Cimpress (Vistaprint) Reports Q2 Results Showing Revenue Growth of 19 Percent Year-Over-Year
VENLO, THE NETHERLANDS—January 29, 2015—Cimpress N.V. has announced financial results for the three month period ended Dec. 31, 2014, the second quarter of its 2015 fiscal year.
“We delivered good results across the business in our second quarter,” stated Robert Keane, president and CEO. “Quarterly revenue reflected continued improvement in the growth of our Vistaprint brand as a result of our investments in our customer value proposition, as well as continued strong growth of our recent acquisitions. Profitability, operating cash flow and free cash flow were also strong. In November, our shareholders overwhelmingly supported the name change of our corporate parent company to Cimpress, as a clear reflection of our strategy to extend our mass customization capabilities well beyond our traditional Vistaprint-branded business. In pursuit of this vision we have embarked on a major multi-year investment to engineer a shared platform of software-driven mass customization capabilities that we can leverage across multiple customer-facing brands.”
Consolidated Financial Metrics:
- Revenue for the second quarter of fiscal year 2015 was $439.9 million, a 19 percent increase compared to revenue of $370.8 million reported in the same quarter a year ago. Excluding the estimated impact from currency exchange rate fluctuations and revenue from businesses acquired during the past twelve months, total revenue grew 7 percent year over year in the second quarter.
- Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the second quarter was 64.4 percent, down from 67.4 percent in the same quarter a year ago. The year-over-year reduction in gross margin was primarily due to our recent acquisitions of Printdeal (formerly named People & Print Group) and Pixartprinting, which have lower gross margins than our Vistaprint-branded business. Excluding the businesses we acquired during the past twelve months, our gross margin increased slightly year over year.
- Operating income in the second quarter was $59.9 million, or 13.6 percent of revenue, an increase in absolute dollars but a decrease as a percent of revenue compared to $52.5 million, or 14.2 percent of revenue, in the same quarter a year ago. This operating margin compression is driven by increased amortization expense for acquisition-related intangible assets, as well as the change in fair-value of our acquisition-related earn-outs.
- GAAP net income for the second quarter was $63.6 million, or 14.5 percent of revenue, compared to $40.9 million, or 11.0 percent of revenue in the same quarter a year ago. Part of the significant year-over-year growth in GAAP net income is due to below-the-line currency movements that created losses in the year-ago period but gains in the current period.
- GAAP net income per diluted share for the second quarter was $1.89, versus $1.18 in the same quarter a year ago, due in part to the currency movements described above.
- Non-GAAP adjusted net income for the second quarter, which excludes amortization expense for acquisition-related intangible assets, tax charges related to the alignment of acquisition-related intellectual property with our operational structure, the change in the fair-value estimate of our acquisition-related earn-outs, unrealized currency gains and losses on currency hedges and intercompany financing arrangements included in net income, share-based compensation expense, and the related income tax effect of these items, was $72.1 million, or 16.4 percent of revenue, representing a 37 percent increase compared to $52.7 million, or 14.2 percent of revenue, in the same quarter a year ago.
- Non-GAAP adjusted net income per diluted share for the second quarter, as defined above, was $2.12, versus $1.50 in the same quarter a year ago.
- Capital expenditures in the second quarter were $18.3 million, or 4.2 percent of revenue.
- During the second quarter, the company generated $138.2 million of cash from operations and $116.0 million in free cash flow, defined as cash from operations less purchases of property, plant and equipment, purchases of intangible assets not related to acquisitions, and capitalization of software and Website development costs.
- As of December 31, 2014, the company had $77.9 million in cash and cash equivalents and $346.9 million of debt. After considering debt covenant limitations, as of December 31, 2014 the company had $399.1 million available for borrowing under its committed credit facility.
The recent acquisitions of Printdeal, Pixartprinting, FotoKnudsen and the recent investment in Printi are not yet incorporated into our customer metrics.
Fiscal 2015 Outlook as of January 28, 2015:
Ernst Teunissen, executive vice president and CFO, said, “Now that we are halfway through our fiscal year, we are adjusting our guidance to reflect, on the one hand currency headwinds but, on the other hand, solid year-to-date operational results."
