Let me just introduce everyone. Good morning. It's still the morning, I can't believe it. It seems like I've been working all night, but day two of Citi's Tech Conference here. Very pleased to have Cricut here with us today. We have the CEO, Ashish, the CFO, Kim.
Kimball.
Kimball, and then, of course, we have Jim here, from who's, you know, I'd be remiss to say my ex-boss here, from Citi Research, but he's now here at Cricut as their SVP. So we'll kick it off. I think Jim had some comments, opening remarks to make, and then we have a bunch of questions that I'm gonna walk through with Cricut, and we'll get started. So thank you, everyone. And just for those on the webcast, this is an event that's only for Citi investors. No media, no press. If you are from the media or press, please disconnect at this point. Thank you.
Thank you, everyone. I would like to reference our safe harbor comments. First of all, welcome to the Citigroup fireside chat here at our technology conference in New York City. A few housekeeping items. This fireside chat is being live broadcast, and a replay will also be available on the investor relations portion of our website. We encourage you to read our safe harbor statements, which are shown here on this slide, as well as please reference our risks and also our recent 10-Q and 10-K and other SEC filings. I do wanna note that please make sure if you do have a question, to please raise your hand, and we will get to you with the microphone as this is being webcast.
Joining us here on stage, from my side or from left to right is, of course, you know, Asiya Merchant, the senior analyst here at Citi, covering Cricut. Also, then in the middle of the stage is Ashish Arora, our Chief Executive Officer, and to the far right is our Chief Financial Officer, Kimball Shill. So with that, let me turn it over to Asiya to go ahead and kick off the fireside chat. Asiya?
Okay. Jim, would you like to sit down? No? Go ahead. Okay. So, Ashish, you know, maybe I can start with you first to just talk about. You know, most people think of Cricut as maybe a nifty, crafty cutting machine, and, you know, when we were talking, you know, when you were giving me a teaching about the company, maybe you can a little bit, talk a little bit about, you know, what data that you have that, really, if you think about the connected engagement platform, how do you guys think about the Cricut, the installed base, the growth drivers a little bit, if you can dig into that?
Sure, sure. Well, let me just kind of start with a quick introduction.
Yeah.
We are a creativity platform that helps people make personalized goods or personalized everyday items. Our users, you know, make items that are everyday items, like they're customizing personalized T-shirts, custom mugs, vinyl decals, cards, paper crafts, and everything, right? That, that, again, I go back to the word everyday. We have 8 million users on our platform and over 2.7 million subscribers on the platform. Now, the user journey starts with the purchase of a connected machine, and it kind of that relationship, you know, and the engagement happens on the platform. And so let me kind of take a minute to talk about what the platform is. You know, first and foremost, our app. We have a suite of apps across all the different OSes, and users use these apps to design projects.
So they design projects on their apps, and they send it to the machine to cut, similar to a printer. In addition to that, our platform has, you know, users discover content and inspiration. You know, similar to what they do on Pinterest, with the exception that, you know, all of the content that they see on our platform is actually makeable because we have the design files under it. So they use our platform to discover content, they design and make projects, and then ultimately, when they've made a project, they share their creativity back on the platform. The way we monetize the platform is threefold. We have connected machines, which is again where the user journey starts.
We have our materials and accessories business, and these are all kinds of materials from, you know, heat transfer vinyls, to permanent and temporary vinyl, to custom mugs, papers, leathers, fabrics, and, you know, pretty much a lot of these, and all of these are designed to work with our platform. Then the final piece of our monetization model is our subscriptions, which is a combination of content, software, and services that are part of the subscription. You know, Asiya, you talked about the growth strategy. You know, a lot of the trends that drove our growth prior to COVID, prior to March 2020, which are around personalization, proliferation of digital tools, you know, marketplaces, are still intact, and we believe these are long-term secular trends. People still always wanna personalize, personalize everyday items. They'll still wanna make shirts.
Mm-hmm.
