Q3 2023 Cricut Inc Earnings Call
Good day and thank you for standing by welcome to the cricket quarter Three earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session.
I ask the question during your session you will need to press Star one one on your telephone you will then hear an automated message advising that your hand is raised to withdraw your question. Please press star one one again please.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Jim Suva.
Senior Vice President of finance.
Jim. Please go ahead.
Thank you operator, and good afternoon, everyone. Thank you for joining us on crickets third quarter 2023 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 had been posted to the Investor Relations section of the company's website investor Doc cricket Dot com.
Joining me on the call today are Ashish Aurora, Chief Executive Officer.
And Kimball shell Chief Financial Officer.
Today's prepared remarks have been recorded.
After which ashish and Kimball will host 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 and results of operations and risk.
Sponsor 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 comp.
<unk> management and involve inherent risks and uncertainties.
Including those identified in the risk factors section of crickets, most recently filed Form 10-Q.
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 November 7th 2023.
Cricket 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 Jim.
Q3 was strong from a profitability perspective, with operating income up 36% year over year, Despite a 1% sales decline.
As we mentioned before in 2023, we are focused on profitability and remain disciplined in our investments to generate value over time.
We view our business through a long term lens and these investments will help us return to meaningful sales growth in the future.
We continue to see retailers, taking a conservative view with open to buy dollars and consumers being careful with discretionary spend especially on higher ticket items.
As the category leader, we are focused on the things that we can control.
We continue to innovate and grow interest in the category, which will ultimately drive customer acquisition.
We're excited about the future of our platform and the opportunities ahead.
Before going into updates on our key priorities I want to highlight some exciting new product launches in Q3 that demonstrate our commitment to innovation.
First joy extra.
Relaunched cricket Joy extra in Q3.
It was available for purchase starting on September 7th.
Targeted primarily at new creative users and broadening our market with a printer friendly compatible format cricket.
Cricket Joy extra is designed to help make us create the most popular projects, especially.
Especially full color stickers as well as custom cards T shirts, and much more yet is compact enough to fit into any space.
Second Cook adventure on the last earnings call I mentioned, we launched cricket venture, which became available for purchase on July 25th.
Click adventure, the largest and fastest connected cutting machine on the cricket platform and represents the fourth all new architecture of connected machines in our history.
The feedback from our users and independent Ws on both machines has been very positive.
Now onto an update on our priorities.
Recall that we have four priorities, new user acquisition user engagement subscriptions and accessories and materials.
I will briefly review these items and provide some detailed commentary on our new platform innovations.
New user acquisition.
We ended the quarter with $8 6 million total users approximately in line with their expectations.
We continue our focus on new user acquisition to grow our member base engaging on our platform, which ultimately drives our monetization flywheel.
We have previously shared that our funnel is healthy and we see an opportunity in holiday to pull consumers through the funnel who had been pausing in their purchase decisions.
We are encouraged by recent Amazon Prime day results that appear to confirm our research that consumers looking for a deal will act for the right value.
As discussed last quarter, we are continuing our plan for deeper shorter lived promotions during holiday to convert more of these consumers.
As we enter Q4, we continue to focus on driving awareness with cricket and I category by driving excitement by getting people talking about and making with cricket with friends and family and across social media.
We know that cricket is a key part of holiday season for makers across the globe.
We plan to position cricket is a key by our gifted the season from supporting sales promotions to executing holiday marketing campaigns that bridge awareness to revenue.
Turning to the international side of our business. We are excited to see a return to sequential and year over year revenue growth of 36% year on year, but international representing 21, 5% of total company revenue in the quarter compared to 15, 6% in Q3 2022.
We ended the quarter with $3 six 4 million engaged users compared to $3 five 6 million a year ago.
As a reminder, we count an engaged user as one who cut the project at least once a quarter.
Engagement body is the core of our platform, where we help users discover make and share their projects.
Our goal is to expand the breadth of <unk> content and help users discover content that inspires them.
We then want to make it easy for them to design and make their project and ultimately share on the platform for others to be inspired.
Although we are still in the early days of executing on engagement strategy, we see several positive signs, resulting from our efforts to drive engagement throughout our members' journey on our platform.
