Cricut, Inc. (CRCT) Q1 2026 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Cricut First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand over the conference to your first speaker today, Michael Hoade, Vice President of Finance. Please go ahead.

Thank you, operator, and good afternoon, everyone. Thank you for joining us on Cricut's First Quarter 2026 Earnings Call. Please note that today's call is being webcast and recorded on the Investor Relations section of the company's website. A replay of the webcast will also be available following today's call. For your reference, accompanying slides used on today's call, along with a supplemental data sheet, have been posted to the Investor Relations section of the company's website, investor.cricut.com. Joining me on the call today are Ashish Arora, Chief Executive Officer; and Kimball Shill, Chief Financial Officer. Today's prepared remarks have been recorded, after which Ashish and Kimball will host a live Q&A. Before we begin, we would like to remind everyone that our prepared remarks contain forward-looking statements, and management may make additional forward-looking statements including statements regarding our strategies, business, expenses, tariffs, capital allocation and results of operations in response to your questions. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them. These statements are based on current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the Risk Factors section of Cricut's most recently filed Form 10-K or Form 10-Q that we have filed with the Securities and Exchange Commission. Actual events or results could differ materially. This call also contains time-sensitive information that is accurate only as of the date of this broadcast, May 5, 2026. Cricut assumes no obligation to update any forward-looking projection that may be made in today's release or call. I will now turn the call over to Ashish.