And the second is, we believe we are working in a, in a expansive SAM, a massive SAM. When we ask people about what, y ou know, if they have made a project that they could use, make with a Cricut, we estimate that to be about 85, 85 million people in the U.S. and Canada, and about 129 million people when you include just the top six markets. We've seen the trends that exist in the U.S. worldwide, so we're really excited, and we feel that we're in the early days of our company's growth trajectory.
When you talk about AI, 'cause that seems to be a topic that everybody, you know, is really focused on, so I would be remiss if I don't mention anything about AI. Maybe you can just, you know, when you look at your growth drivers, is this a growth driver for your company, and how do you think it manifests itself, you know, whether it's on the machine side, on the platform side? If you can just talk about that?
Sure. So we've actually been investing in AI for many years. We've done both. You know, we already have in our platform a lot of applications that are built around, what's called Predictive AI, right? And I'll give you some examples, and then I'll talk about something that's being talked about a lot in the press, which is Generative AI, and how it actually is very complementary to our business and also our platform. So from a Predictive AI standpoint and Machine Learning, you know, today, when users come onto our platform, it's sometimes very hard for them to describe what they're looking for. So we're able to visually find images, so they can kind of look at something and say, "I want to find something that looks like that.
Mm-hmm.
So we use what's called similar images to visually identify images that they may wanna, you know, they may wanna work with. We have other things, like we are working on Semantic Search, which is, again, sometimes very hard for users to describe, you know, what specifically they're looking for. For example, they're looking for girls playing soccer, right? And, you know, if the image is not tagged with that or if a project is not tagged, it's really hard to find it. But our engine is trained to look for things that would look like girls playing soccer, even though there's no keywords attached to it. So again, we are able to leverage these technologies. Automatic background removal is another one where a user can quickly clean an image, and these are all very high-end technology. They're using our AI and Machine Learning engines.
From a Generative AI standpoint, which is where, you know, a lot of the recent press is, which is, you know, you see a lot of creative innovation around coming up with graphical images. So I describe an image, a cat climbing up a tree, and you can actually generate a graphic image with full color.
Mm-hmm.
Where there hasn't been a ton of development is vector-based images, which require what's called SVGs, which require a lot of precision to be able to cut, you know, accurately on our machines. So we are using. We haven't launched anything yet, but we've been, you know, building this technology for the last, for the last many years, actually. And what, what that will allow a user to do is, so again, somebody comes into the platform and they say, "Dolphin jumping over a boat with a little boy standing." Very, very, very specific thing.
Mm-hmm.
You know, if our library doesn't have anything like that, we can actually generate an image that actually-
Okay
you know, matches that description. Again, built around how we have trained our models around other images.
Mm-hmm.
So we see a lot of applications in generative AI that we plan to launch, you know, over the next couple of years. We think it's very complementary to our business model. We see applications of AI in helping generate instructions to help people complete a project. You know, I want to do a glass etching project. We have enough learning that we can actually help the user get from the point of, you know, inspiration all the way to creation.
Mm-hmm.
So again, we're really excited. We just have to make sure that as we launch these technologies, we are very cognizant about copyright laws, we are very respectful of artists, and we're again, we're really, really excited about many of the applications of AI going forward.
Yeah. What about AI internally? You know, whether it's in your sales chatbots, on your. You talked a little bit about training your own, you know, inspirational models, et cetera. But, you know, even when it comes to you, because we heard from some of the vendors who provide the technology for Generative AI to really talk about applications such as productivity improvements, you know, sales chatbots, e-commerce, automating IT. You know, those were some of the killer applications that they initially saw generative AI going to be impactful. Any comments that you can provide as it relates to internal to Cricut.
Yeah, yeah
Where you've deployed these and have had success?
