CIMPRESS plc 10-Q

Item 1. Financial Statements CIMPRESS PLC CONSOLIDATED BALANCE SHEETS (unaudited in thousands, except share and per share data) September 30, 2023 June 30, 2023 Assets Current assets: Cash and cash equivalents $ 125,199 $ 130,313 Marketable securities 22,613 38,540 Accounts receivable, net of allowances of $7,026 and $6,630, respectively 68,892 67,353 Inventory 113,985 107,835 Prepaid expenses and other current assets 113,230 96,986 Total current assets 443,919 441,027 Property, plant and equipment, net 271,507 287,574 Operating lease assets, net 74,519 76,776 Software and website development costs, net 92,620 95,315 Deferred tax assets 12,060 12,740 Goodwill 772,165 781,541 Intangible assets, net 98,836 109,196 Marketable securities, non-current — 4,497 Other assets 43,845 46,193 Total assets $ 1,809,471 $ 1,854,859 Liabilities, noncontrolling interests and shareholders’ deficit Current liabilities: Accounts payable $ 264,032 $ 285,784 Accrued expenses 272,819 257,109 Deferred revenue 49,490 44,698 Short-term debt 10,877 10,713 Operating lease liabilities, current 21,851 22,559 Other current liabilities 20,114 24,469 Total current liabilities 639,183 645,332 Deferred tax liabilities 49,407 47,351 Long-term debt 1,594,942 1,627,243 Operating lease liabilities, non-current 55,051 56,668 Other liabilities 73,668 90,058 Total liabilities 2,412,251 2,466,652 Commitments and contingencies (Note 12) Redeemable noncontrolling interests (Note 10) 10,848 10,893 Shareholders’ deficit: Ordinary shares, nominal value €0.01 per share, 100,000,000 shares authorized; 44,554,058 and 44,315,855 shares issued, respectively; 26,582,811 and 26,344,608 shares outstanding, respectively 615 615 Treasury shares, at cost, 17,971,247 shares for both periods presented ( 1,363,550 ) ( 1,363,550 ) Additional paid-in capital 543,754 539,454 Retained earnings 239,620 235,396 Accumulated other comprehensive loss ( 34,622 ) ( 35,060 ) Total shareholders’ deficit attributable to Cimpress plc ( 614,183 ) ( 623,145 ) Noncontrolling interests (Note 10) 555 459 Total shareholders' deficit ( 613,628 ) ( 622,686 ) Total liabilities, noncontrolling interests and shareholders’ deficit $ 1,809,471 $ 1,854,859 See accompanying notes. 1 CIMPRESS PLC CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited in thousands, except share and per share data) Three Months Ended September 30, 2023 2022 Revenue $ 757,294 $ 703,415 Cost of revenue (1) 398,783 377,735 Technology and development expense (1) 74,330 74,475 Marketing and selling expense (1) 192,188 200,930 General and administrative expense (1) 48,341 54,072 Amortization of acquired intangible assets 9,886 12,350 Restructuring expense (1) ( 334 ) 1,820 Income (loss) from operations 34,100 ( 17,967 ) Other income, net 6,419 27,397 Interest expense, net ( 29,200 ) ( 24,806 ) Gain on early extinguishment of debt 1,372 — Income (loss) before income taxes 12,691 ( 15,376 ) Income tax expense 8,122 9,365 Net income (loss) 4,569 ( 24,741 ) Add: Net (income) attributable to noncontrolling interests ( 15 ) ( 700 ) Net income (loss) attributable to Cimpress plc $ 4,554 $ ( 25,441 ) Basic net income (loss) per share attributable to Cimpress plc $ 0.17 $ ( 0.97 ) Diluted net income (loss) per share attributable to Cimpress plc $ 0.17 $ ( 0.97 ) Weighted average shares outstanding — basic 26,468,769 26,178,818 Weighted average shares outstanding — diluted 27,079,455 26,178,818 ____________________________________________ (1) Share-based compensation expense is allocated as follows: Three Months Ended September 30, 2023 2022 Cost of revenue $ 167 $ 193 Technology and development expense 4,209 3,041 Marketing and selling expense 2,218 2,459 General and administrative expense 5,859 4,782 Restructuring expense — 156 See accompanying notes. 2 CIMPRESS PLC CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited in thousands) Three Months Ended September 30, 2023 2022 Net income (loss) $ 4,569 $ ( 24,741 ) Other comprehensive income (loss), net of tax: Foreign currency translation losses, net of hedges ( 3,787 ) ( 8,182 ) Net unrealized gains on derivative instruments designated and qualifying as cash flow hedges 7,679 16,760 Amounts reclassified from accumulated other comprehensive loss to net income (loss) for derivative instruments ( 3,548 ) ( 2,938 ) Comprehensive income (loss) 4,913 ( 19,101 ) Add: Comprehensive loss attributable to noncontrolling interests 79 647 Total comprehensive income (loss) attributable to Cimpress plc $ 4,992 $ ( 18,454 ) See accompanying notes. 3 CIMPRESS PLC CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (unaudited in thousands) Ordinary Shares Treasury Shares Number of Shares Issued Amount Number of Shares Issued Amount Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Deficit Balance at June 30, 2022 44,084 $ 615 ( 17,971 ) $ ( 1,363,550 ) $ 501,003 $ 414,138 $ ( 47,128 ) $ ( 494,922 ) Restricted share units vested, net of shares withheld for taxes 112 — — — ( 2,212 ) — — ( 2,212 ) Share-based compensation expense — — — — 10,653 — — 10,653 Net loss attributable to Cimpress plc — — — — — ( 25,441 ) — ( 25,441 ) Redeemable noncontrolling interest accretion to redemption value — — — — — ( 2,725 ) — ( 2,725 ) Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges — — — — — — 13,822 13,822 Foreign currency translation, net of hedges — — — — — ( 6,835 ) ( 6,835 ) Balance at September 30, 2022 44,196 $ 615 ( 17,971 ) $ ( 1,363,550 ) $ 509,444 $ 385,972 $ ( 40,141 ) $ ( 507,660 ) Balance at June 30, 2023 44,316 $ 615 ( 17,971 ) $ ( 1,363,550 ) $ 539,454 $ 235,396 $ ( 35,060 ) $ ( 623,145 ) Issuance of ordinary shares due to share option exercises, net of shares withheld for taxes 2 — — — 82 — — 82 Restricted share units vested, net of shares withheld for taxes 236 — — — ( 8,403 ) — — ( 8,403 ) Share-based compensation expense — — — — 12,621 — — 12,621 Net income attributable to Cimpress plc — — — — — 4,554 — 4,554 Redeemable noncontrolling interest accretion to redemption value — — — — — ( 330 ) — ( 330 ) Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges — — — — — — 4,131 4,131 Foreign currency translation, net of hedges — — — — — — ( 3,693 ) ( 3,693 ) Balance at September 30, 2023 44,554 $ 615 ( 17,971 ) $ ( 1,363,550 ) $ 543,754 $ 239,620 $ ( 34,622 ) $ ( 614,183 ) See accompanying notes. 4 CIMPRESS PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited in thousands) Three Months Ended September 30, 2023 2022 Operating activities Net income (loss) $ 4,569 $ ( 24,741 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 39,942 40,942 Share-based compensation expense 12,453 10,631 Deferred taxes ( 1,118 ) ( 1,024 ) Gain on early extinguishment of debt ( 1,372 ) — Unrealized gain on derivatives not designated as hedging instruments included in net income (loss) ( 6,261 ) ( 14,024 ) Effect of exchange rate changes on monetary assets and liabilities denominated in non-functional currency 1,885 ( 749 ) Other non-cash items ( 1,229 ) 2,158 Changes in operating assets and liabilities, net of effects of businesses acquired: Accounts receivable ( 2,209 ) ( 9,460 ) Inventory ( 401 ) ( 36,434 ) Prepaid expenses and other assets 4,214 3,151 Accounts payable ( 22,209 ) ( 12,013 ) Accrued expenses and other liabilities 13,990 16,312 Net cash provided by (used in) operating activities 42,254 ( 25,251 ) Investing activities Purchases of property, plant and equipment ( 22,565 ) ( 11,758 ) Capitalization of software