Cimpress N.V. Aktie

Welcome to the Cimpress Q4 Fiscal Year 2026 Earnings Call. I will now introduce Meredith Burns, Vice President of Investor Relations and Sustainability.

Thank you, Ari, and thank you, everyone, for joining us. With us today are Robert Keane, our Founder, Chairman and Chief Executive Officer; and Sean Quinn, our EVP and Chief Financial Officer. We appreciate the time that you've dedicated to understand our results, the commentary and outlook, particularly at year-end. This live Q&A session will last about 45 minutes or so, and we'll answer both pre-submitted and live questions. You can submit questions via the questions and answers box at the bottom left of the screen.

Before we start, I'll note that in this session, we will make statements about the future. Our actual results may differ materially from these statements due to risk factors that are outlined in detail in our SEC filings and the earnings document we published yesterday on our website. We also have published non-GAAP reconciliations for our financial results on our IR website, and we invite you to read all of those.

So now I'll turn things over to Robert.

Hi, everyone. Thank you very much for joining us today, and it's great to be here. Meredith, thank you. I want to start with my perspective on the strong progress that we've made against the strategic and the operational themes that we've been pursuing for a while now. Then Sean is going to take you through our Q4 results and our updated guidance.

We made great progress in fiscal 2026, right along the path that we've been describing for the past few years. That's true of our strategic objectives, manufacturing and supply chain excellence, elevated products and design enablement. And it's true of our ways of working, the handful of shared capabilities like our mass customization platform, our velocity and our efficiency. I gave a lot of examples in my annual letter, so I won't go through them again here, but I'd really encourage you to read it. It lays out these themes and where we're investing to grow revenue and take out cost.

For those of you who have not yet read the letter, excuse me, there's one thing I want to call out, our new strategic partnership with Canva. Canva is one of the largest design platforms in the world, hundreds of millions of people use it every month. We've launched a first set of Vistaprint-branded products in Canada and the U.S. And by the end of September, we'll have expanded that range significantly, and we'll have gone live in more than 25 additional countries.

Canva is a real leader in Artificial Intelligence, and Canva AI will plug directly into Cimpress systems. There's a deep technical integration. So a customer can go from a design prompt to a professionally produced print-ready Vistaprint product without ever leaving Canva. That gives us a meaningful new on-ramp to customers at scale, and it gives Canva a production partner it can trust for its print shop strategy. It's a real growth opportunity for both companies. The strategic partnership is in its early days, and we're excited about where this can go. I'm sure you'll have questions, but I'll tell you upfront, we can't share much more today because of the confidentiality terms of the partnership.

One more piece of progress that's worth speaking about today is since our last call, we did close on the acquisition of Saxoprint. The logic here is simple. Saxoprint gives us a high capability focused production hub, exactly the kind of asset our cross-Cimpress fulfillment strategy is built on. It will strengthen PrintBrothers directly in the near term. And over the longer, I'd say, midterm, the value will extend beyond PrintBrothers across our European businesses. It's another deliberate step in building the shared production capabilities and capacity that make the whole of Cimpress network stronger. We're excited to have Saxoprint on our team.

So let's step back to the big picture of where Cimpress is overall. First, the momentum we built this past year puts us in a strong position to deliver our profitability and free cash flow commitments through fiscal 2028. And the investments we're making will keep those metrics going well beyond 2028. Second, our competitive advantages are significant. We have thousands of talented, dedicated people, all pulling in the same direction on strategy, on operations, on our financial goals. And every year, we give our customers more value.

No competitor matches our scale and none matches our ability or our willingness to keep investing in new product categories and in world-class manufacturing and supply chain. Third, ever since our start-up days, we've harnessed digital technologies and software to create real value for customers while driving down costs. And AI is going to be a very exciting next chapter in that long history. But here's the thing. We've always made our money by producing customized physical products better than anyone else. These are real tangible things. So even as AI speeds up the velocity with which we can create value and take out cost, it does not threaten our core economic engine. That engine is a huge growing range of customized physical products that we produce every day with high quality, low cost and fast turnaround.

So to sum it up, Cimpress is executing well against the plans I laid out in my investor letter a year ago and which our executive team walked you through in more detail at our Investor Day last September. And those plans build on years of work and the investment before that. We're building real capabilities and real advantages, ones that let us serve customers better and keep up our multi-decade disruption of a very large, very fragmented market for customized marketing products and branded merchandise. Better profitability will show the intrinsic value that we're building per share. It will deliver it without ever losing sight of the long term. Our path ahead is clear.

On the numbers, this progress has let us raise our at least target for 2028 -- fiscal 2028 to $615 million of adjusted EBITDA with free cash flow conversion of around 45%. Now let me be clear about why we share a multiyear EBITDA target. It is not because EBITDA is our top objective. It isn't. Our top objective is and has always been intrinsic value per share.

We share EBITDA as a target because it's public, it's measurable. It's a milestone on the path to much higher cash flow per share, and it holds us accountable. And it gives you a concrete way to track our progress. And I want to be direct about this. We would not chase this target through decisions we thought sacrificed intrinsic value per share for the near term. We just wouldn't do that. But we strongly believe that we can see multiple years of EBITDA expansion compatible with our intrinsic value per share objectives.

With that, I'll hand it over to Sean to walk through the quarter and our financial outlook for the next 2 years. Sean?

Great. Thanks, Robert, and thanks, everyone, for joining us today. As Robert said, fiscal year 2026 was a strong year for Cimpress. We're on the right path operationally. And importantly, we have cohesive plans for delivering on what we've laid out for the next 2 years in our fiscal '27 guidance and also our increased fiscal '28 targets.

The full year revenue in fiscal 2026 reached $3.74 billion, up 10% on a reported basis and 4% on an organic constant currency basis. Adjusted EBITDA grew 6% for the year and that was getting us to $458.5 million in total. For Q4, consolidated revenue grew 9% on a reported basis and 3% on an organic constant currency basis. We continue to see good progress in our ability to better serve high-value customers. One of the best indications of that is the continued variable gross profit per customer growth in Vistaprint, which we've been reporting throughout this year, and that increased 9% year-over-year, continuing that multiyear trend.

For the quarter, adjusted EBITDA was $120.4 million. As noted in yesterday's release, Q4 profitability was impacted by a few items outside of our core operations. We had $7.1 million in higher start-up costs for our North American manufacturing network build-out. We had $4.7 million write-off of Canadian duty drawback receivables that we're actively contesting after a long-standing ruling was revoked and that happened right at the end of the quarter. And we had $1.8 million of inventory write-downs and all that was partially offset by the IEEPA tariff refunds that we had in the quarter of $6.9 million.

Relative to guidance, we came in below where we expected. The duty drawback topic, the inventory write-downs and also an adjustment that was necessary for variable long-term incentives all came up at the very end of the quarter. That was about $10 million of negative impact on adjusted EBITDA. We also had 2 other smaller items. The impact of currency was less favorable than we had expected just based on changes in rates from the end of April when we had updated guidance. And then we had transaction costs for the Saxoprint acquisition as well. The 2 of those combined are about $2 million. Candidly, that's a lot of noise there. As demonstrated from our go-forward guidance that I'll review in a moment, these topics don't change our charted profitability and cash flow growth path.

Adjusted free cash flow was $70.5 million for Q4, and it was $122.4 million for the year. As we've discussed throughout the year, this reflects our higher manufacturing capital expenditures, all those to drive unit cost reductions and also expand elevated product capacity and capabilities. Net working capital was a significant inflow in Q4 as it normally is. But for the full year, the impact of net working capital was an $11 million use of cash, which we expected to be a small inflow for the year. That's just timing, nothing structural there, but that was the other impact relative to our full year guidance.

We ended fiscal 2026 in a strong balance sheet position. Net leverage was 2.9x. Trailing 12 months EBITDA is calculated based on our credit agreement. That was consistent with what we guided to throughout the year, and that's down from 3.1x at the end of fiscal 2025. Our liquidity remains robust. We had $249 million in cash and cash equivalents at the end of the year. We also have our $250 million revolving credit facility. And I should note that we, during the quarter, closed on a new $1.1 billion Term Loan B that's now due 2033 and replaces our prior Term Loan B that was due in 2028.

So turning to our outlook now. Our fiscal 2027 guidance reflects strong continued financial momentum and also significant growth in profitability and cash generation. Specifically, we expect reported revenue growth of at least 7% on an organic constant currency basis, that's 3%, net income of at least $125 million, adjusted EBITDA of at least $520 million, that represents over 13% growth year-over-year and then operating cash flow of approximately $370 million and adjusted free cash flow of approximately $200 million. That's also significant growth year-over-year.

In the earnings document, we provided some additional commentary that you might find helpful just as the assumptions and context for our fiscal 2027 guidance. I'm not going to go through all that here, but I thought it might be useful to just provide a high-level bridge from where we ended up fiscal 2026 at $458.5 million of adjusted EBITDA to the guidance of at least $520 million for next year.

And the first one is, as we noted in our release yesterday, the contribution from M&A. So we had a number of recent tuck-in acquisitions. We expect those to contribute $18 million to $21 million in incremental adjusted EBITDA growth. So that is the growth year-over-year. The revenue attached to those is $165 million to $175 million in fiscal '27. And all that incremental EBITDA is both the full year run rate earnings from the stand-alone businesses, but also the initial synergy realization as well, which we'll be ramping throughout the year.

From a currency standpoint, we do expect currency to be favorable in fiscal '27. Based on current exchange rates and also our contracted hedges, currency is expected to provide $5 million to $10 million positive year-over-year impact on profitability, which that is contracted, so we have visibility to that. And then the remaining $31 million to $39 million of adjusted EBITDA growth comes from a combination of the contribution from organic growth, but also all the cost efficiencies that we're executing on as we've been outlining over the last year.

And those cost efficiencies include both the structural cost of goods sold reductions that are driven by cross-Cimpress fulfillment and focused production hubs and also the investments that we've been making in -- throughout our production network, but also operating expense savings, including the full year impact of actions that have already been taken in fiscal '26.

On the cash flow side, in fiscal ' 27, we expect CapEx and capitalized software will remain at similar levels to fiscal '26, while lower cash taxes and the adjusted EBITDA growth that I just outlined will drive the significant growth in adjusted free cash flow to the $200 million.

Just quickly on the topic of tariffs as it relates to fiscal '27. The trade environment remains dynamic. There were 2 new U.S. tariff measures announced last week. The first one is a broad-based Section 301 tariffs of 10% to 12.5%. Those have already taken effect, and those replaced the 10% global tariff rate that had expired that same day that these went into effect. Our outlook had already assumed the 10% continuation of the Section 301 duties previously. And so this one is, in essence, built into our guidance.

The second one is the 50% tariff on certain Canadian goods under Section 338, and those were announced to take effect on August 19. Given the implementation uncertainties, we haven't included those Section 338 tariffs in our guidance. But of course, we've been doing plenty of work on this. Our preliminary review shows that these duties would affect a small portion of products fulfilled in Canada for U.S. customers, and we're actively operationalizing supply chain and fulfillment adjustments to mitigate a substantial portion of any prospective cost impact. As hopefully, has been clear over the last 1.5 years, I think our team has done a great job being dynamic and addressing these changes as needed when they come up.

Turning to our fiscal '28 targets. We remain confident, as Robert said, in our organic constant currency revenue growth expectation of 4% to 6%. But importantly, in yesterday's release, we raised our fiscal '28 profitability and cash flow targets to net income of at least $192 million, adjusted EBITDA raised to at least $615 million, up from our prior target of at least $600 million and then adjusted free cash flow conversion of approximately 45%, which is consistent with our prior guidance, but on the higher EBITDA base implies roughly $275 million in adjusted free cash flow.

The primary driver of this target increase is a higher expected contribution from M&A compared to our prior remarks, and that's based on the transactions that have closed over the last few quarters. Otherwise, I'd say we remain on track for the other components required to deliver against this at least, and that's important at least target, namely the cost savings previously outlined, the runoff of plant start-up costs, which, as noted for fiscal '26 were sizable, the favorable currency impact and then the contribution from organic growth that's required to bridge the remainder.

Achieving these targets will drive a meaningful reduction in our debt leverage as well. We continue to expect net leverage to decrease to approximately 2.5x exiting fiscal '27 on the way to be meaningfully below 2.0x by the end of fiscal '28, all subject to capital allocation choices such as share repurchases.

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

Thanks, Sean. As a reminder, you can submit questions during this webcast via the questions and answers box at the bottom left of the screen. We also have pre-submitted questions, and then we'll mix some live questions in as well. We've had some overlapping questions. So let's jump to our first one.

Robert, this one is going to be for you. Actually, there's a couple of questions on Canva, unsurprisingly. Robert, can you expand more on the economics and nature of the partnership with Canva? Why was now the time to enter this strategic partnership? And how big could the Canva strategic partnership be? How much does Canva benefit your FY '27 and FY '28 guidance?

Okay. Well, thank you. Let me start with the nature of the partnership. This is a deep technical integration. Both Canva and Cimpress, first and foremost, we worry about the value we bring to customers, empowering our customers to do great things that make them really proud of what they've designed and, in our case, printed. But right underneath that, supporting that commitment is incredibly high-quality software talent at both companies. And a key aspect of this partnership is that we have the technology chops, the technology talent to work as an equal partner with Canva. And our engineers are working together every day.

We've actually built a dedicated team in Australia that includes great engineers who've been part of our tech team since we acquired 99designs 5 years ago. And that's really valuable to both parties, given that Sydney is the headquarters of Canva, and we are able to work very closely with them. So our ability to work at high speed and a tech talent equal differentiates us. I'd say that's the overwhelming nature of the partnership that you don't see from the service.