Yeah, you know, I think we are, again, partnering with some world-class vendors and providers who are integrating and customizing, building their own models-
Yeah
around some of these applications, right? So you think about, you know, customer service. Lots of applications in customer service. We collect lots of data that we can then leverage internally to, you know, to streamline our operations, right? And streamline many of the order, you know, all the steps that are required in order taking, et cetera. So yeah, so we think it's a very promising technology. But I think in that domain, you know, rather than trying to build everything ourselves, we see, you know, working-
Okay
with, you know, world-class partners who are actually integrating anything from sales functionality to customer service applications to, you know, streamlining operations, et cetera. So we again, I think we are in the very early days of a tremendous amount of innovation that's coming.
Mm-hmm.
Well, but then, and another a nd I don't know if my mic's on.
Thanks.
Another place we're using it is in how we match content with users, right?
Yeah.
We have millions and millions of projects. We have hundreds of thousands of images, and being able to match something that matches someone's interest along with their skill set and capability to make on our platform is an opportunity for us that we are pursuing.
Okay. Recently you launched a product called Cricut Venture. Maybe you can just update us on, y ou know, it is a larger machine than, you know, what you consider generally your home-based, you know, your printer that sits on a little table somewhere, nicely tucked away. This is a pretty large machine. Maybe you can talk about, you know, what's the driver behind this? As you look at your SAM that you talked about, both domestically and including the global creatives population, how that fits in with the, y ou know, and what were some of the driver behind going beyond just the smaller machines to something which is much more large format?
Yeah. You know, first of all, we actually see a continued opportunity in coming out with different form factors to go after different segments because, again, we're in the very early stages of penetration of our SAM. So Cricut Venture was actually conceived about a few years ago, specifically focused on what we call a creative enthusiast.
Okay.
So, you know, a lot of our users have multiple machines, you know, they are making lots of projects. They make projects for schools, for organizations, for religious institutions, and name it, right? They make sometimes lots of projects, right? I'm, you know, basically, I'm doing stuff for a dance studio, and I have 25 kids that I wanna make stuff for. I'm in a PTA, and I'm often being requested by parents to make, like, 30 T-shirts at a time. So Cricut Venture is a 24-in large format or wide format cutting machine. It can cut up to 75 ft of repeated images, and it's blazingly fast. You know, of course, you're talking to a product guy, so I'm gonna drool on what we've built.
You know, we design, even in, even though it's a large format machine, we actually design, and this is where a lot of our innovation comes in, we design Cricut Venture to be used in the home. So we actually create what's patented, a 45-degree angle, so that instead of, you know, needing 48 in of space in front and behind the machine, it actually uses the space in, you know, below the table and above the table. So you can actually put it on a kitchen table. So it is designed for creative enthusiasts who make lots of projects. Now, some of these users also happen to sell, you know, their creations, right? So which is a secondary audience for us. We, again, Cricut Venture leverages the same platform that we have for all our cutting machines.
You know, this is our first in-person launch event that we did, a few months, a couple of months ago. We are very pleased with the initial results, and but it's still very early days, right?
Mm.
We see a tremendous amount of growth opportunity, and like I said, you know, we have such a massive user population to go after, that we believe that it's an opportunity to continue to proliferate different form factors and differentiate channels and customer segments.
Mm-hmm. Okay, we have a question in the audience, if you don't mind getting the mic to him. Thank you.
Thanks, Asiya. So I just want to follow up on two things: more about distribution. So could you talk a little bit about what's the channel. And I see you put up a, you know, 40% of users heard about a word-of-mouth, but talk about the channel you have to go to market, both in the U.S. and non-U.S. Thank you.
Let me actually first talk about. Good question. Thank you for asking. Let me first talk about the channels, and then I want to talk about the 40% number that you mentioned. So, you know, we have a fairly good distribution mix, and I, Kimball, I think the last you published was, 40% of our revenues come from bricks and mortar and 60% e-commerce.
Brick- and- mortar, 60% online, correct.
