Q3 2024 Cricut Inc Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to Cricket 3rd quarter 2024 earnings conference call. At this time, all participants are in the list and only mode. After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.
Speaker Change: 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, please go ahead.
Speaker Change: James Suva, Eric Sheridan, James Suva, Eric Sheridan, James Suva, Eric Sheridan,
Speaker Change: Thank you, operator, and good afternoon, everyone. Thank you for joining us on Cricut's third quarter 2024 earnings call.
Speaker Change: Please note that today's call is being webcast and recorded on the Investor Relations section of the company's website.
Speaker Change: 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.Cricket.com.
Speaker Change: 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 live Q&A.
Speaker Change: 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.
Speaker Change: including statements regarding our strategies, business, expenses, 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.
Speaker Change: 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.
Speaker Change: November 5th 2024. 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.
Ashish Arora: Thank you, Jim, and welcome, everyone.
Ashish Arora: We are pleased with the increase in paid subscribers in Q3 of 5% year-on-year, which exceeded our expectations.
Ashish Arora: International sales grew 2% year-on-year with some benefit from foreign exchange rates.
Speaker Change: In Q3, platform revenue increased slightly on paid subscriber growth.
Speaker Change: Products revenue declined 7% as connected machines revenue declined 11% on higher promotions planned for the Q4 holiday season.
Accessories and materials declined 3% on more favorable comps.
Speaker Change: While paid subscriber growth is indeed a win,
Speaker Change: We would benefit from a stronger acquisition and engagement. We ended the quarter with just under 5.9 million active users who cut in the past year, down less than 1% from a year ago, and our 90-day engaged users declined 3%.
Speaker Change: We continue to experience engagement erosion from our large 2020 and 2021 pandemic cohorts and from prior years.
Speaker Change: who age on their engagement curve and are not offset with as many new users in recent quarters.
Speaker Change: While we want to improve engagement for all our users, our focus remains to maximize engagement of our most impactful users from a monetization perspective.
Speaker Change: which are new users onboarding onto the platform, or onboarders, and AXS subscribers.
Speaker Change: During Q3, we continued to make solid progress on our initiatives to drive engagement with our new members.
Speaker Change: We introduced several improvements to make it easier for new members to connect their new machines and successfully design and make their first projects.
Speaker Change: As evidence of this success, we have seen almost a 50% increase compared to a year ago in new users who successfully connect the machine within the first five minutes of the connection process.
Speaker Change: As a reminder, on-boarders are a particular focus because the more they interact with our platform early, the more likely they are to interact with our platform over time.
Speaker Change: We have further integrated education and help resources directly within the onboarding flow and redesigned the homepage for new members to further tailor it with inspiration most appropriate for beginners.
Speaker Change: We've also automated steps that we know are common pitfalls for new members.
Speaker Change: At the end of Q3, we also introduced in beta an AI-driven help assistant to a portion of our members.
Speaker Change: We are pleased with the initial response from beta users and plan to roll it out specifically with onboarders during Q4.
Speaker Change: Evidence that these efforts are having a positive impact is that this is the second consecutive quarter of a year-on-year increase in the share of members who complete a project during the first day and who complete multiple projects in their first week.
Speaker Change: To benefit all members, we continue during the quarter to make improvements to our software platform.
Speaker Change: specifically in helping them search and find inspiring content on our platform and removing friction in designing the projects in design space.
Speaker Change: Based on our A-B testing, our filtering and machine learning algorithms have rolled out several improvements to our search capabilities.
Speaker Change: We have also made content flow simpler by placing images on panels directly adjacent to the canvas, making images a single click away.
Speaker Change: Measure in terms of time to find and place an image onto the canvas.
Speaker Change: We have seen an over 20% improvement year-to-date.
Speaker Change: A major focus in Q3 has also been our text and font editing capabilities.
Speaker Change: And we now have a much broader support of characters among our most popular fonts.
Speaker Change: Recently, our marketing team has made great progress bringing members back to Design Space after their last visit via email, push text notifications, and paid social campaigns in a much more personalized, relevant, and automated manner.
Speaker Change: Our first engagement marketing campaign, utilizing this platform, went live at the very end of Q3.
Speaker Change: We plan to scale this effort during Q4 and Q1.
Speaker Change: While our overall engage user metrics have not stabilized as of Q3, we are confident in our efforts to deliver a simplified and more personalized experience using our design space platform and our ability to leverage a much more scalable engagement marketing infrastructure.