Second, the nature of the partnership is this huge breadth of depth and products in markets and geographies across the world, including our brands, Vistaprint in the future, Printi in Brazil in the very near future that customers know and trust. And that's important for Canva, I believe, I can't speak for them in having brands that customers recognize and trust.

So in summary, all of the organic investment and the acquisitions as well that we've done over the last 12 years have gotten us to a place where we've been in a very good position to work with Canva, and that includes our technology, our product and our service operations investments. As to why is this a good time now, and I'll say why is it good for both parties.

Again, I can't speak for Canva, but I can say some things that are for us certainly and then what they've spoken about publicly. Both companies have in the past 2 years or so evolved how we think about this intersection of design and print. I wrote in the letter last night, we spoke last year at our Investor Day in September about design enablement. And we see the design is being democratized, that customers have a wide choice of design tools. They're certainly our own excellent print-focused tools, but they include third-party tools and increasingly generative AI. And they bring capability or choice to customers to design any way they want, and they can move fluidly. They want to move fluidly between these, and we recognize and embrace that kind of cross tool fluidity.

So our aim is customer happiness rather than trying to lock anyone into our own proprietary tools. And hundreds of millions of customers per month design at Canva primarily for digital applications like social media and presentations, but clearly, many of them also want to produce physical manifestations of their designs. And Canva is, therefore, very important for us in our design democratization understanding. And I would add that Canva really is at the leading edge of bringing Artificial Intelligence capabilities into design.

So again, sticking to the words you can see Canva say for themselves, they have at Canva Create, their annual launch event, spoken about a launch of Print Shop where they recognize print as an increasingly key aspect of their full suite of the types of products that they want to empower their customers to design on from presentations and social media and many other digital media, but including the physical world. And only Cimpress has the breadth, the depth, the quality, the cost-effective or the cost competitiveness and the geographic coverage of customized printed products.

So again, I think from a -- why is a good time for both parties, we both had slight evolutions in our respective strategies at that intersection of print and design. As to economics, I noted in my comments, we can't share more today because of the confidential terms of the partnership and because it's in its early days. Just let me say that we think, and I believe Canva very much thinks this is an opportunity to provide great value to our customers and in doing so, to be very economically attractive to our shareholders. One thing which is obvious, so it's not confidential, but just to be clear, we do gain a major channel to reach customers that we haven't had before, and we think that is economically attractive.

So I'll close by saying our past 10 or 12 years, we've been making huge investments in technology modernization in the mass customization platform and new product introductions and production efficiency and competitiveness and geographic expansion and moving towards higher-value customers. And I think that those investments are very healthy for Cimpress overall, but this Canva partnership is a third-party specialist expert evaluation of how valuable those investments have been. And so we think it, in many ways, reinforces our belief that we've been on the right path making these investments over the past years.

Thank you, Robert. Great. Next question that we had come in. Sean what are the drivers of growth acceleration between FY '27 and '28? Organic constant currency revenue growth of at least 3% in FY '27 and 4% to 6% in FY '28. Also, what accounts for the lowered net income guide for FY '28 to at least $192 million, it had been $200 million before.

Yes. Okay. On the growth side, I mean, I think, first of all, like when we set our guidance for fiscal '27, we want to set that at a level that we feel very comfortable with. And I think despite some of the noise at the end of Q4 there from an adjusted EBITDA perspective, you see this in terms of how we establish guidance in fiscal '26 and then performed against that. For recall, we started out fiscal '26 with revenue guidance growth of 2% to 3% organic, and we ended up at 4%.

So as we enter fiscal '27, we want to take a similar approach. So for the growth rate, at least 3% that is -- that does imply a slight deceleration from what we did for the full year of fiscal '26. It is consistent with what we did for Q4. Again, we want to set that at the appropriate level. As we turn to fiscal '28, and we've been talking about 4% to 6%, what can drive that acceleration. I think there are a number of things.

This isn't where I would naturally start, but given Robert was just talking about the relationship with Canva, of course, new channels like that would be one driver. But from an organic perspective, we've been making a lot of investments. It was a big CapEx year in fiscal '26. It will be another big CapEx year in fiscal '27. A lot of that is for efficiency drivers, but there's a big part of it that is also for growth drivers in terms of expanding our elevated products, capabilities and capacity, things like pushing further into packaging, for example, is a great example of a new growth driver.

So that is really what drives the organic acceleration. It is the continued push into -- further and further into elevated products. As we do that, we're almost sort of entering into new markets within the context of our total addressable market and then the new channels, like I said, like Canva as an example.

On the net income front, to be honest, there's not much to read into that. The net income, even though we've increased our fiscal '28 adjusted EBITDA target, the net income as a starting point went down a little bit. There's a few pieces to that just in terms of our GAAP results. There's a little bit of higher depreciation, but there's amortization from the recent M&A that we've done. There's some small changes to our GAAP tax expense, but that doesn't flow through to changes in our cash taxes. So I really wouldn't read too much into that, just some small tweaks from a GAAP perspective.

Thank you, Sean. All right. Robert, a couple of questions for you on the topic of mergers and acquisitions. First, what have been the main lessons from past M&A successes and failures? And how does that relate to why the M&A that we did in FY '26 made sense? And how should we think about the shift to more M&A in FY '26 compared to '24 and '25? Is there now an opportunity set that has opened up that didn't exist before? Or was it simply that there were other capital allocation opportunities that were more compelling in FY '24 and '25, for example, share repurchases?

Okay. Let me start with the lessons and start with the lessons of our mistakes, which are -- we don't have time on the call to go through all my mistakes in my life, but let's talk about M&A. I think, one, don't stray into digital or into new geographies where both of those really didn't match what we were excellent at. Let me talk about digital.

Over the multiple decades, as you followed us, we've been attracted to Webs, it's websites, ourselves, Depositphotos and Crello, which is now VistaCreate because it was obvious to us from a customer need that customers wanted to design and protect their brand and their image in digital spaces as well as in physical spaces. And we just found in retrospect, the competition there, the focus needed there, we did not have the capabilities to really lead and frankly, the valuations of those markets for acquisitions are very elevated. And so we found that those didn't work.

And then I'd say geographically, although today, we're very optimistic about what we're doing in Brazil, in India, especially with the partnerships with people at Canva, the economics there have been very tough for us. And I'd say that we also -- for those again who followed us for multiple decades, our early attempts to go into China and Japan, just really made it -- I think we were not successful. So stick to our knitting of print in geographic markets where we already are there.

So where have we been really successful? I think it's been a great way to bring in capabilities of just product and talent that we don't have or to strengthen talent and product ranges we have. Examples of that are certainly getting into Upload & Print, which today is really a critical part of our business and a very important part and growing part of Cimpress overall, getting into packaging, promotional product areas where we've just seen -- although we've talked about National Pen not being the type of ROI we really would have wanted to have. When you actually look at the nonquantifiable benefits of getting into a very strong supply chain for promotional products, it's been very helpful. So I think its capabilities are building the product.

And an important lesson is avoid paying anything other than very reasonable multiples of cash flow and EBITDA. And I think that maybe is a lesson that applies to anyone in any M&A world. So how do we think about the shift towards this? I wouldn't call it a shift. I think there are many different opportunities in the spectrum of capital allocation we have ranging from just keeping dry powder for future to share buybacks to organic investment. We do think about those all as fungible.

The types of acquisitions we've been doing right now, and I think that very much represent what we'd be doing in the future are tuck-in acquisitions where we're buying relatively small businesses directly related to what we do as a business in the areas I just mentioned. And I think our future acquisitions to the extent we do them, will follow that pattern.

Thank you, Robert. All right. Moving on to a question for Sean. Sean, can you clarify or expand on expectations for incremental returns on invested capital organically and via M&A, especially as CapEx normalizes working capital as a source of funds in the coming years?

Sure. And I think the reference to working capital and CapEx normalization is just -- I think that speaks to the kind of access to capital that we'll have beyond fiscal '28. So the -- I think in terms of organic incremental returns, one, we've been very happy with what we've been seeing, including in the fiscal '26 organic investments that we've been making, CapEx and manufacturing and supply chain being probably the main domain where those investments are being made, but it's, of course, not exclusive to that.

When you look at the results, our aggregate results get weighed down by things like the start-up costs that are attached to that, that have a near-term impact on earnings. But as we deliver on both the cost reductions that we've outlined, as some of those start-up costs come off, as we make more progress pushing into elevated products, growing with high-value customers, I think those strong returns on the organic investments that we've been making recently will start to shine through a bit more, and that's actually a big part of the fiscal '28 targets that we have, starting to really see that come through and also see that come through in the form of higher EBITDA margins because the incremental returns on organic investment have more impact.

And I think at a consolidated level, like I said, that sometimes gets -- that gets blended in also with parts of the business that have less growth. We talked about legacy products in some places declining. And we'll see more impact from the incremental returns on invested capital organically that we've been doing, but also from an M&A perspective.

At our last Investor Day, we shared on the CapEx side, which is a big part of those investments, some specific examples of the return on invested capital for those investments. And you can see, if you look back to those, they're generally 20%-plus type returns. Many of them also quite fast paybacks. And so these are pretty obvious investments that we would want to continue to make, and we think we'll have continued opportunities to make well beyond fiscal '28 from a CapEx perspective.

On the M&A side of things, we've said that for the recent M&A that we've done, I think we said this for each of the 4 that we've announced over the last 6 to 8 months or so that we expect to generate base case returns on capital that are well in excess of 20%. And I think that for the those types of tuck-in acquisitions, and Robert just talked about some of the learnings that we've had on the M&A front, I think that's a pretty fair benchmark for what we would expect as we think about both the stand-alone businesses, but also the synergies we can bring.

And we do plan to go through this in a bit more detail on our September Investor Day, just explaining kind of the economics of these tuck-in acquisitions and giving you some of the kind of archetypes of what we think makes sense, but also going through some of the numbers of recent ones that we've done, so you can see what the returns have been there.

And then I think as we get out to fiscal '28 and free cash flow increases, I think this maybe is the point of the question, you combine that with lower net leverage, we'll have ample capital to reinvest, whether it be in organic investments, whether it be in some tuck-in M&A, share repurchases, we can pay down debt and we'll be patient on that, and we'll evaluate all those opportunities on a relative basis. But we think that there's a -- there are -- we kind of like these layers of possible avenues to reinvest capital at high rates after fiscal '28 when we'll have a lot more available capital to do so.

Thank you, Sean. All right. We've had some questions on our market opportunity and our future opportunity. So I've got a representative one that covers all the bases here for you, Robert. Can you provide some color on the runway and length of time you see beyond FY 2028 in terms of continued growth in cash flow per share as you address the TAM that you've outlined in past Investor Days. Conceptually, is this TAM growing or declining over time? And does it even matter given the degree of white space?

Thank you. We see a long runway for continued cash flow growth well beyond 2028. And we're going to be leveraging our competitive scale across this huge market. I'll come back to the TAM in one moment, but the investments we've made over the past several years over the past decade in modernizing our technology, in repositioning Vistaprint, moving into elevated product categories really position us to sustain growth past our fiscal '28 targets in n terms of EBITDA, but also cash flow.

And the direction of cash flow will clearly be up and to the right as far as we believe. And there will probably be annual fluctuations, especially in cash flow, but we definitely also believe that we are going to be able to avoid the major cash flow swings that we've seen in the past 5 to 7 years, which we had as we navigated the pandemic, the subsequent supply chain inflation. And while doing so, said we were going to continue on our commitment to invest in tech migration and the repositioning of Vistaprint during that -- those tough times.

So I think looking forward to that continued growth in cash flow per share definitely up to the right with much less volatility than we've seen in the past, although some annual fluctuations in cash flow, I think, are probably part of that. But we're very optimistic.

As to our TAM, you're right. It's about what we see. It is what we think it's been for quite some time, roughly $100 billion. But there are underlying product categories that are shifting. So products like promotional products, logo apparel, packaging are pretty much growing with GDP at the market level. We're growing much faster than that, whereas legacy print categories like business cards or flyers are slowly declining. But when you put all that together, the market is steady to slightly growing.

And our investments in moving into elevated products are really getting us into a lot of those markets that are not facing the headwinds we see in some of our legacy products. We're also getting into markets that are much less penetrated from an online perspective. So that's why we really believe the wallet share of our existing customers is a big driver of how we can drive into that TAM as well as, of course, getting to new customers, including our own customer acquisition channels and partnerships like we are doing with Canva.

So I agree with your question, which said something to the fact that given the size of this white space doesn't really matter. It doesn't really matter. We're a roughly $4 billion company over the coming 12 months and $100 billion market. So what's most critical is continuing our low-cost producer status through manufacturing efficiencies and scale and having incredible customer value across the user experience.

Thanks, Robert. I'm going to follow up quickly while we're talking about TAM because we've got another question that I think is related. What do you think about the TAM of high-value customers and how much share you currently have with those customers?

So I would respectfully disagree with what I think is the premise of the question. High-value customers are already in our -- most -- we have huge numbers of customers who are not high-value customers for us who are buying a lot of print products elsewhere. And so wallet share is a key part of our growth into this TAM. And so HPCs are part of our TAM of $100 billion.

And in the past, because we didn't have the broad product line, because we didn't have the focus on that, especially at Vistaprint and I would say, even at some of the BuildASign properties, we focused more on these lower-value relationships, as you call them in the customers where we are selling $50, $100, $150 a year to customers, and we're shifting to selling customers thousands of dollars per year. But they are part -- they're one and the same or the same TAM.

