What changed in this filing

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Item 1. Business

2022-08-05 compared with 2021-08-06 · 122 added, 122 removed, 184 unchanged (57% of the section changed)

Overview & Strategy

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.

Cimpress is a strategically focused group of more than a dozen businesses that specialize in mass customization of printing and related products, via which we deliver large volumes of individually small-sized customized orders.

Our products 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, 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.

We discuss mass customization in more detail further below.

We have grown substantially over our history, from $0.2 billion of revenue in fiscal year 2006 to $2.6 billion of revenue in fiscal year 2021, and as we have grown we have achieved important benefits of scale.

However, we also believe it is critical for us to “stay small as we get big”.

By this we mean that we need to serve customers and act and compete with focus, nimbleness and speed that is typical of smaller, entrepreneurial firms but often not typical of larger firms.

This is because we face intense competition across all our businesses, and we must constantly and rapidly improve the value we deliver to customers.

To stay small as we get big, our strategy calls for us to pursue a deeply decentralized organizational structure which delegates responsibility, authority and resources to the CEOs and managing directors of our various businesses.

Specifically, our strategy is to invest in and build customer-focused, entrepreneurial mass customization businesses for the long term, which we manage in a decentralized, autonomous manner.

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 $2.9 billion of revenue in fiscal year 2022.

As we have grown we have achieved important benefits of scale.

Our strategy is to 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.

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We believe that, in comparison to a more centralized structure, decentralization 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 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.

This strategy provided great value to us during the COVID-19 crisis because it allowed our businesses to respond quickly to local restrictions, customer needs, and the health and safety of our team members, and leaders shared information and best practices 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.

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We limit all other central activities to only those which must be performed centrally.

Out of more than 14,000 employees we have fewer than 80 who work in central activities that fall into this category, which includes tax, treasury, internal audit, general counsel, sustainability, corporate communications, consolidated reporting and compliance, investor relations, capital allocation and the functions of our CEO and CFO.

Out of more than 15,000 employees we have fewer than 85 who work in central activities that fall into this category, which includes 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.

We seek to avoid bureaucratic behavior in the corporate center.

however we have developed, through experience, guardrails and accountability mechanisms in key areas of governance including cultural aspects such as a focus on customers or being socially responsible, as well as operational aspects such as the processes by which we set strategy and financial budgets and review performance, or the policies by which we ensure compliance with information privacy laws.

This strategy has proven to be of great value to us during the COVID-19 crisis;

we could not have reacted as proactively, effectively or quickly had we not put in place our strategy and organizational structure several years ago.

Our decentralized model allowed our businesses to respond quickly to local restrictions, customer needs, and the health and safety of our team members, and leaders shared information and best practices across the group.

Our shared strategic capabilities in procurement helped us to address supply chain risks and partner with our suppliers to delay our payments to them, the mass customization platform helped us to route orders between production facilities when needed due to temporary closures, and our central finance and legal teams secured the financial flexibility to navigate this period of uncertainty.

We have developed, through experience, guardrails and accountability mechanisms in key areas of governance including cultural aspects such as a focus on customers or being socially responsible, as well as operational aspects such as the processes by which we set strategy and financial budgets and review performance, or the policies by which we ensure compliance with information privacy laws.

Our Uppermost Financial Objective

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We define intrinsic value per share as (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 free cash flow plus interest expense related to borrowings.

We define unlevered free cash flow as adjusted free cash flow plus interest expense related to borrowings.

This financial objective is inherently long-term in nature.

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Other advantages can include faster production, greater personal relevance, elimination of obsolete stock, better design, flexible shipping options, more product choice, and higher quality.

Mass customization delivers a breakthrough in customer value particularly well in markets in which the worth of a physical product is inherently tied to a specific, unique use or application.

Mass customization in print-related markets delivers a breakthrough in customer value particularly well 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 his or her business.

Likewise, a photo mug is more personally relevant if it shows pictures of someone’s own friends and family.

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.

We believe that the business cards sold by our Vistaprint 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 Vistaprint to design and procure aesthetically pleasing, high-quality, quickly-delivered and low-priced business cards.

The Vistaprint 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.

configure, and procure business cards at a fraction of the cost of typical traditional printers with very consistent quality and delivery reliability.