Speaker Change: During Q3, we conducted a market mix analysis for machine sales in the U.S. and Canada.
Speaker Change: The results show that our investment in top and middle of funnel marketing had a positive impact on machine sales in the first half of 2024.
Speaker Change: In addition, the analysis shows that the overall spend on these channels has an attractive ROI.
Speaker Change: Given these results, we are continuing the higher level of marketing span.
Speaker Change: Our deeper promotional strategy during key selling times of the year that we started in late 2023 is working.
Speaker Change: For example, we are pleased with the results from the fall Amazon Prime Day.
Speaker Change: During 2024, we have worked with retailers to get to more healthy inventory levels.
Speaker Change: We are pleased with this progress and believe the channel inventory is healthier this year compared to prior years as we head into the important holiday season. Notwithstanding, there remain pockets in the channel where we would like to see more on-hand inventory for holiday.
Speaker Change: Accessories and materials declined 3% year-on-year on more favorable comps and compares to declines of 27% and 26% in Q2 and Q1 respectively.
Speaker Change: Our materials are engineered to work seamlessly with our machines to create the best user experience.
Speaker Change: Recall, in late Q1, we launched the Cricket Value Line of materials, which we designed to compete in online marketplaces.
Speaker Change: I'm excited to say that the cricket value line has been well received and we launched additional SKUs in Q3 following the initial launch of a limited number of SKUs in late Q1. We are even more optimistic about this product now that we have a bit of history in the market.
Speaker Change: but it's still early in a small portion of our portfolio.
Speaker Change: We have additional innovation products and cost reductions coming in the quarters ahead.
Speaker Change: We are focused on attracting more new users to buy our connected machines, reversing weakening engagement trends, re-injecting enthusiasm among our users, and being more effective competitors in accessories and materials.
Speaker Change: We are intensely focused on the overall customer experience and we are motivated to work with those retailers that help us create a great experience both on shelf and for actual use of our ecosystem.
Speaker Change: It is our fundamental belief that when we give people more reasons and inspiration to make things that are appealing to them,
Speaker Change: and ensure the customer has access to affordable and quality materials, we will see an improved user experience, which is one of the reasons that we offer bundles with many of our machines in select channels.
Speaker Change: We are driven to continue to innovate and improve our platform and user experience while exhibiting both longer-term focus and current discipline. I will now turn the call over to Kimball.
Kimball Shill: Thank you, Ashish. In the third quarter, we delivered revenue of $167.9 million, a 4% decline compared to the prior year and in line with our expectations.
Speaker Change: Breaking revenue down further, Q3 2024 revenue from platform was $77.7 million, up slightly year-on-year.
Speaker Change: While paid subscribers increased 5%, platform revenue was up less as the mix shifted more to annual versus monthly subscriptions and geographic mix shifted more international. Both shifts are targeted efforts. Platform ARPU increased 3% to $52.86.
Speaker Change: Revenue from products was 90.2 million dollars down 7% over Q3 2023. Connected machines decreased 11% driven primarily by more promotional activity planned for Q4. Accessories and materials decreased 3% on favorable comps.
Speaker Change: In terms of geographic breakdown, international revenue was $38.5 million, or up 2%, compared to $37.6 million in Q3 2023. Foreign exchange benefited international sales by just under 2%.
Speaker Change: As a percentage of total revenue, International was 23% in Q3 2024 compared with 21% of total revenue in Q3 2023.
Speaker Change: Turning to active users and engagement, we ended the quarter with just under 5.9 million active users, a decline of less than 1% from a year ago. We ended the quarter with over 3.5 million 90-day engaged users, which was a 3% decline from Q3 last year.
Speaker Change: As Ashish mentioned, we are encouraged by improvement in leading indicator metrics for onboarders, but have more work to do to improve overall engagement. We ended the quarter with over 2.8 million paid subscribers, up 5% from Q3 2023, and up sequentially.
Speaker Change: As discussed in earlier calls, there is some natural subscriber attrition, so subscriber growth will be challenging until we increase the pace of machine sales and new user acquisition.
Speaker Change: Moving to gross margin. Total gross margin in the third quarter was 46.1%, a slight decrease compared to 46.8% in Q3 2023.
Speaker Change: Breaking gross margin down further, gross margins from platform were 87.1% compared to 89.3% a year ago.
