FinanceLooker

Excrept from filing document 2025-06-30

The aggregate market value of the ordinary shares held by non affiliates of the registrant was approximately 1 35 billion on December 31 2024 the last business day of the registrant s most recently completed second fiscal quarter based on the last reported sale price of the registrant s ordinary shares on the Nasdaq Global Select Market
The registrant intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended June 30 2025 Portions of such proxy statement are incorporated by reference into Items 10 11 12 13 and 14 of Part III of this Annual Report on Form 10 K
Cimpress is a strategically focused collection of businesses that specialize in print mass customization through which we deliver large volumes of individually small sized customized orders of printed materials and promotional products Our products and services include a broad range of marketing materials business cards signage promotional products logo apparel packaging books and magazines wall decor photo merchandise invitations and announcements design and digital marketing services and other categories Mass customization is a core element of the business model of each Cimpress business and is a competitive strategy that seeks to produce goods and services to meet individual customer needs with near mass production efficiency We discuss mass customization in more detail further below
We have grown substantially over our history from 0 in 1995 to 0 2 billion of revenue in fiscal year 2006 the year when we became a publicly traded company then to 3 4 billion of revenue in fiscal year 2025 As we have grown we have achieved important benefits of scale Our strategy is to invest in and build customer focused entrepreneurial print mass customization businesses for the long term which we manage in a decentralized autonomous manner We drive competitive advantage across Cimpress through a select few shared strategic capabilities that have the greatest potential to create Cimpress wide value We limit all other central activities to only those which absolutely must be performed centrally
We believe this decentralized structure is beneficial in many ways as it enables our businesses to be more customer focused to make better decisions faster to manage a holistic cross functional value chain required to serve customers well to be more agile to be held more accountable for driving investment returns and to better understand where we are successful and where we are not This structure delegates responsibility authority and resources to the CEOs and managing directors of our various businesses We believe this approach has provided great value enabling our businesses to respond quickly to changes in customer needs and adapt to changing market conditions while also providing our leaders an environment to share best practices and insights across the group
The select few shared strategic capabilities into which we invest include our 1 mass customization platform MCP 2 talent infrastructure in India 3 central procurement of large scale capital equipment shipping services major categories of our raw materials and other categories of spend
and 4 peer to peer knowledge sharing among our businesses We encourage each of our businesses to leverage these capabilities but each business is free to choose the extent to which they use these services This optionality creates healthy pressure on the central teams who provide such services to deliver compelling value to our businesses
The combination of decentralization for most aspects of how we run Cimpress with a select few shared strategic capabilities in which we invest centrally is intended to engender customer centric entrepreneurial and owner mindsets across a wide set of geographies products and customer types while also enabling significant synergies and knowledge sharing across Cimpress
15 000 employees we have approximately 100 who work in central activities that fall into this category which includes tax treasury internal audit legal sustainability corporate communications consolidated reporting and compliance investor relations capital allocation and the functions of our CEO and CFO We have developed guardrails and accountability mechanisms in key areas of governance including cultural aspects such as a focus on customers and being socially responsible as well as operational aspects such as the processes by which we set strategy and financial budgets and review performance and the policies by which we ensure compliance with applicable laws
a the unlevered free cash flow per diluted share that in our best judgment will occur between now and the long term future appropriately discounted to reflect our cost of capital minus b net debt per diluted share We define unlevered free cash flow as adjusted free cash flow plus cash interest expense related to borrowing
We endeavor to make all financial decisions in service of this priority As such we often make decisions that could be considered non optimal were they to be evaluated based on other criteria such as but not limited to near and mid term revenue operating income net income EPS adjusted EBITDA and cash flow
IVPS is inherently long term in nature Thus an explicit outcome of this is that we accept fluctuations in our financial metrics as we make investments that we believe will deliver attractive long term returns on investment
Mass customization is a business model that allows companies to deliver major improvements to customer value across a wide variety of customized product categories Companies that excel at mass customization can automatically direct high volumes of orders into smaller streams of homogeneous orders that are then sent to specialized production lines If done with structured data flows and the digitization of the configuration and manufacturing processes setup costs become very small and small volume orders become economically feasible
The chart illustrates this concept The horizontal axis represents the volume of production of a given product the vertical axis represents the cost of producing one unit of that product Traditionally the only way to manufacture at a low unit cost was to produce a large volume of that product mass produced products fall in the lower right hand corner of the chart Custom made products i e those produced in small volumes for a very specific purpose historically incurred very high unit costs they fall in the upper left hand side of the chart
Mass customization breaks this trade off enabling low volume low cost production of individually unique products Very importantly relative to traditional alternatives mass customization creates value in many ways not just lower cost Other advantages can include faster production greater personal relevance avoidance of obsolete stock and material finished goods inventory better design flexible shipping options more product choice and higher quality
Mass customization in print related markets delivers a breakthrough in customer value particularly in markets in which the worth of a physical product is inherently tied to a specific unique use or application For instance there is limited value to a sign that is the same as is used by many other companies the business owner needs to describe what is unique about their business Likewise customized packaging is a way for a business to add their brand identity to what is oftentimes the first physical touchpoint with a customer for online purchases Before mass customization producing a high quality custom product required high per order setup costs so it simply was not economical to produce a customized product in low quantities
There are three ingredients to mass customization applied to print applications 1 web to print or e commerce stores that offer a wide variety of customizable products a replacement of more expensive and harder to scale physical stores with limited geographic reach 2 software driven order aggregation which enables significantly reduced costs on low volume orders and 3 democratized design that combines intuitive design software AI assisted design capabilities and human designers that are typically located in low cost locations to deliver high quality lower cost highly scalable alternatives to traditional graphic design services
We believe that the business cards sold by our Vista business provide a concrete example of the potential of our mass customization business model to deliver significant customer value and to develop strong profit franchises in large markets that were previously low growth and commoditized Millions of very small customers for example home based businesses rely on Vista to design and procure aesthetically pleasing high quality quickly delivered and low priced business cards The Vista production operations for a typical order of 250 standard business cards in Europe and North America require less than 14 seconds of labor for all of pre press printing cutting and packaging versus an hour or more for traditional printers Combined with advantages of scale in graphic design support services purchasing of materials our self service online ordering pre press automation auto scheduling and automated manufacturing processes we allow customers to design configure and procure
business cards at a fraction of the cost of typical traditional printers with consistent quality and delivery reliability Customers have extensive easily configurable customization options such as rounded corners different shapes specialty papers spot varnish reflective foil folded cards or different paper thicknesses Achieving this type of product variety while also being very cost efficient took us almost two decades and requires massive volume significant engineering investments and significant capital This is a mature but strongly profitable product for us and no longer requires significant capital to maintain our leadership position Our businesses have a history of launching new products that have expanded our revenue and profit opportunity as we have scaled them as we did in our more mature product categories The capabilities and customer trust we initially built via more mature products like business cards have proven to be extensible to newer product categories and we have been investing for more than a decade to serve customer needs in these newer growth categories While these newer products currently have a lower gross margin than many of our mature products they also typically attract customers with higher lifetime value Each product is well along the spectrum of mass customization relative to traditional suppliers with more production optimization opportunity ahead
Mass customization of print and promotional products is not a market itself but rather a business model that can be applied across global geographic markets to customers from varying businesses micro small medium and large graphic designers resellers printers teams associations groups consumers and families to which we offer products such as the following
The products and customer applications listed above constitute a large market opportunity that is highly fragmented We believe that the vast majority of the print related markets to which mass customization could apply are still served by traditional business models that force customers either to produce in large quantities per order or to pay a high price per unit
We believe that these large and fragmented markets are moving away from small traditional suppliers that employ job shop business models to fulfill a relatively small number of customer orders and toward businesses such as those owned by Cimpress that aggregate a relatively large number of orders and fulfill them via a focused supply chain and production capabilities at relatively high volumes thereby achieving the benefits of mass customization We believe we are relatively early in the process of what will be a multi decade shift from job shop business models to mass customization as innovation continues to bring new product categories into this model
Cimpress current revenue represents a very small fraction of this market opportunity We believe that Cimpress and competitors who have built their businesses around a mass customization model are disruptive innovators to these large markets because we enable small volume production of personalized high quality products at an affordable price Disruptive innovation a term coined by Harvard Business School professor Clayton Christensen describes a process by which a product or service takes root initially in simple applications at the bottom of a market such as the free business cards for the most price sensitive of micro businesses or basic white
We believe that a large opportunity exists for major markets to shift to a mass customization paradigm and even though we are largely decentralized the select few shared strategic capabilities into which we centrally invest provide significant scale based competitive advantages for Cimpress
We believe this opportunity to deliver substantially better customer value and therefore disrupt large traditional industries can translate into tremendous future opportunity for Cimpress Earlier in our history we focused primarily on a narrow set of customers highly price sensitive and discount driven micro businesses and consumers with a limited offering of relatively simple to produce products Through acquisitions and via significant investments in our Vista business we have expanded the breadth and depth of our product offerings extended our ability to serve our traditional customers and gained a capability to serve a vast range of customer types with ever more complex product formats what we call elevated products This has been a key part of our growth over the last two decades and we expect to continue to focus on capturing growth via innovation and new product introduction in the coming decades
Our businesses conduct market research on an ongoing basis and through those studies we remain confident in the overall market opportunity however our estimates are only approximate Despite the imprecise nature of our estimates we believe that our understanding is directionally correct and that we operate in a vast aggregate market with significant opportunity for Cimpress to grow as we continue delivering a differentiated and attractive value proposition to customers Today we believe that the revenue opportunity for low to medium order quantities i e still within our focus of small sized individual orders in the four product categories below is over 100 billion annually in North America Europe and Australia and significantly higher if you include other geographies and custom consumer products These product categories are listed in order of current market penetration by mass customization models
Small format marketing materials such as business cards flyers leaflets inserts brochures and magazines Businesses of all sizes are the main end users of short and medium run lengths per order quantities below 2 500 units for business cards and below 20 000 units for other materials This opportunity is estimated to be more than 25 billion per year
Large format products such as banners signs tradeshow displays and point of sale displays Businesses of all sizes are the main end users of short and medium run lengths less than 1 000 units This opportunity is estimated to be more than 35 billion per year
Promotional products apparel and gifts including decorated apparel bags and textiles and hard goods such as pens and drinkware The end users of short and medium runs of these products range from businesses to teams associations and groups as well as individual consumers This opportunity is estimated to be more than 25 billion per year
Packaging products such as corrugated board packaging flexible packaging printed paper bags and labels Businesses of all sizes are the primary end users for short and medium runs below 10 000 units This opportunity is estimated to be more than 15 billion per year
The market for small format marketing materials is the most mature in this penetration though there is still a significant portion served by thousands of small traditional suppliers The market for packaging products is the least mature in terms of penetration by mass customization models but this transition has begun The estimates of annual market opportunity in each of the four product categories above are based on research conducted for Cimpress by third party research firm Keypoint Intelligence in August 2022 to estimate the value of print shipments to small and medium businesses in Australia France Germany Italy the U K and the U S Cimpress extrapolated the findings of the study to estimate the market size of the remaining countries in North America and Europe in which we sell products based on the relative number of small and medium businesses in those other markets
Vista was an early pioneer of the concept of web based do it yourself design as a fundamental part of its original customer value proposition for designs for relatively simple 2D product formats We believe that there is an
ongoing revolution in graphic design for small business marketing one in which a combination of technology tools artificial intelligence and machine learning and convenient access via two sided marketplace platforms to professional freelance design talent including from low cost countries will continue a multi decade democratization of design that has been central to print mass customization and is likely to continue to be a key enabler to bringing elevated products and marketing channels into the mass customization paradigm for example packaging large format signage and catalogs Across Cimpress our businesses are improving their customer design experiences They very often build these business level experiences on top of design capabilities that our MCP provides as software services and individual businesses also develop design enablement capabilities that are specific to their customer and product needs We are advancing design capabilities via user experience improvements workflow automation and a large pool of talented in house and freelance designers and graphic professionals who are located in low cost labor markets We have begun to adopt machine learning and generative AI capabilities for design and personalization to facilitate content creation and matching across a wide variety of products personalized merchandising and more showing promising uplift in key customer metrics and financial outcomes Our businesses use data insights to drive efficiency gains and resource prioritization
Vista has continued to invest in its design capabilities both organically and through acquisition to be a leader in this market shift For example Vista previously acquired a network of 150 000 freelance designers who work with customer specific design projects and a business with more than 100 000 freelance contributors of photos videos music and other content Vista is building a design system that combines graphic templates created by thousands of freelancers with algorithmically generated variations of customers adaptation of those templates across many different print and digital products
Our research has found that small businesses in the markets we serve that purchase design services represent the majority of the addressable market for print and digital marketing materials We believe that a broader complement of design services should enable Vista to retain customers longer as their needs evolve as well as both attract new customers and serve existing customers with elevated products and therefore access more of our total addressable market
Over time small businesses have complemented the physical products they use to market their businesses with digital marketing channels like websites and social media marketing Though the digital marketing channels themselves are not areas where we believe we should allocate significant capital to develop our own offerings design is a common component to both physical and digital marketing for small businesses and our small business customers look for ideas and advice when it comes to ensuring cohesive brand expression and successful campaigns across these channels Our Vista business has an offering for do it yourself social media design that combined with partnership opportunities with leading digital presence businesses like Wix has extended our total addressable market into an adjacency where we believe we have an opportunity to deliver integrated marketing solutions to small business customers using a best in class partnership approach The total market for digital marketing applications is massive as the amount that businesses spend annually on digital marketing solutions is roughly the same amount as is spent on design services and print products However our ambition here is focused on enhancing the customer experience of millions of Vista customers We believe investing in digital design capabilities and offering digital solutions via partnership will enable Vista to capture a portion of this opportunity by attracting new customers and increasing the lifetime value and retention of existing customers
Cimpress businesses include our organically developed Vista business plus businesses that we have either fully acquired or in which we have a majority equity stake Prior to their acquisitions most of our acquired companies pursued business models that already applied the principles of mass customization to print and promotional products Each provided a standardized set of products that could be configured and customized by customers ordered in relatively low volumes and produced via relatively standardized homogeneous production processes at prices lower than those charged by traditional producers
Our businesses serve markets primarily in North America Western Europe Australia and New Zealand as well as smaller businesses in India and Brazil Their websites typically offer a broad assortment of tools and features allowing customers to create a product design or upload their own complete design and place an order either on a self service basis or with varying levels of assistance The combined product assortment across our businesses is extensive including offerings in the following product categories business cards marketing materials such as flyers and postcards digital and marketing services writing instruments signage canvas print wall décor decorated apparel promotional products and gifts packaging design services textiles and magazines and catalogs
The majority of our revenue is driven by standardized processes and enabled by software We endeavor to design these processes and technologies to readily scale as the number of orders received per day increases In particular the more individual jobs we receive in a given time period the more efficiently we can sort and route jobs with homogeneous production processes to given nodes of our internal production systems or of our third party supply chain This sortation and subsequent process automation improves production efficiency We believe that our strategy of systematizing our service and production operations enables us to deliver value to customers much more effectively than traditional competitors
Our businesses operate production facilities throughout the geographies listed above with approximately 3 million square feet of production space in the aggregate across our owned and operated facilities We also work extensively with hundreds of external fulfillers across the globe We believe that the improvements we have made and the future improvements we intend to make in software technologies that support the design sortation scheduling production and delivery processes provide us with significant competitive advantage In many cases our businesses can produce and ship an order the same day they receive it Our supply chain systems and processes seek to reduce inventory and working capital and improve delivery speeds to customers relative to traditional suppliers In certain of our company operated manufacturing facilities software schedules the near simultaneous production of different customized products that have been ordered by the same customer allowing us to produce and deliver multi part orders quickly and efficiently
We believe that the potential for scale based advantages is not limited to focused automated production lines Other advantages include the ability to systematically and automatically sort through the voluminous long tail of diverse and uncommon orders in order to group them into more homogeneous categories and to route them to production nodes that are specialized for that category of operations and or which are geographically proximate to the customer In such cases even though the daily production volume of a given production node is small in comparison to our highest volume production lines the homogeneity and volume we are able to achieve is nonetheless significant relative to traditional suppliers of the long tail product in question thus our relative efficiency gains remain substantial We acquired most of our capabilities in this area via our investments in Exaprint Printdeal Pixartprinting and WIRmachenDRUCK For instance the product assortment of each of these four businesses is measured in the tens of thousands versus Vista where product assortment is dramatically smaller on a relative basis In addition to our own production of long tail products we rely on third party fulfillment partnerships for a portion of our production which allow us to offer a diverse set of products This deep and broad product offering is important to many customers
Consists of the operations of our VistaPrint branded websites in North America Western Europe Australia New Zealand India and Singapore This business also includes our 99designs by Vista business which provides graphic design services VistaCreate for do it yourself DIY design our Vista x Wix partnership for small business websites and our Vista Corporate Solutions business which serves medium sized businesses and large corporations
Our Vista business helps about 11 million small businesses annually to create attractive professional quality marketing and branding products at affordable prices and low volumes With Vista small businesses are able to create and customize their marketing with easy to use digital tools and design templates or by receiving expert graphic design support
Several signature services including VistaPrint VistaCreate 99designs by Vista Vista Corporate Solutions and Vista x Wix operate within the Vista brand architecture This broadens our customers understanding of our value proposition to allow us to serve a larger set of their needs across a wide range of products and solutions that include design social media and web presence as well as print and promotional products
VistaPrint represents the vast majority of the revenue in this segment where during fiscal year 2025 average order value AOV was more than 90 and customers spent on average a bit more than 150 for the year gross margins were about 55 and advertising spend as a percent of revenue was about 15 Vista has had strong free cash flow conversion as its e commerce model typically leads to collections from customers prior to the production and shipment of customer orders and mass customization allows for relatively low levels of inventory relative to revenue
Our Upload Print businesses are organized in two reportable segments PrintBrothers and The Print Group both of which focus on serving graphic professionals such as local printers print resellers graphic artists advertising agencies and other customers with professional desktop publishing skill sets Average order values and annual spend per customer vary by business with AOVs on average of about 100 175 and annual spend per customer of about 300 900 in fiscal year 2025 Gross margins vary by business but averaged about 32 in fiscal year 2025 due to wholesale like pricing and the wide variety of products produced both in owned facilities as well as via third party fulfillers Advertising spend as a percent of external revenue was about 5 in fiscal year 2025 although it also varies by business
Consists of our pens com branded business and a few smaller brands operated by National Pen that are focused on customized writing instruments and promotional products apparel and gifts for small and medium sized businesses
National Pen serves more than a million small businesses annually across geographies including North America Europe and Australia The pens com branded business sells through their ecommerce site and is supported by digital marketing methods as well as direct mail and telesales National Pen focuses on customized writing instruments and promotional products apparel and gifts for small and medium sized businesses During fiscal year 2025 National Pen s average order value was about 300 350 and annual spend per customer was about 470 Gross margins were about 51 in fiscal year 2025 with highly seasonal profits driven in the December quarter Advertising spend as a percent of revenue excluding inter segment revenue was about 20 in fiscal year 2025 Significant inventory and customer invoicing requirements in this business drive different working capital needs compared to our other businesses
A collection of businesses combined into one reportable segment based on materiality including BuildASign a larger and profitable business with strong profitability and cash flow and Printi a small early stage business operating at a relatively modest operating loss
Given the scale of purchasing that happens across Cimpress businesses there is significant value to coordinating our negotiations and purchasing to gain the benefit of scale Our central procurement team negotiates and manages Cimpress wide contracts for large scale capital equipment shipping services and major categories of raw materials e g paper plates ink The Cimpress procurement team also supports procurement improvements tools and approaches across other aspects of our businesses purchases
While we are focused on seeking low total cost in our strategic sourcing efforts we also work to ensure quality reliability and responsible sourcing practices within our supply chain Our efforts include the procurement of high quality materials and equipment that meet our strict specifications at a low total cost across a growing number of manufacturing locations with an increasing focus on supplier compliance with our sustainable paper procurement policy as well as our Supplier Code of Conduct We also work to develop and implement logistics warehousing and outbound shipping strategies to provide a balance of low cost material availability while limiting our inventory exposure Additionally this team partners with each of our businesses and production equipment suppliers to help drive innovation and new product introduction at advantaged costs
Having this central procurement team that works together with the procurement teams in each of our businesses benefits us relative to the market and we believe it has enabled us to operate more effectively mitigating supply and cost risks relative to smaller competitors
Our businesses typically rely on proprietary technology to attract and retain our customers to enable customers to create graphic designs and place orders on our websites and to sort aggregate and produce multiple orders in standardized scalable processes Technology is core to our competitive advantage as without it our businesses would not be able to produce custom orders in small quantities while achieving the economics that are more analogous to mass produced items
We are using our Mass Customization Platform MCP which is a cloud based collection of software services APIs web applications and related technology that can be leveraged independently or together by our businesses and third parties to perform common tasks that are important to mass customization Cimpress businesses and increasingly third party fulfillers to our various businesses leverage different combinations of MCP services depending on what capabilities they need to complement their business specific technology The capabilities that are available in the MCP today include customer facing technologies such as ecommerce or those that enable customers to visualize their designs on various products as well as manufacturing supply chain and logistics technologies that automate various stages of the production and delivery of a product to a customer The
benefits of the MCP include improved speed to market for new product introduction reduction in fulfillment costs improvement of product delivery or geographic expansion improved site experience automating manual tasks and avoidance of certain redundant costs which are especially impactful improvements when the platform is used to enable fulfillment between our Cimpress businesses We believe the MCP can generate significant customer and shareholder value from increased specialization of production facilities aggregated scale from multiple businesses increased product offerings and shared technology development costs
