CIMPRESS plc 10-Q

Item 1. Financial Statements CIMPRESS PLC CONSOLIDATED BALANCE SHEETS (unaudited in thousands, except share and per share data) December 31, 2024 June 30, 2024 Assets Current assets: Cash and cash equivalents $ 224,429 $ 203,775 Marketable securities — 4,500 Accounts receivable, net of allowances of $7,727 and $7,219, respectively 58,863 64,576 Inventory 103,313 97,016 Prepaid expenses and other current assets 109,035 88,112 Total current assets 495,640 457,979 Property, plant and equipment, net 278,510 265,177 Operating lease assets, net 78,461 78,681 Software and website development costs, net 92,180 92,212 Deferred tax assets 90,227 95,059 Goodwill 777,608 787,138 Intangible assets, net 65,940 76,560 Other assets 39,352 39,351 Total assets $ 1,917,918 $ 1,892,157 Liabilities, noncontrolling interests and shareholders’ deficit Current liabilities: Accounts payable $ 340,916 $ 326,656 Accrued expenses 285,084 245,931 Deferred revenue 48,379 46,118 Short-term debt 9,625 12,488 Operating lease liabilities, current 19,814 19,634 Other current liabilities 23,952 13,136 Total current liabilities 727,770 663,963 Deferred tax liabilities 22,898 24,701 Long-term debt 1,579,213 1,591,807 Operating lease liabilities, non-current 62,645 61,895 Other liabilities 60,372 76,305 Total liabilities 2,452,898 2,418,671 Commitments and contingencies (Note 12) Redeemable noncontrolling interests (Note 10) 18,710 22,998 Shareholders’ deficit: Preferred shares, nominal value €0.01 per share, 100,000,000 shares authorized; none issued and outstanding — — Ordinary shares, nominal value €0.01 per share, 100,000,000 shares authorized; 42,789,205 and 43,051,269 shares issued, respectively; 24,817,958 and 25,080,022 shares outstanding, respectively 601 604 Treasury shares, at cost, 17,971,247 shares for both periods presented ( 1,363,550 ) ( 1,363,550 ) Additional paid-in capital 576,881 570,283 Retained earnings 277,562 272,881 Accumulated other comprehensive loss ( 45,962 ) ( 30,364 ) Total shareholders’ deficit attributable to Cimpress plc ( 554,468 ) ( 550,146 ) Noncontrolling interests (Note 10) 778 634 Total shareholders' deficit ( 553,690 ) ( 549,512 ) Total liabilities, noncontrolling interests and shareholders’ deficit $ 1,917,918 $ 1,892,157 See accompanying notes. 1 CIMPRESS PLC CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited in thousands, except share and per share data) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Revenue $ 939,159 $ 921,363 $ 1,744,128 $ 1,678,657 Cost of revenue (1) 489,256 463,423 911,992 862,206 Technology and development expense (1) 82,878 79,961 164,739 154,291 Marketing and selling expense (1) 223,861 211,843 427,708 404,031 General and administrative expense (1) 56,936 48,793 108,868 97,134 Amortization of acquired intangible assets 5,116 9,181 10,271 19,067 Restructuring expense 163 483 262 149 Income from operations 80,949 107,679 120,288 141,779 Other income (expense), net 31,678 ( 391 ) 20,186 6,028 Interest expense, net ( 29,165 ) ( 30,588 ) ( 60,580 ) ( 59,788 ) (Loss) gain on early extinguishment of debt ( 696 ) 349 ( 517 ) 1,721 Income before income taxes 82,766 77,049 79,377 89,740 Income tax expense 21,151 16,795 30,146 24,917 Net income 61,615 60,254 49,231 64,823 Add: Net (income) attributable to noncontrolling interests ( 558 ) ( 2,149 ) ( 723 ) ( 2,164 ) Net income attributable to Cimpress plc $ 61,057 $ 58,105 $ 48,508 $ 62,659 Basic net income per share attributable to Cimpress plc $ 2.45 $ 2.18 $ 1.94 $ 2.36 Diluted net income per share attributable to Cimpress plc $ 2.36 $ 2.14 $ 1.86 $ 2.31 Weighted average shares outstanding — basic 24,965,612 26,609,929 25,066,729 26,539,349 Weighted average shares outstanding — diluted 25,906,151 27,179,073 26,145,452 27,129,264 ____________________________________________ (1) Share-based compensation expense is allocated as follows: Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Cost of revenue $ 208 $ 229 $ 431 $ 396 Technology and development expense 4,962 5,700 10,058 9,909 Marketing and selling expense 2,502 3,089 4,217 5,307 General and administrative expense 6,701 8,631 15,300 14,490 See accompanying notes. 2 CIMPRESS PLC CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited in thousands) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Net income $ 61,615 $ 60,254 $ 49,231 $ 64,823 Other comprehensive income, net of tax: Foreign currency translation losses, net of hedges ( 21,893 ) ( 2,053 ) ( 15,181 ) ( 5,840 ) Net unrealized gains (losses) on derivative instruments designated and qualifying as cash flow hedges 7,213 ( 10,271 ) ( 1,186 ) ( 2,592 ) Amounts reclassified from accumulated other comprehensive loss to net income for derivative instruments 285 55 569 ( 3,493 ) Comprehensive income 47,220 47,985 33,433 52,898 Add: Comprehensive income attributable to noncontrolling interests 35 ( 2,481 ) ( 523 ) ( 2,402 ) Total comprehensive income attributable to Cimpress plc $ 47,255 $ 45,504 $ 32,910 $ 50,496 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, 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 Share-based awards 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 ) Issuance of ordinary shares due to share option exercises, net of shares withheld for taxes — — — — 6 — — 6 Share-based awards vested, net of shares withheld for taxes 50 6 — — ( 1,792 ) — — ( 1,786 ) Share-based compensation expense — — — — 18,051 — — 18,051 Net income attributable to Cimpress plc — — — — — 58,105 — 58,105 Redeemable noncontrolling interest accretion to redemption value — — — — — ( 135 ) — ( 135 ) Net unrealized loss on derivative instruments designated and qualifying as cash flow hedges — — — — — — ( 10,216 ) ( 10,216 ) Foreign currency translation, net of hedges — — — — — — ( 2,385 ) ( 2,385 ) Balance at December 31, 2023 44,604 $ 621 ( 17,971 ) $ ( 1,363,550 ) $ 560,019 $ 297,590 $ ( 47,223 ) $ ( 552,543 ) See accompanying notes. 