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,
development and profitability of certain of our businesses, sufficiency of our
cash, expectations for future share repurchases, expected impacts of our
advertising spend initiatives, legal proceedings, expected currency volatility,
the anticipated competitive position of certain of our businesses in Europe, the
development and anticipated benefits to our businesses of our mass customization
platform, and the expected impacts of Swiss tax reform. Without limiting the
foregoing, the words "may," "should," "could," "expect," "plan," "intend,"
"anticipate," "believe," "estimate," "predict," "designed," "potential,"
"continue," "target," "seek" 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; our failure to execute our strategy; our
inability to make the investments in our business that we plan to make or the
failure of those investments to achieve the results we expect; our failure to
address performance issues in some of our businesses; the failure of the
businesses we acquire or invest in to perform as expected; our failure to
develop and deploy our mass customization platform or the failure of the
platform to drive the performance, efficiencies, and competitive advantage we
expect; loss of key personnel or our inability to recruit talented personnel to
drive performance of our businesses; unanticipated changes in our markets,
customers, or businesses; changes in the laws and regulations, or in the
interpretation of laws and regulations, that affect our businesses, including
changes in the timing of or regulations included in Swiss tax reform; our
failure to attract new customers and retain our current customers; our failure
to manage the growth and complexity of our business and expand our operations;
the willingness of purchasers of customized products and services to shop
online; our failure to maintain compliance with the covenants in our senior
secured revolving credit facility and senior unsecured notes or to pay our debts
when due; competitive pressures; general economic conditions; and other factors
described in our Form 10-K for the fiscal year ended June 30, 2019 and the other
documents we periodically file with the SEC.
Executive Overview
Cimpress is a strategically focused group of more than a dozen businesses that
specialize in mass customization, via which we deliver large volumes of
individually small-sized customized orders for a broad spectrum of print,
signage, photo merchandise, invitations and announcements, writing instruments,
packaging, apparel and other categories. We invest in and build
customer-focused, entrepreneurial 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.
During the first quarter of fiscal 2020, we revised our internal organizational
and reporting structure leading to changes in our Vistaprint and All Other
Businesses reportable segments. Our Vistaprint Corporate Solutions, Vistaprint
India, and Vistaprint Japan businesses, which were previously aggregated based
on materiality in our All Other Businesses, are now directly managed within the
Vistaprint business. These businesses are close derivatives or adjacencies of
the Vistaprint business and leverage the Vistaprint brand, customers,
technology, and other assets. This change in reporting structure will position
them closer to the Vistaprint operations, capabilities, and resources. We have
revised our presentation of all prior periods presented to reflect our revised
segment reporting.
In addition, we changed our segment profitability measure to an adjusted EBITDA
metric in the first quarter of fiscal 2020. The financial metric that we use to
hold our businesses accountable on an annual basis is unlevered free cash flow.
Historically, we have reported segment profit based on adjusted net operating
profit; however, this is not a direct input to unlevered free cash flow. We
believe this change simplifies both our internal and external reporting, while
also increasing the focus on a profitability metric that is a direct input into
our internal operating measure, to our steady-state free cash flow analysis that
we report annually and to our estimates of intrinsic value per share. The most
significant change, when compared to our prior segment profit metric, is the
exclusion of all depreciation and amortization expense, versus our prior
profitability metric which only excluded amortization expense associated with
our acquired intangible assets. Refer to Note 12 in our accompanying
consolidated

                                       32
--------------------------------------------------------------------------------

financial statements for additional information relating to the definition of
segment EBITDA. We also include below adjusted EBITDA, at a consolidated level,
which is the most comparable measure to our definition of segment EBITDA. Refer
below for our definitions of non-GAAP measures.
As of December 31, 2019, we have numerous operating segments under our
management reporting structure that are reported in the following five
reportable segments: Vistaprint, PrintBrothers, The Print Group, National Pen,
and All Other Businesses. Refer to Note 12 in our accompanying consolidated
financial statements for additional information relating to our reportable
segments and our segment financial measures.
Financial Summary
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 cash interest expense related to borrowing; 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, operating income, adjusted EBITDA, cash flow from operations and
adjusted free cash flow. A summary of these key financial metrics for the three
and six months ended December 31, 2019 as compared to the three and six months
ended December 31, 2018 follows:
Second Quarter 2020
• Revenue decreased by 1% to $820.3 million.

© Edgar Online, source Glimpses