Good day, and thank you for standing by. Welcome to the Cricut Q3 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question- and- answer session. To ask a question during the session, you will need to press star one one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Stacie Clements, Investor Relations, The Blueshirt Group. Please go ahead. Thank you, operator, and good afternoon, everyone. Thank you for joining us on Cricut's Third Quarter 2022 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, have been posted to the investor relations section of the company's website, investor.cricut.com. 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. 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 in response 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 company's management and involve inherent risks and uncertainties, including those identified in the Risk Factors section of Cricut's 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 8, 2022. Cricut has 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, Stacie, and welcome everyone. As expected, we ended the third quarter with healthier channel inventory. Revenue in the third quarter was $177 million, slightly down from last quarter as retailers continued to work through their inventory. Underpinning our resilience in this more challenging macro environment is our durable business model and focused investments on high-impact initiatives. We generated net income for the fifteenth consecutive quarter, once again demonstrating our proven track record of sustainable profitability. I'm confident in the fundamentals of the business and encouraged by the positive momentum in some areas while navigating challenges in others. First, we strongly believe that we have millions of new users to acquire domestically and internationally. Our user communities have never been stronger. Our top three Cricut-related hashtags have garnered over 6 billion views on TikTok. Brand familiarity continues to expand with strong search interest on what is Cricut. The success that we saw with Amazon Prime Day in July and October indicates that our sales funnel is healthy. These trends give us confidence in our overall market opportunity and point to expanded interest in the category. We will continue to run the business for the long term, ensuring category and brand health. Our funnel is healthy, and we have a large market opportunity ahead of us. Our qualitative research tells us that interest continues to be strong, but customers are taking longer to convert and have a higher threshold before they make a purchase decision, as they prioritize their needs and wants given the current economic environment. Net new users added in the quarter were down 26% compared to last year, while connected machine revenues were down 49%, indicating that inventory moved through the channel. Consumers continue to purchase the product at a healthier pace than our revenue suggests. Highlighting this point is a 30% year-over-year growth in our user base to nearly 7.5 million, up from 5.7 million the same quarter last year. I'm particularly pleased with the growth we are seeing in our subscription services as we continue to create a richer, more valuable experience for our Cricut Access subscribers. New subscriber growth has outpaced user growth on a percentage basis for 11 consecutive quarters. We continue to drive high-margin revenue and leverage the strength of our platform with attach rates now consistently around 33% compared to mid-20s pre-pandemic. Our platform provides an integrated experience that inspires new design ideas, fosters community, and supports both designing and making. Design Space is our software platform through which users create a profile, follow other users, and connect with the broader Cricut community. Once users discover something they wanna create, they can easily create a design or modify an existing one using our suite of tools. They can also easily bookmark projects, images, and fonts for later use, providing us with valuable insight into their personal preferences. Because we are a connected platform, all of these interactions, including designs and projects, are stored in Design Space and cannot be transferred to an outside ecosystem, thus making our platform extremely sticky. Our connected platform creates a competitive moat. All users must use Design Space to cut with our machines. This gives us valuable touch points with our entire user base each time they create, as well as giving us insight into their behavior and preferences. Our goal is to create a habit-forming experience where users come back often. More recently, we launched a set of robust image manipulation tools, typically only available in high-end software. These tools give users greater flexibility to easily create designs, reducing hours of design time in the process. The more users interact in Design Space, the more value they create and derive from our platform. For example, shared projects can be leveraged within the Cricut community, saving users valuable design and editing time. Cricut Access, our subscription service, fuels our efforts in these areas and offers proven content to help users achieve their creative potential. We've talked about our contributing artist program that provides a marketplace for artists to publish images and share in revenue streams as subscribers use their images. While the program is still young, subscriber reaction has been very enthusiastic. Contributing artists are an