What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-08-09 compared with 2023-08-04 · 170 added, 182 removed, 347 unchanged (50% of the section changed)

1 unchanged sentence

This Report contains forward-looking statements that involve risks and uncertainties.

The statements contained in this Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including but not limited to our statements about the anticipated growth and development of our businesses and financial results, including profitability, cash flows, liquidity, and net leverage;

the expected effects of our cost reductions and recent restructuring, including future cost savings;

our competitive position and the size of our market;

sufficiency of our liquidity position;

legal proceedings;

and sufficiency of our tax reserves.

The statements contained in this Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including but not limited to our statements about the anticipated growth and development of our businesses and financial results, our expectations with respect to our leverage and capital allocation opportunities, our competitive position, future payment terms with suppliers, legal proceedings, and sufficiency of our tax reserves.

Without limiting the foregoing, the words “may,” “should,” “could,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “designed,” “potential,” “continue,” “target,” “seek” and similar expressions are intended to identify forward-looking statements.

1 unchanged sentence

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various important factors, including but not limited to flaws in the assumptions and judgments upon which our forecasts and estimates are based;

the development, severity, and duration of supply chain constraints, inflation, and the lingering effects of the COVID-19 pandemic;

our inability to make the investments in our business that we plan to make or the failure of those investments to achieve the results we expect;

our failure to execute on the transformation of the Vista business;

the development, severity, and duration of supply chain constraints and inflation;

our inability to make the investments in our business and capital allocations that we plan to make or the failure of those investments or allocations to achieve the results we expect;

loss of key personnel or our inability to recruit talented personnel to drive performance of our businesses;

3 unchanged sentences

unanticipated changes in our markets, customers, or businesses;

disruptions caused by political instability and war in Ukraine, Israel, or elsewhere;

changes in the laws and regulations, or in the interpretation of laws and regulations, that affect our businesses;

our failure to manage the growth and complexity of our business and expand our operations;

our failure to manage the growth and complexity of our business;

our failure to maintain compliance with the covenants in our debt documents or to pay our debts when due;

competitive pressures;

general economic conditions, including the possibility of an economic downturn in some or all of our markets;

and other factors described in this Report and the documents that we periodically file with the SEC.

general economic conditions;

and other factors described in Item 1A (Risk Factors) of this Report and the documents that we periodically file with the SEC.

The Business section of this Report also contains estimates and other statistical data from research we conducted in August 2022 with a third-party research firm, and this data involves a number of assumptions and limitations and contains projections and estimates of the sizes of the opportunities of our markets that are subject to a high degree of uncertainty and should not be given undue weight.

Executive Overview

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

Cimpress is a strategically focused collection of businesses that specialize in print mass customization, through which we deliver large volumes of individually small-sized customized orders of printed materials and related products.

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.

4 unchanged sentences

Refer to Note 15 in our accompanying consolidated financial statements for additional information relating to our reportable segments and our segment financial measures.

We announced plans on March 23, 2023 to reduce costs within our Vista business and our central teams and implement organizational changes to support expanded profitability, reduced leverage and increased speed, focus, and accountability.

These plans resulted in a restructuring charge of $30.2 million during fiscal year 2023.

Excluding this restructuring charge, this restructuring action provided a cost savings benefit of approximately $24 million during the current fiscal year due to the timing of the action, and we expect this action to deliver approximately $100 million of annualized pre-tax cost savings in total.

Financial Summary

The primary financial metric by which we set quarterly and annual budgets both for individual businesses and Cimpress wide is our adjusted free cash flow before cash interest expense;

however, in evaluating the financial condition and operating performance of our business, management considers a number of metrics including

revenue growth, organic constant-currency revenue growth, operating income, adjusted EBITDA, cash flow from operations, and adjusted free cash flow.

The primary financial metric by which we set quarterly and annual budgets both for individual businesses and Cimpress wide is our adjusted free cash flow before net cash interest payments;

however, in evaluating the financial condition and operating performance of our business, management considers a number of metrics including revenue growth, organic constant-currency revenue growth, operating income, adjusted EBITDA, cash flow from operations, and adjusted free cash flow.

Reconciliations of our non-GAAP financial measures are included within the "Consolidated Results of Operations" and "Additional Non-GAAP Financial Measures" sections of Management's Discussion and Analysis.

2 unchanged sentences

• Revenue increased by 7% to $3,291.9 million.

• Constant-currency revenue increased 11% when excluding the revenue of acquired companies for the first twelve months after acquisition (a non-GAAP financial measure).

• Organic constant-currency revenue growth (a non-GAAP financial measure) was 5%.

• Operating income increased by $190.0 million to $247.4 million.

• Adjusted EBITDA (a non-GAAP financial measure) increased by $128.9 million to $468.7 million.

• Diluted net loss per share attributable to Cimpress plc increased to $7.08 from $2.08 in the prior fiscal year.

• Cash provided by operating activities decreased by $89.2 million to $130.3 million.

• Adjusted free cash flow (a non-GAAP financial measure) decreased by $81.5 million to $18.7 million.

For the year ended June 30, 2023, the increase in reported revenue was primarily due to growth across all businesses and markets through increased pricing and customer demand.

Revenue growth in our Vista business was driven by increases in new customer count as well as new and repeat customer bookings across most major markets.

Promotional products, apparel, and gifts (PPAG) was our fastest-growing product category, with business cards, marketing materials, packaging and labels, and signage all showing strong year-over-year growth;

however, constant-currency revenue from consumer products has declined from the prior year.

Pricing changes made during the past year across all reportable segments improved our revenue on a year-over-year basis, as these actions were one tool we used to mitigate inflationary cost pressures that have arisen from ongoing supply chain challenges.

Currency exchange fluctuations had a negative effect on revenue growth during the current fiscal year.

The increase to operating income during the year ended June 30, 2023 was driven by gross profit growth as we benefited from higher volumes and the reduced net impact of cost inflation including through improved pricing.

We also realized cost efficiencies in advertising spend during the current year.

These items were partially offset by an increase in restructuring charges of $30.2 million, primarily related to actions taken in March 2023 to reduce costs in the Vista business and in our central teams.

These restructuring charges were offset in part by a partial year of savings from the related actions.

Adjusted EBITDA increased for the year ended June 30, 2023, primarily driven by the gross profit growth described above, as well the $13.7 million net benefit of currency on consolidated adjusted EBITDA year over year.

Adjusted EBITDA excludes restructuring charges, share-based compensation expense, certain impairments, and non-cash gains on the sale of assets, and includes the realized gains or losses on our currency derivatives intended to hedge adjusted EBITDA.

