Segment Information The Company organizes its business into the following two reportable segments: Platform and Products. The chief operating decision makers (“CODM”) review revenue and gross profit for each of the reportable segments. The CODM consists of the Company’s Chief Executive Officer and Chief Financial Officer. The reported measure of segment profit or loss is gross profit, which is defined as revenue less cost of revenue incurred by the segment. The Company identifies cost of revenue as the significant segment expense category included in each reportable segment. No other segment-level expense categories are regularly provided to the CODM. The key operating decisions made by the CODM include assessing segment performance and resource allocation. The CODM primarily focuses on revenue and gross profit of the Platform and Product segments, as well as consolidated operating results and capital expenditures. The CODM uses this information to make budgeting and forecasting decisions, including hiring and compensation of certain employees, and allocating financial or capital resources. The reportable segments reflect the Company’s strategy to focus on continuing to expand revenue and margin generated from its digital platform and Paid Subscribers and the relative importance of physical products to the platform, including bundles (comprised of several combinations of machines, accessories, and materials).
The Platform segment derives revenue primarily from monthly and annual subscription fees, purchases of digital content, and a minimal amount of the revenue allocated to unspecified future upgrades and enhancements related to the essential software and access to the Company’s cloud-based services. For the years ended December 31, 2025, 2024 and 2023, upfront digital content revenue comprised approximately 2%, 1% and 1%, respectively, of Platform revenue. The remaining Platform revenue consists of ratably recognized subscription
revenue and revenue related to unspecified future upgrades and enhancements related to the essential software and access to the Company’s cloud-based services, which are recognized over the determined service period.
The Products segment derives revenue primarily from the sale of its connected machine hardware, and sale of craft, DIY, home décor products and extensions. There are no internal revenue transactions between the Company’s segments.
The Company does not allocate assets at the reportable segment level as these are managed on an entity wide group basis. As of the years ended December 31, 2025 and 2024, long-lived assets located outside the United States, primarily located in Malaysia and China, were $5.2 million and $5.1 million.
Key financial performance measures of the segments including revenue, cost of revenue and gross profit are as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (in thousands) | | | | | |
| Platform: | | | | | |
| Revenue | $ | 327,399 | | | $ | 312,976 | | | $ | 309,012 | |
| Cost of revenue | 35,990 | | | 37,288 | | | 32,804 | |
| Gross profit | $ | 291,409 | | | $ | 275,688 | | | $ | 276,208 | |
| | | | | |
| Products: | | | | | |
| Revenue | $ | 381,381 | | | $ | 399,562 | | | $ | 456,135 | |
| Cost of revenue | 282,359 | | | 322,462 | | | 389,050 | |
| Gross profit | $ | 99,022 | | | $ | 77,100 | | | $ | 67,085 | |
| | | | | |
| Consolidated: | | | | | |
| Revenue | $ | 708,780 | | | $ | 712,538 | | | $ | 765,147 | |
| Cost of revenue | 318,349 | | | 359,750 | | | 421,854 | |
| Gross profit | $ | 390,431 | | | $ | 352,788 | | | $ | 343,293 | |
A reconciliation of our total segment and consolidated gross profit to our income before provision for income taxes is presented in our consolidated statements of operations and comprehensive income.