Thanks, Robert. Helpful clarification there. All right. Sean, another question for you. How should we think about the level of run rate maintenance CapEx after this growth period is completed as compared to where it is currently? Is there a percentage of growth CapEx that is almost certain to get converted to ongoing maintenance going forward post 2027, 2028?

Yes. I'll start with the latter part of the question. And I think part of that will, but also as revenue grows. So I think the right way to think about it is that maintenance CapEx should still stay around 1.5% of revenue. And that's been, on average, the case for a bit. I think what we're going through now, we've -- in fiscal -- actually starting in fiscal '25, but certainly in fiscal '26 and again, in fiscal '27, we've had some pretty significant build-out of new facilities.

And if you go back into our history, for obvious reasons, you see these kind of elevated levels or spikes in our CapEx when we are building out new facilities for obvious reasons and then that kind of settles back down. The -- and that's what we're going through now. And in fiscal '28, we do, as I said earlier, we do expect our CapEx levels to decrease in absolute dollars from fiscal '26 and '27 levels, but then also as a percentage of revenue, of course, be down even further.

I think the other thing that plays into this is M&A, and you can also see this in our historical trends. When we, for example, started to buy into what is now our Upload & Print portfolio because of the capacity that offered and as we started to, in more recent years, get more capacity utilization because of our initiatives with Cimpress -- cross-Cimpress fulfillment, that's enabled maintenance CapEx to come down some because we're getting better capacity utilization.

And I expect that will only improve, but also with some of the more recent M&A that we've done and could do in the future in terms of tuck-in acquisitions. That also serves to somewhat lower maintenance CapEx as well. So that's kind of the story. But I think as we get to fiscal '28, we'll see that moderation and then we'll get back to levels that are pretty consistent with where we've been in our recent past.

Thanks, Sean. And of course, that was all CapEx from a physical CapEx perspective. I'm going to follow up just so that you can hit on capitalized software as well as our investors tend to want to understand what the trends are there, too. So if you could just make a couple of comments on that [indiscernible] perspective.

Yes. We expect that to be basically flat year-over-year in '27. And I think as we look forward, that's another -- in that kind of walk from our profitability to free cash flow, that's another area I expect us to continue to get leverage. And I think all of our efforts from an AI perspective are part of that as well. But I expect us to be able to get leverage out of that line, either not seeing much growth or maybe even opportunity to actually lower that given all the benefits of AI in terms of how development is done. So that would be the path there.

Thank you so much, Sean. Robert, we've got one more question in the queue here. I'm just going to ask you if there have been any changes in the competitive landscape recently?

No, it really has not been at all. It's been very consistent. I'd certainly say post-pandemic, we did see -- I'd have to think back when it was a time long ago where we were seeing what we felt was pretty irrational pricing in the European Upload & Print space that has very much dissipated. We live in a very, very competitive world, but I think that's healthy. It makes us better. It keeps us hyper focused on just improving our customer value, but there's no macro change.

If I try to quantify or describe that in a little more detail, we live in a world where the vast majority of printers and sign shops and promotional product distributors are less than 10 employees and 90% of them plus or less than 100 employees. And if you look at the big companies in printing and packaging, promotional products, they don't serve small customers well.

They don't even really want to serve them even what we consider high-value customers, against someone who might order several thousand dollars a year from us on average, those are tiny customers for what the big print and packaging and promotional product companies target where they're going after enterprises. So I would say that there's no change to that broad description of the competitive landscape, and we're still very optimistic about our opportunity to continue to take market share.

Great. And just as a point of clarification, that more intense competitive irrational behavior in the European market was pre-pandemic in around 2019 time frame, and the pandemic actually helped to quiet that down quite a bit.

Thank you for that. Yes. Correction on that date.

All right. Robert, I'm going to turn it back over to you for closing remarks.

Thank you, Meredith. And let me leave you all with the few things that I think matter the most. First, the strategy we're winning with is the same one we've been pursuing for years and describing to you all along, higher-value customers, elevated products, manufacturing excellence and design enablement. We're now changing course. It's working. Second, in fiscal '26, we kept strengthening the value we deliver to customers, driving up efficiency and picking up the velocity with which we make improvements.

Third, our path is clear. We're building leading capabilities and real competitive advantages, the kind that let us serve customers better and keep our multi-decade disruption of a very large, very fragmented market for customized marketing products and branded merchandise.

Fourth, the investments we've made over the past in technology modernization and in product expansion and in many other areas are paying off on more than one front. They've positioned us to win organically. They've created clear synergy opportunities for tuck-in M&A. And now they've attracted a major strategic partner in Canva, a company that is better than anyone in the world to evaluate just how unique Cimpress is given our combination of our technology our product range, our manufacturing capabilities, our geographic reach and very importantly, our culture and capability to combine entrepreneurial speed with massive scale.

And fifth, on the financials, we're confident we'll hit our newly raised fiscal '28 at least profitability target, along with the cash flow conversion and leverage reduction we've laid out for you before. One housekeeping item that I want to touch on before I close. Please do save the date on your calendar for our Annual Investor Day, that's September 30, 2026, from 8:00 a.m. to 11:00 a.m. Eastern.

And with that, thank you for joining our call, and thank you for continuing to entrust your capital with us.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Welcome to the Cimpress Third Quarter Fiscal Year 2026 Earnings Call. I will now introduce Meredith Burns, Vice President of Investor Relations and Sustainability. Please go ahead.

Thank you, Lisa, and thank you, everyone, for joining us. With us today are Robert Keane, our Founder, Chairman and Chief Executive Officer; and Sean Quinn, EVP and Chief Financial Officer. We appreciate the time that you've dedicated to understand our results, commentary and outlook. This live Q&A session will last about 45 minutes or so, and we'll answer both pre-submitted and live questions.

You can submit questions live via the quest-answers box at the bottom left on the screen. Before we start, I will note that in this session, we'll make statements about the future. Our actual results may differ materially from these statements due to risk factors that are outlined in detail in our SEC filings and the earnings document we published yesterday on our website.

We also have published non-GAAP reconciliations for our financial results on our IR website, and we invite you to read all of those. Now I will turn things over to Robert Keane.

Thanks, Meredith, and thank you to our investors for joining us today. Before Sean reviews our Q3 financial results and our guidance updates, I'll share my thoughts on the recent progress we've made on the strategic and the operational themes that we've covered in detail in our annual letter of July 29 and in our September Investor Day.

Our Q3 earnings document highlights recent examples in a number of categories. First, elevated products are fueling a step function improvement in our per customer lifetime value and our wallet share. Every quarter, we're improving our ability to help millions of businesses build their brands, stand out and grow, thanks to our customized physical marketing products and branded merchandise.

One metric which demonstrates our progress is that Vistaprint's variable gross profit per customer grew 13% year-over-year in Q3, and that's also our 13th consecutive quarter of growth in this metric. We see similar themes in our Upload & Print businesses as well. Second, investments in the Cimpress MCP in our manufacturing operations in cross-Cimpress fulfillment and in artificial intelligence are reducing COGS and operating expenses while increasing the velocity of new product introductions and user experience improvements. In the earnings document, we provide multiple examples of where we are leveraging our deep expertise and scale advantages in manufacturing, where we're using AI to improve customer experiences and to drive operating leverage. Also where we're using our shared software services to reduce costs and improve performance and where we are growing the collaboration between our businesses, for example, deploying shared marketing capabilities.

And third, we continue to march along a clear path to fiscal 2028 adjusted EBITDA of at least $600 million and significantly lower leverage. Progress in the areas I just spoke about has allowed us to start driving down the cost of goods sold and drive up the operating efficiencies that support our previously communicated plan to achieve these financial results.

Our gross profit is growing in part due to the scale advantages we have in manufacturing, new product introductions and many production optimizations within our plants and between Cimpress businesses. We expect more financial benefits in fiscal '27 and fiscal '28 as larger COGS efficiencies from ongoing manufacturing network optimizations kick in and our new production facility start-up costs, which are currently burdening our P&L shift to incremental profitability, thanks to volume growth.

Additionally, we drove advertising efficiency in Q3 while continuing to grow revenue and gross profit. We expect more here in the coming years as we launch more elevated products that grow our wallet share with higher-value customers. We also implemented several OpEx reductions this quarter that will generate annualized savings of $11 million between Vistaprint and National Pen. In last year's earnings -- I'm sorry, in last night's earnings release, we announced two tuck-in acquisitions that we made in April. The first is PrintBrothers acquisition of 85% of Truyol. They're the Spanish leader for elevated brand-building print, packaging and signage products.

This acquisition allows us to expand our product offering into higher-end products while capturing immediate cost synergies through materials and shipping savings, which we bring due to our much larger purchasing power. Second, we've taken a 50% stake with operating control in Mixim, and that will marry Mixim's market-leading customer experience for books, catalogs and magazines with the Print Group's manufacturing strength and their experience for these products. Both of these are in our Upload & Print segments, and we see them as great examples of where we can allocate capital to tuck-in acquisitions. We expect each of these acquisitions to generate base case returns on our capital well in excess of 20%. They continue a string of about a half dozen acquisitions within our Upload & Print segments over the past 3 years, and they are positioning us to bring our mass customization capabilities into the core of the very large markets, which still remain offline with traditional and less competitive production techniques.

We always horse race the capital we allocate to acquisitions against share repurchases, against debt reduction and against organic capabilities development. We generally have a higher hurdle rate for acquisitions given they're typically higher risk. However, our experience in these particular types of tuck-ins is that they are proving to be relatively low risk because of the attractive prices we're paying relative to the post-synergy cash flow. In other words, we are proving to be relatively low-risk, high-return capital outlays.

So to sum it up, we're executing well, and we remain confident in our multiyear plan to significantly grow profits and to significantly reduce our net leverage. We are strengthening the value we deliver to customers, increasing operational efficiency and accelerating the velocity with which we drive these improvements. We still have more work to do to deliver the shareholder returns we expect, but we are on the right path and our path is clear.

Now I'll turn things over to Sean to discuss the financial results for the quarter and our outlook.

Great. Thanks a lot, Robert, and thanks, everyone, for joining us today. Cimpress delivered a strong third quarter. Our adjusted EBITDA surpassed $100 million for the first time in the Q3 period, growing 11% year-over-year. And with strong year-to-date execution, we're again raising our fiscal '26 revenue and profit guidance, which I'll go through in a moment. Consolidated Q3 revenue grew 12% on a reported basis and 4% on an organic constant currency basis. Reported revenue was again aided by currency tailwinds and also the acquisition in our PrintBrothers segment that we completed during the second quarter.

Vistaprint revenue grew 7% on a reported basis and 3% on an organic constant currency basis. The expected decline in business cards and stationery was more than offset by growth in our elevator products. As we noted in last night's release, severe weather in North America dampened results during January and February, and then we saw an acceleration in growth in March.

Our Upload & Print businesses combined organic constant currency revenue grew 8%, driven by order count growth and Cimpress fulfillment with support also from regional elections. Reported revenue for these businesses grew 26%, combined with currency benefits and again, the tuck-in acquisition that we made in Q2, which contributed $15 million to reported revenue during the quarter. Turning to profitability. Adjusted EBITDA was $100.5 million in Q3, an increase of $9.8 million year-over-year. Q3 consolidated gross profit grew 10%, the result of revenue growth, cost improvements, benefits from currency and again, the tuck-in acquisition. And we did have $3.3 million of production start-up costs for the expansion of our North American production network, which weighed on EBITDA, although that was mostly offset by currency benefits of $2.7 million in the quarter. Adjusted free cash flow declined $23.9 million to an outflow of $54.6 million. As I think most of you know, Q3 for us is typically a seasonal working capital outflow. That working capital outflow was higher this year, mostly due to timing, but also unfavorable currency movements on working capital.

Cash taxes were also about $5 million higher compared to last year. From a balance sheet perspective, net leverage at the end of Q3 was 3.0x our trailing 12 months EBITDA. That's as calculated under our credit agreement, and that's consistent with last quarter despite the fact that we repurchased approximately 288,000 shares at an average price of $76 per share in Q3. Maybe just as a point of reference, we have not purchased any shares in April.

Turning now to our guidance. We again raised our revenue and profit expectations for fiscal 2026 based on the strong Q3 results, but also our expectations for the remainder of the year. It's worth noting that we do expect to experience cost increases associated with recent increases in energy and oil prices, and that is factored into this updated guidance.

For the full year, we now expect revenue growth of 9% to 10% after incorporating the recent acquisitions and currency benefits, and that translates to 4% to 5% growth on an organic constant currency basis. We expect net income of at least $87 million and adjusted EBITDA of at least $465 million.

We expect operating cash flow of approximately $298 million to $303 million and adjusted free cash flow of approximately $130 million to $135 million. And we expect net leverage to be at or below 3.0x by the end of fiscal 2026. That is also a slight improvement from our prior guidance.

As we start to look now ahead to fiscal '27, we're going to provide more specifics with our year-end release in July, but we thought it was appropriate to start to share a little bit more as we expect to take another significant step towards our fiscal '28 targets next year in terms of adjusted EBITDA growth.

We're still finalizing our plans for fiscal '27, but we do expect adjusted EBITDA growth next year to be in excess of 10%. And we also expect to have meaningful growth in adjusted free cash flow. And I think it's worth spending a few minutes here. Our free cash flow conversion this year was lower, and that was expected based on the guidance that we have had in place throughout the year. Capital expenditures and cash taxes were both higher this year. And then there's also some timing in working capital, and I just mentioned that was unfavorable for Q3.