Let me share a few examples of what we are working on.
A key Onboarding metric, we look at is the number of days new members within the first 30 days after registering their machines.
This metric is a strong leading indicator of the long term engagement of our member on our platform over the past year, we had mentioned initiatives such as cricket learn classes assisted learning floods and other improvements in our out of box experience.
In Q3, we saw an increase in this key onboarding metric compared to a year ago as well as the share of members who engage in our educational content content plays a key role in our platform.
We've been focused on delivering the depth and breadth of images. We have now crossed 600000 images available to our cricket access members.
The growth of our library over the past year has been possible. Thanks to the great success of our contributing artist program.
We are also making strides in the discovery ability of our content. So members can increasingly find content that is relevant to them.
In Q3, we launched personalized content of the design space homepage.
Well each member gets recommendations based on their past activities on our platform.
Before all users in each country, so exactly the same content.
We're pleased with the click through rates of our members with this new personalized content.
We will continue to invest in personalization, along with growing our cricket library of images.
Our unique differentiator of our platform as projects.
With projects our members can discover a full project ideas.
That they can then customize or just make them as is.
Unlike inspiration found another platforms projects in design space are not just a visual inspiration that needs to be re created from a blank canvas, but actual medical content.
In Q3, we also made improvements to our project search algorithm to provide better visibility to members of community projects.
Which are projects made and shared on our platform by other members not created by cricket.
As a result, we saw a significant increase in the number of members deciding to make the project based on a community project.
By way of context, we see a library of community projects is a key area of growth for our platform.
Community projects will increasingly be a fresh source of inspiration and medical content for our subscribers as network effects accelerate the amount of make both content, which in turn inspires others to discover make and share projects.
While providing good visibility to the diverse creation from our community. We are also making improvements to facilitate and stimulate project sharing.
As we are successful in unlocking this opportunity community projects will become a massive opportunity for growth and will create a competitive moat that'll be hard for others to replicate.
As we broaden our library of images in projects. It is important that our users are able to find the content they're looking for.
I've already talked about the personalization technologies, we are investing in.
In addition, we're also focused on improving search.
Launched semantic search in early Q3 and are actively testing and optimizing it.
Machine learning power semantic search we are already seeing significant search conversion gains from multi word queries and actively training the machine learning model on cricket and cutting machine specific terms to further improve the results there.
The common thread across all of our engagement efforts is to help users discover content that inspires them and matches their skill level in time availability. So they can find fulfillment in making and sharing their creations.
Paid subscribers, but in line with our expectations and increased 261000 year over year.
But decreased 23000 sequentially in Q3.
Ending with approximately $2 7 million paid subscribers.
Recall, we communicated our expectation that paid subscribers could be flat to down in the second half of the year.
While we have a positive outlook on subscriptions lower new user adds compared to prior years puts pressure on our subscriber growth rate and attach rates throughout the second half of the year.
As of today I'm pleased to say that in the month of October and thus far in November our periods.
Paid subscriber count has been positive.
To be clear positive paid subscriber growth is our plan, we have a rich roadmap to continually increase the value proposition for subscribers, including an ever growing suite of premium design tools, along with content strategy as described previously.
Goal is to make it incredibly compelling to sign up as a subscriber to leverage our software and services.
Has that engagement efforts bear fruit, we expect to see a boost to subscriptions.
Accessories and materials sales declined 12% year on year.
As we've highlighted before we are on a two year journey to transform this business.
<unk> with prior comments, we will continue our promotional cadence in this category to remain price competitive for consumers.
We see that when we are in the price range of our competitors, we get our fair share.
We have a strong focus on optimizing our products for lower costs. So we can compete better in the market with improved margins, while still creating a differentiated offering that works seamlessly with our machine platform.
For example, along with the larger cricket Joy Xtra, we released several innovative new materials like printable waterproof sticker sheets, iron-on and vinyl that leveraged standard inkjet printers, and then work seamlessly with our print and cut technology to produce full color projects in a single Cutler.
We are intensely focused on the overall consumer experience and we are motivated to work with those retailers that help us create a great experience both on the shelf and put actual usage of our ecosystem.
