Cimpress PLC (CMPR) 2026 Q2 法說會逐字稿

Good morning and thank you for standing by. Welcome to Cimpress second quarter full year 2026 earnings follow-up. I would like now to turn the conference over to Meredith Burns, Vice-President of Investment relations and sustainability.

Please go ahead.

Thank you, Michelle, and thank you everyone for joining us. With us today are Robert Keane, our founder, Chairman and Chief Executive Officer, and Sean Quinn, our EVP and Chief Financial Officer. We appreciate the time that you've dedicated to understand our results, commentary, and outlook.

This live Q&A session will last about 45 minutes or so, and we'll answer both pre-submitted and live questions. You can submit questions live via the questions and answers box at the bottom left of the screen.

Before we start, I'll note that in this session we will make statements about our future. The actual results may differ materially from these statements due to risk factors that are outlined in detail in our SEC filings and the earnings document we published yesterday on our website

We also have published non-GAAP reconciliations for our financial results on our IR website.

We invite you to read them.

All right, and now I will turn things over to Robert.

Thanks, Meredith. Thank you to investors for joining us today.

Before Sean goes into his review of the Q2 financial results. I will discuss the progress we've made on the strategic and the operational teams that we covered in detail in my annual letter to you of July 29, and at our September Investor Day.

So, I spoke about the following forward themes last quarter. First, elevated products are driving a step function improvement in our per customer lifetime value. In other words, the wallet share we have with small business customers, for example, variable gross profit per customer at reported currency rates grew $0.09 year-over-year, a continuation of a long trend that Vista keeps putting up in terms of or earning in terms of increased wallet share, with especially higher value customers.

Second, MCP enabled us to pursue cross impress fulfillment or XCF, and that's helping us drive manufacturing efficiencies and accelerate new product introduction. In Q2, we continue to make significant progress as we continue to optimize our production footprint, building upfo production hubs.

And drive innovation in new product introductions in elevated categories. Doing so does involve a period of elevated capital expenditures largely for manufacturing equipment. Which we gave examples of at Investor Day. There are many aspects of the work we're doing across Cimpress that is exciting, but this particular area of focus of manufacturing competitiveness is really core to our competitive advantage.

So I'm very proud of the innovation, sophistication and the velocity which our teams are moving forward to drive manufacturing excellence and advantage for the benefit of our customers and our shareholders. The third area I'll bring up is shared technology.

That means organizational delayering that we, and the artificial intelligence that our tech is allowing us to do and that's constraining operating expenses and opening up for future efficiency even as we improve customer value.

For example, we recently announced that we are deepening the collaboration between Vista, National Penn, and build a sign to share product development, sourcing, performance marketing [telesales] treadmill, and manufacturing while maintaining separate focused brands,

We expect this is going to drive meaningful efficiencies while also enabling growth. These same capabilities all support the customer experience when something beyond our operational control impacts our operations. As an example of that is in the past quarter, there was a devastating hurricane that hit Jamaica.

We have had huge challenges for our care team members in that location, but we were able to mitigate the impact by quickly shifting call volumes to care teams in other regions and in within Jamaica because we each of [Nashville] Penn built a sign in Vistaprint had facilities to shift people to the facilities that were least impacted by the facility.

And finally, we've been able to increase use of AI chatbots through increasingly sophisticated uses with shared technology. Fourth, we do have a strong financial future. As noted in last night's earnings document we're increasingly confident on our path to fiscal '28 EBITDA of at least $600 million coupled with a very significant delevering of our balance sheet.

All of the efforts I've dimension and more are part of our roadmap. To that FY '28 financial target. We expect significant efficiencies across our profit and loss statement with the most meaningful benefits and cost of goods, technology, and marketing.

Additionally, the advancements we've made over the last couple of years and the investments we've made, including technology modernization, product expansion, manufacturing supply chain have positioned us to evaluate a healthy pipeline of tuck-in at M&A and potential partnership opportunities that we believe in the aggregate positively impact our results in future years as part of our roadmap to delivering those FY '28 targets.

So to sum up halfway into fiscal '28, where we remain confident in our multi-year plans, our past investments have enabled us to increase the pace at which we improve customer value, and it helps us increase our competitive advantage, our innovation, and increase our efficiency.

So now I'll turn it over to Sean to discuss financial results for the quarter and our outlook.

Thanks a lot, Robert, and thanks everyone for joining us on the call today. Q2 marked a milestone for impress. We exceeded $1 billion in quarterly revenue for the first time ever with organic constant currency growth of 4% through the first half of the year, which was ahead of the annual guidance range that we had previously provided 2% to 3%, and year-over-year adjusted EBITDA growth in the first half of the year. That was equal to the full year dollar growth that was in our prior guidance.

