Cimpress plc Q2 FY2026 earnings call

Management Statement and Operational Highlights

• Elevated Products: Drive a step function improvement in per customer lifetime value, with variable gross profit per customer growing 9% year over year.
• MTP and XCF: Enable cross SymPres fulfillment to drive manufacturing efficiencies and accelerate new product introductions, involving elevated capital expenditures for manufacturing equipment.
• Shared Technology: Include organizational delayering and AI, constraining operating expenses and enabling future efficiencies. Example: Collaboration between Vista, National Penn, and Build A Sign to share product development, sourcing, etc., driving efficiencies.
• Financial Future: Confident in reaching FY '28 EBITDA of at least $600,000,000 and significant balance sheet delevering. Efficiencies in cost of goods, technology, and marketing, and a healthy pipeline of tuck-in M&A and partnership opportunities.

Segment Performance

• Vista: Organic constant currency growth was 5% in Q2, up from 3% in the prior year quarter. Elevated product categories such as promotional products, apparel and gifts, and packaging and labels saw double-digit growth. Legacy products like business cards and stationary declined 1% but improved from last year's decay rate. North America was the main driver of growth. Variable gross profit per customer grew 9% year over year.
• Upload and print: Customer and order count increased, fueling combined organic constant currency revenue growth of 6%.
• Print Brothers: Reported revenue grew 26% in Q2, with a tuck-in acquisition contributing $18,000,000. Excluding the tuck-in and currency, growth was 6%.
• Pixartprinting Group, National Pen, and Build A Sign: Cross impress fulfillment volumes increased. National Penn revenue benefited from tariff-related price increases.
• Profitability: Adjusted EBITDA increased by $6,000,000 year over year. Gross margins declined 110 basis points due to tariff impacts. Vista's segment EBITDA improved 10% due to revenue strength, stable gross profit margins, and currency benefits. Currency provided a $4,100,000 benefit to EBITDA in Q2.

Guidance

• Fiscal 2026: Raised guidance to revenue growth 7%-8%, 3%-4% organic constant currency revenue growth; net income at least $79,000,000; adjusted EBITDA at least $460,000,000 (up from previous $450,000,000); operating cash flow approximately $313,000,000; adjusted free cash flow approximately $145,000,000 (up from previous $140,000,000); net leverage to decrease slightly from FY '25 level of 3.1 times.
• Fiscal 2028: Confident in 4%-6% organic constant currency growth, net income $200,000,000, adjusted EBITDA at least $600,000,000, adjusted EBITDA to free cash flow conversion ~45%; exit fiscal 2027 with net leverage ~2.5 times, exit fiscal 2028 with net leverage below 2.0 times.

Risks

• Natural Disasters: Hurricane in Jamaica had a $2,000,000 negative impact on Vista's profitability, but efforts were made to mitigate through shifting call volumes and expected insurance recovery.
• Tariffs: At National Penn affecting gross margins, though expected to lessen as supply chain remediation ramps up.

Question and Answer

• Q: How would you characterize the holiday season that just concluded for VISTA? Did it go as planned, better, or worse? What worked and what did not? And are there any trends within holiday cards or mentioning, either regarding the industry, your market share, or anything else and what was the percentage change in cost per click in US consumer this year?

A: Overall strong for Vista, with North America as the source of strength. Volume and holiday cards in US was flat year over year, Canada grew double digits. Europe had tougher comp. Data suggests taking share, but details on cost per click not provided.

• Q: Strong Q2 results represent a continuation of trends observed from Q1 and led you to raising your guidance. Can you talk about the biggest areas of outperformance versus your initial FY '26 guidance?

A: Solid execution across the board, including revenue growth aided by acquisition and currency, EBITDA delivering to plan, and currency being a tailwind.

• Q: How do you view the opportunity ahead for cross CIMPRESS fulfillment to continue to drive down COGS, and how much headroom do you think there is ahead? Is there a certain level of cross net press fulfillment activity per business that you would like to achieve?

A: Cross enterprise fulfillment is a big opportunity, growing fast (doubled in first half of FY '25 to FY '26). Headroom ahead, though specific level not disclosed.

• Q: How much capital is the company willing to allocate to tuck in M&A?

A: Capital allocation depends on relative returns, but tuck-in deals like the Austrian printing group acquisition clear the 15% hurdle, with strong synergy opportunities and expected good returns.

• Q: Comment on the current state of operations in Jamaica following the hurricane.

A: Teams back at desks, with capacity shifted to other regions. Financially, operations stable, with insurance expected to cover remediation costs.