Thank you, Michael. In Q1, we began to see the early benefits of our platform-first strategy with guided onboarding, bundles, guided flows in Design Space and services working together for a simpler, more compelling user experience. We successfully introduced our newest machines and launched Cricut's first service offering. Both reflect the strength of our platform in delivering a guided experience that helps users make what they want more easily. We're also encouraged by the positive response to the added value in our new machine bundles, which reinforces our strategy. We are pleased to see growth in active users year-on-year. Simplifying the user experience remains a key focus to drive engagement. We are pleased with profitability, growth in platform revenue and growth in global machine sell-out units. However, those gains did not yet translate into total company sales growth, which declined less than 2% year-over-year in Q1. We are moving with urgency to create a more compelling mass market experience, accelerate our development cycles and compete more effectively. Today, I will discuss what went well in Q1 2026, where we can improve and our priorities for the year. Kimball will then cover the financial details and our outlook for 2026. We delivered solid Q1 profitability despite early headwinds. Platform revenue increased nearly 6% and strong machine sell-out units gave us a solid start to the year. During the quarter, we launched 2 new cutting machines, Joy 2 and Explore 5, offered exclusively in bundled options designed to improve user onboarding while delivering compelling price points and value. We also launched the next generation of our handheld heat presses, EasyPress SE in the popular 9x9 and 12x10 sizes. To support these launches, we introduced several new materials and accessories and continue to improve our software platform, including new AI capabilities and easy-to-use guided project flows. We are encouraged by the initial results and user feedback. We are proud to be the recipient of Michaels' Best New Product Launch Award. Michaels is the world's largest craft retailer and an important partner for Cricut. We're also focused on increasing our speed of execution and are accelerating investments in hardware development, materials and engagement to support future growth. You can already see the early results of those investments in our 2026 launches so far. We plan to maintain a marketing and promotional cadence similar to last year, and we are excited about the road map ahead. We remain focused on acquiring new users and increasing engagement across our platform, which together drive our monetization flywheel of subscription and accessories and materials. We believe Cricut is a growth business, and we are intent on improving it. Let me talk about our priorities. At the top of the funnel, our goal is to broaden awareness and bring new consumers into the brand. Our research tells us that to do that successfully, Cricut has to feel relevant and approachable. Put simply, we need more consumers to believe that Cricut is for someone like me. That is the core objective of our influencer strategy today, and it will also be a central message in the broader marketing campaign we are preparing to launch this summer. As consumers move from awareness into consideration, we see 2 barriers that matter most. They need to believe that Cricut is easy to use and affordable. Our strategy is designed to address both. We are continuing to invest in onboarding, guided flows, software and platform improvements and bundle-only offerings. Together, these efforts help simplify the learning curve, improve affordability and perceived value and make it easier for new users to get started and succeed early in their journey with Cricut. We saw encouraging signs of progress in Q1. We continue to invest in marketing to expand our audience and deepen engagement with the brand. We gained momentum across key channels, driven in part by strong results from our influencer activations, along with continued improvement in overall digital marketing performance. These efforts were further supported by the halo effect of our late Q4 campaigns and promotional activity. Altogether, that contributed to strength in connected machine sell-out in Q1 with particularly strong consumer demand early in the quarter. While we did not grow products revenue in Q1, we did continue to see global machine sell-out increase year-over-year and quarter-to-date trends remain positive. At the same time, we are building the experience in a way that supports stronger adoption over the long term. In 2026, we are leaning into a bundle-only consumer experience as we launch the next generation of our cutting machines. These new bundles combine the machine, tools and materials with tightly integrated guided software flows to create a more cohesive out-of-box experience and help users succeed from their very first project. In Q1, we began to see early benefits from this approach, which I'll speak to more when I get to engagement. We also made important progress in innovation during the quarter. We introduced 2 next-generation cutting machines built on all new architectures, Cricut Joy 2 and Cricut Explore 5. We launched our direct-to-film service, Cricut's first service offering, which is another strong example of how we are reducing complexity for consumers. It combines the power of our creative platform with the simplicity of guided flows, enabling users to create vibrant full-color designs that are delivered directly to their doors. We believe this is the beginning of a new era for Cricut, one where we expand the top of the funnel, remove barriers to adoption and deliver a more seamless end-to-end experience that helps more users create with confidence from day 1. We continue to make progress stabilizing engagement trends, ending the quarter with active users up 1% and 90-day engaged users down 1%, representing improvements year-on-year and sequentially. We are encouraged by the early response to the initiatives we launched in late Q4 and into Q1, including guided flows for full-color stickers and insert cards, expanded vinyl decal use cases, our AI-assisted project designer tool and improved project preview visualization. We now have 6 guided flows, which cover our most popular use cases and dramatically simplify the user experience. In addition, we began rolling out AI Project Designer, which allows users to design and make a project through a conversational interface. Taken together, these launches reflect how our platform is evolving to become