Diluted net loss per share attributable to Cimpress plc increased for the year ended June 30, 2023, primarily due to an increase in income tax expense of $95.6 million, driven by our conclusion that Swiss deferred tax assets' recognition was no longer supported, which caused the recognition of a valuation allowance against these assets during the second quarter of the current fiscal year;

higher interest expense driven by an increased weighted-average interest rate;

and the effects of lower unrealized currency gains caused by exchange rate volatility.

Partially offsetting these items was the increase to operating income as described above, as well as a $6.8 million gain on the repurchase of a portion of our senior unsecured notes during the fourth quarter of the current fiscal year.

Refer to Note 10 of our accompanying consolidated financial statements for additional details.

During the year ended June 30, 2023, cash from operations decreased $89.2 million year over year due primarily to $113.3 million of lower working capital inflows, which was largely influenced by the timing impacts of payables.

In addition, the decrease was also driven by higher restructuring payments of $36.9 million, due to actions taken to reduce costs over the past year, as well as higher net cash interest payments of $7.6 million.

Adjusted free cash flow decreased year over year by $81.5 million for the year ended June 30, 2023, due to the operating cash flow decrease described above, partially offset by lower capitalized software and capitalized expenditures.

• Diluted net income (loss) per share attributable to Cimpress plc increased to income of $6.43 from a loss of $7.08 in the prior fiscal year.

• Cash provided by operating activities increased by $220.4 million to $350.7 million.

• Adjusted free cash flow (a non-GAAP financial measure) increased by $237.7 million to $261.1 million.

For fiscal year 2024, the increase in reported revenue was driven by revenue growth across all of our segments.

Currency exchange fluctuations had a positive effect on revenue growth during the current year.

Revenue growth in our Vista business was driven by increases in new and repeat customers as well as higher revenue per customer.

The increase to operating income during the year ended June 30, 2024 was driven by a $157.8 million increase to gross profit that benefited from the revenue growth described above as well as gross margin expansion.

Operating income also benefited from year-over-year operating expense efficiencies and lower restructuring costs of $43.3 million as a result of cost reduction actions that were completed during the prior year as well as lower amortization of acquired intangible assets of $15.4 million due to the runoff of fully amortized assets across several of our previously acquired businesses.

These items were partially offset by $25.9 million of higher share-based compensation expense year over year, which was largely driven by PSUs granted in the current year (the "2024 PSUs") that have a higher grant pool, an accelerated expense profile and higher than target attainment of the related performance conditions.

Advertising spend also increased $18.6 million year over year.

Adjusted EBITDA increased during the year ended June 30, 2024, primarily driven by the operating income growth described above, which was partially offset by $18.8 million of year-over-year net unfavorable currency impacts.

Adjusted EBITDA excludes depreciation and amortization, restructuring charges, share-based compensation expense, certain impairments, and gains or losses on the sale of assets, and includes the realized gains or losses on our currency derivatives intended to hedge adjusted EBITDA.

Diluted net income (loss) per share attributable to Cimpress plc increased for the year ended June 30, 2024, primarily due to the operating income increase described above.

In addition, we recognized $204.9 million of lower income tax expense ($49.4 million of benefit in the current year versus $155.5 million of expense last year), primarily due to the partial reversal of a valuation allowance on Swiss deferred tax assets in the current year which was originally established in the prior year.

For the year ended June 30, 2024, these increases to income were partially offset by net negative currency impacts of $16.4 million year over year, primarily due to unrealized currency losses caused by exchange rate volatility and lower realized gains on our derivative contracts, as well as $7.0 million of higher interest expense, net, driven by an increased weighted-average interest rate.

During the year ended June 30, 2024 , cash from operations increased $220.4 million year over year due primarily to the increase in operating income as described above, as well as changes in operating assets and liabilities of $90.7 million, which were driven in part by certain timing items.

This favorable impact was partially offset by higher cash taxes of $18.2 million, due in part to increased prior-year assessments in one jurisdiction driven by profitability growth, and higher net cash interest payments of $15.6 million.

Adjusted free cash flow increased by $237.7 million for the year ended June 30, 2024, due to the operating cash flow increase described above, as well as $18.9 million higher proceeds from the sale of assets, primarily driven by the sale of our previously owned customer service facility located in Jamaica and manufacturing facility in Japan.

Information pertaining to fiscal year 2022 was included in our Annual Report on Form 10-K for the year ended June 30, 2022 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the SEC on August 8, 2022.

Consolidated Results of Operations

1 unchanged sentence

Our businesses generate revenue primarily from the sale and shipment of customized products.

We also generate revenue, to a much lesser extent (and primarily in our Vista business), from digital services, graphic design services, website design and hosting, and email marketing services, as well as a small percentage of revenue from order referral fees and other third-party offerings.

We also generate revenue, to a much lesser extent (and primarily in our Vista business), from digital services, graphic design services, website design and hosting, and social media marketing services, as well as a small percentage of revenue from order referral fees and other third-party offerings.

For additional discussion relating to segment revenue results, refer to the "Reportable Segment Results" section included below.

37 unchanged sentences

% of revenue 51.5 % 53.3 % 51.7 %

For the year ended June 30, 2023, cost of revenue increased by $147.9 million as compared to the prior year, primarily due to additional variable cost increases driven by the constant-currency revenue growth described above, as well as continued effects of global supply chain challenges that resulted in increased costs for product substrates like paper, production materials like aluminum plates, freight and shipping charges, and energy costs.

Although input costs were higher year over year, we started to see some easing across many product substrates during the second half of the current fiscal year, and we began to pass the anniversary of input cost increases, so the year-over-year impact lessened.

Compensation costs were also higher due to the combination of a more competitive labor market and the inflationary environment in many jurisdictions where we operate.

The compensation cost increases were partially offset by savings for a portion of the year that resulted from the March 2023 cost reduction actions.

For the year ended June 30, 2024, cost of revenue increased by $54.4 million year over year, partially driven by unfavorable changes in currency exchange rates of $27.3 million, as well as higher production and shipping costs due to volume growth and product mix shifts in some of our businesses.

These cost increases were partially offset by lower input costs, production efficiency gains, and savings that resulted from the March 2023 cost reduction actions, which also supported a reduction to cost of revenue as a percent of revenue as compared to the prior year.

Consolidated Operating Expenses

9 unchanged sentences

Amortization of acquired intangible assets

$ 31,443 $ 46,854 $ 54,497

% of revenue 1.0 % 1.5 % 1.9 %

Restructuring expense (1)

$ 423 $ 43,757 $ 13,603

% of revenue 0.0 % 1.4 % 0.5 %

Impairment of goodwill (2)

$ — $ 5,609 $ —

% of revenue — % 0.2 % — %

_____________________

(1) Refer to Note 8 in our accompanying consolidated financial statements for additional details relating to the amortization of acquired intangible assets.