Right. Yeah. Back when we went IPO, it was 50/50. Today, it's 40/60, where 40% of our business is done on bricks and mortar, and 60% of it is done on e-commerce. Depending on the country, right? And what's amazing is the diversity of channels we have, especially as we think about globally, right? So, you know, obviously, we work with craft specialty retailers in the countries that those exist, right? So we have, you know, a couple of leading retailers in the United States. We have a few of them in different parts of the world. So we work with those specialty retailers to go to market. We also work with, as we've continued to broaden our SAM, or at least penetrate our SAM, we work with mass retailers, right?
So you can think about the biggest mass merchants in the United States. We have similar partnerships in other parts of the world, like Australia. In some countries, we work with consumer electronic stores, you know, office stores, right? So the diversity and depth of our retail distribution is pretty amazing because, again, it goes back to the use cases that we have. So, you know, in addition to that, obviously, you know, most of the large e-commerce partners around the world, we work with them, and, you know, that's where we are proliferating our products and our platform. I want to go back to. Does that answer your question?
Yeah.
Okay. You know, I want to go back to the 40%. What's actually very unique about our brand and our platform and how our users engage with our platform, if you think about it, there's millions and millions of projects that are being done on our platform. And every time you create a project, there's an opportunity to create a marketing conversation in the digital or the physical space. So if I, y ou know, Jim made a mug for me in the office, and every time I, you know, anybody sees that mug, people ask me, "How did you make it?" "Well, I have a Cricut machine. You know, here's how I did it," etcetera. So every time somebody wears a T-shirt, it's an opportunity to create a conversation.
So over 40% of our marketing come from word of mouth, which is very organic and very sustainable. In addition to that, social media platform like Pinterest, Instagram, TikTok, Facebook, YouTube, play a massive role. And, you know, we think it's an, it's an incredible way of going to market. So when we go into a country, we, we literally have thousands of people that come and start helping us, and, you know, they start becoming brand champions. And we believe it takes us a little bit longer. We don't go and spend, like, you know, tens of millions of dollars in a country. It takes us a little bit longer, but it actually really creates a marketing flywheel and network effects going, which makes it a very, you know, scalable way of expanding our market and our population.
But we believe that, you know, friends and family, word of mouth, network effects, are an incredible way of going to market for us. And we've used this playbook over and over again in many countries.
Yeah. Maybe you can talk a little bit about, now that you have the new product out, you know, just new user acquisitions. You obviously referred to it in terms of word of mouth, etcetera, but, you know, how do you guys think about the engagement, you know, post-pandemic? People are in this demand normalization scenario as it relates to consumer hardware. Just if you can talk a little bit about how you've seen your engagement trends over this time period, and then as you guys talk about bringing more people onto the Cricut platform.
Sure.
Yeah.
So I'll break your question into two parts.
Yes.
Let me first talk about acquisition, and then I'll talk about engagement.
Yep.
Right. So, you know, we're in the early days of penetrating our TAM, and, you know, as we, we obviously were growing, you know, pretty healthy all the way from 2014 to 2019. We saw a massive increase and spike during the COVID years, 2020 and 2021, and, you know, some, some part of 2022. And as we came into this year, we basically expected to add fewer net users, right? So in Q2, we added 200,000 users, and there are a couple of reasons for that. One is we didn't have the tailwinds impact because of inflation, consumer sentiment. We had the consumer clamping down on discretionary spend, so we expected to add fewer net users this year than we did last year.
Mm-hmm.
In addition to that, you know, our average prices were much higher because we wanted to revert back to our, you know, or gravitate towards our long-term model of mid-teen margins for machines, which Kimball can talk about later. So, you know, we had lack of tailwinds, a few headwinds, there was inflation, and we felt that it was best for the brand strategy for the long term not to be discounting and buying that customer. We thought, you know, the best thing for our business is to monetize that existing install base, continue to penetrate our TAM, and build a brand over time. And that's we are on track for that. When it comes to the funnel, and, you know, I like, I, I love to talk about the funnel. The marketing funnel is very healthy.