I've never felt so encouraged and excited about the cricket platform.
In the early days of this transformation while remaining profitable.
We are driven to continue to innovate while exhibiting both vogtle focus and current discipline as we look ahead into Q4 and beyond I'm excited about the future innovations of our platform and products that will continue beyond what I've detailed previously to help users discover make in check.
With that I will turn it over to Campbell.
Thank you Ashish and welcome everyone to the third quarter, we delivered revenue of $174 9, million% to 1% decline compared to prior year, we generated $17 2 million in net income.
38% year over year increase in our 19th consecutive quarter of positive net income as we continued to invest in our key priorities.
Breaking revenue down further revenue from connected machines was $49 $5 million down 6% over Q3 2022, we continue to experience the effects of softness in consumer discretionary spending and retailer caution and inventory commitments Rev.
Revenue from accessories and materials for the quarter was $49 $1 million.
Down 12% over Q3, 2022, and was primarily driven by a decrease in project materials as Ashish referenced we have more work to do here.
Subscriptions revenue for the quarter was $76 $3 million, an 11% increase over Q3 2022, reflecting targeted investments in cricket access and the expansive improvements made over the last several quarters.
In terms of geographic breakdown international revenue was $37 $6 million up 36% compared to $27 $6 million in Q3 2022.
As a percentage of total revenue international was 21, 5% compared to 15, 6% of total revenue in Q3 2022.
Turning to users and engagement I am pleased to share we ended the quarter with over $8 6 million total users or a 16% growth over Q3 2022.
We ended the quarter with over $3 6 million engaged users, which was a 2% increase from Q3 last year and essentially flat sequentially.
We ended the quarter with approximately $2 7 million paid subscribers up 11% from Q3, 2022, but down 23000 sequentially our subscription attach rate declined to 31% in Q3 2023 and from 33% last year as discussed in earlier calls there is some natural.
Subscriber attrition.
Subscriber growth will be muted until we increase the pace of machine sales and new user acquisition moved.
Moving to gross margin total gross margins in the third quarter was 46, 8% an improvement compared to the 46, 2% in Q3 2022 and reflects a higher amount of subscription revenue as a percentage of total revenue breaking.
Breaking gross margin down further gross margin from connecting machines was 15, 9% compared to six 1% in Q3 of last year. The increase in margin was primarily due to less promotional activity as a percentage of revenue and a favorable product mix compared to Q3 2022 as our end of life maker machine continues to represent a small.
What percentage of machine sales.
Subscription gross margin for the quarter was 89, 3% compared to Q3 2022 of 96%.
Third quarter gross margin for accessories and materials was 12, 1%. This compares to 29, 2% in Q3 2022.
The decline in margin was driven primarily by inventory impairments without the impairments gross margin would've been approximately 30% our full year expectations for A&M margins remain unchanged looking into Q4 for both connected machines and accessories and materials margin pressures for capitalized warehousing and operations.
Expenses will accelerate as we reduce inventory levels. Also Q4 is typically our lowest gross margin quarter machine sales are seasonally higher with the holidays, which will naturally pressure margins since machines carry lower gross margins than other products and will represent a higher percentage of revenue in that quarter.
Total operating expense for the quarter was $58 2 million and included $11 $7 million in stock based compensation.
Operating expense was down nearly 10% from $64 4 million in Q3 2022.
The $6 $2 million decrease in total operating expense included a $4 $5 million reduction in bad debt allowance.
Income for the quarter was $23 7 million or 13, 5% of revenue compared to $17 4 million or nine 8% of revenue in Q3 last year or.
Our tax rate of 32, 5% was higher than normal compared to 29, 5% in Q3 last year due to an increase in stock based compensation difference due to the decrease in stock price upon vesting versus the stock price at the grant date.
We delivered our 19th consecutive quarter of positive net income net income was $17 2 million or eight cents per diluted share compared to $12 4 million or six cents per diluted share in Q3 2022.
Turning now to balance sheet and cash flow, we continued to generate healthy cash flow on an annual basis, which funds inventory needs and investments for long term growth year to date, we have generated $196 million in cash from operations compared to $630000 a year ago, I think with a cash and cash.