(2) During the fourth quarter of fiscal 2023, we recognized a goodwill impairment charge of $5.6 million, which related to one of our small businesses that is a part of our All Other Businesses reportable segment.

(1) Refer to Note 18 in our accompanying consolidated financial statements for additional details relating to restructuring expense.

(2) During fiscal year 2023, we recognized a goodwill impairment charge of $5.6 million, which related to one of our small businesses that is a part of our All Other Businesses reportable segment.

Refer to Note 8 in the accompanying consolidated financial statements for additional details.

2 unchanged sentences

Depreciation expense for information technology equipment that directly supports the delivery of our digital marketing services products is included in cost of revenue.

Technology and development expenses increased by $9.4 million for the year ended June 30, 2023 as compared to the prior year.

This increase is primarily driven by higher volume-related third-party technology costs due in part to increased customer demand.

In addition, amortization expense from capitalized software increased $3.6 million, driven by the higher capitalized asset base, as well as other operating cost increases due to higher travel and training costs.

These increases were partially offset by lower compensation costs year-over-year of $0.8 million, due to cost savings resulting from recent restructuring actions that reduced headcount, which more than offset increases from our inflation-adjusted annual merit cycle and market adjustments.

We also benefited from lower building costs, driven by actions taken over the past year to further optimize our real estate footprint for many of our team members operating under a remote-first model.

Technology and development expense increased by $19.7 million for the year ended June 30, 2024 as compared to the prior year.

The increase was driven in part by higher share-based compensation costs of $7.9 million due to higher expense from our 2024 PSU grants as described above.

The expense increases were also impacted by higher amortization of capitalized software of $6.7 million as compared to the prior year, due to the higher capitalized asset base and fluctuations in currency exchange rates.

Third-party technology costs increased by $6.2 million year over year, driven in part by our businesses' further adoption of certain products offered through our mass customization platform, which has driven increased consumption of those services.

These increases were partially offset by lower cash compensation costs of $6.9 million due to cost savings resulting from the March 2023 restructuring actions that reduced headcount.

Marketing and selling expense

4 unchanged sentences

Our Vista, National Pen, and BuildASign businesses have higher marketing and selling costs as a percentage of revenue as compared to our PrintBrothers and The Print Group businesses due to differences in the customers that they serve.

For the year ended June 30, 2023, marketing and selling expenses decreased by $15.3 million as compared to the prior year.

The decreased expense was due to lower compensation costs of $13.4 million due in part to recent cost reduction actions.

Other cost decreases include lower third-party consulting spend, mainly in our Vista business, and less building costs driven by actions taken over the past year to further optimize our real estate footprint for many of our team members operating under a remote-first model.

These cost decreases were partially offset by higher advertising spend of $9.3 million across Cimpress, including increases in mid- and upper-funnel spend, partially offset by lower performance advertising in Vista.

For the year ended June 30, 2024, marketing and selling expenses increased by $15.9 million, primarily due to higher advertising spend of $18.6 million as compared to the prior year, driven by higher volumes across businesses.

Share-based compensation costs increased $6.0 million primarily due to our 2024 PSU grants as described above.

Payment processing fees also increased $4.4 million as compared to the prior year due to increased order volumes.

These cost increases are offset in part by lower cash compensation costs of $5.8 million during the year ended June 30, 2024, due to the cost reduction actions that were implemented in March 2023.

There was also lower third-party consulting spend of $4.1 million, as compared to the prior year, mainly in our Vista business, and lower building costs driven by actions taken over the past year to further optimize our real estate footprint for many of our team members operating under a remote-first model.

General and administrative expense

General and administrative expense consists primarily of transaction costs, including third-party professional fees, insurance, and payroll and related expenses of employees involved in executive management, finance, legal, strategy, human resources, and procurement.

For the year ended June 30, 2023, general and administrative expenses increased by $11.9 million as compared to the prior year.

Compensation costs increased year over year from higher headcount and the impacts of our inflation-adjusted annual merit cycle, partially offset by savings from recent cost reduction actions.

Other cost increases included higher travel and training costs and consulting spend.

We also recognized an additional $2.2 million of expense related to the termination of one of our leased office locations as we continue to optimize our office footprint with many of our team members operating under a remote-first model.

This incremental expense was partially offset by lower building costs due to the termination.

The increases were partially offset by lower share-based compensation expense due to forfeitures from our recent restructuring actions, as well as favorability due to different timing of expense from our granting of restricted share units, or RSUs, and share options for most employees during the current year, as compared to performance share units, or PSUs, in prior years.

Restructuring expense

Restructuring costs include 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.

For the year ended June 30, 2023, restructuring expenses increased by $30.2 million as compared to the prior year.

This increase is largely driven by $30.2 million of costs related to the previously described action taken in our Vista business and central teams during March 2023 that were intended to reduce costs and support expanded profitability, reduced leverage, and increased speed, focus, and accountability.

The remaining increase relates to other actions announced in the fourth quarter of fiscal year 2022 to prioritize our investments and exit the Japanese and Chinese markets.

Refer to Note 18 in the accompanying consolidated financial statements for additional details.

General and administrative expenses decreased by $3.5 million during the year ended June 30, 2024 as compared to the prior year.

The decrease was driven by $2.8 million of lower cash compensation largely driven by a reduction to long-term incentive compensation expense due to lower than previously estimated attainment levels in certain Cimpress businesses, and cost savings from the March 2023 cost reductions, which were partially offset by increased compensation costs from our annual merit cycle.

The cost decrease was also impacted by a $2.5 million reduction to third-party consulting spend, the non-recurrence of $2.4 million in expense for the prior-year termination of one of our leased office locations, a $1.9 million indirect tax expense recognized in the prior year that did not recur in the current year, and the exit of our business in China during fiscal year 2023 that reduced our general and administrative expenses by $1.8 million year over year.

These decreases were partially offset by increases to share-based compensation costs of $11.7 million driven by the 2024 PSU grants as described above.

Other Consolidated Results

Other income, net

Other income, net generally consists of gains and losses from currency exchange rate fluctuations on

transactions or balances denominated in currencies other than the functional currency of our subsidiaries, as well as the realized and unrealized gains and losses on some of our derivative instruments.

Other income, net generally consists of gains and losses from currency exchange rate fluctuations on transactions or balances denominated in currencies other than the functional currency of our subsidiaries, as well as the realized and unrealized gains and losses on some of our derivative instruments.

