• Consolidated Revenue Growth: 1% on a reported basis, 3% on an organic constant currency basis.
• Vista Revenue Growth: 3% organic constant currency growth, with double-digit growth in promotional products, signage, packaging, and labels.
• Consumer Products Growth: Returned to 5% growth after a decline in Q2.
• Business Cards and Stationary Category: Declined 3% year over year, an improvement from a 4% decline last quarter.
• Consolidated Adjusted EBITDA: Declined by $3.5 million year over year.
• Gross Profit Impact: Affected by a $2.6 million impairment charge and $1.1 million in pre-production startup costs.
• Operating Expenses: Increased by about $3 million year over year.
• Tariff Impact: Minimal impact from Canada and Mexico; primary exposure from Chinese-sourced raw materials, with plans to reduce exposure to less than $20 million annually.
• Guidance Withdrawal: FY 2025 guidance withdrawn due to tariff and trade environment uncertainty.

• Warning! GuruFocus has detected 4 Warning Sign with CMPR.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cimpress PLC (NASDAQ:CMPR) reported strong growth in elevated products such as promotional products, apparel, signage, packaging, and labels, which are helping to increase customer lifetime value.
• Cross Cimpress fulfillment is growing quickly, accelerating new product introductions and lowering costs.
• Pixartprinting's new production facility in the US is operational, fulfilling for Vista, and will soon launch its US website, marking entry into the US upload and print market.
• Despite macro headwinds, business performance remains strong in Europe, with consistent growth trends.
• Efforts to optimize organic search in the US have shown improvement, particularly in March, indicating recovery from previous algorithm changes.

Negative Points

• Cimpress PLC (NASDAQ:CMPR) faces headwinds in legacy products and channels, reducing consolidated growth rates.
• Tariffs and the threat of future tariffs create uncertainty, impacting business operations and necessitating mitigation strategies.
• Consolidated adjusted EBITDA declined by $3.5 million year-over-year, impacted by impairment charges and startup costs.
• Vista's revenue and profitability in the US are affected by organic search algorithm changes, particularly impacting business cards and stationery.
• The company has withdrawn its guidance for FY 2025 and beyond due to tariff uncertainties and potential impacts on demand.

Q & A Highlights

Q: Which customer verticals are most exposed to tariff impacts, and what percentage of revenue do they represent? A: Robert Keane, CEO, explained that Cimpress serves a diverse range of industries with little concentration in any single vertical. The largest exposure from tariffs is in promotional products, apparel, and gifts (PPAG), which is over 20% of consolidated revenue. The US portion is about 11% of global revenues. The impact is primarily due to sourcing from China, but Cimpress is working on alternative sourcing and price adjustments to mitigate this.

Q: What is the expected tariff expense on the remaining $20 million of China COGS, and how will Cimpress manage this? A: Sean Quinn, CFO, stated that the tariff expense on the remaining $20 million of China COGS would be about $29 million. However, Cimpress plans to offset this through pricing changes and alternative sourcing. The impact is expected to be less than the $20 million due to these mitigation efforts.

Q: How is Cimpress planning to offset tariff and demand-related impacts by cutting costs? A: Sean Quinn mentioned that Cimpress is prepared to reduce costs if needed. They have already put some constraints in place and can flex variable and semi-variable costs in response to demand changes. The company is maintaining a high bar for growth investments and is focused on cost awareness.

Q: Can you provide an update on revenue growth in April and any trends noticed? A: Sean Quinn noted that April's performance was stable compared to March, with no significant changes across regions. The timing of holidays and other factors complicate direct comparisons, but overall trends remain consistent.

Q: What gives management confidence in the long-term gross margin profile of the business? A: Sean Quinn emphasized that Cimpress focuses on gross profit rather than gross margin percentage. The company aims to grow gross profit dollars by serving high-value customers well. They have clear objectives, KPIs, and investments to attract and retain these customers, ensuring long-term success.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.