Customers have very extensive, easily configurable, customization options such as rounded corners, different shapes, specialty papers, “spot varnish”, reflective foil, folded cards, or different paper thicknesses.

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 with a large-scale of human designers that are typically located in low-cost locations to deliver high-quality, or 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 very consistent quality and delivery reliability.

Customers have very 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.

Business cards is a mature market that, at the overall market level, has experienced continual declines over the past two decades.

Yet, for Vistaprint, pre-pandemic, this remained a growing category and was highly profitable, and thus provides an example of the power of mass customization.

Even though we do not expect many other products to reach this extreme level of automation, we do currently produce many other product categories (such as flyers, brochures, signage, mugs, calendars, pens, t-shirts, hats, embroidered soft goods, rubber stamps, photobooks, labels and holiday cards) via analogous methods whose volume and processes are well along the spectrum of mass customization relative to traditional suppliers and thus provide great customer value and a strong, profitable and growing revenue stream.

For example, business cards is a mature market that, at the overall market level, has experienced continual declines over the past two decades.

Yet, for Vista, this has remained a growing category that is highly profitable, even with temporary impacts earlier in the pandemic.

We currently produce many other product categories (such as flyers, brochures, signage, mugs, calendars, pens, t-shirts, hats, embroidered soft goods, rubber stamps, photobooks, labels, packaging, stickers, books, catalogs, magazines and holiday cards) via similar analogous methods.

While these product categories are not as automated as business cards, each is well along the spectrum of mass customization relative to traditional suppliers and thus provide great customer value and a strong, profitable and growing revenue stream.

Market and Industry Background

Mass Customization Opportunity

Mass customization 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:

Large traditional markets undergoing disruptive innovation

Print's Mass Customization Opportunity

Mass customization of print and related 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:

Large traditional print markets undergoing disruptive innovation

The products, geographies and customer applications listed above constitute a large market opportunity that is highly fragmented.

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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 early in the process of what will be a multi-decade shift from job-shop business models to 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 business 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 free business cards for the most price sensitive of micro-businesses or low-quality white t-shirts) and then moves up market, eventually displacing established competitors (such as those in the markets mentioned above).

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 free business cards for the most price sensitive of micro-businesses or low-quality white t-shirts) and then moves up market, eventually displacing established competitors (such as those in the markets mentioned above).

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 to therefore disrupt large traditional industries can translate into tremendous future opportunity for Cimpress.

Until approximately our fiscal year 2012, we focused primarily on a narrow set of customers (highly price-sensitive and discount-driven micro businesses and consumers) with a limited product offering.

Through acquisitions and via significant investments in our Vistaprint 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.

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 product offering.

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.

As we continue to evolve and grow Cimpress, our understanding of these markets and their relative attractiveness is also evolving.

Our expansion of product breadth and depth as well as new geographic markets has significantly increased the size of our addressable market opportunity.

We base our market size and attractiveness estimates upon considerable research and analysis;

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 an enormous aggregate market with significant opportunity for Cimpress to grow as we continue delivering a differentiated and attractive value proposition to customers.

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.

Print Market Opportunity

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 and Europe combined and at least $150 billion annually if you include other geographies and consumer products.

These product categories are listed in order of market penetration by mass customization models.

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.

• Small format marketing materials such as business cards, flyers, leaflets, inserts, brochures and magazines.

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• Promotional products, apparel and gifts including decorated apparel, bags and textiles, and hard goods such as pens, USB sticks, and drinkware.

The end users of short-and-medium runs of these products range from businesses to teams, associations and groups, as well as consumers.

The end users of short-and-medium runs of these products range from businesses to teams, associations and groups, as well as individual consumers.

• Packaging products, such as corrugated board packaging, folded cartons, bags and labels.

Businesses are the primary end users for short-and-medium runs (below 10,000 units).

Cimpress’ recent acquisition of 99designs, which operates within our Vistaprint business, combined with organic investment in design services, has extended our total addressable market.

Vistaprint researched the design spend in two of its largest markets, the U.S.

Businesses of all sizes are the primary end users for short-and-medium runs (below 10,000 units).

Design Market Opportunity

Vista was an early pioneer of the concept of web-based do-it-yourself design for printed products 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 ever-more-complex product formats and marketing channels into the mass customization paradigm (for example, packaging, large format signage, catalogs).