In evaluating our currency hedging programs and ability to qualify for hedge accounting in light of our legal entity cash flows, we considered the benefits of hedge accounting relative to the additional economic cost of trade execution and administrative burden.

Based on this analysis, we execute certain currency derivative contracts that do not qualify for hedge accounting.

The following table summarizes the components of other income (expense), net:

The following table summarizes the components of other income, net:

Year Ended June 30,

2024 2023 2022

Gains (losses) on derivatives not designated as hedging instruments $ 3,311 $ 58,148 $ (20,728)

Currency-related gains, net 16,350 244 1,005

Other (losses) gains (1,163) 3,071 370

Total other income (expense), net $ 18,498 $ 61,463 $ (19,353)

The decrease in other income (expense), net was primarily due to the currency exchange rate volatility impacting our derivatives that are not designated as hedging instruments, of which our Euro and British Pound contracts are the most significant exposures that we economically hedge.

We expect volatility to continue in future periods, as we do not apply hedge accounting for most of our derivative currency contracts.

We experienced currency-related net gains due to currency exchange rate volatility on our non-functional currency intercompany relationships, which we may alter from time to time.

The impact of certain cross-currency swap contracts designated as cash flow hedges is included in our currency-related gains, net, offsetting the impact of certain non-functional currency intercompany relationships.

Gains on derivatives not designated as hedging instruments

$ 3,915 $ 3,311 $ 58,148

Currency-related (losses) gains, net

(2,818) 16,350 244

Other gains (losses) 486 (1,163) 3,071

Total other income, net $ 1,583 $ 18,498 $ 61,463

The decrease in other income, net was primarily due to the currency exchange rate volatility impacting our derivatives that are not designated as hedging instruments, of which our Euro and British Pound contracts are the most significant exposures that we economically hedge.

During the year ended June 30, 2024, there were

$40.8 million of lower unrealized losses, mostly offset by $40.2 million of lower realized gains on our derivatives not designated as hedging instruments when compared to the prior year We expect volatility to continue in future periods, as we do not apply hedge accounting for most of our derivative currency contracts.

We experience currency-related net gains and losses due to currency exchange rate volatility on our non-functional currency intercompany relationships, which we may alter from time to time.

Gains on the revaluation of non-functional currency debt and on a cross-currency swap contract designated as a cash flow hedge are included in our currency-related losses, net, offsetting the impact of certain non-functional currency intercompany relationships.

Interest expense, net

Interest expense, net primarily consists of interest paid on outstanding debt balances, amortization of debt issuance costs, debt discounts, interest related to finance lease obligations, accretion adjustments related to our mandatorily redeemable noncontrolling interests, and realized gains (losses) on effective interest rate swap contracts and certain cross-currency swap contracts.

Interest expense, net increased by $13.4 million during the year ended June 30, 2023 as compared to the prior year, primarily due to a higher weighted-average interest rate (net of interest rate swaps) and partially offset by an increase in interest income earned on our cash and marketable securities of $7.7 million.

In addition, we recognized expense related to accretion adjustments of $2.3 million during the year ended June 30, 2023 for our mandatorily redeemable noncontrolling interests, which did not occur in the prior year.

Income tax expense

Year Ended June 30,

Interest expense, net increased $7.0 million during the year ended June 30, 2024, primarily due to a year-over-year increase to our weighted average interest rate (net of interest rate swaps) on our senior secured Term Loan B.

This interest expense, net increase was partially offset by lower interest expense associated with our 7.0% Senior Notes due 2026 ("2026 Notes") driven by our purchase of a portion of those notes, as well as $2.7 million higher interest income earned on our cash and marketable securities.

(Loss) gain on extinguishment of debt

During the year ended June 30, 2024, we recognized losses on the extinguishment of debt of $0.7 million, due to the write-off of unamortized financing fees of $2.4 million, as a result of the fourth quarter amendment to our senior secured credit facility which reduced the interest rate margin on most of our outstanding senior secured Term Loan B debt.

This loss was partially offset by a $1.7 million gain on the extinguishment of debt arising from the purchase of a portion of our outstanding 2026 Notes.

Refer to Note 10 in our accompanying consolidated financial statements for additional details.

Income tax (benefit) expense

In thousands Year Ended June 30,

2024 2023 2022

Income tax expense $ 155,493 $ 59,901 $ 18,903

Income tax (benefit) expense $ (49,362) $ 155,493 $ 59,901

Effective tax rate (38.4) % (514.5) % 642.0 %

Income tax expense increased for the year ended June 30, 2023 versus the prior comparable period primarily due to recording a full valuation allowance during the year ended June 30, 2023 of $116.7 million on Swiss deferred tax assets related to Swiss Tax Reform benefits recognized in fiscal year 2020 and tax loss carryforwards, partially offset by a partial valuation allowance on Swiss deferred tax assets of $29.6 million recorded during the year ended June 30, 2022.

Management concluded in the second quarter of this fiscal year that based on current period results at that time, that objective and verifiable negative evidence of recent losses in Switzerland outweighed more subjective positive evidence of anticipated future income.

Tax expense decreased for the year ended June 30, 2024 versus the prior year due to the partial release of the valuation allowance on Swiss deferred tax assets of $105.8 million in the current period as compared to tax expense of $116.7 million recorded during the year ended June 30, 2023 to increase the valuation allowance in Switzerland.

After considering all available evidence, including the recent history of strong earnings from core operations in Switzerland and the expectation of future taxable income, management concluded it is more likely than not that the recognized deferred tax assets are realizable and reduced the valuation allowance accordingly.

We believe that our income tax reserves are adequately maintained by 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 therefore there is a possibility that final

resolution of these matters could have a material impact on our results of operations or cash flows.

Refer to Note 13 in our accompanying consolidated financial statements for additional discussion.

However, the final determination of our tax return positions, if audited, is uncertain, and therefore there is a possibility that final resolution of these matters could have a material impact on our results of operations or cash flows.

Refer to Note 13 in our accompanying consolidated financial statements for additional details.

Reportable Segment Results

Our segment financial performance is measured based on segment EBITDA, which is defined as operating income plus depreciation and amortization;

plus proceeds from insurance;

plus proceeds from insurance not already included in operating income;

plus share-based compensation expense related to investment consideration;

2 unchanged sentences

plus restructuring related charges;

less gain on purchase or sale of subsidiaries.

The effects of currency exchange rate fluctuations impact segment EBITDA and we do not allocate to segment EBITDA any gains or losses that are realized by our currency hedging program.

less gain on purchase or sale of subsidiaries as well as the disposal of assets.