simpler, more intuitive and more compelling for a broader set of consumers. A key leading indicator of future growth is how effectively we engage new users. In Q1, cut intensity among our 2026 onboarder cohort in their first few weeks reached its highest level for a Q1 in the past 2 years. Users onboarding with our newly launched Joy 2 and Explore 5 machines are now guided through a broader range of projects that utilize a full set of materials included in their bundles. We also introduced additional improvements late in the quarter to further reduce friction and drive repeat engagement. These include enhanced educational content within guided flows, improved accuracy of our AI assistant chatbot and gamification designed to encourage exploration of machine capabilities and repeat visits. Among returning members, we are seeing early signs of progress as well. Members who joined in recent years and returned to create projects in Q1 demonstrated higher cut intensity compared to prior year. At the same time, as the large 2020 and 2021 cohorts continue to decline as a percentage of our active user base, we are seeing a moderation in overall engagement erosion. Our engagement marketing efforts, which focus on bringing users back into our platform are also becoming more effective and efficient. For example, using AI to generate and personalize life cycle campaign messaging has consistently improved click-through rates. The product improvements experienced by returning users in Design Space are positively impacting perception among both members and independent influencers. Looking ahead, we are excited about our upcoming platform innovations, which we believe will continue to make the creative experience faster, more intuitive and more delightful. In Q1, paid subscribers increased 104,000 or over 3% year-on-year to almost 3.08 million as we saw platform revenue increase nearly 6% to almost $84.8 million year-on-year. We did see a drop of 13,000 subscribers sequentially from Q4 2025, reflecting lower promotional activity in Q1 as we emphasize revenue growth in the quarter. As discussed in earlier calls, there is some natural subscriber attrition. So subscriber growth may be challenging until we increase the pace of machine sales and new user acquisition. We saw some of this pressure manifest in Q1. That said, we continue to see healthy sign-up rates from our new members and are achieving a higher revenue growth rate. Additionally, at the end of Q1, we started testing new subscription plans and pricing tiers on new sign-ups, using AI credits and shop benefits as differentiators. Early conversion signals and higher tier adoption are encouraging, but it is still early. We will continue to test new plans and price points as we add more value and benefits for our subscribers. Earlier, we also rolled out a price increase on new subscribers through the iOS App Store, while simultaneously offering alternative payment options to purchase via Cricut at the lower legacy price. We have been watching this test and have seen positive results in shifting users to the Cricut payment options or a higher price purchase via the App Store without significant impact to overall expected sign-ups. We have a rich road map to continually increase the value proposition for subscribers. Our goal is to make it incredibly compelling to be a subscriber to leverage our content, software tools and services. This remains a highly competitive category, particularly in material types with low barriers to entry, where we continue to see pressure from private label offerings at retail as well as new entrants across online marketplaces and store shelves. We are not satisfied with our position in part of this category, and we are moving aggressively to refresh the portfolio, improve value and sharpen our channel execution. Those efforts produced mixed results in Q1, but there were encouraging signs. We saw double-digit growth in value materials online, and we made share gains in iron-on, vinyl and cutting mats. At the same time, share in heat presses was pressured as we move through product line transitions. Overall, our view is clear. When we bring the right combination of innovation, quality and affordability to market, we can improve our share position while enhancing the making experience for our users. Innovation remains central to that effort. For example, with the launch of Joy 2 and Explore 5, we introduced omni pen, our new universal pen system, which has been well received for its performance and compatibility. Across Q1 and Q2, we are expanding the portfolio with more than 200 new SKUs and executing a meaningful retail refresh with key partners. We're also continuing to invest in core categories such as Smart Iron-on and Vinyl, with new colors, finishes and a broader assortment. At the same time, we are advancing our full-color strategy through continued innovation and printables across inkjet and sublimation along with refreshed tools and accessories. In heat presses, we are broadening our lineup to address more price points and use cases. EasyPress Mini LT, which we launched in Q4, is helping address affordability and early results suggest much of that demand has been incremental. In Q1, we also launched EasyPress SE in the popular 9x9 and 12x10 sizes, which expands our ability to compete more effectively across markets with a professional quality, easy-to-use heat transfer solution. We also launched Cricut's first service offering with our Direct-to-Film or DTF service, which leverages our creative platform content and new guided flows. Customers create vibrant full-color designs that we print and deliver to them, which they can then press on to fabric or other substrates. While still a small experiment, this service is an important example of how we can monetize our creative platform beyond cutting machines. Early response has been encouraging. So far, over 80% of orders are coming from subscribers and around 1/3 of orders have already come from repeat customers. Over time, we believe this can deepen engagement and further increase the value of our subscription offering. Stepping back, we are moving with urgency on both innovation and cost discipline. We have more product innovation ahead. We are equally focused on execution, improving the end-to-end customer experience and driving greater efficiency across the business. Our conviction remains the same. When we make it easier and more affordable for people to create, we increase engagement, materials usage and long-term value creation. With that, I will turn the call over to Kimball.

