November 6, 2017

First quarter results of Cimpress N.V.

For the first quarter of its currrent fiscal year (July 1 to September 30, 2017), Cimpress N.V. has announced US$ 563.3 million in revenue, a 27 percent increase compared to the same quarter a year ago (US$ 443.7 million). Excluding the estimated impact from currency exchange rate fluctuations and revenue from businesses acquired or divested during the past twelve months, revenue grew 12 percent year over year in the first quarter. Gross margin in the first quarter was 49.6 percent, down from 52.0 percent in the same quarter a year ago due to lower Vistaprint gross margins as a result of significant growth in lower-margin new products which are not yet at scale, as well as a continued mix shift toward the company’s Upload and Print businesses which have a lower gross margin than the Vistaprint and National Pen businesses.

Contribution margin (revenue minus the cost of revenue, the cost of advertising and payment processing as a percent of total revenue) in the first quarter was 31.0 percent, down from 32.5 percent in the same quarter a year ago. Advertising spend as a percent of revenue declined year over year for the first quarter, which partially offset the decline in gross margin as described above.

GAAP operating income in the first quarter was US$ 46.6 million, or 8.3 percent of revenue, compared to an operating loss of US$ 27.8 million, or 6.3 percent of revenue, in the same period a year ago. The drivers of this significant improvement were the sale of the Albumprinter business, and frestructuring savings of approximately US$ 10 million, a decrease in acquisition-related charges and favorable year-over-year currency fluctuations.

GAAP net income attributable to Cimpress for the first quarter was US$ 23.4 million, or 4.1 percent of revenue, compared to a net loss of US$ 29.1 million a year ago. GAAP net income per diluted share for the first quarter was US$ 0.72, versus a net loss of US$ 0.92 in the same quarter a year ago.

As of September 30, 2017, the company had US$42.8 million of cash/cash equivalents and US$ 820.8 million of debt, net of issuance costs. After considering debt covenant limitations, as of September 30, 2017, the company had US$ 262.4 million available for borrowing under its committed credit facility. Based on Cimpress’ debt covenant definitions, its total leverage ratio was 3.39 as of September 30, 2017. The company continues to expect to reduce its leverage ratio to approximately 3 times trailing twelve month EBITDA by the end of calendar year 2017 through a combination of debt repayment and EBITDA expansion.

“We are off to a solid start for fiscal year 2018,” commented Robert Keane, President and CEO. “Our -businesses delivered strong results in terms of the value they are creating for their customers, and our financial results are on track relative to our internal objectives for fiscal year 2018 growth in revenue and unlevered free cash flow. We entered this fiscal year with our new decentralized operating structure that we announced on January 25, 2017, and we have seen the intended benefits, including tightened coordination between marketing and manufacturing activities throughout our businesses, reduction of complexity and costs, and an improved ability to evaluate performance and assess returns on the capital we invest.”

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