Cimpress plc Q1 FY2026 earnings call

• Elevated products are driving step function improvement in per customer lifetime value, especially at Vistaprint, with high percentage in categories like signage, logo apparel, etc.
• Capitalizing on mass customization platform and scale in elevated products to reduce COGS and increase new product velocity, with CapEx invested in production operations and consolidation of volumes into focused hubs.
• Cross-Cimpress fulfillment (XCF) drove incremental $15M of gross profit last year, with segments growing cross-Cimpress fulfillment revenue, and MCP-enabled fulfillment improving delivery and customer communication.
• Shared technology, organizational delayering, and AI helping constrain operating expenses while improving customer value, e.g., Vistaprint rolled out AI chatbot improving customer care efficiency 6% year-over-year.
• Strong financial future with path to FY '28 EBITDA of at least $600M and significant delevering, with $70M-$80M annualized adjusted EBITDA improvements expected exiting fiscal '27.

Consolidated Q1 revenue grew 7% on a reported basis and 4% on an organic constant currency basis. Vistaprint saw growth in elevated products like promotional products, apparel, gifts, packaging, and labels, with double-digit year-over-year growth. Legacy products like business cards and stationery declined 1% in constant currency vs a 4% decline in Q1 of last year. Upload & Print delivered 15% reported growth and 8% constant currency growth. National Pen and BuildASign grew due to their role as fulfillment partners for Vistaprint. Adjusted EBITDA increased $10.9 million year-over-year, gross profit grew 5% consolidated, but gross margins contracted 80 basis points. Variable gross profit per customer for Vistaprint grew 7% year-over-year, with nearly all growth from top 2 customer deciles.

• Reiterated fiscal 2026 guidance: 5%-6% revenue growth, 2%-3% organic constant currency revenue growth, net income at least $72M, adjusted EBITDA at least $450M, operating cash flow ~$310M, adjusted free cash flow ~$140M, and net leverage to decrease slightly by end of fiscal '26.
• Outlook to FY '28: Cimpress to deliver at least $200M net income and at least $600M adjusted EBITDA with ~45% conversion of adjusted EBITDA to adjusted free cash flow.

• Tariffs: Impact was minimal in Q1, with nearly all impact offset by pricing adjustments, and largest exposure at National Pen, focusing on mitigation via pricing and supply chain optimization.
• Macroeconomic factors: Uncertainty in consumer behavior and postal system affecting holiday season, but structurally better than last year with addressed headwinds like organic search changes.
• Tax expense: GAAP tax expense volatile quarter-to-quarter due to accounting rules and seasonality of profitability, with cash taxes expected to increase driven by profitability increases.

Q: How was consolidated revenue only up 4% on an organic constant currency basis if segments were up 8%?

A: Due to cross-Cimpress fulfillment where revenues from fulfilling for other segments are eliminated in consolidated results, incentivizing teams to drive cross-Cimpress fulfillment and leveraging synergies across Cimpress.

Q: What is the current status of dealings with Spruce House?

A: Appreciate their feedback, believe recent share price doesn't reflect intrinsic value, and focus is on executing plans outlined to change paradigm.

Q: How do Q1 results position for remainder of fiscal year?

A: Revenue growth rate ahead of annual range, off to good start, Q1 results provide strong foundation to meet or exceed FY '26 guidance, confident in execution through Q2 and remainder of year.

Q: Impact of tariffs during the quarter?

A: Impact was minimal, less than $1M net, no strange profile, removal of minimis exemption had no material effect, and positioned well with broad coverage under IEEPA and USMCA.

Q: Framework for holiday season?

A: Structurally better than last year with 1 extra buying day, addressed organic search headwinds, confident in plans leaning into strengths, team ready to execute.

Q: Why was tax expense so high?

A: GAAP tax expense difficult to understand quarter-by-quarter due to accounting rules and seasonality, cash taxes higher year-over-year as some refunds from last year won't repeat, expecting cash taxes to increase with profitability increases.