important source of localized content in many international markets. Also, we recently launched a beta version of editable images, a key benefit for Cricut Access subscribers that we highlighted in our last call. This represents one of the most significant advancements in our image architecture and offers our Cricut Access members a tremendous amount of creative flexibility with editable images. We continue to invest in the platform to improve discoverability and provide more inspiration, community features, diverse content, and design tools, some of which will be available only to Cricut Access subscribers. We're creating more advertising touchpoints in Design Space to drive increased monetization and subscribers. For example, we have multiple touchpoints related to user onboarding, content searches, and design tools that deliver context-sensitive ads depending on what the user is doing. Early success in these initiatives is driving an increase in trials and subscribers. The chart shows our top 10 touchpoints, but there are many others, and we continue to optimize and learn. Aside from general advertising and key touchpoints in the user's journey, significant upsell touchpoints to Cricut Access include content and subscriber-only premium design tools. As a result of these efforts, we added approximately 89,000 net new subscribers in Q3, which is better than expected in the face of slower machine demand and user growth. We have a solid roadmap of features and data-driven marketing capabilities to further enrich the platform. Just as importantly, we continue to invest in our onboarding initiatives. We know that the faster a user gets up and running, the more they create, engage, and share over their entire life cycle. Last year, we rolled out an online learning center, which is primarily focused around how-to guides for specific projects. More recently, we integrated a virtual learning platform into Design Space that walks users step by step through a series of simple and fun lessons. These lessons teach users the basics of Design Space and how to use their connected machine, Cricut materials, and more. In addition, users can take advantage of our learning kits on cricut.com, which provide materials and tools to complete specific projects that enable our users to build their confidence in their designs and crafting efforts. We have almost half of our total user base cutting on our platform in the past 90 days, with nearly 3.6 million engaged users, up 11% year-over-year. Now keep in mind that these engaged users are defined by how many users have actually cut a project. Our current definition of engaged users doesn't take into account the hundreds of thousands of daily users coming into Design Space that aren't cutting, but are taking a variety of actions. For example, users have bookmarked over 120 million images and projects, and we see this accelerating, with nearly 2 million bookmarks being added each week since the middle of Q3. The majority of these users who come in on any given day end up cutting over the next week. When we ask users who have not cut with their machines in over 90 days, 80% of them are motivated to use their Cricut machine more often and express a strong desire and interest in doing so. We believe that if we can give them compelling reasons to come into Design Space more often, to browse and to be inspired, and make it easier and faster to find the right idea and make projects, we can get these users to engage. Our mobile apps play a key role in making it easier for users to take some action on our platform and have a frictionless experience for even the briefest moments of engagement, whether it's a spare five minutes to project discovery, checking community notifications, or creative design work. Our data shows that users who use Design Space on more than one device are significantly more likely to cut and are much more likely to subscribe to Cricut Access than those using only one device. The more time users spend in Design Space and use the platform, the more opportunities we have to monetize and ultimately cut. Additional monetization opportunities exist within our accessories and materials business, where we continue to innovate in ways that uniquely leverage our platform. Last quarter, we noted that we are seeing competition, especially online, as well as more placement of competitive materials in our retail channels. While our members realized that Cricut materials work seamlessly with our machines and our software, users are more price- sensitive than they have ever been. During Q3, we began running additional promotions to help improve affordability and help right-size channel inventory. We plan to continue to focus on making our products more affordable through cost promotions. We will also continue to expand into new use cases. In Q3, we launched a wide range of items from card making, labeling, and personalization. These included watercolor cards, markers and brush sets, Smart Label, glow-in-the-dark vinyl and iron-on, and several other consumables. The early results show that these items are driving additional sales of accessories and materials and helping people do projects quicker and easier. Finally, we will lean into those retailers that help tell the entire ecosystem, Cricut ecosystem story, showcasing compatibility between machines and Cricut materials. International remains an important priority. The trends that have driven our business since 2014 also hold true internationally, and our research shows