DeepValue - Deep Research for Stocks | Institutional Intelligence at Scale

Cricut is one of those quirky, under-the-radar names that looks like a “craft gadget” business on the surface, but the financials tell a very different story. Underneath the cutting machines and vinyl rolls sits a high-margin software and content platform that’s still quietly growing—even as the market has largely written the story off as ex-growth and structurally challenged.

As of January 20, 2026, Cricut (NASDAQ: CRCT) trades around $4.25 per share, down roughly 28% over the last year, with a valuation near 11x trailing earnings and about 6x EV/EBITDA on a net-cash balance sheet.[Financials (FMP)] That’s more like a struggling hardware manufacturer than a subscription-enabled ecosystem with mid‑50s gross margins, mid‑teens operating margins, and consistently positive free cash flow.

Our team sees a classic disconnect: sentiment has turned “crowded bearish” while operating data through Q3 2025 point to deceleration, not collapse. Active users are essentially flat at ~5.9 million; paid subscribers are still growing mid-single digits; and platform ARPU keeps inching higher. SEC Q3 2025 8‑K (2025), Nov 2025 At the same time, Cricut is walking into a tougher 2026 with tariff pressure, soft discretionary demand, and real questions around whether engagement initiatives and AI tools can offset macro and competitive headwinds.

We rate Cricut a POTENTIAL BUY, with an attractive entry zone around $3.75 and a trim zone above $6.75 based on our scenario work. Our base case points to fair value around $6 per share over 12–24 months, assuming modest platform growth, flattish product revenue, and operating margins holding in the low double digits.

Want to see the full structured thesis, risks, and scenarios side by side? Use DeepValue to recreate this analysis in minutes instead of days by parsing filings, calls, and industry data automatically.

Run Deep Research on CRCT →

Before jumping to conclusions based on the dividend yield or the Strong Sell labels, it’s worth unpacking what’s really going on inside Cricut’s business model, balance sheet, and 2026 setup.

Cricut’s Business: More Than “Craft Gadgets”

Cricut operates what it calls a “creativity platform”: connected cutting machines, its Design Space software, accessories and materials, and a high-margin subscription/content layer called Cricut Access. Cricut FY 2024 release (2025), Mar 2025 Users range from casual home crafters to micro-merchants who sell personalized products on Etsy or at local markets.

The company sells through:

Major retailers like Walmart, Target, Costco, Michaels, Best Buy, and Amazon
Its own e-commerce channels
International partners in the UK, Western Europe, India, Japan, and Australia Business Wire, Feb 2025 TipRanks Q3 2025, Nov 2025

Over the last few years, Cricut has deliberately shifted its identity:

From: a hardware-heavy business selling cutting machines and cartridges
To: a platform where high‑margin software and content subscriptions drive profitability

According to the FY 2024 results (2025), revenue peaked at about $1.3 billion in 2021 during COVID pull‑forward, then fell to $712.5 million in 2024 as demand normalized. In 2024, management formally re-segmented the business into:

Platform: subscriptions, digital content, and a small slice of software allocation
Products: machines, accessories, materials

The economics between these segments couldn’t be more different.

Platform vs Products: Where the Real Profits Live

Products

Revenue from connected machines plus accessories/materials
Lower-margin, cyclical, promotion-sensitive

Platform

Cricut Access subscriptions (monthly/annual)
A la carte digital content
Revenue allocated to future software upgrades
Gross margins around 88–90%

In Q3 2025, total revenue grew 2% year over year to $170.4 million, but the mix tells the story: GlobeNewswire Q3 2025, Nov 2025 Investing.com Q3 slides (2025)

Platform revenue: +7% YoY
Products revenue: −3% YoY
Total gross margin: improved to 55.2%, up from 46.1% a year prior
Products gross margin: jumped to 23% vs 11% last year, helped by lower inventory impairment and better procurement

User metrics from the Q3 2025 8‑K (2025) paint a nuanced picture:

Active users: 5.874 million (−0.3% YoY)
90-day engaged users: 3.419 million (−3% YoY)
Paid subscribers: 3.004 million (+6% YoY)
Platform ARPU: $54.96 (+4% YoY)

So engagement is softening modestly, but the monetization of those users is still improving. That’s one of the central tensions in the Cricut thesis: is this a shrinking ecosystem being milked, or a stable base being better monetized while management works to reignite engagement?

From our perspective, the data so far argue for deceleration, not deterioration into a death spiral. But the next 12–18 months will be decisive.

Is CRCT Stock a Buy in 2026?