We intend to continue developing and enhancing our MCP based customer facing and manufacturing supply chain and logistics technologies and processes We develop our MCP technology centrally and we also have software and production engineering capabilities in each of our businesses Our businesses are constantly seeking to strengthen our manufacturing and supply chain capabilities through engineering improvements in areas like automation lean manufacturing choice of equipment product manufacturability materials science process control and color control
Each of our businesses uses a mix of proprietary and third party technology that supports the specific needs of that business Their technology intensity ranges depending on their specific needs Over the past few years most of our businesses have modernized and modularized their business specific technology to enable them to launch new products faster provide a better customer experience more easily connect to our MCP technologies and leverage third party technologies where we do not need to bear the cost of developing and maintaining proprietary technologies For example our businesses are increasingly using third party software for capabilities such as content management multivariate testing tools and data warehousing which are areas that specialized best in class technologies are better than the proprietary technologies they have replaced This allows our engineering and development talent to focus on artwork technologies product information management and marketplace technologies from which we derive competitive advantage
In our central Cimpress Technology team and in an increasing number of our businesses we have adopted an agile micro services based approach to technology development that enables multiple businesses or use cases to leverage this API technology regardless of where it was originally developed We believe this development approach can help our businesses serve customers and scale operations more rapidly than could have been done as an individual business outside Cimpress
Each Cimpress business is responsible for working to ensure that customer company and team member information is secure and handled in ways that are compliant with relevant laws and regulations Because there are many aspects of this topic that apply to all of our businesses Cimpress also has a central security team that defines security policies deploys security controls provides services and embeds security into the development processes of our businesses This team works in partnership with each of our businesses and the corporate center to measure security maturity and risk and provides managed security services in a way that allows each business to address their unique challenges lower their costs and become more efficient in using their resources
We make it easy low cost and efficient for Cimpress businesses to set up and grow teams in India via a central infrastructure that provides all the local recruiting onboarding day to day administration HR and facilities management to support these teams whether for technology graphic services or other business functions Most of our businesses have established teams in India leveraging this central capability with those teams working directly for the respective Cimpress business This is another example of scale advantage albeit with talent relative to both traditional suppliers and smaller online competitors that we leverage across Cimpress
The markets for the products our businesses produce and sell are intensely competitive highly fragmented and geographically dispersed with many existing and potential competitors Though Cimpress is the largest business in our space we still represent a small fraction of the overall market and believe there is significant room for growth over the long term future Within this highly competitive context our businesses compete on the basis of breadth and depth of product offerings price convenience quality technology design content tools and assistance customer service ease of use and production and delivery speed It is our intention to offer a broad selection of high quality products as well as related services at competitive price points and in doing so offer our
Today s market has evolved to be more competitive This evolution which has been ongoing for over 20 years has led to major benefits for customers in terms of lower prices faster lead times and easier customer experience Cimpress and its businesses have proactively driven and benefited from this dynamic The mass customization business model first took off with small format products like business cards post cards and flyers and consumer products like holiday cards As the model has become better understood and more prevalent and online advertising approaches more common the competition has become more intense We continue to derive significant profits from these small format products Additionally there are other product areas that have only more recently begun to benefit from mass customization such as books catalogs magazines textiles and packaging as well as promotional products apparel and gifts PPAG and large format products such as signage
During this most recent fiscal year we conducted our first Double Materiality Assessment DMA in preparation for the EU s Corporate Social Responsibility Directive CSRD which will be effective for our fiscal year 2028 reporting The DMA further informed our view of our most material sustainability issues Following completion of the DMA we conducted a review of our environmental sustainability targets several of which reached expiration at the end of fiscal year 2025 and made adjustments to sharpen our focus on our most material issues Following this review our work in sustainability continues to include focus on reducing risk and improving our resilience in the following areas
We strive to achieve net zero carbon emissions by fiscal year 2040 across our entire value chain and to achieve a 38 reduction in emissions by fiscal year 2030 as compared to our fiscal year 2024 baseline The majority of these baseline emissions are from our value chain Scope 3 Through investments in energy efficient infrastructure and equipment as well as renewable energy we have achieved significant reductions in our direct emissions Scope 1 and indirect emissions from purchased electricity or other forms of energy Scope 2 and expect further reductions in the future In fiscal year 2025 we decided to update our baseline year to fiscal year 2024 previously fiscal year 2019 to reflect significant enhancements in the quality of our Scope 3 accounting that rendered previous baselines less reliable our targets continue to be informed by a science based approach and we believe are in alignment with a 1 5 C decarbonization pathway This improved accounting has enabled deeper analysis of our Scope 3 emissions including substrate and logistics choices and clarified opportunities to reduce total emissions We continue to focus on engaging our suppliers to further refine our Scope 3 data and have begun to implement new ways to rationalize and systematize investment in carbon reduction across our businesses
Our sourcing strategy seeks to minimize any contribution to deforestation forest degradation or loss of biodiversity We have converted the vast majority of the paper we print on in our Cimpress owned production facilities to materials certified by either the Forest Stewardship Council FSC or the Programme for the Endorsement of Forest Certification PEFC leading certifications of responsible forestry practices These certifications confirm that the paper we print on comes from responsibly managed
forests that meet high environmental and social standards and form a part of our preparations for compliance with the upcoming European Union Deforestation Regulation EUDR that becomes effective in January 2026 In fiscal year 2026 we will be required to comply with the EUDR for all products produced imported or exported in Europe and we will continue our efforts to achieve FSC and PEFC conversion for products produced outside of Europe We are also continuing to engage our third party suppliers to materially expand their use of responsibly forested paper for the products that they customize on our behalf
We are committed to ensuring that the plastic products most material to our financial performance are made from materials with lower environmental impacts and higher resiliency to potential regulation due to impacts on human health We will continue our focus on transitioning away from the use of PVC and polystyrene in our plastic product portfolio largely banners rigid signs and decals We have made important progress toward this goal including the test and launch of multiple alternative products and we continue to focus on implementing merchandising approaches designed to maximize customer adoption of these new materials
We also remain focused on reducing the risk of forestry and plastic transition related issues in our packaging We have updated our targets to provide direction to our businesses on these issues as well as ensure that we remain aligned with regulatory advancement and customer expectations
We require recruiting retention and other performance management related decisions to be made based solely on merit and organizational needs and considerations such as an individual s ability to do their job with excellence and in alignment with the company s strategic and operational objectives We do not tolerate discrimination on any basis protected by human rights laws or anti discrimination regulations and we strive to do more in this regard than the law requires We are committed to a work environment where team members are treated with respect and fairness and have invested in education and awareness programs for team members to make further improvements in this area We value individual differences unique perspectives and the distinct contributions that each one of us can make to the company
We require safe working conditions at all times to ensure our team members and other parties are protected and require legal compliance at a minimum at all times We require training on and compliance with safe work practices and procedures at all manufacturing facilities to ensure the safety of team members and visitors to our plant floors
It is important to us that our supply chain reflects our commitment to doing business with the highest standards of ethics and integrity We expect our suppliers to act in full compliance with applicable laws rules and regulations Our code of business conduct and supplier code of conduct lay out our expectations regarding human rights including forced and child labor environmental standards and safe working conditions Each Cimpress business is responsible for closely monitoring its supply chain for adherence to these requirements
More information can be found at www cimpress com in our Corporate Social Responsibility section including links to reports and documents such as our environmental social and governance ESG reports supplier code of conduct and compliance with the UK Modern Slavery Act and Canada s Fighting Against Forced Labour and Child Labour in Supply Chains Act
We seek to protect our proprietary rights through a combination of patents copyrights trade secrets trademarks and contractual restrictions imposed on our employees and third parties and control access to and distribution of our proprietary information We have registered or applied for the registration of a number of U S and international domain names trademarks and copyrights Additionally we have filed U S and international patent applications for certain of our proprietary technology
Our profitability has historically had seasonal fluctuations Our second fiscal quarter ending December 31 includes the majority of the holiday shopping season and has been our strongest quarter for sales of our consumer oriented products such as holiday cards calendars canvas prints photobooks and personalized gifts
Cimpress plc was incorporated on July 5 2017 as a private company limited by shares under the laws of Ireland and on November 18 2019 was re registered as a public limited company under the laws of Ireland On December 3 2019 Cimpress N V the former publicly traded parent company of the Cimpress group of entities merged with and into Cimpress plc with Cimpress plc surviving the merger and becoming the publicly traded parent company of the Cimpress group of entities
We make available free of charge through our investor relations website at ir cimpress com the reports proxy statements amendments and other materials we file with or furnish to the SEC as soon as reasonably practicable after we electronically file or furnish such materials with or to the SEC We are not including the information contained on our website or information that can be accessed by links contained on our website as a part of or incorporating it by reference into this Annual Report on Form 10 K
Our future results may vary materially from those contained in forward looking statements that we make in this Report and other filings with the SEC press releases communications with investors and oral statements due to the following important factors among others Our forward looking statements in this Report and in any other public statements we make may turn out to be wrong These statements can be affected by among other things inaccurate assumptions we might make or by known or unknown risks and uncertainties or risks we currently deem immaterial Consequently no forward looking statement can be guaranteed We undertake no obligation to update any forward looking statements whether as a result of new information future events or otherwise except as required by law
Our revenue and operating results often vary significantly from period to period due to a number of factors and as a result comparing our financial results on a period to period basis may not be meaningful We prioritize our uppermost financial objective of maximizing our intrinsic value per share even at the expense of shorter term results Many of the factors that lead to period to period fluctuations are outside of our control however some factors are inherent in our business strategies Some of the specific factors that have caused and or could cause our operating results to fluctuate from quarter to quarter or year to year include among others
Some of our expenses such as building leases depreciation related to previously acquired property and equipment and personnel costs are relatively fixed As a result we sometimes have been and may in the future be unable or unwilling to adjust operating expenses to offset any revenue shortfall Accordingly any shortfall in revenue may cause significant variation in operating results in any period Our operating results have at times fallen below the expectations of public market analysts and investors which has led to declines in the price of our ordinary shares in the past and may do so again in the future
A primary component of our business strategy is to promote strengthen and evolve our brands to attract new and repeat customers and we face significant competition from other companies in our markets who also seek to establish strong brands To promote strengthen and evolve our brands we must incur substantial marketing expenses and establish a relationship of trust with our customers by providing a high quality customer experience which requires us to invest substantial amounts of our resources A negative incident or circumstance involving our products services advertising or corporate conduct can damage our reputation especially if the incident or circumstance is widely publicized or goes viral and causes customers to lose trust in our brands which could negatively impact our revenues
We are a global company with production facilities offices employees and localized websites in many countries across six continents and we manage our businesses and operations in a decentralized autonomous manner We are subject to a number of ongoing risks and challenges that relate to our global operations decentralization and complexity including among others
the challenge of complying with disparate laws in multiple countries such as local regulations that may impair our ability to conduct our business or impact the willingness of third parties to conduct business with us protectionist laws that favor local businesses and restrictions imposed by local labor laws
changes in governmental trade policies particularly across North America China and Europe difficulty importing and exporting our products and supply chain materials across country borders and difficulty complying with customs regulations in the many countries where we produce and or sell products
The trade and tariff environment continues to evolve and is highly unpredictable The U S presidential administration has announced and or implemented and could continue to announce and or implement new and or increased tariffs on goods imported into the United States which has generated and could continue to generate various trade and tariff related responses from other countries Certain of the recent tariffs were imposed pursuant to the International Emergency Economic Powers Act 50 U S C 1701 et seq IEEPA and 50 U S C 1702 b 3 explicitly precludes the President from regulating the importation of informational materials under IEEPA Any change to the statutory basis upon which the U S presidential administration relies for imposing tariffs could materially and adversely impact our financial results if we are unable to rely upon the informational materials exclusion for most of our U S imported printed products and such products were not otherwise exempt from tariffs under the United States Mexico Canada Agreement The recently adopted bill H R 1 Pub L 119 21 provides for the elimination of the de minimis exemption from import taxes and duties codified in 19 U S C 1321 a 2 C for commercial shipments which currently benefits our business effective July 1 2027 however we currently expect the de minimis exemption to end even sooner on August 29 2025 based on a recently signed Executive Order We operate manufacturing facilities throughout the world including one in Ontario Canada that primarily services our Vista business and others in Mexico the United States Australia Brazil and throughout Europe If the United
States whether based on statutes or through trade agreements imposes and enforces significant tariffs applicable to imports from Canada Mexico China or any of the other countries in which we manufacture our products and or source materials for any meaningful period we would incur increased costs in operating our business and our financial results could be materially and adversely affected In addition if other countries impose and enforce increased or additional tariffs for any meaningful period our business could be materially and adversely affected In addition to changes in U S trade policy other changes to U S policy may impact among other things the U S and global economy international trade relations unemployment immigration healthcare taxation the U S regulatory environment inflation and other areas At this time we cannot predict the impact if any of any of these potential changes to our business Until we know what policy changes are made and enforced and how those changes impact our business and the business of our competitors over the long term we will not know if overall we will benefit from them or be negatively affected by them
In addition we are exposed to fluctuations in currency exchange rates that have impacted and may continue to impact items such as the translation of our revenue and expenses remeasurement of our intercompany balances and the value of our cash and cash equivalents and other assets and liabilities denominated in currencies other than the U S dollar our reporting currency The hedging activities we engage in sometimes have not mitigated and may in the future not mitigate the net impact of currency exchange rate fluctuations and our financial results sometimes have differed and may in the future differ materially from expectations as a result of such fluctuations
We have entered into derivatives to manage our exposure to interest rate and currency movements If we do not accurately forecast our results of operations execute contracts that do not effectively mitigate our economic exposure to interest rates and currency rates elect to not apply hedge accounting or fail to comply with the complex accounting requirements for hedging our results of operations and cash flows could be volatile as well as negatively impacted Also our hedging objectives may be targeted at improving our non GAAP financial metrics which could result in increased volatility in our GAAP results Since some of our hedging activity addresses long term exposures such as our net investment in our subsidiaries the gains or losses on those hedges could be recognized before the offsetting exposure materializes to offset them potentially causing volatility in our cash or debt balances and therefore our leverage
Failure to protect our information systems and the confidential information of our customers employees and business partners against security breaches and thefts could damage our reputation and brands subject us to litigation and enforcement actions and substantially harm our business and results of operations
Our business involves the receipt storage and transmission of customers personal and payment information as well as confidential information about our business employees suppliers and business partners some of which is entrusted to third party service providers partners and vendors We and third parties with which we share information have experienced and will continue to experience threats to and breaches of our and their data and systems cyberattacks and other malicious activity including physical and electronic break ins computer viruses ransomware attacks and phishing and other social engineering scams among other threats Security threats continue to evolve and become more sophisticated and more difficult to detect and defend against including by the increased use of artificial intelligence to enhance attacks and our vulnerabilities may be heightened by our decentralized operating structure and many of our employees working remotely Despite our efforts a hacker or thief may defeat our security measures or those of our third party service providers partners or vendors and obtain confidential or personal information and we or the third party may not discover the security breach and theft of information for a significant period of time after the breach occurs or at all We may need to significantly increase the resources we expend to protect against security breaches and thefts of data or to address problems caused by breaches or thefts and we may not be able to anticipate cyber attacks or implement adequate preventative measures Any compromise breach or failure of our information systems or the information systems of third parties with which we share information could result in among other things
loss of revenue and profits and other negative financial results to the extent existing and potential customers believe that their personal and payment information may not be safe with us or those third parties
We are subject to the laws of many states countries and regions and industry guidelines and principles governing the collection use retention disclosure sharing and security of data that we receive from and about our customers and employees Any failure or perceived failure by us to comply with any of these laws guidelines or principles could result in actions against us by governmental entities or others a loss of customer confidence and damage to our brands In addition the regulatory landscape is constantly changing as various regulatory bodies throughout the world enact new laws concerning privacy data retention data transfer and data protection including possible limitations on our ability to use customer data and regulating the use of artificial intelligence and machine learning Complying with these varying and changing requirements is challenging especially for our smaller more thinly staffed businesses and could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business and operating results
Our various businesses rely on a variety of marketing methods to attract new and repeat customers These methods include promoting our products and services through paid channels such as online search display and television as well as leveraging our owned and operated channels such as email direct mail our social media accounts telesales and SMS messaging When the costs of these channels significantly increase or the effectiveness of these channels significantly declines such as from changes to algorithms or targeting rules and or from shifts in consumer behavior in online search and shopping related to artificial intelligence AI based discovery tools and chatbots which we have experienced in the past and may experience in the future then our ability to efficiently attract new and repeat customers is reduced our revenue and net income decline and our business and results of operations are harmed
Shifts in online search behavior including the rise of generative AI tools and agentic search technologies may negatively impact customer traffic and acquisition efficiency and conversion rates which could materially harm our business results of operations and financial condition
Consumers are increasingly relying on generative AI tools and agentic search technologies such as conversational search engines autonomous shopping assistants and AI powered product recommendations to discover compare and purchase products and services These emerging tools represent a shift away from traditional search engine behavior and direct website visits which have historically driven a significant portion of our customer traffic and conversion activity
As generative AI and agentic search tools become more prevalent and integrated into consumers browsing and purchasing workflows we may experience a decline in visibility within digital ecosystems we do not directly control This could include lower rankings in AI generated product summaries reduced referral traffic from major platforms or increased reliance on third party interfaces that prioritize competing offerings
These changes could adversely affect our customer acquisition cost conversion rates and overall brand control Furthermore our ability to adapt to new search paradigms may be limited by technology constraints data availability or platform interoperability especially if generative AI search providers restrict access to their ecosystems or favor end to end platforms that control the full customer journey
Our profitability has historically been highly seasonal Our second fiscal quarter which ends on December 31 includes the majority of the holiday shopping season and typically accounts for a disproportionately high portion of our earnings for the year primarily due to higher sales of home and family products such as holiday cards calendars photo books and personalized gifts In addition our National Pen business has historically generated a large portion of its profits during the second fiscal quarter Lower than expected sales during the second quarter which we have experienced in the past and may experience in the future have a disproportionately large impact on
our operating results and financial condition for the full fiscal year Likewise an inability of our manufacturing and other operations to keep up with the high volume of orders during our second fiscal quarter or other inefficiencies in our production or disruptions of our supply chains during the quarter resulting in higher than expected costs which we have experienced in the past and may experience in the future have a disproportionately large impact on our earnings results and financial condition for the full fiscal year as well as delays in order fulfillment and delivery and other disruptions which negatively impact our ability to attract repeat customers our reputation and our future financial results
Our businesses production facilities websites infrastructure supply chain customer service centers and operations are vulnerable to interruptions and we do not have redundancies or alternatives in all cases to carry on these operations in the event of an interruption In addition because our businesses are dependent in part on third parties for certain aspects of our communications and production systems we may not be able to remedy interruptions to these systems in a timely manner or at all due to factors outside of our control Our suppliers service providers including shipping and logistics providers third party fulfillers business partners and customers face similar vulnerabilities to interruptions Some of the events that could cause interruptions in our businesses systems and operations and those of our suppliers service providers third party fulfillers business partners and customers are the following among others
Any interruptions to our systems or operations or those of our suppliers service providers third party fulfillers business partners and customers could result in lost revenue and or increased costs as well as negative publicity damage to our reputation and brands and other adverse effects on our business and results of operations Building redundancies into our infrastructure systems and supply chain to mitigate these risks may require us to commit substantial financial operational and technical resources
We may not be successful in advancing the use of artificial intelligence which involves significant risks and competitors may develop new or better products using artificial intelligence that take market share which could adversely affect our business brand perception or financial results
We use artificial intelligence AI including generative AI in many parts of our value chain There can be no assurance that we will be successful in using AI to enhance our products or services or otherwise benefit our business including our efficiency or profitability and there are significant risks involved in developing and deploying AI For example our AI related efforts may give rise to risks related to harmful content accuracy bias discrimination intellectual property infringement or misappropriation data privacy and cybersecurity among others New laws rules directives and regulations governing the use of AI new or enhanced governmental or regulatory scrutiny litigation or other legal liability ethical concerns negative consumer perceptions as to automation and AI or other complications could also adversely affect our business brand perception or financial results Further we face competition from other companies that are developing their own AI products and technologies that may have a negative impact on our value chain including in the areas of design services and content creation These AI enabled products and technologies are evolving quickly can influence customer behavior and preferences and may allow other companies to become more efficient than us and or to more effectively acquire and retain customers In addition AI tools are rapidly shifting consumer behavior in online search and shopping particularly relative to traditional search engines which may require rapid strategic and technical adaptations and investments including further standardizing and optimizing our data structures all of which could increase our costs or otherwise adversely affect our business or financial results Moreover the pace of innovation in AI and developments related to its use together with the breadth of its potential applications to our industry make it impossible to identify or predict all of the risks related to using AI or all of the AI related risks to our business
Demand for our products and services is sensitive to customers expectations particularly as to price for almost all of our businesses and past changes in our pricing strategies had a significant impact on the numbers of customers and orders in some regions which in turn adversely affected our revenue profitability and results of operations Many factors impact our pricing and marketing strategies including the costs of running our business the costs of raw materials our competitors pricing and marketing strategies and the effects of inflation We may not be able to mitigate increases in our costs by increasing the prices of our products and services More recently customer expectations have evolved as to shipping speeds as well as speed and creative control from rapid developments in digital design tools Failure to meet our customers price or other expectations in the future would adversely affect our future business and results of operations