Speaker Change: The decline in platform gross margins was primarily related to higher software development costs and higher hosting fees compared to a year ago, which we expect to continue.
Speaker Change: Gross margin from products was 10.7% compared to 13.1% in Q3 a year ago. The decrease in gross margins was primarily due to our decision to be more promotional, offset partially by less inventory reserves.
Speaker Change: Total operating expenses for the quarter were $66.8 million and included $11.4 million in stock-based compensation.
Speaker Change: Total operating expenses increased 15% from $58.2 million in Q3 2023, driven primarily by increased sales and marketing efforts that we have talked about for the last couple of quarters.
Speaker Change: Recall Q3 2023 benefited from $4.5 million of net bad debt reversal. Operating income for the quarter decreased 55% to $10.6 million, or 6.3% of revenue, from $23.7 million, or 13.5% of revenue, in Q3 last year.
Speaker Change: We had some discrete items which lower the effective tax rate for Q3. We expect full year tax rate to be around 29.5 percent.
Speaker Change: Net income was $11.5 million, or $0.05 for diluted share, compared to $17.2 million, or $0.08 for diluted share in Q3 2023.
Speaker Change: This marks our 23rd consecutive quarter of positive net income as we continue to invest in our key priorities while running the company in a profitable manner and for long-term value creation.
Speaker Change: Turning now to balance sheet and cash flow, we continue to generate healthy cash flow on an annual basis, which funds inventory needs and investments for long-term growth. In Q3, we generated $70 million in cash from operations compared to $36 million a year ago.
Speaker Change: We ended Q3 with a cash equivalence and marketable securities balance of $247 million.
Speaker Change: We remain debt-free. Current inventory decreased by $136 million from a year ago to $168 million at the end of Q3 2024. During Q3, we used $10.3 million of cash to repurchase 1.8 million shares of our stock.
Speaker Change: resulting in 30.8 million dollars remaining on our 50 million dollar authorized stock repurchase program.
Speaker Change: The Board of Directors authorized our second recurring semiannual dividend of $0.10 per share for shareholders of record on January 7, 2025.
Speaker Change: and Payable on January 21, 2025. These capital allocations are possible due to past profitability and our confidence in the sustainability of our future profitable operations. We want Cricut to always have ample liquidity to sustain and grow our business, but not hold excess cash.
Speaker Change: We do not anticipate the need for any debt or utilization of our credit line in the near term. Now on to our outlook.
Speaker Change: Recall we do not give detailed quarterly or annual guidance but we do want to offer
Speaker Change: some updated color on our outlook for the rest of 2024, which remains generally unchanged. Given the first three quarters of the year, we expect sales will decline for the full year.
Speaker Change: We expect continued sales pressure on our product segment and, accordingly, total company revenue likely will be down Q4 year-on-year. We expect paid subscribers to grow compared to Q4 2023, and we expect platform revenue to be up slightly.
Speaker Change: As we stated above, we plan to continue our increased spend on sales and marketing. Given year-to-date performance, we continue to expect some incremental improvement in operating margins for the full year.
Speaker Change: Our long-term financial model remains unchanged with operating margin targets of 15 to 19 percent.
Speaker Change: Our proven model has demonstrated that when we operate at scale, which we define as revenue above $1 billion and drive top-line growth, these margins are achievable. With that, I'll turn the call over to the operator for questions.
Speaker Change: Thank you. As a reminder to ask a question please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 1 again.
Speaker Change: Please stand by while we compile the Q&A roster.
Speaker Change: Ashish Arora, Kimball Shill, Jim Suva
Speaker Change: Our first question comes from the line of Eric Woodring from Morgan Stanley.
Eric Woodring: Super, thanks so much for taking my questions, just two if I may. Ashish first, you know, I think this was the second consecutive quarter where active users are declining year over year and sequentially, but at the same time paid subscribers are growing year over year and sequentially. So can you maybe just give us a bit more detail on exactly what's happening under the hood because, you know, it seems just looking at those metrics you're having a tough time kind of maintaining your user base, but you are successful at converting a smaller cohort of users to paid subscribers, which is just a bit interesting. So do you mind double-clicking on it and helping us maybe understand what's going on under the hood? And then I have a follow-up please, thanks.
Ashish Arora: Thanks Eric for the question. So let me talk about engagement first and I'll kind of break it down for you and then I'll talk a little bit about the second part of your question which is the subscribers.