We have a lot of people who are in the awareness stage. We have data for that. We have people that are coming to the middle of the funnel, where they start researching the product, considering the product.
Mm-hmm.
But then, when they come down to converting or, you know, hitting that buy button, we hear users saying: "Well, I still want- I want to save money. I'm kind of worried about my expenses. I'm just gonna wait, or I'm gonna wait for a sale." So as we go into Q4, we do plan to be more promotional to help convert those users. You know, back in 2020, what happened in March or April 2020, what happened was, you know, there was a massive funnel that had developed. What COVID did was not create awareness, it actually converted the funnel in the first 12 months. So we had all of these people in the funnel.
People did not go on the web and say, "Well, let me find a home machine that I can use." There were all of these people waiting. The funnel converted.
Mm-hmm.
We see the exact opposite happening today.
Yeah
Which is the funnel is building, it's healthy. They are going through the research process. We've done a lot of things to help answer user questions, but then right before the conversion stage, they stop.
Mm-hmm.
You know, we think that funnel will convert over time.
Mm-hmm.
So we are actually, again, taking a very long view on the business. So I feel really good about the fundamentals of our marketing, the fundamentals of the brand, and we think that, again, you know, as some of these headwinds go away, we will see that growth spike again. On the engagement front, we had over 3.7 million users last quarter that cut-
Okay
which is flat year-over-year. I want to talk just for a second about how we define engagement. I think there's a nuance to it that people don't understand. When a user actually sends a cut command to the machine, in the last 90 days, we counted that as engagement, right? So that's 3.7 million people in the last quarter-
Mm-hmm
that engaged. But internally, within the company, we look at engagement in a much broader way, right? We've spent a lot of time helping people discover inspiration on our platform. We want them to use our mobile app. So even if you are, you know, let's say you're in New York and your machine is back home in Toronto, like, you could be using your apps to design things for your family.
Yep.
But we don't count any of that as engagement.
Fair enough.
Right? So I always tell my team, saying: "The more we get people to engage, right-
Wow!
the more opportunities we have to create different forms of monetization. It is also our belief that the more users that will actually spend time on our platform, ultimately, those users will be inclined to cut. I'll just leave you with one last example. My wife, a couple of years ago, came back from a doctor's office like, "Oh, my God, I finally understand why you've been investing so much in mobile apps." She, you know, was like: "I knew that I was gonna run late, and I didn't have enough time to finish my kids' school projects. So I was able to use that hour in the doctor's office to design everything, and then it just took me a minute to cut.
Yep.
So today, we give ourselves credit for that one minute of cutting, whereas the opportunity is that somebody spent three, four, five, six hours when they're away from their machine, and that's where, you know, we are able to show them ads on Cricut Access, which is our subscription product. We're able to show them different types of materials, so there's a lot of opportunity. So over time, we expect to evolve that metric-
Okay
to be more expansive because we believe that the more time people spend time discovering projects, the more time they will ultimately end up cutting and the more opportunities we'll have for monetization.
Fair enough.
So-
Yeah
that's our engagement strategy.
Okay. Kimball, I'm gonna shift a little bit to you because, you know, Ashish talked a lot about engagement, and then when we look at, hopefully, that drives accessories and accessories revenues for you guys. So maybe in the second quarter, you know, it was nice to see the machine sales now starting to inflect positively up year-over-year. But then on the accessories side, we were still down, I think double digits, down 20% in the reported quarter. Maybe, so if you can just talk to us about the dynamics, what's going on there, and then how does it correlate with what Ashish was just saying, where, you know, engagement is, as the way you guys measure it, is still flattish year-over-year.
Yeah, I appreciate it. There's a couple of things going on. First of all, we're very excited to see growth resume in our machine sales. And that's partly, as Ashish mentioned, because we have higher prices. And so even though we sold—we don't re-disclose units, but we sold marginally fewer units, but at higher prices, and so machine revenues were up. On the accessories material side, a year ago, we had a couple of products that we were launching, and so there was sell-in to the channel for channel fill for our Autopress and our Hat Press products. There were no releases in the same quarter this year.