An important way in which we pursue our strategy is to selectively acquire businesses technologies and services and make minority investments in businesses and joint ventures The time and expense associated with acquisitions and investments can be disruptive to our ongoing business and divert our management s attention In addition we have needed in the past and may need in the future to seek financing for acquisitions and investments which may not be available on terms that are favorable to us or at all and can cause dilution to our shareholders cause us to incur additional debt or subject us to covenants restricting the activities we may undertake There also is an opportunity cost that capital allocated to an acquisition minority investment or joint venture is no longer available for other uses
An acquisition minority investment or joint venture may fail to achieve our goals and expectations and may have a negative impact on our business and financial results in a number of ways including the following
Acquisitions and minority investments can be costly and can result in increased expenses including impairments of goodwill and intangible asserts if financial goals are not achieved assumptions of contingent or unanticipated liabilities amortization of certain acquired assets and increased tax costs In addition we may overpay for acquired businesses
The management of our acquired businesses minority investments and joint ventures may be more expensive or may take more resources than we expected In addition continuing to devote resources to a struggling business can take resources away from other investment areas and priorities
We may not be able to retain customers and key employees of the acquired businesses In particular it can be challenging to motivate the founders who built a business to continue to lead the business after they sell it to us
The accounting for our acquisitions and minority investments requires us to make significant estimates judgments and assumptions that can change from period to period based in part on factors outside of our control which can create volatility in our financial results For example we often pay a portion of the purchase price for our acquisitions in the form of an earn out based on performance targets for the acquired companies or enter into obligations or options to purchase noncontrolling interests in our acquired companies or minority investments which can be difficult to forecast and can lead to larger than expected payouts that can adversely impact our results of operations
Furthermore provisions for future payments to sellers based on the performance or valuation of the acquired businesses such as earn outs and options to purchase noncontrolling interests can lead to disputes with the sellers about the achievement of the performance targets or valuation or create inadvertent incentives for the acquired company s management to take short term actions designed to maximize the payments they receive instead of taking actions that benefit the business over the long term
A key component of our strategy is the development and deployment of a mass customization platform which is a cloud based collection of software services APIs web applications and related technology offerings that
can be leveraged independently or together by our businesses and third parties to perform common tasks that are important to mass customization The process of developing new technology is complex costly and uncertain and requires us to commit significant resources before knowing the extent to which our businesses may adopt and or continue to utilize components of our mass customization platform or the extent to which the platform may make us more effective and competitive As a result there can be no assurance that we will find new capabilities to add to the growing set of technologies that make up the platform that our diverse businesses will realize further value from the platform or that we will realize expected returns on the capital expended to develop the platform
We are subject to a variety of safety health and environmental or SHE laws and regulations across the jurisdictions in which we operate SHE laws and regulations frequently change and evolve including the addition of new SHE regulations especially with respect to climate change These laws and regulations govern among other things air emissions wastewater discharges the storage handling and disposal of hazardous and other regulated substances and wastes soil and groundwater contamination and employee health and safety We use regulated substances such as inks and solvents and generate air emissions and other discharges at our manufacturing facilities and some of our facilities are required to hold environmental permits If we fail to comply with existing or new SHE requirements we may be subject to monetary fines civil or criminal sanctions third party claims or the limitation or suspension of our operations In addition if we are found to be responsible for hazardous substances at any location including for example offsite waste disposal facilities or facilities at which we formerly operated we may be responsible for the cost of cleaning up contamination regardless of fault as well as for claims for harm to health or property or for natural resource damages arising out of contamination or exposure to hazardous substances
Complying with existing SHE laws and regulations is costly and we expect our costs to significantly increase as new SHE requirements are added and existing requirements become more stringent In some cases we pursue self imposed socially responsible policies that are more stringent than is typically required by laws and regulations for instance in the areas of worker safety team member social benefits and environmental protection such as carbon reduction initiatives The costs of this added SHE effort are often substantial and could grow over time
We contract with many suppliers fulfillers merchants and other business partners in multiple jurisdictions worldwide We require our business partners to operate in compliance with all applicable laws including those regarding corruption working conditions employment practices safety and health and environmental compliance but we cannot control their business practices We may not be able to adequately vet monitor and audit our many business partners or their suppliers throughout the world and our decentralized structure heightens this risk as not all of our businesses have equal resources to manage their business partners If any of them violates labor environmental or other laws or implements business practices that are regarded as unethical or inconsistent with our values our reputation could be severely damaged and our supply chain and order fulfillment process could be interrupted which could harm our sales and results of operations
If we are unable to protect our intellectual property rights our reputation and brands could be damaged and others may be able to use our technology which could substantially harm our business and financial results
We rely on a combination of patents trademarks trade secrets copyrights and contractual restrictions to protect our intellectual property but these protective measures afford only limited protection Despite our efforts to protect our proprietary rights unauthorized parties may be able to copy or use technology or information that we consider proprietary There can be no guarantee that any of our pending patent applications or continuation patent applications will be granted and from time to time we face infringement invalidity intellectual property ownership or similar claims brought by third parties with respect to our patents In addition despite our trademark registrations throughout the world our competitors or other entities may adopt names marks or domain names similar to ours thereby impeding our ability to build brand identity and possibly leading to customer confusion Enforcing our intellectual property rights can be extremely costly and a failure to protect or enforce these rights could damage our reputation and brands and substantially harm our business and financial results
From time to time we receive claims from third parties that we infringe their intellectual property rights that we are required to enter into patent licenses covering aspects of the technology we use in our business or that we improperly obtained or used their confidential or proprietary information Any litigation settlement license or other proceeding relating to intellectual property rights even if we settle it or it is resolved in our favor could be costly divert our management s efforts from managing and growing our business and create uncertainties that may make it more difficult to run our operations If any parties successfully claim that we infringe their intellectual property rights we might be forced to pay significant damages and attorney s fees and we could be restricted from using certain technologies important to the operation of our business
Because most of our businesses depend primarily on the Internet for our sales laws specifically governing the Internet e commerce and email marketing may have a greater impact on our operations than other more traditional businesses In particular laws covering pricing customs privacy consumer protection or commercial email may impede the growth of e commerce and our ability to compete with traditional brick and mortar retailers Unfavorable changes in interpretations of or developments with respect to these types of laws or related or similar government regulation could substantially harm our business and financial results
Because of our focus on automation and high volumes many of our sales do not involve any human based review of content Although our websites terms of use specifically require customers to make representations about the legality and ownership of the content they upload for production there is a risk that a customer may supply an image or other content for an order we produce that is the property of another party used without permission that infringes the copyright or trademark of another party or that would be considered to be defamatory hateful obscene or otherwise objectionable or illegal under the laws of the jurisdiction s where that customer lives or where we operate If the machine learning tools we have developed to aid our content review fail to find instances of intellectual property infringement or objectionable or illegal content in customer orders we could be required to increase the amount of manual screening we perform which could significantly increase our costs and we could be required to pay substantial penalties or monetary damages for any failure in our screening process
A number of factors have impacted in the past and could impact in the future the availability of materials we use in our business including rising costs and other inflationary pressures changes in trade policies such as new or increased tariffs on materials we use in our business rationing measures labor shortages civil unrest and war and climate change Our inability to source sufficient materials for our business in a timely manner or at all would significantly impair our ability to fulfill customer orders and sell our products which would reduce our revenue and harm our financial results
An inability to recruit retain develop and motivate our employees in senior management and key roles such as technology marketing data science and production would significantly increase the risk that we may not be able to execute on our strategy and grow our business as planned We have seen increased competition for talent in recent years that makes it more difficult for us to retain the employees we have and to recruit new employees and also drives up the cost of compensation and our current management and employees may cease their employment with us at any time with minimal advance notice This retention risk is heightened with respect to the leaders of certain of our businesses who have in the past or may in the future receive substantial payouts from either their redeemable non controlling interests in those businesses or long term incentive awards as it may be
challenging to retain and motivate them to continue running their businesses Although we believe our remote first way of working which allows many of our team members to work remotely with no expectation that they will commute to a company facility is a competitive advantage it can be more challenging to engage motivate and develop team members in a remote work environment and our success depends on an engaged and motivated workforce and on developing the skills and talents of our workforce
The markets for our products and services are intensely competitive highly fragmented and geographically dispersed The competitive landscape for e commerce companies and the mass customization market continues to change as new e commerce businesses are introduced established e commerce businesses enter the mass customization and print markets and traditional brick and mortar businesses establish an online presence With Vista s increased focus on design services we now also face competition from companies in the design space including those with AI enabled design capabilities some of which may be more established experienced or innovative than we are Some of our current and potential competitors may have advantages over us including longer operating histories greater brand recognition or loyalty broader customer reach more focus on a given subset of our business significantly greater financial marketing and other resources production in lower cost countries speed of execution or willingness to operate at a loss while building market share Competition may result in price pressure increased advertising expense reduced profit margins and loss of market share and brand recognition any of which could substantially harm our business and financial results
If some or all of our markets enter a recession or other sustained economic downturn demand for our products and services could be negatively impacted An economic downturn could result in potential customers especially small and medium sized businesses not being able to afford our products and rely more on free social media channels to market themselves instead of the products and services we offer If demand for our products and services decreases our business and financial results could be harmed In addition we experienced material cost increases in recent years that caused volatility in our financial performance Although many costs have stabilized or come down in the last years we cannot predict whether costs will increase in the future or by how much our ability to offset such cost increases through pricing and if our costs rise again there could be further impacts to our financial results
We face risks arising from the increased focus by our customers investors regulators and others on environmental social and governance criteria including with respect to climate change labor practices the diversity of our management and directors and the composition of our Board Meeting the ESG goals we have set and publicly disclosed will require significant resources and expenditures and we may face pressure to make commitments establish additional goals and take actions to meet them beyond our current plans If customers potential customers regulators or other influential groups or individuals are dissatisfied with our ESG goals or our progress toward meeting them or our positions on ESG issues then they may choose not to buy our products and services or to otherwise target us negatively which could lead to reduced revenue and our reputation could be harmed
Our senior secured credit facility that governs our Term Loan B and revolving credit and the indenture that governs our 7 375 Senior Notes due 2032 which we collectively refer to as our debt documents contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit how we conduct our business execute our strategy compete effectively or take advantage of new business opportunities including restrictions on our ability to
Our failure to make scheduled payments on our debt or our breach of the covenants or restrictions under any of our debt documents could result in an event of default under the applicable indebtedness Such a default could have a material adverse effect on our business and financial condition including the following among others
requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes thereby reducing the amount of cash flows available for working capital capital expenditures acquisitions and other general corporate purposes
If our cash flows and capital resources are insufficient to fund our debt service obligations we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations seek additional debt or equity capital or restructure or refinance our indebtedness Refinancing our debt may be particularly challenging in a high interest rate environment We may not be able to effect any such alternative measures if necessary on commercially reasonable terms or at all and if we cannot make scheduled payments on our debt we will be in default
Borrowings under our credit facility are at variable rates of interest and expose us to interest rate risk and any interest rate swaps we enter into in order to reduce interest rate volatility may not fully mitigate our interest rate risk If interest rates increase our debt service obligations on the variable rate indebtedness will increase even if the amount borrowed remains the same and our net income and cash flows including cash available for servicing our
indebtedness will correspondingly decrease As of June 30 2025 a hypothetical 100 basis point increase in rates inclusive of our outstanding interest rate swaps would result in an increase of interest expense of approximately 8 3 million
We are an Irish public limited company that operates through various subsidiaries in a number of countries throughout the world Consequently we are subject to tax laws treaties and regulations in the countries in which we operate and these laws and treaties are subject to interpretation From time to time we are subject to tax audits and the tax authorities in these countries could claim that a greater portion of the income of the Cimpress plc group should be subject to income or other tax in their respective jurisdictions which could result in an increase to our effective tax rate and adversely affect our results of operations
Changes in tax laws treaties or regulations or their interpretation of any country in which we operate have had in the past and may have in the future a materially adverse impact on us including increasing our tax burden increasing costs of our tax compliance or otherwise adversely affecting our financial condition results of operations and cash flows There are currently multiple initiatives for comprehensive tax reform underway in key jurisdictions where we have operations and we cannot predict whether any other specific legislation will be enacted or the terms of any such legislation Furthermore with the change in the U S presidential administration and composition of the U S Congress the administration have made and may in the future make changes to U S tax law regulations treaties and policies Although we cannot predict the impact if any of these changes to our business they could adversely affect our business In addition the application of sales value added or other consumption taxes to e commerce businesses such as Cimpress is a complex and evolving issue When and if a government entity claims that we should have been collecting such taxes on the sale of our products in a jurisdiction where we have not been doing so we have incurred and may in the future incur substantial tax liabilities for past sales
We operate pursuant to written transfer pricing agreements among Cimpress plc and its subsidiaries which establish transfer prices for various services performed by our subsidiaries for other Cimpress group companies If two or more affiliated companies are located in different countries the tax laws or regulations of each country generally will require that transfer prices be consistent with those between unrelated companies dealing at arm s length Our transfer pricing arrangements are not binding on applicable tax authorities If tax authorities in any country were successful in challenging our transfer prices as not reflecting arm s length transactions they could require us to adjust our transfer prices and thereby reallocate our income to reflect these revised transfer prices A reallocation of taxable income from a lower tax jurisdiction to a higher tax jurisdiction would result in a higher tax liability to us In addition if the country from which the income is reallocated does not agree with the reallocation both countries could tax the same income resulting in double taxation
Approximately 70 of our ordinary shares are held by our top 10 shareholders and we may repurchase shares in the future subject to the restrictions in our debt documents which could further increase the concentration of our share ownership Because of this reduced liquidity the trading of relatively small quantities of shares by our shareholders could disproportionately influence the price of those shares in either direction The price for our shares could for example decline precipitously if a large number of our ordinary shares were sold on the market without commensurate demand as compared to a company with greater trading liquidity that could better absorb those sales without adverse impact on its share price
Because of our corporate structure our shareholders may find it difficult to enforce claims based on United States federal or state laws including securities liabilities against us or our management team
We are incorporated under the laws of Ireland There can be no assurance that the courts of Ireland would recognize or enforce judgments of U S courts obtained against us or our directors or officers based on the civil liabilities provisions of the U S federal or state securities laws or that the courts of Ireland would hear actions against us or those persons based on those laws There is currently no treaty between the U S and Ireland providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters and Irish common law rules govern the process by which a U S judgment will be enforced in Ireland Therefore a final judgment for the payment of money rendered by any U S federal or state court based on civil liability whether or not based solely on U S federal or state securities laws would not automatically or necessarily be enforceable in Ireland
In addition because most of our assets are located outside of the United States and some of our directors and management reside outside of the United States it could be difficult for investors to place a lien on our assets or those of our directors and officers in connection with a claim of liability under U S laws As a result it may be difficult for investors to enforce U S court judgments or rights predicated upon U S laws against us or our management team outside of the United States
If our passive income or our assets that produce passive income exceed levels provided by law for any taxable year we may be characterized as a passive foreign investment company or a PFIC for United States federal income tax purposes If we are treated as a PFIC U S holders of our ordinary shares would be subject to a disadvantageous United States federal income tax regime with respect to the distributions they receive and the gain if any they derive from the sale or other disposition of their ordinary shares
We believe that we were not a PFIC for the tax year ended June 30 2025 and we expect that we will not become a PFIC in the foreseeable future However whether we are treated as a PFIC depends on questions of fact as to our assets and revenues that can only be determined at the end of each tax year Accordingly we cannot be certain that we will not be treated as a PFIC in future years
If a United States shareholder owns 10 or more of our ordinary shares it may be subject to increased United States taxation under the controlled foreign corporation rules Additionally this may negatively impact the demand for our ordinary shares
If a United States shareholder owns 10 or more of our ordinary shares it may be subject to increased United States federal income taxation and possibly state income taxation under United States federal income taxation rules relating to certain non U S corporations that are considered a controlled foreign corporation or CFC In general if a U S person owns or is deemed to own at least 10 of the voting power or value of a non U S corporation or 10 U S Shareholder and if such non U S corporation is a CFC then such 10 U S Shareholder who owns or is deemed to own shares in the CFC on the last day of the CFC s taxable year must include in its gross income for United States federal income tax and possibly state income tax purposes its pro rata share of the CFC s Subpart F income even if the Subpart F income is not distributed Subpart F income consists of among other things certain types of dividends interest rents royalties gains and certain types of income from services and personal property sales In addition a 10 U S Shareholder s pro rata share of other income of a CFC even if not distributed might also need to be included in a 10 U S Shareholder s gross income for United States federal income tax and possibly state income tax purposes under the Global Intangible Low Taxed Income or GILTI provisions of the U S tax law In general a non U S corporation is considered a CFC if one or more 10 U S Shareholders together own more than 50 of the voting power or value of the corporation on any day during the taxable year of the corporation
The rules for determining ownership for purposes of determining 10 U S Shareholder and CFC status are complicated depend on the particular facts relating to each investor and are not necessarily the same as the rules for determining beneficial ownership for SEC reporting purposes For taxable years in which we are a CFC each of our 10 U S Shareholders will be required to include in its gross income for United States federal income tax and possibly state income tax purposes its pro rata share of our Subpart F income even if the Subpart F income is not
distributed by us and might also be required to include its pro rata share of other income of ours even if not distributed by us under the GILTI provisions of the U S tax law We currently do not believe we are a CFC However whether we are treated as a CFC can be affected by among other things facts as to our share ownership that may change Accordingly we cannot be certain that we will not be treated as a CFC in future years
The risk of being subject to increased taxation as a CFC may deter our current shareholders from acquiring additional ordinary shares or new shareholders from establishing a position in our ordinary shares Either of these scenarios could impact the demand for and value of our ordinary shares
We have policies procedures and processes for assessing identifying and managing cybersecurity risks which are defined and managed by Cimpress central security and privacy team and are designed to help protect our information assets and operations from internal and external cyber threats and secure our networks and systems Our cybersecurity processes include procedural and technical safeguards response plans regular vulnerability and penetration tests on our systems incident simulations and routine reviews of our policies and procedures to identify risks and improve our practices Our cybersecurity incident response plan is designed to help coordinate our response to and recovery from cybersecurity incidents and includes processes to assess the severity of escalate contain investigate and remediate incidents as well as to comply with applicable legal obligations We have security policies that apply to all employees worldwide and we conduct annual employee trainings on data protection cybersecurity and incident prevention which covers timely and relevant topics including social engineering phishing password protection confidential data protection asset use and mobile security
In addition to our internal penetration testing and vulnerability management program we engage an external party to simulate attacks on our systems to test our defenses and response We also use a third party vendor risk assessment platform to score vendors cybersecurity vulnerabilities and provide suggested mitigations
The Audit Committee of our Board of Directors oversees cybersecurity risk and receives regular updates from our Vice President and Chief Security and Privacy Officer on these risks risk management activities incident response plans best practices the effectiveness of our security measures and other related matters Our Vice President and Chief Security and Privacy Officer who reports to our Chief Technology Officer leads our central security and privacy team which works in partnership with each of our businesses and the corporate center to measure security maturity and risk and provides managed security services in a way that allows each business to address their unique challenges and become more efficient in using their resources We have processes and policies for the escalation of cybersecurity incidents to the central security team evaluation of the materiality of the incidents and coordination of our response as needed across businesses and operations Our Chief Security and Privacy Officer has more than 20 years of privacy and data security experience including a series of roles in Cimpress over the last 15 years the last three and a half years of which have been spent leading the central security and privacy team
Although risks from cybersecurity threats have to date not materially affected us our business strategy results of operations or financial condition we have from time to time experienced threats to and breaches of our and our third party vendors data and systems See Part I Item 1A Risk Factors in this Annual Report for a discussion of cybersecurity risks
The information required by this item is incorporated by reference to the information set forth in Item 8 of Part II Financial Statements and Supplementary Data Note 16 Commitments and Contingencies in the accompanying notes to the consolidated financial statements included in this Report
The ordinary shares of Cimpress plc are traded on the Nasdaq Global Select Market the Nasdaq under the symbol CMPR As of July 31 2025 there were six holders of record of our ordinary shares although there is a much larger number of beneficial owners
On May 29 2024 the Board of Directors of Cimpress plc authorized the repurchase of up to 200 0 million aggregate purchase price excluding any fees commissions or other expenses of such purchases of Cimpress issued and outstanding ordinary shares on the open market through privately negotiated transactions or in one or more self tender offers The Board did not set an expiration date for this new repurchase program and we may suspend or discontinue our share repurchases at any time
The following graph compares the cumulative total return to shareholders of Cimpress plc ordinary shares relative to the cumulative total returns of the Nasdaq Composite index and the Research Data Group RDG Internet Composite index An investment of 100 with reinvestment of all dividends is assumed to have been made in our ordinary shares and in each of the indexes on June 30 2020 and the relative performance of each investment is tracked through June 30 2025