an almost universal propensity for crafting. In Q3, we executed a new go-to-market model in Australia, deploying a local warehouse facility which will allow us to improve customer experience. We continue to make strides in continental Europe, especially France and Germany, with expanded distribution and awareness. Our platform investments, such as the contributing artist program and editable images, will play a key role in our international expansion in existing markets. We recently launched in South Korea, Japan, Saudi Arabia, with imminent launches in India and Taiwan. Additionally, we localized versions of Design Space in nine new languages Swedish, Polish, Danish, Hungarian, Czech, Norwegian, Romanian, Finnish, and Thai. In summary, operating in this macro environment has been challenging, but I believe we are stronger for it, with greater focus and discipline than ever before. As we end 2023, we believe channel inventory imbalance will be mostly behind us and we anticipate sell-in and sell-out to be more closely aligned. We have a large serviceable addressable market with less than 10% penetration, and we will continue to drive new machine sales and use it for the long term. We benefit from our Design Space platform, giving us significant opportunity to drive user engagement and monetization. Some of our investments are already showing signs of success, building confidence that what we are doing today will have lasting impacts for long- term growth. I will now turn the call over to Kimball for more details on the financials. Thank you, Ashish, and good afternoon, everyone. We continue to see the effects on consumer demand of a softer macro environment. Retailers' orders in September were a little softer than historical trends would have indicated as retailers work through channel inventory positions. In October, we started to see orders for holiday season, although at lower levels than previous years as retailers are taking a cautious approach to inventory levels. Given this dynamic, we continue to tightly manage what is within our control. In the third quarter, we generated revenue of $177 million, a 32% decline compared to prior-year Q3, and we generated $12.1 million in net income. Breaking revenue down further, revenue from connected machines was $52.4 million, down 49% year-over-year again, against difficult comps from Q3 2021 related to sell- in of next- generation cutting machines and continued replenishment orders. New user adds as a proxy for machine sell- outs and consumers were down only 26% for the same period, indicating that consumers continue spending, albeit at a lower level as retailers work through inventory. As you'll recall, we entered Q3 with some retailers holding higher than normal channel inventory positions, while at the same time managing to lower inventory targets. Exiting the third quarter, we believe retailer inventory positions are much healthier, with most retailers needing to place new orders to fully capture expected holiday demand. We believe holiday demand remains seasonally strong. We are working closely with our retail partners as well as leveraging our more flexible direct consumer sales channels to place inventory where needed to meet demand. We are proud of our subscription performance. Revenue from subscriptions was $68.9 million, up 29% over last year and 2% sequentially. Our continued success highlights the durability of our business model and validates the focus we placed on Cricut Access and the expansive improvements we've made over the last several quarters, as Ashish mentioned. Revenue from accessories and materials was $55.7 million, down 47% over last year when we benefited from channel fill of Smart Materials related to the launch of next generation cutting machines, continued replenishment orders and higher engagement trends. Let me provide some context around accessories and materials. Our revenue mostly derives from selling into retailers and is influenced by multiple factors, including consumer buying behavior such as pantry loading, promotional activity, competition and currency. Further, we have been more promotional in this segment and see favorable share gains when our products are closer to price parity with the competition. Accessories and materials continues to be the segment with the most competition. In terms of geographic breakdown, international revenue was $27.6 million, down 11.5% from prior year Q3 and up 13.8% sequentially. International again grew as a percentage of the total business, representing 15.6% of total revenue, compared to 12% in Q3 of the prior year. Turning to users and engagement, we ended the quarter with nearly 7.5 million total users, up 1.7 million users over last year. The number of users engaged in our platform, meaning those who cut at least once in the 90-day period ending September 30, was nearly 3.6 million, up 11% year-over-year. Engagement as a percent of total users dropped from 51% last quarter to 48% this quarter. Keep in mind that summer is historically the lowest period for engagement, and the scale of this seasonal drop is similar to what we saw from Q2 to Q3 last year. As expected, we are seeing engagement pick up as we head into the holidays. As Ashish talked about, we are increasingly looking at engagement on a more holistic level, starting with the number of users that are interacting in Design Space on a daily and weekly basis. We will continue to invest in content, community, and software features with a specific focus on