We are raising our annual guidance for revenue for adjusted EBITDA and for free cash flow, and I'll go through those all in a moment. For the quarter in Q2 revenue grew 11% on a reported basis and 4% on an organic constant currency basis with revenue growth across all of our segments. Reported revenue was aided by a Falcon acquisition in our PrintBrothers segment as well as the benefits from currency.

Invista, organic cost the currency growth of 5% was up from 3% in the prior year quarter, and that continues to be supported by growth in promotional products, apparent gifts, and packaging and labels which each grew double-digits. We've covered this before just as a reminder and Robert alluded to this as well.

Our elevated product categories help us to serve and retain high value customers that make up our most profitable customer deciles. In terms of our legacy products, business cards and stationery declined 1% for the quarter. That's consistent with Q1 and also an improvement from last year's decay rate. Geographically this strong performance in North America was the main driver of the acceleration and growth versus the prior year quarter.

Turning to our other segments, upload and print customer and order count increased and fueled combined organic constant currency revenue growth there of 6%. The Tuck-in acquisition that we completed in the quarter, contributed $18 million to the PrintBrothers segment, reported revenue, which grew 26% this quarter and 6% if you exclude that tuck-in and also currency benefits.

The Print Group National Pen and BuildASign continues to increase their cross-impress fulfillment volumes as they act as a fulfillment partner on behalf of Vista. And National Penn Revenue also benefited. From some tariff-related price increases.

Turning to profitability, adjusted EBITDA increased by $6.6 million year over year. Q2 profit dollars increased 8% on a consolidated basis from growth in our higher value elevated product categories and also supported by favorable currency movements. Gross margins declined 110 basis points and most of that was from the tariff impacts at National Penn, both the tariff costs but also the offset of tariff pricing.

Invista segment needed to approve 10% or approximately $10 million resulting from revenue strength, but also stable gross profit margins and currency benefits were referred to this earlier, but I'll say it again, this is variable gross profit per customer grew 9% year-over-year, a continuation of a trend that we've seen for some time and a strong indication of our continued strategic strategic progress.

Profitability at Vista was negatively impacted by about $2 million associated with the hurricane that hit Jamaica at the end of October that Robert talked about a portion of which may be recoverable through insurance in future periods.

Profitability was also dampened by $1.5 million of production startup cost for expansion of our North American production network. And also $1 million of tariffs, net of pricing increases. We do expect that that impact of tariffs should lessen in future quarters as supply chain remediation continues to ramp up.

And lastly, Currency provided a $4.1 million benefit to EBITDA this quarter. That should be a source of some continued year-over-year favorability in the second half and also as we look ahead to next year as well. Adjusted free cash flow, the declined $9.2 million to an inflow of $124 million. We had lower networking capital in flows this year versus last year.

That's just normal timing. And as we've guided capital expenditures were higher as we invest in the expansion of our North America production network, but also we invest behind efficiency and the expansion of our production capabilities for elevated products.

From a balance sheet perspective, net leverage at the end of Q2 was 2.97 times, trailing 12-months EBITDA. That's as calculated on our credit agreement. That's down sequentially from last quarter, despite allocating over $25 million to share repurchases in Q2.

Our cash position ended the quarter at $258 million. And we continue to have $250 million remaining on our credit facility that is undrawn at the end of the quarter. Turning to our guidance, I said before, we raised our expectations for fiscal '26 based on the strong results from the first half of the year.

We now expect revenue growth of 7% to 8%. And 3% to 4% organic constant currency revenue growth. We expect net income of at least $79 million and adjusted EBITDA of at least $460 million, up from the previous $450 million. We expect operating cash flow of approximately $313 million and adjusted pre-cash flow of approximately $145 million that's up from previously $140 million. And we continue to expect net leverage to decrease slightly by the end of fiscal '26. From the FY '25 level of 3.1 times.

We also, as Robert said, we remain confident in our ability to deliver on our fiscal '28 targets, which again, I'll reiterate as 4% to 6% organic constant currency growth in fiscal '28 $200 million in net income. Adjusted EBITDA at least $600 million. Adjusted EBITDA did a free cash flow conversion of approximately 45%.

And from a leverage perspective, we expect to exit fiscal '27 with net leverage of approximately 2.5 times as we begin to expand profitability more significantly, and then exit fiscal '28 with net leverage below 2.0 times subject to capital allocation choices such as share repurchases.

With that, Meredith, why don't we open it up for questions.

Thanks, Shawn. (Operator Instructions)

So let's take our first question. Sean, this one's going to be for you.