This Report contains forward looking statements that involve risks and uncertainties The statements contained in this Report that are not purely historical are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 including but not limited to our statements about the anticipated growth and development of our businesses and financial results the impact of interest rate and currency fluctuations the impact of U S tariffs including potential changes in related trade policies and potential mitigation actions and related estimates cost impacts pricing changes and changes in customer demand sources of liquidity to fund future operations future payment terms with suppliers the timing of adoption of certain accounting standards legal proceedings our ability to prevail in our appeal of an adverse land duty tax assessment indefinitely reinvested earnings unrecognized tax benefits our effective tax rate and sufficiency of our tax reserves Without limiting the foregoing the words may should could expect plan intend anticipate believe estimate predict assume designed potential possible continue target seek likely will and similar expressions are intended to identify forward looking statements All forward looking statements included in this Report are based on information available to us up to and including the date of this document and we disclaim any obligation to update any such forward looking statements Our actual results could differ materially from those anticipated in these forward looking statements as a result of various important factors including but not limited to flaws in the assumptions and judgments upon which our forecasts and estimates are based the development severity and duration of supply chain constraints and fluctuating inflation our inability to make investments in our business and allocate our capital as planned or the failure of those investments and allocations to achieve the results we expect costs and disruptions caused by acquisitions and minority investments the failure of businesses we acquire or invest in to perform as expected loss of key personnel or our inability to recruit talented personnel our failure to develop and deploy our mass customization platform or the failure of the mass customization platform to drive the performance efficiencies and competitive advantage we expect unanticipated changes in our markets customers or businesses disruptions caused by geopolitical events or political instability and war in Ukraine Israel the Middle East or elsewhere changes in governmental policies laws and regulations or in the enforcement or interpretation of governmental policies laws and regulations that affect our businesses including related to import tariffs our failure to manage the growth and complexity of our business our failure to maintain compliance with the covenants in our debt documents or to pay our debts when due competitive pressures general economic conditions and other factors described in Item 1A Risk Factors of this Report and the documents that we periodically file with the SEC The Business section of this Report also contains estimates and other statistical data from research we conducted in August 2022 with a third party research firm and this data involves a number of assumptions and limitations and contains projections and estimates of the sizes of the opportunities of our markets that are subject to a high degree of uncertainty and should not be given undue weight
Cimpress is a strategically focused collection of businesses that specialize in print mass customization through which we deliver large volumes of individually small sized customized orders of printed materials and promotional products Our products and services include a broad range of marketing materials business cards signage promotional products logo apparel packaging books and magazines wall decor photo merchandise invitations and announcements design and digital marketing services and other categories Mass customization is a core element of the business model of each Cimpress business and is a competitive strategy which seeks to produce goods and services to meet individual customer needs with near mass production efficiency
As of June 30 2025 we have numerous operating segments under our management reporting structure that are reported in the following five reportable segments Vista PrintBrothers The Print Group National Pen and All Other Businesses Refer to Note 14 in our accompanying consolidated financial statements for additional information relating to our reportable segments and our segment financial measures
The U S tariff environment remains fluid Cimpress businesses operate in the U S and we have fulfillment operations for U S customers in multiple locations in the U S Canada and Mexico Cimpress has multiple exemptions and exclusions that currently shield us from paying tariffs on many of the products we fulfill for U S customers in Canada and Mexico The primary impact of tariffs on Cimpress continues to be for promotional products that we source from China During the fourth quarter of fiscal year 2025 we implemented price increases to mostly offset the combination of tariffs and the loss of the de minimis tariff exemption on Chinese sourced goods In our Vista business we believe we were able to offset the new tariffs through pricing changes In our National Pen business we were able to largely offset the tariffs but did experience net costs In total we incurred approximately
We continue to work to mitigate the impact of tariffs on Cimpress and our U S customers We are monitoring the status of reciprocal tariffs from other countries and we will remain nimble in our sourcing and pricing responses The de minimis exemption for shipments of under 800 per day to individual U S customers is expected to end on August 29 2025 under a recently signed Executive Order however most of the computed value of the products we produce in Canada and Mexico for U S customers remains covered by exemptions due to their compliance with the US Mexico Canada USMCA trade agreement and the International Emergency Economic Powers Act IEEPA carve out for informational materials Furthermore we continue to believe that our scale based advantages and the assets of our manufacturing supply chain and procurement and flexible technology infrastructure have become even clearer through this turbulence We remain confident that we can manage this effectively even as facts and circumstances continue to change
The primary financial metric by which we set quarterly and annual budgets both for individual businesses and Cimpress wide is our adjusted free cash flow before net cash interest payments however in evaluating the financial condition and operating performance of our business management considers a number of metrics including revenue growth constant currency revenue growth organic constant currency revenue growth which excludes the impact of acquisitions divestitures operating income net income loss adjusted EBITDA cash flow from operations and adjusted free cash flow Reconciliations of our non GAAP financial measures are included within the Consolidated Results of Operations and Additional Non GAAP Financial Measures sections of Management s Discussion and Analysis A summary of these key financial metrics for the year ended June 30 2025 as compared to the year ended June 30 2024 follows
For the year ended June 30 2025 the increase in reported consolidated revenue was primarily driven by external revenue growth in our Vista and PrintBrothers reportable segments Revenue growth was led by strong revenue performance in Vista product categories like PPAG signage and packaging and labels as well as continued order volume growth in our PrintBrothers reportable segment Consolidated revenue growth was dampened by lower revenue for certain products in the U S mainly from weaker demand for business cards in our Vista business and home decor products in our BuildASign business as well as lower revenue in the direct mail channel of our National Pen business particularly in North America and decreased direct sales in our traditional product portfolio in Europe within The Print Group reportable segment
The decrease to operating income of 21 1 million during the year ended June 30 2025 was driven by the non recurrence of approximately 12 million of items that benefited the prior year as well as approximately 5 million of discrete items that negatively impacted the current year which included an Australian land duty tax in the second quarter of the current fiscal year that we are appealing related to our 2019 redomiciliation to Ireland as well as a combined increase in impairment and restructuring charges of 9 3 million and startup costs of 3 8 million for a new U S manufacturing facility that started production in March 2025 Additionally as previously described the increased cost of tariffs in the U S net of price increases had a negative 3 million impact during the fourth quarter of the current fiscal year Operating income was also also impacted by lower gross margins due to the product mix shift described above as well as higher operating expenses These items were offset in part by
of lower amortization of acquired intangible assets due to the runoff of fully amortized assets across several of our previously acquired businesses and reduced share based compensation expense of 6 7 million
due to the operating income decline described above In addition we recognized 133 5 million of higher income tax expense 84 1 million of expense in the current year versus 49 4 million of benefit in the prior year due primarily to a change of estimate to increase our valuation allowance in Switzerland We also recognized higher unrealized hedging losses as compared to the prior year
Adjusted EBITDA decreased during the year ended June 30 2025 for similar reasons described above as operating expenses more than offset the growth in gross profit Gross profit growth in our fastest growing product categories continues to be offset in part by the decline in certain higher margin product categories that has weighed on gross margins as compared to the prior year
Adjusted free cash flow decreased by 113 0 million for the year ended June 30 2025 due to the operating cash flow decrease described above as well as a 34 1 million increase in capitalized expenditures primarily due to planned investments in new production equipment and facility expansion Proceeds from the sale of assets decreased by 20 5 million driven by the prior year sale of our previously owned customer service facility located in Jamaica and manufacturing facility in Japan
Our businesses generate revenue primarily from the sale and shipment of customized products We also generate revenue to a much lesser extent and primarily in our Vista business from digital services graphic design services website design and hosting and social media marketing services as well as a small percentage of revenue from order referral fees and other third party offerings For additional discussion relating to segment revenue results refer to the Reportable Segment Results section included below
Total revenue and revenue growth by reportable segment for the years ended June 30 2025 2024 and 2023 are shown in the following tables The revenue by reportable segment includes inter segment transactions which is when one Cimpress business chooses to buy from or sell to another Cimpress business that is part of a different reportable segment These transactions are then eliminated in the inter segment elimination line in the table below
1 The prior period segment results have been adjusted to ensure comparability with the new methodology used for inter segment transactions Refer to Note 14 of the accompanying consolidated financial statements for additional details
2 Constant currency revenue growth a non GAAP financial measure represents the change in total revenue between current and prior year periods at constant currency exchange rates by translating all non U S dollar denominated revenue generated in the current period using the prior year period s average exchange rate for each currency to the U S dollar Our reportable segments related growth is inclusive of inter segment revenues which are eliminated in our consolidated results
3 Constant currency revenue growth excluding acquisitions divestitures a non GAAP financial measure excludes revenue results for businesses in the period in which there is no comparable year over year revenue Our reportable segments related growth is inclusive of inter segment revenues which are eliminated in our consolidated results
We have provided these non GAAP financial measures because we believe they provide meaningful information regarding our results on a consistent and comparable basis for the periods presented Management uses these non GAAP financial measures in addition to GAAP financial measures to evaluate our operating results These non GAAP financial measures should be considered supplemental to and not a substitute for our reported financial results prepared in accordance with GAAP
For the year ended June 30 2025 the reported revenue growth of 111 2 million was primarily driven by revenue growth in our Vista and PrintBrothers reportable segments and 4 6 million of positive effects from currency exchange rate fluctuations as compared to the prior year Excluding the effect of changes in currency exchange rates and inter segment revenue the largest increase in revenue was from our Vista business with
81 5 million of incremental revenue for the year ended June 30 2025 Vista revenue was higher year over year across all major markets with the most significant growth in the PPAG and signage product categories Our PrintBrothers reportable segment also contributed 24 2 million of increased revenue for the year ended June 30 2025 excluding the effect of changes in currency exchange rates and inter segment revenue primarily driven by continued order volume and customer growth partially offset by customers purchasing lower quantities in certain product categories
Cost of revenue includes materials used by our businesses to manufacture their products payroll and related expenses for production and design services personnel depreciation of assets used in the production process and in support of digital marketing service offerings shipping handling and processing costs third party production and design costs costs of free products and other related costs of products our businesses sell
For the year ended June 30 2025 cost of revenue increased by 90 6 million year over year driven by increases in third party fulfillment costs of 33 1 million due in in part to product mix shifts toward faster growing product categories that leverage our third party fulfillment network In addition variable based manufacturing and shipping costs increased by
27 2 million and 15 1 million respectively primarily driven by volume related increases In the aggregate our variable cost of goods sold increased by approximately 100 basis points as a percentage of revenue due to the previously mentioned product mix shift to product categories that generally have higher gross profit per order but lower gross margins than many of our legacy products including business cards
Other discrete items that contributed to the increase in cost of revenue were the recognition of a 2 6 million impairment charge in the third quarter of fiscal 2025 for our planned sale of a facility by our National Pen business as well as increased fixed startup costs that were recognized as part of a new U S manufacturing facility that resulted in cost of revenue of 1 6 million for the year ended June 30 2025 The cost increase was also impacted by the nonrecurrence of a favorable tax ruling of 3 0 million that benefited the prior year Currency exchange fluctuations had a positive benefit year over year of 5 4 million for the year ended June 30 2025
2 During fiscal year 2023 we recognized a goodwill impairment charge of 5 6 million related to one of our small businesses that is part of our All Other Businesses reportable segment Refer to Note 7 in the accompanying consolidated financial statements for additional details
Technology and development expense consists primarily of payroll and related expenses for employees engaged in software and manufacturing engineering information technology operations and content development as well as amortization of capitalized software and website development costs including hosting of our websites asset depreciation patent amortization and other technology infrastructure related costs Depreciation expense for information technology equipment that directly supports the delivery of our digital marketing services products is included in cost of revenue
Technology and development expense increased by 12 1 million for the year ended June 30 2025 as compared to the prior year driven by 5 9 million of higher cash compensation costs that were impacted in part by our annual merit cycle In addition third party technology costs increased by 4 4 million driven partly by our businesses further adoption of certain products offered through our mass customization platform as well as increased business volumes which has collectively increased consumption of those services Amortization of capitalized software also increased 2 8 million as compared to the prior year due to an increase in the capitalized asset base driven by continued investment in technology capabilities across many of our businesses These items were offset in part by 1 4 million of lower share based compensation costs due to lower attainment of the performance conditions in our 2025 PSU grants
Marketing and selling expense consists primarily of advertising and promotional costs payroll and related expenses for our employees engaged in marketing sales customer support and public relations activities direct mail advertising costs and third party payment processing fees Our Vista National Pen and BuildASign businesses have higher marketing and selling costs as a percentage of revenue as compared to our PrintBrothers and The Print Group businesses due to differences in the customers that they serve
For the year ended June 30 2025 marketing and selling expenses increased by 24 1 million partly due to higher cash compensation costs of 18 3 million driven by our annual merit cycle as well as hiring in our Vista business In addition advertising spend increased by 9 8 million as compared to the prior year largely driven by volume driven increases to advertising spend as well as targeted advertising investments Additionally for the current year advertising was higher due to the higher cost of performance advertising in the U S market during the second quarter of the current fiscal year These were offset in part by 2 7 million of lower share based compensation costs due to lower attainment of the performance conditions in our 2025 PSU grants
General and administrative expense consists primarily of transaction costs including third party professional fees insurance and payroll and related expenses of employees involved in executive management finance legal strategy human resources and procurement
of higher long term incentive cash compensation due to prior year reductions in estimated payouts for certain businesses as well as higher cash compensation costs that were impacted by our annual merit cycle and a 2 9 million charge recognized in the second quarter of the current fiscal year for a land duty tax in Australia related to our 2019 redomiciliation to Ireland that we are appealing These increases were offset in part by 2 9 million of lower share based compensation costs due to lower attainment of the performance conditions in our 2025 PSU grants
Other expense income net generally consists of gains and losses from currency exchange rate fluctuations on transactions or balances denominated in currencies other than the functional currency of our subsidiaries as well as the realized and unrealized gains and losses on some of our derivative instruments In evaluating our currency hedging programs and ability to qualify for hedge accounting in light of our legal entity cash flows we considered the benefits of hedge accounting relative to the additional economic cost of trade execution and administrative burden Based on this analysis we execute certain currency derivative contracts that do not qualify for hedge accounting
The changes in other expense income net was primarily due to the currency exchange rate volatility impacting our derivatives that are not designated as hedging instruments of which our Euro and British Pound contracts are the most significant exposures that we economically hedge We expect volatility to continue in future periods as we do not apply hedge accounting for most of our derivative currency contracts
Interest expense net primarily consists of interest on outstanding debt balances amortization of debt issuance costs debt discounts interest related to finance lease obligations accretion adjustments related to our mandatorily redeemable noncontrolling interests and realized gains losses on effective interest rate swap contracts and certain cross currency swap contracts
Interest expense net decreased 4 6 million during the year ended June 30 2025 primarily due to a year over year decrease to our weighted average interest rate net of interest rate swaps on our senior secured Term Loan B arising in part from our repricing actions in May 2024 and December 2024 that reduced the credit spread on our outstanding debt
During the year ended June 30 2025 we recognized 0 5 million of losses on the extinguishment of debt primarily due to the net write off of unamortized debt discount and financing fees associated with the refinancing of our Term Loan B Refer to Note 9 in our accompanying consolidated financial statements for additional details
Income tax expense for the year ended June 30 2025 increased versus the prior year primarily due to a change in estimate of our Swiss valuation allowance During the fourth quarter of 2025 we recognized tax expense of 26 8 million to adjust the partial valuation allowance in Switzerland to reflect the current estimated usage of these tax assets We considered all available evidence including the near term impact of recent product mix shifts in the Vista segment the expectation of the timing of future taxable income and the expiration of the tax assets
This is compared to a tax benefit of 105 8 million in the year ended June 30 2024 to partially release the full valuation allowance previously recorded in the period ended December 31 2022 As some of these tax assets will expire prior to when they can be used a partial valuation allowance remained against those expected to expire unused The prior year release was based on cumulative income in Switzerland current period and forecasted profits resulting in the ability to utilize some of these tax assets prior to their expiration
We believe that our income tax reserves are adequately maintained by taking into consideration both the technical merits of our tax return positions and ongoing developments in our income tax audits However the final determination of our tax return positions if audited is uncertain and therefore there is a possibility that final resolution of these matters could have a material impact on our results of operations or cash flows Refer to Note 12 in our accompanying consolidated financial statements for additional details
Our segment financial performance is measured based on segment EBITDA which is defined as operating income plus depreciation and amortization plus proceeds from insurance not already included in operating income plus share based compensation expense related to investment consideration plus earn out related charges plus certain impairments and other adjustments plus restructuring related charges less gain or loss on the purchase or sale of subsidiaries as well as the disposal of assets The effects of currency exchange rate fluctuations impact segment EBITDA and we do not allocate to segment EBITDA any gains or losses that are realized by our currency hedging program
For purposes of measuring and reporting our segment financial performance we implemented changes to the methodology used for inter segment transactions during the first quarter of fiscal 2025 These transactions are when one Cimpress business chooses to buy from or sell to another Cimpress business We have recast the prior periods presented for segment revenue and segment EBITDA to ensure comparability with the current fiscal year These changes in methodology have no impact on our consolidated financial results Refer to Note 14 in our accompanying consolidated financial statements for additional details
1 The prior year segment results have been adjusted to ensure comparability with the new methodology used for inter segment transactions Refer to Note 14 of the accompanying consolidated financial statements for additional details
was 5 Revenue growth for the year ended June 30 2025 was stronger for product categories like promotional products apparel signage and packaging and labels In addition revenue growth was stronger in Europe Revenue growth was dampened by a decline in the business cards and stationery product category in the U S influenced by the negative impact from algorithm changes in the organic search channel that we ve continued to optimize against
For the year ended June 30 2025 segment EBITDA decreased by 0 4 million primarily due to modest gross profit growth that was more than offset by the combination of higher advertising spend of 7 1 million that was driven by increases in performance marketing spend in the U S market as well as higher operating expenses as compared to the prior year Vista s gross profit growth was dampened by the decline in business cards and stationery revenue described above since this category has a higher variable gross margin than Vista s faster growing product categories Currency exchange fluctuations had a positive year over year impact of 3 8 million for the year ended June 30 2025
1 The prior year segment results have been adjusted to ensure comparability with the new methodology used for inter segment transactions Refer to Note 14 of the accompanying consolidated financial statements for additional details
PrintBrothers reported revenue growth for the year ended June 30 2025 was positively affected by currency of 1 resulting in organic constant currency revenue growth of 4 Organic constant currency revenue growth was driven primarily by order volume growth Increased volumes from new customer growth was partially offset by decreased order sizes in categories such as flyers brochures and magazines that was influenced by macroeconomic softness in the German market and the nonrecurrence of election related demand during the prior year
8 2 million partially due to an increase in advertising spend of 6 7 million driven by one of the segment s businesses testing into new digital marketing channels as well as the non recurrence of discrete items that benefited the prior year by 2 0 million as well as higher operating expenses These items were offset in part by gross profit growth that was driven by the revenue growth described above as well as positive year over year impacts from currency exchange fluctuations of 1 1 million for the year ended June 30 2025
1 The prior year segment results have been adjusted to ensure comparability with the new methodology used for inter segment transactions Refer to Note 14 of the accompanying consolidated financial statements for additional details
The Print Group s segment EBITDA increased 4 6 million during the year ended June 30 2025 as compared to the prior year largely driven by revenue growth from cross Cimpress fulfillment as described above and gross margin expansion due to reductions in key input costs such as raw materials The gross profit growth for the year ended June 30 2025 was partially offset by 3 8 million of startup costs related to Pixartprinting s new U S facility Currency exchange fluctuations had a positive year over year impact of 1 0 million for the year ended June 30 2025
1 The prior year segment results have been adjusted to ensure comparability with the new methodology used for inter segment transactions Refer to Note 14 of the accompanying consolidated financial statements for additional details
For the year ended June 30 2025 National Pen s revenue growth was positively impacted 1 by currency exchange rate fluctuations resulting in constant currency revenue growth of 4 as compared to the prior year National Pen revenue growth was driven by growth in e commerce and cross Cimpress fulfillment for other Cimpress businesses These growing channels were offset by revenue declines in mail order where National Pen continued to optimize for efficiency of direct mail advertising
National Pen s segment EBITDA increased 1 7 million for the year ended June 30 2025 driven by the revenue growth described above and 3 2 million of lower advertising spend intended to drive efficiency across channels Currency exchange fluctuations had a positive year over year impact of 1 3 million for the year ended June 30 2025
1 The prior year segment results have been adjusted to ensure comparability with the new methodology used for inter segment transactions Refer to Note 14 of the accompanying consolidated financial statements for additional details
All Other Businesses revenue growth was negatively impacted 1 by currency exchange rate fluctuations resulting in constant currency revenue growth of 8 during the year ended June 30 2025 BuildASign the largest business in this segment delivered strong growth from fulfillment for other Cimpress businesses which was partially offset by lower revenue for canvas print products Our smaller Printi business delivered constant currency revenue growth versus the prior year
For the year ended June 30 2025 segment EBITDA decreased 0 6 million versus the prior year largely driven by higher long term incentive compensation expense of 3 0 million due to a prior year reversal of expense driven by changes in estimated payouts that did not recur during the current year period In addition gross profits declined year over year during the seasonally significant second quarter for our BuildASign business driven by lower revenue in canvas print products as well as gross margin compression driven in part by temporary production inefficiencies related to new capabilities Currency exchange fluctuations had a positive year over year impact of 0 5 million for the year ended June 30 2025
Central and corporate costs consist primarily of the team of software engineers that is building our mass customization platform shared service organizations such as global procurement technology services such as security administrative costs of our Cimpress India offices where numerous Cimpress businesses have dedicated business specific team members and corporate functions including our tax treasury internal audit legal sustainability corporate communications remote first enablement consolidated reporting and compliance investor relations and the functions of our CEO and CFO These costs also include certain unallocated share based compensation costs
During the year ended June 30 2025 central and corporate costs increased by 3 0 million as compared to the prior year due in part to a 2 9 million charge recognized in the second quarter for a land duty tax in Australia related to our 2019 redomiciliation to Ireland that we are appealing In addition cash compensation costs in our central functions increased as a result of both hiring in our central technology organization and our annual merit cycle We also recognized higher third party technology costs as a result of continued adoption and usage of mass customization platform products that are developed by our central technology teams These increases were partially offset by lower unallocated share based compensation expense year over year of 9 5 million due to lower attainment associated with performance share units granted during the current fiscal year
Adjustments for non cash items of 265 6 million primarily related to adjustments for depreciation and amortization of 141 1 million share based compensation costs of 58 9 million deferred taxes of 42 0 million and unrealized currency related losses of 12 6 million
Net repayments of debt of 25 0 million including the impact of the refinancing of our 2026 Notes and amendment to our Senior Secured Credit Facility as well as financing fees paid Refer to Note 9 in the accompanying consolidated financial statements for additional details
At June 30 2025 we had 234 0 million of cash and cash equivalents and 1 604 5 million of debt excluding debt issuance costs and debt premiums and discounts During the year ended June 30 2025 we financed our operations and strategic investments through internally generated cash flows from operations and cash on hand We expect to finance our future operations through our cash operating cash flow and borrowings under our debt arrangements
We have historically used excess cash and cash equivalents for organic investments share repurchases acquisitions and equity investments and debt reduction During the year ended June 30 2025 we purchased and
retired 1 193 355 of our ordinary shares for 77 8 million We evaluate share repurchases as any other use of capital relative to our view of the impact on our intrinsic value per share compared against other opportunities
As part of our ongoing efforts to manage our liquidity we work with our suppliers to optimize our terms and conditions which includes the extension of payment terms We facilitate a voluntary supply chain finance program through a financial intermediary to allow our suppliers to receive funds earlier than our contractual payment date We do not believe there is a substantial risk that our payment terms will be shortened in the near future Refer to Note 16 of the accompanying consolidated financial statements for additional information
93 8 million We do not intend to repatriate these funds as the cash and cash equivalent balances are generally used and available without legal restrictions to fund ordinary business operations and investments of the respective subsidiaries If there is a change in the future the repatriation of undistributed earnings from certain subsidiaries in the form of dividends or otherwise could have tax consequences that could result in material cash outflows