mobile to move users through their journey from inspiration to cutting over time. Paid subscribers grew by more than 600,000 on a year-over-year basis and approximately 89,000 sequentially, ending the quarter with nearly 2.5 million. Attach rates remained high at 33%. We measure user monetization through average revenue per user in both subscriptions and accessories & materials by dividing revenue for the period in those segments by our entire user base. ARPU for subscriptions in the third quarter was $9.40, down slightly from $9.60 in Q3 2021. For context, three factors generally explain variability in subscriptions ARPU from one quarter to the next when subscribers are growing and attach rates remain high. First, timing of sign-ups during the quarter. Second, mix of new versus renewal subscriptions. And third, the increasing mix of international subscriptions. Accessories and materials ARPU was $7.61 compared to Q3 2021 ARPU of $18.79 due to lower sell-in revenue in the quarter. Moving to gross margin. Total gross margin in the third quarter was 46.2%, an improvement of nearly 7% compared to Q3 2021, and effectively flat on a sequential basis, which highlights the benefit of our diverse revenue streams. Breaking gross margin down further. Gross margin from connected machines was 6.1%, up 450 basis points sequentially from Q2, reflecting a benefit in product mix. This compares to 14.5% in Q3 of last year. The year-over-year decline in margin was primarily attributable to an increase in promotions as a percentage of revenue, particularly on older machines moving to end of life. Subscriptions was effectively flat last year at 90.6%. Gross margin from accessories and materials was 29.2%, down from 38.2% in the prior year, reflecting increased promotions as well as fixed operating costs over lower volumes. Going forward, you will see us offer more promotions in our materials business with a focus on remaining competitive on price and on market share. Total operating expenses were $64.4 million and included $11.1 million in stock-based compensation. This was essentially flat compared to the $64.3 million in Q3 2021 as we continue investing for the long term. Operating income for the third quarter was $17.4 million, or 9.8% of revenue, compared to $37.7 million, or 14.5% of revenue in Q3 2021. Operating income was impacted by lower revenues in the quarter while maintaining targeted investments for long-term growth. We delivered our 15th consecutive quarter of positive net income. Net income in the third quarter was $12.4 million, down from $30 million in Q3 of the prior year. Diluted earnings per share was $0.06 compared to $0.06 sequentially and $0.13 in Q3 2021. We continue to manage the business for the long term while navigating short-term headwinds. Our profitable business model gives us the flexibility to continue to invest and deliver healthy operating margins as we work toward our long-term target range of 15%-19%. Turning now to the balance sheet and cash flow. We benefit from a strong balance sheet. We ended the quarter with $198 million in cash equivalents, and marketable securities, and our $300 million credit line remains untapped. During the quarter, we repurchased 1.38 million shares of our stock at a cost of $10 million. As a reminder, we generate cash on an annual basis. Cash generated is the primary source of funding toward our annual inventory needs and additional investments for long-term growth. This fosters a balanced and disciplined approach to capital allocation. It is common for us to be cash flow negative in Q2 and Q3 as we build inventories and generate cash in Q4 with higher seasonal sales. We were positive cash flow from operations year-to-date in Q3. As we look to the fourth quarter, we expect to see sequential growth as demand picks up. We have seen some retailers ordering appropriately to meet holiday demand, while others have taken a conservative inventory approach. Our goal is to have product on shelves throughout holiday and enter 2023 with healthy channel inventory levels. Downside risks include the timing of the remaining retail orders and possible retailer reluctance to spend dollars on new inventory of any kind. We anticipate operating margins in Q4 to be lower versus Q3 as revenue mix is more weighted to physical products along with the impact of higher inventory procurement costs flowing through the P&L and some inventory reserves tied primarily to accessories and materials. As we look ahead to 2023, we are taking a conservative approach in our planning. We anticipate entering 2023 with healthy channel inventory levels and plan to maintain a more linear relationship between sell-in and sell-out going forward. Given our success of our most recent investments in subscriptions and our profitable business model, we are able to invest at consistent levels to drive long-term growth. While we remain committed to our annual operating margin targets of 15%-19% over the long term, we expect small incremental improvements towards that goal toward the end of next year. Looking at the long term, we believe the trends that have driven our business over the last eight years remain intact. We are confident in the unique value proposition that Cricut brings to millions of users and to the millions more around the world that we have an opportunity to bring to the Cricut platform. The significant growth in our user base over the last two years also provides opportunity to further drive engagement and monetization. We are