and website development costs ( 14,397 ) ( 15,330 ) Proceeds from the sale of assets 5,636 122 Purchases of marketable securities — ( 84,030 ) Proceeds from maturity of held-to-maturity investments 20,500 9,953 Net cash used in investing activities ( 10,826 ) ( 101,043 ) Financing activities Proceeds from borrowings of debt 173 10,000 Payments of debt ( 3,784 ) ( 13,256 ) Payments for early redemption of 7% Senior Notes due 2026 ( 19,815 ) — Payments of debt issuance costs — ( 23 ) Payments of purchase consideration included in acquisition-date fair value — ( 225 ) Payments of withholding taxes in connection with equity awards ( 8,404 ) ( 2,212 ) Payments of finance lease obligations ( 2,768 ) ( 2,412 ) Proceeds from issuance of ordinary shares 82 — Distributions to noncontrolling interests ( 549 ) ( 3,652 ) Net cash used in financing activities ( 35,065 ) ( 11,780 ) Effect of exchange rate changes on cash ( 1,477 ) ( 6,879 ) Net decrease in cash and cash equivalents ( 5,114 ) ( 144,953 ) Cash and cash equivalents at beginning of period 130,313 277,053 Cash and cash equivalents at end of period $ 125,199 $ 132,100 See accompanying notes. 5 CIMPRESS PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (unaudited in thousands) Three Months Ended September 30, 2023 2022 Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ 24,239 $ 15,060 Income taxes 15,794 4,257 Cash received during the period for: Interest 3,349 2,074 Non-cash investing and financing activities Property and equipment acquired under finance leases 386 2,412 Amounts accrued related to property, plant and equipment 6,403 9,500 Amounts accrued related to capitalized software development costs 205 213 Amounts accrued related to business acquisitions — 8,463 See accompanying notes. 6 CIMPRESS PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited in thousands, except share and per share data) 1. Description of the Business Cimpress is a strategically focused collection of 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 and services include a broad range of marketing materials, business cards, signage, promotional products, logo apparel, packaging, books and magazines, wall decor, photo merchandise, invitations and announcements, design and digital marketing services, and other categories. Mass customization is a core element of the business model of each Cimpress business and is a competitive strategy which seeks to produce goods and services to meet individual customer needs with near mass production efficiency. 2. Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements include the accounts of Cimpress plc, its wholly owned subsidiaries, entities in which we maintain a controlling financial interest, and those entities in which we have a variable interest and are the primary beneficiary. Intercompany balances and transactions have been eliminated. Investments in entities in which we cannot exercise significant influence, and for which the related equity securities do not have a readily determinable fair value, are included in other assets on the consolidated balance sheets; otherwise the investments are recognized by applying equity method accounting. Our equity method investments are included in other assets on the consolidated balance sheets. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We believe our most significant estimates are associated with the ongoing evaluation of the recoverability of our long-lived assets and goodwill, estimated useful lives of assets, share-based compensation, and income taxes and related valuation allowances, among others. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates. Marketable Securities We hold certain investments that are classified as held-to-maturity as we have the intent and ability to hold them to their maturity dates. Our policy is to invest in the following permitted classes of assets: overnight money market funds invested in U.S. Treasury securities and U.S. government agency securities, U.S. Treasury securities, U.S. government agency securities, bank time deposits, commercial paper, corporate notes and bonds, and medium term notes. We invest in securities with a remaining maturity of two years or less. As the investments are classified as held-to-maturity, they are recorded at amortized cost and interest income is recorded as it is earned within interest expense, net. We will continue to assess our securities for impairment when the fair value is less than amortized cost to determine if any risk of credit loss exists. As our intent is to hold the securities to maturity, we must assess whether any credit losses related to our investments are recoverable and determine if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. We did not record an allowance for credit losses and we recognized no impairments for these marketable securities during the three months ended September 30, 2023 and 2022. 7 The following is a summary of the net carrying amount, unrealized losses, and fair value of held-to-maturity securities by type and contractual maturity as of September 30, 2023 and June 30, 2023. September 30, 2023 Amortized cost Unrealized losses Fair value Due within one year or less: Corporate debt securities $ 13,337 $ ( 143 ) $ 13,194 U.S. government securities 9,276 ( 80 ) 9,196 Total held-to-maturity securities $ 22,613 $ ( 223 ) $ 22,390 June 30, 2023 Amortized cost Unrealized losses Fair value Due within one year or less: Commercial paper $ 15,982 $ ( 10 ) $ 15,972 Corporate debt securities 16,298 ( 190 ) 16,108 U.S. government securities 6,260 ( 69 ) 6,191 Total due within one year or less 38,540 ( 269 ) 38,271 Due between one and two years: Corporate debt securities 1,498 ( 35 ) 1,463 U.S. government securities 2,999 ( 66 ) 2,933 Total due between one and two years 4,497 ( 101 ) 4,396 Total held-to-maturity securities $ 43,037 $ ( 370 ) $ 42,667 Other Income, Net The following table summarizes the components of other income, net: Three Months Ended September 30, 2023 2022 Gains on derivatives not designated as hedging instruments (1) $ 8,312 $ 28,645 Currency-related losses, net (2) ( 2,699 ) ( 197 ) Other gains (losses) 806 ( 1,051 ) Total other income, net $ 6,419 $ 27,397 _____________________ (1) Includes realized and unrealized gains and losses on derivative currency forward and option contracts not designated as hedging instruments. For contracts not designated as hedging instruments, we realized gains of $ 2,050 and $ 14,621 for the three months ended September 30, 2023 and 2022. Refer to Note 4 for additional details relating to our derivative contracts. (2) Currency-related losses, net primarily relates to significant non-functional currency intercompany financing relationships that we may change at times and are subject to currency exchange rate volatility. In addition, we have a cross-currency swap designated as a cash flow hedge which hedges the remeasurement of an intercompany loan. Refer to Note 4 for additional details relating to this cash flow hedge. Net Income (Loss) Per Share Attributable to Cimpress plc Basic net income (loss) per share attributable to Cimpress plc is computed by dividing net income (loss) attributable to Cimpress plc by the weighted-average number of ordinary shares outstanding for the respective period. Diluted net income (loss) per share attributable to Cimpress plc gives effect to all potentially dilutive securities, including share options, restricted share units (“RSUs”), warrants, and performance share units ("PSUs"), if the effect of the securities is dilutive using the treasury stock method. Awards with performance or market conditions are included using the treasury stock method only if the conditions would have been met as of the end of the reporting period and their effect is dilutive. 