Speaker Change: So, you know, engagement continues, you know, we've talked about this for several quarters now. It continues to be a focus for the company and what we see is we see some pressure
Speaker Change: from the cohorts of 2020 and 21, but we also see some very healthy signs. So I'm going to spend some time on that.
Speaker Change: The cohorts that we acquired in 2020 and 2021, and we acquired a lot of users, as these users graduate over time, over the engagement curve, that's putting some pressure on the overall engagement numbers.
Speaker Change: Now, you know, typically we'd offset that as we acquire new members, and since we aren't acquiring as many new members as we'd like, that's not helping. So the net result of that is what you see in the overall engagement numbers.
Speaker Change: Now from a focus standpoint
Speaker Change: We have kind of two populations, and maybe another one called the engaged subscribers. But basically, we are focusing on on-boarders and then the entire install base of active users. From an on-boarder perspective, these are good leading indicators. We really want to make it easy for them.
Speaker Change: to come onto the platform in a way that their lifetime engagement is better than the cohorts that we acquired in 2020 and 2021.
Speaker Change: And some of the metrics we talked about is that we saw nearly a 50% improvement in the number of people being able to connect with their machine in the first five minutes. And why that's important is that those users then create more projects because they spend less time connecting.
Speaker Change: It was also the second quarter in a row that on-boarders created more projects in the first few days, and from our data from prior history, we know that when that happens, that tends to lead to better engagement over the lifetime of that customer.
Speaker Change: Without going into all the details, we also talked a little bit about what we are doing for the entire install base. So we've seen some pretty significant improvement in the amount of time it's taking for people to search for content.
Speaker Change: And we've actually implemented a new platform that would allow us, going into Q4, to bring those users back to design space.
Speaker Change: So, Eric, those are some of the...
Speaker Change: things that you know
Speaker Change: are helping.
Speaker Change: with increasing engagement and, you know, specifically from an engaged subscriber standpoint.
Speaker Change: Because people are able to find content, they're able to get personalized information, we are seeing a better success rate in acquiring those customers back or retaining those customers. So I think the net result of that is, you know, we see that improvement in engaged subscribers. And, you know, we're pretty convinced that the things that we are working on, especially given the leading indicators that I talked about,
Speaker Change: You know are things that will impact our overall engagement curves over time So we're going to say focus on executing on that path
Speaker Change: on subscriptions. So since I work on subscriptions, we're actually very excited about our subscription business. We think it's evidence of we continue to focus on adding value, making sure that our customers view that as a compelling value.
Speaker Change: You know, you may recall last quarter we talked about, we thought we might even be marginally down as subscribers of the quarter. So we were quite pleased to grow subscribers by 5%, but I think that also talks to our ability to reach into our user base, even as...
Speaker Change: as we're not adding as many new users as we would like currently.
Eric Woodring: Okay, that's really helpful. Thank you for all that color, guys. Maybe my second question or my follow-up is for you, Kimball, and you know you've included in your prepared remarks comments around incremental operating and margin improvements year-over-year this year. I think through the first three quarters of the year you're at roughly over just over 12% operating margins, and I believe it was last quarter you referenced maybe a point of operating margin improvement this year relative to 2023. Is that still how we should be thinking about the operating margin improvement that you're referencing, or has anything changed in the background? Thanks so much. Thanks, Eric. No, nothing's changed in the
Speaker Change: Thank you.
Kimball Shill: Highlighted in the prepared remarks, our general outlook remains unchanged. We're still expecting about a point improvement in year-over-year operating margin for full year.
Speaker Change: Remember, as we go into the holiday, we tend to have lower gross margins on our physical products.
Kimball Shill: given the promotionality and the higher volumes of physical products we sell during the holidays. So that will pressure margins for the quarter, but so we still expect about a point improvement on year-over-year.
Speaker Change: for the year. For the year, yeah, for full year. For the year, super. Thank you so much guys. I'll get back in the queue.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Adrian Yee from Barclays.
Speaker Change: Hi, this is Angus on for Adrian. Thanks for taking my question.
Speaker Change: How do you think about long-term margin levels in the platform segment? Is there a path back to 90% in the near term and then on that
Speaker Change: What are the fundamental drivers of platform gross margin performance and how did those behave this quarter because it sounds like the
Speaker Change: software issue kind of cloudied the
Speaker Change: and then I have a follow-up. Thanks.