focused on managing our profitability while investing in areas with the highest impact, including improving onboarding, fostering higher levels of engagement, and innovating on our platform to drive growth in Cricut Access and our accessories and materials business. With that, I'll now turn the call over to the operator for questions. Certainly. As a reminder, to ask a question, you will need to press star one one on your telephone. Please stand by while we compile the Q&A roster. Our first question will come from Mark Altschwager of Baird. Your line is open. Hi. Yeah, thanks for taking my question. First, related to inventory, are you able to quantify how much destock you believe has taken place across machines and materials and accessories this year? I'm taking your question in terms of channel inventory. If you recall our comments back in Q1, right? We called out that the end of the year with what we thought was $35 million heavy. What changed as we went throughout the year is that was relative to what had been the historical trend through COVID, and we think retailers have changed their targets over time. It was a moving target throughout the year. What we are confident with is the number of weeks we have on hand the in-channel by channel, and the targets are a little bit different. We're at a point where most retailers need to be reordering related to holiday. We have seen those reorders in most cases coming close to our expectations. Although, as I called out in my prepared remarks, in September, we saw a little bit lighter orders than we would have expected, but those have picked up in October. Mark, I'll just add to Kimball's point. I think there's a couple of data points that we are sharing. Some of this is really hard to exactly quantify. One is, you know, if you look at our machines, our revenues are down 49%. Our net new user adds, which is a little bit of a proxy for sell-through, was down only 26%. We saw the same thing in materials and accessories, which is our sell-in revenues, which is what is captured in the ARPU calculation, was not as positive. We saw better sell-through in materials and accessories than that ARPU number suggests. It was still lower than last year, but it was much better than sell-in revenues. Both of those, you know, basically indicate to the fact that we are able to move, you know, pretty significant channel inventory and feel like we're, after several quarters, are in line with, you know, where our sell-in and sell-through correlate. It's helpful color. Thank you. With the promotions on materials and accessories that you've been leaning into in recent months, what have been some of the key takeaways so far? Curious what you're seeing in terms of, you know, basket size or order frequency from some of your users and any other metrics you can share, or maybe the market share of users using Cricut materials versus alternative materials. Thank you. Okay. Appreciate the question. We're omni-channel, and there are limitations of our data. Some of the lessons we've learned as we have been more promotional, the closer we get to price parity with competition, we hold our own or pick up share with specific retailers where we have reliable data. We also know from our own proprietary consumer research that, you know, there's a higher hurdle for consumers to part with their dollars right now. What you'll see from us is being more promotional in that category, both to address affordability to the consumer, but also to continue to capture market share on materials. Great. Thanks for all the detail. I'll jump back in the queue. As a reminder, if you do have a question, please press star one one on your touch tone telephone. Again, please press star one one for additional questions. Our next question will come from Jim Suva of Citi. Your line is open. Thank you. My first question is on the accessories and materials, you know, $7.61 is lower than last quarter and way lower than a year ago. Is that due mostly to retail destocking? 'Cause I believe you recognize the revenues on the retail sell-through. Does it lead one to believe that we're at the bottom, or could it go lower? I just wonder, are people just being more prudent with what they spend, or they're doing more outdoor activities? 'Cause in the entire life of your company, I don't know if we've actually seen it this low. Any commentary you can give us on the accessories, that would be great. Yeah, Jim, thanks for the question. As you pointed out, there are a bunch of dynamics impacting the revenue in that segment. It is a sell-in metric, and our revenue largely derives from sales to retailers that then sell through to end consumers. The channel inventory that we've talked about, the channels have been destocking, has continued to be a headwind through, you know, throughout the year. But we also, as Ashish pointed out just a minute ago, sell-through is healthier. Now, we don't have perfect data on sell-through, so we don't report on it. The data we do have suggests that sell-through is much healthier than sell-in. So, we believe that's a better indicator for the health of the category. Then there's really kind of three influences that we look at on sell-through. One is promotional activity. The other is competition, right? We do see increasing competition in that space. The other is engagement because it's a proxy for users consuming the materials and needing to repurchase. In any given quarter, it's hard to quantify the impact to isolate the impact of each one of