We believe Cricut is a POTENTIAL BUY within a disciplined price band, not a blind “back up the truck” call. Our judgment framework looks like this:

Attractive entry: around $3.75
Fair value (base case): $6.00
Bull-case value: $7.50
Bear-case value: $4.00
Trim zone: above $6.75

Our Base, Bull, and Bear Scenarios

Here’s how we’re thinking about the range of outcomes:

Base case (50% probability, implied value ~$6.00)

Platform revenue grows 5–7% annually
Products decline low single digits
Operating margin normalizes near 11–12%
Tariffs and wage inflation are mostly offset by:
Mix shift toward high-margin platform revenue
Procurement savings
Selective price increases

In this world, you’re basically locking in a mid-teens annualized total return from today’s price over 12–24 months, including a roughly $0.20 annual dividend, as the market re-rates a still-profitable, cash-generative platform.

Bull case (20% probability, implied value ~$7.50)

Strong adoption of the new Maker 4 and Explore 4 machines plus AI-heavy Design Space features revitalizes engagement
Active users and 90‑day engaged users return to low single-digit growth
Platform revenue compounds 10%+ annually

This requires more than just defensive execution; it needs Cricut’s AI and UX investments to really resonate with non-expert users and micro-merchants who want speed and guidance over manual design. It’s not our base case, but we think the optionality is real.

Bear case (30% probability, implied value ~$4.00)

User engagement weakens despite UX simplification and AI tools
Subscription renewals and materials attachment soften
Accessories/materials revenue keeps falling double digits
90-day engaged users decline >5% annually through 2027

In that scenario, Cricut’s platform remains profitable but becomes less scalable, and the market may be right to assign a low multiple to a slowly eroding ecosystem.

At ~$4.25, we see the stock priced much closer to the bear narrative than the base one, which is why it lands in our “potential buy” bucket.

If you want to pressure-test Cricut’s bull, bear, and base cases against another 10–15 names at once, DeepValue can run parallel deep dives and standardize the outputs for easy comparison.

See the Full Analysis →

Valuation, Balance Sheet, and Margin of Safety

A big part of why we’re willing to lean against consensus here is the balance sheet and cash generation.

According to Financials (FMP) and the FY 2024 release (2025):

P/E: about 11.15x
EV/EBITDA: 6.12x
ROE: 17.53%
Net debt/EBITDA: −1.84 (meaning net cash)
Interest coverage: 226x
Gross margin: mid‑50s
Operating margin: mid‑teens pre full tariff impact

As of Q3 2025, Cricut had:

$207 million of cash and marketable securities
No debt
An undrawn $300 million revolving credit facility
$69 million of operating cash flow in 1H 2025 GlobeNewswire Q3 2025, Nov 2025

That’s despite paying out around $181 million in dividends earlier in 2025, including hefty specials.

From a value-investor perspective, this is meaningful:

You have a still-profitable business with high structural margins.
You have a net-cash balance sheet and ample liquidity.
You are paying a single-digit EBITDA multiple for it.

The margin of safety, in our view, rests on:

1. Conservative valuation versus earnings and cash flow

2. Tangible downside protection from cash and an unused revolver

3. Platform economics that should remain attractive even if products keep shrinking modestly

The catch: that margin of safety shrinks fast if tariffs bite harder than expected, engagement keeps trending down, or capital returns aren’t dialed back in line with free cash flow.

Will Cricut Deliver Long-Term Growth—or Just Milk Its Base?

The heart of the Cricut debate is whether this is a shrinking post-COVID fad or a durable creative platform adapting to a normalized market.

We break that into three questions:

1. Is the ecosystem stable or contracting?

So far, we see stabilization, not outright contraction.

From 2022 to 2024, net income stayed positive each year at $60.7 million, $53.6 million, and $62.8 million despite revenue decline. Cricut FY 2024 release (2025) By 2024:

Active users stabilized near 5.9 million
Paid subscribers rose to 2.96 million
Platform ARPU increased to $53.12

By Q3 2025:

Paid subscribers reached 3.004 million (+6% YoY)
Platform ARPU rose to about $55 SEC Q3 2025 8‑K (2025)

We interpret that as:

The installed base isn’t growing, but it isn’t collapsing.
The intensity of usage is slipping at the margin (90‑day engaged −3% YoY).
Monetization per user is still trending up.

Our thesis starts to break if we see two or more consecutive quarters of:

Declining platform revenue
Declining paid subscribers
Declining platform ARPU

That would be a genuine ecosystem contraction signal, not just slower growth.

2. Can Cricut offset tariffs and inflation?

Tariffs are a real wildcard for 2026.