8 The following table sets forth the reconciliation of the weighted-average number of ordinary shares: Three Months Ended September 30, 2023 2022 Weighted average shares outstanding, basic 26,468,769 26,178,818 Weighted average shares issuable upon exercise/vesting of outstanding share options/RSUs/warrants (1)(2) 610,686 — Shares used in computing diluted net income (loss) per share attributable to Cimpress plc 27,079,455 26,178,818 Weighted average anti-dilutive shares excluded from diluted net income (loss) per share attributable to Cimpress plc (1) 187,649 2,688,813 ___________________ (1) In the periods in which a net loss is recognized, the impact of share options, RSUs and warrants is not included as they are anti-dilutive. (2) On May 1, 2020, we entered into a financing arrangement with Apollo Global Management, Inc., which included 7-year warrants to purchase 1,055,377 of our ordinary shares with a strike price of $60 that have a potentially dilutive impact on our weighted average shares outstanding. For the three months ended September 30, 2023, the average market price of our ordinary shares was higher than the strike price of the warrants, as such the weighted average dilutive effect of the warrants was 98,319. For the three months ended September 30, 2022, the average market price of our ordinary shares was lower than the strike price of the warrants; therefore, the total 1,055,377 outstanding warrants were considered anti-dilutive. Share-based Compensation Total share-based compensation costs were $ 12,453 and $ 10,631 for the three months ended September 30, 2023 and 2022, respectively. During the first quarter of fiscal 2024, we issued PSUs (the "2024 PSUs") as part of our long-term incentive program for team members in our Vista business and central teams. The 2024 PSUs include both a service and performance condition, and the related expense is recognized using an accelerated expense attribution over the requisite service period for each separately vesting portion of the award. The performance condition for these awards is based on one-year financial targets for fiscal year 2024 revenue, adjusted EBITDA, and unlevered free cash flow for Cimpress (for grants to central team members) and Vista (for grants to Vista team members). Actual shares issued for each grant will range from 0% to 160% of the number of 2024 PSUs granted based on the attainment of the performance condition. Share-based compensation expense for these awards will be recognized on an accelerated basis using the grant date fair value and our estimated attainment percentage of the related performance condition. Until the performance condition is measured at the end of fiscal year 2024, changes in the estimated attainment percentages may cause expense volatility since a cumulative expense adjustment will be recognized in the period a change occurs. Assets Held for Sale During the first quarter of fiscal 2024, we began marketing our customer service facility located in Montego Bay, Jamaica for sale as part of the ongoing efforts to optimize our real estate footprint with many of our team members in Jamaica operating under a remote-first model. The building is available for immediate sale, and we believe a sale will occur within one year. The plan to sell the asset meets all held-for-sale criteria, which resulted in the reclassification of the building's carrying value of $16,446 from property, plant, and equipment, net to other current assets as of September 30, 2023. The estimated selling price less costs to sell exceeds carrying value as of September 30, 2023, and therefore no loss has been recorded on the asset held for sale. Recently Issued or Adopted Accounting Pronouncements Adopted Accounting Standards Supply Chain Finance Programs In September 2022, the FASB issued Accounting Standards Update No. 2022-04 "Liabilities - Supplier Finance Programs (Subtopic 405-50)" (ASU 2022-04), which provides authoritative guidance about expanded disclosure requirements for supply chain finance programs. The new standard requires disclosure of the key terms of outstanding supply chain finance programs and a rollforward of the related amounts due to suppliers participating in these programs. The adoption of the new disclosure requirements was effective for the current quarter, except for 9 a rollforward of activity within supply chain finance programs, which is effective as part of our annual disclosures for fiscal year 2025. The adoption of the new standard did not have an impact on our consolidated financial statements. We facilitate a voluntary supply chain finance program through a financial intermediary, which provides certain suppliers the option to be paid by the financial intermediary earlier than the due date of the applicable invoice. The decision to sell receivables due from us is at the sole discretion of both the suppliers and the financial institution. Our responsibility is limited to making payment on the terms originally negotiated with each supplier, regardless of whether a supplier participates in the program. We are not a party to the agreements between the participating financial institution and the suppliers in connection with the program, we do not receive financial incentives from the suppliers or the financial institution, nor do we reimburse suppliers for any costs they incur for participating in the program. There are no assets pledged as security or other forms of guarantees provided for the committed payment to the financial institution. All unpaid obligations to our supply chain finance provider are included in accounts payable in the consolidated balance sheets, and payments we make under the program are reflected as a reduction to net cash provided by operating activities in the consolidated statements of cash flows. The outstanding obligations with our supply chain finance provider that are included in accounts payable as of September 30, 2023 and June 30, 2023 were $49,025 and $44,522, respectively. 3. Fair Value Measurements We use a three-level valuation hierarchy for measuring fair value and include detailed financial statement disclosures about fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows: • Level 1: Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy: September 30, 2023 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Interest rate swap contracts $ 23,949 $ — $ 23,949 $ — Cross-currency swap contracts 13 — 13 — Currency forward contracts 4,128 — 4,128 — Currency option contracts 934 — 934 — Total assets recorded at fair value $ 29,024 $ — $ 29,024 $ — Liabilities Currency forward contracts $ ( 1,545 ) $ — $ ( 1,545 ) $ — Currency option contracts ( 1,505 ) — ( 1,505 ) — Total liabilities recorded at fair value $ ( 3,050 ) $ — $ ( 3,050 ) $ — 10 June 30, 2023 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Interest rate swap contracts $ 19,218 $ — $ 19,218 $ — Currency forward contracts 2,301 — 2,301 — Currency option contracts 990 — 990 — Total assets recorded at fair value $ 22,509 $ — $ 22,509 $ — Liabilities Cross-currency swap contracts $ ( 1,777 ) $ — $ ( 1,777 ) $ — Currency forward contracts ( 4,485 ) — ( 4,485 ) — Currency option contracts ( 3,055 ) — ( 3,055 ) — Total liabilities recorded at fair value $ ( 9,317 ) $ — $ ( 9,317 ) $ — During the three months ended September 30, 2023 and year ended June 30, 2023, there were no significant transfers in or out of Level 1, Level 2, and Level 3 classifications. The valuations of the derivatives intended to mitigate our interest rate and currency risks are determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each instrument. This analysis utilizes observable market-based inputs, including interest rate curves, interest rate volatility, or spot and forward exchange rates, and reflects the contractual terms of these instruments, including the period to maturity. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparties' nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements. Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to appropriately reflect both our own nonperformance risk and the respective counterparties' nonperformance risk in the fair value measurement. However, as of September 30, 2023, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 in the fair value hierarchy. As of September 30, 2023 and June 30, 2023, the carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable, and other current liabilities approximated their estimated fair values. As of September 30, 2023 and June 30, 2023, the carrying value of our debt, excluding debt issuance costs and debt premiums and discounts, was $ 1,621,001 and $ 1,653,989 , respectively, and the fair value was $ 1,596,312 and $ 1,604,190 , respectively. Our debt at September 30, 2023 includes variable-rate debt instruments indexed to Term SOFR and Euribor that resets periodically, as well as fixed-rate debt instruments. The estimated fair value of our debt was determined using available market information based on recent trades or activity of debt instruments with substantially similar risks, terms and maturities, which fall within Level 2 under the fair value hierarchy. As of September 30, 2023 and June 30, 2023, our held-to-maturity marketable securities were held at an amortized cost of $ 22,613 and $ 43,037 , respectively, while the fair value was $ 22,390 and $ 42,667 , respectively. The securities were valued using quoted prices for identical assets in active markets, which fall into Level 1 under the fair value hierarchy. The estimated fair value of assets and liabilities disclosed above may not be representative of actual values that could have been or will be realized in the future. 11 4. Derivative Financial Instruments We use derivative financial instruments, such as interest rate swap contracts, cross-currency swap contracts, and currency forward and option contracts, to manage interest rate and foreign currency exposures. Derivatives are recorded in the consolidated balance sheets at fair value. If a derivative is designated as a cash flow hedge or net investment hedge, then the change in the fair value of the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified into earnings in the period the hedged forecasted transaction affects earnings. We have designated one intercompany loan as a net investment hedge, and any unrealized currency gains and losses on the loan are recorded in accumulated other comprehensive loss. Additionally, any ineffectiveness associated with an effective and designated hedge is recognized within accumulated other comprehensive loss. The change in the fair value of derivatives not designated as hedges is recognized directly in earnings as a component of other income, net. Hedges of Interest Rate Risk We enter into interest rate swap contracts to manage variability in the amount of our known or expected cash payments related to a portion of our debt. Our objective in using interest rate swaps is to add stability to interest expense and to manage our exposure to interest rate movements. We designate our interest rate swaps as cash flow hedges. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the contract agreements without exchange of the underlying notional amount. Realized gains or losses from interest rate swaps are recorded in earnings as a component of interest expense, net. Amounts reported in accumulated other comprehensive loss related to interest rate swap contracts will be reclassified to interest expense, net as interest payments are accrued or made on our variable-rate debt. As of September 30, 2023, we estimate that $ 6,612 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending September 30, 2024. As of September 30, 2023, we had eleven effective outstanding interest rate swap contracts that were indexed to Term or Daily SOFR. Our interest rate swap contracts have varying start and maturity dates through April 2028. Interest rate swap contracts outstanding: Notional Amounts Contracts accruing interest as of September 30, 2023 (1) $ 245,000 Contracts with a future start date 430,000 Total $ 675,000 ________________________ (1) Based on contracts outstanding as of September 30, 2023, the notional value of our contracted interest rate swaps accruing interest will fluctuate between $215,000 and $380,000 through April 2028 based on layered start dates and maturities. Hedges of Currency Risk Cross-Currency Swap Contracts We execute cross-currency swap contracts designated as cash flow hedges or net investment hedges. Cross-currency swaps involve an initial receipt of the notional amount in the hedged currency in exchange for our reporting currency based on a contracted exchange rate. Subsequently, we receive fixed rate payments in our reporting currency in exchange for fixed rate payments in the hedged currency over the life of the contract. At maturity, the final exchange involves the receipt of our reporting currency in exchange for the notional amount in the hedged currency. Cross-currency swap contracts designated as cash flow hedges are executed to mitigate our currency exposure to the interest receipts as well as the principal remeasurement and repayment associated with certain intercompany loans denominated in a currency other than our reporting currency, the U.S. dollar. As of September 30, 2023, we had one outstanding cross-currency swap contract designated as a cash flow hedge with a total notional amount of $ 58,478 , maturing during June 2024. We entered into the cross-currency swap contract to 12 hedge the risk of changes in one Euro-denominated intercompany loan entered into with one of our consolidated subsidiaries that has the Euro as its functional currency. Amounts reported in accumulated other comprehensive loss will be reclassified to other income, net as interest payments are accrued or paid, and upon remeasuring the intercompany loan. As of September 30, 2023, we estimate that $ 1,353 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending September 30, 2024. Other Currency Hedges We execute currency forward and option contracts in order to mitigate our exposure to fluctuations in various currencies against our reporting currency, the U.S. dollar. These contracts or intercompany loans may be designated as hedges to mitigate the risk of changes in the U.S. dollar equivalent value of a portion of our net investment in consolidated subsidiaries that have the Euro as their functional currency. Amounts reported in accumulated other comprehensive loss are recognized as a component of our cumulative translation adjustment. As of September 30, 2023, we