those factors. We know each of those come into play. We do know that you know, summer is usually our lowest period of the year for engagement. We do think that has played a role in sell-through activity. Then as a follow-up on the accessories, are you trying to educate the users? Or maybe it's just my family who had a terrible experience of using knockoff Cricut brands where, you know, gummed up our cutters and all this, and we've now gone back to the original equipment, Cricut branded for the vinyls and such. But is there a way, like, to educate investors? Are you doing that? Or are you just doing that more from promotional dollars out there? Because, you know, saving $0.50 or $1 may seem attractive to people till they realize it will kind of mess up their machines. Or is there a way, like, to QR code it and make it authentic? Or I'm just trying to think out loud about ways to educate and keep the lower quality supplies from eroding your company's profitability. Thank you. Jim, we actually work really hard to communicate the benefits of our materials. We think in general, our users understand that they get an optimized experience when they use Cricut materials. That said, as I mentioned, you know, in our research that we've been doing, you know, with our consumers, there's just a higher hurdle rate. There's a lot of price sensitivity. That has been, you know, driving our promotional strategy to make sure that we're addressing affordability, even as we continue to tell that story and make sure that we're getting the right price value trade-off in the mind of the consumer, so that we can be competitive in the material space. Yeah. Jim, I'll just add to Kimball's answer. I mean, clearly, you know, the point's really well made, and we know you're a very discerning consumer as well. Clearly we are working with retailers. We are providing messaging, providing data to help, you know, better explain the value proposition and the ease of use and seamless compatibility. The second is we are also, you know, increasingly integrating, you know, settings and, you know, inside our software so that people can have a hassle-free experience with our materials because they've all been tested rigorously across, you know, for that individual specific machine. Last but not the least, which I think is really important, right? Which is that we're gonna continue to partner and lean in on with retailers that are, you know, gonna showcase the compatibility of our materials. Really we focus on, you know, giving the customer the best experience because we ultimately think that that'll ultimately be good for engagement and the long-term health of the category and really gives the consumer a best experience. We agree with you that anything less than that is frustrating and ultimately, you know, while we may sell an alternative material, if the customer doesn't have an experience, the project is not being made afterwards. My last question is, are we at an equilibrium now for machines and accessories, or are we still working down? If we're still working down, will we hit that point mid-calendar Q4, or what's your, you know, forecast for that equilibrium? Thank you. As we called out in our prepared remarks, we exited Q3 with what we consider to be much healthier channel inventory levels, and that most retailers were in a position where they needed to be placing orders in order to capture the holiday demand that we expect to see. You know, we're watching retail orders. We have seen them pick up over the course of October, even though they were a little bit lighter than we expected towards the end of September. There are still, I think, some potential headwinds with retailers in terms of being concerned about investing in inventory of any type in the current environment. They continue to be cautious. Generally, I think we're in a good channel inventory position, and we're looking to exit the year and keep that at kind of a healthy number of weeks in channel. Okay. Thank you so much. I appreciate all the details. One moment. Our next question comes from Erik Woodring of Morgan Stanley. Your line is open. Hey, guys. Good afternoon. Thank you for taking my questions. You know, maybe the first one, Ashish or Kimball, you know, I kinda allow it to either one of you, and that is, you know, I appreciate there are still a number of kind of macro and micro crosscurrents at play today. I realize the holidays are incredibly important, but like, yeah, I guess something we're less than 60 days away from the end of the year, and so I'm just curious, what are the kind of most significant factors that kinda limit your visibility into things, you know, like year-end users or, you know, revenue by any of the segments or margins, or just your ability to provide any more kind of incremental information about 4Q? And then I have a follow-up. Thanks. Actually, thanks for the question, Erik. Let me provide some color on this. You know, I think one of the things that I know you look at in other categories that we've kinda shared for the first time this time is when we look at Google Trends, and we see the interest in the brand with either what is Cricut or the Cricut search term. We see that, you know, mostly flat year-over-year, right? We see that significantly higher than 2019, and yet the data in, you know, the sell-through doesn't, you know, clearly reflect the 2021 results. We've actually also done some proprietary research where, you know, we've talked to people who are well down the funnel, and