Minus One, Then Minus Nine

Three numbers describe the problem: minus 14, minus 7, minus 1.

Those are Cricut's annual revenue changes for 2023, 2024 and 2025 - $765.1 million, then $712.5 million, then $708.8 million. Three consecutive years of decline, each shallower than the last. By the end of 2025 the fall had almost stopped. One more year of that arithmetic and the line turns.

Ashish Arora, chief executive of Cricut, Inc. since February 2012, declined to call it nearly fixed. On March 3, 2026, publishing a ninth consecutive profitable year and net income up 22 percent to $76.7 million, he chose the least promotional sentence available to him.

"While we are pleased with increased profitability with net income up 22%, the over 4% increase in paid subscribers, and positive machine-sell out units in both North America and International, we are disappointed in the lack of total company sales growth for both Q4 and 2025," he said. "We are working with urgency and focus to drive a mass market experience, accelerating our development cycles, and competing better."

Five months later revenue fell 9 percent.

Two Halves, Opposite Directions

Cricut makes connected cutting machines and sells the subscriptions, designs and materials that make them useful. Its revenue splits in two, and the halves have been moving apart for years. In 2025 platform revenue - subscriptions and design services - rose 5 percent to $327.4 million. Products revenue - machines, accessories, materials - fell 5 percent to $381.4 million.

That mix is the whole margin story. Gross margin went from 49.5 percent in 2024 to 55.1 percent in 2025 because the company was selling proportionally more software and less hardware. Net income climbed from $53.6 million in 2023 to $62.8 million in 2024 to $76.7 million in 2025, on revenue that fell in every one of those years.

Paid subscribers finished 2025 just over 3.09 million, up more than 4 percent, generating an average of $55.77 each.

A business shrinking at the top and thickening in the middle. The model works until the top shrinks faster than the middle thickens.

The First Quarter Went Backwards

It began to in 2026. Cricut's first quarter, reported on May 5, held revenue at $159.5 million - down less than 2 percent - but the profit line reversed. Gross margin slipped to 58.1 percent from 60.5 percent. Operating income fell 22 percent to $22.9 million. Net income fell 15 percent to $20.3 million.

Arora's framing stayed on strategy rather than the number. The company, he said, "began to see early benefits from our platform-first strategy," crediting guided onboarding, bundles, guided flows in Design Space and services with 1 percent growth in active users.

One percent, on a base of nearly six million.

Where The Second Quarter Came From

Then came August 4 and a set of results that read, at a glance, like a breakthrough. Second-quarter revenue: $156.3 million, down 9 percent. Second-quarter net income: $39.1 million, up 59 percent. Gross margin: 74.5 percent, against 59.0 percent a year earlier. Operating income up 58 percent.

The worst revenue quarter in years and the best profit quarter. The explanation sits in the 10-Q filed the following day, and it is not operating leverage.

On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act were unauthorised. Cricut submitted refund claims to U.S. Customs and Border Protection in April. When those claims were approved, the company recognised $20.3 million including interest - $17.9 million of it straight off product cost of revenue, $1.7 million off inventory, $0.7 million into interest income. A separate favourable legal outcome cut platform and product costs further.

Products gross margin for the quarter came in at 52 percent, against 32 percent a year earlier. The filing attributes that increase to the tariff refunds and the legal outcome.

Cricut's chief financial officer, Kimball Shill, said as much in the release itself: the quarter delivered "net income of $39.1 million, or 25.0% of sales, benefiting from some unique items."

Arora's own comment leaned on the operating signals instead - subscriptions above 3.1 million, "improving engagement trends", double-digit global machine sell-out growth. Both accounts are accurate. Only one of them recurs.

Fourteen Years, One Company

Arora has run Cricut since February 2012, before it was public and before the product family that now defines it existed. The company's own annual report names him in its risk factors: it is "highly dependent on the services of Ashish Arora, our Chief Executive Officer and the founder of our current product family and business model." That is the key-man clause, written plainly. He joined the board in March 2021, at the initial public offering. Before Cricut he spent two and a half years at Logitech International as general manager of Digital Home, running software platforms and products. He holds a bachelor's degree in electronics engineering from the Thapar Institute of Engineering and Technology, in Patiala, Punjab, and an MBA from the University of Kansas.

Fourteen years is long enough to have built the thing that is now declining and to be the only person expected to reverse it.

What 2026 Still Has To Prove

The company is not fragile. It closed 2025 with roughly $276 million of cash, no debt and $200.2 million of operating cash flow, and it pays a semi-annual dividend of 10 cents while buying back stock. The product answer to the sales problem has shipped: two next-generation cutting machines, new heat presses and a Direct To Film service, all in 2026. Platform revenue is still climbing - $85.0 million in the second quarter, up more than 5 percent.

But the sequence Arora set out to break has not broken. Minus 14, minus 7, minus 1 - and then a first half of 2026 at $315.8 million against $334.7 million a year before. Products revenue in the second quarter alone was down 22 percent.

The subscription half keeps growing. The tariff refund does not come twice.