Speaker Change: because
Speaker Change: So, um...
Speaker Change: You know, we continue to invest in the platform and those are costs to be capitalized and those get amortized over three years, Angus. Also, we've seen our hosting fees for subscribers for our platform go up both as
Speaker Change: both of those, both of which put pressure on platform margins for the quarter. We do expect that, that trend to continue. I mean we wrote it about a point in margins as we continue to lean into those investments and I think that trend you can expect to continue going forward.
Speaker Change: Yeah, you know, Kimball, you also talked about a little bit of the mix of annual versus monthly, with annual being, you know, at a lower revenue for that, so it puts some pressure as well, but ultimately that's our intended result.
Kimball Shill: Yes, well, so Ashish is highlighting, you know, we were up 5% on number of subscribers, but only up marginally on revenue.
Kimball Shill: And that really is two factors that are intentional on our part. One, we are trying to increase the mix of annual subscribers over monthly. That comes at a discount. And then also as the mix...
Kimball Shill: continues to shift more international that also puts pressure on subscription revenue and then and obviously slightly lower revenue with with the increased cost puts pressure on overall margin for that for that
Speaker Change: Got it. Thanks. Very helpful. And then my second question is I think in your remarks you spoke about retailer inventory levels But anything you could share on whether you see a potential restocking environment in the future or if it seems like retailers are making You know more permanent shifts in the levels of crafting products that they carry
Speaker Change: Yeah, so this is the second quarter where we talked about we've seen partial restocking in the channel and as we go into holiday, you know, I think channel is in generally a healthy position. There are pockets where we would like to see more inventory, but overall I think it's better than it was a year ago as we go into this holiday season.
Speaker Change: We have our, you know, deeper Q4 promotions lined up and we're just at the at the doorway of holiday season. So at this point we're anxious to see how consumers show up for holiday.
Speaker Change: And let me, you know, Angus, I'll add on to that.
Speaker Change: So, you know, our traffic to our site is up based on all the marketing we've been doing. And, you know, our expectation going into Q4, given all the promotional activity, is that that conversion will start to manifest itself.
Speaker Change: So, while the retailer inventory is better, and we are happy and excited about that, there are still some pockets, as Kimball said, you know, there will be some, hopefully nobody leaves money on the table in terms of when that consumer comes in to shop, but, you know, definitely an improvement year on year.
Speaker Change: Got it. Thank you, guys, and see you next month.
Speaker Change: Thanks, Angus.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Asia Merchant from Citigroup.
Asia Merchant: Great, thanks for taking my question today. If you can double-click a little bit, looks like accessory revenues down, you know, 3% an improvement from what we've seen in the first half of this year. Are we at some kind of an inflection point here, you think, on your accessories? And on the flip side, you know, connected machines being down 11% on a year-on-year basis, which was...
Speaker Change: a little bit, you know, different than what you've seen in the first half of the year. So if you can just double click on, you know, the trends that you're seeing on both those, that would be great. Thanks.
Speaker Change: Asya, thanks for the question. First on the assessment materials, that's really more a story of easier comps if you look at prior year comparisons.
Speaker Change: And I think it's more instructive if you look at sequentially, where we're about flat from Q2 to Q3, and then let that inform your assumptions on Q4. But we do expect to see continued pressure in accessories and materials, and they're not calling the flexion point at this point.
Speaker Change: on machines that's really a story about promotionality as we prepare for deeper Q4 promotions.
Speaker Change: And so gross sales on machines was actually up marginally for the quarter, but by the time we take into account provisions for Q4 promotions, that's what's really driving the 11% down in machine revenue for the quarter.
Speaker Change: Okay, that's helpful. And then on just promotional intensity, I understand you guys have, you know, obviously promotions lined up here for the holiday season. Generally speaking though, you know, relative to the competitive environment,
Speaker Change: How do you, how are you looking at the promotional environment, given that, you know, assuming consumers seems like you think that that's going to be a positive driver. How is the promotional intensity broadly in the crafting category?
Speaker Change: I think we're seeing promotions.
Speaker Change: broadly in the category. In the accessories materials segment, for example, throughout the year, we have seen increased
Speaker Change: you know competition on price point and that's partly what informs our promotional strategy on that front.
Speaker Change: on connected machines, you know, we continue to see positive uplifts as we as we go through each of these promotional periods and and that gives us confidence to continue executing on that strategy.