How would you characterize the holiday season that just concluded for Vista. Did it go as planned better or worse? What worked and what did not, and are there any trends within holiday cards worth mentioning, either regarding the industry, your market share, or anything else. And what was the percentage change in cost per click in US consumer this year.

Okay. Overall, it was a strong quarter for Vista and I said this in my earlier remarks, but I would highlight North America as the source of strength compared to last year. I think on the Q1 call I talked a little bit about, our approach for the holiday season and what gave me optimism and one of the things is that we had been involved approach to the holiday season this year.

With just a a I would say more balanced approach, leaning into the things that have been working for us, including elevated product growth and being intentional about not shifting as much resource to consumer specific messaging and I would say we're happy with how that was executed. Team did a great job and, it's a strong result overall.

In the release, we didn't get into too many specifics on, consumer growth, etc. But I'll give you a few data points, and the question, I think was quite focused on the US, and also holiday cards, volume and holiday cards and calendars in the US was flat year-over-year.

And in Canada, it grew double-digits. So I think I think that, those are good data points and I think, yeah, some of that's because of what we're copying, especially in Canada, there were a few things last year, but I think that data point coupled actually with the improved DK rate in business cards, from last year, I think it shows that these legacy products are still relevant, but also that if we can continue to influence these trends through our experience selection, the merchandizing, other things in our control.

In Europe, we had a tougher comp. Last year was, it was quite a strong holiday quarter for consumer in Europe, and, in Europe, consumer was down a little bit year-over-year in Q2, so I'd say that was the weak spot if I was going to name one. But again, it was a tough com --

As we look at things like, data, on Google search volumes and such, it would suggest that we took share this quarter, some of that data, a little fuzzy in terms of how precise that is with market share, but directionally I think, I think that would be the case.

Year-to-date, just from a consumer perspective, consumer flat year-to-date in constant currencies in Vista, with a little bit of gross profit growth, so yeah, we do continue to expect to see a little bit of consumer growth outside of the holiday peak.

In particular from elevator products we've launched with consumer use cases, with respect to the question on cost per click, that those aren't details that we get into, in any specific markets, but I would say just in general in terms of, certainly on the performance marketing side, it's in our (inaudible), our channel mix continues to evolve. And that's the, that was the case in Q2, has evolved quite a bit, and that won't be the case just for Q2. I would say that, kind of in general, it's an exciting area and we're looking forward to continued progress there.

Thank you, Sean. I'm going to stick with you for the next question. So strong, Q2 results represent a continuation of trends observed from Q1 and led you to raising your guidance. Can you talk about the biggest areas of outperformance versus your initial FY '26 guidance.

Yeah, sure. The, there weren't really any, big areas of outperformance, I would, it was really a solid quarter of execution really across the board. I think, yeah, that was the case in Q1 too. And yeah, there was of course a few unexpected things as well, Robert talked about the, and I mentioned in my remarks, the hurricane in Jamaica.

There were a few others, but we were able to overcome those operationally and then we did have, We did have some help from Currency too. On the revenue side, I think, in terms of like, how we're tracking to our plans.

I would say we're, basically on track. When we set our guidance, if you go back to the words we put around that, we did note that we factored in potential uncertainty, and I think, for revenue. We're now confident increasing because of what we've been able to deliver in the first half of the year.

The reported growth also factors in now 100 basis points of growth from the acquisition that we did in Q2, and then, you could see currency continues to detail when and so you know that's factored in but pretty consistent with the impact that we had included for the original annual guidance.

From an EBITDA perspective, again, I would say, we're delivering to our plant almost exactly on our plan for each one. And, now we've already attained the full year even the dollar growth that was implied in our annual original annual guidance, and so we've updated that.

You may recall Q1 was a record Q1 for us from an EBITDA perspective, and Q2 is is always a seasonally really important quarter. So with the solid Q2 now behind us. And you know having had a record Q1, we now feel comfortable raising our EBITDA guidance for the year.

And, through the first half of the year, I would say Vista is on track, upload and print overall has been strong. Yeah, those are our two biggest sources of and EBITDA the operational teams that are driving those results are all very consistent with what we shared at our investor day and Robert started the call with today.

You one other thing that has helped to support adjust the EBITDA growth is currency. I mentioned this in my remarks as well. With the EUR and the pound strengthening, if that's favorable for our results both from a revenue and EBITDA the perspective, and yeah, that is, that has been a little bit of ahead of our plan That should continue to be the case with some of the year-over-year benefit in H2.

And then as we lock in our hedges looking out past that by '26. We have visibility to continue DB that favorability from currency as well. So that was one of the bridge items that we had in our path to our fiscal '28 targets if you can recall the slide that we used in our investor day, and I would say there, we feel good about where we're at, based on what we've contracted and then also, recent further strengthening in the EUR and the pound.