have one intercompany loan designated as a net investment hedge with a total notional amount of $ 310,270 that matures in May 2028. We have elected to not apply hedge accounting for all other currency forward and option contracts. During the three months ended September 30, 2023 and 2022, we experienced volatility within other income, net, in our consolidated statements of operations from unrealized gains and losses on the mark-to-market of outstanding currency forward and option contracts. We expect this volatility to continue in future periods for contracts for which we do not apply hedge accounting. Additionally, since our hedging objectives may be targeted at non-GAAP financial metrics that exclude non-cash items such as depreciation and amortization, we may experience increased, not decreased, volatility in our GAAP results as a result of our currency hedging program. In most cases, we enter into these currency derivative contracts, for which we do not apply hedge accounting, in order to address the risk for certain currencies where we have a net exposure to adjusted EBITDA, a non-GAAP financial metric. Adjusted EBITDA exposures are our focus for the majority of our mark-to-market currency forward and option contracts because a similar metric is referenced within the debt covenants of our amended and restated senior secured credit agreement (refer to Note 8 for additional information about this agreement). Our most significant net currency exposures by volume are the Euro and the British Pound (GBP). Our adjusted EBITDA hedging approach results in addressing nearly all of our forecasted Euro and GBP net exposures for the upcoming twelve months, with a declining hedged percentage out to twenty-four months. For certain other currencies with a smaller net impact, we hedge nearly all of our forecasted net exposures for the upcoming six months, with a declining hedge percentage out to fifteen months. As of September 30, 2023, we had the following outstanding currency derivative contracts that were not designated for hedge accounting and were primarily used to hedge fluctuations in the U.S. dollar value of forecasted transactions or balances denominated in Australian Dollar, Canadian Dollar, Czech Koruna, Danish Krone, Euro, GBP, Indian Rupee, Mexican Peso, New Zealand Dollar, Norwegian Krone, Philippine Peso, Swiss Franc and Swedish Krona: Notional Amount Effective Date Maturity Date Number of Instruments Index $ 651,202 December 2021 through September 2023 Various dates through September 2025 595 Various 13 Financial Instrument Presentation The table below presents the fair value of our derivative financial instruments as well as their classification on the balance sheet as of September 30, 2023 and June 30, 2023. Our derivative asset and liability balances fluctuate with interest rate and currency exchange rate volatility. September 30, 2023 Asset Derivatives Liability Derivatives Balance Sheet line item Gross amounts of recognized assets Gross amount offset in Consolidated Balance Sheet Net amount Balance Sheet line item Gross amounts of recognized liabilities Gross amount offset in Consolidated Balance Sheet Net amount Derivatives designated as hedging instruments Derivatives in cash flow hedging relationships Interest rate swaps Other current assets / other assets $ 23,949 $ — $ 23,949 Other liabilities $ — $ — $ — Cross-currency swaps Other current assets 13 — 13 Other current liabilities — — — Total derivatives designated as hedging instruments $ 23,962 $ — $ 23,962 $ — $ — $ — Derivatives not designated as hedging instruments Currency forward contracts Other current assets / other assets $ 5,837 $ ( 1,709 ) $ 4,128 Other current liabilities / other liabilities $ ( 2,452 ) $ 907 $ ( 1,545 ) Currency option contracts Other current assets / other assets 935 ( 1 ) 934 Other current liabilities / other liabilities ( 2,186 ) 681 ( 1,505 ) Total derivatives not designated as hedging instruments $ 6,772 $ ( 1,710 ) $ 5,062 $ ( 4,638 ) $ 1,588 $ ( 3,050 ) 14 June 30, 2023 Asset Derivatives Liability Derivatives Balance Sheet line item Gross amounts of recognized assets Gross amount offset in Consolidated Balance Sheet Net amount Balance Sheet line item Gross amounts of recognized liabilities Gross amount offset in Consolidated Balance Sheet Net amount Derivatives designated as hedging instruments Derivatives in cash flow hedging relationships Interest rate swaps Other assets $ 19,341 $ ( 123 ) $ 19,218 Other liabilities $ — $ — $ — Cross-currency swaps Other assets — — — Other current liabilities ( 1,777 ) — ( 1,777 ) Total derivatives designated as hedging instruments $ 19,341 $ ( 123 ) $ 19,218 $ ( 1,777 ) $ — $ ( 1,777 ) Derivatives not designated as hedging instruments Currency forward contracts Other current assets / other assets $ 2,873 $ ( 572 ) $ 2,301 Other current liabilities / other liabilities $ ( 6,074 ) $ 1,589 $ ( 4,485 ) Currency option contracts Other current assets / other assets 990 — 990 Other current liabilities / other liabilities ( 3,055 ) — ( 3,055 ) Total derivatives not designated as hedging instruments $ 3,863 $ ( 572 ) $ 3,291 $ ( 9,129 ) $ 1,589 $ ( 7,540 ) The following table presents the effect of our derivative financial instruments designated as hedging instruments and their classification within comprehensive loss, net of tax, for the three months ended September 30, 2023 and 2022: Three Months Ended September 30, 2023 2022 Derivatives in cash flow hedging relationships Interest rate swaps $ 6,131 $ 12,954 Cross-currency swaps 1,548 3,806 Derivatives in net investment hedging relationships Intercompany loan 5,775 12,951 Currency forward contracts ( 1,080 ) — Total $ 12,374 $ 29,711 15 The following table presents reclassifications out of accumulated other comprehensive loss for the three months ended September 30, 2023 and 2022: Amount of Net Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income Affected line item in the Statement of Operations Three Months Ended September 30, 2023 2022 Derivatives in cash flow hedging relationships Interest rate swaps $ ( 2,223 ) $ 397 Interest expense, net Cross-currency swaps ( 1,936 ) ( 3,742 ) Other income, net Total before income tax ( 4,159 ) ( 3,345 ) Income (loss) before income taxes Income tax 611 407 Income tax expense Total $ ( 3,548 ) $ ( 2,938 ) The following table presents the adjustment to fair value recorded within the consolidated statements of operations for the three months ended September 30, 2023 and 2022 for derivative instruments for which we did not elect hedge accounting. Amount of Gain (Loss) Recognized in Net Income (Loss) Affected line item in the Statement of Operations Three Months Ended September 30, 2023 2022 Currency contracts $ 8,312 $ 28,645 Other income, net Total $ 8,312 $ 28,645 5. Accumulated Other Comprehensive Loss The following table presents a roll forward of amounts recognized in accumulated other comprehensive loss by component, net of tax of $ 4,040 for the three months ended September 30, 2023 : Gains on cash flow hedges (1) Losses on pension benefit obligation Translation adjustments, net of hedges (2) Total Balance as of June 30, 2023 $ 12,297 $ ( 356 ) $ ( 47,001 ) $ ( 35,060 ) Other comprehensive income before reclassifications 7,679 — ( 3,693 ) 3,986 Amounts reclassified from accumulated other comprehensive loss to net income (loss) ( 3,548 ) — — ( 3,548 ) Net current period other comprehensive income 4,131 — ( 3,693 ) 438 Balance as of September 30, 2023 $ 16,428 $ ( 356 ) $ ( 50,694 ) $ ( 34,622 ) ________________________ (1) Gains on cash flow hedges include our interest rate swap and cross-currency swap contracts designated in cash flow hedging relationships. (2) As of September 30, 2023 and June 30, 2023, the translation adjustment is inclusive of both the unrealized and realized effects of our net investment hedges. Gains on currency forward and swap contracts, net of tax, of $ 15,079 have been included in accumulated other comprehensive loss as of September 30, 2023 and June 30, 2023. Intercompany loan hedge gains of $ 47,109 and $ 38,489 have been included in accumulated other comprehensive loss as of September 30, 2023 and June 30, 2023, respectively. 