Cimpress’ recent acquisitions of 99designs and Depositphotos (VistaCreate), which operate within our Vista business, provide significant capabilities to be a leader in this market shift.

For example, 99designs has a network of 150 thousand freelance designers who work with customer-specific design projects and Depositphotos brings more than 100 thousand freelance contributors of photos, videos, music and other content.

VistaCreate is building a design system that combines graphic templates created by thousands of freelancers with algorithmically generated variations across many different print and digital products of customers' adaptation of those templates.

Vista researched the design spend in two of its largest markets, the U.S.

and Germany, and found that small businesses spend approximately $6 billion annually on design services in these two markets, exclusive of the purchases of the print or digital products that the designs enhance.

Even more importantly, this research found that small businesses in these markets 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 Vistaprint to retain customers longer as their needs evolve, as well as both attract new customers and serve existing customers with more complex products and therefore access more of our total addressable market.

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 more complex products and therefore access more of our total addressable market.

Digital Market Opportunity

Over the past decade, 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 that 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.

Cimpress' recent acquisition of Depositphotos, which includes the VistaCreate offering for do-it-yourself social media design and operates within our Vista business, 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, but our ambition here is focused on enhancing the customer experience of millions of Vista customers, where the amount that businesses spend annually on digital marketing solutions is roughly the same amount as is spent on design services and print products.

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.

Our Businesses

Cimpress businesses include our organically developed Vistaprint business, plus previously independent businesses either that we have fully acquired or in which we have a majority equity stake.

Prior to its acquisition, each of our acquired companies pursued business models that embodied the principles of mass customization.

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 related products.

In other words, 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 collectively operate across North America and Europe, as well as in India, Japan, Brazil, China and Australia.

Our businesses serve markets primarily in North America, Western Europe, Australia and New Zealand.

We also have small but fast growing 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 completely self-service basis or with varying levels of assistance.

Some of our businesses also use offline techniques to acquire customers (e.g., mail order, telesales).

Some of our businesses also use offline techniques to acquire customers (e.g., direct mail marketing, telesales).

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.

Also, we have responded to customer needs with new pandemic-related design templates for existing products as well as launching new products like face masks.

The majority of our revenue is driven by standardized processes and enabled by software.

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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-owned 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.

In certain of our company-owned 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.

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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 Vistaprint where product assortment is dramatically smaller on a relative basis.

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.

This deep and broad product offering is important to many customers.

Our businesses are currently organized into the following five reportable segments:

Consists of the operations of our Vistaprint-branded websites in North America, Europe, Australia, New Zealand, India and Japan.

This business also includes our Vistaprint Corporate Solutions business which serves medium-sized businesses and large corporations and our 99designs business which provides graphic design services.

Our Vistaprint business helps more than 15 million micro businesses (companies with fewer than 10 employees) create attractive, professional-quality marketing products at affordable prices and at low volumes.

With Vistaprint, 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.

In October 2020, Vistaprint acquired 99designs to expand its design offering via a worldwide community of more than

150,000 talented designers to make it easy for designers and clients to work together to create designs they love.

Vistaprint’s average order value is about $50, and customers spend about $100 per year;

yet Vistaprint has historically had gross margins of about 60% and advertising spend as a percent of revenue of about 15%.

Vistaprint has had strong free cash flow conversion as its e-commerce model leads to collections from customers prior to the production and shipment of customer orders.

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, our rapidly growing VistaCreate brand 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 more than 15 million small businesses create attractive, professional-quality marketing products at affordable prices and at 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.

In October 2020, Vista acquired 99designs to expand its design offering via a worldwide community of more than 150,000 talented designers to make it easy for designers and clients to work together to create designs they love.

In October 2021, Vista acquired Depositphotos and its business now known as VistaCreate to expand the content available for our customers and to introduce VistaCreate, which is a versatile, intuitive design software which leverages templates from freelance contributors.

In early fiscal year 2022 our Vista business began evolving its brand architecture to "Vista".

Brands like "VistaPrint", "VistaCreate", "99designs by Vista", "Vista Corporate Solutions" and Vista x Wix now operate within the "Vista" brand architecture.