Cash equivalents balance of 170 to $3 $6 million, we remained debt free recall, we are generating higher levels of cash is as we work to bring inventory more in line with pre pandemic norms accordingly inventory decreased by $182 million from a year ago to 303.
$6 million at the end of the quarter.
In Q2, we announced a $234 $6 million special shareholder dividend.
Which $232 $2 million was distributed in July with the remainder to repaid upon vesting of restricted shares.
During the quarter, we used $347000 of cash to repurchase 39000 shares of our stock we have $26 $9 million remaining in the repurchase program as of the end of Q3. After the end of the quarter and through October 31, we used $6 $9 million of cash to repurchase 821000 shares.
Of our stock, which resulted in $20 million remaining in the repurchase program as of November one.
Much of our outlook remains consistent with what Ive communicated in our prior earnings call.
But I do want to highlight a few additional items during Q3 and specifically in July we paid the special dividend, which will result in a lower cash balance and lower interest income in the second half of the year.
We expect to continue generating healthy cash flow from operations and to end the year with substantial cash and no debt.
Consistent with our commentary last quarter, we continue to see softening consumer spend in our category and retailers, taking a conservative approach to inventory commitments.
Retailers did not restart to historical normal levels in Q3 as a result, we are taking a prudent and prioritized approach in our planning as we look ahead.
Leveraging our consumer analytics, we plan to execute deep for Q4 promotions for machines combined with comprehensive marketing plans to address consumer concerns about affordability and consumer reluctance to spend we remain cautious because it is difficult to predict how consumers and retailers will respond to these initiatives.
Typical revenue seasonality as 60% in the second half given the current macro environment, we expect second half revenues to be softer as a percentage of full year revenues and expected lower sequential growth rate in Q4 compared to historical norms in terms of new user growth, we still expect to add fewer new users in 2023 than we did last.
Year.
We have a positive outlook on subscriptions and expect to end Q4 with more paid subscribers than we had in Q3 as we look to 2024, however, new user growth rates may put pressure on our subscriber growth in attach rates, which could result in a similar seasonal subscriber pattern as we observed in 2023.
Gross margins will continue to be pressured for multiple reasons first the mix of revenue in Q4 is more weighted toward machines, which carried lower gross margins.
On physical products higher fixed costs as a percentage of revenue and warehousing to capitalized operations expense will be more pronounced in Q4 as inventory levels decrease.
Third accessories and materials will also have a promotional cadence to remain price competitive.
As a result, we expect full year accessories and materials margins will be similar to Q4 2020 twos gross margin.
We expect operating margins to be similar to 2022 full year margins, we remain focused on managing our profitability, while investing in areas with the highest impact should macro conditions worsen we will continue to make adjustments as needed just as we demonstrated in 2022, we expect to continue generating healthy cash flow from.
And we remain committed to our long term operating margin targets of 15% to 19%. Our proven model has demonstrated that when we operate at scale and drive top line growth. These margins are achievable.
With that I'll turn the call over to the operator for questions.
Thank you.
At this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.
And by as we compile the Q&A roster.
Our first question comes from Eric <unk> at Morgan Stanley. Please go ahead.
Hi. Thank you this is <unk> on for Eric.
First question just as we look at the percentage of engaged users had dropped to a new level of 42% in the quarter, where do you think engage Matt bottoms and how should we think about that metric and faruk here I know, it's usually obviously a seasonal uptick and then I have a follow up thank you.
<unk>. This is Ashish, let me take that and thanks for the question.
Clearly engagement as we've highlighted before is one of the top priorities for the company.
We definitely have seen some promising results and promising thing, but too early to declare victory. So let me kind of give you some color on that.
And to answer your question as well so as you said percentages are down.
Year on year for engagement, but the number of engaged users were up by about 80000.
Yep.
We will see by the fact that we have a larger number of users, but the number of engaged users are up 80000.
Now when we ask you know we dug into this and when we ask users who've not been on the platform for the last 90 days or more they kind of highlight a number of things, but the first thing to highlight is that over 80% of them as you want to be on the cricket platform right. They like it they want to engage with cricket more so than we asked them well why didn't you do that.