Hey Sean. All right, we're going to move along to a question for Robert.

At Vista, you called out that promotional products, the aril gifts and packaging along with labels, all grew at double-digit clip during the quarter. How are the underlying trends progressing for these cost cohorts.

Robert?

Sorry, I had put myself on mute. So the strong growth you're talking about really does demonstrate How we've been driving our wallet share SMBs, thanks to the past and the ongoing investments.

So those investments especially in elevated products and manufacturing capabilities that allow us to be very competitive in elevated products have really played a part. Now, in our investor day, we had a slide and we showed that the top 2% of our customers at Vista contribute just about as much total variable gross profit is the bottom 80% combined.

And it really that top 2% in the top 10%, 20% of our customers, in that level of spend which represents our future, so they play a big role in the results And in the trends that we see in those portions of our new cohorts are very healthy.

To your question more specifically, the underlying trends we're seeing are progressing very well, starting last quarter, we began discussing the variable growth profit per customer as a way that you as an investor can evaluate our progress in serving these higher value customers and growing wallet share, so, that includes

Everything I've just talked about for your question. Just to recall in Q1 that growth was 7% and in Q2 it was 9% so we like what we see there. It's very consistent with our strategy. There's still a lot of opportunity in elevated categories amongst all, customers who are in markets that are less penetrated from an e-commerce perspective, and there are large addressable markets that we are addressing that we have not done so much so in the past.

We're investing with this behind us with CapEx, with expanded capabilities and fundamentally lowering the cost of production, for example, through focus production hubs so that we can push further into these categories like packaging, like apparel, etc.

Serving customers with great products that they need at great prices, with beautiful, quality and delivery times. That's where [Pro Cimpress] collaboration is playing a role in an increasing role, XCF cross impress fulfillment is already something we're doing to lead new product introductions, lower costs.

The increased collaboration we just announced between Vista Build us on National Penn, it's going to accelerate XCF, but also other types of collaboration in promotional products, in packaging, as well as in signage, which all get back to the drivers of the underlying trends in your question.

Thank you, Robert.

Let's stick with you here for the next question.

We, can you talk about the North American business for the group. How have things trended versus your ini initial expectation? And how do you view the opportunity ahead for the business?

Can you quantify its contribution in the quarter and how do you think about its growth going forward?

We're on track, as planned, we're focusing on building out the production capabilities, we have revenues in this unit, but they're still small. I think it was about [$3 million] for the first half, but growing quarter over quarter of a fast clip.

That being said, from a revenue perspective, we're just getting started and we have fixed costs that are weighing down on our overall that, and CapEx, but that is very consistent with our our plans and how we think about this.

We've not yet started putting any ad spend against Pixar printing.com or US site other than small tests we have everything from a production and delivery perspective. In the near term, the bigger opportunities is really growing volumes as a fulfiller through cross-impress fulfillment Pro-vistaprint in multi-page small formats and labels and other products.

Now Pixar printing has always been very strong in manufacturing innovation around those areas amongst other areas so we've taken the investments that we've made in Europe. In the past multiple years and exporting that capability into North America for these products where we really don't today have focused production hubs.

Like we do in Europe for those particular product lines and we are coming, we believe we've been doing so we're going to be the low cost producer in North America that we can scale those categories through Vistaprint as well as the Pixar printing brand, but a little bit analogous to what we're doing in National Penn and Build Design, we see that.

A big part of that production operation can be volume that goes to the VistaPrint brand, in North America. We're ex excited about Pixar being in North America as a brand, but it will be part and parcel of a broader entry that we're planning.

Thank you, Robert. So you just mentioned, the closer collaboration between Vista National Penn and BuildASign. So we do have a question on that. It seems that in bringing National Pen and build a sign closer together, there will be a lot of capability sharing, product development, sourcing, performance marketing, direct mail, and manufacturing were all quoted in the January 13, release as part of the collaboration.

What will remain separate and why?

So we're couldn't keep the brand separate, and focus on integrating what I'll call the back end capabilities of National Pen and build design, to drive growth and drive profitability at Vistaprint in North America. I'm actually in Europe as well with National Penn is strong in Europe, and is doing great collaboration already with Vista Print and our upload and print businesses.

So it's really the brands that will stay separate in more and more collaboration will happen on the back end. We're doing that because we continue to believe that it is advantageous to have multiple brands in the market, both from a search perspective what it shows up in front of the customers but also in be able to vary our value propositions into different brands, but on the backend operations.

All of these investments we've been making over the past years in technology platforms, or manufacturing talent in other areas are allowing us to take synergies or drive synergies and importantly drive customer value by sharing those capabilities.