And so if we adjust for channel fill of new products last year, we were still down, but we're down 4% instead of 20%.
Okay. And then, as you kind of roll it forward, you know, with the new connected machines now, you know, reinflecting positively, what's your outlook for both on the machine side and the accessories side, just broadly speaking, for the remainder of the year?
Well, so Ashish mentioned that, that we see our consumers under pressure, but, I mean, our, our consumers look very much like the U.S. population. And so there, there's no new news there. But as we look at the year unfolding, you know, we're a seasonal business and, and so typically we would sell 40% in the first half and 60% in the second half. We do see the first half being stronger than the, than the second half being stronger than the first half, but it's gonna be slightly less than the normal seasonality for us this year as we, as we see consumer behavior.
Mm-hmm. Okay. Maybe on the long-term model, you guys have, you know, sales and marketing. I mean, I think a lot of your consumer peers would be very envious of that S&M expense line, as a percentage of its revenues. Maybe you can just talk to us about your long-term target model, where you guys have been in the first half of calendar 2023, as you guys kind of look at your gross margins and, you know, as you look at your operating margins. And just remind us, like, what kind of revenue run rate level perhaps you need to be to kind of get to those operating margin levels?
So, thank you for the question. You know, we are focused on achieving operating margins of 15%-19%. That's kind of our North Star. We also manage our business with a medium to long-term focus. And so, you know, in the current environment, we've been very focused on maintaining profitability and protecting that even as we're making the right investments to drive long-term growth in our business. You know, we have our subscriptions business that is very robust and helps us, you know, have a very high gross margin, even in the current environment.
But as we look to, you know, resume growth in coming quarters and as we bring in more users into our ecosystem by selling them machines, we would see gross margins kind of revert back to more historical norms as we resume growth. The other point I wanted to make is, you know, even though we are operating below our long-term targets on operating margins today, we do see that as achievable as we hit scale. And for us, that's kind of growing and $1 billion+ in revenue, is where we think we can achieve those operating margins going forward.
Actually, let me just add a couple of qualitative comments in each of the categories.
Mm-hmm.
You know, G&A, obviously, we have warehousing expenses, headcount expenses, and the like, but as a brand, because that's just how we grew up, we are an incredibly frugal, cautious brand, you know, and we really wanna make sure that we invest in the right areas. So G&A, I'm always generally very proud of how stringent we are, how focused we are in terms of how we decide to make those investments.
Mm-hmm.
On the R&D front, you know, we're clearly an innovation company, and one of the things we talked about is that majority of our focus is gonna be in building connected machines and where, you know, these are intelligent machines that are hard for competitors, et cetera. So there's a lot of innovation happening, and, you know, we'll continue to see similar levels of R&D expenses. And, you know, you use the word envious from a sales and marketing standpoint, even though some of the percentages have gone up, because that's mostly because of the sales being under pressure. Overall, our sales and marketing strategy hasn't changed. You know, we've built, you know, a massive company with 8.5 million users, and most of that has been in the incredible eye towards efficiency for marketing.
Mm-hmm.
And like I said, you know, if when we go into a country, we are just in South Korea, Taiwan, Japan, and hundreds and hundreds of users will start building and helping build the brand. And in a typical country, actually, we don't even have people in every country. We'll have, you know, in fact, I'll give you an example. We have, for our entire META region, which is Middle East, Turkey, and Africa, we have two people. We have a head of sales, and we have a head of marketing. The head of marketing is in Turkey, the head of sales is in South Africa, and we have yet 2,000 people plus, that are the army of people that are helping them do store demos, you know, put-
And-
-go on live TV.
Unpaid ambassadors.
Yeah. These are just brand evangelists. They literally have. There's an entire organization that, you know, mostly we just, they just wanna build the brand. So there's an incredibly organic, which you say, envious.
Mm-hmm.