Thank you, Ashish, and welcome, everyone. In the first quarter, we delivered revenue of $159.5 million, a 2% decline compared to the prior year. We generated $20.3 million in net income or 12.7% of total sales in Q1. Breaking revenue down further, Q1 2026 revenue from platform was $84.8 million, up nearly 6% year-over-year. ARPU increased 4.8% to $55.65 from $53.10 a year ago. Platform revenue was up primarily due to the year-over-year increase in paid subscribers and foreign exchange. As mentioned in our last call, as we shift to our bundle-only strategy where we will only sell next-generation connected machines bundled with materials, we will no longer provide the supplemental revenue breakdown of connected machines and accessories and materials in our SEC filings and data sheet. We will continue to report platform and products revenues and costs as we currently do in our consolidated statement of operations and comprehensive income. Q1 revenue from products was $74.7 million, down 9.6% year-over-year. Product revenue was down primarily due to the lower average selling prices from increased promotional activity and mix as we cleared out end-of-life inventory in preparation for our Q1 product launches. As Ashish mentioned, global machine sell-out units were positive in Q1 year-over-year. As a reminder, we don't have perfect coverage for sell-out data in all channels, so treat this as directional. In terms of geographic breakdown, international sales grew over 16% year-on-year to $40.9 million. International revenue represented 26% of total revenue in Q1 2026, up from 22% in the prior year, reflecting continued progress in expanding our global footprint. Foreign exchange benefited international sales in Q1 by 10.3%. Our targeted pricing and marketing investments in Europe and Australia drove solid results, delivering year-over-year growth across these regions. We also saw strong momentum in our emerging markets with our early-stage investments in Asia and Lat Am driving strong year-over-year growth. In contrast, we experienced a challenging quarter in our META region, which declined year-over-year, partly due to the ongoing geopolitical pressures. Importantly, our exposure to this region remains limited. Looking ahead, we plan to accelerate our investments in our international markets with a focus on increasing brand awareness and driving member acquisition throughout 2026. As Ashish mentioned, we ended the quarter with just under 3.08 million paid subscribers. We expect to see seasonal pressure on subscription rates in Q2 and Q3, which could result in flat to declining quarter-on-quarter subscriber growth rates. We remain focused on driving growth for the full year, supported by new product introductions, improved onboarding, ongoing investments in engagement and promotional support. Regarding engagement, in our published data sheet, Q3 and Q4 2025 active users, 90-day engaged users and platform ARPU were updated post earnings to reflect immaterial corrections. Moving to gross margin. Total gross margin in Q1 was 58.1%, which was down 2.4% year-on-year. Breaking gross margin down further, gross margin from platform in Q1 was 89%, a decrease compared to 89.2% a year ago. As we've mentioned previously, we are excited about our AI investments, and there may be some gross margin pressure as we continue to ramp AI features. Gross margin from products was 23.1% compared to 32.7% in Q1 a year ago. The decrease in gross margin for Q1 was primarily driven by inventory write-downs from end-of-life programs, lower monetization of previously reserved inventory, tariffs and increased promotional activity. Total operating expenses for the quarter were $69.8 million and included $6.3 million in stock-based compensation. Total operating expenses increased just over 1% from $69 million in Q1 2025. As Ashish mentioned, we are focused on increasing our speed of execution and are accelerating investments that will help drive future revenue growth for hardware product development, materials, engagement and marketing. So we expect to see greater increases in year-on-year operating expenses. Operating income for the quarter was $22.9 million or 14.4% of revenue compared to $29.3 million or 18% of revenue in Q1 last year. The Q1 2026 tax rate declined to 19% from 26.7% last year, primarily due to higher R&D tax credits from increased investments. For the quarter, net income was $20.3 million or $0.10 per diluted share compared to $23.9 million or $0.11 per diluted share in Q1 2025. Turning now to balance sheet and cash flow. We continue to generate healthy cash flow on an annual basis, which funds our inventory needs and investments for long-term growth. In Q1 2026, we generated $26.9 million in cash from operations compared to $61.2 million in Q1 2025. We ended Q1 2026 with cash and cash equivalents of $256 million. We remain debt-free. Inventory decreased by $8 million year-over-year to $106 million, reflecting improved inventory management and normalization as we exited end-of-life machines. As discussed on prior calls, inventory is now at levels that generally support the business with normal fluctuations as products transition. Accordingly, we typically use cash in the first half and into Q3 to build holiday inventory, then generate cash in Q4. During Q1, we used $12.2 million of cash to repurchase 2.8 million shares of our stock. As a result, $29.1 million remain on our approved $50 million stock repurchase program. During the quarter, we paid approximately $21 million for the declared $0.10 per share semiannual dividend on January 20, 2026. The Board also approved a recurring semiannual dividend of $0.10 per share, supported primarily by our profitable operations. The dividend will be payable on July 21, 2026, to shareholders of record as of July 7, 2026. Recall, we do not give detailed quarterly or annual guidance, but we do want to offer some color on our outlook for 2026. We are focused on bringing excitement to our category. We are doing this by accelerating our investments in R&D, new product launches and marketing, including international markets and continuing our promotional strategy to drive affordability. We remain optimistic about the year overall despite a more challenging first half. In Q2, we do not expect total company revenue to grow year-over-year, primarily due to a difficult comparison against Q2 2025, which benefited from revenue pull-forward amid tariff-related supply chain uncertainty. That said, we expect platform revenue to grow each quarter, while subscriber trends follow their typical seasonal pattern with softness in Q2 and Q3. With a strong road map ahead, we remain confident for growth in the second half. Previously, we talked about the headwinds that tariffs presented to our business. Given the recent Supreme Court ruling overturning IEEPA tariffs and associated dynamics, we are not providing any guidance on margin impact. We expect to be profitable each quarter and generate cash flow from operations for full year 2026. We also expect to continue to be active with our authorized $50 million stock repurchase program, which has $29.1 million remaining, and the Board approved a recurring semiannual dividend of $0.10 per share, payable on July 21, 2026, to shareholders of record July 7. While tariff uncertainty remains a reality, we are also navigating broader cost pressures, including input costs, supply chain dynamics and a more cautious consumer environment in certain markets. Our team continues to operate proactively and with discipline, adjusting where needed while maintaining our focus on strategic investments to position the company for growth. With that, I'll turn the call over to the operator for questions.