I'll give you a couple examples of that. We talk a lot about cross and press fulfillment. We accelerate the benefit of focus production hubs which Still remain decentralized because teams were very close to that market, focus on not only what the customer needs are but how to best produce products, but we are incentivizing volume to flow to the most efficient highest quality production operations we have and over time there's a lot of benefits to that. It increases profitability, increases product introduction we get better li capacity utilization. And so on.

On the tech re-platforming that creates opportunities obviously in our technology investments to do two things. First of all, take the best in class. Or and certainly in a very minimum, the best in Cimpress capabilities and share that across different brands.

But secondly to share the cost and therefore drive efficiencies in our software development and other technology investments. So that recent announcement about this the National Penn and Bill design, we expect to extend this to other areas.

Now why well it's the reason that these businesses are doing this is generally speaking, they're serving similar types of customers and customer use cases. The other thing that is common between these is they have a higher spend in advertising as a percentage of revenue if you were to compare them to our upload and print businesses.

So with access to the same product catalogs, via MCP and crossing fulfillment that makes the sharing possible and we can optimize our advertising spend, across those different brands that all may show up in the same Google search or other areas, and make sure we're getting the best ROI across the board for all of impress, not an individual brand.

So there's things that will still be unique about these businesses, and they will remain with the respective specializations, but we do believe as I just described, there's a lot that we can share.

Thanks, Robert.

Going to stick with you for one more question for now.

How do you view the opportunity ahead for cross and press fulfillment, to continue to drive down COGS and how much headroom do you think there is the head? Is there a certain level of cross-impress fulfillment activity per business that you would like to achieve.

Okay, I've already, mentioned a lot of this in today's call, but in summary, cross inference fulfillment is a big opportunity. It's another example of past and current investments that are driving both top-line and bottom line growth.

It's part of our execution plan to achieve the EBITDA expansion to at least $600 million by a fiscal '28. So, that's how we view it. Now we're still early in the opportunity for cross-press fulfillment, but it's growing fast. It was a little over $40 million in the first fiscal '25, and now it was, over $80 million in the first half of this year, so it basically doubled within a year.

We, believe that last year, that delivered about $15 million of gross profit, Increase as a result of that and that was for fiscal '25 ending June. Our scale-based manufacturing advantages that we've always talked about for decades and mass customization typically happen on a product by product basis.

So we have through these focused production hubs, the opportunity to lower costs, improve quality, improve speed, expand our product lines, increase utilization of invested capital by aggregating all this volume into these focused production hubs.

And I'd say beyond that, but very closely related to cross interest fulfillment with the announcements we've made during national Penn, in BuildESign, but similar things we're doing in Europe with our upload and print businesses.

We have great, very strong teams who are experienced in the product category, lunch process, the new product integration, introduction process for specific areas just like we do a Vistaprint and we're able to have teams specialize in the areas they're strongest at so as to what level of cross impress fulfillment we'd like to achieve we don't disclose that, specifically, but we do expect it to grow strongly for some time, to your question, there's a lot of [headroom] ahead.

Thank you, Robert.

All right, Sean, let's take a technical question.

In the quarter, it looks like the company allocated $22.6 million for the purchase of non-controlling interest. What position did the company buy? Any details you can share would be appreciated. What non-controlling interests remain outstanding.

There are two transactions that make up that little bit more than $22 million. Both of them were in our par and that was a mandatory redemption that required us to purchase the remaining shares from minority holders that sold a portion of their equity interest to us in fiscal '23 and then the other one is, with the remaining $12 million of that $22 million or so that relates to minority equity holders, in a smaller business within printbrothers that exercise the foot

Options sell their shares in terms of other non-controlling interests that remain outstanding. There's nothing material. You can see this on the face of the balance sheet. We have $6 million of redeemable, not controlling interest outstanding at the end of the quarter.

We don't have anything, in terms of anything mandatorily redeemable, and I just maybe add that those two transactions, in the quarter were contractual. All of the minority shareholders that we're part of these transactions remain active. In our business and we are in active discussions with them on buying back into the respective businesses, with a long-term horizon and so we look forward to concluding those conversations.

Thank you.

All right, next question, on M&A. We got some live questions on M&A too. We'll definitely cover the answer to those in the next couple of questions.

Robert, the company did a tuck-in acquisition for $10.4 million in a quarter, and you noted in your in your earnings document that the company has a healthy pipeline of potential tuck-in and M&A opportunities. How much capital is the company willing to allocate here.

Also, I believe in the past, the company used 15% hurdle rate for any tech in M&A deals. I assume the fiscal Q2 tuck-in deal clears this hurdle, but any financial details you can provide would be interesting.