16 6. Goodwill The carrying amount of goodwill by reportable segment as of September 30, 2023 and June 30, 2023 was as follows: Vista PrintBrothers The Print Group All Other Businesses Total Balance as of June 30, 2023 $ 295,731 $ 141,092 $ 149,797 $ 194,921 $ 781,541 Effect of currency translation adjustments (1) ( 1,750 ) ( 3,658 ) ( 3,968 ) — ( 9,376 ) Balance as of September 30, 2023 $ 293,981 $ 137,434 $ 145,829 $ 194,921 $ 772,165 ________________________ (1) Related to goodwill held by subsidiaries whose functional currency is not the U.S. dollar. 7. Other Balance Sheet Components Accrued expenses included the following: September 30, 2023 June 30, 2023 Compensation costs $ 67,519 $ 74,879 Income and indirect taxes 43,091 53,266 Advertising costs (1) 35,207 16,548 Third party manufacturing and digital content costs 21,492 17,380 Shipping costs 10,726 11,146 Variable compensation incentives 11,473 9,413 Restructuring costs 1,486 7,567 Sales returns 6,795 6,441 Interest payable (2) 12,309 2,847 Professional fees 2,730 2,743 Other 59,991 54,879 Total accrued expenses $ 272,819 $ 257,109 ______________________ (1) The increase to accrued advertising costs is largely driven by the timing of invoice processing from third-party vendors and, to a lesser extent, increased spend in preparation for our peak holiday season during the second quarter of our fiscal year. (2) The increase in interest payable as of September 30, 2023, is due to the interest on our 7.0% Senior Notes Due 2026 being payable semi-annually on June 15 and December 15 of each year. Refer to Note 8 for further detail. Other current liabilities included the following: September 30, 2023 June 30, 2023 Current portion of finance lease obligations $ 9,270 $ 9,938 Short-term derivative liabilities 6,041 9,865 Other 4,803 4,666 Total other current liabilities $ 20,114 $ 24,469 Other liabilities included the following: September 30, 2023 June 30, 2023 Long-term finance lease obligations $ 28,526 $ 29,822 Long-term compensation incentives 13,324 22,286 Mandatorily redeemable noncontrolling interest (1) 9,488 12,018 Long-term derivative liabilities 307 1,737 Other 22,023 24,195 Total other liabilities $ 73,668 $ 90,058 ______________________ (1) The decrease to mandatorily redeemable noncontrolling interest liabilities is primarily driven by an accretion adjustment of $ 1,864 recognized as a benefit within interest expense, net in the consolidated statements of operations. 17 8. Debt September 30, 2023 June 30, 2023 7.0% Senior Notes due 2026 $ 527,135 $ 548,300 Senior secured credit facility 1,087,383 1,098,613 Other 6,483 7,076 Debt issuance costs and discounts, net of debt premiums ( 15,182 ) ( 16,033 ) Total debt outstanding, net 1,605,819 1,637,956 Less: short-term debt (1) 10,877 10,713 Long-term debt $ 1,594,942 $ 1,627,243 _____________________ (1) Balances as of September 30, 2023 and June 30, 2023 are inclusive of short-term debt issuance costs, debt premiums and discounts of $ 3,533 and $ 3,526 , respectively. Our various debt arrangements described below contain customary representations, warranties, and events of default. As of September 30, 2023, we were in compliance with all covenants in our debt contracts, including those under our amended and restated senior secured credit agreement ("Restated Credit Agreement") and the indenture governing our 7.0% Senior Notes due 2026 ("2026 Notes"). Senior Secured Credit Facility On May 17, 2021, we entered into a Restated Credit Agreement consisting of the following: • A senior secured Term Loan B with a maturity date of May 17, 2028 (the “Term Loan B”), consisting of: ◦ a $ 795,000 tranche that currently bears interest at Term SOFR (with a SOFR floor of 0.50 %) plus 3.50 %, and ◦ a € 300,000 tranche that currently bears interest at EURIBOR (with a EURIBOR floor of 0 %) plus 3.50 %; and • A $ 250,000 senior secured revolving credit facility with a maturity date of May 17, 2026 (the “Revolving Credit Facility”). Borrowings under the Revolving Credit Facility currently bear interest at Term SOFR (with a SOFR floor of 0 %) plus 2.50 % to 3.00 % depending on the Company’s First Lien Leverage Ratio, a net leverage calculation, as defined in the Restated Credit Agreement. The LIBOR sunset occurred on June 30, 2023, and under the terms of our Restated Credit Agreement, our benchmark rate transitioned to Term SOFR in July 2023. The Restated Credit Agreement contains covenants that restrict or limit certain activities and transactions by Cimpress and our subsidiaries, including, but not limited to, the incurrence of additional indebtedness and liens; certain fundamental organizational changes; asset sales; certain intercompany activities; and certain investments and restricted payments, including purchases of Cimpress plc’s ordinary shares and payment of dividends. In addition, if any loans made under the Revolving Credit Facility are outstanding on the last day of any fiscal quarter, then we are subject to a financial maintenance covenant that the First Lien Leverage Ratio calculated as of the last day of such quarter does not exceed 3.25 to 1.00 . As of September 30, 2023, we have borrowings under the Restated Credit Agreement of $ 1,087,383 consisting of the Term Loan B, which amortizes over the loan period, with a final maturity date of May 17, 2028. We have no outstanding borrowings under our Revolving Credit Facility as of September 30, 2023. As of September 30, 2023, the weighted-average interest rate on outstanding borrowings under the Restated Credit Agreement was 7.91 %, inclusive of interest rate swap rates. We are also required to pay a commitment fee for our Revolving Credit Facility on unused balances of 0.35 % to 0.45 % depending on our First Lien Leverage Ratio. We have pledged the assets and/or share capital of a number of our subsidiaries as collateral for our debt. Senior Unsecured Notes As of September 30, 2023, we have $ 527,135 in aggregate principal outstanding of our 2026 Notes, which are unsecured. We can redeem some or all of the 2026 Notes at the redemption prices specified in the indenture 18 that governs the 2026 Notes, plus accrued and unpaid interest to, but not including, the redemption date. During the three months ended September 30, 2023, we purchased an aggregate principal amount of $ 21,165 for a purchase price of $ 19,815 , as well as the related settlement of unpaid interest, which resulted in the recognition of a gain on the extinguishment of debt of $ 1,372 . Other Debt Other debt consists primarily of term loans acquired through our various acquisitions or used to fund certain capital investments. As of September 30, 2023 and June 30, 2023, we had $ 6,483 and $ 7,076 , respectively, outstanding for those obligations that are payable through November 2027. 