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Segment Information | 3 Months Ended
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Mar. 31, 2024
Segment Reporting [Abstract] |
Segment Information | Segment Information In January 2024, the Company reevaluated its operating segments in order to better align with how the CODM evaluates performance and allocates resources. The key factor evaluated by the Company resulted from the growth and expansion of Design Space, the Company’s digital platform. Since its initial public offering, the Company’s digital platform has evolved and grown considerably. Key enhancements to the platform include the size of its images, fonts, and projects library, the introduction of advanced design tools, the software support for several new cutting machines, and the creation of enhanced subscriptions offerings. The change in operating segments reflects the Company’s strategy to focus on continuing to expand revenue and margin generated from its digital platform and Paid Subscribers. At the same time, a number of product related factors also contributed to this decision, including the relative importance of physical products to the platform, including bundles (comprised of several combinations of machines, accessories, and materials), and changes in our Accessories and Materials business. Based on these changes, the Company has determined that it was appropriate to reduce its reportable segments from three to two, combining its Subscriptions and digital content businesses into one Platform segment, and its Connected Machines and Accessories and Materials businesses into one Product segment. Prior period segment results have been retrospectively recast to reflect the new reportable segments. The CODM reviews revenue and gross profit for each of the reportable segments. Gross profit is defined as revenue less cost of revenue incurred by the segment. The Company considered the provisions of ASC 280-10-50 as it relates to the information provided to and used by the CODM for evaluating performance and allocating resources to operating segments. The Company does not allocate assets at the reportable segment level as these are managed on an entity wide group basis. As of March 31, 2024, long-lived assets located outside the United States, primarily located in Malaysia and China, were $7.3 million. The Platform segment derives revenue primarily from monthly and annual subscription fees, digital content, and a portion 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 three months ended March 31, 2024, upfront digital content revenue comprised 1% of Platform revenue. The remaining Platform revenue consists of ratably recognized subscription revenue. 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. Key financial performance measures of the segments including revenue, cost of revenue and gross profit are as follows:
| Three Months Ended March 31, |  |
| 2024 |  | 2023 |  |  |  |
(in thousands) |  |  |  |  |  |  |
Platform: |  |  |  |  |  |  |
Revenue | $ | 78,286 |  |  | $ | 76,241 |  |  |  |  |
Cost of revenue | 8,759 |  |  | 7,761 |  |  |  |  |
Gross profit | $ | 69,527 |  |  | $ | 68,480 |  |  |  |  |
Products: |  |  |  |  |  |  |
Revenue | $ | 89,106 |  |  | $ | 104,986 |  |  |  |  |
Cost of revenue | 67,039 |  |  | 96,800 |  |  |  |  |
Gross profit | $ | 22,067 |  |  | $ | 8,186 |  |  |  |  |
Consolidated: |  |  |  |  |  |  |
Revenue | $ | 167,392 |  |  | $ | 181,227 |  |  |  |  |
Cost of revenue | 75,798 |  |  | 104,561 |  |  |  |  |
Gross profit | $ | 91,594 |  |  | $ | 76,666 |  |  |  |  |

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- Definition The entire disclosure for reporting segments including data and tables. 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