I always tell people, say, "If you go on TikTok, look at the top three hashtags of Cricut, 99% that we haven't paid for—it's like, you know, like 20, it's massive. So billions and billions of impressions, whereas you compare to, like, some of the world's largest brands, we kinda compete right up there.
Mm-hmm.
All of that is organic, and again, it goes back to, you know, building a brand that's positive, that's inspiring, that's empowering, and ultimately, you know, generates network effects. I was at a similar investor conference in San Francisco a couple of days ago, and a portfolio manager walked up to me and, you know, introduced himself, saying, "Hey, I just saw your name, and I wanted to introduce myself," 'cause he had a disabled sister. And basically, he said, "This is the only thing that kept her positive." And he said, "Every single time we go somewhere, we can't stop talking about how powerful your brand is and how creative it makes people feel." So there are very few brands in the world that actually make people feel great about themselves, right?
And I think, you know, and that's how the company is built, that's how we run the company, and it goes back to ultimately, where it translates to financials, is that we believe that we have a very, you know, scalable, effective way to, you know, to, to go to market and drive sales and marketing. So we just believe there's a lot of leverage there over time.
Yeah. Fair enough. A little bit on capital allocation. You know, you guys paid out, or you do have a special dividend, that you paid out. I think it was $1 per share in July. You followed up, you know, and there was something prior to that in February. So I know you're a growth company, I know there's a long runway for growth, and typically, growth companies don't pay dividends. So maybe you can talk a little bit about, are you guys planning to become a regular dividend-paying company? Kind of what's the strategy behind the special dividends that you guys announced?
No, so we do very much consider ourselves a growth company. We also are a company that produces cash. And so, periodically, as we have excess cash, we will find an efficient way to return that to shareholders, and that's why you saw two special dividends this year. But we think of these dividends really as right-sizing our balance sheet, coming out of COVID. So think of it as a COVID dividend, really. Because, you know, one of our strategies as we navigated all the supply chain uncertainty, during the pandemic, is we intentionally held more finished goods inventory than we normally would.
Okay.
As we've come out of that and started to work to bring inventory levels back in line with historical norms, that's producing more cash than we typically would for our business. And so, you know, our capital allocation strategy is first making sure we can fund organic growth. Secondly, we're looking at R&D to make sure we're protecting growth in future years, and then looking, are there any acquisitions that we think would be synergistic with our business? But after we've fully accounted for all of those, we're looking for what's the most efficient way to return capital to shareholders.
Our first preference would be share buybacks, and we have a program that's been in place for over a year, but we also trade within the Safe Harbor provisions, and given just some of the volumes on our stock, we're not able to place as much capital as we'd like in that approach, and therefore, a periodic dividend makes sense for us.
Mm-hmm. Okay. Jim, you've been waiting patiently, so I can ask you that. You know, as you moved from, you know, the sell-side brokerage world to working within the company, you know, what is—what's been some of the more surprising dynamics that you've observed when working within the company versus observing it from outside?
Thank you, Asiya. Since being on the inside, I would say there are three specific things that my eyes have really been opened to. The first one is the platform of the company, not necessarily just a product, but really a platform, and it comes down to what I'm showing you on the slide here of discover, make, and share. This flywheel of a platform that keeps people coming back to the Cricut platform, and there are some examples on this slide. So the platform strength really is underappreciated and something that I've really got a, a lot more better understanding since joining Cricut. The second thing is the early innings of the adoption and growth. You know, I knew the products. Our family had been using it for years and years and years, but the adoption and growth is so much at the early innings.
And the third and final point is all of this, whether it be the innovation, the platform, design, make, share, the early innings and growth, is being done so at a profitable time. 18 consecutive quarters of profitability. There's a lot of tech companies out there who can't boast that, but the profitability in the company is very impressive. But, to summarize your question, Asiya, I would say, first, the strength in the platform. Second, the early innings of growth. And finally, third, profitable growth.