4 CIMPRESS PLC CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (CONTINUED) (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, 2024 43,051 $ 604 ( 17,971 ) $ ( 1,363,550 ) $ 570,283 $ 272,881 $ ( 30,364 ) $ ( 550,146 ) Issuance of ordinary shares due to share option exercises, net of shares withheld for taxes 22 — — — 1,000 — — 1,000 Purchase and cancellation of ordinary shares ( 123 ) ( 1 ) — — ( 1,713 ) ( 8,906 ) — ( 10,620 ) Share-based awards vested, net of shares withheld for taxes 282 3 — — ( 12,951 ) — — ( 12,948 ) Share-based compensation expense — — — — 16,573 — — 16,573 Net loss attributable to Cimpress plc — — — — — ( 12,549 ) — ( 12,549 ) Redeemable noncontrolling interest accretion to redemption value — — — — — ( 503 ) — ( 503 ) Net unrealized loss on derivative instruments designated and qualifying as cash flow hedges — — — — — — ( 8,115 ) ( 8,115 ) Foreign currency translation, net of hedges — — — — — — 6,319 6,319 Balance at September 30, 2024 43,232 $ 606 ( 17,971 ) $ ( 1,363,550 ) $ 573,192 $ 250,923 $ ( 32,160 ) $ ( 570,989 ) Issuance of ordinary shares due to share option exercises, net of shares withheld for taxes 7 — — — 369 — — 369 Purchase and cancellation of ordinary shares ( 534 ) ( 6 ) — — ( 7,352 ) ( 35,009 ) — ( 42,367 ) Restricted share units vested, net of shares withheld for taxes 84 1 — — ( 3,823 ) — — ( 3,822 ) Share-based compensation expense — — — — 14,495 — — 14,495 Net income attributable to Cimpress plc — — — — — 61,057 — 61,057 Redeemable noncontrolling interest accretion to redemption value — — — — — 591 — 591 Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges — — — — — — 7,498 7,498 Foreign currency translation, net of hedges — — — — — — ( 21,300 ) ( 21,300 ) Balance at December 31, 2024 42,789 $ 601 ( 17,971 ) $ ( 1,363,550 ) $ 576,881 $ 277,562 $ ( 45,962 ) $ ( 554,468 ) See accompanying notes. 5 CIMPRESS PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited in thousands) Six Months Ended December 31, 2024 2023 Operating activities Net income $ 49,231 $ 64,823 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 70,757 79,031 Share-based compensation expense 30,006 30,102 Deferred taxes 3,373 ( 2,115 ) Loss (gain) on early extinguishment of debt 123 ( 1,721 ) Unrealized (gain) loss on derivatives not designated as hedging instruments included in net income ( 12,313 ) 4,868 Effect of exchange rate changes on monetary assets and liabilities denominated in non-functional currency ( 9,448 ) ( 10,663 ) Other non-cash items 3,370 ( 770 ) Changes in operating assets and liabilities, net of effects of businesses acquired: Accounts receivable 5,495 2,521 Inventory ( 6,562 ) 5,309 Prepaid expenses and other assets ( 13,572 ) 881 Accounts payable 11,557 55,017 Accrued expenses and other liabilities 48,886 ( 10,083 ) Net cash provided by operating activities 180,903 217,200 Investing activities Purchases of property, plant and equipment ( 43,419 ) ( 33,955 ) Capitalization of software and website development costs ( 31,248 ) ( 28,344 ) Proceeds from the sale of assets 1,668 5,988 Proceeds from maturity of held-to-maturity investments 4,500 25,916 Proceeds from the settlement of derivatives designated as hedging instruments 5,438 — Net cash used in investing activities ( 63,061 ) ( 30,395 ) Financing activities Proceeds from issuance of 7.375% Senior Notes due 2032 525,000 — Payments for early redemption or purchase of 7.0% Senior Notes due 2026 ( 522,135 ) ( 24,471 ) Proceeds from borrowings of debt 41,191 520 Payments of debt ( 49,156 ) ( 7,675 ) Payments of debt issuance costs ( 11,551 ) — Payments of withholding taxes in connection with equity awards ( 16,770 ) ( 10,188 ) Payments of finance lease obligations ( 4,158 ) ( 4,880 ) Purchase of noncontrolling interests ( 4,058 ) — Purchase of ordinary shares ( 52,987 ) — Proceeds from issuance of ordinary shares 1,369 88 Distributions to noncontrolling interests ( 821 ) ( 549 ) Net cash used in financing activities ( 94,076 ) ( 47,155 ) Effect of exchange rate changes on cash ( 3,112 ) 4,245 Net increase in cash and cash equivalents 20,654 143,895 Cash and cash equivalents at beginning of period 203,775 130,313 Cash and cash equivalents at end of period $ 224,429 $ 274,208 See accompanying notes. 6 CIMPRESS PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (unaudited in thousands) Six Months Ended December 31, 2024 2023 Supplemental disclosures of cash flow information Cash paid for interest $ 54,753 $ 66,646 Cash received for interest 6,380 6,165 Cash paid for income taxes 11,386 26,434 Non-cash investing and financing activities Property and equipment acquired under finance leases 805 2,209 Amounts accrued related to property, plant and equipment 16,477 6,561 Amounts accrued related to capitalized software development costs 60 189 See accompanying notes. 7 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 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. 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. 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. Ordinary Shares During the six months ended December 31, 2024, we repurchased 657,193 of our ordinary shares on the open market and through privately negotiated transactions for $ 52,987 . The repurchased shares were immediately retired after repurchase and therefore have been classified as authorized and unissued shares as of December 31, 2024. Subsidiary Equity Option Awards During the second quarter of fiscal 2025, we granted subsidiary-level option awards, which provides the founder group of one of our businesses with the option to purchase a 5.25% minority equity interest in each of the principal businesses that are included in our PrintBrothers reportable segment. The option awards have an expiration date of January 15, 2026, and upon exercise the underlying shares are subject to a ten-year lockup period, while the holders are subjected to non-compete provisions over the period in which they are shareholders, plus an additional two years. The fair value of the share option is determined as of the grant date using the Black-Scholes valuation model and the fair value is recognized ratably as expense over the non-compete period, as the provision is deemed to be substantive. No material expense was recognized for any period presented. 8 Other Income (Expense), Net The following table summarizes the components of other income (expense), net. Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Gains (losses) on derivatives not designated as hedging instruments (1) $ 33,632 $ ( 13,668 ) $ 13,063 $ ( 5,356 ) Currency-related (losses) gains, net (2) ( 2,107 ) 13,062 6,560 10,363 Other gains 153 215 563 1,021 Total other income (expense), net $ 31,678 $ ( 391 ) $ 20,186 $ 6,028 _____________________ (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 $ 2,981 and $ 749 for the three and six months ended December 31, 2024, respectively, and losses of $ 2,539 and $ 488 for the three and six months ended December 31, 2023, respectively. Refer to Note 4 for additional details relating to our derivative contracts. (2) Currency-related (losses) gains, 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, during the three and six months ended December 31, 2023, we recognized gains of $ 2,230 and $ 294 , respectively, on a cross-currency swap designated as a cash flow hedge which hedges the remeasurement of an intercompany loan. We did not hold any cross-currency swap contracts that were designated as cash flow hedges during the three and six months ended December 31, 2024. Refer to Note 4 for additional details regarding our cash flow hedges. Net Income Per Share Attributable to Cimpress plc Basic net income per share attributable to Cimpress plc is computed by dividing net income attributable to Cimpress plc by the weighted-average number of ordinary shares outstanding for the respective period. Diluted net income per share attributable to Cimpress plc gives effect to all potentially dilutive securities, including share options, restricted share units (“RSUs”), performance share units ("PSUs"), and warrants, 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. The following table sets forth the reconciliation of the weighted-average number of ordinary shares. Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Weighted average shares outstanding, basic 24,965,612 26,609,929 25,066,729 26,539,349 Weighted average shares issuable upon exercise/vesting of outstanding share options/PSUs/RSUs/warrants (1) 940,539 569,144 1,078,723 589,915 Shares used in computing diluted net income per share attributable to Cimpress plc 25,906,151 27,179,073 26,145,452 27,129,264 Weighted average anti-dilutive shares excluded from diluted net income per share attributable to Cimpress plc 299,877 192,204 153,799 189,927 __________________ (1) On May 1, 2020, we entered into a financing arrangement 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. The weighted average dilutive effect of the warrants for the three and six months ended December 31, 2024 were 248,156 and 294,657 , respectively, and for the three and six months ended December 31, 2023 were 146,506 and 122,412 , respectively. Recently Issued or Adopted Accounting Pronouncements Accounting Standards to be Adopted In November 2024, the FASB issued Accounting Standards Update No. 2024-03 "Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses" (ASU 2024-03), which requires disaggregated disclosure of income statement expenses into specified categories. The expanded disclosure requirements will be effective starting with our annual report for the fiscal year ending June 30, 2028, as well as each interim period thereafter. Early adoption is permitted, but we do not intend to early adopt this standard. In December 2023, the FASB issued Accounting Standards Update No. 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" (ASU 2023-09), which provides authoritative guidance about 9 expanded annual disclosure requirements for the income tax rate reconciliation and income taxes paid by jurisdiction. The expanded disclosure requirements will be effective starting with our annual report for the fiscal year ending June 30, 2026. Early adoption is permitted, but we do not intend to early adopt this standard. In November 2023, the FASB issued Accounting Standards Update No. 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" (ASU 2023-07), which requires enhanced disclosures about significant segment expenses and introduces a reconciliation between segment revenue and segment profitability metrics. The expanded disclosure requirements will be effective starting with our annual report for the fiscal year ending June 30, 2025, as well as each interim period thereafter. We will include all required disclosures in our upcoming annual report under the retrospective transition method for the fiscal year ending June 30, 2025. 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. December 31, 2024 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 $ 16,989 $ — $ 16,989 $ — Currency forward contracts 12,722 — 12,722 — Currency option contracts 2,146 — 2,146 — Total assets recorded at fair value $ 31,857 $ — $ 31,857 $ — Liabilities Cross-currency swap contracts $ ( 849 ) $ — $ ( 849 ) $ — Currency forward contracts ( 1,625 ) — ( 1,625 ) — Currency option contracts ( 187 ) — ( 187 ) — Total liabilities recorded at fair value $ ( 2,661 ) $ — $ ( 2,661 ) $ — 10 June 30, 2024 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 $ 18,830 $ — $ 18,830 $ — Cross-currency swap contracts 1,043 — 1,043 — Currency forward contracts 3,642 — 3,642 — Currency option contracts 137 — 137 — Total assets recorded at fair value $ 23,652 $ — $ 23,652 $ — Liabilities Currency forward contracts $ ( 856 ) $ — $ ( 856 ) $ — Currency option contracts ( 2,180 ) — ( 2,180 ) — Total liabilities recorded at fair value $ ( 3,036 ) $ — $ ( 3,036 ) $ — During the six months ended December 31, 2024 and year ended June 30, 2024, 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 December 31, 2024, 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. Our held-to-maturity marketable securities are recognized at an amortized cost. As of December 31, 2024, we had no held-to-maturity securities. 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 June 30, 2024. The fair value was determined using quoted prices for identical assets in active markets, which fall into Level 1 under the fair value hierarchy. We did not record an allowance for credit losses and impairments for these marketable securities during the three and six months ended December 31, 2024 and 2023. June 30, 2024 Amortized cost Unrealized losses Fair value Due within one year or less: Corporate debt securities $ 1,500 $ ( 1 ) $ 1,499 U.S. government securities 3,000 ( 4 ) 2,996 Total held-to-maturity securities $ 4,500 $ ( 5 ) $ 4,495 As of December 31, 2024 and June 30, 2024, the carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable, and other current liabilities approximated their estimated fair values. As of December 31, 2024 and June 30, 2024, the carrying value of our debt, excluding debt issuance costs and debt premiums and discounts, was $ 1,610,463 and $ 1,616,607 , respectively, and the fair value was $ 1,610,975 and 11 $ 1,617,364 , respectively. Our debt at December 31, 2024 includes variable-rate debt instruments indexed to Term SOFR that reset 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. 