The effects of currency exchange rate fluctuations impact segment EBITDA and we do not

allocate to segment EBITDA any gains or losses that are realized by our currency hedging program.

Year Ended June 30,

5 unchanged sentences

Segment Revenue

Vista's reported revenue growth for the year ended June 30, 2023 was negatively affected by a currency impact of 2%, and organic constant-currency revenue growth was 9%.

Constant-currency revenue growth was driven by new customer count and new customer bookings growth across all major markets, as well as increased repeat customer bookings and higher average order values.

From a product perspective, the strongest growth was in the promotional products, apparel, and gifts (PPAG) category, as well as business cards, marketing materials, packaging, and signage.

Revenue from consumer oriented products that include holiday cards, invitations, and announcements declined, particularly in the U.S.

market, which had a more pronounced impact during our seasonally significant second quarter.

For the year ended June 30, 2023, revenue growth described above was partially offset by a decline in face mask sales of $10.3 million as well as lower revenue year over year of $7.2 million due to our exit from the Japanese market.

Vista's reported revenue growth for the year ended June 30, 2024 benefited from a 1% favorable impact on currency fluctuations, resulting in constant-currency revenue growth of 7%.

The revenue growth was driven by increases in new and repeat customers as well as higher revenue per customer.

Revenue was higher year over year across all major markets, with the most significant growth in sales of signage and promotional products, apparel and gifts.

Vista continues to improve its customer experience, resulting in higher customer satisfaction and lower credit rates.

Segment Profitability

For the year ended June 30, 2023, segment EBITDA increased by $28.8 million, due in part to gross profit growth as a result of the revenue growth described above.

Cost inflation had a negative impact on gross profit year over year, but the impacts were more pronounced during the first half of fiscal year 2023, as input costs have started to stabilize and further price increases have been implemented throughout the current fiscal year.

Product mix weighed on Vista's gross margins during the current fiscal year, since the fastest growth was in product categories like PPAG that have lower gross margins despite higher average order values.

Vista's advertising expense decreased by $1.1 million year over year, driven by reductions to performance advertising spend during the second half of the fiscal year, which were offset in part by higher mid- and upper funnel advertising spend, mainly during the first half of fiscal year 2023.

Operating expenses also decreased $13.8 million, largely due to a partial year of cost savings of approximately $20.0 million that resulted from cost reduction actions implemented in March 2023.

Changes in currency exchange rates had a negative impact year over year.

For the year ended June 30, 2024, segment EBITDA increased by $104.4 million.

Incremental gross profit was driven by the revenue growth described above, lower input costs, and efficiency gains as compared to the prior year.

Segment EBITDA growth was also driven by lower operating expenses, primarily due to savings resulting from cost reduction actions implemented in March 2023.

These operating expense savings were partially offset by inflationary cost increases, such as our annual merit cycle increases' effect on compensation costs.

Advertising expenses were higher year over year largely due to increased volume.

Changes in currency exchange rates had a positive impact on segment EBITDA of $4.7 million as compared to the prior-year period.

PrintBrothers

6 unchanged sentences

Segment Revenue

PrintBrothers' reported revenue growth for the year ended June 30, 2023 was negatively affected by currency impacts of 8%.

When excluding the benefit from a small recent acquisition, organic constant-currency revenue growth was 17%.

This strong performance was driven by growth in order volumes and price increases implemented to address inflationary cost increases.

PrintBrothers' reported revenue growth for the year ended June 30, 2024 was positively affected by currency impacts of 3% with revenue increasing on a constant-currency basis by 7% year over year.

Constant-currency growth was driven primarily by continued order volume and customer growth, partially offset by customers purchasing lower quantities in certain product categories.

Segment Profitability

Despite a challenging supply chain and inflationary environment, PrintBrothers' segment EBITDA for the year ended June 30, 2023 grew year over year, driven by the constant-currency revenue growth described above, as well as profit contribution from a business acquired in the last twelve months.

Currency exchange fluctuations negatively impacted segment EBITDA year over year by $3.8 million.

We continue to focus on key areas within these businesses to exploit scale advantages and improve their cost competitiveness.

These businesses also continue to adopt technologies that are part of our mass customization platform, which we believe will further improve customer value and the efficiency of each business over the long term.

PrintBrothers' segment EBITDA for the year ended June 30, 2024 grew significantly year over year, driven by the constant-currency revenue growth described above, gross margin improvements which benefited from lower input costs and product mix shifts, and operating expense efficiencies.

Currency exchange fluctuations positively impacted segment EBITDA year over year by $3.2 million.

The Print Group

6 unchanged sentences

Segment Revenue

The Print Group's reported revenue for the year ended June 30, 2023 was negatively affected by a currency impact of 8%, resulting in an increase to revenue on a constant-currency basis of 13%.

Constant-currency revenue growth was largely driven by price increases that have been implemented over the past year to address inflationary cost increases, as well as volume growth and increased order fulfillment for other Cimpress businesses.

The Print Group's reported revenue for the year ended June 30, 2024 was positively affected by currency impacts of 3%, with flat revenue on a constant-currency basis year over year.

The Print Group revenue has benefited from order growth, but revenue was dampened by customers purchasing lower quantities in certain product categories and headwinds in the reseller channel.

Segment Profitability

The increase in The Print Group's segment EBITDA during the year ended June 30, 2023 as compared to the prior year was largely due to the revenue growth described above, despite higher input costs that are impacted by supply chain disruptions and higher shipping and energy costs, which had a larger impact during the first half of fiscal year 2023.

Currency exchange fluctuations negatively impacted segment EBITDA year over year by $3.9 million.

The increase in The Print Group's segment EBITDA during the year ended June 30, 2024 as compared to the prior year was largely driven by gross profit growth, as The Print Group benefited from gross margin expansion due to reductions in key input costs such as raw materials, energy and shipping.

There was also a year-over-year reduction in long-term incentive compensation expense of $3.0 million for the year ended June 30, 2024 due to changes in the estimated payouts.

Currency exchange fluctuations positively impacted segment EBITDA year over year by $2.0 million.

In thousands Year Ended June 30,

5 unchanged sentences

Segment Revenue

For the year ended June 30, 2023, National Pen's revenue growth was negatively affected by currency impacts of 5%, resulting in constant-currency revenue growth of 12%.

Constant-currency revenue growth was driven by price increases that have been implemented over the past year to address inflationary cost increases, as well as volume growth in new product categories that include bags and drinkware.

Year-over-year revenue growth was negatively impacted by our exit from the Japanese market by approximately $11.7 million as well as the decline in face mask sales of approximately $9.2 million.