This move should broaden our customers' understanding of our value proposition over time to allow us to serve a broader set of their needs across a wide range of products and solutions that include design, social media and web presence as well as print.

Vista’s average order value is more than $70, customers spend on average a bit more than $100 per year;

gross margins are about 60% and advertising spend as a percent of revenue is about 17%.

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.

Upload & Print:

Our Upload & Print businesses are organized in two sub-groups.

We refer to these reportable segments as PrintBrothers and The Print Group, each of which focuses on serving graphic professionals:

Our Upload & Print businesses are organized in two reportable segments PrintBrothers and The Print Group, both of which focus on serving graphic professionals:

local printers, print resellers, graphic artists, advertising agencies and other customers with professional desktop publishing skill sets.

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Consists of our National Pen 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 more than 20 countries.

National Pen serves more than a million small businesses annually across geographies including North America, Europe, Japan and Australia.

Marketing methods are typically direct mail and telesales, as well as a growing e-commerce site.

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National Pen’s average order value is about $200 - $250, and annual revenue per customer is about $300.

Gross margins have historically been about 55% with highly seasonal profits driven in the December quarter.

Gross margins are about 55% with highly seasonal profits driven in the December quarter.

Advertising spend as a percent of revenue is about 22%.

Significant inventory and customer invoicing requirements in this business drive different working capital needs compared to our other businesses.

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BuildASign, the largest of the these businesses with strong profitability and cash flow, and Printi and YSD, small early-stage businesses operating at modest losses, by which Cimpress is expanding into new markets.

BuildASign is an e-commerce provider of canvas-print wall décor, business signage and other large-format printed products, based in Austin, Texas.

In the fourth quarter of fiscal year 2021, we closed a small acquisition under BuildASign in a new product category.

During the fourth quarter of fiscal 2022, we decided to exit our YSD business which we expect to complete in early fiscal 2023.

BuildASign is an e-commerce provider of canvas-print wall décor, business signage and other large-format printed products, based primarily in Austin, Texas.

As the online printing leader in Brazil, Printi offers a superior customer experience with transparent and attractive pricing, reliable service and quality.

YSD is a startup operation that provides end-to-end mass customization solutions to brands and intellectual property owners in China, supporting multiple channels including retail stores, websites, WeChat and e-commerce platforms to enhance brand awareness and competitiveness, and develop new markets.

Central Procurement

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The Cimpress procurement team is also available on an as-requested basis to help with procurement improvements, tools and approaches across other aspects of our businesses’ purchases.

We are focused on achieving the lowest total cost in our strategic sourcing efforts by concentrating on quality, logistics, technology and cost, while also striving to use responsible sourcing practices within our supply chain.

While we are focused on seeking low total cost in our strategic sourcing efforts, we also work to ensure quality, deliver 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.

Additionally, we 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.

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 aggregate and produce multiple orders in standardized, scalable processes.

In fiscal year 2022, there were significant disruptions to global supply chains, impacting many industries including ours.

Having this strong central procurement team that worked together with the procurement teams in each of our businesses benefited us during this challenging period and we believe it has enabled us to operate more effectively and mitigate 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 building and using our MCP 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.

Cimpress businesses, and increasingly third-party fulfillers to our various businesses, can 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 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 avoiding IT expense (through a reduction in expenses related to maintaining/licensing software).

Over time, we believe we 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 are building and 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, logistics technologies that automate various stages of the production and delivery of a product to a customer.

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.

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.

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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 own engineering and development talent to focus on artwork technologies, product information management and marketplace technologies from which we derive competitive advantage.

This allows our own 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 decentralized 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.

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Each Cimpress business is responsible for ensuring that customer, company and team member information is secure and handled in ways that are fully compliant with relevant laws and regulations.

Because there are many aspects of this topic that apply to all of our businesses, Cimpress has a central security team that defines security policies, deploys security controls, and provides services and embeds security into the development processes of our businesses.

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, and 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 cost, and become more efficient in using their resources.

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We believe that this market is at least $150 billion annually if you include other geographies and consumer products.

Additionally, as described above, through the acquisition of 99designs and organic investment in Vistaprint, we have also expanded this total addressable market to now include the large market for design services.

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.