1 Operating and finance lease payments above include only amounts which are fixed under lease agreements Our leases may also incur variable expenses which are not reflected in the contractual obligations above
2 Interest payments are based on the interest rate as of June 30 2025 and assume all Term SOFR based revolving loan amounts outstanding will not be paid until maturity but that the term loan amortization payments will be made according to our defined schedule Senior secured credit facility and interest payments include the effects of interest rate swaps whether they are expected to be payments or receipts of cash
3 We may be required to make cash outlays related to our uncertain tax positions However due to the uncertainty of the timing of future cash flows associated with our uncertain tax positions we are unable to make reasonably reliable estimates of the period of cash settlement if any with the respective taxing authorities Accordingly uncertain tax positions of 0 4 million as of June 30 2025 have been excluded from the contractual obligations table above See Note 12 in our accompanying consolidated financial statements for additional information on uncertain tax positions
We rent manufacturing facilities and office space under operating leases expiring on various dates through 2037 The terms of certain lease agreements require security deposits in the form of bank guarantees and letters of credit with 4 6 million in the aggregate outstanding as of June 30 2025
At June 30 2025 we had unrecorded commitments under contract of 391 4 million Purchase commitments consisted of third party cloud services of 260 3 million third party fulfillment and digital services of 78 9 million software of 37 4 million professional and consulting fees of 6 3 million production and computer equipment purchases of 2 9 million insurance costs of 1 6 million and other commitments of 2 8 million
On September 26 2024 we entered into an amendment to our Restated Credit Agreement to extend the maturity date of our senior secured revolving credit facility to September 26 2029 and reduced the minimum credit spread on borrowing and the minimum commitment fee on unused balances depending on our First Lien Leverage Ratio Our 250 0 million senior secured revolving credit facility has 232 1 million unused as of June 30 2025 There are no drawn amounts on the Revolving Credit
Facility but our outstanding letters of credit reduce our unused balance Our unused balance can be drawn at any time so long as we are in compliance with our debt covenants and if any loans made under the Revolving Credit Facility are outstanding on the last day of any fiscal quarter then we are subject to a financial maintenance covenant that the First Lien Leverage Ratio as defined in the Restated Credit Agreement calculated as of the last day of such quarter shall not exceed 3 25 to 1 00 Any amounts drawn under the Revolving Credit Facility will be due on September 26 2029 Interest payable included in the above table is based on the interest rate as of June 30 2025 and assumes all Term SOFR based revolving loan amounts outstanding will not be paid until maturity but that the term loan amortization payments will be made according to our defined schedule As of June 30 2025 we have borrowings under our Restated Credit Agreement of 1 072 8 million consisting of the Term Loan B which amortizes over the loan period with a final maturity date of May 17 2028
On September 26 2024 we completed a private placement of 525 0 million in aggregate principal amount of senior unsecured notes due 2032 the 2032 Notes We used the net proceeds from the 2032 Notes together with cash on hand to redeem all of the outstanding 2026 Notes and pay associated accrued interest and all related financing fees Our 525 0 million 2032 Notes bear interest at a rate of 7 375 per annum and mature on September 15 2032 Interest on the 2032 Notes is payable semi annually on March 15 and September 15 of each year Refer to Note 9 in the accompanying consolidated financial statements for additional information
The Restated Credit Agreement and the indenture that governs our 2032 Notes contain covenants that restrict or limit certain activities and transactions by Cimpress and our subsidiaries As of June 30 2025 we were in compliance with all covenants under our Restated Credit Agreement and the indenture governing our 2032 Notes Refer to Note 9 in the accompanying consolidated financial statements for additional information
In addition we have other debt which consists primarily of term loans acquired through our various acquisitions or used to fund certain capital investments As of June 30 2025 we had 6 7 million outstanding for those obligations that have repayments due on various dates through September 2028
We lease certain facilities machinery and plant equipment under finance lease agreements that expire at various dates through 2037 The aggregate carrying value of the leased assets under finance leases included in property plant and equipment net in our consolidated balance sheet at June 30 2025 is 30 3 million net of accumulated depreciation of 35 7 million The present value of lease installments not yet due included in other current liabilities and other liabilities in our consolidated balance sheet at June 30 2025 amounts to 33 6 million
Constant currency revenue growth and constant currency revenue growth excluding acquisitions divestitures which we refer to above as organic constant currency revenue growth in each case as defined and presented in the consolidated results of operations section above with reconciliations to GAAP revenue growth as well as adjusted EBITDA and adjusted free cash flow presented below are supplemental measures of our performance that are not required by or presented in accordance with GAAP We do not nor do we suggest that investors should consider such non GAAP financial measures in isolation from or as a substitute for financial information prepared in accordance with GAAP
Adjusted EBITDA is defined as net loss income plus income tax expense plus gain loss on early extinguishment of debt plus interest expense net plus other expense income net plus depreciation and amortization plus share based compensation expense plus earn out related charges plus certain impairments plus restructuring related charges less the gain or loss on purchase or sale of subsidiaries as well as the disposal of assets In addition adjusted EBITDA includes the impact of certain items that are recognized in other income net which includes realized gains or losses on currency derivatives that are intended to hedge our adjusted EBITDA exposure to foreign currencies for which we do not apply hedge accounting as well as proceeds from insurance recoveries
Adjusted EBITDA is the primary profitability metric by which we measure our consolidated financial performance and is provided to enhance investors understanding of our current operating results from the underlying and ongoing business for the same reasons it is used by management For example for acquisitions we believe excluding the costs related to the purchase of a business such as amortization of acquired intangible assets contingent consideration or impairment of goodwill provides further insight into the performance of the
Adjusted free cash flow is the primary financial metric by which we set quarterly and annual budgets both for individual businesses and Cimpress wide Adjusted free cash flow is defined as net cash provided by used in operating activities less purchases of property plant and equipment purchases of intangible assets not related to acquisitions and capitalization of software and website development costs that are included in net cash used in investing activities plus the proceeds from sale of assets payment of contingent consideration in excess of acquisition date fair value and gains on proceeds from insurance that are not included in net cash provided by operating activities if any We use this cash flow metric because we believe that this methodology can provide useful supplemental information to help investors better understand our ability to generate cash flow after considering certain investments required to maintain or grow our business as well as eliminate the impact of certain cash flow items presented as operating cash flows that we do not believe reflect the cash flow generated by the underlying business
Our adjusted free cash flow measure has limitations as it may omit certain components of the overall cash flow statement and does not represent the residual cash flow available for discretionary expenditures For example adjusted free cash flow does not incorporate our cash payments to reduce the principal portion of our debt or cash payments for business acquisitions Additionally the mix of property plant and equipment purchases that we choose to finance may change over time We believe it is important to view our adjusted free cash flow measure only as a complement to our entire consolidated statement of cash flows
1 These realized gains losses include only the impacts of certain currency derivative contracts that are intended to hedge our adjusted EBITDA exposure to foreign currencies for which we do not apply hedge accounting Refer to Note 4 in our accompanying consolidated financial statements for further information
Our financial statements are prepared in accordance with U S generally accepted accounting principles GAAP To apply these principles we must make estimates and judgments that affect our reported amounts of assets liabilities revenues and expenses and related disclosure of contingent assets and liabilities In some instances we reasonably could have used different accounting estimates and in other instances changes in the accounting estimates are reasonably likely to occur from period to period Accordingly actual results could differ significantly from our estimates We base our estimates and judgments on historical experience and other assumptions that we believe to be reasonable at the time under the circumstances and we evaluate these estimates and judgments on an ongoing basis We refer to accounting estimates and judgments of this type as critical accounting policies and estimates which we discuss further below This section should be read in conjunction with Note 2 Summary of Significant Accounting Policies of our audited consolidated financial statements included elsewhere in this Report
Revenue Recognition We generate revenue primarily from the sale and shipment of customized manufactured products To a much lesser extent and only in our Vista business we provide digital services website design and hosting and email marketing services as well as a small percentage from order referral fees and other third party offerings Revenues are recognized when control of the promised products or services is transferred to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services
Under the terms of most of our arrangements with our customers we provide satisfaction guarantees which give our customers an option for a refund or reprint over a specified period of time if the customer is not fully satisfied As such we record a reserve for estimated sales returns and allowances as a reduction of revenue based on historical experience or the specific identification of an event necessitating a reserve Actual sales returns have historically not been significant
We have elected to recognize shipping and handling activities that occur after transfer of control of the products as fulfillment activities and not as a separate performance obligation Accordingly we recognize revenue for our single performance obligation upon the transfer of control of the fulfilled orders which generally occurs upon delivery to the shipping carrier If revenue is recognized prior to completion of the shipping and handling activities we accrue the costs of those activities We do have some arrangements whereby the transfer of control and thus revenue recognition occurs upon delivery to the customer If multiple products are ordered together each product is considered a separate performance obligation and the transaction price is allocated to each performance obligation based on the standalone selling price Revenue is recognized upon satisfaction of each performance obligation We generally determine the standalone selling prices based on the prices charged to our customers
Our products are customized for each individual customer with no alternative use except to be delivered to that specific customer however we do not have an enforceable right to payment prior to delivering the items to the customer based on the terms and conditions of our arrangements with customers and therefore we recognize revenue at a point in time
We record deferred revenue when cash payments are received in advance of our satisfaction of the related performance obligation The satisfaction of performance obligations generally occur shortly after cash payment and we expect to recognize the majority of our deferred revenue balance as revenue within three months subsequent to June 30 2025
We periodically provide marketing materials and promotional offers to new customers and existing customers that are intended to improve customer retention These incentive offers are generally available to all customers and therefore do not represent a performance obligation as customers are not required to enter into a contractual commitment to receive the offer These discounts are recognized as a reduction to the transaction price when used by the customer Costs related to free products are included within cost of revenue and sample products are included within marketing and selling expense
Share Based Compensation We measure share based compensation costs at fair value and recognize the expense over the period that the recipient is required to provide service in exchange for the award which generally is the vesting period We recognize the impact of forfeitures as they occur
We have issued PSUs that include a performance condition in which compensation costs are recorded if it is probable that the performance condition will be achieved The fair value is determined based on the quoted price of our ordinary shares on the date of the grant and our estimated attainment percentage of the related performance condition Until the performance condition is measured changes in the estimated attainment percentages may cause expense volatility since a cumulative expense adjustment will be recognized in the period a change occurs
Income Taxes As part of the process of preparing our consolidated financial statements we calculate our income taxes in each of the jurisdictions in which we operate This process involves estimating our current tax expense including assessing the risks associated with tax positions together with assessing temporary and permanent differences resulting from differing treatment of items for tax and financial reporting purposes We recognize deferred tax assets and liabilities for the temporary differences using the enacted tax rates and laws that will be in effect when we expect temporary differences to reverse We assess the ability to realize our deferred tax assets based upon the weight of available evidence both positive and negative To the extent we believe that it is more likely than not that some portion or all of the deferred tax assets will not be realized we establish a valuation allowance Our estimates can vary due to the profitability mix of jurisdictions foreign exchange movements changes in tax law regulations or accounting principles as well as certain discrete items In the event that actual results differ from our estimates or we adjust our estimates in the future we may need to increase or decrease income tax expense which could have a material impact on our financial position and results of operations
We establish reserves for tax related uncertainties based on estimates of whether and the extent to which additional taxes will be due These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are in accordance with applicable tax laws We adjust these reserves in light of changing facts and circumstances such as the closing of a tax audit new tax legislation or the change of an estimate based on new information To the extent that the final outcome of these matters is different than the amounts recorded such differences will affect the provision for income taxes in the period in which such determination is made Interest and if applicable penalties related to unrecognized tax benefits are recorded in the provision for income taxes
Software and Website Development Costs We capitalize eligible salaries and payroll related costs of employees and third party consultants who devote time to the development of our websites and internal use computer software Capitalization begins when the preliminary project stage is complete management with the relevant authority authorizes and commits to the funding of the software project and it is probable that the project will be completed and the software will be used to perform the function intended These costs are amortized on a straight line basis over the estimated useful life of the software which is three years Our judgment is required in evaluating whether a project provides new or additional functionality determining the point at which various projects enter the stages at which costs may be capitalized assessing the ongoing value and impairment of the capitalized costs and determining the estimated useful lives over which the costs are amortized Historically we have not had any significant impairments of our capitalized software and website development costs
Goodwill Indefinite Lived Intangible Assets and Other Definite Lived Long Lived Assets We evaluate goodwill and indefinite lived intangible assets for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount We consider the timing of our most recent fair value assessment and associated headroom the actual operating results as compared to the cash flow forecasts used in those fair value assessments the current long term forecasts for each reporting unit and the general market and economic environment of each reporting unit In addition to the specific factors mentioned above we assess the following individual factors on an ongoing basis such as
If the results of the qualitative analysis were to indicate that the fair value of a reporting unit is less than its carrying value the quantitative test is required Under the quantitative approach we estimate the fair values of our reporting units using a discounted cash flow methodology and in certain circumstances a market based approach
This analysis requires significant judgment and is based on our strategic plans and estimation of future cash flows which is dependent on internal forecasts Our annual analysis also requires significant judgment including the identification and aggregation of reporting units as well as the determination of our discount rate and perpetual growth rate assumptions We are required to compare the fair value of the reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit s fair value For the year ended June 30 2025 we recognized no impairments
We are required to evaluate the estimated useful lives and recoverability of definite lived long lived assets for example customer relationships developed technology property and equipment on an ongoing basis when indicators of impairment are present For purposes of the recoverability test long lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities The test for recoverability compares the undiscounted future cash flows of the long lived asset group to its carrying value If the carrying values of the long lived asset group exceed the undiscounted future cash flows the assets are considered to be potentially impaired The next step in the impairment measurement process is to determine the fair value of the individual net assets within the long lived asset group If the aggregate fair values of the individual net assets of the group are less than the carrying values an impairment charge is recorded equal to the excess of the aggregate carrying value of the group over the aggregate fair value The loss is allocated to each long lived asset within the group based on their relative carrying values with no asset reduced below its fair value The identification and evaluation of a potential impairment requires judgment and is subject to change if events or circumstances pertaining to our business change We evaluated our long lived assets for impairment during the year ended June 30 2025 and we recognized no impairments
As of June 30 2025 our cash and cash equivalents consisted of standard depository accounts which are held for working capital purposes money market funds and marketable securities with an original maturity of less than 90 days We do not believe we have a material exposure to interest rate fluctuations related to our cash and cash equivalents
1 072 8 million of variable rate debt As a result we have exposure to market risk for changes in interest rates related to these obligations In order to mitigate our exposure to interest rate changes related to our variable rate debt we execute interest rate swap contracts to fix the interest rate on a portion of our outstanding or forecasted long term debt with varying maturities As of June 30 2025 a hypothetical 100 basis point increase in rates inclusive of the impact of our outstanding interest rate swaps that are accruing interest as of June 30 2025 would result in a 8 3 million impact to interest expense over the next 12 months This does not include any yield from cash and marketable securities
We conduct business in multiple currencies through our worldwide operations but report our financial results in U S dollars We manage these currency risks through normal operating activities and when deemed appropriate through the use of derivative financial instruments We have policies governing the use of derivative instruments and do not enter into financial instruments for trading or speculative purposes The use of derivatives is intended to reduce but does not entirely eliminate the impact of adverse currency exchange rate movements A summary of our currency risk is as follows
Revenue and related expenses generated in currencies other than the U S dollar could result in higher or lower net income loss when upon consolidation those transactions are translated to U S dollars When the value or timing of revenue and expenses in a given currency are materially different we may be exposed to significant impacts on our net loss and non GAAP financial metrics such as adjusted EBITDA
Our currency hedging objectives are targeted at reducing volatility in our forecasted U S dollar equivalent adjusted EBITDA in order to maintain stability on our incurrence based debt covenants Since adjusted EBITDA excludes non cash items such as depreciation and amortization that are included in net loss income we may experience increased not decreased volatility in our GAAP results due to our hedging approach Our most significant net currency exposures by volume are in the Euro and British Pound
In addition we elect to execute currency derivatives contracts that do not qualify for hedge accounting As a result we may experience volatility in our consolidated statements of operations due to i the impact of unrealized gains and losses reported in other expense income net on the mark to market of outstanding contracts and ii realized gains and losses recognized in other expense income net whereas the offsetting economic gains and losses are reported in the line item of the underlying activity for example revenue
Each of our subsidiaries translates its assets and liabilities to U S dollars at current rates of exchange in effect at the balance sheet date The resulting gains and losses from translation are included as a component of accumulated other comprehensive loss on the consolidated balance sheet Fluctuations in exchange rates can materially impact the carrying value of our assets and liabilities We have currency exposure arising from our net investments in foreign operations We enter into currency derivatives to mitigate the impact of currency rate changes on certain net investments
Transaction gains and losses generated from remeasurement of monetary assets and liabilities denominated in currencies other than the functional currency of a subsidiary are included in other expense income net on the consolidated statements of operations Certain of our subsidiaries hold intercompany loans denominated in a currency other than their functional currency Due to the significance of these balances the revaluation of intercompany loans can have a material impact on other expense income net We expect these impacts may be volatile in the future although our largest intercompany loans do not have a U S dollar cash impact for the consolidated group because they are either 1 U S dollar loans or 2 used to hedge certain non U S dollar loans with cross currency swaps and forward contracts A hypothetical 10 change in currency exchange rates was applied to total net monetary assets denominated in currencies other than the functional currencies at the balance sheet dates to compute the impact these changes would have had on our income before income taxes in the near term A hypothetical decrease in exchange rates of 10 against the functional currency of our subsidiaries would have resulted in a change of 22 6 million on our income before income taxes for the year ended June 30 2025
We have audited the accompanying consolidated balance sheets of Cimpress plc and its subsidiaries the Company as of June 30 2025 and 2024 and the related consolidated statements of operations of comprehensive income loss of shareholders deficit and of cash flows for each of the three years in the period ended June 30 2025 including the related notes collectively referred to as the consolidated financial statements We also have audited the Company s internal control over financial reporting as of June 30 2025 based on criteria established in
In our opinion the consolidated financial statements referred to above present fairly in all material respects the financial position of the Company as of June 30 2025 and 2024 and the results of its operations and its cash flows for each of the three years in the period ended June 30 2025 in conformity with accounting principles generally accepted in the United States of America Also in our opinion the Company maintained in all material respects effective internal control over financial reporting as of June 30 2025 based on criteria established in
The Company s management is responsible for these consolidated financial statements for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in Management s Report on Internal Control Over Financial Reporting appearing under Item 9A Our responsibility is to express opinions on the Company s consolidated financial statements and on the Company s internal control over financial reporting based on our audits We are a public accounting firm registered with the Public Company Accounting Oversight Board United States PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the consolidated financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the consolidated financial statements Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk Our audits also included performing such other procedures as we considered necessary in the circumstances We believe that our audits provide a reasonable basis for our opinions
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that i pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company ii provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and iii provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that i relates to accounts or disclosures that are material to the consolidated financial statements and ii involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates
As described in Notes 2 and 14 to the consolidated financial statements revenue is generated primarily from the sale and shipment of customized manufactured products Revenues are recognized at a point in time when control of the promised products is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products The Company s consolidated revenue was 3 4 billion for the year ended June 30 2025 of which a significant portion relates to certain physical printed products and other revenue
The principal consideration for our determination that performing procedures relating to revenue recognition for certain physical printed products and other revenue is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company s revenue recognition for certain physical printed products and other revenue
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements These procedures included testing the effectiveness of controls relating to the revenue recognition process including controls over the recording of revenue for certain physical printed products and other revenue when control of the promised product is transferred to the customer These procedures also included among others i testing revenue recognition for a sample of certain physical printed products and other revenue transactions by obtaining and inspecting source documents such as order confirmations invoices and proof of shipment or delivery ii testing the timing of revenue recognition for a sample of certain physical printed products and other revenue transactions before and after period end by obtaining and inspecting source documents such as order confirmations invoices and proof of shipment or delivery and iii confirming a sample of outstanding customer invoice balances as of June 30 2025 and for confirmations not returned obtaining and inspecting source documents such as order confirmations invoices proof of shipment or delivery and subsequent cash receipts
Cimpress is a strategically focused collection of businesses that specialize in print mass customization through which we deliver large volumes of individually small sized customized orders of printed materials and promotional products Our products and services include a broad range of marketing materials business cards signage promotional products logo apparel packaging books and magazines wall decor photo merchandise invitations and announcements design and digital marketing services and other categories Mass customization is a core element of the business model of each Cimpress business and is a competitive strategy which seeks to produce goods and services to meet individual customer needs with near mass production efficiency
The consolidated financial statements include the accounts of Cimpress plc its wholly owned subsidiaries entities in which we maintain a controlling financial interest and those entities in which we have a variable interest and are the primary beneficiary Intercompany balances and transactions have been eliminated Investments in entities in which we cannot exercise significant influence and for which the related equity securities do not have a readily determinable fair value are included in other assets on the consolidated balance sheets otherwise the investments are recognized by applying equity method accounting Our equity method investments are included in other assets on the consolidated balance sheets
The preparation of financial statements in conformity with U S generally accepted accounting principles GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes We believe our most significant estimates are associated with the ongoing evaluation of the recoverability of our long lived assets and goodwill estimated useful lives of assets share based compensation accounting for business combinations and income taxes and related valuation allowances among others By their nature estimates are subject to an inherent degree of uncertainty Actual results could differ from those estimates
We consider all highly liquid investments purchased with an original maturity of three months or less to be the equivalent of cash for the purpose of balance sheet and statement of cash flows presentation Cash equivalents consist of depository accounts and money market funds Cash and cash equivalents restricted for use were 569
For bank accounts that are overdrawn at the end of a reporting period including any net negative balance in our notional cash pool we reclassify these overdrafts to short term debt on our consolidated balance sheets Book overdrafts that result from outstanding checks in excess of our bank balance are reclassified to other current liabilities
At times we hold certain investments that are classified as held to maturity as we have the intent and ability to hold them to their maturity dates Our policy is to invest in the following permitted classes of assets overnight money market funds invested in U S Treasury securities and U S government agency securities U S Treasury securities U S government agency securities bank time deposits commercial paper corporate notes and bonds and medium term notes We invest in securities with a remaining maturity of two years or less As the investments are classified as held to maturity they are recorded at amortized cost and interest income is recorded as it is earned within interest expense net