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. 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. At times, we have designated intercompany loans 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 (expense), 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 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 December 31, 2024, we estimate that $ 2,786 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending December 31, 2025. As of December 31, 2024, we had nine 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 December 31, 2024 (1) $ 215,000 Contracts with a future start date 380,000 Total $ 595,000 ________________________ (1) Based on contracts outstanding as of December 31, 2024, 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 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. 12 Cross-currency swap contracts designated as net investment hedges are executed to mitigate our currency exposure of net investments in subsidiaries that have reporting currencies other than the U.S. dollar. As of December 31, 2024, we had one outstanding cross-currency swap contract designated as a net investment hedge with a total notional amount of $ 254,547 , maturing during September 2028. We entered into the cross-currency swap contract to hedge the risk of changes in the U.S. dollar equivalent value of a portion of our net investment in a consolidated subsidiary that has the Euro as its functional currency. Amounts reported in accumulated other comprehensive loss are recognized as a component of our cumulative translation adjustment. 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. The impact of net investment hedges is recognized in accumulated other comprehensive loss as a component of translation adjustments, net of hedges, and would only be reclassified to earnings if the hedged subsidiaries were no longer consolidated entities. We have elected to not apply hedge accounting for all other currency forward and option contracts. During the three and six months ended December 31, 2024 and 2023, we experienced volatility within other income (expense), 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 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 December 31, 2024, 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 $ 512,769 March 2023 through December 2024 Various dates through December 2026 653 Various 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 December 31, 2024 and June 30, 2024. Our derivative asset and liability balances fluctuate with interest rate and currency exchange rate volatility. 13 December 31, 2024 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 $ 16,989 $ — $ 16,989 Other current liabilities / other liabilities $ — $ — $ — Derivatives in net investment hedging relationships Cross-currency swaps Other assets — — — Other liabilities ( 849 ) — ( 849 ) Total derivatives designated as hedging instruments $ 16,989 $ — $ 16,989 $ ( 849 ) $ — $ ( 849 ) Derivatives not designated as hedging instruments Currency forward contracts Other current assets / other assets $ 15,227 $ ( 2,505 ) $ 12,722 Other current liabilities / other liabilities $ ( 1,642 ) $ 17 $ ( 1,625 ) Currency option contracts Other current assets / other assets 2,651 ( 505 ) 2,146 Other current liabilities / other liabilities ( 187 ) — ( 187 ) Total derivatives not designated as hedging instruments $ 17,878 $ ( 3,010 ) $ 14,868 $ ( 1,829 ) $ 17 $ ( 1,812 ) 14 June 30, 2024 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 $ 18,830 $ — $ 18,830 Other liabilities $ — $ — $ — Derivatives in net investment hedging relationships Cross-currency swaps Other assets 1,043 — 1,043 Other liabilities — — — Total derivatives designated as hedging instruments $ 19,873 $ — $ 19,873 $ — $ — $ — Derivatives not designated as hedging instruments Currency forward contracts Other current assets / other assets $ 5,549 $ ( 1,907 ) $ 3,642 Other current liabilities / other liabilities $ ( 1,084 ) $ 228 $ ( 856 ) Currency option contracts Other current assets / other assets 212 ( 75 ) 137 Other current liabilities / other liabilities ( 2,351 ) 171 ( 2,180 ) Total derivatives not designated as hedging instruments $ 5,761 $ ( 1,982 ) $ 3,779 $ ( 3,435 ) $ 399 $ ( 3,036 ) 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 and six months ended December 31, 2024 and 2023. Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Derivatives in cash flow hedging relationships Interest rate swaps $ 7,213 $ ( 8,081 ) $ ( 1,186 ) $ ( 1,950 ) Cross-currency swaps — ( 2,190 ) — ( 642 ) Derivatives in net investment hedging relationships Intercompany loan 2,744 ( 9,319 ) 615 ( 3,545 ) Currency forward contracts — — — ( 1,080 ) Total $ 9,957 $ ( 19,590 ) $ ( 571 ) $ ( 7,217 ) The following table presents reclassifications out of accumulated other comprehensive loss for the three and six months ended December 31, 2024 and 2023. Amount of Net Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income Affected line item in the Statement of Operations Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Derivatives in cash flow hedging relationships Interest rate swaps $ 322 $ ( 2,274 ) $ 643 $ ( 4,496 ) Interest expense, net Cross-currency swaps — 2,230 — 294 Other income (expense), net Total before income tax 322 ( 44 ) 643 ( 4,202 ) Income before income taxes Income tax ( 37 ) 98 ( 74 ) 709 Income tax expense Total $ 285 $ 54 $ 569 $ ( 3,493 ) 15 The following table presents the adjustment to fair value recorded within the consolidated statements of operations for the three and six months ended December 31, 2024 and 2023 for derivative instruments for which we did not elect hedge accounting. Amount of Gain (Loss) Recognized in Net Incom Affected line item in the Statement of Operations Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Currency contracts $ 33,632 $ ( 13,668 ) $ 13,063 $ ( 5,356 ) Other income (expense), net Total $ 33,632 $ ( 13,668 ) $ 13,063 $ ( 5,356 ) 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 $ 580 for the six months ended December 31, 2024 : Gains on cash flow hedges (1) Gains (losses) on pension benefit obligation Translation