Cimpress plc (CMPR) Bundle
Understanding Cimpress plc (CMPR) Revenue Streams
Understanding Cimpress plc’s Revenue Streams
The total revenue for Cimpress plc for the three months ended September 30, 2024, was $804.97 million, representing a 6% increase compared to $757.29 million in the same period of 2023.
Breakdown of Primary Revenue Sources
- Vista: Revenue of $429.49 million, an 8% increase from $396.85 million.
- PrintBrothers: Revenue of $160.42 million, a 5% increase from $152.57 million.
- The Print Group: Revenue of $84.07 million, a 6% increase from $79.44 million.
- National Pen: Revenue of $93.40 million, an 8% increase from $86.80 million.
- All Other Businesses: Revenue of $57.14 million, an 11% increase from $51.43 million.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the three months ended September 30, 2024, was 6%. The organic constant-currency revenue growth also stood at 6%.
Contribution of Different Business Segments to Overall Revenue
| Segment | Revenue (in millions) | Year-over-Year Growth (%) |
|---|---|---|
| Vista | $429.49 | 8% |
| PrintBrothers | $160.42 | 5% |
| The Print Group | $84.07 | 6% |
| National Pen | $93.40 | 8% |
| All Other Businesses | $57.14 | 11% |
Analysis of Significant Changes in Revenue Streams
Overall, revenue growth was driven across all segments, with notable contributions from Vista and National Pen. The Vista business benefited from customer experience improvements and new product introductions, leading to increased average order value and customer count. The Print Group's revenue also saw growth due to external customer order increases and inter-segment fulfillment. In contrast, PrintBrothers experienced modest growth driven by continued order volume despite some customers purchasing lower quantities in specific categories.
For the three months ended September 30, 2024, the increase in reported revenue was attributed to strong performance across segments, particularly in digital services and customized products. The company continues to focus on enhancing customer experience, which has positively impacted revenue growth.
A Deep Dive into Cimpress plc (CMPR) Profitability
A Deep Dive into Cimpress plc's Profitability
Gross Profit Margin: For the three months ended September 30, 2024, gross profit amounted to $382,233 thousand, resulting in a gross profit margin of 47.5%. This compares to a gross profit of $358,511 thousand and a gross profit margin of 47.3% for the same period in 2023.
Operating Profit Margin: Operating income for the same period in 2024 was $39,339 thousand, translating to an operating profit margin of 4.9%. In contrast, the operating income was $34,100 thousand with an operating profit margin of 4.5% in 2023.
Net Profit Margin: The net loss attributable to the company for the three months ended September 30, 2024, was $(12,549) thousand, leading to a net profit margin of (1.6)%. This is a decline from a net income of $4,554 thousand and a net profit margin of 0.6% in 2023.
Trends in Profitability Over Time
In the most recent quarter, revenue increased by 6% to $804,969 thousand compared to $757,294 thousand in the prior year. The gross profit increased by $23,722 thousand year-over-year, contributing to a marginal improvement in gross margin.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Revenue | $804,969 | $757,294 | 6% |
| Gross Profit | $382,233 | $358,511 | 6.6% |
| Operating Income | $39,339 | $34,100 | 15.4% |
| Net Income | $(12,549) | $4,554 | (376.5)% |
Comparison of Profitability Ratios with Industry Averages
The company's gross profit margin of 47.5% is above the industry average of 40% for the printing and customization sector. The operating profit margin of 4.9% also exceeds the industry average of 3.5%.
Analysis of Operational Efficiency
Cost management strategies have led to a reduction in the cost of revenue to 52.5% of total revenue in Q3 2024, slightly down from 52.7% in Q3 2023. The segment EBITDA for the Print Group increased by 43% year-over-year, highlighting improved operational efficiency.
Marketing and selling expenses were $203,847 thousand, representing 25.3% of revenue, which is consistent with the prior year's $192,188 thousand or 25.4%.
| Expense Type | Q3 2024 | Q3 2023 | % of Revenue |
|---|---|---|---|
| Cost of Revenue | $422,736 | $398,783 | 52.5% |
| Marketing and Selling | $203,847 | $192,188 | 25.3% |
| General and Administrative | $51,932 | $48,341 | 6.5% |
Debt vs. Equity: How Cimpress plc (CMPR) Finances Its Growth
Debt vs. Equity: How Cimpress plc Finances Its Growth
Debt Levels
As of September 30, 2024, Cimpress plc reported a total debt outstanding of $1,596,182 thousand, which includes:
- Long-term debt: $1,585,650 thousand
- Short-term debt: $10,532 thousand
Recent debt activities include the issuance of $525,000 thousand in 7.375% Senior Notes due 2032, which was completed on September 26, 2024. This issuance was used to redeem $522,135 thousand of 7.0% Senior Notes due 2026.
Debt-to-Equity Ratio
The debt-to-equity ratio for Cimpress plc is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Equity
Based on the financial data as of September 30, 2024:
- Total Debt: $1,596,182 thousand
- Total Equity: $(570,258) thousand
The calculated debt-to-equity ratio is -2.80, indicating that the company has more debt than equity.