At the.
The top reasons among many one is.
Life, just got too busy I didn't have time.
I couldn't think of a reason to make something and even with the higher the reason I couldnt find the project easily so what we are focusing on two.
Basically to capitalize on the opportunity we have in engagement is to innovate on the platform to make it easier for them to make things that it takes less time to send them trigger then.
Identified reason that they would want to come back to the platform like for example, reminding them, saying Hey, you've made you've made for about the last year, it's time to make a birthday.
The project or a trend that you follow on the platform made something and finally.
Just give them the right inspiration the right content, so that they can make it so a lot of our innovations and I think it is.
It's a series of things that we're doing but let me give you. An example that we kind of highlighted in the script.
We introduced this personalization driven which identifies based on users' interest things that they would be interested in and we saw a pretty significant engagement with that content right. So again, we're going to continue to work on a variety of initiatives.
All of these many of these are showing promising signs, but obviously they have to at some point add up.
Impact the overall metric that we report on publicly.
One thing that we do want to highlight is that the.
Our conventional belief is that the more people come back to the platform more often to be inspired to be discovered to discover content. The more likely they will be to make so again like I said.
Some good promising.
Results on the micro initiatives, but we have to still see how they all add up to improve the metric overall.
Okay.
Great. Thank you and then.
You talked a little bit about how retailers continue to be cautious on <unk> as you look into it.
October and November to date.
Are you starting to see retailers restock more significantly.
Or is it kind of that same cautious retailer behavior.
So my this is kimball thanks for the question.
Our saying retailers continue to be cautious as we move into Q4.
We also continue to see consumers.
Yes.
And the discretionary spend under pressure.
That said, we have a large sam with the huge opportunity in front of us notwithstanding the short with headwinds.
Our research shows us that the funnel is healthy.
And and we have.
Promotional strategy in Q4 that we've talked about where we're going to have some deeper lives promotion. Some deeper shorter lived promotions to to accelerate some of those consumers through the funnel that tell us that they are waiting for a deal or they're saving money to to buy a cricket.
The recent Prime day performance, we're encouraged by that but it's still a little early for us to say how holiday works out for for consumer demand.
So we're watching that very carefully.
But in some instances, we believe retailers have sub optimized inventory purchases for holiday.
And let me, let me just kind of add to that and reinforce some of the things that Kevin mentioned right, which is that we have.
Made a deliberate strategy for the majority of the year based on the headwinds we are seeing to build the top of funnel in the middle of funnel.
So as we kind of continue to pull people through the funnel right before they convert they basically highlight a few different reasons why they haven't hit the purchase button, which is.
I'm saving money.
I'm looking for a special deal I'm worried about expenses. So our Q4 strategy as Kimball said was very much driven by.
Let's promote and let's understand the elasticity of those promotions, we think we can.
Clearly you saw the results on Prime day, we definitely work with retailers to highlight some of our concerns we think that there'll be somebody or some money left on the table as these consumers either.
By something else or go online to purchase these products, but again, we go into the holidays.
Basically based on data that some of the consumers will actually respond to the promotion that we're actually pretty excited about it.
Great. Thank you so much.
One moment for our next question.
Our next question comes from Adrian <unk> at Barclays. Your line is open.
Hey, Good evening. This is Paul Kearney on for Adrian or just drill down on accessories and materials on the gross margin performance, hoping you can give us some more color on what's driving the year over year decline in gross margin. It sounds like 12% I know there was how much of this was the excess inventory reserve versus kind of just deleverage on higher fixed costs.
Bigger picture on excess food and materials, how do we get back to a point where customers and materials at the gross margin contribution becomes a larger part of the story the razor blade part of the story or the when things are working do you see anything different.
Cost of accessories and materials getting back to that point. Thanks.
Oh, let's Kevin Thanks for thanks for the question.
Firstly, a question on gross margins, so accessories and materials gross margins in the quarter would've been 30% but for.
The write downs alright.
M is our broadest category is a category where you see the most competition.
And we launched a lot of products in that category and some some do well some some don't do as well and.
As we look at velocity and do periodic look backs GAAP requires that we write down of excess inventory.
