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As part of our ongoing series at The Acquirer’s Multiple, we highlight stocks from our Stock Screeners that may represent mispriced opportunities relative to their underlying cash-generation ability.

This week’s spotlight is Cricut, Inc. (CRCT) — a design-focused consumer hardware/software ecosystem business with recurring platform participation, positive operating profitability, and a valuation profile suggesting meaningful embedded value for patient investors.

Business Overview

Cricut designs and sells consumer cutting machines, accessories, and digital content that enable craft, design, and small-scale production projects. Its ecosystem pairs hardware (Cricut cutting machines), consumables (materials and replacement accessories), and software (Cricut Access subscriptions and cloud design tools).

The model resembles a scaled-down analog to Razor + Blades economics — where machine sales introduce customers into a walled ecosystem that drives ongoing monetization via materials and digital subscription offerings.

While not a classic “consumer staples” name, Cricut benefits from:

•  a loyal user base
•  sticky workflows
•  relatively predictable reorder behavior
•  increasing digital penetration

The company operates primarily in North America but continues to expand in international markets as awareness and hobby-based demand rises.

What Is IV/P? (Intrinsic Value to Price)

IV/P measures the relationship between intrinsic value and market price:

• IV/P > 1 → price undervalues intrinsic business value

• IV/P < 1 → price overvalues intrinsic business value

For CRCT, IV/P = 1.40, suggesting intrinsic value is estimated to be ~40% above current market price.

This places Cricut solidly in undervalued territory, particularly for a profitable, cash-flow positive consumer ecosystem business.

Supporting Metrics

Market Cap: ≈ US$ 850–900M
Enterprise Value: ≈ US$ 700–750M (net cash position)
Free Cash Flow (TTM): ≈ US$ 200M (TTM)
FCF Yield on EV: roughly 26–28%, unusually high for a consumer hardware/software name
Acquirer’s Multiple (AM): 7.32

An AM of 7.32 is firmly value-oriented. It suggests that an acquirer could theoretically recoup the full enterprise value via operating earnings in just ~7 years, before factoring in any continued ecosystem penetration, margin improvement, or optionality in digital monetization.

Revenue & Profitability Profile

(TTM basis):

• Revenue: ≈ $714M

• Gross Margin: ≈ 54%

• Operating Income: ≈ $95–100M

• Operating Margin: ≈ 13–14%

• Net Income: ≈ $80M

• Diluted EPS: ≈ $0.37

For a company selling physical consumer equipment, >50% gross margin and double-digit operating margin are noteworthy.

The revenue model blends:

1. Hardware (one-time)

2. Consumables (repeat)

3. Subscriptions (recurring + high margin)

This multi-layer model gives Cricut a more software-like margin trajectory than peers in pure hardware retail.

Balance Sheet Structure

CRCT’s balance sheet is unusually clean for a consumer hardware business:

• Total Assets: ≈ $560M

• Total Liabilities: ≈ $205M

• Shareholder Equity: ≈ $360M

• Net Cash: positive

The company carries no structural debt pressure, giving it flexibility in downturns and optionality for future buybacks or reinvestment.

Free cash flow isn’t being manufactured through leverage — it’s being earned operationally.

Cash Flow & Capital Allocation

Cricut has quietly become a free-cash-flow machine, supported by:

•  profitable hardware
•  recurring software
•  low capex demands
•  rational working capital management

(TTM):

• Operating Cash Flow: ≈ $220M

• Capex: ≈ $21M

• Free Cash Flow: ≈ $200M

This equates to a ~28% FCF yield on EV, which is extremely high for a business with no terminal distress narrative.

Capital allocation remains conservative:

• no aggressive debt usage

• share count stable rather than dilutive

• reinvestment focused on ecosystem enhancement rather than speculative growth

Why CRCT Might Be Undervalued

Market hesitation around CRCT has been driven by:

• post-pandemic demand normalization
• perceived “fad” risk in maker/crafter markets
• hardware cyclicality fears
• limited Wall Street coverage

However, what appears underappreciated is the ecosystem nature of the model:

Hardware → Materials → Subscriptions → Cash Flow

Once onboarded, users tend to stay, spend, and expand usage. The company demonstrated that even in a cooling macro environment, cash generation remains robust, aided by:

•  subscription margin uplift
•  working capital release
•  disciplined operating costs

With IV/P = 1.40 and AM = 7.32, the market may be pricing Cricut as if it were a volatile, undifferentiated hardware retailer rather than a cash-flow-positive, capital-light, net-cash ecosystem operator.

Conclusion

With an IV/P of 1.40, an Acquirer’s Multiple of 7.32, and ~$200M in trailing free cash flow, Cricut screens as one of the more attractive small-mid cap cash-generative value opportunities in the consumer/creator tools category.

While growth is modest and sentiment remains muted, the current valuation embeds a level of pessimism that likely understates:

✓ the durability of the maker ecosystem
✓ the margin uplift from subscriptions
✓ the advantage of a net-cash balance sheet
✓ the compounding power of high FCF yields

For investors who prioritize cash generation, margin of safety, and balance sheet integrity, CRCT screens attractively relative to intrinsic earning power and may represent an overlooked value opportunity.

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