[Operator Instructions] Our first question comes from the line of Erik Woodring with Morgan Stanley.

It's Dylan Liu on for Erik Woodring. So first, 90 days ago, you did mention a difficult comp, as you mentioned in the prepared remarks, for product in the first half of this year. So you posted 10% of product revenue decline for the first quarter. And how did that compare with your expectations? And as we are now 2/3 of the first half, has the first half headwind tracking better or worse than you had anticipated and why? And also, I'm curious about why you're confident that the second half will be better.

Dylan, this is Kimball. Thanks for the question. So the story in the first half really is a story about average selling price declines on a year-over-year basis, and let me break that down for you in a second. But first, I want to highlight that we talked about machine sell-out units continue to be up year-over-year. And that I'll add that sell-in units are also up double digit in the first quarter. And why that's important is that's the start of our flywheel. So a consumer buys our connected machine, and then that gives us the opportunity to monetize them through subscriptions and accessories and materials. And so we're very pleased with those results. And it really is a story about lower selling prices this year versus last year and as we launched 2 new machines. So we launched this year Joy 2 and Explore 5. And last Q1, we launched Explore 4 and Maker 4. And the average selling price last year was much higher. So our Joy our Joy 2 machine has an entry point for U.S. consumers of $99 to $129. And that is comping against Maker 4 that had an entry price point of about $399 last year. And so part of it is we're just selling less expensive machines in the first half than we did in the first half of last year. Our continuing products in the market. So Maker 4, for example, continues forward in the market. And last year, when it was first launched, there was no promotionality. And as we move through the natural product life cycle, we are exercising promotion on that machine, but that also puts further pressure on the margins. And then we also saw some continued erosion in our accessories and materials business. Now as we move forward with our new bundle-only strategy on next-generation machines, there was some offsetting goodness that came from that where there's materials bundled with each machine in this next generation, but it wasn't enough to fully offset that trend. And then looking to Q2, we expect to see these trends continue. In addition, we also talked about our difficult comp in Q2 set up by last year where we had a pull-in related to tariff uncertainty, and we had retail partners asking for support, and we saw an opportunity to accelerate revenue last year that does set up that difficult comp. And so we don't expect to grow in the first half. That said, as we move to the back half, we expect to reverse that trend, right? We have more new products to come. We're excited about those products. We're confident in our road map. And so while I'm not prepared to give more detail than that, we do have more confidence in the back half, and we do expect to grow platform revenue each quarter as we move through the year.