For the year ended June 30, 2024, currency positively impacted National Pen's revenue growth by 2%.

The segment's constant-currency revenue growth was 5% as compared to the prior year.

National Pen continued to deliver strong growth within its e-commerce and telesales channels, as well as from fulfillment for other Cimpress businesses, partially offset by lower revenue from mail order sales that was impacted by a choice to meaningfully reduce advertising spend for this channel.

Segment Profitability

The decrease in National Pen's segment EBITDA for the year ended June 30, 2023 was driven by currency exchange fluctuations that negatively impacted segment EBITDA year over year by $8.1 million.

Excluding the effect of currency, segment EBITDA grew, as a result of contribution profit growth that was due to the revenue growth described above.

During the current fiscal year, duplicative costs from the migration of European manufacturing from Ireland to the Czech Republic lessened contribution profit growth versus the prior year.

Additionally, operating expenses increased year over year due to higher tech spend and customer service costs driven by higher sales volumes, which partially offset the contribution profit growth described above.

The increase in National Pen's segment EBITDA for the year ended June 30, 2024 was driven by the revenue growth described above and $3.6 million less long-term incentive compensation expense, primarily due to changes in the estimated payouts.

These segment EBITDA growth drivers were partially offset by $1.7 million higher advertising spend, primarily during the first half of the fiscal year.

Currency exchange fluctuations had a negative year-over-year impact of $1.2 million for the year ended June 30, 2024.

All Other Businesses

5 unchanged sentences

% of revenue 12 % 12 % 11 %

This segment includes BuildASign, which is a larger and profitable business, and Printi, an early-stage business that we have managed at a relatively modest operating loss as previously described and planned.

This segment also included results from our YSD business in China that was divested during the third quarter of fiscal year 2023.

This segment includes BuildASign and Printi, an early-stage business that we have managed at a relatively modest operating loss.

Segment Revenue

All Other Businesses' constant-currency revenue growth was 4% during the year ended June 30, 2023.

BuildASign generates the majority of revenue in this segment, and grew year over year with mixed performance by product line.

Printi delivered strong revenue growth across product lines and channels supported by price increases implemented over the past year.

All Other Businesses' revenue growth was minimally impacted by currency, resulting in constant-currency revenue growth of 1% during the year ended June 30, 2024.

BuildASign, the largest business in this segment, delivered growth in signage products and from fulfillment for other Cimpress businesses, but that growth was offset by lower revenue for real estate-related products and home decor products.

Our smaller Printi business continued to deliver revenue growth versus last year.

Segment Profitability

The increase in segment EBITDA for the year ended June 30, 2023, as compared to the prior year, was primarily due to the recent divestiture of our small, loss making business in China (YSD), which we completed during the third quarter of fiscal year 2023.

Segment EBITDA for our BuildASign business declined due to lower gross margins driven by higher input costs, including increased labor and marketing costs, which had a larger impact on BuildASign's home decor products.

For the year ended June 30, 2024, segment EBITDA was flat versus last year, partly driven by less efficient advertising spend that was higher versus last year and was only partially offset by increased gross profit that was supported by the revenue growth described above.

Operating expenses benefited year over year from $0.9 million of less long-term incentive compensation expense primarily due to changes in estimated payouts.

Our Printi business reduced its operating losses as it continues to gain scale and deliver efficiencies.

Segment EBITDA also benefited from the fiscal year 2023 exit of our business in China, which had $1.8 million of losses last year.

Central and Corporate Costs

5 unchanged sentences

These costs also include certain unallocated share-based compensation costs.

Central and corporate costs decreased by $10.4 million during the year ended June 30, 2023 as compared to the prior year, driven by favorability from unallocated share-based compensation due to changes in the mix of

equity instruments granted and forfeitures from recent cost reduction actions.

In addition, compensation costs decreased due to savings from recent cost reduction actions, which more than offset the effect of our inflation-adjusted annual merit cycle and higher volume-related technology costs.

During the year ended June 30, 2024, central and corporate costs increased by $11.8 million as compared to the prior year.

The increases were driven by $20.5 million of increased share-based compensation expense due to a higher grant pool and the impact from our 2024 PSU grants as described above.

This increase was partially offset by lower cash compensation expense of $3.7 million due to savings from the March 2023 cost reductions, as well as lower third-party consulting spend of $4.0 million as compared to the prior year.

Liquidity and Capital Resources

4 unchanged sentences

Net cash used in investing activities (54,614) (103,725) (3,997)

Net cash (used in) provided by financing activities (177,106) (106,572) 224,128

Net cash used in financing activities (222,552) (177,106) (106,572)

The cash flows during the year ended June 30, 2024 related primarily to the following items:

Cash inflows:

• Adjustments for non-cash items of $353.9 million primarily related to adjustments for depreciation and amortization of $162.4 million, deferred taxes of $114.9 million, share-based compensation costs of $42.1 million, and unrealized currency-related losses of $22.4 million

• Proceeds from the maturity of held-to-maturity securities of $8.1 million, net of purchases

• Net income of $177.8 million

• Adjustments for non-cash items of $120.2 million primarily related to adjustments for depreciation and amortization of $151.8 million, share-based compensation costs of $65.6 million, partially offset by deferred taxes of $94.4 million and unrealized currency-related gains of $4.9 million

• Net working capital inflow of $52.8 million, primarily due to further reductions to inventory following the prior-year build up of safety stock to mitigate the risk of supply chain disruptions as well as favorable changes to accounts payable and accrued liabilities

• Proceeds from the maturity of held-to-maturity securities of $38.7 million

• Proceeds from the sale of assets of $23.6 million, which primarily included proceeds from the sale of our customer service facility located in Jamaica and manufacturing facility in Japan during the current fiscal year

Cash outflows:

• Net loss of $185.7 million

• Exercise of PrintBrothers and BuildASign minority equity interest holders' put options for $95.6 million;

refer to Note 14 in the accompanying consolidated financial statements for additional details

• Purchases of our ordinary shares for $157.0 million

• Internal and external costs of $58.3 million for software and website development that we have capitalized

• Capital expenditures of $54.9 million, of which the majority related to the purchase of manufacturing and automation equipment for our production facilities

• Repurchases of a portion of our 7.0% Senior Notes due 2026 (the "2026 Notes") of $45.0 million.

Refer to Note 10 in the accompanying consolidated financial statements for additional details.

• Total outflow from net working capital of $37.9 million, primarily due to timing impacts from unfavorable changes to accounts payable and accrued expenses.