We assess our securities for impairment when the fair value is less than amortized cost to determine if any risk of credit loss exists As our intent is to hold the securities to maturity we must assess whether any credit losses related to our investments are recoverable and determine if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis We did not record an allowance for credit losses and we recognized no impairments for any period presented
Accounts receivable includes amounts due from customers We offset gross trade accounts receivable with an allowance for doubtful accounts which is our best estimate of the amount of probable credit losses in existing accounts receivable Account balances are charged off against the allowance when the potential for recovery is no longer reasonably assured
Inventories consist primarily of raw materials and are recorded at the lower of cost or net realizable value using the first in first out method Costs to produce products are included in cost of revenues as incurred
Property plant and equipment are stated at cost less accumulated depreciation and amortization Additions and improvements that substantially extend the useful life of a particular asset are capitalized while repairs and maintenance costs are expensed as incurred Assets that qualify for the capitalization of interest cost during their construction period are evaluated on a per project basis and if material the costs are capitalized No interest costs associated with our construction projects were capitalized in any of the years presented as the amounts were not material Depreciation of plant and equipment is recorded on a straight line basis over the estimated useful lives of the assets
We capitalize eligible salaries and payroll related costs of employees and third party consultants who devote time to the development of websites and internal use computer software Capitalization begins when the preliminary project stage is complete management with the relevant authority authorizes and commits to the funding of the software project and it is probable that the project will be completed and the software will be used to perform the function intended These costs are amortized on a straight line basis over the estimated useful life of the software which is generally over a three year period Costs associated with preliminary stage software development repair maintenance or the development of website content are expensed as incurred
We capitalize the costs of purchasing patents from unrelated third parties and amortize these costs over the estimated useful life of the patent The costs related to patent applications pursuing others who we believe infringe on our patents and defending against patent infringement claims are expensed as incurred
We record acquired intangible assets at fair value on the date of acquisition using the income approach to value the trade names customer relationships and customer network and a replacement cost approach to value developed technology and our print network The income approach calculates fair value by discounting the forecasted after tax cash flows back to a present value using an appropriate discount rate The baseline data for this analysis is the cash flow estimates used to price the transaction We amortize such assets using the straight line method over the expected useful life of the asset unless another amortization method is deemed to be more appropriate In estimating the useful life of the acquired assets we reviewed the expected use of the assets acquired factors that may limit the useful life of an acquired asset or may enable the extension of the useful life of an acquired asset without substantial cost the effects of obsolescence demand competition and other economic factors and the level of maintenance expenditures required to obtain the expected future cash flows from the asset
We evaluate the remaining useful life of intangible assets on a periodic basis to determine whether events and circumstances warrant a revision to the remaining useful life If the estimate of an intangible asset s remaining useful life is changed we amortize the remaining carrying value of the intangible asset prospectively over the revised remaining useful life
Long lived assets with a finite life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset a significant change in the extent or manner in which an asset is used or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable
We recognize the assets acquired and liabilities assumed in business combinations on the basis of their fair values at the date of acquisition We assess the fair value of assets including intangible assets using a variety of methods and each asset is measured at fair value from the perspective of a market participant The method used to estimate the fair values of intangible assets incorporates significant assumptions regarding the estimates a market participant would make in order to evaluate an asset including a market participant s use of the asset and the appropriate discount rates Assets acquired that are determined to not have economic use for us are expensed immediately Any excess purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill Transaction costs and restructuring costs associated with a business combination are expensed as incurred
The consideration for our acquisitions often includes future payments that are contingent upon the occurrence of a particular event For acquisitions that qualify as business combinations we record an obligation for such contingent payments at fair value on the acquisition date
The evaluation of goodwill for impairment is performed at a level referred to as a reporting unit A reporting unit is either the operating segment level or one level below which is referred to as a component The level at which the impairment test is performed requires an assessment as to whether the operations below the operating segment should be aggregated as one reporting unit due to their similarity or reviewed individually Goodwill is evaluated for impairment on an annual basis or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable Goodwill is considered to be impaired when the carrying amount of a reporting unit exceeds its estimated fair value
We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value If the results of this analysis indicate that the fair value of a reporting unit is less than its carrying value the quantitative impairment test is required otherwise no further assessment is necessary To perform the quantitative approach we estimate the fair value of our reporting units using a discounted cash flow methodology If the carrying value of a reporting unit s goodwill exceeds its implied fair value then we record an impairment loss equal to the difference
We recognized no goodwill impairment charges during the years ended June 30 2025 and 2024 For the year ended June 30 2023 we recognized a goodwill impairment charge of 5 609 The charge is a partial impairment of the goodwill for one of our reporting units within our All Other Businesses reportable segment Refer to Note 7 for additional details regarding the annual goodwill impairment test
Noncontrolling interests held by third parties in consolidated subsidiaries are considered mandatorily redeemable when they are subject to an unconditional obligation to be redeemed by both parties The redeemable noncontrolling interest must be required to be repurchased on a specified date or on the occurrence of a specified event that is certain to occur and is to be redeemed via the transfer of assets Mandatorily redeemable noncontrolling interests are presented as liability based financial instruments and are re measured on a recurring basis to the expected redemption value
Costs associated with the issuance of debt instruments are capitalized and amortized over the term of the respective financing arrangement on a straight line basis through the maturity date of the related debt instrument We evaluate all changes to our debt arrangements to determine whether the changes represent a modification or extinguishment to the old debt arrangement If a debt instrument is deemed to be modified we capitalize all new lender fees and expense all third party fees If we determine that an extinguishment of one of our debt instruments has occurred the unamortized financing fees associated with the extinguished instrument are expensed For the revolving loans associated with our senior secured credit facility all lender and third party fees are capitalized and in the event an amendment reduces the committed capacity under the revolving loans we expense a portion of any unamortized fees on a pro rata basis in proportion to the decrease in the committed capacity
We record all derivatives on the consolidated balance sheet at fair value We apply hedge accounting to arrangements that qualify and are designated for hedge accounting treatment which includes cash flow and net investment hedges Hedge accounting is discontinued prospectively if the hedging relationship ceases to be effective or the hedging or hedged items cease to exist as a result of maturity sale termination or cancellation
Derivatives designated and qualifying as hedges of the exposure to variability in expected future cash flows or other types of forecasted transactions are considered cash flow hedges which could include interest rate swap contracts and cross currency swap contracts In a cash flow hedging relationship the effective and ineffective portion of the change in the fair value of the hedging derivative is initially recorded in accumulated other comprehensive loss The portion of gain or loss on the derivative instrument previously recorded in accumulated other comprehensive loss remains in accumulated other comprehensive loss until the forecasted transaction is recognized in earnings For derivatives designated as cash flow hedges we present the settlement amount of these contracts within cash from operating activities in our consolidated statement of cash flows if the hedged item continues after contract settlement
Derivatives designated and qualifying as hedges of currency exposure of a net investment in a foreign operation are considered net investment hedges which could include cross currency swap and currency forward contracts as well as intercompany loans In hedging the currency exposure of a net investment in a foreign operation the effective and ineffective portion of gains and losses on the hedging instruments is recognized in accumulated other comprehensive loss as part of currency translation adjustment The portion of gain or loss on the derivative instrument previously recorded in accumulated other comprehensive loss remains in accumulated other comprehensive loss until we reduce our investment in the hedged foreign operation through a sale or substantial liquidation
We also enter into derivative contracts that are intended to economically hedge certain of our risks even though we may not elect to apply hedge accounting or the instrument may not qualify for hedge accounting When hedge accounting is not applied the changes in the fair value of the derivatives are recorded directly in earnings as a component of other expense income net
In accordance with the fair value measurement guidance our accounting policy is to measure the credit risk of our derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio We execute our derivative instruments with financial institutions that we judge to be credit worthy defined as institutions that hold an investment grade credit rating
Treasury shares are accounted for using the cost method and are included as a component of shareholders equity Our various share based compensation programs entitle recipients to receive issuances of Cimpress ordinary shares upon the vesting of awards which meet applicable performance criteria We reissue treasury shares as part of our share based compensation programs and as consideration for some of our acquisition transactions Upon issuance of treasury shares in conjunction with these programs we determined the cost using the average cost method We issue new ordinary shares to meet the needs of our share based compensation programs
We retire ordinary shares from time to time Upon retirement these shares become classified as authorized and unissued shares The retirement of ordinary shares are accounted for as a reduction to the nominal value of our ordinary shares outstanding and additional paid in capital in proportion to the amount of total shares outstanding with the remaining repurchase value recognized as a reduction to retained earnings
Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non owner sources Comprehensive loss is composed of net loss unrealized gains and losses on derivatives unrealized gains and losses on pension benefit obligation and cumulative foreign currency translation adjustments which are included in the accompanying consolidated statements of comprehensive loss
We bifurcate and separately account for a detachable warrant as a separate equity instrument The value assigned to the warrants was determined based on a relative fair value allocation between the warrants and related debt The fair value of the warrants was determined using a Monte Carlo valuation and applying a discount for the lack of marketability for the warrants We present the allocated value for the warrants within additional paid in capital in our consolidated balance sheet Refer to Note 10 for additional details
During fiscal year 2025 we granted subsidiary level option awards which provides the founder group of one of our businesses with the option to purchase a 5 25 minority equity interest in each of the principal businesses that are included in our PrintBrothers reportable segment The option awards have an expiration date of January 15 2026 and upon exercise the underlying shares are subject to a ten year lockup period while the holders are subjected to non compete provisions over the period in which they are shareholders plus an additional two years The fair value of the share option is determined as of the grant date using the Black Scholes valuation model and the fair value is recognized ratably as expense over the non compete period as the provision is deemed to be substantive The expense associated with the subsidiary option is currently recognized as a liability within other liabilities on our consolidated balance sheets and upon exercise of the option the related balance will be reclassified to noncontrolling interests
We generate revenue primarily from the sale and shipment of physical printed products We also generate revenue to a much lesser extent and primarily in our Vista business from digital services website design and hosting professional design services and email marketing services as well as a small percentage from order referral fees and other third party offerings Revenues are recognized when control of the promised products or services is transferred to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services Shipping revenues are recognized when control of the related products is transferred to the customer For design service arrangements we recognize revenue when the services are complete A portion of this revenue relates to design contests in which we have determined that we are the principal in the arrangement as we satisfy our contractual performance obligation to provide the customer with the benefit of our platform and network of designers
Under the terms of most of our arrangements with our customers we provide satisfaction guarantees which give our customers an option for a refund or reprint over a specified period of time if the customer is not fully satisfied As such we record a reserve for estimated sales returns and allowances as a reduction of revenue based on historical experience or the specific identification of an event necessitating a reserve Actual sales returns have historically not been significant
We have elected to recognize shipping and handling activities that occur after transfer of control of the products as fulfillment activities and not as a separate performance obligation Accordingly we recognize revenue for our single performance obligation upon the transfer of control of the fulfilled orders which generally occurs upon delivery to the shipping carrier If revenue is recognized prior to completion of the shipping and handling activities
we accrue the costs of those activities We do have some arrangements whereby the transfer of control and thus revenue recognition occurs upon delivery to the customer If multiple products are ordered together each product is considered a separate performance obligation and the transaction price is allocated to each performance obligation based on the standalone selling price Revenue is recognized upon satisfaction of each performance obligation We generally determine the standalone selling prices based on the prices charged to our customers We record revenue net of taxes collected from customers that are remitted to governmental authorities
Our products are customized for each individual customer with no alternative use except to be delivered to that specific customer however we do not have an enforceable right to payment prior to delivering the items to the customer based on the terms and conditions of our arrangements with customers and therefore we recognize revenue at a point in time
We record deferred revenue when cash payments are received in advance of our satisfaction of the related performance obligation The satisfaction of performance obligations generally occurs shortly after cash payment and we expect to recognize the majority of our deferred revenue balance as revenue within three months subsequent to our fiscal year end
We periodically provide marketing materials and promotional offers to new customers and existing customers that are intended to improve customer retention These incentive offers are generally available to all customers and therefore do not represent a performance obligation as customers are not required to enter into a contractual commitment to receive the offer These discounts are recognized as a reduction to the transaction price when used by the customer Costs related to free products are included within cost of revenue and sample products are included within marketing and selling expense
We have elected to expense incremental direct costs as incurred which primarily includes sales commissions since our contract periods generally are less than one year and the related performance obligations are satisfied within a short period of time
Restructuring costs are recorded in connection with initiatives designed to improve efficiency or enhance competitiveness Restructuring initiatives require us to make estimates in several areas including expenses for severance and other employee separation costs and our ability to generate sublease income to enable us to terminate lease obligations at the estimated amounts
For jurisdictions in which there are statutorily required minimum benefits for involuntary terminations severance benefits are documented in an employee manual or labor contract or are consistent with prior restructuring plan benefits we evaluate these benefits as ongoing benefit arrangements We recognize the liability for these arrangements when it is probable that the employee would be entitled to the benefits and the amounts can be reasonably estimated The expense timing generally occurs when management has committed to and approved the restructuring plan
Involuntary termination benefits that are in excess of statutory minimum requirements and prior restructuring plan benefits are recognized as termination benefits and expensed at the date we notify the employee unless the employee must provide future service beyond the statutory minimum retention period in which case the benefits are expensed ratably over the future service period Liabilities for costs associated with a facility exit or disposal activity are recognized when the liability is incurred as opposed to when management commits to an exit plan and are measured at fair value Restructuring costs are presented as a separate financial statement line within our consolidated statement of operations
As part of the process of preparing our consolidated financial statements we calculate our income taxes in each of the jurisdictions in which we operate This process involves estimating our current tax expense and deferred tax expense based on assessing temporary and permanent differences resulting from differing treatment of items for tax and financial reporting purposes We recognize deferred tax assets and liabilities for the temporary differences using the enacted tax rates and laws that will be in effect when we expect temporary differences to reverse We assess the ability to realize our deferred tax assets based upon the weight of available evidence both positive and negative To the extent we believe that it is more likely than not that some portion or all of the deferred tax assets will not be realized we establish a valuation allowance In the event that actual results differ from our estimates or we adjust our estimates in the future we may need to increase or decrease income tax expense which could have a material impact on our financial position and results of operations
We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the tax position The tax benefits recognized in our financial statements from such positions are measured as the largest benefit that has a greater than 50 likelihood of being realized upon ultimate resolution The unrecognized tax benefits may reduce our effective tax rate if recognized Interest and if applicable penalties related to unrecognized tax benefits are recorded in the provision for income taxes Stranded income tax effects in accumulated other comprehensive loss are released on an item by item basis based on when the applicable derivative is recognized in earnings
Our non U S dollar functional currency subsidiaries translate their assets and liabilities denominated in their functional currency to U S dollars at current rates of exchange in effect at the balance sheet date and revenues and expenses are translated at average rates prevailing throughout the period The resulting gains and losses from translation are included as a component of accumulated other comprehensive loss Transaction gains and losses and remeasurement of assets and liabilities denominated in currencies other than an entity s functional currency are included in other expense income net in our consolidated statements of operations
1 Includes realized and unrealized gains and losses on derivative currency forward and option contracts not designated as hedging instruments as well as the ineffective portion of certain interest rate swap contracts that have been de designated from hedge accounting For contracts not designated as hedging instruments we realized gains losses of 2 706 1 078 and 39 133 respectively for the fiscal years ended June 30 2025 2024 and 2023 Refer to Note 4 for additional details relating to our derivative contracts
2 Currency related gains losses net primarily relates to significant non functional currency intercompany financing relationships that we may change at times and are subject to currency exchange rate volatility In addition during all fiscal years presented we had certain cross currency swaps designated as cash flow hedges which hedge the remeasurement of certain intercompany loans refer to Note 4 for additional details relating to these cash flow hedges
attributable to Cimpress plc by the weighted average number of ordinary shares outstanding for the respective period Diluted net loss per share attributable to Cimpress plc gives effect to all potentially dilutive securities including share options restricted share units RSUs warrants and performance share units PSUs if the effect of the securities is dilutive using the treasury stock method Awards with performance or market conditions are included using the treasury stock method only if the conditions would have been met as of the end of the reporting period and their effect is dilutive
1 In the periods in which a net loss is recognized the impact of share options PSUs RSUs and warrants is excluded from shares used in computed diluted net income loss per share as it is anti dilutive Any equity awards that have a performance condition are not included in dilutive or anti dilutive shares until the performance condition would have been met as of the end of the reporting period
2 On May 1 2020 we entered into a financing arrangement which included 7 year warrants to purchase 1 055 377 of our ordinary shares with a strike price of 60 that have a potentially dilutive impact on our weighted average shares outstanding For the years ended June 30 2025 and 2024 the average market price of our ordinary shares was higher than the strike price of the warrants therefore the weighted average dilutive effect of the warrants were 147 329 and 220 668 respectively For the year ended June 30 2023 the average share price was below the strike price for the full fiscal year therefore the total 1 055 377 outstanding warrants were considered anti dilutive
Compensation expense for all share based awards is measured at fair value on the date of grant and recognized over the requisite service period We recognize the impact of forfeitures as they occur The fair value of share options is determined using the Black Scholes valuation model The fair value of RSUs is determined based on the quoted price of our ordinary shares on the date of the grant Such value is recognized ratably as expense over the requisite service period or on an accelerated method for awards with a performance condition
We have issued PSUs that include a service condition as well as a market or performance condition and we calculate the fair value at grant which is fixed throughout the vesting period For PSUs that include a market condition the fair value is determined using a Monte Carlo simulation valuation model and the expense recognized over the requisite service period will not be reversed if the market condition is not achieved For PSUs that include a performance condition compensation cost is recorded if it is probable that the performance condition will be achieved The fair value is determined based on the quoted price of our ordinary shares on the date of the grant and our estimated attainment percentage of the related performance condition The related expense is recognized using the accelerated expense attribution method over the requisite service period for each separately vesting portion of the award Until the performance condition is measured changes in the estimated attainment percentages may cause expense volatility since a cumulative expense adjustment will be recognized in the period a change occurs
Compensation expense associated with a sabbatical leave or other similar benefit arrangements is accrued over the requisite service period during which an employee earns the benefit net of estimated forfeitures and is included in other liabilities on our consolidated balance sheets
We monitor the creditworthiness of our customers to which we grant credit terms in the normal course of business We do not have any customers that accounted for greater than 10 of our accounts receivable as of June 30 2025 and 2024 We do not have any customers that accounted for greater than 10 of our revenue for the years ended June 30 2025 2024 and 2023
We maintain an allowance for doubtful accounts for potential credit losses based upon specific customer accounts and historical trends and such losses to date in the aggregate have not materially exceeded our expectations
We determine if an arrangement contains a lease at contract inception We consider an arrangement to be a lease if it conveys the right to control an identifiable asset for a period of time Costs for operating leases that include incentives such as payment escalations or rent abatement are recognized on a straight line basis over the term of the lease Additionally inducements received are treated as a reduction of our costs over the term of the agreement Leasehold improvements are capitalized at cost and amortized over the shorter of their expected useful life or the lease term excluding renewal periods
Lease right of use ROU assets and liabilities for operating and finance leases are recognized based on the present value of the future lease payments over the lease term at lease commencement date As most of our leases do not provide an implicit interest rate we use our incremental borrowing rate based on the information available at the lease commencement date Our incremental borrowing rate approximates the interest rate on a collateralized basis for the economic environments where our leased assets are located and is established by considering the credit spread associated with our existing debt arrangements as well as observed market rates for instruments with a similar term to that of the lease payments ROU assets also include any lease payments made at or before the lease commencement as well as any initial direct costs incurred Lease incentives received from the lessor are recognized as a reduction to the ROU asset
Our initial determination of the lease term is based on the facts and circumstances that exist at lease commencement The lease term may include the effect of options to extend or terminate the lease when it is reasonably certain that those options will be exercised We consider these options reasonably certain to be exercised based on our assessment of economic incentives including the fair market rent for equivalent properties under similar terms and conditions costs of relocating availability of comparable replacement assets and any related disruption to operations that would be experienced by not renewing the lease
Finance leases are accounted for as an acquisition of an asset and incurrence of an obligation Assets held under finance leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease and amortized over the useful life of the asset The corresponding finance lease obligation is recorded at the present value of the minimum lease payments at inception of the lease
Operating leases are included in operating lease assets and current and non current operating lease liabilities in the consolidated balance sheets Finance lease assets are included in property plant and equipment net and the related liabilities are included in other current liabilities and other liabilities in the consolidated balance sheets
Variable lease payments are excluded from the operating lease assets and liabilities and are recognized as expense in the period in which the obligation is incurred Variable lease payments primarily include index based rent escalation associated with some of our real estate leases as well as property taxes and common area maintenance payments for most real estate leases which are determined based on the costs incurred by the lessor We also make variable lease payments for certain print equipment leases that are determined based on production volumes
We have subleased a small amount of our equipment and real estate lease portfolio to third parties making us the lessor Most of these subleases meet the criteria for operating lease classification and the related sublease income is recognized on a straight line basis over the lease term within the consolidated statement of operations To a lesser extent we have leases in which we are the lessees and we classify the leases as finance leases which have been subleased under similar terms resulting in the sublease classification as direct financing leases For direct financing leases we recognize a sublease receivable within prepaid expenses and other current assets and other assets in the consolidated balance sheets
In November 2023 the FASB issued Accounting Standards Update No 2023 07 Segment Reporting Topic 280 Improvements to Reportable Segment Disclosures ASU 2023 07 which requires enhanced disclosures about significant segment expenses and introduces a reconciliation between segment revenue and segment profitability metrics As required we ve adopted the standard in the current fiscal year and incorporated all expanded disclosure requirements in Note 14
In December 2023 the FASB issued Accounting Standards Update No 2023 09 Income Taxes Topic 740 Improvements to Income Tax Disclosures ASU 2023 09 which provides authoritative guidance about expanded annual disclosure requirements for the income tax rate reconciliation and income taxes paid by jurisdiction The expanded disclosure requirements will be effective starting with our annual report for the fiscal year ending June 30 2026 Early adoption is permitted but we did not early adopt this standard