adjustments, net of hedges (2) Total Balance as of June 30, 2024 $ 10,789 $ ( 706 ) $ ( 40,447 ) $ ( 30,364 ) Other comprehensive loss before reclassifications ( 1,186 ) — ( 14,981 ) ( 16,167 ) Amounts reclassified from accumulated other comprehensive loss to net income 569 — — 569 Net current period other comprehensive loss ( 617 ) — ( 14,981 ) ( 15,598 ) Balance as of December 31, 2024 $ 10,172 $ ( 706 ) $ ( 55,428 ) $ ( 45,962 ) ________________________ (1) Gains on cash flow hedges include our interest rate swap contracts designated in cash flow hedging relationships. (2) As of December 31, 2024 and June 30, 2024, the translation adjustment is inclusive of both the realized and unrealized effects of our net investment hedges. Gains on currency forward and swap contracts designated as net investment hedges, net of tax, of $ 21,875 and $ 15,042 have been included in accumulated other comprehensive loss as of December 31, 2024 and June 30, 2024, respectively. Intercompany loan hedge gains, net of tax, of $ 42,159 and $ 48,270 have been included in accumulated other comprehensive loss as of December 31, 2024 and June 30, 2024, respectively. 6. Goodwill The carrying amount of goodwill by reportable segment as of December 31, 2024 and June 30, 2024 was as follows: Vista PrintBrothers The Print Group All Other Businesses Total Balance as of June 30, 2024 $ 295,285 $ 149,244 $ 147,688 $ 194,921 $ 787,138 Effect of currency translation adjustments (1) ( 1,144 ) ( 4,115 ) ( 4,271 ) — ( 9,530 ) Balance as of December 31, 2024 $ 294,141 $ 145,129 $ 143,417 $ 194,921 $ 777,608 ________________________ (1) Related to goodwill held by subsidiaries whose functional currency is not the U.S. dollar. 16 7. Other Balance Sheet Components Accrued expenses included the following: December 31, 2024 June 30, 2024 Compensation costs $ 71,930 $ 80,844 Income and indirect taxes (1) 66,659 46,499 Advertising costs (1) 27,531 23,524 Third-party manufacturing and digital content costs (1) 21,845 17,608 Shipping costs (1) 20,090 10,088 Interest payable (2) 11,162 3,658 Variable compensation incentives 7,324 9,263 Sales returns 6,334 5,181 Professional fees 2,760 2,596 Other 49,449 46,670 Total accrued expenses $ 285,084 $ 245,931 ______________________ (1) The increase in income and indirect taxes, advertising, third party manufacturing, and shipping costs is due to increased sales volumes during our holiday peak season in the second quarter of our fiscal year. (2) On September 26, 2024, we issued the 7.375% senior notes due 2032 to redeem all of the outstanding 7.0% senior notes due 2026. The increase in interest payable as of December 31, 2024, is due to the interest on our 7.375% senior notes due 2032 being due on March 15, 2025 as compared to the interest on our 7.0% senior notes due 2026 being due June 15, 2024. Refer to Note 8 for additional detail. Other current liabilities included the following: December 31, 2024 June 30, 2024 Mandatorily redeemable noncontrolling interest (1) $ 9,290 $ — Current portion of finance lease obligations 8,329 8,323 Short-term derivative liabilities 4,732 4,833 Other 1,601 ( 20 ) Total other current liabilities $ 23,952 $ 13,136 Other liabilities included the following: December 31, 2024 June 30, 2024 Long-term finance lease obligations $ 23,587 $ 28,037 Long-term compensation incentives 15,492 17,127 Long-term derivative liabilities 956 584 Mandatorily redeemable noncontrolling interest (1) — 9,608 Other 20,337 20,949 Total other liabilities $ 60,372 $ 76,305 ________________________ (1) During the current quarter, the mandatorily redeemable noncontrolling interests were reclassified from long-term liabilities to current liabilities, since we are required to purchase the outstanding equity interests during the second quarter of fiscal year 2026. 17 8. Debt December 31, 2024 June 30, 2024 7.375% Senior Notes due 2032 $ 525,000 $ — 7.0% Senior Notes due 2026 (1) — 522,135 Senior secured credit facility 1,078,222 1,084,627 Other 7,241 9,845 Debt issuance costs and discounts, net of debt premiums ( 21,625 ) ( 12,312 ) Total debt outstanding, net 1,588,838 1,604,295 Less: short-term debt (1) 9,625 12,488 Long-term debt $ 1,579,213 $ 1,591,807 _____________________ (1) Balances as of December 31, 2024 and June 30, 2024 are inclusive of short-term debt issuance costs, debt premiums and discounts of $ 4,887 and $ 3,492 , respectively. Our various debt arrangements described below contain customary representations, warranties, and events of default. As of December 31, 2024, we were in compliance with all covenants in our debt contracts, including those 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") and the indenture governing our 2032 Notes. Senior Secured Credit Facility On December 16, 2024, we amended our Restated Credit Agreement to refinance our Term Loan B, which consists of a tranche denominated in U.S. dollars ("USD Tranche") and as part of the amendment the size of the USD tranche was increased by $ 48,614 , and those proceeds were used to fully repay the previously outstanding tranche denominated in Euros ("Euro Tranche"). The amendment reduced the interest rate margin of the USD Tranche by 50 basis points, from Term SOFR plus 3.00% to Term SOFR plus 2.50%. No other material changes were made to the terms of the Term Loan B or the Restated Credit Agreement, and the maturity date of the Term Loan B is still May 17, 2028. As a result of this refinancing transaction, we recognized a loss on extinguishment of debt amounting to $ 696 , which consisted of the non-cash write-off of a portion of unamortized debt discount and deferred financing fees associated with prepaying the Euro Tranche as well as third-party legal fees that were associated with the modification of our debt. Our Restated Credit Agreement consists of the following as of December 31, 2024: • a $ 1,078,222 USD Tranche that bears interest at Term SOFR (with a Term SOFR rate floor of 0.50 %) plus 2.50%, and • a $ 250,000 senior secured revolving credit facility with a maturity date of September 26, 2029 (the “Revolving Credit Facility”), with no outstanding borrowings for any periods presented. ◦ Borrowings under the Revolving Credit Facility bear interest at Term SOFR (with a Term SOFR rate floor of 0 %) plus 2.25 % to 3.00 % depending on the Company’s First Lien Leverage Ratio, a net leverage calculation, as defined in the Restated Credit Agreement. 