Your question is absolutely right. It very easily clears a hurdle, but let me give you a little more detail about this particular tuck-in. We purchased an Austrian printing group with annual revenues of about $70 million in annualized EBITDA of about $5 million prior to synergies and we have very significant synergy opportunities ahead.

The enterprise value we paid wasn't just the $10 million or $10.4 million it included debt, but if you take the equity plus that enterprise relative to the pre-synergy EBITDA we paid was comfortably below [5]. Now inclusive of synergies, we expect that multiple to be much lower.

And we expect the return on this investment to be very comfortably higher than [15%], the purchase price was also done at a very attractive multiple of cash flow after tax cash flows relative to cash we're delaying, we're, deploying there.

Strategically it really a positions us in Austria to grow faster in elevated products like multi-page products on but also importantly to through cross and press fulfillment, use that Austrian instruction capabilities, especially in Germany, and use some of our German production operations to expand products into the acquisition.

That is one of many examples of the synergies we see before us that will lower our post-synergy multiple. Now, this is a tuck-in I'll call it acquisition, which brings both cost relationships but vertical integration has fast payback, very clear, paths to deliver profitability and cash flow, now and in over the coming years, importantly, we have a strong leadership team in Austria who's doing very well at droof.at.

That's part of PrintBrothers. They've been with us for years. They sourced the deal. They, proposed the deal once it was approved. They let it, they, they're taking full accountability for it, and they're managing this and So I think all those things I just talked about exemplifies what we're looking for in tuck ends, strategic fit against our goals of elevated products manufacturing supply chain, importantly also with strong impress leaders on the front lines who sponsor and lead the deal with strong cash on cash returns to the capital we put there with high IRR, and capabilities that either complement or accelerate our existing capabilities.

Now, your question, I think was how much capital we'd be putting to other talking M&A that frankly is going to be depending on other capital allocation opportunities. We'll be looking at the relative return and risk versus buying back our own shares, by the investments we're making in internally that we've been talking about a lot in this call that are driving cash flows through production operations.

Our commitment to de-lever our balance sheet. And then of course these types of deals so it's hard to say what it will be specifically we don't see this as a fundamental, singular or even pop three driver of how we're going to get to our FY '28 goals, but as I think we've talked about since the September, we do see it as a part that's consistent with our strategy which has good returns to capital and will be part of that overall path.

Thanks, Robert.

So there is a follow-up question here that I think you can touch on pretty quickly because you, you've already, talked a little bit about this, but the question is, my understanding is that the company measures any potential M&A deals or any capital allocation decisions against the returns from repurchasing shares.

With the stock trading at a low valuation, especially if the company achieves its fiscal 2028 targets. Does this imply that tuck in M&A deals in the pipeline potentially exceed a 15% hurdle rate

Absolutely, yeah.

I love it.

Shortest answer ever.

All right, we're going to move on, to Sean, another capital allocation question. On capital allocation, share repurchases stepped up during the quarter and that leverage fell below 3 times.

How should investors be thinking about the magnitude of repurchases in the back half of the year, and Sean, one thing that I want to add to this just because we got a live question, somebody asking us, basically what our position is

On our valuation at this time.

Yeah, well, there's still some level repurchases that we can do in the second half of the year within the net leverage guidance that we gave so you know we left some room for that, of course, and Robert just touching this too, but, our capital allocation is always, depending on a lot of factors, including other opportunities, but in this case, share repurchas are always price dependent, but yeah, I would say, listen, we're really happy to allocate a little over $25 million do to repurchases in Q2.

We did that as a, at an average price that was below $70 We still believe it's a very good use of capital at recent price levels, so I still would expect some, in the second half of the year. Probably a bit less in terms of intensity overall in the second half of the year relative to certainly relative to, where we're at in Q2, but again, always price dependent. In terms of, I mean, I guess I kind of, implicitly covered the other one. And listen, we just ramped up the, repurchases that we did in Q2. I just said, we feel that that was a very good use of capital, buying back below 70 and as I just said to you, like we, we're, we would still view that as very attractive at current price levels and we have room to do repurchases, in H2 and so we would put dollars behind them.

Great. So this next question is, basically getting at the math behind what we might do in the back application for the remainder of the year. The leverage guidance for the end of the year is to be slightly below 3.1 times, which is essentially where the leverage level is currently.

EBITDA will be increasing by at least $10 million and the business is expected to generate incremental adjusted free cash flow, which includes working capital for the remainder of the year, is there a specific plan share purchases or M&A that's driving the guidance.