From a working capital perspective, there's nothing structural to that. It's really -- for us, it's not unusual to have some variability there. In fiscal '27, we expect the growth that we'll have in adjusted EBITDA that I just referenced greater than 10% to have much more flow-through to free cash flow. And I'll just go through a couple of components there to set expectations.

Capital expenditures, we expect to still be at similar levels to this year as we complete the ongoing projects that we have in place. But we do expect capitalized software to be relatively flat. We expect cash taxes to be lower next year, and we expect working capital inflows to be more favorable. And so when you put that all together, we expect to have significant free cash flow growth in fiscal '27.

And as Robert noted earlier, we do remain confident in our ability to deliver our fiscal '28 targets. which I'll again reiterate as 4% to 6% organic constant currency revenue growth, at least $200 million in net income, adjusted EBITDA of at least $600 million, adjusted EBITDA to free cash flow conversion of approximately 45%. Just doing the math, that implies at least $270 million of free cash flow. And from a leverage perspective, we expect to exit fiscal '27 with net leverage of approximately 2.5x and exit fiscal '28 with net leverage below 2.0x, subject to capital allocation choices.

Each quarter this year, we've provided increased visibility to the pillars of how we'll meet those fiscal '28 targets. And of course, we still have more to go. If you go back to our September Investor Day, I went through a session that walked from fiscal '25 adjusted EBITDA to be at least $600 million in fiscal '28. And in each of those pillars, we've made good progress. I just wanted to run through them each quickly now.

Starting with the growth in fiscal '26, our latest guidance that I just went through is now $15 million higher than the guidance that we started the year with. We still feel good about the $70 million to $80 million in efficiency gains. We had in that bridge, the midpoint there, $75 million that we expect to have exiting fiscal '27.

And we touched on some tangible examples of these initiatives in last night's earnings and throughout the call so far today. But just to reiterate, we have meaningful COGS efficiencies from manufacturing projects, from our work with focused production hubs and cross Cimpress fulfillment.

From an AI standpoint, we're seeing productivity improvements, and that extends well beyond the examples that we provided in the letter. Increased collaboration between Vistaprint, National Pen and BuildASign, including shared software services and marketing capabilities is starting to take hold and other operating cost efficiencies, including the $11 million of annualized cost reductions that we've already actioned between Vistaprint and National Pen late in Q3, as we talked about as well in the release last night.

Our work on this one is not done in terms of the overall cost savings, but we remain confident in our ability to deliver this pillar, and these are clear examples of our progress. The next pillar is the plant start-up cost, which we expect to roll off as planned. That one is just math.

On the M&A front, we touched on this in the letter as well, but with the three tuck-in acquisitions this year, we expect contribution in fiscal 2027 to be approximately $125 million of revenue and $13 million of adjusted EBITDA. That's well above the $10 million of adjusted EBITDA over a 2-year period that was in that bridge. And so we're ahead of plan there. Currency contribution is also tracking ahead of plan as well. The original contribution of which was set at $10 million total for fiscal '27 and '28 combined in that bridge. We're tracking ahead of that. And then the last pillar was just mathematically, what do you have to believe from organic growth contribution to get to at least $600 million of adjusted EBITDA.

And when you update for everything I just stepped through, that leaves a minimal contribution needed from organic growth over the next few years to get to at least $600 million of adjusted EBITDA. Our results for this year and the momentum that we're building based on the progress that Robert outlined earlier, leaves us confident here as well. Achieving these fiscal '28 targets will generate very meaningful per share free cash flow growth and also significantly reduce our net leverage. From the Board down through our teams, we're laser-focused on this.

And so with that, Meredith, let's turn it over to questions.

[Operator Instructions] So our first question is for you, Sean. Can you explain why currency is benefiting operating income and EBITDA, but it had a negative impact on free cash flow this quarter?

Yes, so that's been a theme throughout the year that currency has benefited adjusted EBITDA. And as I just said in the remarks on our forward-looking guidance as we -- really for fiscal '28, but it's true for fiscal '27 as well. We expect -- we continue to expect currency to be favorable year-over-year in '27 and '28 from an adjusted EBITDA perspective. And that really just has to do with the direction of travel of our main currencies relative to the dollar, the euro being our largest net exposure from an adjusted EBITDA perspective. And we have a currency hedging program where we average in over each quarter for some currencies over a 2-year period, for some currencies over a 1-year period depending on our forecast visibility. And so that means that as rates change, there's a little bit of a delayed effect of when we either benefit or get hurt from those currency changes.

And right now, we're certainly in this period of getting help from that. So that's the story from an adjusted EBITDA perspective. And like I said, because we average in each quarter and we contract out for our largest exposures over a 2-year period, that gives us visibility also to what we expect in fiscal '27 and fiscal '28, which will continue in the direction of positive impact.

So then on the -- we mentioned that the currency impact on working capital was negative. That operates under a little bit of a different dynamic. And what we saw in Q3, I mean, just to do the kind of maybe an illustration of how the math works, we have -- at the end of the December quarter, we typically have a bunch of liabilities in our working capital that then get flushed out in Q3, and the opposite is true in Q2 and Q4.

And so if you think about it, at the end of December of 2024, I don't have the rates in front of me, but I think the euro, that's our largest exposure. The euro is at, I think, [ EUR 104 million ] or thereabouts. And at the end of December of 2025, it was somewhere around [ EUR 116 million ]. And so if you imagine you have, just for illustration, EUR 100 million of liabilities that will flush through in Q3. And at the end of December 2024, that was worth EUR 104 million. At the end of December of 2025, that was worth 116 million in U.S. dollar terms. And so that has a negative impact when you have an outflow quarter from working capital.

The opposite is true as well, right? So in Q2, because it's a large working capital inflow quarter, also for Q4, the quarter that we're now in is a large -- typically a large working capital inflow quarter. There, we benefit from that dynamic. So that's all normal stuff. And over the course of a year, tends to even out and certainly over a multiyear period. But that was the dynamic that we had in Q3.

All right. I'm going to go to Robert for the next question. Robert, here's some more math. This is a fun call. We got a lot of math. Robert, am I calculating correctly that you paid $35 million for three acquisitions that are expected to yield $13 million of adjusted EBITDA next year. Is that less than 3x forward EBITDA? Or am I missing something?

Your math is correct. But it is important to note that, that math is based on our consolidated reporting, and we have two of the acquisitions where we purchased less than 100% because the founder of each of those has stayed active and kept his investment or each of their investments in their -- the businesses they founded. And we really like that. It creates great aligned incentives for both Cimpress and the founder. But as we noted, we bought 85% of Turl. We expect to pay for the full acquisition amount, the 85% over 3 years. So not all of that is upfront, but it will be a small use of cash in fiscal '27 and '28. We also bought 50% of Mixim. So the implied valuation is higher if you're calculating off the enterprise value of 100% ownership. That being said, even if you adjust for that, we paid very attractive multiples of both profit, of EBITDA, of cash flow and our base case returns on the capital are also very attractive with a relatively short payback.

Okay. A question for Sean on leverage. Sean, how will you be able to keep net leverage at 3x trailing 12-month EBITDA at the end of Q4 when you have already spent $25 million on M&A in April and your free cash flow guidance has come down?

Yes. Under -- the way it works under our credit agreement, we're able to take credit for trailing 12-month EBITDA when we do an acquisition. So we don't get just what is in our reported results, but we look back over a 12-month period. And that makes sense. We also get to take pro forma benefit from any synergies that we expect to have. And really -- and there, we're limited to the things that are under our control. So that tends to be the things that are on the cost side, procurement savings and the like.

The updated guidance that we provided for at least $465 million, that implies further year-over-year EBITDA growth in Q4. And so obviously, that plays into the leverage expectations for the end of Q4 as well. And then if you do the math on our full year free cash flow guidance, as is typical, like Q4 is a large free cash flow quarter, and we do expect significant free cash flow in Q4 as well. I think at the midpoint of the guidance range, it's somewhere around $80 million if you just do that math.

So anyway, so that's how you get to the leverage guidance that we provided. And then just referencing back to the prior question as well that Robert just answered, we did pay less than 3x for the recent M&A because of the dynamics that Robert just went through.

Sean, I'm going to stick with you on this next one. Can you please comment on each segment -- we get this question every quarter. Can you please comment on each segment's revenue performance in the month of April versus last year? What trends have you noticed?

We try not to get into too much detail on a particular month's performance. And so we'll stay true to that here. But yes, I think I think the main takeaways, and I can understand why this question gets asked, especially in the current environment. I think the key takeaways are, one, we felt comfortable increasing our guidance for the full year. Obviously, we only have 1 quarter left. And so that's based on what we're seeing in April. It's also based on our forecast for the rest of the year. So I think that's a signal of confidence. I know that there's obviously a lot of focus right now on the health of SMBs, the health of consumers from a demand perspective.

And I'll just say we haven't seen a change there in April. And so anyway, so we feel good about the updated guidance that we provided. And again, maybe I'll just also reiterate to the guidance that we have provided, which is increased for revenue and profitability does also consider increased fuel and energy costs in that guidance. And we will have some of that in Q4.

Robert, I'm going to shift to you for the next one. You bought some shares this quarter and your Board authorized more purchases. That was in March for anybody who missed it, a $200 million authorization that replaced the last one. Will there be more repurchases in Q4?

So we don't provide forward guidance about repurchases. I will describe how we think about it. It's the same as we've said many times before. First of all, we do want to repurchase shares when we think they are undervalued, and we do think our shares are still undervalued, although less so than earlier this year.

Second, like any capital allocation, we horse race share repurchases against other options, and we're in a cycle of higher-than-normal CapEx where we see excellent returns. And as we discussed a few moments ago, we have some very attractive tuck-in acquisition opportunities. So we just have to take those into account.

And third, -- from the cash available, we are solving for a number of different things in fiscal '26, Sean talked about higher cash taxes, on favorable net working capital timing and very importantly, our commitment to deleverage plus the normal seasonality of the business. So we do have a very strong balance sheet, strong liquidity. We think we'd be able to continue to have attractive capital allocation opportunities in the future.

We certainly will continue to look at M&A -- I'm sorry, excuse me, share buybacks is a use of that. But again, I would go back to that leverage once again because we have called for net leverage to be below -- at or below 3x by the end of this quarter. And it's really something that's important to us to achieve.

Okay. Sean, a question for you. Based on everything you went through at the opening of the call, why aren't you updating your FY '28 targets at this point? I know you said there's still work to do on the cost savings piece, but every other part of that bridge was favorable?

Yes. I think it's a fair question and fully expected that question. If you take a step back, we put these targets in place. I think the first time we started to talk about them was in Robert's letter to investors at the end of July. So we're talking about less than 1 year ago. And that was just after we finished the year where we did a little over $430 million in adjusted EBITDA. So at the time, we were basically saying that we'd grow our adjusted EBITDA around 40%. I think it's 39% or something over the next 3 years. and also with pretty sizable -- sizably improved free cash flow conversion on that as well. And so that's a lot of growth.

So just to keep things in perspective. But when we put the targets in place, we did it as this at least framework, and we had that in the guidance that we've used throughout this year as well. So that, of course, means it could be higher. But from the Board down through the management team, we're completely committed to delivering what we said we would do. And hopefully, it's clear from what we outlined at the beginning of the call earlier that we're making good progress, and we're confident that we'll meet or exceed those targets. But we still have a long way to go.

Our updated guidance for fiscal '26 that we just went through is $465 million. So we still have a long way to go to make sure that we deliver against at least $600 million over the next 2 or so years. In our view, I think if you just model out what the free cash flow per share would be in fiscal '28 based on the targets that we have and also knowledge that, that would also imply significantly lower leverage, and that's part of our targets as well. I don't think that these fiscal '28 targets are today reflected in how we're valued. And so we'll keep updating each quarter on our progress, but we're going to leave our fiscal '28 targets as they are. There are certainly areas that we're ahead of plan based on what I shared earlier. And so I think the main takeaway for investors should be that the probability of achievement has continued to increase each quarter based on the progress that we're making and the specific examples that we shared.

And it is in at lease framework. So we're certainly -- we certainly could end higher -- but we have 2 years to go, and we don't want to get ahead of ourselves because we want to be sure that if we provide a committed target that we're sure that we hit it.

Great. Sean, I'm going to stick with you for the next few questions here. So first up, are you able to estimate how much of a revenue benefit the Upload & Print business has got from regional elections during Q3?

Yes. We didn't break that out. There's -- every quarter, there's always some change in activity. And this quarter, there happened to be in some countries in Europe, some nice volume growth attached to regional elections, and that tends to impact a few products in particular. It wasn't like the dominant trend by any stretch, but it definitely was a help including in France. And -- but we were not going to break out that specifically. But for posters, flyers, there was definitely some help there. It's sometimes hard to like the -- it's not like we can see it overall in the volume, but it's not like we're scanning the content of every order and then trying to categorize that as if we're an election or not. So that's why it's a little bit difficult to break that out, and we don't seek to do that externally, but definitely helps this quarter.

Next question for you. Can you provide more color on the weather disruptions to Vistaprint's revenue in January and February?

Yes. If you'll recall, in each of January and February, there were some very significant snowstorms -- and typically, like if we -- we'll look at bookings for each day on a map, right? And so you can see that by state, year-over-year trends, et cetera. You can get more specific than that if you really want to drill down even further geographically. But imagine you're looking at a map and you can see a bunch of green and red based on year-over-year bookings.

Typically, what would happen when there is a severe snowstorm is all the impacted states that you might expect if it was happening in the Northeast or if it was happening in the Midwest or whatever, you could see very clearly in that visualization, the states that are impacted and that's pretty normal stuff.