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 December 31, 2024, the weighted-average interest rate on outstanding borrowings under the Restated Credit Agreement was 6.45 %, inclusive of interest rate swap rates. We are also required to pay a commitment fee for our Revolving Credit Facility on unused balances of 0.30 % 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 under our Restated Credit Agreement. 18 Senior Notes On September 26, 2024, we completed a private placement of $ 525,000 in aggregate principal amount of 7.375% senior unsecured notes due 2032 (the "2032 Notes"). We issued the 2032 Notes pursuant to a senior notes indenture dated as of September 26, 2024, among Cimpress plc, our subsidiary guarantors, and U.S Bank Trust Company, as trustee (the "Indenture"). We used the net proceeds from the 2032 Notes, together with cash on hand, to redeem all of the outstanding 7.0% senior unsecured notes due 2026 (the "2026 Notes") at a redemption price equal to par of the principal amount, to pay all accrued unpaid interest thereon, and to pay all fees and expenses related to the redemption and offering. As a result of the redemption, we incurred a gain on the extinguishment of debt of $338 which included the write-off of the associated unamortized debt premium of $ 2,525 which was partially offset by the write-off of unamortized debt issuance costs of $ 2,187 . The 2032 Notes bear interest at a rate of 7.375% per annum and mature on September 15, 2032. Interest on the 2032 Notes is payable semi-annually on March 15 and September 15 of each year, commencing on March 15, 2025, to the holders of record of the 2032 Notes at the close of business on March 1 or September 1, respectively, preceding such interest payment date. The 2032 Notes are senior unsecured obligations and rank equally in right of payment to all our existing and future senior unsecured debt and senior in right of payment to all of our existing and future subordinated debt. The 2032 Notes are effectively subordinated to any of our existing and future secured debt to the extent of the value of the assets securing such debt. Subject to certain exceptions, each of our existing and future subsidiaries that is a borrower under or guarantees our senior secured credit facilities guarantees the 2032 Notes. The Indenture under which the 2032 Notes are issued contains various covenants, including covenants that, subject to certain exceptions, limit our restricted subsidiaries’ ability to: incur and/or guarantee additional debt; pay dividends, repurchase shares or make certain other restricted payments; enter into agreements limiting dividends and certain other restricted payments; prepay, redeem or repurchase subordinated debt; grant liens on assets; merge, consolidate or transfer or dispose of substantially all of our consolidated assets; sell, transfer or otherwise dispose of property and assets; and engage in transactions with affiliates. At any time prior to September 15, 2027, we may redeem some or all of the 2032 Notes at a redemption price equal to 100% of the principal amount redeemed, plus a make-whole amount as set forth in the Indenture, plus, in each case, accrued and unpaid interest and Additional Amounts (as defined in the Indenture), if any, to, but not including, the redemption date. In addition, at any time prior to September 15, 2027, Cimpress may on any one or more occasions redeem up to 40% of the original aggregate principal amount of the Notes with the net proceeds of certain equity offerings by Cimpress at a redemption price equal to 107.375% of the principal amount thereof, plus accrued and unpaid interest and Additional Amounts, if any (which accrued and unpaid interest and Additional Amounts need not be funded with such proceeds), to, but not including, the redemption date. At any time on or after September 15, 2027, Cimpress may redeem some or all of the Notes at the redemption prices specified in the Indenture, plus accrued and unpaid interest and Additional Amounts, if any, to, but not including, the redemption date. Other Debt Other debt consists primarily of term loans acquired through our various acquisitions or used to fund certain capital investments. As of December 31, 2024 and June 30, 2024, we had $ 7,241 and $ 9,845 , respectively, outstanding for those obligations that are payable through September 2027. 9. Income Taxes Our income tax expense was $ 21,151 and $ 30,146 for the three and six months ended December 31, 2024, respectively, as compared to $ 16,795 and $ 24,917 for the three and six months ended December 31, 2023, respectively. Income tax expense increased versus the prior comparative periods due to an increased full-year forecasted effective tax rate. Excluding the effect of discrete tax adjustments, our estimated annual effective tax rate is higher for fiscal year 2025 than for fiscal year 2024 primarily due to increased Swiss tax as in the prior comparative periods we had a full valuation allowance in Switzerland, which was partially released in the quarter ended June 30, 2024. O ur 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. These losses with no tax benefit were excluded in calculating income tax expense for the three and six months ended December 31, 2024 and 2023, in 19 accordance with GAAP. 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 December 31, 2024 we had unrecognized tax benefits of $ 16,858 , including accrued interest and penalties of $ 2,356 . We recognize interest and, if applicable, penalties related to unrecognized tax benefits in the provision for income taxes. If recognized, $ 6,809 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 $ 6,400 to $ 6,900 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 2024 remain open for examination by the U.S. Internal Revenue Service and the years 2015 through 2024 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, 2024 $ 22,998 $ 634 Accretion to redemption value recognized in retained earnings (1) ( 88 ) — Net income attributable to noncontrolling interests 553 170 Purchase of noncontrolling interest (2) ( 4,579 ) — Foreign currency translation ( 174 ) ( 26 ) Balance as of December 31, 2024 $ 18,710 $ 778 _________________ (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. Any change in the estimated redemption amount which exceeds the estimated fair value is recognized within net income attributable to noncontrolling interests. (2) During the current quarter, we purchased 49% of the remaining equity interest in one of the smaller businesses previously acquired and included in our PrintBrothers reportable segment for a total purchase price of $ 4,579 , which consisted of $ 4,059 of cash paid at closing, and $ 520 of a deferred payment that is payable in fiscal year 2029. 