Financial Guidance as of January 28, 2015:
The company provides revenue and earnings guidance on only a fiscal year basis, not quarterly. Our guidance incorporates completed acquisitions and share repurchases, and outstanding debt obligations, as of January 28, 2015. Based on current and anticipated levels of demand, the company expects the following financial results:
Fiscal Year 2015 Revenue
- The company expects revenue of approximately $1,430 million to $1,470 million, or 13 percent to 16 percent growth year over year in reported terms and 17 percent to 20 percent growth on a constant-currency basis. Constant-currency growth expectations assume a recent 30-day currency exchange rate for all currencies.
- This constant-currency growth expectation remains the same as the guidance we last gave on October 29, 2014 at the top end of the range. We have increased the low end of the range.
- Our reported revenue outlook has been lowered at the high end of the range by about $30 million due to recent weakening of currencies against the US dollar, particularly European currencies.
Fiscal Year 2015 GAAP Net Income Per Diluted Share
- The company expects GAAP net income per diluted share of approximately $2.00 to $2.30, which assumes 33.6 million weighted average diluted shares outstanding.
- We expect our fiscal 2015 GAAP net income to benefit from strong year-to-date operational performance.
- Based on a recent 30-day currency exchange rate for relevant currencies, we estimate that realized gains and losses on currency forward contracts as well as natural hedges will largely offset the currency impact to revenue in our full-year net income results.
- However, we are decreasing our GAAP EPS guidance range versus the guidance we last gave on October 29, 2014 because of a large projected GAAP loss in the third quarter resulting from the recent appreciation of the Swiss Franc, which has a non-cash, non-operational impact on a US dollar denominated intercompany loan. If the USD to CHF exchange rates remain the same as late January rates, we expect this loss will more than offset the year-to-date currency gains on the intercompany loan we have recorded in our GAAP net income. This projected loss is excluded from our non-GAAP EPS expectation.
Fiscal Year 2015 Non-GAAP Adjusted Net Income Per Diluted Share
- The company expects non-GAAP adjusted net income per diluted share of approximately $3.80 to $4.10, which excludes our expectations for the following items inclusive of their tax effects: Acquisition-related amortization of intangible assets of approximately $22.2 million or approximately $0.65 per diluted share; share-based compensation expense of approximately $21.7 million or approximately $0.64 per diluted share; the change in fair-value estimate of our acquisition-related earn-outs of approximately $7.4 million or approximately $0.22 per diluted share; tax charges related to the alignment of acquisition-related intellectual property with global operations of approximately $2.2 million, or $0.06 per diluted share; an unrealized currency loss of $(11.0) million, or $(0.32) per diluted share, based on a recent spot rate of relevant currencies (USD to Swiss Franc);changes in unrealized gains on currency forward contracts of $2.3 million, or $0.07 per diluted share, based on a recent 30-day currency exchange rate for relevant currencies.
- This guidance assumes a non-GAAP weighted average diluted share count of approximately 34.0 million shares.
- This non-GAAP EPS guidance is higher than the guidance we last gave on October 29, 2014 to reflect our strong performance to date.
Fiscal Year 2015 Depreciation and Amortization and Capital Expenditures
- The company expects depreciation and amortization expense to be approximately $95 million to $100 million. This includes the amortization of acquisition-related intangible assets described above in our non-GAAP earnings per share expectations, as well as our expectations for capitalized software development costs.
- The company expects to make capital expenditures of approximately $85 million to $95 million. The majority of planned capital investments are designed to support the planned long-term growth of the business. This fiscal year, we expect to invest about $20 million to build a new manufacturing facility in Japan as part of our joint venture there and about $20 million in the expansion of our product lines and other new manufacturing capabilities.
The foregoing guidance supersedes any guidance previously issued by the company. All such previous guidance should no longer be relied upon.
Cimpress N.V. (Nasdaq: CMPR) is the world leader in mass customization. For 20 years, the company has focused on developing software and manufacturing capabilities that transform traditional markets in order to make customized products accessible and affordable to everyone. Cimpress’ portfolio of brands that includes Vistaprint, Albelli, Drukwerkdeal, Pixartprinting and others serves many customer segments across many applications for mass customization. The company produces more than 80 million unique products a year via its network of computer integrated manufacturing facilities.