And Dylan, this is Ashish. Let me kind of reinforce a couple of things that Kimball mentioned. First of all, I think the thing that we feel really pleased about is the continued sell-out of machines, and that's a leading indicator. It's up to us of how we monetize that, but we believe that, that creates a healthy trend for our business. And as we said, we've seen that in Q1, and we continue to see that in Q2. The areas that we're going to lean in on -- I mean international is clearly one of them. We're going to continue to -- we have continued to lean in on international, continue to make marketing investments and other personnel investments, and we expect that to be a tailwind for the second half of the year. I also think that -- and we've talked about this for some time now. We've been working very hard for the last several quarters on driving innovation and new product introductions. So you'll see the impact of that in the second half. We are focusing on a new brand campaign of really addressing -- while we are addressing ease of use and affordability, we also want to make Cricut feel like that is for someone like them. So we -- hopefully that, that marketing campaign will deliver. And finally, as we go through the year, I think the availability of our higher-priced bundles will also have a positive impact. So we think that it's the year of the 2 halves. The first half had some headwinds as long as we continue to execute and we will see second half to have some tailwinds behind us.

Got it. Just one follow-up, if I may. So on gross margins. So product gross margins recovered almost 5 points sequentially to 23%. What is your product gross margin outlook for the year? I do notice that at least for the international market, there are quite some -- there were quite some tailwind from FX side in the first quarter. With that in mind, how should we think about 2026 product gross margins?

Dylan, thanks for the question. So gross margins are falling in line with expectations and consistent with what we talked about last quarter. And just breaking it down, I mean I think if you look at year '24 gross margins, on average, that kind of sets where you expect. But let me kind of break it down into pieces because we do expect lower gross margins this year than last year, right? And we are down as we have kind of 3 factors going. One, we have some E&O impairments related to end-of-life machines as we transition from old generation to next generation. There is less monetization of existing excess and obsolete inventory this year than last year, and that's consistent with the expectations we've talked about before. And there continues to be tariff pressures on margins. And that kind of breaks down into 2 pieces. We have IEEPA tariffs that a lot of the inventory we brought in have those built into our COGS and that continues to throw P&L -- flow through the P&L. We have applied for tariff refunds. And so if and when those happen, we'll take credit for them kind of in a one-time accounting entry, but there's no adjustments so far in that. And then even though the IEEPA tariffs have been overturned, the administration immediately put an additional 10% tariffs on everything. And so the way I think about that flowing through our business is 25% of our business roughly is international, not subject to tariffs. A little over half of the business this last quarter was platform. That's not subject to tariffs. But for the balance, it's subject to tariffs, and we had guided last time to about an average tariff impact of 20% going forward. That's closer to a 10% once we get through the noise of the IEEPA tariffs. And so tariffs will continue to be a bit of a headwind. On your question on international, we are excited about the continued growth in international. It was 16% for the quarter and about 10 points, as you called out, was related to foreign exchange. It's worth calling out that the benefit from foreign exchange started in Q2 last year in June. And so we'll lap that pretty soon. But even with that, we continue to have organic growth across our international segments. And we called out in the prepared remarks, solid growth in Europe and Australia and New Zealand and strong growth in some of our more nascent markets in Latin America and Asia. Let me add one more thing. So we talked about average selling prices in my last answer. That's really a story about revenue. We haven't seen the lower average selling prices pressuring margins. And that's because we've largely offset the lower prices on machines and materials with supply chain efficiencies and cost-out in reengineering. And so it's those 3 factors I talked about pressuring gross margins, not the fact that we're selling different units at lower prices as we move to next-generation products.