9. Income Taxes Our income tax expense was $ 8,122 and $ 9,365 for the three months ended September 30, 2023 and 2022, respectively. Tax expense decreased year over year due to various immaterial discrete items in both periods, offset by increased tax on increased profits. Excluding the effect of discrete tax adjustments, our estimated annual effective tax rate is higher for fiscal 2024 as compared to fiscal 2023 primarily due to forecasted pre-tax profits in fiscal 2024 as compared to a pre-tax loss in fiscal 2023. Our effective tax rate continues to be negatively impacted by losses in certain jurisdictions where we are unable to recognize a tax benefit in the current period. We continuously analyze our valuation allowance positions and the weight of objective and verifiable evidence of actual results against the more subjective evidence of anticipated future income. As of September 30, 2023 we had unrecognized tax benefits of $ 16,276 , including accrued interest and penalties of $ 1,835 . We recognize interest and, if applicable, penalties related to unrecognized tax benefits in the provision for income taxes. If recognized, $ 7,585 of unrecognized tax benefits would reduce our tax expense. It is reasonably possible that a reduction in unrecognized tax benefits may occur within the next twelve months in the range of $ 500 to $ 1,700 related to the lapse of applicable statutes of limitations or settlement. We believe we have appropriately provided for all tax uncertainties. We conduct business in a number of tax jurisdictions and, as such, are required to file income tax returns in multiple jurisdictions globally. The years 2014 through 2023 remain open for examination by the U.S. Internal Revenue Service and the years 2015 through 2023 remain open for examination in the various states and non-U.S. tax jurisdictions in which we file tax returns. We believe that our income tax reserves are adequately maintained taking into consideration both the technical merits of our tax return positions and ongoing developments in our income tax audits. However, the final determination of our tax return positions, if audited, is uncertain, and there is a possibility that final resolution of these matters could have a material impact on our results of operations or cash flows. 10. Noncontrolling Interests Redeemable Noncontrolling Interests For some of our subsidiaries, we own a controlling equity stake, and a third party or key members of the business management team own a minority portion of the equity. These noncontrolling interests span multiple businesses and reportable segments. The following table presents the reconciliation of changes in our noncontrolling interests: Redeemable Noncontrolling Interest Noncontrolling Interest Balance as of June 30, 2023 $ 10,893 $ 459 Accretion to redemption value (1) 330 — Net (loss) income attributable to noncontrolling interests ( 96 ) 111 Distribution to noncontrolling interests ( 200 ) — Foreign currency translation ( 79 ) ( 15 ) Balance as of September 30, 2023 $ 10,848 $ 555 _________________ (1) Accretion of redeemable noncontrolling interests to redemption value recognized in retained earnings is the result of changes in the estimated redemption amount to the extent increases do not exceed the estimated fair value. 19 11. Segment Information Our operating segments are based upon the manner in which our operations are managed and the availability of separate financial information reported internally to the Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), for purposes of making decisions about how to allocate resources and assess performance. As of September 30, 2023, we have numerous operating segments under our management reporting structure which are reported in the following five reportable segments: • Vista - Vista is the parent brand of multiple offerings including VistaPrint, VistaCreate, 99designs by Vista, Vista Corporate Solutions, and Depositphotos, which together represent a full-service design, digital, and print solution. • PrintBrothers - Includes the results of our druck.at, Printdeal, and WIRmachenDRUCK businesses. • The Print Group - Includes the results of our Easyflyer, Exaprint, Packstyle, Pixartprinting, and Tradeprint businesses. • National Pen - Includes the global operations of our National Pen business, which manufactures and markets custom writing instruments and promotional products, apparel and gifts. • All Other Businesses - Includes two businesses grouped together based on materiality. ◦ BuildASign, a larger and profitable business, is an internet-based provider of canvas-print wall décor, business signage and other large-format printed products. ◦ Printi, a smaller business that we continue to manage at a relatively modest operating loss, is an online printing leader in Brazil, which offers a superior customer experience with transparent and attractive pricing, reliable service and quality. Central and corporate costs consist primarily of the team of software engineers that is building our mass customization platform; shared service organizations such as global procurement; technology services such as hosting and security; administrative costs of our Cimpress India offices where numerous Cimpress businesses have dedicated business-specific team members; and corporate functions including our Board of Directors, CEO, and the team members necessary for managing corporate activities, such as treasury, tax, capital allocation, financial consolidation, internal audit and legal. These costs also include certain unallocated share-based compensation costs. The expense value of our PSU awards is based on fair value and is required to be expensed on an accelerated basis. In order to ensure comparability in measuring our businesses' results, we allocate the straight-line portion of the fixed grant value to our businesses. Any expense in excess of the amount as a result of the fair value measurement of the PSUs and the accelerated expense profile of the awards is recognized within central and corporate costs. Our definition of segment EBITDA is GAAP operating income excluding certain items, such as depreciation and amortization, expense recognized for contingent earn-out related charges including the changes in fair value of contingent consideration and compensation expense related to cash-based earn-out mechanisms dependent upon continued employment, share-based compensation related to investment consideration, certain impairment expense, and restructuring charges. We include insurance proceeds that are not recognized within operating income. We do not allocate non-operating income, including realized gains and losses on currency hedges, to our segment results. Our balance sheet information is not presented to the CODM on an allocated basis, and therefore we do not present asset information by segment. We do present other segment information to the CODM, which includes purchases of property, plant and equipment and capitalization of software and website development costs, and therefore include that information in the tables below. Revenue by segment is based on the business-specific websites or sales channel through which the customer’s order was transacted. The following tables set forth revenue by reportable segment, as well as disaggregation of revenue by major geographic region and reportable segment. 