Speaker Change: I will add that, you know, when we're not on promotion, we've seen weaker baseline demand than we expected, and we've talked about that for a couple quarters now, where that's continued throughout the year.
Speaker Change: Yeah, and let me just add to that, you know, we've kind of been, we've intensified our marketing over the last few quarters.
Speaker Change: And we see the traffic to not just cricket.com, but other online properties.
Speaker Change: And, you know, but at the same time, we still think that despite, you know, when we do, when we are promoting, we see that demand manifests itself, but in normal times, we think that the consumer is still waiting and affordability is still, you know, just given the consumer discretionary spending, affordability is still one of the key factors.
Speaker Change: So I think, you know, our Q4 strategy is very much built around the hypothesis that, you know, there's awareness, there's, you know, interest in the category, and basically our goal is to, you know, help drive some of that conversion in this timeframe.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: Okay, thank you.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Eric Sheridan from Goldman Sachs.
Speaker Change: Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com
Eric Sheridan: Thank you so much for taking the question. Maybe just a couple of parts in one question and then I'll go back into the queue. When you go back to earlier this year where you
Eric Sheridan: sort of asserted this move towards higher marketing intensity to sort of stimulate growth. If we go backwards before we go forwards...
Eric Sheridan: What have been the key learnings from that higher level of marketing intensity that you feel are working and that are building scale around the platform and the product array of the company? And to the extent to which some of those efforts around marketing have fallen short of your original goals, how much of it is down to either intensity or channels you're investing in on the marketing side versus the overall environment you find yourself in with respect to the consumer and possibly down to receptivity of some of those marketing messages? Thank you.
Speaker Change: Eric, thanks for the question. So if I look at history, right, we haven't grown top line in a couple years and as we
Speaker Change: were managing OpEx, we pulled back in marketing as part of that and got to the point where we feel like we'd over-indexed on that. But as we pulled back on marketing, we didn't initially see dramatic drop-offs in demand or consumer enthusiasm.
Eric Sheridan: And likewise, as we came into the year and we've talked about, we're leaning into marketing. We want to regenerate enthusiasm both with the consumers and the retailers.
Eric Sheridan: We've been spending more throughout the year and slowly seeing improvement on key metrics. Now, granted, we haven't seen overall top-line improvement, but one of the key things that we measure is traffic to cricket.com, as Ashish mentioned a moment ago.
Eric Sheridan: We measured that because regardless of what channel
Eric Sheridan: consumer decides to enter our ecosystem by purchasing a connected machine, we know that coming to Cricut.com to research our products is an important part of that journey.
Eric Sheridan: And we have seen improvement in that, both on a quarter-over-quarter and a year-on-year basis for traffic.
Eric Sheridan: We also have a multimedia mixed model.
Eric Sheridan: where we are measuring the impact of spend by channel.
Eric Sheridan: and we're looking at returns based on multiples of our spend and optimizing that model on a frequent basis to optimize the mix and move money around.
Eric Sheridan: You know, we are confident enough in the data that we see that keeps us leading into that spend. So in Q4, Q4 marketing spend tends to be higher than Q3, so you can expect that to continue in Q4, but also for us to continue spending at an elevated rate going into 25.
Eric Sheridan: because it also isn't just start marketing and see immediate results. We're building for the long term and happy with the results we're seeing so far.
Speaker Change: Thank you for watching!
Speaker Change: Great, thank you.
Speaker Change: Thank you.
Speaker Change: At this time, I would now like to turn the call back over to Jim Suva for closing remarks.
Jim Suva: Thank you, Gigi, and thank you for everyone joining us this afternoon. We have a large opportunity over the long term to drive new user growth and increased engagement. The Cricut platform continues to not only strengthen, but also provide increased value to our users.
Jim Suva: We will continue to manage the business for sustainable, profitable growth and generate healthy cash flows. I'm excited about the opportunities ahead of us.
Eric Sheridan: We will be meeting with investors
Eric Sheridan: at the Barclays Investor Conference in New York City on Thursday, December 5th, and the Roth MKM Investor Conference in Deer Valley, Utah on Thursday, December 12th.
Eric Sheridan: We hope to see you there. If you have additional questions, please email me at jsuva at cricket.com. This now concludes this earnings call, and you may disconnect.
Eric Sheridan: Thank you.