Yeah. You know, now that we're on the platform, like, maybe I don't know if you have a slide on that or not on the slideshow, which talks about your subscriptions, your paid subscriptions, you know, that are quite impressive. And so maybe you can talk about Ashish or Kimball or Jim about that paid subscription platform. You know, what keeps people in that platform? What's kind of your outlook for those subscription users? Because those are the most, you know, obviously margin accretive to your portfolio. They're above average.
Yeah, I'm actually really glad that you asked the question. So, you know, as we said before, we have over 2.7 million subscribers, and I want to talk about the nuances that I think make it a very compelling product. I'm super excited about just our roadmap and everything we are doing. So first of all, the subscription product is about, you know, access to over 500,000 images, plus software and services. So we have premium tools that allow people to design things, that if you're a subscriber, you basically, you know, basically have access to those tools. One thing that actually is not very well understood, I'm gonna try to explain it, because there's a lot of stickiness in our subscription product.
So let's say I'm a school teacher, and I have, you know, I'm a subscriber today, and I have done 200 projects this year for my kids' school, right? And I was subscribing 8 or 9 months in the year. If I stop subscribing, so I've probably subscribed for eight months, I've done 200 projects, I've spent 300 hours subscribing, and making those projects. If I stop subscribing next year, I can still see all of those things that I created. But in order for me to go back and cut them again, I need to go and subscribe to Cricut Access.
So now, the more users engage, the more they are committed to subscribing, because they're not only getting access to our content, they're actually having to pay to subscribe to get access to the content that they've created on top of our content. So the more things people make, the more they're likely to subscribe. So we see people—we have both monthly and annual subscription. We see people, you know, going in and out of subscriptions over time. So they may subscribe in the first two months of the year, then they may go back and subscribe again. You know, and I always talk about switching costs, right? Which is, I can switch from one rideshare platform to the other. We have not invested in that platform.
Mm-hmm.
In our case, everything that you've ever done, all the photos you've uploaded, all the community projects you've bookmarked, all of those things exist in the cloud. But if you stop subscribing, that's, that you don't have access to those anymore. You can't cut those on those machines.
Mm.
So we think that our subscription product, by design, is incredibly fundamental. The second thing that I think also not appreciated, unlike a home printer, which gets disintermediated, right? A user can use any software with a home printer at your work. It is. You know, you can create a lot of things in other platform, in other software, but the machine only works with our platform. So you have to interact with our platform, and every time you interact with our platform to use the machine, we have an opportunity to intermediate you. We can sell you a subscription, we can sell you other things.
Mm-hmm.
I think those are nuances, both of our subscription and our platform, that people don't understand. So there's a lot of stickiness. We measure metrics like, you know, the number of users that are subscribing, the attachment, et cetera.
Mm-hmm.
But again, like I said, we are in the very, very early stages of our subscription product, and I think there's a lot of innovation coming, including some of the things that we talked on the AI front.
Yeah, great. Any other questions from the audience? Oh, there is a question.
So I don't know your company or any of your background, but the fact you attracted a professional person like Jim, it intrigues me, and I will appreciate later on. I will connect with your whoever I need to connect with investors contact, and I would like to learn more about you, sir. That's all I want to say.
Oh-
Sure. We really appreciate it. We are very fortunate and grateful that Jim joined our team, and I couldn't think of a better investor in the world as a Cricut user and his passion about our platform. So again, you know, we always tell Jim that he just—he's starting with the company. He always tells me, "Oh, I wish I had joined many years ago." I know he loves it as well, but I always tell him, saying, "Jim, we are still at—we are still building the ground level. You're joining us at the right time.
You didn't miss the upside yet.
I am a big customer for 20 years-
Okay.
I'm excited to see more.
Thank you for the comment.
Awesome. So that's a wrap. I appreciate Ashish, Kimball, and of course, Jim, for making it to the Citi Conference. I hope, I know you guys have a very packed schedule with investors. So excited for you guys to communicate your story to those investor base.