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In an effort to point investors of this board to a business that is definitely not being unsustainably positively impacted by the pandemic, I present to you Cricut. Cricut's secret sauce is they sell "connected crafting machines" that enable its subscribers to make professional-looking goods.

 

Their sales have doubled and their margins have EXPLODED during 2020. They sell their high-quality connected machines at low-margin, but they offer high-margin consumables and a subscription to a content library of designs that generate significant recurring revenue for them.

 

Reviews from various customers state the price is high for the machines but it works "so much better" than the alternatives, so its worth it.

 

I see blue skies and continued revenue and profit growth for as far as the eye can see.

 

https://www.sec.gov/Archives/edgar/data/0001828962/000156459021013306/crct-s1a.htm

 

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Thanks for sharing - impressive growth in 2020. I see this being the single risk that can cripple the company

 

 

supply chain, manufacturing, distribution and fulfillment risks, including our being primarily dependent on a single China-based manufacturer and on limited sources of supply for components, accessories and materials ;

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  • 2 weeks later...

It seems to be an interesting business model. CEO wants it to be the Ritz Carlton of the crafts industry. There is enormous focus on both form and function in how they design both their machines as well as the software that interacts with the user (a sort of "liquid quality" to it that is boosting unit sales, lowering average age of users, raising frequency of usage and getting rave reviews/passionate usage. Women seem to love it). The growth of Etsy is a material driver of business for them (a pull from small businesses catering to customized craft needs).  They are perceived as materially superior to their closest competitors (sturdier machines, easier to use, less clunky software, much broader usage spectrum etc) and have a growing international presence (across a dozen markets). Like a mobile device, the machines get replaced in 3-4 years as newer versions come through with better functionality (they have a persistent focus on newer machines, newer tools, newer materials and newer users...a-la 3M). They have a strong subscription layer (materials, designs) that generates strong recurring revenue even if the user base does not grow by much. It's a good razor blade model. They started out with outsourcing key areas a decade back but by now software, engineering & design are virtually all done in-house. The financials look pristine and the multiple is not onerous (<25x fw PE). The penetration at 5% of their claimed TAM is not high yet leaving strong room for growth. Still trading at around IPO price.  

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