In November 2024 the FASB issued Accounting Standards Update No 2024 03 Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures Subtopic 220 40 Disaggregation of Income Statement Expenses ASU 2024 03 which provides authoritative guidance around the expanded disclosure requirements for disaggregation of each relevant expense caption on the income statement within the footnotes as well as a qualitative description of the amounts remaining in these relevant expense captions that are not separately disaggregated quantitatively in order to improve transparency and provide more detailed insight into the nature of expenses reported The expanded disclosure requirements will be effective starting with our annual report for the fiscal year ending June 30 2027 Early adoption is permitted but we do not intend to early adopt this standard
We use a three level valuation hierarchy for measuring fair value and include detailed financial statement disclosures about fair value measurements The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date The three levels are defined as follows
Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets quoted prices for identical or similar assets in markets that are not active and inputs that are observable for the asset or liability either directly or indirectly for substantially the full term of the financial instrument
A financial instrument s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy
The valuations of the derivatives intended to mitigate our interest rate and currency risks are determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each instrument This analysis utilizes observable market based inputs including interest rate curves interest rate volatility or spot and forward exchange rates and reflects the contractual terms of these instruments including the period to maturity We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparties nonperformance risk in the fair value measurements In adjusting the fair value of our derivative contracts for the effect of nonperformance risk we have considered the impact of netting and any applicable credit enhancements
Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy the credit valuation adjustments associated with our derivatives utilize Level 3 inputs such as estimates of current credit spreads to appropriately reflect both our own nonperformance risk and the respective counterparties nonperformance risk in the fair value measurement However as of June 30 2025 we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives As a result we have determined that our derivative valuations in their entirety are classified in Level 2 in the fair value hierarchy
Our held to maturity marketable securities are recognized at an amortized cost As of June 30 2025 we had no held to maturity securities The following is a summary of the net carrying amount unrealized losses and fair value of held to maturity securities by type and contractual maturity as of June 30 2024 The fair value was determined using quoted prices for identical assets in active markets which fall into Level 1 under the fair value hierarchy We did not record an allowance for credit losses and impairments for these marketable securities during any period presented
As of June 30 2025 and June 30 2024 the carrying amounts of our cash and cash equivalents accounts receivable accounts payable and other current liabilities approximated their estimated fair values As of June 30 2025 and June 30 2024 the carrying value of our debt excluding debt issuance costs and debt premiums and discounts was
1 604 513 and 1 616 607 respectively and the fair value was 1 582 599 and 1 617 364 respectively Our debt at June 30 2025 includes variable rate debt instruments indexed to Term SOFR that reset periodically as well as fixed rate debt instruments The estimated fair value of our debt was determined using available market information based on recent trades or activity of debt instruments with substantially similar risks terms and maturities which fall within Level 2 under the fair value hierarchy
We use derivative financial instruments such as interest rate swap contracts cross currency swap contracts and currency forward and option contracts to manage interest rate and foreign currency exposures Derivatives are recorded in the consolidated balance sheets at fair value If a derivative is designated as a cash flow hedge or net investment hedge then the change in the fair value of the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified into earnings in the period the hedged forecasted transaction affects earnings We previously had designated an intercompany loan as a net investment hedge and any unrealized currency gains and losses on the loan are recorded in accumulated other comprehensive loss Additionally any ineffectiveness associated with an effective and designated hedge is recognized within accumulated other comprehensive loss The change in the fair value of derivatives not designated as hedges is recognized directly in earnings as a component of other expense income net
We enter into interest rate swap contracts to manage variability in the amount of our known or expected cash payments related to a portion of our debt Our objective in using interest rate swaps is to add stability to interest expense and manage our exposure to interest rate movements We designate our interest rate swaps as cash flow hedges Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed rate payments over the life of the contract agreements without exchange of the underlying notional amount Realized gains or losses from interest rate swaps are recorded in earnings as a component of interest expense net Amounts reported in accumulated other comprehensive loss related to interest rate swap contracts will be reclassified to interest expense net as interest payments are accrued or made on our variable rate debt
As of June 30 2025 we estimate that 3 084 of income will be reclassified from accumulated other comprehensive loss to interest expense net during the twelve months ending June 30 2026 As of June 30 2025 we had eight effective outstanding interest rate swap contracts that were indexed to Term or Daily SOFR Our interest rate swap contracts have varying start and maturity dates through April 2028
1 Based on contracts outstanding as of June 30 2025 the notional value of our contracted interest rate swaps accruing interest will fluctuate between 250 000 and 380 000 through April 2028 based on layered start dates and maturities
We execute cross currency swap contracts designated as net investment hedges Cross currency swaps involve an initial receipt of the notional amount in the hedged currency in exchange for our reporting currency based on a contracted exchange rate Subsequently we receive fixed rate payments in our reporting currency in exchange for fixed rate payments in the hedged currency over the life of the contract At maturity the final exchange involves the receipt of our reporting currency in exchange for the notional amount in the hedged currency
Cross currency swap contracts designated as net investment hedges are executed to mitigate our currency exposure of net investments in subsidiaries that have reporting currencies other than the U S dollar As of June 30 2025 we had one outstanding cross currency swap contract designated as a net investment hedge with a total notional amount of 254 547 maturing during September 2028 We entered into the cross currency swap contract to hedge the risk of changes in the U S dollar equivalent value of a portion of our net investment in a consolidated subsidiary that has the Euro as its functional currency Amounts reported in accumulated other comprehensive loss are recognized as a component of our cumulative translation adjustment
We execute currency forward and option contracts in order to mitigate our exposure to fluctuations in various currencies against our reporting currency the U S dollar These contracts or intercompany loans may be designated as hedges to mitigate the risk of changes in the U S dollar equivalent value of a portion of our net investment in consolidated subsidiaries
that have the Euro as their functional currency The impact of net investment hedges is recognized in accumulated other comprehensive loss as a component of translation adjustments net of hedges and would only be reclassified to earnings if the hedged subsidiaries were no longer consolidated entities
We have elected to not apply hedge accounting for all other currency forward and option contracts During the years ended June 30 2025 2024 and 2023 we experienced volatility within other expense income net in our consolidated statements of operations from unrealized gains and losses on the mark to market of outstanding currency forward and option contracts We expect this volatility to continue in future periods for contracts for which we do not apply hedge accounting Additionally since our hedging objectives may be targeted at non GAAP financial metrics that exclude non cash items such as depreciation and amortization we may experience volatility in our GAAP results as a result of our currency hedging program
In most cases we enter into these currency derivative contracts for which we do not apply hedge accounting in order to address the risk for certain currencies where we have a net exposure to adjusted EBITDA a non GAAP financial metric Adjusted EBITDA exposures are our focus for the majority of our mark to market currency forward and option contracts because a similar metric is referenced within the debt covenants of our amended and restated senior secured credit agreement refer to Note 9 for additional information about this agreement Our most significant net currency exposures by volume are the Euro and the British Pound GBP Our adjusted EBITDA hedging approach results in addressing nearly all of our forecasted Euro and GBP net exposures for the upcoming twelve months with a declining hedged percentage out to twenty four months For certain other currencies with a smaller net impact we hedge nearly all of our forecasted net exposures for the upcoming six months with a declining hedge percentage out to fifteen months
As of June 30 2025 we had the following outstanding currency derivative contracts that were not designated for hedge accounting and were primarily used to hedge fluctuations in the U S dollar value of forecasted transactions or balances denominated in Australian Dollar Canadian Dollar Czech Koruna Danish Krone Euro GBP Indian Rupee Mexican Peso New Zealand Dollar Norwegian Krone Philippine Peso Swiss Franc and Swedish Krona
The table below presents the fair value of our derivative financial instruments as well as their classification on the balance sheet as of June 30 2025 and June 30 2024 Our derivative asset and liability balances fluctuate with interest rate and currency exchange rate volatility
The following table presents the effect of our derivative financial instruments designated as hedging instruments and their classification within comprehensive loss net of tax for the years ended June 30 2025 2024 and 2023
The following table presents the adjustment to fair value recorded within the consolidated statements of operations for the years ended June 30 2025 2024 and 2023 for derivative instruments for which we did not elect hedge accounting
2 As of June 30 2025 and 2024 the translation adjustment is inclusive of both realized and unrealized effects of our net investment hedges Losses Gains on currency forward and swap contracts net of tax of 9 406 and 15 042 have been included in accumulated other comprehensive loss as of June 30 2025 and 2024 respectively Intercompany loan hedge gains of 42 159 and 48 270 net of tax have been included in accumulated other comprehensive loss as of June 30 2025 and 2024 respectively
1 In each of the fiscal years 2025 and 2024 we acquired an immaterial business that is included in our PrintBrothers reportable segment which resulted in the recognition of goodwill of 1 121 and 2 701 respectively
We considered the timing of our most recent fair value assessments associated headroom actual operating results as compared to the forecasts used to assess fair value the current long term forecasts for each reporting unit and the general economic environment of each reporting unit After performing this qualitative assessment we determined that there was no indication the carrying values for any of these reporting units exceeded their respective fair values We concluded that sufficient headroom between the most recent estimated fair value and carrying value existed Therefore no quantitative goodwill impairment test was required for any of our reporting units and there were no events that caused us to update our annual impairment test
For our annual goodwill impairment test date of May 31 2024 after performing the initial qualitative assessment we determined that there was no indication the carrying values for six of our eight reporting units exceeded their respective fair values For the two remaining reporting units which included Exaprint which is part of The Print Group reportable segment and BuildASign which is included in the All Other Businesses reportable segment we performed a quantitative goodwill impairment test that compared the estimated fair value to carrying value We used the income approach specifically the discounted cash flow method to derive the fair value As required prior to performing the quantitative goodwill impairment test for the two reporting units mentioned above we first evaluated the recoverability of long lived assets and concluded that no impairment of long lived assets existed For both reporting units we concluded that sufficient headroom between the estimated fair value and carrying value existed and that no goodwill impairment was identified
During the year ended June 30 2023 we concluded that an impairment existed in one of our reporting units which is included in our All Other Businesses reportable segment The impairment was driven in part by declines in revenue growth rates and lower near term cash flow forecasts We recognized an impairment charge of 5 609 using a WACC of 17 0 resulting in a post impairment goodwill balance of 8 824 at June 30 2023
Acquired intangible assets amortization expense for the years ended June 30 2025 2024 and 2023 was 19 062 31 443 and 46 854 respectively Estimated intangible assets amortization expense for each of the five succeeding fiscal years and thereafter is as follows
1 The increase in short term and long term derivative liabilities is primarily due to the increase in unrealized losses associated with forward contracts that are intended to mitigate our exposure to fluctuations in various currencies against our reporting currency the U S dollar The increase in unrealized losses is primarily due to the weakening of the U S dollar against certain currencies including the Euro and GBP which are our most significant currency exposures Refer to Note 4 for additional details relating to our derivative contracts
2 During the current fiscal year the mandatorily redeemable noncontrolling interests were reclassified from long term liabilities to current liabilities since we were required to purchase the outstanding equity interests during fiscal year 2026
1 On September 26 2024 we completed a private placement of 525 000 in aggregate principal amount of 7 375 Senior Notes due 2032 We used the net proceeds of this offering plus cash on hand to redeem the 522 135 in aggregate principal amount of our 7 0 Senior Notes due 2026 and pay the associated interest and financing fees
Our various debt arrangements described below contain customary representations warranties and events of default As of June 30 2025 we were in compliance with all covenants in those debt contracts including our amended and restated senior secured credit agreement dated as of May 17 2021 as further amended from time to time the Restated Credit Agreement and the indenture governing our 2032 Notes
On December 16 2024 we amended our Restated Credit Agreement to refinance our Term Loan B which consists of a tranche denominated in U S dollars USD Tranche and as part of the amendment the size of the USD tranche was increased by 48 614 and those proceeds were used to fully repay the previously outstanding tranche denominated in Euros Euro Tranche The amendment reduced the interest rate margin of the USD Tranche by 50 basis points from Term SOFR plus 3 00 to Term SOFR plus 2 50
No other material changes were made to the terms of the Term Loan B or the Restated Credit Agreement and the maturity date of the Term Loan B is still May 17 2028 For the year ended June 30 2025 we recognized a loss on extinguishment of debt as part of this refinancing of 696
Borrowings under the Revolving Credit Facility bear interest at Term SOFR with a Term SOFR rate floor of 0 plus 2 25 to 3 00 depending on the Company s First Lien Leverage Ratio a net leverage calculation as defined in the Restated Credit Agreement
The Restated Credit Agreement contains covenants that restrict or limit certain activities and transactions by Cimpress and our subsidiaries including but not limited to the incurrence of additional indebtedness and liens certain fundamental organizational changes asset sales certain intercompany activities and certain investments and restricted payments including purchases of Cimpress plc s ordinary shares and payment of dividends In addition if any loans made under the Revolving Credit Facility are outstanding on the last day of any fiscal quarter then we are subject to a financial maintenance covenant that the First Lien Leverage Ratio calculated as of the last day of such quarter does not exceed 3 25 to 1 00
As of June 30 2025 the weighted average interest rate on outstanding borrowings under the Restated Credit Agreement was 6 43 inclusive of interest rate swap rates We are also required to pay a commitment fee for our Revolving Credit Facility on unused balances of 0 30 to 0 45 depending on our First Lien Leverage Ratio We have pledged the assets and or share capital of a number of our subsidiaries as collateral under our Restated Credit Agreement
On September 26 2024 we completed a private placement of 525 000 in aggregate principal amount of 7 375 senior unsecured notes due September 15 2032 the 2032 Notes We issued the 2032 Notes pursuant to a senior notes indenture dated as of September 26 2024 among Cimpress plc our subsidiary guarantors and U S Bank Trust Company as trustee the Indenture We used the net proceeds from the 2032 Notes together with cash on hand to redeem all of the outstanding 7 0 senior unsecured notes due 2026 the 2026 Notes at a redemption price equal to par of the principal amount to pay all accrued unpaid interest thereon and to pay all fees and expenses related to the redemption and offering For the year ended June 30 2025 we recognized a gain on the extinguishment of debt as part of this refinancing of 198
The 2032 Notes bear interest at a rate of 7 375 per annum and mature on September 15 2032 Interest on the 2032 Notes is payable semi annually on March 15 and September 15 of each year commencing on March 15 2025 to the holders of record of the 2032 Notes at the close of business on March 1 or September 1 respectively preceding such interest payment date
The 2032 Notes are senior unsecured obligations and rank equally in right of payment to all our existing and future senior unsecured debt and senior in right of payment to all of our existing and future subordinated debt The 2032 Notes are effectively subordinated to any of our existing and future secured debt to the extent of the value of the assets securing such debt Subject to certain exceptions each of our existing and future subsidiaries that is a borrower under or guarantees our senior secured credit facilities guarantees the 2032 Notes
The Indenture under which the 2032 Notes are issued contains various covenants including covenants that subject to certain exceptions limit our restricted subsidiaries ability to incur and or guarantee additional debt pay dividends repurchase shares or make certain other restricted payments enter into agreements limiting dividends and certain other restricted payments prepay redeem or repurchase subordinated debt grant liens on assets merge consolidate or transfer or dispose of substantially all of our consolidated assets sell transfer or otherwise dispose of property and assets and engage in transactions with affiliates
At any time prior to September 15 2027 we may redeem some or all of the 2032 Notes at a redemption price equal to 100 of the principal amount redeemed plus a make whole amount as set forth in the Indenture plus in each case accrued and unpaid interest and Additional Amounts as defined in the Indenture if any to but not including the redemption date In addition at any time prior to September 15 2027 Cimpress may on any one or more occasions redeem up to 40 of the original aggregate principal amount of the Notes with the net proceeds of certain equity offerings by Cimpress at a redemption price equal to 107 375 of the principal amount thereof plus accrued and unpaid interest and Additional Amounts if any which accrued and unpaid interest and Additional Amounts need not be funded with such proceeds to but not including the redemption date At any time on or after September 15 2027 Cimpress may redeem some or all of the Notes at the redemption prices specified in the Indenture plus accrued and unpaid interest and Additional Amounts if any to but not including the redemption date
In fiscal year 2020 in conjunction with our issuance of our 12 Senior Secured Notes due 2025 which we subsequently redeemed in fiscal year 2021 we also issued 7 year warrants to purchase 1 055 377 ordinary shares of Cimpress representing approximately 3 875 of our outstanding diluted ordinary shares at the time of issuance The warrants which currently remain outstanding are accounted for as equity as they are redeemable only in our own shares with an exercise price of 60 per share The warrants may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised
The fair value used for the warrants in this allocation was calculated using the Monte Carlo valuation model The valuation of the notes and warrants resulted in a carrying value allocated to the warrants of 22 432 which in addition to being accounted for as an equity instrument recorded in additional paid in capital was included as a discount to the 12 Senior Secured Notes
On November 25 2020 our shareholders approved our 2020 Equity Incentive Plan the 2020 Plan Upon approval we ceased granting new awards under any of our prior equity plans the 2016 Performance Equity Plan 2011 Equity Incentive Plan and 2005 Non Employee Directors Share Option Plan and we now grant all equity awards under the 2020 Plan Some awards previously granted under the former plans remain outstanding and are governed by their original terms
The 2020 Plan allows us to grant share options share appreciation rights restricted shares restricted share units other share based awards and dividend equivalent rights to our employees officers non employee directors consultants and advisors The maximum number of ordinary shares authorized for issuance under the 2020 Plan is 7 500 000 plus an additional number of shares equal to the number of PSUs outstanding under the 2016 Performance Equity Plan that expire terminate or are otherwise surrendered canceled or forfeited
2 211 747 ordinary shares were available for future awards under our 2020 Plan For PSUs where the performance condition has not been completed we assumed that we would issue the maximum potential ordinary shares based on the terms described below
During the prior fiscal year we issued PSUs the 2024 PSUs as part of our long term incentive program The 2024 PSUs include both a service and performance condition The performance condition for these awards was based on one year financial targets for fiscal year 2024 revenue adjusted EBITDA and unlevered free cash flow Actual shares issued for each grant could range from 0 to 160 of the number of 2024 PSUs granted based on the attainment of the performance condition
During the current fiscal year we issued PSUs the 2025 PSUs as part of our long term incentive program The 2025 PSUs include both a service and performance condition The performance condition for these awards is based on one year financial targets for fiscal year 2025 revenue adjusted EBITDA and unlevered free cash flow On May 23 2025 the Compensation Committee of Cimpress Board of Directors amended the terms of the 2025 PSUs to incorporate a minimum performance attainment of 60 subject to the Compensation Committee s discretion to account for non recurring items that previously had been 0 The change of terms impacted all 276 PSU grant recipients for the 2025 PSUs with awards outstanding as of the modification date The modification resulted in incremental compensation expense of 4 8 million from the awards for which estimated attainment as of the modification date was below 60 Actual shares issued for each grant will range from 60 to 160 of the number of 2025 PSUs granted based on the attainment of the performance condition subject to the Compensation Committee s discretion to account for non recurring items The final measurement of the performance condition will occur during the first quarter of fiscal year 2026
All other outstanding PSUs entitle the recipient to receive Cimpress ordinary shares between 0 and 250 of the number of units based upon service vesting requirements and the achievement of a compounded annual growth rate target based on Cimpress three year moving average share price PSU awards with a grant date prior to fiscal year 2020 and PSU awards granted before fiscal year 2025 to our Chief Executive Officer and Board of Directors are assessed for achievement annually in years 6 10 following the grant date and awards with a grant date in or after fiscal year 2020 and before fiscal year 2025 other than to the CEO and Board will be assessed annually for achievement in years 4 8 following the grant date
The weighted average fair value of PSUs granted during the fiscal years ended June 30 2025 2024 and 2023 was 80 80 70 21 and 17 61 respectively The total intrinsic value of PSUs outstanding as of June 30 2025 2024 and 2023 was 106 242 169 512 and 83 376 respectively The total intrinsic value of PSUs assumes that the performance condition is met at target however it is possible that a portion or all of these PSUs granted before fiscal year 2024 will not achieve the associated market condition As of June 30 2025 the number of shares subject to PSUs included in the table above assumes the issuance of one share for each PSU but based on the terms of each program as described above the actual issuance of shares could range from a minimum of 685 084 shares to a maximum of 4 623 522 shares
The fair value of an RSU award is equal to the fair market value of our ordinary shares on the date of grant and the expense is recognized on a straight line basis over the requisite service period RSUs generally vest over 4 years
The weighted average fair value of RSUs granted during the fiscal years ended June 30 2025 2024 and 2023 was 83 71 71 42 and 44 25 respectively The total intrinsic value of RSUs vested during the fiscal years ended June 30 2025 2024 and 2023 was 38 110 47 661 and 13 544 respectively
We have granted options to purchase ordinary shares at prices that are at least equal to the fair market value of the shares on the date the option is granted and that generally vest over four years with a contractual term of ten years
The fair value of each option award subject only to service period vesting is estimated on the date of grant using the Black Scholes option pricing model Use of a valuation model requires management to make certain assumptions with respect to inputs The expected volatility assumption is based upon historical volatility of our share price The expected term assumption is based on the contractual and vesting term of the option and historical experience The risk free interest rate is based on the U S Treasury yield curve with a maturity equal to the expected life assumed at the grant date
Total share based compensation costs were 58 879 65 584 and 42 122 for the years ended June 30 2025 2024 and 2023 respectively and we recognize the impact of forfeitures as they occur Share based compensation costs capitalized as part of software and website development costs were 3 808 3 160 and 1 879 for the years ended June 30 2025 2024 and 2023 respectively
For the years ended June 30 2025 2024 and 2023 we recognized tax benefits on total share based compensation costs as part of income tax expense benefit of 10 797 11 970 and 7 649 respectively For the years ended June 30 2025 2024 and 2023 tax benefit expense related to awards vested or exercised was 426 1 190 and 2 514 respectively
As of June 30 2025 there was 68 370 of total unrecognized compensation cost related to non vested share based compensation arrangements This cost is expected to be recognized over a weighted average period of 1 8 years
During the year ended June 30 2025 we repurchased 1 193 355 of our ordinary shares for 77 775 The shares were immediately retired after repurchase and therefore have been classified as authorized and unissued shares as of June 30 2025 The retirement of the repurchased ordinary shares resulted in a reduction in ordinary shares of 13 as well as a reduction to additional paid in capital and retained earnings of 16 608 and 61 154 respectively
We maintain certain government mandated and defined contribution plans throughout the world Our most significant defined contribution retirement plans are in the U S and comply with Section 401 k of the Internal Revenue Code We offer eligible employees in the U S the opportunity to participate in one of these plans and match most employees eligible contributions at various rates subject to service vesting as specified in each of the related plan documents
We currently have a defined benefit plan that covers substantially all of our employees in Switzerland Our plan is a government mandated retirement fund with benefits generally earned based on years of service and compensation during active employment however the level of benefits varies within the plan Eligibility is determined in accordance with local statutory requirements Under this plan both we and certain employees with annual earnings in excess of government determined amounts are required to make contributions into a fund managed by an independent investment fiduciary Employer contributions must be in an amount at least equal to the employee s contribution Minimum employee contributions are based on the respective employee s age salary and gender As of June 30 2025 and 2024 the plan had an unfunded net pension obligation of approximately 1 988 and 1 426 respectively and plan assets which totaled approximately 7 494 and 5 800 respectively For the years ended June 30 2025 2024 and 2023 we recognized expense totaling 423 438 and 282 respectively related to our plan
The effective tax rate reconciliation uses the U S statutory tax rate of 21 instead of the 12 5 statutory tax rate of Ireland our country of domicile as the U S is one of our most significant operating jurisdictions in terms of revenue manufacturing and personnel and management believes it is more meaningful to the readers of the financial statements
For the year ended June 30 2025 our effective tax rate was above our U S federal statutory tax rate primarily due to a change in estimate for our Swiss valuation allowance on Swiss deferred tax assets related to Swiss tax reform benefits recognized in fiscal year 2020 During the fourth quarter of 2025 we recognized tax expense of 26 804 to adjust the partial valuation allowance in Switzerland to reflect the current estimated usage of these tax assets We considered all available evidence including the near term impact of recent product mix shifts in the Vista segment the expectation of the timing of future taxable income and the expiration of the tax assets
This is compared to a tax benefit of 105 765 in the year ended June 30 2024 to partially release the full valuation allowance previously recorded in the quarter ended December 31 2022 As some of these tax assets will expire prior to when they can be used a partial valuation allowance remained against those expected to expire unused The prior year release was based on cumulative income in Switzerland current period and forecasted profits resulting in the ability to utilize some of these tax assets prior to their expiration
In addition we had non deductible interest expense and losses in certain jurisdictions for which we cannot recognize a tax benefit The jurisdictions that have the most significant impact to our non U S tax provision include Canada Germany India Ireland Italy the Netherlands Spain and Switzerland The applicable tax rates in these