As we have.
I've gone through the last couple of years and had.
Declining sales in this category.
Has exacerbated somewhat that velocity factors as we do these look backs and so that's really what weighed down the margins thus far in the quarter.
Yes.
On the revenue side of the equation when we do see we do see competition here, but as Ashish mentioned that when we are closer to price with our competitors we win our fair share and so we are focused on how we maintain share in this space.
Engagement continues to be a headwind because when consumers are cutting less there theyre using fewer materials and that puts pressure on on their demand and then again there is.
An element of the retailer conservative approach to restocking inventory that also is weighing on our on our revenues currently.
We're about eight months into a two year journey to remake this business.
I just want to highlight that.
We have a strong conviction that we have a right to play and win in this space, where you have an integrated platform and we design our retails works seamlessly with our platform and as we as we rebuild this business over the next coming quarters right. We're focused on making sure we have the right products at the right price with the right cost structure. So that we can win and also.
To help our retailers with better margins also.
I'll just add that as we as we drive engagement.
As the most structural variable that lifts all boats.
I think we need to just make sure that.
We continue to do that over time.
Yes, and I would just call out these improvements aren't going to be like a light switch right youll see incremental improvement over time.
Perfect. Thanks peso.
One moment for our next question.
Our next question comes from Mark at Swagger at Baird. Please go ahead.
Your line is muted please on mute it please rejoin the conference call.
If you can't hear our next question comes from Mark <unk> at Baird.
Can you hear me now.
Yes, yes, yes, we can hear you.
Alright. This is Amy <unk> remarks, I would thank you for taking our questions.
In your prepared remarks that subscriber growth and attach rate could remain under pressure in 2024.
At this point can you provide us any more color on your initial expectations for 2024.
Okay.
So that and when we talk to this.
In Q2, and Q and then this quarter that.
Current rate of new user adds that we could be flat to slight decline in subscribers.
And to the extent that that.
Growth.
<unk> and <unk> acquisition as moderate we'd see this we would expect to see the same seasonal pressure next year, which means that would be exciting to add subscribers in Q1, and Q2 and potentially flat to maybe down in Q3, depending on exactly how those acquisitions play out.
In terms of of Q2 for sure.
In terms of 2024 outlook I think it's a little early for us to call that out and we've talked about the headwinds that we're seeing currently in Q4.
We've talked about the promotions that we have planned and we are watching those closely to see what resonates with consumers and what elasticity, we see as we go through those promotions and Thats really going to inform us as we think about especially the first half of 2024.
Again.
I think if you look at all of the four priorities that we have.
The <unk> acquisition engagement materials.
We feel that we are furthest along in our subscriptions roadmap, it's where we have a ton of innovation coming.
Focusing on driving search improving services content. So we generally a level of confidence in that part of the portfolio is high.
As Kimball said.
In addition to that as we look at acquisition, but as we acquire new members and penetrate our Sam.
Does the more we acquired to help them further the more it helps our subscriber base.
Ability to succeed in acquisition is going to directly have a positive impact on subscriptions.
In terms of acquiring new customers.
Efforts on engagement is going to have a positive impact on our ability to retain those subscribers. So I think again, it's hard to talk about how the economy is going to shape out how some of the consumer spending will happen, but again as we look at the medium to long term.
We have a high degree of confidence in our subscriptions roadmap and strategy.
Great. Thank you and then.
You know you've continued to expand the capabilities of your subscription platform, while introducing cutting capabilities with the joy extra dungeon machines.
Is there any benefit in the quarter related to that Joy extra launch and then could you also speak to any particular areas of opportunity you see in the innovation pipeline. Thank you.
So there was some sell in benefit in the quarter.
But not enough that were splitting it out separately its still an illustration in being placed and retailers. So it's not it's not fully set in all locations, where we expect to see it it's actually very late in the quarter.
Right when we launch <unk> extra so again.
Again, but just kind of rolling out we've had really really strong reviews, great feedback from our existing add on new.
Consumers.
For a joint venture for it just to add to your question. We obviously did not see any sell in benefit.
No artificial pull in of revenue I would say a preventative because it's only distributed online so our sell through.