Additionally, as described above, through the acquisitions of 99designs and Depositphotos/VistaCreate, as well as organic investment and partnership opportunities in Vista, we have expanded this total addressable market to now include the large market for design services and a portion of the market for digital marketing services.

The markets for the products our businesses produce and sell are intensely competitive, highly fragmented and geographically dispersed, with many existing and potential competitors.

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• providers of digital marketing such as social media and local search directories

Today’s market has evolved to be much tougher in terms of competition.

Today’s market has evolved to be more competitive.

This evolution, which has been going on for 20 years, has led to major benefits for customers in terms of lower prices, faster lead times, and easier customer experience.

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As the model has become better understood and more prevalent, and online advertising approaches more common, the competition has become more intense.

We are seeing these types of small format products growing at rates slower than some other product categories, and we continue to derive significant profits from these small format products.

Conversely, there are other product areas that have only more recently begun to benefit from mass customization, such as signage, promotional products, apparel and gifts, textiles and packaging.

Here, we see higher rates of growth, but with a wider variety of profit outcomes as we continue to scale our offering in these areas.

There is also a geographic overlay to these trends.

For example, in developing markets like India and Brazil where these products are more recently available in an online marketplace, we see stronger growth across all product areas, whereas the market in countries such as Germany is far more mature and therefore more slow growing.

Some of these trends were distorted over the last year because of the pandemic, which temporarily altered demand and behavior patterns.

We anticipate that the overall competitive landscape described above has already begun to change as a result of the pandemic, in the following ways:

• New business formation :

Economic data shows that new business formation has increased meaningfully during the pandemic in our top markets:

U.S., UK, France, and Germany.

This often happens in a recession out of necessity:

people who lose employment need to make ends meet and so start their own businesses.

We have an opportunity to serve millions of individuals who take up self-employment or freelance roles because of our ability to serve the needs of those customers – we have demonstrated this in past recessions and expect to be able to do so again.

• E-commerce acceleration :

We believe that the shift from traditional to mass customized models has accelerated as shelter-at-home experiences are making e-commerce and service-at-a-distance experiences like ours more mainstream.

For example, McKinsey has estimated in the U.S.

that 10 years of e-commerce adoption was compressed into three months during the pandemic [1] .

There are similar trends in other countries around the world, according to an OECD policy brief [2] , among other sources.

• Accelerated shift from traditional production to mass customized sources :

Conditions have been very difficult for small traditional suppliers and we believe some of these businesses are unlikely to last beyond the period of time that they are receiving government aid.

We see this through industry news coverage [3] and research [4] and through some of our businesses that sell to these suppliers as bookings from those channels have been harder hit.

One of the reasons for this is small traditional suppliers have a narrower

range of products than Cimpress so as demand for those products dropped significantly, even if temporary, there was less room to maneuver.

• Share gains versus online players :

Additionally, we believe that some of the online competitors that offer a more limited product portfolio or lack scale advantages have had less flexibility to navigate changing customer demand levels.

We saw online competitors [5] who report their revenue publicly down year over year 35% - 40% during the 6-month period from July 1, 2020 to December 31, 2020, while our own revenue declined just 10% in the same period.

[1] https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/survey-us-consumer-sentiment-during-the-coronavirus-crisis#

[2] http://www.oecd.org/coronavirus/policy-responses/e-commerce-in-the-time-of-covid-19-3a2b78e8/

[3] https://www.printweek.com/news/article/industry-bodies-warn-on-carnage-in-print

[4] https://store.whattheythink.com/downloads/printing-outlook-2021/

[5] We note that we have three known competitors with publicly reported revenue

These types of small format products are growing and 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.

Social and Environmental Responsibility

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Examples of these efforts are:

• Environmental:

We regularly evaluate ways to minimize the impact of our operations on the environment.

In terms of combating climate change, we have established and centrally fund a company-wide carbon emissions reduction program to lower the emissions associated with our operations at a rate slightly exceeding the 1.5 o C target pathway, and expect to achieve carbon neutrality by 2040.

This commitment expands upon our previous 2°C target, established in alignment with the 2015 United Nations Global Change Conference (COP21 “Paris Climate Accord”), and now includes the emissions from our supply chain (Scope 3).

Our plan includes investments in energy-reducing infrastructure and equipment, renewable energy sourcing, and examination of our substrate and logistics choices for further opportunities to reduce total emissions.

