Cimpress Beats Q3 2015 EPS, Grows Revenue

Cimpress N.V. announced financial results for the three month period ended March 31, 2015, the third quarter of its 2015 fiscal year.
 
Revenue for the third quarter of fiscal year 2015 was $339.9 million, a 19% increase compared to revenue of $286.2 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 12 months, total revenue grew 11% year over year in the third quarter, in line with our expectations.
 
“Our Vistaprint brand continues to show positive customer loyalty momentum in the wake of significant and on-going improvements to its customer value proposition,” said Robert Keane, president and CEO. “This includes continued reductions to traditional Vistaprint practices such as aggressive cross-selling, which create on-going revenue headwinds in all Vistaprint geographic markets. However, Vistaprint’s net growth rate continues to improve in geographies where the value proposition improvements are most advanced because the force of long-term loyalty tailwinds is overcoming that of the revenue headwinds.”
 
Keane added, “We also continue to invest heavily in our vision to build a common mass customization platform that we bring to market via multiple, focused brands; in new product development; and in building foundational capabilities in potentially large and valuable geographic markets such as India, Japan and Brazil.
 
“As we pass the anniversary of the Pixartprinting and Printdeal acquisitions, we have been pleased with their sustained revenue and bottom-line performance,” Keane continued. “Subsequent to the end of the quarter we closed the acquisitions of Exagroup and Druck.at, which together represent an initial investment of over €110 million. As we integrate these firms into Cimpress over the coming years, we expect them to bring strong operational capabilities that we will incorporate into our mass customization platform and focused brands that will operate as part of our growing portfolio of brands.”
 
Gross margin (revenue minus the cost of revenue as a% of total revenue) in the third quarter was 63.1%, down from 64.7% in the same quarter a year ago. The year-over-year reduction in gross margin was primarily due to the mix effect of the acquisitions of Printdeal and Pixartprinting, which have lower gross margins than our Vistaprint-branded business.
 
Operating income in the third quarter was $4.3 million, or 1.3% of revenue, a decrease in both absolute dollars and as a percentage of revenue compared to $5.2 million, or 1.8% of revenue, in the same quarter a year ago.
 
During the third quarter, the company generated $1.6 million of cash from operations and a loss of $17.5 million in free cash flow.
 
The company expects revenue of approximately $1,460 million to $1,480 million, or 15% to 17% growth year over year in reported terms and 21% to 22% growth on a constant-currency basis.