And one of the things that was different about the large storm that hit in January was that -- and also across the Southeast, there were significant issues with the electrical grid and freezing and winds and freezing rain. And so there are a lot of states where there are significant power outages. And of course, that impacts people's both focus on coming to Vistaprint in this case and ordering what they need, but also ability, right, because they were -- they had power outages. So we can see -- when that happens, like we can see it very clearly like what states are impacted whoever. And that was just a broader impact than what we would typically see when there's a snowstorm in the winter months. And so that's what we're referring to. And it's a real thing, like it has a real impact.

That dampened the results in January. There were some similar storms in February that were pretty severe. And then as we got to the -- towards the end of February and then into March, in Vistaprint, we saw a definitive acceleration in results, leading to overall a strong quarter for Vistaprint.

Okay. And can you provide more color on the cost increases that you expect from energy prices? And will you look to offset that with price increases?

Yes. Well, there's -- obviously, energy prices or oil prices are, at some point, an input to a lot of our either raw materials or logistics cost inbound freight, outbound freight. So there's certainly impact. Some of that impact is a little bit delayed depending on the respective supply chain for the particular material.

On the logistics side of things, again, for inbound freight, outbound logistics, that's a little bit more real time. The way a lot of our, for example, outbound logistics work is that contractually, there's a fuel surcharge that is a variable that can go up or down depending on where oil prices are and if they're outside of a certain bound. And so the cost increases will happen. They're real. And I think that's to be expected.

We do expect that in large part, we would be looking to pass these on from a price standpoint. And to the extent that the increase specifically in oil prices and the flow-through that impact that has on logistics costs, especially for outbound logistics, that also then as hopefully, those prices at some point, normalize that we would then bring that back down. And so there's certainly -- we'll have some cost impact in Q4. It's not overly material, but it's notable, and we do expect that much of that will be offset by price increases, yes.

That brings us to the end of our pre-submitted and live questions. So I'm going to turn the call back over to Robert to wrap things up.

Thanks, Meredith. The key takeaways from our announcement today are we've raised our FY '26 revenue and profit guidance for the second time. And we certainly expect to end the year -- the fiscal year with net leverage that is more favorable than our prior guidance. Strategically and operationally, we are progressing in key areas that I discussed briefly today that we covered in much more detail in my July letter to investors and in our September Investor Day. At the top level, what we continue to do is enable millions of businesses to build their brands, stand out and grow by leveraging our core competitive strength in manufacturing and supply chain excellence and by continuing to improve the customer experience to drive efficiency gains.

Our ongoing progress reinforces our confidence in our path to fiscal '28 EBITDA of at least $600 million and approximately 45% free cash flow conversion, coupled with significant reductions in net leverage. And achieving that result should really drive significant returns for long-term investors. So I'll wrap up by saying thank you again for joining the call, and thank you for continuing to entrust your capital with us. Have a great day.

This does conclude today's program. Thank you all for joining, and you may disconnect.

Good morning, and thank you for standing by. Welcome to Sempra's Second Quarter Full Year 2026 Earnings Follow-up. I would like now to turn the conference over to Meredith Burns, Vice President of Investor Relations and Sustainability. Please go ahead.

Thank you, Michelle, and thank you, everyone, for joining us. With us today are Robert Keane, our Founder, Chairman and Chief Executive Officer; and Sean Quinn, our EVP and Chief Financial Officer. We appreciate the time that you've dedicated to understand our results, commentary and outlook. This live Q&A session will last about 45 minutes or so, and we'll answer both pre-submitted and live questions. You can submit questions live via the qu-wtomc. Before we start, I'll note that in this session, we will make statements about our future. The actual results may differ materially from these statements due to risk factors that are outlined in detail in our SEC filings and the earnings document we published yesterday on our website. We also have published non-GAAP reconciliations for our financial results on our IR website. We invite you to read them. All right. And now I will turn things over to Robert.

Thanks a lot, Robert, and thanks, everyone, for joining us on the call today. Q2 marked a milestone for Cimpress. We exceeded $1 billion in quarterly revenue for the first time ever, with organic constant currency growth of 4% through the first half of the year, which was ahead of the annual guidance range that we had previously provided of 2% to 3% and year-over-year adjusted EBITDA growth in the first half of the year that is equal to the full year dollar growth that was in our prior guidance. We are raising our annual guidance for revenue, for adjusted EBITDA and for free cash flow, and I'll go through those all in a moment. For the quarter and Q2, revenue grew 11% on a reported basis and 4% on an organic constant currency basis with revenue growth across all of our segments. Reported revenue was aided by a tuck-in acquisition in our Print Brothers segment as well as the benefits from currency. In Vista, organic constant currency growth of 5% was up from 3% in the prior year quarter, and that continued to be supported by growth in promotional products, apparel and gifts and packaging and labels, which each grew double digits. We've covered this before, but just as a reminder, and Robert alluded to this as well, our elevated product categories help us to serve and retain high-value customers that make up our most profitable customer deciles. In terms of our legacy products, business cards and stationery declined 1% for the quarter. That's consistent with Q1 and also an improvement from last year's decay rate. Geographically, while we had growth across all markets in Vista, strong performance in North America was the main driver of the acceleration in growth versus the prior year quarter. Turning to our other segments. Upload and Print customer and order count increased and fueled combined organic constant currency revenue growth there of 6%. The tuck-in acquisition that we completed in the quarter contributed $18 million to the Print Brothers segment reported revenue, which grew 26% this quarter and 6% if you exclude that tuck-in and also currency benefits. The Print Group, National Pen and BuildASign continued to increase their crossSimpress fulfillment volumes as they act as a fulfillment partner on behalf of Vista. And National Pen revenue also benefited from some tariff-related price increases. Turning to profitability. Adjusted EBITDA increased by $6.6 million year-over-year. Q2 profit dollars increased 8% on a consolidated basis from growth in our higher-value elevated product categories and also supported by favorable currency movements. Gross margins declined 110 basis points, and most of that was from the tariff impacts at National Pen, both the tariff costs, but also the offset of tariff pricing. In Vista, segment EBITDA improved 10% or approximately $10 million, resulting from revenue strength, but also stable gross profit margins and currency benefits. Robert referred to this earlier, but I'll say it again, Vista's variable gross profit per customer grew 9% year-over-year, a continuation of a trend that we've seen for some time and a strong indication of our continued strategic progress

Profitability at Vista was negatively impacted by about $2 million associated with the hurricane that hit Jamaica at the end of October that Robert talked about, a portion of which may be recoverable through insurance in future periods. Profitability was also dampened by $1.5 million of production start-up costs for expansion of our North American production network and also $1 million of tariffs net of pricing increases.

We do expect that, that impact of tariffs should lessen in future quarters and supply chain remediation continues to ramp up. And lastly, currency provided a $4.1 million benefit to EBITDA this quarter that should be a source of some continued year-over-year favorability in the second half and also as we look ahead to next year as well. Adjusted free cash flow declined $9.2 million to an inflow of $124 million. We had lower net working capital flows this year versus last year, there's just normal timing. And as we've guided, capital expenditures were higher as we invest in the expansion of our North America production network, but also we invest behind efficiency and the expansion of our production capabilities for elevated products.

From a balance sheet perspective, net leverage at the end of Q2 was 2.97x trailing 12 months EBITDA and that's as calculated on our credit agreement. That's down sequentially from last quarter despite allocating over $25 million to share repurchases in Q2. Our cash position ended the quarter at $258 million, and we continue to have $250 million remaining on our credit facility that is undrawn at the end of the quarter.

Turning to our guidance. As I said before, we've raised our expectations for fiscal '26 based on the strong results from the first half of the year, we now expect revenue growth of 7% to 8% and 3% to 4% organic constant currency revenue growth. We expect net income of at least $79 million and adjusted EBITDA of at least $460 million, up from the previous $450 million. We expect operating cash flow of approximately $313 million and adjusted free cash flow of approximately $145 million, that's up from previously $140 million. And we continue to expect net leverage to decrease slightly by the end of fiscal '26 from the FY '25 level of 3.1x.

We also, as Robert said, we remain confident in our ability to deliver on our fiscal '28 targets, which, again, I'll reiterate as 4% to 6% organic constant currency growth in fiscal '28, $200 million in net income, adjusted EBITDA of at least $600 million, adjusted EBITDA and free cash flow conversion of approximately 45% and from a leverage perspective, we expect to exit fiscal '27 with net leverage of approximately 2.5x as we begin to expand profitability more significantly and then exit fiscal '28 with net leverage below 2.0x subject to capital allocation choices, such as share repurchases.

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

Thanks, Sean. As a reminder, you can submit questions during this webcast via the questions and answers box at the bottom left of the screen. We had a good number of pre-submitted questions on a range of topics. Where there are thematic overlaps, I will combine some questions to make sure that we're addressing what's on people's minds. So let's take our first question.

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

Okay. Overall, it was a strong quarter for Vista, and I said this in my earlier remarks, but I would highlight North America as the source of strength compared to last year. I think on the Q1 call, I talked a little bit about our approach for the holiday season and what gave me optimism. And one of the things is that we had an evolved approach to the holiday season this year, with just, I would say, more balanced approach leading into the things that have been working for us, including elevated product growth and being intentional about not shifting as much resource to consumer-specific messaging. And I would say we're happy with how that was executed. Team did a great job and is a strong result overall.

In the release, we didn't get into too many specifics on consumer growth, et cetera, but I'll give you a few data points, and the question I think was quite focused on the U.S. and also holiday card. Volume even holiday cards and calendars in the U.S. was flat year-over-year. And in Canada, it grew double digits. So I think that's -- those are good data points. And I think some of that's because of what we're comping especially in Canada, there were a few things last year. But I think that data point, coupled actually with the improved DK rate in business cards from last year. I think that shows that these legacy products are still relevant, but also that we can continue to influence these trends through our experience, selection, merchandising, other things in our control.

In Europe, we had a tougher comp. Last year was quite a strong holiday quarter for consumer in Europe. And in Europe, consumer was down a little bit year-over-year in Q2. So I'd say that was the weak spot if I was going to name one. But again, it was a tough comp. As we look at things like data on Google Search volumes and such, it would suggest that we took share this quarter. Some of that data is a little fuzzy in terms of how precise that is with market share. But directionally, I think that would be the case.

Year-to-date, just from a consumer perspective, consumers flat year-to-date in constant currencies in Vista with a little bit of gross profit growth. So we do continue to expect to see a little bit of consumer growth outside of the holiday peak in particular from elevated products we've launched with consumer use cases.

With respect to the question on cost per click, those aren't details that we get into in any specific markets. But I would say just in general, in terms of -- certainly on the performance marketing side of things, I would just say that -- we're being bold in our testing agenda. Our channel mix continues to evolve, and that was the case in Q2. It has evolved quite a bit. And that won't be the case just for Q2, I would say that kind of in general, it's an exciting area, and we're looking forward to continued progress there.

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

Yes, sure. There weren't really any big areas of outperformance. I -- it was really a solid quarter of execution really across the board. I think that was the case in Q1, too. And there was, of course, a few unexpected things as well. Robert talked about the -- and I mentioned in my remarks, the hurricane in Jamaica. There were a few others, but we were able to overcome those operationally and then we did have some help from currency too. On the revenue side, I think in terms of like how we're tracking to our plans, I would say we're basically on track -- when we set our guidance, if you go back to the words we put around that, we did note that we factored in potential uncertainty.

And I think for revenue, we're now confident increasing because of what we've been able to deliver in the first half of the year. The reported growth also factors in now -- about 100 basis points of growth from the acquisition that we did in Q2, and then you could see currency continues to be a tailwind. And so that's factored in, but pretty consistent with the impact that we had included for the original annual guidance.

From an EBITDA perspective, again, I would say we're delivering to our plan almost exactly on our plan for H1. And now we've already attained the full year EBITDA dollar growth that was implied in our annual original annual guidance. And so we've updated that. You may recall Q1 was a record Q1 for us from an EBITDA perspective. And Q2 is always a seasonally really important quarter. So with the solid Q2 now behind us, -- and having had a record Q1, we now feel comfortable raising our EBITDA guidance for the year. And through the first half of the year, I would say Vista is on track. Upload and Print overall has been strong. Those are our 2 biggest sources of EBITDA and the operational themes that are driving those results are all very consistent with what we shared at our Investor Day and Robert started the call with today.

One other thing that has helped to support adjusted EBITDA growth is currency. I mentioned this in my remarks as well, with the euro and the pound strengthening, that's favorable for our results, both from a revenue and EBITDA perspective. And that has been a little bit of ahead of our plan. That should continue to be the case with some of the year-over-year benefit in H2. And then as we lock in our hedges, looking out past FY '26, we have visibility to continue EBITDA favorability from currency as well. So -- that was one of the bridge items that we had in our path to our fiscal '28 targets, if you can recall the slide that we used at our Investor Day. And I would say there, we feel good about where we're at based on what we've contracted and then also recent further strengthening in the euro and the pound.

Thank you, Sean. All right. We're going to move along to a question for Robert. At Vista, you called out that promotional products, apparel, gifts and packaging, along with labels, all grew at double-digit clip during the quarter. How are the underlying trends progressing for these customer cohorts? Robert?

