 machines are offsetting discount bundles and tariff costs.
International Sales Grew 30% After Channel Reset
Cricut has been investing in overseas marketing to reduce its reliance on a mature North American market. In the second quarter, international sales dipped 1% from a year ago, which management blamed on a temporary disruption while switching European distribution partners.
With that transition finished, international revenue rose 30% from a year ago in the third quarter and reached 28% of total sales, up from 24% a year earlier. By our math, North American revenue grew about 4.8% over the same period, so overseas markets supplied more than half of the company's dollar growth.
What to watch: the constant-currency international growth rate in the quarterly filing. That figure will show how much of the 30% jump came from local customer demand versus a weaker US dollar.
Special Dividend Returns $167 Million of Cash
Cricut carries no debt and ended September with $272.7 million in cash and marketable securities. Finance chief Kimball Shill announced "the approval of our recurring semi-annual dividend of $0.10 per share, a special dividend of $0.70 per share, and the replenishment of our stock repurchase program up to $50 million".
By our math, the two dividends will send about $167 million in cash to shareholders in January 2027, following $6.5 million spent to buy back 1.29 million shares in the third quarter. The payout shows that hardware inventory builds are not straining the balance sheet.
What to watch: share buyback spending in the fourth quarter after the board refilled the $50 million authorization. Continued repurchases alongside the special dividend would keep shrinking the share count.
🐻 Bear Case
Paid Subscribers Fell From Last Quarter
Cricut's Platform segment—which sells Cricut Access design subscriptions and digital content at a 90% gross margin—is the profit engine of the company. Management has shifted toward a platform-first strategy, counting on new machine buyers and a higher-priced Access Premium tier to keep subscription revenue compounding.
Instead, the subscription engine cooled in the third quarter. Paid Subscribers—users paying for Cricut Access—fell by 31,000 from the second quarter to 3.07 million, trimming year-over-year subscriber growth to 2.3%. Platform revenue growth slowed for a third straight quarter to 3.7%, down from 6.0% in the first quarter.
- Paid Subscribers: 3.07 million, down 31,000 from last quarter and up 2.3% from a year ago
- Platform revenue growth: 3.7% from a year ago, down from 5.3% in Q2 and 6.0% in Q1
- Platform ARPU (yearly platform sales per active user): $56.70, up 3.3% from a year ago vs 4.7% in Q2
This slowdown matters because Platform brings in more than three-quarters of total gross profit. If subscriber additions stall during a quarter when hardware sales jumped 17%, new machines are not converting into recurring revenue fast enough.
What to watch: net subscriber additions in the fourth quarter and first quarter after holiday machine gifting. Failing to pass the second quarter's peak of 3.10 million subscribers would mean the high-margin platform is nearing saturation.
User Activity Barely Moves Despite Machine Sales
"Double-digit sell-out growth for the second consecutive quarter, rising active users, and more than 3.07 million paid subscribers reflect the progress we are making to broaden our reach and deepen engagement," Arora said. Active Users are people who used a connected machine in the past year, while 90-Day Engaged Users made a project in the past three months.
The numbers in the release test Arora's claim about deeper engagement. Active Users rose 1.8% from a year ago to 5.99 million—adding 20,000 users from the second quarter—while 90-Day Engaged Users were flat from a year ago at 3.47 million and fell by 28,000 from the second quarter. Two quarters of double-digit retail machine unit growth are mostly replacing inactive crafters rather than expanding the active base.
What to watch: 90-Day Engaged Users in the fourth quarter, when holiday crafting peaks. A reading below last year's 3.70 million would confirm that upgrades like Maker 5 are going to existing users rather than bringing new makers onto the platform.
Risks this quarter didn't answer
Several standing concerns around hardware mix, materials competition and operating costs received no numbers in the earnings release.
- Accessories and materials vs connected machines sales: omitted in the release for a third consecutive quarter; the quarterly filing or conference call will show whether cheap rival materials are still shrinking consumable sales.
- Bundle-only pricing and attachment rates: no detail on whether low-priced Joy 2 and Explore 5 bundles are generating repeat materials buying.
- Residual tariffs and raw material costs: no update on post-refund tariff rates or petrochemical cost pressures in the release.
- Free AI image tools vs paid content: no commentary on whether free generative AI is hurting subscription sign-ups or raising cloud computing costs.
💲 Other KPIs
Inventories rose 8.9% from a year ago and 38.8% from the second quarter as Cricut stocked Maker 5 and StickerPix machines ahead of the fourth-quarter holiday season. That seasonal build consumed $28.6 million of cash over the first nine months, compared with a $2.8 million cash inflow from inventory reductions a year earlier.
Deferred revenue—cash that subscribers have paid upfront for Cricut Access plans not yet delivered—grew 5.9% from a year ago, up from 5.0% growth in the second quarter. Because it outpaced the 3.7% rise in reported Platform revenue, annual subscription billings are holding up better than the quarterly subscriber count.
Diluted shares fell 1.2% from a year ago, helped by $25.7 million of stock buybacks across the first nine months of 2026. Basic shares rose slightly from the second quarter as employee stock awards vested, offsetting the 1.29 million shares retired during the third quarter.
❓ Key Questions
Did materials sales grow, or only cutting machines?
Products revenue jumped 17%, but Cricut stopped reporting the split between connected machines and crafting materials this year. Investors need to know if Maker 5 and StickerPix drove all the growth while materials kept losing share to cheaper store brands.
Why did Cricut lose 31,000 paid subscribers this quarter?
Paid subscribers fell from 3.10 million in June to 3.07 million in September even as retail machine sales grew by double digits. Management should explain whether churn rose or fewer new machine buyers signed up for trials.
What is the outlook for fourth-quarter revenue and margins?
The earnings release included no financial outlook for the fourth quarter. With $146.9 million of inventory on hand and a $167 million dividend due in January, investors need to know how promotional holiday hardware pricing will be.
Were there any remaining tariff refunds in third-quarter margins?
At the end of June, $1.7 million of tariff refunds remained in inventory to flow through future cost of sales. Clarifying how much helped third-quarter Products gross margin will show the true run-rate margin.