this is a pretty exhaustive research that we did, but it was qualitative, so it wasn't quantitative, if you're happy to share some insights from. Basically, people who've gone from awareness to consideration to research and are very, very interested in the product, there's just a higher threshold, you know, for them to make that purchase. Now, we do see that when we promote the product in, you know, and we did that on, you know, both Prime Days, that consumer comes in. We definitely feel that there's a healthy demand, healthy awareness, interest in the category there. We, you know, as we are focused in the long term, you know, we believe that we have a long time ahead of us. Our expectation is that as the consumer spending returns, that consumer will come in and shop the category. One other point that I'll just make specifically around October is, you know, in the last couple of years, we've started our promotional periods, you know, early on in the year, just given, you know, everybody was worried about getting the product to their house. You know, and this year we've kind of haven't really gotten into that, you know, promotional period that we have typically done at the time of October. I think we are seeing some of that. You know, as again as I look at the fundamentals of the category and look at overall brand interest, brand awareness, internal research, external factors such as Google Trends, we feel that there's the marketing funnel is healthy, and it's just, you know, how do we get it's just the consumer waiting to make that conversion spend. Just a point of clarification. When Ashish says we're flat in Google Trends year-over-year, if you know, our interest peaked in 2020 and we're essentially flat, we're matching this year interest from 2020 and 2021. Yeah. 2021 is the point of reference that I specifically brought up in September, and we basically are flat year-over-year compared to 2021 and significantly higher compared to 2019. The interest in the brand at the peak of COVID at the pandemic was, you know, higher, but we are comping 2021 in terms of brand interest for the most part in September. Okay. Thank you. That was really helpful. Thank you for that color. I guess maybe, you know, one other modeling question then a strategy question. You know, if you look at sequential growth in, you know, net new users historically, it would suggest that you could end the year kind of right around your original eight million kind of total user target you guided to a few quarters ago. I realize that's not the hard and fast guide today, but, you know, why would that not be the case? Should we expect net new user growth kind of below normal seasonality? Or just any comments you can give us to help us think about that. Thanks. Yeah. I think just for, you know, just to get the details. Thanks, Erik, again. You know, we definitely, you know, after the initial guidance, we basically, you know, kind of reflected that, you know, given everything that was going on, it was very hard to predict, so we kind of, you know, muted that a little bit. You know, we continue to believe that, like, you know, we're doing all the right things to get from an awareness standpoint. Like I said, there's just, the holidays are such a big part of the sales, right? Especially, given the fact that there's pent-up demand, the funnel is full, at least we think it's really healthy, now, will the customer jump in? You know, at this point, hard to kind of give any guidance on how the economy and consumer sentiment. I mean, you read that just as well as we do. We feel good about awareness, actually, and we think that we're doing all the right things to get that customer to make that purchase. I think a lot is gonna depend on what happens in November and December, you know, and where the customer decides to spend the money, but we feel that we're in a good position going into November and December. The other thing that we feel good about is, as we've talked about, is that, you know, given the fact that we've been able to work through the channel inventory, we feel that, you know, we'll have a higher correlation between sell-ins and sell-through next year. Okay. Yeah. My last question, Ashish, for you is, you know, you made an interesting comment earlier on the call just about the hundreds of thousands of users that aren't necessarily engaging with their machine but are on the Design Space app. Obviously you've had really nice performance on the subscriber side, even if there's just a tiny bit of ARPU pressure there. I guess my question is just, is there an opportunity that you see on your end to kind of better monetize this kind of non-connected machine engagement? It's just the business that is clearly outperforming, and so obviously subscriptions are really nice to have, and I'm just wondering if you can monetize some of this engagement that actually isn't on the machine, but instead on the app, even if not in a subscription basis. That's all for me. Thank you so much. Yeah. Thanks, Erik. That is a really good question, something that I'm incredibly excited about. Let me talk about that. Just as a reminder, you know, which is the way we calculate our engagement metric is the number of users cutting, right? Or the percentage of users cutting in the past 90 days as a percentage of the total users we acquired since 2014, right? And if you think about it, like, almost half our entire user base, like 48% of them, you know, cut on the machine, right? And we saw that number increase