Sorry, I had a. So the strong growth you're talking about really does demonstrate how we've been driving our wallet share SMBs, thanks to the past and the ongoing investments. So those investments, especially in elevated products and manufacturing capabilities that allow us to be very competitive in elevated products have really played part. In our Investor Day, we had a slide and we showed the top 2% of our customers at Vista contribute just about as much total variable gross profit as the bottom 80% combined. And it's really that top 2 and top 10% to 20% of our customers -- and that level of spend, which represents our future. So they play a big role in our results and the trends that we see in those portions of our new cohorts are very, very healthy. to your putting more specifically, the underlying trends we're seeing are progressing very well. Starting last quarter, we began discussing the variable gross profit per customer as a way that you as an investor can evaluate our progress in serving these higher-value customers and growing wallet share. So that includes everything I've just talked about for your question. Just recall, Q1, that growth was 7% and in Q2, it was 9%. So we like what we see there. It's very consistent with our strategy.

There's still a lot of opportunity in categories amongst all customers who are in markets that are less penetrated from an e-commerce perspective. And there are large addressable markets that we are addressing that we have not done so much so in the past. We're investing with behind this with CapEx, with expanded capabilities and fundamentally lowering the cost of production, for example, through focused production hubs so that we can push further into these categories like packaging, like apparel, et cetera, serving customers with great products they need at great prices with beautiful quality and delivery times. So that's where Cross Cimpress collaboration is playing a role in an increasing role. CF across Cimpress fulfillment is already something we're doing to lead new product introductions, lower costs. The increased collaboration we just announced between Vista National Pen, it's going to accelerate CF, but also other types of collaboration in promotional products in packaging as well as in signage, which I'll get back to the drivers of the underlying trends in your question.

Thank you, Robert. Let's stick with you here for the next question. Can you talk about the North American business for the Print Group? How have things trended versus your initial expectation? And how do you view the opportunity ahead for the business? Can you quantify its contribution in the quarter? And how do you think about its growth going forward?

Great. We're on track. As planned, we're focusing on building out the production capabilities. We have revenues in this unit, but they're still small. I think it was about $3 million for the first half, but growing quarter-over-quarter a fast clip. That being said, from a revenue perspective, we're just getting started and we have fixed costs that are weighing down on our overall EBITDA and CapEx, but that is very consistent with our plans and how we think about this. We've not yet started putting any ad spend against Pixartprinting or U.S. site other than small tests. We like the opportunity ahead, but we want to make sure we have everything right from a production and delivery perspective. In the near term, the bigger opportunity is really growing volumes as of a pillar through crossing press fulfillment for Vistaprint in multi-basmall formats and labels and other products. .

Now Pixartprinting printing has always been very strong in manufacturing innovation around those areas, amongst other areas. So we've taken the investments that we've made in Europe in the past multiple years and exporting that capability into North America for these products where we really don't today have focused production hubs like we do in Europe for those particular product lines. and we are coming -- we believe we've been doing so we're going to be a low-cost producer in North America that we can scale those categories through Vistaprint as well as the Pixartprinting brand. But a little bit analogous to what we're doing with National Pen and build design. We see that a big part of that production operation can be volume that goes to the Vistaprint brand in North America. We're excited about Pixartprinting in North America as a brand, but it will be part and parcel of a broader entry that we're planning.

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

So we are going to keep the brand separate and focus on integrating what I'll call the back-end capabilities of National Pen and BuildASign to drive growth and drive profitability at VistaPrint in North America. I'm actually in Europe as well with Pen -- National Pen is strong in Europe and is doing great collaboration already. with VistaPrint and our Upload and Print businesses. So it's really the brands that will stay separate and more and more collaboration will happen on the back end. We're doing that because we continue to believe that it is advantageous to have multiple brands in the market both from a search perspective, which shows up in front of the customers, but also be able to vary our value propositions into different brands.

But on the back-end operations, all of these investments we've been making over the past years in technology platforms, manufacturing talent in other areas are allowing us to take synergies or drive synergies and importantly, drive customer value by sharing those capabilities. I'll give you a couple of examples of that. We talk a lot about Cross-Cimpress fulfillment. We accelerate the benefit of focused production hubs, which still remain decentralized because teams who are very close to that market focus on not only what the customer needs are, but how to best produce the product, but we are incentivizing volume to flow to the most efficient highest quality production operations we have. And over time, there's a lot of benefits to that. It increases profitability, increases product introduction, we get better capacity utilization and so on.

On the tech replatforming that creates opportunities, obviously, in our technology investments to do 2 things. First of all, take the best-in-class and certainly at a very minimum, the best in Cimpress capabilities and share that across different brands. But secondly, to share the cost and, therefore, drive efficiencies in our software development and other technology investments. So that recent announcement about Vista National Pen and Buildisign, we expect to extend this to other areas. Now why last reason that these businesses are doing this is, generally speaking, they're serving similar types of customers and customer use cases.

The other thing that is common between these is they have a higher spend in advertising as a percentage of revenue if you were to compare them to our Upload & Print businesses. So with access to the same product catalogs, via MCP and across in equipment that makes the sharing possible and we can optimize our advertising spend across those different brands that all may show up in the same Google search or other areas and make sure we're getting the best ROI across the board for all of Cimpress, not an individual brand. So there's things that will still be unique about these businesses, and they will remain with respect to specializations, but we do believe, as I've just described, there's a lot that we can share.

Thanks, Robert. I'm going to stick with you for one more question for now. How do you view the opportunity ahead for Cross Cimpress fulfillment to continue to drive down COGS? And how much headroom do you think there is ahead -- is there a certain level of cross Cimpress fulfillment activity per business that you would like to achieve? .

Okay. I've already mentioned a lot of this in today's call. But in summary, Cross Cimpress fulfillment is a big opportunity. It's another example of past and current investments that are driving both top line and bottom line growth. It's part of our execution plan to achieve the EBITDA expansion to at least $600 million by fiscal '28. So -- that's how we view it. Now we're still early in the opportunity for cross-Cimpress fulfillment, but it's growing fast. It was a little over $40 million in the first half of fiscal '25 and now it was over $80 million in the first half of this year. So it basically doubled with the midyear. We believe that last year, that delivered about $15 million of gross profit increase as a result of that -- again, that was for fiscal '25 ending June. Our scale-based manufacturing advantages that we've always talked about for decades in mass customization, typically happen on a product-by-product basis. So we have, through these focused production hubs, the opportunity to lower cost, improve quality, improve speed, expand our product lines, increased utilization of invested capital by aggregating all this volume into these focused production hubs.

And I'd say beyond that, but very closely related to cross-Cimpress fulfillment with the announcements, we've mentioned with National Pen and BuildASign, but similar things that we're doing in Europe with our Upload & Print businesses. We have great, very strong teams who are experienced in the product category launch process, the new product introduction process for specific areas just like we do at VistaPrint. And we're able to have teams specialize in the areas their strongest at. So as to what level of cross impress fulfillment we'd like to achieve, we don't disclose that specifically, but we do expect this to grow strongly for some time to your question, there's a lot of headroom ahead.

Thank you, Robert. All right. Sean, let's take a technical question. In the quarter, it looks like the company allocated $22.6 million for the purchase of noncontrolling interest. -- what position did the company buy? Any details you can share would be appreciated, what noncontrolling interests remain outstanding.

There are 2 transactions that make up that a little bit more than $22 million. Both of them were in our Print Brothers segment. $11 million of that was a mandatory redemption that required us to purchase the remaining shares from minority holders that sold a portion of their equity interest to us in fiscal '23. And then the other 1 is, was the remaining $12 million of that $22 million or so that relates to minority equity holders in a smaller business within PrintBrothers that exercised the put option to sell those shares. In terms of other noncontrolling interest, that remain outstanding. There's nothing material. You can see this on the face of the balance sheet. We have $6 million of redeemable noncontrolling interest outstanding at the end of the quarter.

We don't have anything in terms of anything mandatorily redeemable. And I'll just maybe add that those 2 transactions in the quarter were contractual all of the minority shareholders that were part of these transactions remain active in our business, and we are in active discussions with them on buying back into the respective businesses with a long-term horizon. And so we look forward to concluding those conversations.

All right. Next question on M&A. We got some live questions on M&A, too. We'll definitely cover the answer to those in the next couple of questions. Robert, the company did a tuck-in acquisition for $10.4 million in the quarter, and you noted in your earnings document that the company has a healthy pipeline of potential tuck-in M&A opportunities. How much capital is the company willing to allocate here? Also, I believe in the past, the company used a 15% hurdle rate for any tuck-in M&A deals. I assume the fiscal Q2 tuck-in deal clears this hurdle but any financial details you can provide would be interesting.

Your assumption is absolutely right. It's very easily clear hurdle. But let me give you a little more detail about this particular tuck-in. We purchased an Austrian printing group with annual revenues of about $70 million in annualized EBITDA of about $5 million prior to synergies, and we have very significant synergy opportunities ahead. The enterprise value we paid wasn't just the $10 million or $10.4 million. It included debt. But if you take the equity plus debt that enterprise relative to the pre-synergy EBITDA we paid was comfortably below $5 million. .

Now inclusive of synergies, we expect that multiple to be much lower, and we expect the return on this investment to be very comfortably higher than 15%. The purchase price was also done at a very attractive multiple of cash flow after-tax cash flows relative to the care delaying -- where we're deploying there. Strategically, it really positions us in Austria to grow faster in elevated products like multipage products, but also importantly to -- through cross Cimpress fulfillment, used that Austrian production capabilities, especially in Germany and use some of our German production operations to expand products into the acquisition. That is one of many examples of the synergies we see before us that will lower our post-synergy multiple.

Now this is a tuck-in, I'll call it, acquisition, which brings both customer relationships, but vertical integration has fast payback, very clear have to deliver profitability and cash flow now and over the coming years. Importantly, we have a strong leadership team in Austria who's doing very well at group.at. That's part of PrintBrothers. They've been with us for years. they sourced the deal. They proposed the deal once it was approved, they led it. They're taking full accountability for it, and they're managing this. And so I'd say all those things I just talked about exemplifies what we're looking for in tuck-ins, strategic fit against our goals of elevated products, manufacturing supply chain, importantly, also with strong Cimpress leaders on the front lines who sponsor and lead the deal with strong cash-on-cash returns to the capital we put there with high IRR and capabilities that either complement or accelerate our existing communities.

Now your question, I think, was how much capital we'd be putting into other tuck-in M&A. That, frankly, is coming -- depending on other capital allocation opportunities. we'll be looking at the relative return and risk versus buying back our own shares by the investments we're making in internally that we've been talking about a lot in this call that are driving cash flows through production operations, our commitment to delever our balance sheet and then, of course, these types of deals. So it's hard to say what it will be specifically. We don't see this as a fundamental singular or even top 3 driver of how we're going to get to our FY '28 goals. But as I think we've talked about since the September Investor Day, we do see it as a part that's consistent with our strategy, which has good returns to capital and will be part of that overall path.

Thanks, Robert. So there is a follow-up question here that I think you can touch on pretty quickly because you've already talked a little bit about this. But -- the question is, my understanding is that the company measures any potential M&A deals or any capital allocation decisions against the returns from repurchasing shares. -- with the stock trading at a low valuation, especially if the company achieves its fiscal 2028 target, does this imply that tuck-in M&A deals in the pipeline potentially exceed a 15% hurdle rate? .

Absolutely, yes. .

I love it. Shortest answer ever. All right. We're going to move on to Sean, another capital allocation question. On capital allocation, share repurchases stepped up during the quarter and net leverage fell below 3x. How should investors be thinking about the magnitude of repurchases in the back half of the year? And Sean, one thing that I want to add to this just because we got a live question, somebody asking us basically what our position is on our valuation at this time. .

Okay. Yes. Well, there's still some level of repurchases that we can do in the second half of the year within the net leverage guidance that we gave. So we left some room for that. Of course, and Robert just touched on this, too, but any of our capital allocation is always dependent on a lot of factors, including other opportunities. But in this case, share repurchases are always price dependent. But Yes, I would say, listen, we were really happy to allocate a little over $25 million to repurchase in Q2. We did that at an average price that was below $70. We still believe it's a very good use of capital at recent price levels. So I still would expect some in the second half of the year, probably a bit less in terms of intensity overall in the second half of the year relative to -- certainly relative to where we're at in Q2. But again, always price dependent. In terms of -- I mean, I guess I kind of implicitly cover the other one. I mean, listen, we just ramped up the repurchases that we did in as just said, we feel that, that was a very good use of capital, buying back below 70%. And as I just said too, like we would still view that as very attractive at current price levels, and we have room to do repurchases in H2. And so we would put dollars behind that.

Great. So this next question is basically getting up the math behind what we might do in the back half of the year at 1x, which is essentially where the leverage level is currently. EBITDA will be increasing by at least $10 million, and the business is expected to generate incremental adjusted free cash flow, which includes working capital for the remainder of the year. Is there a specific planned share repurchases or M&A that's driving the guidance? .

Yes. So yes, all that math is right. Our free cash flow, as you can see, we reported in the first half of the year was $107 million. So versus the $145 million in the guidance, that implies $38 million of free cash flow in the second half of the year. That does already include the higher CapEx that we've also assumed in our guidance. And then we have $10 million of EBITDA growth implied in the guidance in the second half of the year as well. We don't provide specific guidance on other capital allocation that we do in the normal course because, again, as I just said, it depends on a lot of factors, including price, but also relative opportunities, et cetera. But with the free cash flow and EBITDA that I just outlined and you've outlined in the question, yes, there is some room for for other capital allocation on top of the -- any organic investments that were already included in the plan. That includes for repurchases and still allowing us to end the year slightly below 3.1x. So we have provided some room for them.

Thanks, Sean. All right. We're going to take a break for a second from financial questions. Can you talk a bit about how you view the opportunity for you in a genetic commerce? How are you -- are you in talks with any LLM providers today? How far away are you from being able to integrate into chat GPT or Gemini?