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 December 31, 2024, we have numerous operating segments under our management reporting structure which are reported in the following five reportable segments: • Vista - Consists of the operations of our VistaPrint branded websites in North America, Western Europe, Australia, New Zealand, India, and Singapore. This business also includes our 99designs by Vista business, which provides graphic design services, VistaCreate for do-it-yourself (DIY) design, our Vista x Wix partnership for small business websites, and our Vista Corporate Solutions business, which serves medium-sized businesses and large corporations. 20 • PrintBrothers - Includes the results of druck.at, Printdeal, and WIRmachenDRUCK, a group of Upload & Print businesses that serve graphic professionals throughout Europe, primarily in Austria, Belgium, Germany, the Netherlands, and Switzerland. • The Print Group - Includes the results of Easyflyer, Exaprint, Packstyle, Pixartprinting, and Tradeprint, a group of Upload & Print businesses that serve graphic professionals throughout Europe, primarily in France, Italy, Spain, and the United Kingdom. • National Pen - Serves small businesses across geographies including North America, Europe, and Australia. The pens.com branded business sells through their ecommerce site and is supported by digital marketing methods as well as direct mail and telesales. National Pen focuses on customized writing instruments and promotional products, apparel, and gifts for small- and medium-sized businesses. • All Other Businesses - Includes two businesses grouped together based on materiality. ◦ BuildASign is a provider of canvas-print wall décor, business signage and other large-format printed products. ◦ Printi, a smaller business that is an online printing leader in Brazil. For purposes of measuring and reporting our segment financial performance, we implemented changes to the methodology used for inter-segment transactions during the first quarter of fiscal 2025. These transactions occur when one Cimpress business chooses to buy from or sell to another Cimpress business. Under the new approach, a merchant business (the buyer) is cross charged the actual cost of fulfillment that includes product (e.g., labor, materials and overhead allocation) and shipping costs. A fulfiller business (the seller) receives inter-segment revenue that includes the product costs plus a markup, as well as the shipping costs. The fulfiller profit is included in the fulfiller’s segment results, but eliminated from consolidated reporting through an inter-segment EBITDA elimination . The new approach allows our merchant businesses to access the ultimate Cimpress cost of fulfillment for a given product and therefore that ultimate Cimpress cost can be used to determine pricing, advertising spend, and other operational decisions. Prior to this change, inter-segment transactions were based on marked-up pricing that resulted in the merchant business recognizing inter-segment cost of goods sold that was equal to inter-segment revenue that were recognized by the fulfiller business, as such there was no inter-segment EBITDA elimination under our prior method. We have recast all prior periods presented for segment revenue and segment EBITDA to ensure comparability with the current fiscal year. These changes in methodology have no impact on our consolidated financial results. 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 this 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 21 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. Three Months Ended December 31, Six Months Ended December 31, 2024 2023 (1) 2024 2023 (1) Revenue: Vista $ 497,677 $ 485,445 $ 927,171 $ 882,295 PrintBrothers 174,508 165,551 334,923 318,124 The Print Group 98,628 92,135 182,700 171,572 National Pen 131,423 130,096 224,827 216,892 All Other Businesses 60,333 59,762 117,476 111,187 Total segment revenue 962,569 932,989 1,787,097 1,700,070 Inter-segment eliminations (2) ( 23,410 ) ( 11,626 ) ( 42,969 ) ( 21,413 ) Total consolidated revenue $ 939,159 $ 921,363 $ 1,744,128 $ 1,678,657 _____________________ (1) The prior period segment results have been adjusted to ensure comparability with the new methodology used for inter-segment transactions. Refer to the discussion above for further details. (2) Refer to the "Revenue by Geographic Region" tables below for detail of the inter-segment revenue within each respective segment. Three Months Ended December 31, 2024 Vista PrintBrothers The Print Group National Pen All Other Total Revenue by Geographic Region: North America $ 326,538 $ — $ — $ 58,486 $ 45,730 $ 430,754 Europe 140,852 173,437 92,012 64,702 26 471,029 Other 29,633 — — 1,524 6,219 37,376 Inter-segment 654 1,071 6,616 6,711 8,358 23,410 Total segment revenue 497,677 174,508 98,628 131,423 60,333 962,569 Less: inter-segment elimination ( 654 ) ( 1,071 ) ( 6,616 ) ( 6,711 ) ( 8,358 ) ( 23,410 ) Total external revenue $ 497,023 $ 173,437 $ 92,012 $ 124,712 $ 51,975 $ 939,159 Six Months Ended December 31, 2024 Vista PrintBrothers The Print Group National Pen All Other Total Revenue by Geographic Region: North America $ 635,713 $ — $ — $ 110,773 $ 89,098 $ 835,584 Europe 236,509 332,805 172,919 96,709 26 838,968 Other 53,392 — — 2,966 13,218 69,576 Inter-segment 1,557 2,118 9,781 14,379 15,134 42,969 Total segment revenue 927,171 334,923 182,700 224,827 117,476 1,787,097 Less: inter-segment elimination ( 1,557 ) ( 2,118 ) ( 9,781 ) ( 14,379 ) ( 15,134 ) ( 42,969 ) Total external revenue $ 925,614 $ 332,805 $ 172,919 $ 210,448 $ 102,342 $ 1,744,128 22 Three Months Ended December 31, 2023 Vista PrintBrothers The Print Group National Pen All Other Total Revenue by Geographic Region: North America $ 325,693 $ — $ — $ 59,229 $ 50,570 $ 435,492 Europe 131,138 164,378 90,026 63,482 — 449,024 Other 27,880 — — 2,031 6,936 36,847 Inter-segment (1) 734 1,173 2,109 5,354 2,256 11,626 Total