We are on track to meet this commitment, and we seek to make further improvements each year going forward.

• Climate change:

We strive to achieve net zero carbon emissions by 2040 across our entire value chain and to achieve a 53% reduction in emissions by 2030 (compared to a 2019 baseline).

Our targets have been informed by a science-based approach and are in alignment with a 1.5 o C pathway.

This includes the emissions from our supply chain (Scope 3).

Through investments in energy-efficient infrastructure and equipment, as well as renewable energy, we have achieved significant reductions in our Scope 1 and 2 emissions, and expect further reductions in the future.

We have begun to examine our Scope 3 emissions, including substrate and logistics choices, for further opportunities to reduce total emissions.

We are focused on engaging our suppliers to refine our Scope 3 data, while building internal systems and processes to enhance our data management capabilities and improve our decision making.

• Responsible forestry:

We have converted the vast majority of the paper we print on in our Cimpress-owned production facilities to FSC-certified paper (FSC ® C143124, FSC ® C125299), the leading certification of responsible forestry practices.

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Currently over 85% of the paper that we print on in our facilities is FSC-certified, and we seek to move that to 100% over time.

We have also committed to influencing our third-party suppliers to materially expand their use of responsibly forested paper for the products that they customize on our behalf, as well as using either FSC-certified corrugate or packaging materials containing recycled content from post-consumer sources to help ensure our packaging does not contribute to deforestation.

We also have also recently committed to improve the profile of our plastic-based packaging and products in line with the targets set by the New Plastics Economy Global Commitment, co-sponsored by the United Nations Environment Programme.

This includes a focus on reduced plastic usage, increased recyclability, and support of products that contain recycled materials.

We have expanded beyond our original product goal to also include packaging, where we target 95% of our packaging to be either FSC-certified corrugate or containing recycled content from post-consumer sources.

We have also begun to engage our third-party suppliers to materially expand their use of responsibly forested paper for the products that they customize on our behalf.

• Plastics transition:

We are committed to improving the profile of our plastic-based packaging and products in line with the targets set by the New Plastics Economy Global Commitment, co-sponsored by the United Nations Environment Programme.

This includes a focus on reducing plastic usage, eliminating problematic plastic, increasing recyclability, and supporting products and packaging that contain recycled materials.

• Fair labor practices:

We make recruiting, retention, and other performance management related decisions based solely on merit, based on an individual’s ability to do their job with excellence and in alignment with the company’s strategic and operational objectives.

We make recruiting, retention, and other performance management related decisions 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 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.

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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.

Given the global impacts of the COVID-19 pandemic, we have held our team member health and safety as a top priority, and have implemented measures such as remote working for members who are able to and increased safety

measures at our manufacturing and customer service centers including additional cleaning and sanitary protocols.

Given the ongoing impacts of the COVID-19 pandemic, we continue to prioritize team member health and safety, and have implemented measures such as remote working for members who are able to and increased safety measures at our manufacturing and customer service centers including additional cleaning and sanitary protocols.

• Ethical supply chain:

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, environmental standards, and safe working conditions.

Each Cimpress business is responsible to ensure its supply chain does not allow for unacceptable practices such as environmental crimes, child labor, slavery or unsafe working conditions.

More information can be found at www.cimpress.com in our Corporate Social Responsibility section, including links to reports and documents such as our supplier code of conduct, compliance with the UK anti-slavery act and our supply chain transparency disclosure.

To enhance transparency in the areas listed above, we are working toward the release of our inaugural ESG report for fiscal year 2022, which we expect to publish during the second quarter of fiscal year 2023.

This will be guided by standard ESG reporting frameworks.

We are monitoring developments in the ESG reporting regulatory landscape and are building the necessary processes and capabilities to remain in compliance as relevant regulations evolve.

Intellectual Property

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Our second fiscal quarter, ending December 31, includes the majority of the holiday shopping season and is our strongest quarter for sales of our consumer-oriented products, such as holiday cards, calendars, canvas prints, photobooks, and personalized gifts.

Human Capital

As of June 30, 2022, we had approximately 15,000 full-time and approximately 1,000 temporary employees worldwide.

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Available Information

We make available, free of charge through our United States website, 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.

The address of our United States website is www.cimpress.com.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business