On the Q2 2025 call, management flagged new and increased tariffs on manufacturing in Malaysia, Thailand, South Korea, and residual China sourcing as already putting “a little pressure” on margins, with “more meaningful tariff impact in 2026.” Investing.com transcript, Aug 2025

The near-term checkpoint we care about:

For Q4 2025 and Q1 2026, we want to see gross margin compression no worse than ~400 bps versus Q3 2025.
We also want credible mitigation levers discussed: mix shift, pricing, sourcing changes, or further cost control.

If gross margins compress more than that and stay there, and commentary is vague, we would cut our normalized margin assumptions and likely move to the low end of position sizing—or exit if the price no longer discounts that weaker margin structure.

3. Are AI and UX investments actually improving engagement?

Cricut is leaning heavily into:

Lower-priced, faster Maker 4 and Explore 4 machines
Expanded guided flows and AI-driven Design Space features like “Create AI”
The Cricut Creator Program to reinforce content and community Business Wire, Feb 2025 Cricut Creator Portal, Jan 2026 MarketBeat call excerpt, Nov 2025

The test over the next 6–18 months is straightforward:

Do 90‑day engaged users stabilize or grow?
Does accessories/materials revenue stop declining double digits?
Does platform revenue growth stay positive mid-single digits or better?

If after several quarters of rolled-out AI/UX improvements we still see:

Double-digit YoY declines in accessories/materials
Mid-single-digit or worse declines in 90‑day engaged users

then we have to mark down the practical strength of Cricut’s moat and its ability to sustain recurring platform growth. Cricut Q1/Q2/Q3 2025 releases, May–Nov 2025

Market Sentiment: A Crowded Bearish Trade

Sentiment around Cricut has swung hard from cautious optimism to outright skepticism.

Recent coverage frames Cricut as:

A structurally challenged discretionary hardware story
Dependent on promotions and demand pull-forward
Facing imminent margin erosion from tariffs Stock Analysis, Jan 2026 Trefis, Jan 2026 Seeking Alpha, Dec 2025

Key sentiment markers:

Multiple outlets now highlight a Strong Sell consensus, downside targets, and rising short interest. MarketBeat, Jul 2025 American Banking News, Jan 2026
Analysts that were once Neutral/Buy have shifted to Sell with repeated price target cuts. Nasdaq, Oct 2025
Earnings beats are no longer consistently rewarded; Q3 2025 outperformance was met with stock weakness, signaling deep distrust of the quality of earnings. Trefis, Jan 2026

For contrarian value investors, a “crowded bearish” setup with:

Net cash
Positive earnings
High structural margins

is exactly the kind of environment where mispricings can emerge.

The risk is that the bears are right and early, not wrong. That’s why our thesis leans heavily on quantitative checkpoints around engagement, margins, and capital allocation, not just sentiment.

Dividend, Buybacks, and Capital Allocation Risk

Cricut has used its cash machine to reward shareholders aggressively:

Specials of $1.00, $0.50, and $0.75 per share in recent years
A recurring $0.10 semi-annual dividend
Buyback authorizations replenished to $50 million in Q1 2025 Cricut Q1/Q2 2025 releases, May–Aug 2025

In FY 2024, free cash flow payout ratio sat around 0.45x, indicating distributions were significant but not reckless given strong cash generation. BusinessQuant, Jan 2026

Our stance on capital allocation:

Positive: Returning truly excess cash in a low-leverage, high-margin business is shareholder-friendly and has helped compress excess balance-sheet slack.
Risk: As tariffs bite and engagement remains under pressure, management must dial payouts to match sustainable free cash flow, not past peaks.

We treat capital-return overreach as a potential thesis breaker. If the board keeps issuing large specials and buying back stock in size while:

Free cash flow falls
Tariffs erode margin
Cash balances trend toward working-capital-only levels

then the balance-sheet safety net thins out rapidly. Cricut Q1/Q2 2025 releases, May–Aug 2025 That would force us to assume a higher probability of permanent capital loss.

Upcoming dividend decisions (January 2026 and mid-2026) are therefore important tells. A prudent reset to the baseline $0.10 semi-annual dividend while moderating specials would be a reassuring signal.

