Revenue for the third quarter of fiscal year 2017 was $550.6 million, a 26% increase compared to revenue of $436.8 million 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, revenue grew 11% year over year in the third quarter.
Gross margin in the third quarter was 51.2%, down from 54.9% in the same quarter a year ago due to the increased weighting of the Upload and Print business units with a full quarter of WIRmachenDRUCK’s results, and lower Vistaprint gross margins due to planned investments in projects that weigh down gross margins, unfavorable currency changes, and product mix.
“We continue to execute across a broad spectrum of initiatives as outlined at our August 2016 investor day, including activating additional components of our mass customization platform. Additionally, this was our first full quarter of ownership of National Pen, and our integration efforts to achieve targeted synergies are underway,” said Robert Keane, president and CEO. “As previously announced, we also deeply decentralized our operations over the past quarter.”
“Revenue growth accelerated in line with our expectations, both in aggregate due to the addition of National Pen, as well as on an organic constant-currency basis, even though revenue continues to be pressured in the near term by the loss of certain partner revenue and the reduction of shipping prices to Vistaprint customers,” said CFO Sean Quinn.
During the third quarter, the company generated $9.0 million of cash from operations and $(21.3) million in free cash flow, a non-GAAP financial measure. As of March 31, 2017, the company had $43.5 million in cash and cash equivalents and $891.5 million of debt, net of issuance costs.
Based on Cimpress’ debt covenant definitions, its total leverage ratio was 3.59 as of March 31, 2017. As previously described, Cimpress expected its leverage ratio to increase in the third quarter due to the typical seasonality of its working capital cycles. The company remains committed to reducing its leverage ratio to or below its long-term target of three times trailing 12 month EBITDA by the end of calendar year 2017 through a combination of debt repayment and EBITDA expansion.