Revenues match pretty well.
I think our innovation strategy is we're going to continue to.
Continue to drive for affordability and approach ability on machines on materials, but again I would reinforce the the biggest innovation that is going to benefit and ultimately helps US cross the chasm is going to be all of the effort that we're working on the platform to drive engagement and to make it easy for people to discover make sure.
Their projects so that ultimately drives network effects, I think thats kind of Theres a lot of innovations coming but that is the core backbone all innovations play off each other.
Alright, thank you.
One moment for our next question.
Our next question comes from GM merchant at Citigroup. Your line is open.
Thank you for taking my question.
So the international growth was particularly strong.
And you highlighted that in your page remarks as well.
Maybe you can talk to us about is it just off a small base or what.
It's been some of the driving factors that you see on the international front and how we should think about.
Sales and marketing expenses in the December quarter, and you continue to drive maybe perhaps the international growth or even domestically that you've talked about your various initiatives.
And then I have a follow up thank you.
Okay. Thanks for the question. This is this is Kimball yes, yes, we're excited about our international performance, we were up 36% year over year.
Presents almost 22% of revenue in the quarter, which is which is up from a year ago.
International benefited from retailer expansion within different countries as.
<unk> also is also online expansion.
That said we are.
<unk>.
Excited about our Sam both in North America, and internationally, we have a huge opportunity in front of us and.
While we benefited relatively in international in the last quarter, we said that we have a huge opportunity ahead of us and.
In our domestic business as well.
Turning to your question on marketing spend in Q4.
As part of the deeper promotion strategy, we've talked about.
To create buzz around some of those promotions and adding.
A number of Influencers I think we've shared the number of targeting.
Two additional 200 influence to help us influencers to Airbus advertise.
Our promotions and our product.
<unk> added almost 300 at this point and we continue to execute on that broader marketing strategy in the quarter.
Okay, and then just on cash flow generation.
Very healthy here can you talk to us about.
The return of cash on this one like what we should be modeling for the outer quarters things like the repurchase of shares with a little bit lower this quarter than the prior quarters are you expecting more of this to continue given the given you guys have.
Our balance still remaining on your share buyback.
So so we have a business that generates cash and we've talked about in the last couple of quarters that that we're generating more cash this year than we normally would as we bring.
Pandemic level of finished goods inventories down in line with historical norms and so we highlighted.
Almost $200 million worth of cash generated this year versus <unk>.
Today versus 600 and something thousand.
The prior year. So we are producing a lot more cash and the.
$234 million dividend that we.
Paid in Q3.
Reflected a right sizing of our balance sheet.
And we continue active with our with our buyback program.
We buy within during during outside.
Outside of our open trading windows, where trading within kind of.
Safe Harbor provisions for volume, but we also have price targets, which were more active versus less active.
And so that's part of what played into the Q3 purchases as we highlighted.
In the month of October.
Also spent $6 9 million to purchase an additional 821000 shares.
So.
We will be active in buyback.
Buyback, but yes.
We have a pricing strategy that.
<unk>.
We adjust from time to time.
Okay. Thank you.
Thank you I would now like to turn it back to Jim <unk> for closing remarks.
Thank you Amber and thank you to everyone for joining us. This afternoon, we have a large opportunity over the long term to drive new user growth and increased engagement. We believe the initiatives. We are deploying now will position us well in the future. The cricket platform continues to not only strengthen but also provide increased <unk>.
<unk> to our users we will continue to manage the business for sustainable profitable growth and generate healthy cash flows I am excited about the opportunities ahead of US we will be at the Roth MKS 12 annual Deer Valley Investor Conference in Deer Valley, Utah on December <unk>.
2014, and look forward to seeing everyone. Then if you have additional questions. Please E Mail me at Jay Suva at cricket Dot Com.
This now concludes this earnings call and you may disconnect. Thank you.
Okay.
Okay.
[music].
Okay.
[music].
Okay.
Okay.
Yeah.
[music].
Yes.
Okay.
Yes.
[music].
Okay.
Okay.
Yes.
[music].
[music].
Yes.
Okay.
Okay.
[music].
Yes.
Okay.
[music].
Okay.
Yes.