On 4 August, Cricut told investors its second-quarter profit had grown by more than half. Very little of that came from selling machines.

Cricut sells consumer cutting machines — the Joy, Explore and Maker lines — through big-box retail, and rents its Design Space software to owners through a paid subscription called Cricut Access. Revenue in the quarter was $156.3m, down 9.2% from a year earlier. The products line, which is the machines and the vinyl and paper they cut, fell 22% to $71.3m. Net income was $39.1m.

Inside that profit sat $24.3m of items that will not repeat: $17.9m of refunds from U.S. Customs and Border Protection, booked as a reduction of product cost of revenue, plus a $6.4m royalty settlement. The refunds followed the Supreme Court's February ruling that tariffs imposed under the International Emergency Economic Powers Act were unauthorized. Cricut's finance chief said that without the one-offs, gross margin would have been about 58.9% — roughly flat sequentially — against the 74.5% that printed.

The durable part is smaller and slower. Paid subscribers reached 3.10 million, up 3% year on year, and platform revenue rose 5% to $85m at an average of $56.37 per user. Machine sell-through grew double digits in units; the revenue decline came from lower prices on the new Joy 2 and Explore 5. Management said engaged users have stabilized for the first time since 2022. That is against a top line that has fallen every year since 2021, from $1.31bn to $709m last year, even as gross margin climbed from 35% to 55%.

The most telling number is the valuation. Cricut's trailing price/earnings ratio of 13.0x is flattered by the refund; its forward multiple of 19.0x sits above it, because analysts model earnings down — $0.29 a share this year against $0.35 actually earned last year, and $0.226 next. The company holds $286m of cash, carries no debt, and yields 12.8% on trailing free cash flow.

The one business that inflected

Red Cat Holdings, which builds small reconnaissance drones for the U.S. Army and allied militaries out of Puerto Rico, is the real thing in this group. Second-quarter revenue was $20.2m, up 527% year on year and 30% sequentially, with gross margin of 16.1% against 11.6% a year earlier. The customer base broadened: the Army fell below half of revenue from 73%, with Japan second and NATO's support agency third.

The arithmetic ahead is severe. Red Cat reaffirmed full-year revenue of $150–180m; first-half revenue was $35.7m, so the second half must run at three to four times the first. Management points to $50–80m of finished drones in inventory awaiting orders, and warns that the Army program office has been restructured and the timing of the transition to low-rate production is unclear. A $2.49m Air Force order placed on 30 July is a rounding error against that guide. The quarterly net loss was $35.26m.

Red Cat's cash — $325.6m at 30 June, up from $167.9m — came from investors, not customers: about 27.5m new shares priced at $9.40 in May. The shares closed 17 August only about 11% above that. On losses, the earnings multiple is meaningless; on sales the stock trades at 10.4x forward, and on forward gross profit at 193x — the price of a 16%-margin hardware line.

Flat revenue, record refills

Stratasys makes polymer 3D printers and the materials they consume, for aerospace, dental and automotive customers. Revenue was $137.6m, down 0.3%, with an operating loss of $17.4m. The mix improved while the base did not: consumables hit a record $66.3m and the parts-service arm grew 12.1% to $44.9m, while printer sales fell to $26.4m from $30.6m. Aerospace and defense, now the largest vertical, grew 17%. The company withdrew its full-year free-cash-flow target after burning $18.7m in the quarter on intellectual-property litigation, and agreed in May to buy MarkForged for $42.5m. Revenue has now declined four straight years. It is the cheapest of the three — 0.94x book, 1.35x forward sales, with $212.5m of debt-free cash against a $767m market value — and consensus still models this year up 3.1%, which the reported first half, down 1.4%, does not support.

What the month actually was

Red Cat rose 36.6% between 17 July and 17 August, Cricut 19.0%, Stratasys 8.6%. Remove each name's two strongest sessions and only Red Cat is still up, at 12.5%; Cricut turns to minus 5.8% and Stratasys to minus 4.2%, because each of those two moves is one earnings day. Red Cat's own biggest session was 14 August, when the White House imposed tariffs on foreign-made drones and parts — a policy event that lifted AeroVironment, Kratos and Ondas too. Over the same month Kratos gained 38.9% and Ondas 37.9%, both more than Red Cat. Over twelve months, all three of these shares are roughly where they started.

The setup

Where it stands — One operating inflection at Red Cat, priced as defense-sector beta; two single-session earnings pops at Cricut and Stratasys. Would confirm — Red Cat third-quarter revenue above $50m, converting the $50–80m of finished-drone inventory into deliveries. Would invalidate — Red Cat cutting or missing the $150–180m full-year guide; Cricut products revenue declining again in the third quarter. Watch next — Third-quarter results in November, and whether Stratasys closes MarkForged in the second half as scheduled. Valuation — Cricut 13.0x trailing and 19.0x forward earnings, forward above trailing on falling estimates; Red Cat 10.4x forward sales; Stratasys 0.94x book.