All right. So it's something that I think the entire world will move towards, and we certainly have been investing in that at the highest levels, myself and our CTO of the entire Cimpress executive team are spending time specifically on these subjects. I won't go into very specific discussions. But yes, agenetic Commerce is coming. We are working on that. And we feel comfortable that we will be at, if not the lead baton thrower, but very much at the front of the parade.

So next question for Sean. Could you please help us bridge or provide color around the difference between the all-time high trailing 12-month EBITDA of $469 million from Q4 of FY '24 to the trailing 12-month EBITDA today of $451 million. Gross profit has increased by $79 million over the same period, and contribution profit has increased by 52%, while EBITDA has decreased by $18 million. SP1 This is some

Heavy math on the fly here. So I'll cover this high level. And I do think it's a good question. And I think stepping back, we've actually used a similar framing as we look to architect what we need to hit in fiscal '28 looking back 2 years and saying, what needs to be true for us to make sure that we're having more EBITDA flow-through -- and we have a large cost efficiency component that we've talked about in our targets going out to FY '28. And part of it is we'll address kind of what is in the end of this bridge between what was our prior -- our highest ever EBITDA in fiscal '24, which is the base that you referenced in the question and where we're at today. So there's a few things -- again, I'm going to go high level because I don't have all the math in front of me, but I think that 1 of the big things is that in -- if you look at Q2 of FY '24, we had about $12 million of nonrecurring benefits in that quarter, which supported the full year. So that's relevant for your question, but it's also kind of a good data point as you look back just for Q2 that we just reported versus 2 years ago.

So that didn't repeat. So that's a bigger 1 in the math. In fiscal '24, that was the year where we were coming off of -- we were basically supply chains were normalizing. Input costs were normalizing as well and coming down. So we had pretty sizable reductions in input costs that year, but still kind of favorable pricing. So there's some net benefit to that in gross profit which is kind of already covered in your math. We also -- it was after that, that we had starting in FY '25, starting to see some overall declines in business cards and holiday cards. Those are more stable this year, but that has some impact on the math too. We do also have start-up costs this year for plant expansion, and we didn't have that before. And then really the remainder and other than the nonrecurring items, probably the biggest impact is just the remainders in OpEx with technology costs being the largest driver. And again, I connect that back to where and why we need to drive efficiency as we march to the FY '28 targets. One of the things that offsets that in the other direction is currency is a little bit more favorable in the current TTM versus where we were at back in fiscal '24. So that's high level. But hopefully, that hits on the key drivers.

I'll stick with you for the next 1 as well. on FY '28 targets. So should we be thinking about the bridge to FY '28 a bit differently than what was communicated at the Investor Day? Is $40 million of organic incremental benefit still the target? And is $10 million from tuck-in M&A is still a target. SP1 Okay. This is a great question. Thank you. The the bridge that we --

This is a great question. Thank you. The the bridge that we the question of is this bridge that we did at Investor Day. And in that bridge, that the objective of that bridge was to show what we needed to get to at least $600 million in EBITDA in fiscal '28. So it wasn't necessarily for each of the pillars in there, it wasn't a target per se. Importantly, the last pillar was what organic growth, what we needed in EBITDA contribution we needed from organic growth to get to $600 million, and that was the $40 million plus. So that wasn't to say that, that was necessarily the target, but that was the math you needed. And the whole point at bridge is kind of what you need to believe, especially from organic growth.

So we'll update that bridge at the end of the year. I think it's a helpful framing and hopefully gives all of you confidence as well. But the pillars in that bridge, they're still the right ones. And maybe I'll just -- I'll run through them quickly just to give you a little bit of commentary because it is a really important topic. So the first thing in that bridge, I'm just looking at on my screen here, was our fiscal '28 growth, and now we've increased that by $10 million based on our guidance update today, okay. We still feel good about...

Just fiscal '26...

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

The next 1 is the runoff of plant start-up costs. That is -- frankly, that is just math and so we feel good about that. Tuck-in M&A has been a source of some questions today. That was the next 1 in the bridge. And again, we feel good about that as well. We've covered that -- the next 1 was currency benefits. I touched on that earlier, too. We have good visibility to what's in that bridge based on what we're already contracted. So I feel good about that.

And then the remainder is the organic growth needed to bridge to the at least $600 million. And that $40 million plus, that because we -- that represents 2 years, right? That's $40 million of organic growth flow through for 2 years. And again, that's just what you have to believe to get there. So as we get -- as we're able to provide all of you with increased confidence on the other pillars, and make that more tangible that will serve to also make that last element of the bridge more tangible and likely lessen over time in terms of what we need to believe. So -- so that's how we think about it. And like I said, we'll update more specifically on that bridge as we get to the end of the year. But hopefully, that's helpful in terms of kind of overall commentary. It's super important. And I just would add these FY '28 targets has -- they have all the attention of the management team, all the focus of the Board. And so we're laser-focused on this, and it's driving a lot in terms of our day-to-day focus of the management team.

Thanks, Sean. We have one more question that came in, just asking for a comment on the current state of our operations in Jamaica following the hurricane I don't know which one of you wants to answer -- any of you could? .

I'll jump in and say that I wouldn't say we're back at 100% of what we have. We are doing some renovations, but the teams are back at their desks, and we also -- where we don't have full capacity, we definitely have capacity in our service centers in Tunisia and the Philippines, which all stepped up big time in terms of helping out in the moment of the hurricane. So we're fine. I'd overlay that with, unfortunately, the hurricane hit right -- a week or 2 before our peak period Black Friday, Cyber Monday kind of the worst time of year to hit in terms of a peak season capacity. Besides having built back capacity, the volumes we have going through service centers in all parts of our business are lower now than they are in the peak period at the end of November, early December. So we're fine.

And maybe I could just add 2 things. One is I mean this hierarchy devastated Montego Bay. And so like our team members suffered devastating impact, and we've done a lot to try and help them. But frankly, I mean, these I said this multiple times internally. -- may be proud to be part of this team seeing the response to help them, but also the response to help make sure that our operations were running smoothly to support customers, too. And I just want to make sure it's clear that in terms of the impact financially, from an operational standpoint, things are stable, and we don't expect continued impact in terms of higher cost or lost gross profit in terms of how we support customers operationally, we're back to a stable place. Not to to continue to improve a little bit, but we're stable. -- we will continue to have some cost of just getting the office back to where it needs to be, the normal kind of remediation, that's where we do expect to have coverage from an insurance perspective. And so I would not expect this to be of any significance in terms of any drag on results in the second half of the year. And in fact, as we noted, yes, there's -- we'll pursue opportunities to recover some of the costs we've already incurred in the second half of the year. It's unknown when exactly we would recover that. That could stem into next fiscal year, but that process is very active.

Thank you so much, both of you. So that's it for the live and presubmitted questions that came in. So I'm going to turn things over to Robert to wrap up the call.

Thank you, Meredith. So the critical takeaways from the announcement we made last night, the conversation today are that halfway through fiscal '26, we are on track to deliver better financial results compared to our initial guidance for the year. The reason that's the case is because we are consistently executing and progressing in all the key areas that I've discussed today that are very consistent with what we talked about in July, in September, and I would say even in the years before that. These are elevated products that drive a step function improvement to our per customer LTV measured as gross profit per customer. MCP and the manufacturing capabilities that reduce cost of goods and OpEx by sharing overhead, increasing the velocity of new product introductions and user experience improvements, leveraging AI and other technologies to drive efficiencies and as someone just alluded to in the last question, I would say also revenue opportunities as we get into things like agent commerce in the future, increasing cross-Cimpress collaboration via CF, but also via broader collaborations as exemplified by the announcements we made with Vistaprint, National Pen and BuildASign. All of those factors reinforce our confidence in our path to fiscal '28 EBITDA of at least $600 million and approximately 45% free cash flow conversion, coupled with, as we've said many times, significant reductions in our net leverage.

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

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

Thank you for joining us. My name is Marlane Pereiro. I'm the high-yield cable and media analyst at Bank of America. I'm pleased to have with us from Cimpress, Jonathan Chevalier, Senior Vice President, Treasurer and Vista Finance; and Meredith Burns, Vice President, Investor Relations and Sustainability. Thank you for joining us.

Thanks so much. Thanks for hosting us. We're happy to be here.

Always a pleasure, Meredith. So we'll start out with the presentation.

Yes. So I'm going to go at a pretty quick clip through a few slides here, and then we'll leave lots of time for a fireside chat Q&A. So I'd like to say thank you to everybody who's here in the room, also the people that are on our webcast. Today, we will talk about the future and our thoughts about the future. There are risks to investing in our stock, which you can see listed on this slide, but also in much more detail in our SEC filings, so you should check those out. One thing that we will not be doing today is we won't be providing an intra-quarter update on the December quarter. So sorry, but that's not what we're here for, but happy to talk about the longer-term future for sure. And then there are some non-GAAP measures in this presentation, which you can find a reconciliation to on our website at ir.cimpress.com.

So at Cimpress, we help millions of businesses build brands, stand out and grow via custom print and promotional products like the ones that you see here on this slide. This is something that we excel at, and we've been doing for a very long time, which you can see on this next slide. This just shows our revenue over the course of the last 21 years. And the bars that are stacked, the blue part of the bar is our Vista business, which you'll know as Vistaprint. That is our organic business during this period of time. The gray bars actually represent the companies that we have acquired over time and then subsequently grown through this period. You can see the CAGRs.

And during this period of time -- not this period of time, during the last 10 years, we've had $2.3 billion of unlevered free cash flow and over $1.5 billion of adjusted free cash flow. So very cash generative. So what we do is web-to-print mass customization. What that is, is being able to deliver custom products even in small quantities with the reliability, quality and affordability of mass production. Customers care about this and love this because it helps them build their brands. It provides a fast turnaround, broad choice, low prices, high quality, e-commerce convenient and quantities that are right for them even if they're a very small business. And it is very hard to do. How we do it is we combine scaled talent across multiple organizations like manufacturing, software, design, advertising, service operations and product development.

We have -- we operate in a very large and fragmented market. It's about $100 billion in North America, Europe and Australia. And that market represents a range of different types of products. We have products that came to the mass customization paradigm relatively early, like paper-based products like business cards, postcards and flyers. For us, we call those legacy products. We've been in that market for a very long time, and they're more mature. The end markets have been shrinking over time. We have been growing over time until very recently that has matured and that is a little bit of a drag on our revenue growth.

However, we have this long history and track record of bringing more and more product categories into the mass customization paradigm. Some examples of recent places where we've been focusing are on this slide -- on this slide, paper bags, corrugated boxes, paper cups, drinkware, flexible packaging, sophisticated signage, roll labels, stickers, multipage booklets, you get the idea. We also have expanded our capabilities in being able to offer these massive explosion of SKUs in the promotional products industry, partnering with suppliers for just-in-time inventory like type of inventory management. We've also expanded into faster shipping speeds for our customers as well. And so -- and we've done that through the combination of capabilities that I talked about on the last slide.

So I will say that there is a lot that we have been investing in on the product front, on the manufacturing front. We went into that in a ton of detail in our September Investor Day. So if anybody is interested in that, you can find on ir.cimpress.com, the video recording of the Investor Day presentation and the slides and the transcript. And I would highly encourage you to go there because we really talked a lot about how getting into those more elevated products, those newer product categories where we've been able to bring the mass customization paradigm is helping us to grow our wallet share with higher-value customers. That's across our businesses. And in particular, in our Vista business, that's really been very helpful for us over the course of the last several years, and it's fueling the growth in both revenue and profitability.

Okay.

Sorry. Moving on. We have a strong capital structure. We've got no near-term maturities. We had a senior notes refinancing in September of 2024. That's an 8-year term. So those are 2032. Our Term Loan B was repriced twice in calendar year 2024, and that is a 2028 maturity date. And we've also had over the past couple of years, a couple of upgrades from our rating agencies. Currently, our credit ratings for the family are BB- and Ba3.

Okay. So we'll go into some outlook here. This is for the current year that we're in. We just finished our first quarter. We're a June 30 fiscal year-end. And so for fiscal '26, which ends this coming June of 2026, we have guided to revenue growth of 5% to 6% or organic constant currency growth of 2% to 3%. We're getting some help from currency this year. Profitability from an adjusted EBITDA perspective of $450 million, up a bit from where we ended in fiscal '25 and operating cash flow of $310 million and adjusted free cash flow of about $140 million. We are investing this year, particularly in capital expenditures, in new equipment and also fitting out some manufacturing locations that we are doing in order to bring these new products to market and also to optimize our network in terms of where we produce things and make sure that we're producing products in the most efficient place to produce them.

That will help us lower cost. In some cases, it will help us get product to customer faster, et cetera. And so there is, from a cash flow perspective, CapEx included in this guidance of about $100 million this year. Our maintenance-oriented CapEx is about 1.5% of revenue, and this will be about 3% of revenue or so. We also recently, at our Investor Day in September, introduced a framework for thinking about FY '28 a few years out. The reason why we are talking about FY '28 is because that is going to be the first year that we expect to be benefiting fully on an annualized basis from a lot of these improvements that we're making on the manufacturing side that we talked about, also other improvements and efficiency gains that we can get throughout the P&L in advertising and also in our operating expense.

Overall, we expect about $70 million to $80 million of annual EBITDA improvement through the combination, so all up and down the P&L, with a big part of that coming from COGS, but not only COGS. So in FY '28, which would be the first year that we get the full benefit of that, we would expect our constant currency revenue to be growing 4% to 6%. We would expect our adjusted EBITDA to be at least $600 million and our adjusted free cash flow conversion to be about 45% of that adjusted EBITDA. So what that would yield if we are successful or when we are successful in achieving these plans, it would drive our EBITDA margins from a little under 13% in FY '25 to about 15% in FY '28.