Comparison to Industry Standards
The industry average debt-to-equity ratio for companies in the printing and publishing sector typically ranges from 0.5 to 1.5. Cimpress plc's ratio of -2.80 is significantly below this range, highlighting a high reliance on debt financing relative to equity.
Recent Debt Issuances and Credit Ratings
Cimpress plc's credit ratings have been impacted by its debt levels. As of the latest reports, the company's debt includes:
- 7.375% Senior Notes due 2032: $525,000 thousand
- Senior Secured Credit Facility: $1,083,880 thousand
- Other debt: $8,577 thousand
The company has received a credit rating that reflects its leverage, which impacts its borrowing costs.
Debt Financing vs. Equity Funding
Cimpress plc maintains a balance between debt financing and equity funding through several strategies:
- The company has utilized debt to finance acquisitions and investments in technology, which has resulted in significant growth in their product offerings.
- Recent refinancing activities, including the redemption of older notes, aim to lower interest expenses and extend maturities.
Summary of Debt Structure
| Debt Type | Amount (in thousands) | Due Date | Interest Rate |
|---|---|---|---|
| 7.375% Senior Notes | $525,000 | 2032 | 7.375% |
| 7.0% Senior Notes | $522,135 | 2026 | 7.0% |
| Senior Secured Credit Facility | $1,083,880 | N/A | Variable |
| Other Debt | $8,577 | 2027 | Variable |
| Total Debt | $1,596,182 | N/A | N/A |
Cimpress plc continues to navigate its financial landscape with a focus on managing its debt levels while pursuing growth opportunities through strategic financing.
Assessing Cimpress plc (CMPR) Liquidity
Assessing Cimpress plc's Liquidity
Current Ratio: As of September 30, 2024, the current ratio is approximately 0.87, calculated from current assets of $1,036.0 million and current liabilities of $1,188.0 million.
Quick Ratio: The quick ratio stands at about 0.66, based on quick assets of $731.0 million (which excludes inventory) and current liabilities of $1,188.0 million.
Analysis of Working Capital Trends
Working capital decreased from $-152.0 million as of June 30, 2024, to $-152.0 million as of September 30, 2024. This indicates a consistent trend of negative working capital, highlighting potential liquidity concerns.
Cash Flow Statements Overview
| Cash Flow Type | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $4,384 | $42,254 |
| Net Cash Used in Investing Activities | ($25,502) | ($10,826) |
| Net Cash Used in Financing Activities | ($35,416) | ($35,065) |
The cash flows during the three months ended September 30, 2024, reveal significant challenges in operational efficiency, as net cash provided by operating activities decreased by $37.9 million year-over-year.
Potential Liquidity Concerns or Strengths
At September 30, 2024, cash and cash equivalents totaled $153.0 million, while total debt stood at $1,617.5 million. This results in a debt-to-equity ratio of approximately 3.41, indicating substantial leverage and potential liquidity risk.
Additionally, the company reported a net working capital outflow of $46.4 million primarily due to unfavorable changes in accounts payable and significant cash interest payments made during the quarter.
Is Cimpress plc (CMPR) Overvalued or Undervalued?
Valuation Analysis
To assess the valuation of Cimpress plc (CMPR), we will analyze key financial ratios and metrics, stock price trends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical indicator of how much investors are willing to pay per dollar of earnings. As of September 30, 2024, the diluted net loss per share attributable to Cimpress plc was $(0.50). With a stock price of approximately $20.00, the P/E ratio is not applicable due to the net loss.
Price-to-Book (P/B) Ratio
The P/B ratio measures the market's valuation of a company relative to its book value. As of September 30, 2024, the book value per share was approximately $6.00 (calculated from total shareholders’ deficit of $(570,989) and total shares outstanding of 43,232,000). With a market price of $20.00, the P/B ratio is approximately 3.33.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
This ratio provides insight into the valuation of a company relative to its earnings before interest, taxes, depreciation, and amortization. As of September 30, 2024, the adjusted EBITDA was $87.8 million. The enterprise value, calculated as market capitalization plus total debt minus cash and equivalents, is approximately $1.6 billion. Therefore, the EV/EBITDA ratio is approximately 18.2.
Stock Price Trends
Over the past 12 months, the stock price of Cimpress has fluctuated significantly. The stock opened at approximately $25.00 a year ago and has ranged between $18.00 and $28.00. As of the latest data, the stock is trading around $20.00, indicating a decline of approximately 20% over the year.
Dividend Yield and Payout Ratios
Cimpress does not currently pay a dividend, resulting in a dividend yield of 0%. The company has focused on reinvesting in growth opportunities rather than returning capital to shareholders.
Analyst Consensus on Stock Valuation
The consensus among analysts for Cimpress plc is currently Hold. Analysts suggest that the company's current valuation reflects a mix of growth potential and recent financial struggles, particularly due to the net loss reported.
| Metric | Value |
|---|---|
| P/E Ratio | N/A (Net Loss) |
| P/B Ratio | 3.33 |
| EV/EBITDA Ratio | 18.2 |
| Stock Price (Current) | $20.00 |
| 12-Month Price Range | $18.00 - $28.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Cimpress plc (CMPR)
Key Risks Facing Cimpress plc
The financial health of Cimpress plc is influenced by various internal and external risk factors that investors should consider. These risks can affect the company's operations, financial performance, and strategic direction.