jurisdictions range from 12 5 to 30 The total tax rate impact from operating in non U S jurisdictions is included in the line Tax rate differential on non U S earnings in the above tax rate reconciliation table
For the year ended June 30 2025 our effective tax rate was 86 7 as compared to the prior year effective tax rate of 38 4 The increase in our effective tax rate as compared to the prior year is primarily due to changes in the Swiss valuation allowance year over year as discussed above Our fiscal year 2024 effective tax rate was higher than fiscal year 2023 primarily due to pre tax income for the year ended June 30 2024 as compared to a pre tax loss for the year ended June 30 2023 and changes in the Swiss valuation allowance year over year
As of June 30 2025 we had a deferred tax asset of 141 872 gross of valuation allowance related to Swiss tax amortizable goodwill During the year ended June 30 2025 the Swiss tax amortizable goodwill deferred tax asset increased due to currency exchange rate changes offset by partial utilization
In assessing the realizability of deferred tax assets we consider whether it is more likely than not that some or all of the deferred tax assets will not be realized We have recorded a partial valuation allowance of 78 911 against the Swiss tax amortizable goodwill deferred tax asset which we can only benefit from through calendar year 2029 under our Swiss tax ruling In addition we have recorded valuation allowances of 51 300 against deferred tax assets related to tax losses in certain jurisdictions mainly Australia Bermuda Brazil Cyprus France Ireland Japan and the United Kingdom 29 796 against interest limitation carryforwards mainly the Netherlands and the U S and 31 339 against Irish foreign tax credits for which management has determined that it is more likely than not that these will not be realized Many of the tax losses the interest limitation carryforwards and the foreign tax credit carryforwards do not expire but management has determined it is more likely than not that these will not be utilized We will continue to assess the realization of the deferred tax assets based on operating results on a quarterly basis
Amount is primarily related to the partial increase of the Swiss valuation allowance losses in certain jurisdictions mainly Bermuda and Brazil and interest limitation carryforwards in certain jurisdictions mainly the U S offset by decreased Irish foreign tax credit carryforwards tax loss expirations in certain jurisdictions mainly Japan and U S capital loss expirations
2 Amount is primarily related to increased deferred tax assets on non U S net operating losses Irish foreign tax credits and Swiss tax amortizable goodwill due to currency exchange rate changes and unrealized losses on derivative financial instruments included in accumulated other comprehensive loss
that expire on various dates from fiscal year 2033 through fiscal year 2045 or with unlimited carryforward We also had tax effected non U S net operating loss carryforwards of 57 873 with amounts expiring on various dates through fiscal year 2035 or having unlimited carryforward In addition we had 29 165 of tax credit carryforwards primarily related to U S federal and state research and development credits which expire on various dates beginning in fiscal year 2030 or having unlimited carryforward Lastly we had 31 339 of Irish foreign tax credits with unlimited carryforward The benefits of these carryforwards are dependent upon the generation of taxable income in the jurisdictions in which they arose
On July 4 2025 President Trump signed into law the One Big Beautiful Bill Act the Act which makes permanent several of the provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025 Among other provisions the Act reinstates 100 bonus depreciation immediate expensing of U S research and development costs and modifies the calculation for the interest expense limitation under U S Internal Revenue Code 163 j We are currently evaluating the full effects of the legislation but do not believe it will have a material impact on our financial statements
We consider the following factors among others in evaluating our plans for indefinite reinvestment of our subsidiaries earnings i the forecasts budgets and financial requirements of both our parent company and its subsidiaries both for the long term and for the short term ii the ability of Cimpress plc to fund its operations and obligations with earnings from other businesses within the global group without incurring substantial tax costs and iii the tax consequences of any decision to reinvest earnings of any subsidiary As of June 30 2025 no tax provision has been made for 93 756 of undistributed earnings of certain of our subsidiaries as these earnings are considered indefinitely reinvested If in the future we decide to repatriate the undistributed earnings from these subsidiaries in the form of dividends or otherwise we could be subject to withholding taxes payable in the range of 19 500 to 20 500 at that time A cumulative deferred tax liability of 9 045 has been recorded attributable to undistributed earnings that we have deemed are not indefinitely reinvested The remaining undistributed earnings of our subsidiaries are not deemed to be indefinitely reinvested and can be repatriated with no tax cost Accordingly there has been no provision for income or withholding taxes on these earnings
For the year ended June 30 2025 the amount of unrecognized tax benefits exclusive of interest that if recognized would impact the effective tax rate is 375 We recognize interest and if applicable penalties related to unrecognized tax benefits in income tax expense The interest and penalties recognized as of years ended June 30 2025 2024 and 2023 were 17 2 394 and 1 924 respectively It is reasonably possible that a further change in unrecognized tax benefits in the range of 350 to 450 may occur within the next twelve months related to the settlement of one or more audits or the lapse of applicable statutes of limitations We believe we have appropriately provided for all tax uncertainties
We conduct business in a number of tax jurisdictions and as such are required to file income tax returns in multiple jurisdictions globally The years 2014 through 2025 remain open for examination by the United States Internal Revenue Service and the years 2015 through 2025 remain open for examination in the various states and non U S tax jurisdictions in which we file tax returns
We are currently under income tax audit in certain jurisdictions globally We believe that our income tax reserves are adequately maintained taking into consideration both the technical merits of our tax return positions and ongoing developments in our income tax audits However the final determination of our tax return positions if audited is uncertain and therefore there is a possibility that final resolution of these matters could have a material impact on our results of operations or cash flows
For some of our subsidiaries we own a controlling equity stake and a third party or key members of the business management team own a minority portion of the equity These noncontrolling interests span multiple businesses and reportable segments
1 Accretion of redeemable noncontrolling interests to redemption value recognized in retained earnings is the result of changes in the estimated redemption amount to the extent increases do not exceed the estimated fair value Any change in the estimated redemption amount which exceeds the estimated fair value is recognized within net income attributable to noncontrolling interests
2 During fiscal year 2024 we identified an immaterial error in the initial purchase accounting related to the noncontrolling interest of a previously acquired business This was corrected in the prior period resulting in an increase to redeemable noncontrolling interests of 7 319 This adjustment was immaterial to the prior and current period financial statements
3 During fiscal year 2025 we completed the acquisition of an immaterial business that is part of our PrintBrothers reportable segment This represents the estimated fair value of the noncontrolling interest upon acquisition
4 During the current fiscal year we purchased 49 of the remaining equity interest in one of the smaller businesses previously acquired and included in our PrintBrothers reportable segment for a total purchase price of 4 579 which consisted of 4 058 of cash paid at closing and 521 of a deferred payment that is payable in fiscal year 2029
Our operating segments are based upon the manner in which our operations are managed and the availability of separate financial information reported internally to the Chief Executive Officer who is our Chief Operating Decision Maker CODM Our CODM manages our business primarily by reviewing consolidated results by segment as part of the quarterly reporting process using EBITDA to assess performance and allocate resources to our segments
Consists of the operations of our VistaPrint branded websites in North America Western Europe Australia New Zealand India and Singapore This business also includes our 99designs by Vista business which provides graphic design services VistaCreate for do it yourself DIY design our Vista x Wix partnership for small business websites and our Vista Corporate Solutions business which serves medium sized businesses and large corporations
Includes the results of druck at Printdeal and WIRmachenDRUCK a group of Upload Print businesses that serve graphic professionals throughout Europe primarily in Austria Belgium Germany the Netherlands and Switzerland
Includes the results of Easyflyer Exaprint Packstyle Pixartprinting and Tradeprint a group of Upload Print businesses that serve graphic professionals throughout Europe primarily in France Italy Spain and the United Kingdom During fiscal year 2025 Pixartprinting expanded their operations to the U S launching a new Pixartprinting branded website and opening a new production facility that started fulfilling orders in March 2025
For purposes of measuring and reporting our segment financial performance we implemented changes to the methodology used for inter segment transactions during the first quarter of fiscal 2025 These transactions occur when one Cimpress business chooses to buy from or sell to another Cimpress business Under the new approach a merchant business the buyer is cross charged the actual cost of fulfillment that includes product e g labor materials and overhead allocation and shipping costs A fulfiller business the seller receives inter segment revenue that includes the product costs plus a markup as well as the shipping costs The fulfiller profit is included in the fulfiller s segment results but eliminated from consolidated reporting through an inter segment EBITDA elimination
The new approach allows our merchant businesses to access the ultimate Cimpress cost of fulfillment for a given product and therefore that ultimate Cimpress cost can be used to determine pricing advertising spend and other operational decisions Prior to this change inter segment transactions were based on marked up pricing that resulted in the merchant business recognizing inter segment cost of goods sold that was equal to inter segment revenue that was recognized by the fulfiller business and as such there was no inter segment EBITDA elimination under our prior method We have recast all prior periods presented for segment revenue and segment EBITDA to ensure comparability with the current fiscal year These changes in methodology have no impact on our consolidated financial results
Central and corporate costs consist primarily of the team of software engineers that is building our mass customization platform shared service organizations such as global procurement technology services such as hosting and security administrative costs of our Cimpress India offices where numerous Cimpress businesses have dedicated business specific team members and corporate functions including our tax treasury internal audit legal sustainability corporate communications remote first enablement consolidated reporting and compliance investor relations capital allocation and the functions of our CEO and CFO These costs also include certain unallocated share based compensation costs
The expense value of our PSU awards is based on fair value and is required to be expensed on an accelerated basis In order to ensure comparability in measuring our businesses results we allocate the straight line portion of the fixed grant value to our businesses Any expense in excess of this amount as a result of the fair value measurement of the PSUs and the accelerated expense profile of the awards is recognized within central and corporate costs
Our definition of segment EBITDA is GAAP operating income excluding certain items such as depreciation and amortization expense recognized for contingent earn out related charges including the changes in fair value of contingent consideration and compensation expense related to cash based earn out mechanisms dependent upon continued employment share based compensation related to investment consideration certain impairment expense and restructuring charges We include insurance proceeds that are not recognized within operating income We do not allocate non operating income including realized gains and losses on currency hedges to our segment results
Revenue by segment is based on the business specific websites or sales channel through which the customer s order was transacted The following tables set forth revenue by reportable segment as well as disaggregation of revenue by major geographic region and reportable segment
The following tables include segment revenue and significant segment expenses by reportable segment as well as our reported measure of segment profit or loss EBITDA by reportable segment for the years ended June 30 2025 2024 and 2023 Total segment EBITDA shown in the tables below is prior to inter segment eliminations
1 For each reportable segment other operating expenses consists primarily of marketing and selling expense excluding advertising expenses technology and development expense and general and administrative expense
2 Other segment items primarily includes certain items excluded from our definition of segment EBITDA which includes expense recognized for contingent earn out related charges including the changes in fair value of contingent consideration and compensation expense related to cash based earn out mechanisms dependent upon continued employment share based compensation related to investment consideration certain impairment expense and restructuring charges
3 For the years ended June 30 2025 2024 and 2023 total segment EBITDA was 555 431 558 369 and 412 628 respectively In addition to the adjustments described above as part of other segment items total segment EBITDA excludes the impact of central and corporate costs which is not considered a reportable segment as well as the elimination of inter segment transactions which are included in the reconciliation to income loss before income taxes as outlined below
1 Includes the elimination of inter segment profit that relates to cross Cimpress transactions in which the merchant business is cross charged the actual cost of fulfillment and the fulfiller business receives a markup on the cost to fulfill the related orders These inter segment profits are eliminated at a consolidated level Refer to the discussion above for additional details related to the method for which one Cimpress business chooses to buy and sell to another Cimpress business
We lease certain machinery and plant equipment office space and production and warehouse facilities under non cancelable operating leases that expire on various dates through 2037 Our finance leases primarily relate to machinery and plant equipment Over the past three years we continually assessed our leased real estate footprint as a facet of our evolving remote first operating model for many of our employees which resulted in a decrease to our leased real estate portfolio over this period of time
We facilitate a voluntary supply chain finance program through a financial intermediary which provides certain suppliers the option to be paid by the financial intermediary earlier than the due date of the applicable invoice The decision to sell receivables due from us is at the sole discretion of both the suppliers and the financial institution Our responsibility is limited to making payment on the terms originally negotiated with each supplier regardless of whether a supplier participates in the program We are not a party to the agreements between the participating financial institution and the suppliers in connection with the program we do not receive financial incentives from the suppliers or the financial institution nor do we reimburse suppliers for any costs they incur for participating in the program There are no assets pledged as security or other forms of guarantees provided for the committed payment to the financial institution
All unpaid obligations to our supply chain finance provider are included in accounts payable in the consolidated balance sheets and payments we make under the program are reflected as a reduction to net cash provided by operating activities in the consolidated statements of cash flows The outstanding obligations with our supply chain finance provider that are included in accounts payable in our consolidated balance sheets as of June 30 2025 and 2024 were 64 854 and 62 848 respectively
We are not currently party to any material legal proceedings Although we cannot predict with certainty the results of litigation and claims to which we may be subject from time to time we do not expect the resolution of any of our current matters to have a material adverse impact on our consolidated results of operations cash flows or financial position For all legal matters at each reporting period we evaluate whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies We expense the costs relating to our legal proceedings as those costs are incurred
Restructuring costs include one time employee termination benefits acceleration of share based compensation write off of assets costs to exit loss making operations and other related costs including third party professional and outplacement services All restructuring costs are excluded from segment and adjusted EBITDA During the years ended June 30 2025 2024 and 2023 we recognized restructuring charges of 5 528 423 and 43 757 respectively
The restructuring charges recognized during the year ended June 30 2025 primarily included employee termination benefits related to cost reduction actions within our Vista reportable segment that resulted in expense of 5 103 An immaterial amount of restructuring charges were recognized across our National Pen and All Other reportable segment as well as our Central and corporate costs for similar cost reduction actions We expect an immaterial amount of restructuring expense during the first half of fiscal year 2026 as part of employee termination benefits that have ongoing service requirements that extend beyond statutorily required minimum periods
During the year ended June 30 2023 we recognized restructuring charges of 43 757 primarily due to decisions to reduce costs in our Vista business and central teams For the year ended June 30 2023 the restructuring charges consisted of 28 840 and 9 645 in our Vista business for the impairment of assets and central and corporate costs respectively In addition we recognized restructuring charges of 1 715 and 3 557 in our National Pen and All Other Businesses reportable segments which included employee termination benefits and the write off of certain assets
On November 8 2024 we repurchased 316 056 of our outstanding ordinary shares par value 0 01 per share from entities affiliated with Prescott General Partners LLC Prescott in a privately negotiated transaction at a price of 79 10 per share representing a discount of 1 78 to the closing price of our ordinary shares on November 6 2024 the FY25 Transaction
Vassalluzzo a Managing Member of Prescott serves as a member of Cimpress Board of Directors and Audit Committee In light of the foregoing the disinterested members of Cimpress Audit Committee reviewed the FY25 Transaction under our related person transaction policy and considered among other things Mr Vassalluzzo s and Prescott s interest in the FY25 Transaction the approximate dollar value of the FY25 Transaction and the purpose and the potential benefits to Cimpress of entering into the FY25 Transaction Based on these considerations the disinterested members of the Audit Committee concluded that the FY25 Transaction was in our best interest The FY25 Transaction was effected pursuant to the share repurchase program approved by Cimpress Board of Directors and announced on May 29 2024
During fiscal year 2024 we repurchased 300 000 of our outstanding ordinary shares par value 0 01 per share from The Spruce House Partnership LLC Spruce House in a privately negotiated transaction at a price of 97 50 per share representing a discount of 2 14 to the closing price of our ordinary shares on March 1 2024 the FY24 Transaction
Zachary Sternberg a Managing Member of Spruce House previously served as a member of Cimpress Board of Directors and Audit Committee at the time of the FY24 Transaction In light of the foregoing the disinterested members of Cimpress Audit Committee reviewed the FY24 Transaction under our related person transaction policy and considered among other things Mr Sternberg s and Spruce House s interest in the FY24 Transaction the approximate dollar value of the FY24 Transaction and the purpose and the potential benefits to Cimpress of entering into the FY24 Transaction Based on these considerations the disinterested members of the Audit Committee concluded that the FY24 Transaction was in our best interest The FY24 Transaction was effected pursuant to the share repurchase program approved by Cimpress Board of Directors in effect at the time
Our management with the participation of our chief executive officer and chief financial officer evaluated the effectiveness of our disclosure controls and procedures as of June 30 2025 The term disclosure controls and procedures as defined in Rules 13a 15 e and 15d 15 e under the Securities Exchange Act of 1934 or the Exchange Act means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded processed summarized and reported within the time periods specified in the SEC s rules and forms Disclosure controls and procedures include without limitation controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company s management including its principal executive and principal financial officers as appropriate to allow timely decisions regarding required disclosure Management recognizes that any controls and procedures no matter how well designed and operated can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures Based on the evaluation of our disclosure controls and procedures as of June 30 2025 our chief executive officer and chief financial officer concluded that as of such date our disclosure controls and procedures were effective at the reasonable assurance level
There were no significant changes in our internal control over financial reporting as defined in Rules 13a 15 f and 15d 15 f under the Exchange Act during the three months ended June 30 2025 that materially affected or are reasonably likely to materially affect our internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company Internal control over financial reporting is defined in Rules 13a 15 f and 15d 15 f promulgated under the Exchange Act as a process designed by or under the supervision of the company s chief executive officer and chief financial officer and effected by our Board of Directors management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
Our management assessed the effectiveness of our internal control over financial reporting as of June 30 2025 In making this assessment our management used the criteria set forth in the Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO Based on our assessment management concluded that as of June 30 2025 our internal control over financial reporting is effective based on criteria in Internal Control Integrated Framework 2013 issued by the COSO
PricewaterhouseCoopers LLP our independent registered public accounting firm has audited the effectiveness of our internal control over financial reporting as of June 30 2025 as stated in their report included on page
The information required by this item is incorporated by reference to the information in the sections captioned Information about our Directors and Executive Officers Corporate Governance Insider Trading Policy and Delinquent Section 16 a Reports contained in our definitive proxy statement for our 2025 Annual General Meeting of Shareholders which we refer to as our 2025 Proxy Statement
We have adopted a written code of business conduct and ethics that applies to all of our employees including our principal executive officer and principal financial and accounting officer and is available on our website at www cimpress com We did not waive any provisions of this code during the fiscal year ended June 30 2025 If we amend or grant a waiver under our code of business conduct and ethics that applies to our principal executive financial or accounting officers or persons performing similar functions we will post information about such amendment or waiver on our website at www cimpress com
The information required by this item is incorporated by reference to the information contained in the sections of our 2025 Proxy Statement captioned Compensation Discussion and Analysis Summary Compensation Tables Compensation of our Board of Directors and Compensation Committee Interlocks and Insider Participation
The information required by this item is incorporated by reference to the information contained in the sections of our 2025 Proxy Statement captioned Security Ownership of Certain Beneficial Owners and Management and Securities Authorized for Issuance Under Equity Compensation Plans
The information required by this item is incorporated by reference to the information contained in the sections of our 2025 Proxy Statement captioned Certain Relationships and Related Transactions and Corporate Governance
The information required by this item is incorporated by reference to the information contained in the section of our 2025 Proxy Statement captioned Independent Registered Public Accounting Firm Fees and Other Matters
Senior Notes Indenture including form of 7 375 senior notes due 2032 dated as of September 26 2024 between Cimpress plc certain subsidiaries of Cimpress plc as guarantors thereto and U S Bank Trust Company National Association as Trustee is incorporated by reference to our Current Report on Form 8 K filed with the SEC on September 30 2024
Form of Nonqualified Share Option Agreement under our 2005 Non Employee Directors Share Option Plan is incorporated by reference to our Quarterly Report on Form 10 Q for the fiscal quarter ended September 30 2009
Form of Performance Share Unit Agreement for employees and executives under our 2016 Performance Equity Plan is incorporated by reference to our Quarterly Report on Form 10 Q for the fiscal quarter ended December 31 2019
Form of Performance Share Unit Agreement for our Chief Executive Officer under our 2016 Performance Equity Plan is incorporated by reference to our Quarterly Report on Form 10 Q for the fiscal quarter ended December 31 2019
Form of Performance Share Unit Agreement for members of our Board of Directors under our 2016 Performance Equity Plan is incorporated by reference to our Quarterly Report on Form 10 Q for the fiscal quarter ended December 31 2019
Form of Performance Share Unit Agreement for employees and executives under our 2020 Equity Incentive Plan is incorporated by reference to our Quarterly Report on Form 10 Q for the fiscal quarter ended December 31 2020
Form of Performance Share Unit Agreement for our Chief Executive Officer under our 2020 Equity Incentive Plan is incorporated by reference to our Quarterly Report on Form 10 Q for the fiscal quarter ended December 31 2020
Form of Performance Share Unit Agreement for our Board of Directors under our 2020 Equity Incentive Plan is incorporated by reference to our Quarterly Report on Form 10 Q for the fiscal quarter ended December 31 2020
Form of Performance Based Restricted Share Unit Agreement based on fiscal year 2024 Cimpress financial performance under the 2020 Equity Incentive Plan is incorporated by reference to our Quarterly Report on Form 10 Q for the fiscal quarter ended September 30 2023
Form of Performance Based Restricted Share Unit Agreement based on fiscal year 2024 Vista financial performance under the 2020 Equity Incentive Plan is incorporated by reference to our Quarterly Report on Form 10 Q for the fiscal quarter ended September 30 2023
Form of Indemnification Agreement between Cimpress USA Incorporated and each director of Cimpress plc is incorporated by reference to our Current Report on Form 8 K filed with the SEC on January 29 2020
Second Amended and Restated Executive Retention Agreement dated as of February 20 2023 between Cimpress plc and Robert Keane is incorporated by reference to our Current Report on Form 8 K filed with the SEC on February 23 2023
Form of Amended and Restated Executive Retention Agreement between Cimpress plc and each of Sean Quinn and Maarten Wensveen is incorporated by reference to our Current Report on Form 8 K filed with the SEC on February 23 2023
Memorandum clarifying relative precedence of agreements dated May 6 2010 between Cimpress plc as successor to Cimpress N V and Robert Keane is incorporated by reference to our Annual Report on Form 10 K for the fiscal year ended June 30 2010
Employment Agreement dated May 5 2024 between Cimpress Puerto Rico LLC and Cimpress USA Incorporated as employers and Robert Keane as employee is incorporated by reference to our Annual Report on Form 10 K for the fiscal year ended June 30 2024
Employment Agreement between Cimpress Deutschland GmbH and Florian Baumgartner dated July 10 2019 is incorporated by reference to our Quarterly Report on Form 10 Q for the fiscal quarter ended March 31 2023
Amendment to Employment Agreement between Cimpress Deutschland GmbH and Florian Baumgartner dated January 1 2021 is incorporated by reference to our Quarterly Report on Form 10 Q for the fiscal quarter ended March 31 2023
Form of Invention and Non Disclosure Agreement between Cimpress and each of Robert Keane Sean Quinn and Maarten Wensveen is incorporated by reference to our Registration Statement on Form S 1 as amended
Form of Non Competition and Non Solicitation Agreement between Cimpress and each of Robert Keane Sean Quinn and Maarten Wensveen is incorporated by reference to our Registration Statement on Form S 1 as amended
Amendment and Restatement Agreement dated as of May 17 2021 among Cimpress plc Vistaprint Limited Cimpress Schweiz GmbH Vistaprint B V Vistaprint Netherlands B V and Cimpress USA Incorporated as borrowers the Borrowers the lenders named therein as lenders and JPMorgan Chase Bank N A as administrative agent for the lenders the Administrative Agent which amends and restates the Credit Agreement dated as of October 21 2011 as amended and restated as of February 8 2013 and as further amended and restated as of July 13 2017 as amended and restated by the Amendment and Restatement Agreement the Credit Agreement is incorporated by reference to our Current Report on Form 8 K filed with the SEC on May 19 2021
Amendment No 1 LIBOR Hardwire Transition Amendment dated as of June 13 2023 to the Credit Agreement is incorporated by reference to our Annual Report on Form 10 K for the fiscal year ended June 30 2023
Second Amended and Restated Guaranty dated as of July 13 2017 between Cimpress subsidiary guarantors named therein as guarantors the Subsidiary Guarantors and the Administrative Agent which amends and restates the Amended and Restated Guaranty dated as of February 8 2013 is incorporated by reference to our Current Report on Form 8 K filed with the SEC on July 14 2017
Amended and Restated Pledge and Security Agreement dated as of July 13 2017 between certain Borrowers and Subsidiary Guarantors on one hand and the Administrative Agent on the other hand which amends and restates the Pledge and Security Agreement dated as of February 8 2013 is incorporated by reference to our Current Report on Form 8 K filed with the SEC on July 14 2017
The following materials from this Annual Report on Form 10 K formatted in Inline Extensible Business Reporting Language iXBRL i Consolidated Balance Sheets ii Consolidated Statements of Operations iii Statements of Shareholder s Equity iv Consolidated Statements of Cash Flows and v Notes to Condensed Consolidated Financial Statements
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated

Company Name	CIMPRESS plc Vist SEC web-site
Category	COMMERCIAL PRINTING
Trading Symbol	CMPR