Yeah, all that math is right, our free cash flow as you can see we reported in the first half of the year was $107 million so, versus the $145 million in guidance that implies $38 million free cash flow in the second half of the year, that does, that does already include the higher CapEx that we've also assumed in our guidance and then yeah, we have $10 million of EBITDA they growth implied in the in the guidance and.

The second half of the year as well, we don't provide specific guidance on other capital allocation that we do in the normal course because again, as I just said, it depends on a lot of factors, including price, but also, relative opportunities, etc.

But with the free cash flow and the EBITDA that just outlined and you've outlined in the question, yes, there is some room for for other capital allocation on top of the, any organic investments that were already included in the plan. That includes repurchases, and still allowing us to end the year slightly below 3.1 times.

So, we have provided some room for that.

Thanks, Sean. All right, we're going to take a break for a second from financial questions.

Can you talk a bit about how you view the opportunity for you in agentic commerce. How are you, are you in talks with any LLM providers today? How far away are you from being able to integrate into chat GPT or Gemini.

All right, so it's something that I mean, the entire world will move towards, and we certainly have. Been investing in that at the highest levels myself and our CTO or the entire Cimpress executive team are spending time specifically on these subjects.

I won't go into very specific discussions, but yes, agentic commerce is coming. We are working on that, and, we feel comfortable that we will be at, if not in the lead, Bata thrower, but very much at the front of the parade.

So, next question for Sean. Could you please help us bridge or provide color around the difference between the all-time high trailing twelve-month EBITDA of $469 million from Q4 of FY '24 to the trailing 12-months EBITDA of $451 million. TTM profit has increased by $79 million over the same period in contribution profit has increased by 52%, while EBITDA has decreased by $18 million.

This is some heavy math on the fly here. So, I'll cover this high level and I do think it's a good question, and I think stepping back like we, we've actually used a similar framing as we look to architect what we need to hit in fiscal '28, looking back, 2-years and saying.

What needs to be true for us to make sure that we're having more easy to flow through and and we have a large cost efficiency component, that we've talked about in our targets going out to FY '28 and par part of it is we'll address kind of what is in the end of this bridge between what was our prior PR highest ever even be done fiscal '24, which is the base that you referenced in the question, and where we're at today.

So the, there's a few things again I'm going to go high level because I don't have all the math in front of me, but I think that one of the big things is that in, if you look at Q2 of FY '24, we had about $12 million of non-recurring benefits in that quarter which supported the full year, so that's relevant for your question, but it's also kind of, a good data point as you look back just for Q2 that we just reported versus two years ago.

So that didn't repeat. So that's a bigger one, in the math. In fiscal '24, that was the year where we were coming off of the the supply chains were normalizing input costs were at a normalizing as well and coming down. So we had pretty sizable reductions in input cost that year, but still, kind of favorable pricing so there's some net benefits to that in gross profit, which is kind of already covered in your math.

We also, it was after that that we had starting in FY '25 started to see some overall declines in business cards and holiday cards, those are more stable this year, but, that has some impact on the math too. We do also have startup cost this year for plan expansion, so we, and we didn't have that before.

And then really the remainder and other than the non-recurring items, probably the biggest impact is just the remainders and OpEx, with technology cost being the largest driver, and again, I connect that back to, what, where and why we need to, drive efficiency as we marched to the FY '28 targets.

One of the things that offsets that in the other direction is currency is a little bit more favorable. In the current TTM, versus where we're at back in fiscal '24. So that's high level, but hopefully that hits on the key, the key drivers.

I'll stick with you for the next one as well. On FY '28 targets. So should we be thinking about the bridge to FY '28 a bit differently than what was communicated at the investor day. It's $40 million of organic incremental benefits. Still, the target, and there's $10 million from Tuck-in M&A still a target.

Okay, this is a great question. Thank you. The bridge that we, so the question of references this bridge that we did at Investor Day. And in that bridge, at the objective of that bridge was to show what we needed to get to at least $600 million and need to end fiscal '28.

So it wasn't necessarily, for each of the pillars in there, it wasn't a target per se. Importantly, the last, the last pillar was what organic growth, what we needed in EBITDA contribution we needed from organic growth to get to $600 million and that was the $40 million plus so that wasn't to say that that was necessarily, the target, but that was the math you needed and the whole point of that bridge is kind of what you need to believe, especially from organic growth.

So we'll update that bridge at the end of the year, yeah, I think it's a helpful framing and hopefully, gives all of you confidence as well, but the pillars in that bridge, they're still the right ones and maybe I'll just I'll run through them quickly just to give you a little bit of commentary because, it is a really important topic.

So the first one, the first thing in that bridge, I'm just looking at it on my screen here was our fiscal '28 growth and now we've increase that by $10 million based on our guidance update today, okay? We still feel good about the --

Just fiscal '26.