Our next question comes from the line of Adrienne Yih from Barclays.

This is Angus Kelleher on for Adrienne Yih. I wanted to ask about retailers and your retail partners. Just given the recent uptick in energy prices and broader consumer pressure, are you seeing any change in retailer ordering behavior or demand signals either in terms of caution on forward buys or shifts in mix toward lower-priced offerings?

Angus, this is Ashish. So I think overall, and just as I speak globally, right, I would say the headline is that our retailers are very excited about the road maps, the innovation that Cricut is driving. And I would say, across the board, there's general enthusiasm for driving innovation in the category. That's kind of the overriding theme. The second is we -- obviously, we changed our strategy from a stand-alone machine to bundles and primarily all our retailers today worldwide carry the bundles. And our goal in offering the bundles was to address ease of use so that people have everything that they need in the bundle as well as affordability. Those are the 2 things that -- and the retailers have been very pleased. As we said, Michaels gave us the new product launch award for the launch of Joy 2 and Explore 5. So today, that's what we hear from our retailers, is general enthusiasm for the category and general reception to the launch of bundles. They also see the platform improvements that we are making. I mean I would say, for the most part, we don't see a significant retailer shift in buying -- at least in their buying behavior from -- based on the economy or based on consumer sentiment today. Kimball, I don't know if you want to add anything to that, but that's -- I wanted to give a broader -- what are we hearing from retailers and today's enthusiasm...

I agree. Retailers is enthusiastic. As we did mention in the prepared remarks, I mean we have seen some consumer caution, but that's primarily in Europe. We haven't seen a pullback in U.S. even as we're all watching oil prices and seeing how that evolves.

That's great. I would say, if anything, even though it hasn't manifested itself, if this was to continue, we could see disruptions in supply chain or cost of plastics or shortage of certain things. But today...

Well, so let me add to Ashish's comments. So on the supply side, anything that is oil stock related, we've seen some runs on that material, but we have been locking in our supply to make sure that we have continuity of supply. And so we're managing that risk proactively.

Great. That's great color. And then I just kind of have 2 housekeeping items. First, on the App Store dynamics, how meaningful has the shift toward Cricut direct payments been for subscriber economics so far? And then second, on the IEEPA-related tariff refunds, can you update us on the expected like magnitude of those? And I ask that because we've seen some of our branded peers monetize those receivables, but it sounds like you have not sold your receivables there.

Yes. So let me take those down. So we actually have seen -- as we launched the parallel path on the iOS App Store, we have seen a majority of consumers choose the Cricut payment option and -- where they're able to access the legacy price. That said, there's still a significant minority choosing Apple Pay. And the good news across both is we haven't seen a significant impact to overall expected sign-up rates. And so we've learned that some consumers are willing to pay more for our offering without it really affecting sign-up rates. And I'll just add to that. At the very end of the quarter, we started some other tests not related to the iOS store, where we're testing new plans and higher pricing across multiple tiers. And so there's multiple tests that we're doing where we're learning more about consumer behavior and pricing relative to our subscription offering and largely differentiated by quantity of AI credits and some shop benefits. But it lets us learn on that without putting our entire installed base at risk with an across-the-board price increase. So we're pretty excited about that. And then on the IEEPA tariffs, we aren't sharing the number. We have applied for refunds. We had an ongoing duty drawback program, and so it was ordinary course for us to apply for those refunds. I will say it is material for us. We're not monetizing or factoring them because at this point, we have $256 million in cash. We have no debt. And so we can be patient to get that money back when we get it. But when we get it, we will make an accounting entry that credits COGS at the time and then keep moving forward. But at this point, we're just -- we're waiting to see how that process plays out.

Thank you. This concludes the question-and-answer session, and thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.