20 Three Months Ended September 30, 2023 2022 Revenue: Vista $ 396,647 $ 369,369 PrintBrothers 152,221 132,699 The Print Group 80,539 76,823 National Pen 87,255 81,666 All Other Businesses 51,800 51,827 Total segment revenue 768,462 712,384 Inter-segment eliminations (1) ( 11,168 ) ( 8,969 ) Total consolidated revenue $ 757,294 $ 703,415 _____________________ (1) Refer to the "Revenue by Geographic Region" tables below for detail of the inter-segment revenue within each respective segment. Three Months Ended September 30, 2023 Vista PrintBrothers The Print Group National Pen All Other Total Revenue by Geographic Region: North America $ 289,055 $ — $ — $ 52,735 $ 42,214 $ 384,004 Europe 85,407 151,542 77,802 27,737 — 342,488 Other 21,890 — — 1,377 7,535 30,802 Inter-segment 295 679 2,737 5,406 2,051 11,168 Total segment revenue 396,647 152,221 80,539 87,255 51,800 768,462 Less: inter-segment elimination ( 295 ) ( 679 ) ( 2,737 ) ( 5,406 ) ( 2,051 ) ( 11,168 ) Total external revenue $ 396,352 $ 151,542 $ 77,802 $ 81,849 $ 49,749 $ 757,294 Three Months Ended September 30, 2022 Vista (1) PrintBrothers The Print Group National Pen All Other Total (1) Revenue by Geographic Region: North America $ 273,658 $ — $ — $ 49,447 $ 43,292 $ 366,397 Europe 72,795 132,382 74,991 24,945 — 305,113 Other 22,406 — — 2,552 6,947 31,905 Inter-segment 510 317 1,832 4,722 1,588 8,969 Total segment revenue 369,369 132,699 76,823 81,666 51,827 712,384 Less: inter-segment elimination ( 510 ) ( 317 ) ( 1,832 ) ( 4,722 ) ( 1,588 ) ( 8,969 ) Total external revenue $ 368,859 $ 132,382 $ 74,991 $ 76,944 $ 50,239 $ 703,415 ___________________ (1) During fiscal year 2023, we identified an immaterial error in our previously disclosed revenue by geographic area for our Vista reportable segment for the quarter ended September 30, 2022, which understated revenue in North America and Europe, with an offsetting overstatement in the Other geographies. We have corrected the disclosed figures as included herein. 21 The following table includes segment EBITDA by reportable segment, total income (loss) from operations and total income (loss) before income taxes: Three Months Ended September 30, 2023 2022 Segment EBITDA: Vista $ 74,424 $ 30,737 PrintBrothers 19,826 14,991 The Print Group 13,608 12,220 National Pen ( 8,303 ) ( 1,297 ) All Other Businesses 6,458 6,178 Total segment EBITDA 106,013 62,829 Central and corporate costs ( 31,780 ) ( 34,578 ) Depreciation and amortization ( 39,942 ) ( 40,942 ) Restructuring-related charges 334 ( 1,820 ) Certain impairments and other adjustments ( 525 ) ( 3,456 ) Total income (loss) from operations 34,100 ( 17,967 ) Other income, net 6,419 27,397 Interest expense, net ( 29,200 ) ( 24,806 ) Gain on early extinguishment of debt 1,372 — Income (loss) before income taxes $ 12,691 $ ( 15,376 ) Three Months Ended September 30, 2023 2022 Depreciation and amortization: Vista $ 14,875 $ 14,670 PrintBrothers 3,889 4,773 The Print Group 5,822 5,862 National Pen 5,188 5,891 All Other Businesses 4,547 4,516 Central and corporate costs 5,621 5,230 Total depreciation and amortization $ 39,942 $ 40,942 Three Months Ended September 30, 2023 2022 Purchases of property, plant and equipment: Vista $ 3,611 $ 3,124 PrintBrothers 5,152 708 The Print Group 8,496 4,819 National Pen 2,669 1,601 All Other Businesses 2,235 1,068 Central and corporate costs 402 438 Total purchases of property, plant and equipment $ 22,565 $ 11,758 22 Three Months Ended September 30, 2023 2022 Capitalization of software and website development costs: Vista $ 6,640 $ 6,635 PrintBrothers 457 389 The Print Group 694 490 National Pen 805 588 All Other Businesses 1,187 924 Central and corporate costs 4,614 6,304 Total capitalization of software and website development costs $ 14,397 $ 15,330 The following table sets forth long-lived assets by geographic area: September 30, 2023 June 30, 2023 Long-lived assets (1): United States $ 79,768 $ 83,956 Switzerland 71,417 73,857 Netherlands 62,013 65,547 Canada 55,732 57,328 Italy 39,848 42,377 France 30,361 29,302 Germany 29,553 27,813 Australia 18,642 19,664 Jamaica (2) 1,186 17,834 Other 92,232 86,690 Total $ 480,752 $ 504,368 ___________________ (1) Excludes goodwill of $ 772,165 and $ 781,541 , intangible assets, net of $ 98,836 and $ 109,196 , deferred tax assets of $ 12,060 and $ 12,740 as of September 30, 2023 and June 30, 2023, respectively, as well as marketable securities, non-current of $ 4,497 as of June 30, 2023. (2) The decrease in Jamaica's long-lived assets is due to the planned sale of an owned customer service facility as we continue to optimize our real estate footprint with many of these team members operating under a remote-first model, which resulted in the classification of the related assets as held-for-sale as of September 30, 2023, which is presented as part of prepaid expenses and other current assets in the consolidated balance sheets. Refer to Note 2 for additional details. 12. Commitments and Contingencies Purchase Obligations At September 30, 2023, we had unrecorded commitments under contract of $ 285,698 , including inventory, third-party fulfillment and digital service purchase commitments of $ 142,588 ; third-party cloud services of $ 65,298 ; software of $ 22,240 ; advertising of $ 11,264 ; professional and consulting fees of $ 7,237 ; production and computer equipment purchases of $ 3,556 ; and other unrecorded purchase commitments of $ 33,515 . Legal Proceedings We are not currently party to any material legal proceedings. Although we cannot predict with certainty the results of litigation and claims to which we may be subject from time to time, we do not expect the resolution of any of our current matters to have a material adverse impact on our consolidated results of operations, cash flows or financial position. For all legal matters, at each reporting period, we evaluate whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. We expense the costs relating to our legal proceedings as those costs are incurred. 23 13. Restructuring Charges Restructuring costs include one-time employee termination benefits, acceleration of share-based compensation, write-off of assets, costs to exit loss-making operations, and other related costs including third-party professional and outplacement services. All restructuring costs are excluded from segment and adjusted EBITDA. During the three months ended September 30, 2023, we recognized benefits to restructuring expense of $ 334 , due to adjustments to our previously estimated restructuring expense for actions taken in our Vista business and central teams during March 2023. We do not expect any additional material charges for these restructuring actions. During the three months ended September 30, 2022, we recognized restructuring expense of $ 1,820 , which included $ 1,456 in our Vista business, $ 209 in our National Pen business and $ 155 in our Central and corporate costs. We do not expect any additional material charges for these restructuring actions. The following table summarizes the restructuring activity during the three months ended September 30, 2023. Severance and Related Benefits Other Restructuring Costs Accrued Restructuring Liability Balance as of June 30, 2023 $ 7,567 $ — $ 7,567 Restructuring charges ( 359 ) 25 ( 334 ) Cash payments ( 5,715 ) — ( 5,715 ) Non-cash charges — ( 25 ) ( 25 ) Foreign currency translation ( 7 ) — ( 7 ) Balance as of September 30, 2023 $ 1,486 $ — $ 1,486 24