• Payments for the purchase of a portion of our 2026 Notes for $24.5 million

• Payment of withholding taxes in connection with share awards of $16.4 million, primarily driven by the vesting of restricted share unit grants

• Repayments of debt, net of proceeds from borrowings, of $13.9 million

• Payments for finance lease arrangements of $10.1 million

• $6.9 million for the payment of purchase consideration included in the Depositphotos acquisition's fair value

• Payment of withholding taxes in connection with share awards of $4.4 million

• $3.7 million of distributions to noncontrolling interest holders

Additional Liquidity and Capital Resources Information.

2 unchanged sentences

We expect to finance our future operations through our cash, investments, operating cash flow, and borrowings under our debt arrangements.

In light of our recently implemented cost savings measures and our expectation of continued profitability expansion and cash flow generation, we expect our liquidity to increase in fiscal year 2024.

We have historically used excess cash and cash equivalents for organic investments, share repurchases, acquisitions and equity investments, and debt reduction.

During the fourth quarter of fiscal year 2023, we allocated $45.0 million of capital toward the repurchase of a portion of our 2026 Notes.

We expect to continue reducing our net leverage through fiscal year 2024.

Beyond fiscal year 2024, we expect to have the flexibility to opportunistically deploy

capital that enhances our intrinsic value per share even while maintaining leverage similar to or below our pre-pandemic levels.

During the year ended June 30, 2024, we purchased and retired 1,723,393 of our ordinary shares for $157.0 million.

We evaluate share repurchases, as any other use of capital, relative to our view of the impact on our intrinsic value per share compared against other opportunities.

During the year ended June 30, 2024, we also allocated $24.5 million of capital toward the purchase of a portion of our 2026 Notes, and we will continue to consider using excess liquidity to repurchase our debt.

We have significantly reduced our net leverage over the last year primarily through increased profitability driven by the combination of returns from past investments, the focusing of our growth investments, restrained growth of operating expenses, and the easing of inflationary pressure on our input costs.

This increased profitability and resultant cash flow generation should provide the opportunity to continue to delever our balance sheet while also opportunistically allocating capital that enhances our intrinsic value per share.

Supply Chain Financing Program.

As part of our ongoing efforts to manage our liquidity, we work with our suppliers to optimize our terms and conditions, which includes the extension of payment terms.

We facilitate a voluntary supply chain finance program through a financial intermediary to allow our suppliers to receive funds earlier than our contractual payment date.

We do not believe there is a substantial risk that our payment terms will be shortened in the near future.

Refer to Note 17 of the accompanying consolidated financial statements for additional information.

Indefinitely Reinvested Earnings.

7 unchanged sentences

Purchase commitments 229,865 188,432 24,600 16,833 —

2026 Notes and interest payments 663,443 38,381 625,062 — —

Senior secured credit facility and interest payments (2) 1,392,796 94,319 179,234 1,119,243 —

2026 Notes and interest payments 595,233 36,549 558,684 — —

Other debt 9,845 4,984 4,395 466 —

8 unchanged sentences

Accordingly, uncertain tax positions of $9.3 million as of June 30, 2024 have been excluded from the contractual obligations table above.

See Note 13 in our accompanying consolidated financial statements for further information on uncertain tax positions.

See Note 13 in our accompanying consolidated financial statements for additional information on uncertain tax positions.

Operating Leases .

6 unchanged sentences

software of $39.1 million;

advertising of $10.1 million;

commitments for professional and consulting fees of $6.2 million;

production and computer equipment purchases of $3.9 million, and other commitments of $13.8 million.

production and computer equipment purchases of $5.5 million;

professional and consulting fees of $3.3 million;

and other commitments of $39.6 million.

Senior Secured Credit Facility and Interest Payments.

As of June 30, 2023, we have borrowings under our amended and restated senior secured credit agreement ("Restated Credit Agreement") of $1,098.6 million, consisting of the Term Loan B, which amortizes over the loan period, with a final maturity date of May 17, 2028.

As of June 30, 2024, we have borrowings under our amended and restated senior secured credit agreement dated as of May 17, 2021 (as further amended from time to time, the "Restated Credit Agreement") of $1,084.6 million, consisting of the Term Loan B, which amortizes over the loan period, with a final maturity date of May 17, 2028.

Our $250.0 million senior secured revolving credit facility with a maturity date of May 17, 2026 (the "Revolving Credit Facility"), under our Restated Credit Agreement, has $238.0 million unused as of June 30, 2024.

There are no drawn amounts on the Revolving Credit Facility, but our outstanding letters of credit reduce our unused balance.

unused balance can be drawn at any time so long as we are in compliance with our debt covenants and 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 (as defined in the Restated Credit Agreement) calculated as of the last day of such quarter shall not exceed 3.25 to 1.00.

Our unused balance can be drawn at any time so long as we are in compliance with our debt covenants, and 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 (as defined in the Restated Credit Agreement) calculated as of the last day of such quarter shall not exceed 3.25 to 1.00.

Any amounts drawn under the Revolving Credit Facility will be due on May 17, 2026.

Interest payable included in the above table is based on the interest rate as of June 30, 2023 and assumes all LIBOR-based revolving loan amounts outstanding will not be paid until maturity but that the term loan amortization payments will be made according to our defined schedule.

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.

Interest payable included in the above table is based on the interest rate as of June 30, 2024 and assumes all Term SOFR-based revolving loan amounts outstanding will not be paid until maturity but that the term loan amortization payments will be made according to our defined schedule.

2026 Notes and Interest Payments.

1 unchanged sentence

Interest on the notes is payable semi-annually on June 15 and December 15 of each year.

During the year ended June 30, 2024, we purchased an aggregate principal amount of $26.2 million for a purchase price of $24.5 million, as well as the related settlement of unpaid interest, which resulted in the recognition of a gain on the extinguishment of debt of $1.7 million.

Debt Covenants.

The Restated Credit Agreement and the indenture that governs our 2026 Notes contain covenants that restrict or limit certain activities and transactions by Cimpress and our subsidiaries.

As of June 30, 2023, we were in compliance with all covenants under our Restated Credit Agreement and the indenture governing our 2026 Notes.

As of June 30,

2024, we were in compliance with all covenants under our Restated Credit Agreement and the indenture governing our 2026 Notes.

Refer to Note 10 in our accompanying consolidated financial statements for additional information.

3 unchanged sentences

We lease certain facilities, machinery, and plant equipment under finance lease agreements that expire at various dates through 2037.

The aggregate carrying value of the leased equipment under finance leases included in property, plant and equipment, net in our consolidated balance sheet at June 30, 2023 is $30.6 million, net of accumulated depreciation of $36.5 million.