Moat, Competition, and Industry Context

Cricut’s edge is its integrated ecosystem:

Widely distributed hardware
Proprietary Design Space software
Subscription/content layer (Cricut Access)
Branded smart materials and tools Cricut FY 2024 release (2025)

Evidence that this ecosystem is real, not just marketing:

Platform gross margins have held at 88–90% from 2022–2024.
Platform ARPU rose from $47.76 in 2022 to $53.12 in 2024, then to around $55 by Q3 2025.
Paid subscribers increased from 2.609 million in 2022 to 2.959 million in 2024, and over 3.0 million by Q3 2025. Cricut FY 2024 release (2025) SEC Q3 2025 8‑K (2025)

Competitively, Cricut operates in a fragmented craft die‑cutting market against players like Silhouette America, Brother, Sizzix, and numerous private-label and generic competitors. WiseGuyReports, Jan 2026 The market is expected to grow around 5.9% CAGR from 2025–2035, with value concentrating in platforms that combine:

User-friendly hardware
Integrated software
Content ecosystems WiseGuyReports, Jan 2026

Cricut’s challenge is twofold:

Defend premium positioning in hardware and software vs lower-cost rivals
Stop losing share in highly commoditized accessories/materials, which fell 17% YoY in Q3 2025 under pressure from generic alternatives. Investing.com Q3 slides (2025)

Our read: the moat is strongest in software and subscriptions, less durable in physical consumables. Long-term, the investment case rests on platform growth more than recovering materials share.

How We’d Monitor CRCT Over the Next 12–18 Months

We don’t think Cricut is a “set and forget” value stock. It’s a structured watchlist name where you get paid for doing the monitoring work the market is too impatient to do.

Here’s how we’d track it:

90-Day and 6–18 Month Checkpoints

Over the next year and a half, we care about three checkpoints:

1. Q4 2025 earnings (near-term)

Are 90-day engaged users at least stable vs Q3 2025?
Is accessories/materials revenue stabilizing or still declining double digits?
Action: If deterioration persists, we’d tighten position sizing and avoid adding at anything above deep-value levels.

2. Q1 2026 results (within ~180 days of Q3 2025)

Gross margin compression ≤400 bps vs Q3 2025?
Is management giving specific plans on mix, sourcing, and pricing to offset tariffs? Investing.com transcript, Aug 2025
Action: If margins crack and commentary is vague, we’d assume structurally lower profitability and require a much larger discount to stay invested.

3. Capital returns across the next two dividend cycles

Does management stick to the $0.10 semi-annual dividend and rein in large specials?
Or do they keep paying out aggressively despite rising tariff pressure and weaker FCF? GlobeNewswire Q3 2025, Nov 2025
Action: Normalized payouts are neutral-to-positive; continued over-distribution is a governance red flag.

Early Warning Indicators

We’d also stay alert for:

Usage erosion: continued double-digit declines in accessories/materials and mid-single-digit drops in 90‑day engaged users despite AI/UX efforts.
Tariff pass-through failure: sustained >400 bps margin compression attributed to tariffs with no concrete mitigation plan.
Dividend strain: cash balances trending down quickly while management still emphasizes “significant positive cash flow” but the numbers no longer back that up. GlobeNewswire Q3 2025, Nov 2025

This is where leveraging tools matters. Manually reading every 10‑Q, 8‑K, and transcript across a basket of similar names can eat days each quarter. Read our AI-powered value investing guide to see how we think about automating this monitoring process so we can spend more time on judgment and less on PDF drudgery.

Our Take: How to Position Cricut in a Portfolio

Putting it all together, how would we practically use Cricut in a diversified portfolio?

We’d treat CRCT as a small, high-variance value position, not a core holding.
Current pricing bakes in a lot of pessimism about engagement, tariffs, and hardware demand.
The business still prints cash, carries no debt, and enjoys real software-like economics in its platform segment.

Under our base case, the return profile looks attractive:

Price appreciation from ~$4.25 to around $6 over 12–24 months
Dividend yield from the regular $0.20 annual payout
Optionality from a potential re-acceleration in platform growth if AI/UX and new hardware resonate

The bear case is not trivial:

If platform revenue, subscribers, and ARPU all start declining, the thesis is broken.
If tariffs cause a structural reset in margins and management can’t offset them, the valuation may be fair or even rich.
Aggressive capital returns in the face of weakening fundamentals would further raise downside risk.

In short, we like Cricut as a monitored contrarian value idea where the downside is cushioned by cash and current earnings, and the upside comes from the market gradually recognizing that the platform is sturdier than the headline narrative suggests.

Cricut is exactly the kind of nuanced, “is it broken or just out of favor?” name where a deep research agent shines. Use DeepValue to parse SEC filings, earnings calls, and niche industry sources so you can scale this style of analysis across your entire watchlist in minutes.

Try DeepValue Free →

Cricut (CRCT) Deep Research Report: Undervalued Platform Cash Machine Or Value Trap in 2026?