Cricut, Inc. (CRCT) Cash Flow Statement

The consistent OCF/NI ratio above 1.0, even reaching 10.6x in Q4 2025, suggests that reported earnings are backed by actual cash generation, not aggressive accruals. The gap between net income and operating cash flow is largely explained by non-cash charges like D&A and SBC, which are added back, and working capital fluctuations that have been favorable. This pattern implies that the company's profitability is not just accounting-driven but reflects real cash inflows from its subscription and materials segments.

Free cash flow has remained positive and relatively stable, with quarterly FCF ranging from $13.9M to $99.2M over the past two years. The FCF margin has improved from 17.9% in Q2 2024 to 26.1% in Q2 2026, indicating that the company is generating more cash per dollar of revenue even as top-line contracts. This suggests that the business model is becoming more efficient, likely due to higher-margin subscription revenue and reduced promotional activity on hardware.

Capex has been relatively flat in absolute terms, ranging from $3.9M to $9.5M per quarter, despite revenue fluctuations. This low capital intensity suggests that Cricut's growth does not require significant investment in physical assets, consistent with its outsourced manufacturing and software-centric ecosystem. The modest capex likely represents maintenance spending on IT and tooling, rather than expansionary investments, which may limit future growth capacity but supports current cash generation.

The working capital line is the primary source of quarterly cash flow volatility, with large positive contributions in Q4 and Q1 periods, likely due to holiday season inventory sell-through and collections. Negative working capital changes in other quarters suggest inventory build-up or slower collections, which may indicate channel management challenges. Investors should monitor inventory levels and receivables turnover, as a sustained negative working capital trend could pressure cash flow despite stable earnings.

The company has consistently repurchased shares each quarter, with total buybacks exceeding $70 million in the last year, while dividends have been minimal and sporadic. The large special dividend of $180.6M in Q3 2025 and $108.2M in Q3 2024 indicate a willingness to return excess cash to shareholders, possibly to offset dilution from SBC. This deployment strategy suggests management is confident in the balance sheet's strength, but the lack of consistent dividends may signal a preference for flexibility over income stability.

The cumulative gap of $343.7M between operating cash flow and net income is substantial and suggests that earnings understate the company's cash-generating ability. This divergence is likely due to non-cash charges like D&A and SBC, which are added back, and favorable working capital movements. However, the sustainability of this gap depends on the company's ability to maintain its subscription growth and manage inventory, as a reversal in working capital could narrow the gap in future periods.