Yeah, fiscal '26, that's been updated, that's been increased by $10 million, and so, yeah, that's an improvement relative to the original bridge. We still feel good about the $78 million to $80 million of cost savings and that's the [$70 million] we use the midpoint there in the bridge, $75 million, and you heard today about some of the areas that we're focused on to drive them.

Next one is the runoff of plant startup costs. I feel good about that. Tuck-in M&A and a has been a source of some questions today. That was the next one in the bridge. And again, we feel good about that as well. We've covered that. The next one was currency benefits.

I touched on that earlier too, we have good good visibility to, what's in that bridge, based on, what we're already contracted so feel good about that. And then the remainder is the organic growth needed to bridge to the at least $600 million.

And that $40 million plus, that because we're that's represents 2 years, right? That's $40 million of organic growth flow through for two years, and again, that's just what you have to believe to get there. So as we get, as we're able to provide all of you with increased confidence on the other pillars, and make that more tangible.

That will serve to also make that last element of the bridge, more, tangible and likely lessen over time in terms of what we need to believe. So now I think about it and like I said, we'll update more specifically on that bridge, as we get to the end of the year, but hopefully that's helpful in terms of, kind of overall commentary.

It's super important and I just would add the, these FY '28 targets has, they have all the attention of the management team, all the focus of the board. And so, we're laser focused on this and it's driving a lot in terms of our, day to day focus of the management team.

Thanks, Sean. We have one more live question that came in, just asking for a comment on the current state of our operations in Jamaica following the hurricane.

I don't know which one of you wants to answer any of you could.

I'll jump in to say that, I wouldn't say we're back at 100% of what we have. We are doing some renovations, but the teams are, back at their desks and we are we also where we don't have full capacity we definitely have capacity in our service centers in Tunisia and the Philippines, which all stepped up big time in terms of helping out in the moment of the hurricane.

So we're fine. I'd overlay that with, unfortunately, the hurricane that hit right as, a week or two before our peak period of Black Friday, Cyber Monday, like kind of the worst time of year to hit in terms of a peak season capacity, besides having built back capacity, the volumes we have going through service centers in all parts of our business are lower now than they are in the peak period at the end of November early December so we're fine.

And maybe I could just add two things. One is, I mean, the, this hurricane devastated Montego Bay, and so, like, our team members suffered devastating impact, we, and we've done A lot to try and help them, but it, I, frankly, I mean, these, I said this multiple times internally, made me proud to be part of this team, seeing, the response to help them, but also the response to help make sure that, our operations were running smoothly to support customers too, and I just want to make sure it's clear that in terms of the impact financially, from an operational standpoint, things are stable and we

Don't expect continued impact in terms of, higher cost or lost gross profit in terms of how we support customers, operationally we're back to a stable place that continue to improve a little bit, but, we're stable. We will continue to have some cost of just getting the office back to where it needs to be, the normal kind of remediation, that's where we do expect to have, coverage from an insurance perspective.

And so, I would not expect this to be of any significance in terms of any dragon results in the second half of the year. And in fact, as we noted, yeah, there's, we'll pursue opportunities to recover some of the costs we've already incurred, in the second half of the year it's unknown when exactly we would recover that could stem into next fiscal year, but, that process is very active.

Thank you so much, Both of you.

So that's it for the live and pre-submitted questions that came in. So I'm going to turn things over to Robert to wrap up the call.

Hey, thank you, Meredith. So the critical to the announcement we made last night, the conversation today are that halfway through fiscal '26 we are on track to deliver better financial results. Compared to our initial guidance for the year.

The reason that's the case is because we are consistently executing and progressing in all the key areaos that I've discussed today that are very consistent with what we talked about in July, in September, and I was even in the years before that, the, your elevated products that drive a step function improvement to our [percu] customer LTV, measured its gross profit per cost.

MCP and the manufacturing capabilities that reduce cost of goods and OpEx by sharing overhead, Increasing the velocity of new product introductions and user experience improvements. Leveraging AI and other technologies to drive efficiencies and someone just alluded to, in the last question, I would say also revenue opportunities as we get into things like a [genetic] commerce in the future, increasing cross-impress collaboration via XCF but also via broader collaborations as exemplified by the announcements we made with Vistaprint National Penn.

All of those factors reinforced our confidence in our path to fiscal '28 EBITDA at least $600 million in approximately 45% free cash flow for inversion coupled with, as we've said many times, significant reductions in our net leverage.

So I'll wrap up by saying thank you to our investors for joining the call and thank you for continuing to entrust your capital with us. Have a great day.

This concludes today's conference call. Thank you for participating, and you may now disconnect.