year-on-year. Now, you know, we've kind of been sharing this a little bit, and we probably went into a lot more detail. Like, we've been obsessed, and we've been focusing on really getting the user to interact in very rich ways on the platform. Right? They're creating bookmarks, which is effectively an intent to come back and make that thing, liking project. They're following other users. They're connecting with people. They're sharing stuff. We know from our data that when they, you know, come in Design Space, there's a higher likelihood to cut, and we made a comment to that in our prepared remarks. Our goal is how do we get more people coming into Design Space, right? Even when they are away from their machine, I think mobile's gonna play a huge strategy. We think that that'll ultimately convert to either them cutting and monetizing. One data point specifically to your question, which is, you know, a proof point, is that today we have not, you know, we've seen the benefit of that with selling Cricut Access, right? Not only are we do we have a, you know, significantly better, more enhanced Cricut Access product, we are actually also able to merchandise that and, you know, create ad impressions in many, many, many different places in the app, right? We think that our continued focus on bringing users to Design Space, getting them to interact, and in lots and lots and lots of time, we will have the opportunity to monetize that as, you know, in ways we've defined traditionally, which is cutting, but also in many other ways. I think we're in the very early stages, but, you know, we have a lot of exciting initiatives. I'm very proud of the team. We are building a platform where that activity is adding every user is creating value, adding value and deriving value on the platform. Awesome. Thank you so much, Ashish, for the detail. One moment. Our next question comes from Paul Kearney of Barclays. Your line is open. Hi, everyone. Thanks for taking my question. If we kinda hit the goal of exiting Q4 at healthy inventory levels at retail, can you maybe help us parse through the puts and takes for the top line growth into FY 2023 for the first half and the back half? Just some of what are some of the, maybe some of the channel dynamics that we have to think of within our model? Thanks. Paul, thanks for the question. You know, given all the macro dynamics going on, we're taking a conservative view in our own planning of how to look at next year, right? Where we had significant headwinds from channel inventory, that will be largely behind us, right? There are still some pockets that we'll face next year related to that, especially in our NAM segment. What we are confident about is, you know, Ashish talked about our awareness funnel and you know what we understand about our consumers, and we're confident that when consumer spending returns, that we're well -positioned to capture growth. Right now we're planning that the first half of next year probably looks a lot like the current environment. Okay. Helpful. Just maybe a longer term strategic question. Can you just maybe update us on what you think the long-term user growth trajectory is for this business? Maybe you can start with where your awareness levels are today with the increased promotional activity. Do you think that the consumer is going to continue to need promotions? Maybe just some metrics on where the user is today and the perception of the brand. Thanks. Yeah. Thanks for the question, Paul. I think one of the things that, again, I wanna kind of point out that our revenues were down 49% and net new user growth was down 26%. You know, we talked a little bit about the brand interest in the category, which is, you know, when people type in the term Cricut or what is Cricut, you know, we continue to use the same levers that we have in the past, which is network effects, social media, word of mouth, et cetera. We have not shared this detail, but we do a lot of awareness. We do a broad-based awareness and index study. We stress test our serviceable addressable market by saying, "Well, what if, you know, if we define it one way? Well, what if we get a lot more rigorous about it?" Everything that we know, both in the domestic markets and in international markets, leads us to believe that, you know, our SAM ahead of us. We have a large market opportunity. You know, again, the things that we control today are, you know, build passion for the brand, create awareness. You know, we have, you know, even though our sales and marketing numbers as a percentage of sales look higher, we believe that sales, you know, it's really because of, you know, the sales being low. The effectiveness of that sales and marketing dollar to get that awareness and driving people down that funnel is pretty effective. Now, there are a number of things that our team is working on based on, you know, a tremendous amount of research, is to how do we bring people into the funnel? What are the things that we control in terms of helping the user get through, you know, to get the research that they're looking for, et cetera. We feel that they're putting in place a lot of, you know, fundamentals in place, and we have continued to build on things that we knew about the customer and continue to build on that. We believe that all of that will ultimately help us, you know, get more conversion when the consumer spending returns. We feel really good about, you know, our initiatives. Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.