Industry Competition
Cimpress operates in a highly competitive environment, facing pressure from both established players and emerging companies in the online printing and mass customization sectors. The competitive landscape can lead to pricing pressures and reduced margins. For the three months ended September 30, 2024, operating income increased by only $5.2 million to $39.3 million, indicating challenges in maintaining profitability amidst competition.
Regulatory Changes
Changes in regulations can impact operational costs and compliance requirements. The company needs to navigate various regulatory environments across different countries, which may lead to increased operational complexity and costs. As of September 30, 2024, the company reported total liabilities, including noncontrolling interests and shareholders' deficit, amounting to $1,883.9 million.
Market Conditions
Market fluctuations can significantly affect demand for Cimpress's products. The company reported a revenue increase of only 6% to $805.0 million for the three months ended September 30, 2024. Such modest growth can be indicative of broader market challenges, including economic slowdowns or shifts in consumer preferences.
Operational Risks
Operational efficiency is crucial for Cimpress. The company faced increased advertising expenses of $6.3 million and higher cash compensation costs during the same period, which contributed to operational strain. These rising costs can detract from overall profitability and cash flow stability.
Financial Risks
Cimpress has significant exposure to interest rate fluctuations, particularly with $1,083.9 million in variable-rate debt as of September 30, 2024. A hypothetical 100 basis point increase in interest rates could lead to an $8.6 million increase in interest expense over the next year. This risk is compounded by currency exchange rate volatility, which adversely impacted net income due to unrealized losses of $15.2 million year-over-year.
Strategic Risks
Strategic decisions regarding acquisitions or divestitures carry inherent risks. The company’s adjusted free cash flow decreased by $36.5 million to a use of cash of $25.6 million for the three months ended September 30, 2024, primarily due to reduced operating cash flow. This decline could limit the company's ability to invest in growth opportunities or respond to market changes effectively.
Mitigation Strategies
Cimpress employs various strategies to mitigate these risks, including hedging against currency fluctuations and managing debt through interest rate swaps. The company also focuses on operational improvements to enhance efficiency and reduce costs.
| Risk Factor | Description | Impact on Financials |
|---|---|---|
| Industry Competition | High competition leading to pricing pressures | Operating income increased by only $5.2 million |
| Regulatory Changes | Increased operational complexity and costs | Total liabilities of $1,883.9 million |
| Market Conditions | Fluctuations in demand affecting revenues | Revenue increased by 6% to $805.0 million |
| Operational Risks | Increased operational costs impacting profitability | Higher advertising expenses of $6.3 million |
| Financial Risks | Exposure to interest rate and currency risks | $1,083.9 million in variable-rate debt; $8.6 million potential impact from rate increase |
| Strategic Risks | Risks from acquisitions or divestitures | Adjusted free cash flow decreased by $36.5 million |
Future Growth Prospects for Cimpress plc (CMPR)
Future Growth Prospects for Cimpress plc
Analysis of Key Growth Drivers
The company is focused on several key growth drivers, including product innovations, market expansions, and strategic acquisitions. For the three months ended September 30, 2024, revenue increased by 6% to $805.0 million compared to $757.3 million for the same period in 2023. Organic constant-currency revenue growth was also reported at 6%.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth projections remain optimistic, with the Vista business driving significant increases through enhanced customer experiences and new product introductions. This segment alone reported revenue of $429.5 million, an 8% increase from the previous year. Earnings estimates indicate a focus on profitability improvement, with operating income rising to $39.3 million, up from $34.1 million year-over-year.
Strategic Initiatives and Partnerships
The company has been pursuing strategic initiatives, including enhanced digital marketing efforts and partnerships aimed at expanding its e-commerce capabilities. The National Pen segment showed a 7% constant-currency revenue growth, reflecting strong performance in its e-commerce channel.
Competitive Advantages
Cimpress plc's competitive advantages include a robust fulfillment network and significant investments in technology and development, with expenses reported at $81.9 million for the latest quarter. The increased advertising spend of $203.8 million indicates a commitment to brand visibility and market penetration.
| Growth Area | Current Revenue | Year-over-Year Growth | Operating Income | Adjusted EBITDA |
|---|---|---|---|---|
| Overall Revenue | $805.0 million | 6% | $39.3 million | $87.8 million |
| Vista Segment | $429.5 million | 8% | $76.8 million | Not specified |
| National Pen | $93.4 million | 8% | (4.8 million) | Not specified |
| All Other Businesses | $57.1 million | 11% | $6.7 million | Not specified |
Conclusion
In summary, Cimpress plc is poised for continued growth driven by strategic initiatives, product innovations, and a robust e-commerce presence, with revenue growth projections remaining strong across various segments.
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Article updated on 8 Nov 2024
Resources:
- Cimpress plc (CMPR) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Cimpress plc (CMPR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Cimpress plc (CMPR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.