segment revenue (1) 485,445 165,551 92,135 130,096 59,762 932,989 Less: inter-segment elimination (1) ( 734 ) ( 1,173 ) ( 2,109 ) ( 5,354 ) ( 2,256 ) ( 11,626 ) Total external revenue $ 484,711 $ 164,378 $ 90,026 $ 124,742 $ 57,506 $ 921,363 Six Months Ended December 31, 2023 Vista PrintBrothers The Print Group National Pen All Other Total Revenue by Geographic Region: North America $ 614,748 $ — $ — $ 111,964 $ 92,784 $ 819,496 Europe 216,545 315,920 167,828 91,219 — 791,512 Other 49,770 — — 3,408 14,471 67,649 Inter-segment (1) 1,232 2,204 3,744 10,301 3,932 21,413 Total segment revenue (1) 882,295 318,124 171,572 216,892 111,187 1,700,070 Less: inter-segment elimination (1) ( 1,232 ) ( 2,204 ) ( 3,744 ) ( 10,301 ) ( 3,932 ) ( 21,413 ) Total external revenue $ 881,063 $ 315,920 $ 167,828 $ 206,591 $ 107,255 $ 1,678,657 _____________________ (1) The prior period segment results have been adjusted to ensure comparability with the new methodology used for inter-segment transactions. Refer to the discussion above for further details. The following table includes segment EBITDA by reportable segment, total income from operations and total income before income taxes: Three Months Ended December 31, Six Months Ended December 31, 2024 2023 (1) 2024 2023 (1) Segment EBITDA: Vista $ 92,423 $ 107,870 $ 169,270 $ 186,448 PrintBrothers 23,333 28,802 43,489 49,012 The Print Group 18,526 17,309 36,428 29,816 National Pen 23,299 25,389 18,541 16,627 All Other Businesses 3,667 7,371 10,402 13,389 Inter-segment elimination ( 6,579 ) ( 2,934 ) ( 12,079 ) ( 5,472 ) Total segment EBITDA 154,669 183,807 266,051 289,820 Central and corporate costs ( 37,163 ) ( 35,967 ) ( 74,175 ) ( 67,747 ) Depreciation and amortization ( 35,211 ) ( 39,089 ) ( 70,757 ) ( 79,031 ) Restructuring-related charges ( 163 ) ( 483 ) ( 262 ) ( 149 ) Certain impairments and other adjustments ( 1,183 ) ( 589 ) ( 569 ) ( 1,114 ) Total income from operations 80,949 107,679 120,288 141,779 Other income (expense), net 31,678 ( 391 ) 20,186 6,028 Interest expense, net ( 29,165 ) ( 30,588 ) ( 60,580 ) ( 59,788 ) (Loss) gain on early extinguishment of debt ( 696 ) 349 ( 517 ) 1,721 Income before income taxes $ 82,766 $ 77,049 $ 79,377 $ 89,740 _____________________ (1) The prior period segment results have been adjusted to ensure comparability with the new methodology used for inter-segment transactions. Refer to the discussion above for further details. 23 Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Depreciation and amortization: Vista $ 13,096 $ 13,176 $ 26,151 $ 28,051 PrintBrothers 3,391 4,024 6,866 7,913 The Print Group 4,889 6,000 10,100 11,822 National Pen 3,188 4,992 6,434 10,180 All Other Businesses 4,743 4,509 9,390 9,056 Central and corporate costs 5,904 6,388 11,816 12,009 Total depreciation and amortization $ 35,211 $ 39,089 $ 70,757 $ 79,031 Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Purchases of property, plant and equipment: Vista $ 9,768 $ 5,859 $ 17,294 $ 9,470 PrintBrothers 1,740 90 3,107 5,242 The Print Group 8,546 2,547 12,313 11,043 National Pen 1,113 1,486 2,476 4,155 All Other Businesses 4,541 1,181 7,052 3,416 Central and corporate costs 710 227 1,177 629 Total purchases of property, plant and equipment $ 26,418 $ 11,390 $ 43,419 $ 33,955 Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Capitalization of software and website development costs: Vista $ 6,544 $ 6,050 $ 12,601 $ 12,690 PrintBrothers 991 456 1,593 913 The Print Group 1,506 1,056 2,455 1,750 National Pen 1,147 1,171 2,247 1,976 All Other Businesses 1,757 1,110 3,256 2,297 Central and corporate costs 4,732 4,104 9,096 8,718 Total capitalization of software and website development costs $ 16,677 $ 13,947 $ 31,248 $ 28,344 24 The following table sets forth long-lived assets by geographic area: December 31, 2024 June 30, 2024 Long-lived assets (1): United States $ 80,194 $ 77,095 Canada 64,996 54,848 Switzerland 64,645 67,201 Netherlands 55,986 60,974 Italy 38,084 37,380 Germany 30,357 31,656 France 26,849 28,002 Australia 21,062 22,131 Jamaica 3,546 3,782 Other 100,640 90,380 Total $ 486,359 $ 473,449 ___________________ (1) Excludes goodwill of $ 777,608 and $ 787,138 , intangible assets, net of $ 65,940 and $ 76,560 , deferred tax assets of $ 90,227 and $ 95,059 , and equity method investments of $ 2,075 and $1,904 as of December 31, 2024 and June 30, 2024, respectively. 12. Commitments and Contingencies Supply Chain Finance Program 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 in our consolidated balance sheets as of December 31, 2024 and June 30, 2024 were $ 56,151 and $ 62,848 , respectively. Purchase Obligations At December 31, 2024, we had unrecorded commitments under contract of $ 207,240 , including inventory, third-party fulfillment and digital service purchase commitments of $ 93,209 ; software of $ 38,346 ; third-party cloud services of $ 36,628 ; production and computer equipment purchases of $ 7,588 ; insurance costs of $5,387; professional and consulting fees of $ 5,162 ; production-related temporary labor of $ 4,000 ; advertising of $ 684 ; and other unrecorded purchase commitments of $ 16,238 . 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. 25 13. Related Party Transaction On November 8, 2024, we repurchased 316,056 of our outstanding ordinary shares, par value €0.01 per share, from entities affiliated with Prescott General Partners LLC (“Prescott”) in a privately negotiated transaction at a price of $ 79.10 per share, representing a discount of $ 1.78 to the closing price of our ordinary shares on November 6, 2024 (the “Transaction”). Scott Vassalluzzo, a Managing Member of Prescott, serves as a member of Cimpress’ Board of Directors and Audit Committee. In light of the foregoing, the disinterested members of Cimpress’ Audit Committee reviewed the Transaction under our related person transaction policy and considered, among other things, Mr. Vassalluzzo’s and Prescott’s interest in the Transaction, the approximate dollar value of the Transaction, and the purpose and the potential benefits to Cimpress of entering into the Transaction. Based on these considerations, the disinterested members of the Audit Committee concluded that the Transaction was in our best interest. The Transaction was effected pursuant to the share repurchase program approved by Cimpress’ Board of Directors and announced on May 29, 2024. 26