The aggregate carrying value of the leased assets under finance leases included in property, plant and equipment, net in our consolidated balance sheet at June 30, 2024 is $26.0 million, net of accumulated depreciation of $30.3 million.

The present value of lease installments not yet due included in other current liabilities and other liabilities in our consolidated balance sheet at June 30, 2024 amounts to $36.4 million.

Other Obligations.

During fiscal year 2023, we made a $6.9 million deferred payment for our Depositphotos acquisition, and there were no outstanding acquisition-related deferred liabilities as of June 30, 2023.

Additional Non-GAAP Financial Measures

6 unchanged sentences

Adjusted free cash flow is the primary financial metric by which we set quarterly and annual budgets both for individual businesses and Cimpress-wide.

Adjusted free cash flow is defined as net cash provided by operating activities less purchases of property, plant and equipment, purchases of intangible assets not related to acquisitions,

and capitalization of software and website development costs that are included in net cash used in investing activities, plus the payment of contingent consideration in excess of acquisition-date fair value and gains on proceeds from insurance that are included in net cash provided by operating activities, if any.

During the current fiscal year, we revised our adjusted free cash flow definition to include proceeds from the sale of assets, which we believe provides useful information regarding the net cash deployed for the purchase of capital assets by incorporating any cash that is recovered from the subsequent sale of any assets.

We have revised all periods presented to incorporate this change.

Adjusted free cash flow is defined as net cash provided by operating activities less purchases of property, plant and equipment, purchases of intangible assets not related to acquisitions, and capitalization of software and website development costs that are included in net cash used in investing activities, plus the proceeds from sale of assets, payment of contingent consideration in excess of acquisition-date fair value, and gains on proceeds from insurance that are included in net cash provided by operating activities, if any.

We use this cash flow metric because we believe that this methodology can provide useful supplemental information to help investors better understand our ability to generate cash flow after considering certain investments required to maintain or grow our business, as well as eliminate the impact of certain cash flow items presented as operating cash flows that we do not believe reflect the cash flow generated by the underlying business.

9 unchanged sentences

Depreciation and amortization 151,764 162,428 175,681

Proceeds from insurance — — 122

Share-based compensation expense 65,584 39,682 49,766

1 unchanged sentence

Restructuring-related charges 423 43,757 13,603

Realized gains (losses) on currency derivatives not included in operating income (1) 29,724 4,424 (6,854)

Realized gains on currency derivatives not included in operating income (1) 2,406 29,724 4,424

Adjusted EBITDA $ 468,682 $ 339,832 $ 281,063

_________________

(1) These realized gains (losses) include only the impacts of certain currency derivative contracts that are intended to hedge our adjusted EBITDA exposure to foreign currencies for which we do not apply hedge accounting.

See Note 4 in our accompanying consolidated financial statements for further information.

(1) These realized gains include only the impacts of certain currency derivative contracts that are intended to hedge our adjusted EBITDA exposure to foreign currencies for which we do not apply hedge accounting.

Refer to Note 4 in our accompanying consolidated financial statements for further information.

The table below sets forth net cash provided by operating activities and adjusted free cash flow for the years ended June 30, 2024, 2023, and 2022:

4 unchanged sentences

Capitalization of software and website development costs (58,307) (57,787) (65,297)

Proceeds from the sale of assets (1) 23,565 4,659 14,545

Adjusted free cash flow (1)

$ 261,053 $ 23,389 $ 114,744

_________________

(1) During fiscal year 2024, we revised our adjusted free cash flow definition to include proceeds from the sale of assets.

We have revised all prior periods presented to incorporate this change.

Critical Accounting Policies and Estimates

12 unchanged sentences

Under the terms of most of our arrangements with our customers we provide satisfaction guarantees, which give our customers an option for a refund or reprint over a specified period of time if the customer is not fully satisfied.

As such, we record a reserve for estimated sales returns and allowances as a reduction of revenue, based on historical experience or the specific identification of an event necessitating a reserve.

As such, we record a reserve for estimated sales returns and allowances as a reduction of revenue, based

on historical experience or the specific identification of an event necessitating a reserve.

Actual sales returns have historically not been significant.

18 unchanged sentences

We recognize the impact of forfeitures as they occur.

Our performance share units, or PSUs, are estimated at fair value on the date of grant, which is fixed throughout the vesting period.

The fair value is determined using a Monte Carlo simulation valuation model.

As the PSUs include both a service and market condition, the related expense is recognized using the accelerated expense attribution method over the requisite service period for each separately vesting portion of the award.

For PSUs that meet the service vesting condition, the expense recognized over the requisite service period will not be reversed if the market condition is not achieved.

The compensation expense for these awards is estimated at fair value using a Monte Carlo simulation valuation model and compensation costs are recorded only if it is probable that the performance condition will be achieved.

We have issued PSUs that include a service condition as well as a market or performance condition and we calculate the fair value at grant, which is fixed throughout the vesting period.

For PSUs that include a market condition, the fair value is determined using a Monte Carlo simulation valuation model and the expense recognized over the requisite service period will not be reversed if the market condition is not achieved.

For PSUs that include a performance condition, compensation cost is recorded if it is probable that the performance condition will be achieved.

The fair value is determined based on the quoted price of our ordinary shares on the date of the grant and our estimated attainment percentage of the related performance condition.

Until the performance condition is measured, changes in the estimated attainment percentages may cause expense volatility since a cumulative expense adjustment will be recognized in the period a change occurs.

Income Taxes .

5 unchanged sentences

Our estimates can vary due to the profitability mix of jurisdictions, foreign exchange movements, changes in tax law, regulations or accounting principles, as well as certain discrete items.

In the event that actual results differ from our estimates or we adjust our estimates in the future, we may need to increase or decrease income tax expense, which could have a material impact on our financial position and results of operations.

In the event that actual

results differ from our estimates or we adjust our estimates in the future, we may need to increase or decrease income tax expense, which could have a material impact on our financial position and results of operations.

We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due.

35 unchanged sentences

We are required to compare the fair value of the reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value.

For the year ended June 30, 2023, we recognized a goodwill impairment charge of $5,609.

The charge is a partial impairment of the goodwill for one of our small reporting units within our All Other Businesses reportable segment.

There were no impairments identified for any other reporting units.

For the year ended June 30, 2024, we recognized no impairments.

We are required to evaluate the estimated useful lives and recoverability of definite lived long-lived assets (for example, customer relationships, developed technology, property, and equipment) on an ongoing basis when indicators of impairment are present.

10 unchanged sentences

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 7. Management’s Discussion and Analysis