Now I'm not going to go through this in super detail, but we did provide along with this framework for FY '28, a bridge to help people understand like what goes into getting to that at least $600 million. That is something that for us is we're going to strive to do better than that, to do better than the $600 million. But the way that the math works out to get to the $600 million coming from where we were in FY '25 to FY '26, which is the guidance I just talked about. You've got the cost savings. We have some plant start-up costs in FY '26 that are going to run off in future years. We do expect some tuck-in M&A contribution.

We expect some currency benefit just based on the way that we do our hedging. And then what you have to believe in order to get to $600 million is at least $40 million of profit -- contribution profit growth from our organic growth. The contribution margin on that is that's implied with that at least $40 million is not very high. We would hope to and expect to do better than that, but we wanted to sort of help people see what the components were of getting to that at least $600 million.

And then finally, what would that yield? That would yield significant delevering for us. We -- as of Q1, we're at about 3.1x trailing 12-month EBITDA as defined by our credit facility definitions, based on getting to that minimum level of profitability and cash flow in FY '28. That means that we would be meaningfully below 2x net leverage by the end of FY '28, subject to capital allocation choices that we may make. And along that path, we expect to be at approximately 2.5x trailing 12-month EBITDA by the end of FY '27, which would still allow some room for share repurchases or other capital allocation that we may want to do along the way. All right. With that...

Great. Meredith, I have a few to start off and then, of course, happily turn it to the audience. Obviously, AI is a big topic. So how do you see AI impacting the business, both in terms of opportunities of optimization, but also what segments could be at risk from some level of disintermediation?

Great. Great question. Thank you. So AI is a very important topic for us across our businesses. I would say that on the opportunity side, we are pushing ourselves to uncover those opportunities across the P&L. And we see that in the software space, we see that in regular G&A and marketing, we're already getting some good successes there in terms of automating advertising decisions or automating creative content in advertising, getting more efficient in software engineering and documentation, things like that.

We have been very successful, I would say, but still pretty early in the type of thing that you would normally expect every e-commerce company to be doing in terms of customer service and automating there in terms of chatbots and also just making our representatives more efficient. So I'd say from an opportunity perspective, you've got like sort of the bucket of things we can do, we use AI for to get more efficient ourselves. There's another place that I think the AI is going to be disruptive, but could yield opportunity for us, and that is in the design space, obviously. People are really experimenting and in some cases, successful using AI to design different things.

And I think our view there, even though we offer design services, that's not where we make our money. We make our money on the sale of the physical products, the production and the sale of the physical products, and nobody does that better than us. And so to the extent that AI is going to further democratize design, further make designs more accessible to more people, we would expect that those people would want to put the designs on more physical things. And so that, that could ultimately benefit us. But we do need to manage that as we go because we have folks in our business that focus on either creating templates for our customers to use from a design perspective, creating AI tools themselves for our customers to use from a design perspective and also design support or do-it-for-you type of design.

So right now, we can use AI to help make those people more effective, more efficient. And over time, we just sort of need to manage like how does this go over that period of time. And then the one other place that I would say there is likely to be disruption, and we also need to manage it is on the advertising side in terms of making sure that we are ahead of -- or keeping pace with at least where the market goes in terms of currently paid search advertising and organic search in terms of the benefits that we get there and bringing customers into our businesses through to, okay, what do you have to do in order to make sure that you're coming up with great results in these AI agents and LLMs and things like that.

We think we just really have to focus on customer satisfaction, making sure that we continue to delight people and that we are generating strong reviews, strong ratings from those folks, and that will help us continue on that front. And then, of course, we're investing from a team perspective in making sure that, that transition goes as smoothly as we can as we go through, I would say, the next several years where things are going to be changing quite a bit from an advertising perspective.

And when we think about revenue growth, is that driven more by customer retention and/or better customer like retention rates, new customers or [ repeat ] customers?

I think it can come from both, but very clearly, what we are experiencing right now is wallet share gains and improvements with higher-value customers within our customer base. And so we have a situation where, okay, even the new customers are higher-value customers, the repeat customers, we're gaining more traction because we're gaining more wallet share and people are sort of -- the average is sort of moving up in terms of what that looks like from a variable gross profit perspective coming from our highest value customers. So that's probably -- and that's in the Vista business, but also in our other businesses, that has already been a feature. And so I would expect a little bit more on the revenue from existing customers than just pure new customers.

I mean our customer data shows that a lot of our customers are buying similar products that we offer, just not from us. So I think there's a huge opportunity as we gain kind of awareness of our assortment and get better at serving high-value customers that people will start buying a broader set of our products, and that's good. And in terms of like thinking about high-value customers then and advertising as a percent of revenue, there should be opportunity there to capture as we are more successful in just getting more money from customers that really we can serve the best.

Great. And as we think about capital allocation, obviously, you've laid out kind of the leverage trajectory. How should we think about your capital allocation priorities, especially once you get to that leverage target? And in terms of acquisitions, do you think Cimpress could be in a position to be an acquirer, possibly a seller of assets in '26? Any color there would be helpful.

Yes. I mean I think we've stated recently that, I mean, we're focused on the path that we've laid out. We could see a role for small tuck-in acquisitions that can really help us in different areas, let's say, new product, new technology. But yes, we don't expect any kind of major shift to what we've laid out in our guidance there. And I think we are just committed to the delevering path that we've laid out, subject to our financial policy and then opportunities that arise.

Great. Any questions from the audience? I shall continue. All right. Great. Obviously, tariffs were a big topic this year. So any impact in the recent quarter, any lingering impacts as we go into next year?

Great. Great question. So yes, a little bit, but it's actually been pretty good. We've been able in this last quarter to really limit the tariff impact to less than $500,000 in the quarter. And that's been a lot of hard work behind the scenes in terms of shifting our supply where we can to places that have lower tariffs or no tariffs and also raising prices where we can't in order to offset that. I should say for everybody that the tariff concept really only impacts Cimpress in our promotional products and apparel space for things like paper-based products, signage, packaging, labels, that is either covered by USMCA compliance or it is -- their informational products that can't be tariffed under IEEPA because it would be taxing free speech.

And so it's really confined to the type of products that aren't substantially transformed when we decorate them. So like on this table right here, Colin has a beautiful Cimpress water bottle, and that is something like that. It was a water bottle when it came to us, it was a water bottle after we decorated it with the Cimpress logo that doesn't change the function of it. And so that retains its country of origin. And so that -- those are the products where we have that impact. We did build in, in this fiscal year, about $5 million of potential downside risk. So we're tracking ahead of that right now in Q1, but it's a volatile environment. There have been changes that have happened already during this fiscal year, and they may continue to sort of rapidly evolve. And so that's why we built that downside risk into -- and that's factored into our guidance.

And then turning to the cost side. You expect to generate about $60 million of cost saves this year. Can you remind us or how should we think about the cost to achieve those savings? Are there further cost saving opportunities as well?

Yes. So the $70 million to $80 million of cost savings, as I mentioned in the presentation, comes across the P&L. The COGS piece of that is going to be material, and that is the thing that we're investing in right now. So in FY '25, we had elevated CapEx. In FY '26, we have elevated CapEx. That is actually helping us to improve the amount of what we call cross Cimpress fulfillment. It's when we can take a product that maybe we outsourced before to a third-party fulfiller and bring that in-house to a sister company or it also allows us to combine volumes from 2 different companies into a focused production hub.

And -- but that does take some moving around. It takes a little bit of investment. And so we're making that investment this year. That actually is weighing on our profitability this year a bit. I mentioned in the presentation, there's going to be about $15 million or so of start-up costs in FY '26 that will run off as the volumes grow in those production areas. So that's one of the ones where there's the biggest amount of investment. Jonathan also mentioned the advertising, which is the better we can get at these elevated products and penetrating into the customer wallet share for high-value customers, the more efficient our advertising spend can be. And so that can be a source for those cost savings as well or at least for margin leverage as we go.

And then as I mentioned before, AI is something that we are investing our time in and in some cases, our expense in terms of making sure that we are as efficient as we can be, and we're uncovering opportunities there.

Great. And from a cost structure perspective, how much would you say is variable?

So variable cost structure is actually quite high at Cimpress. It's about 65% of our costs are either variable, like truly variable like raw material shipping of our products or third-party fulfillers, things like that, or they're what we would call semi-variable, which is we have proven that we can keep those costs in line with demand. So think about customer service costs or advertising spend. These are things that we can affect relatively quickly. We've demonstrated our ability to do that, especially during the pandemic in a big way. And so that's something that we're very comfortable sort of viewing as a variable cost, even though in some cases, it would take an action to affect it.

Great. And then obviously, the longer-term target of $600 million driven by revenue growth, COGS perspective, et cetera, what is potential upside?

I'm going to decline to quantify the potential upside there. I will just reiterate, though, that our own internal plans will be to chart a better course than the $600 million. We see that as a minimum. And frankly, we see that as a minimum in terms of delivering returns on the investments that we've been making organically in this business. And so we do hope to do better, but I'm going to decline to size it.

Okay. And there was news or kind of a little while ago around Spruce House activist, can you discuss that relationship? Do you speak with them? Any context or color you can provide would be helpful.

Yes. So I'm not able to share a lot of detail there. We have spoken to them. They have been a shareholder for a long time, and we really appreciate their feedback and their constructive ideas. But beyond that, I can't share any details. I will say that there was an amendment to the 13D last night that came out. And they -- in that reserve the right to have all of the strategic conversations that they want to have to either buy shares or sell shares. But the reason why they updated was it looks like they have been a recent seller.

And then it seems that at least anecdotally, there appears to be some digital saturation with consumers wanting more tangible products and experiences. Are you kind of seeing any sign of this? Is it -- how would you characterize that? Or -- because I said at this point, it seems somewhat anecdotal, but...

Yes. I mean we've been in markets that have been in secular decline for years, and we've been able to grow for -- Meredith had a slide here where we've been growing for the past 20 years. So I think we do believe that there's always going to be relevance for physical products. And you think about the a lot of our products really represent a person and who they are, whether it's their small business and like it's their livelihood or it's their family and friends on the consumer products. So yes, we do think that there's going to be constant relevancy there.

Now we've been transparent that some of our legacy products like business cards have started to decline a bit. We do think there's a long runway there as well just because the kind of the use cases of those types of products aren't necessarily what you and I would envision in terms of like passing a business card across the table. It's like, hey, leaving a card for their -- at a restaurant so that they can be relevant physically because otherwise, they're not going to be seen. So yes, whether it's business products or consumer products, there's still going to be relevancy and it's for us, it's where do we meet those customers. And again, we do think a lot of our growth is going to be from the elevator products that there aren't digital substitutes for in terms of packaging, promotional products, signage, things like that.

Great. And then just a few quick free cash flow items. From a CapEx perspective, you mentioned 1.5% of revenue as maintenance. As a more normalized total CapEx number, how should we think about that?

Yes. So we -- I would say that if you look at CapEx plus the value of capitalized leases as a percentage of revenue over the course of the last 5 years or so, there were a few years where we were actually sub-2%. And so that maybe felt like we were a little underinvested just from a normalized perspective, there were reasons for that because that was at the period of time that we were completely migrating our technology stack in our largest business in the Vista business. And because of that migration, we were very inwardly focused. We weren't actually at that point in time, launching new products through our own manufacturing capabilities.

And so now that we're out from under that technology migration, and that's been several years now, we're coming back to it, but I think we're playing catch up a little bit. And so the amount that we're spending in '25 and '26 is probably a little bit more than a normalized level and the sort of 1.8% or 1.9% of revenue is probably a little bit less. So I'd say around 2% or a little more than 2% feels right as long as we're -- we have these opportunities to be investing in these new product categories or in efficiency gains within manufacturing.

Great. And can you remind us, are you a cash taxpayer?

We are a cash taxpayer. That is true. We -- last year, our cash taxes were about $33 million. That was low for us because we received over $10 million of refunds last year from prior year cash taxes. This year, our guidance is for $55 million to $60 million in cash taxes.

Should we think about that as a somewhat more normalized run rate reasonably.

Yes. I mean cash taxes is definitely a better thing to look at than GAAP taxes because there's a lot of volatility in our GAAP tax rate. On the cash tax side, you can sort of think of it in 2 different chunks. If you look at our Vista business, the way that generally works is the more profitable Vista gets the lower the effective cash tax rate is because of some tax planning that we've done there and have had been able to take advantage of for a while.

In our Upload & Print businesses, however, that behaves like much more like sort of a normal situation where as profitability grows, the taxes grow as well. And those Upload & Print businesses happen to be in some pretty heavy tax rate jurisdictions like Germany, Italy. And so that's sort of the piece where if that's growing faster, we would expect absolute dollars of cash taxes to be growing up faster as well.

Great. Well, we're out of time. Jonathan, Meredith, thank you so much for joining us.

Thanks a lot, Marlane.

Thank you.

Good morning, and thank you for standing by. Welcome to Cimpress' First Quarter Fiscal Year 2026 Earnings Follow-up Call.

I would like to introduce Meredith Burns, Vice President of Investor Relations and Sustainability. Please go ahead.

Thanks, Michelle, and thank you, everyone, for joining us. With us today are Robert Keane, our Founder, Chairman and Chief Executive Officer; and Sean Quinn, EVP and Chief Financial Officer. We appreciate the time that you've dedicated to understand our results, commentary and outlook. This live Q&A session will last about 45 minutes or so and we'll answer both pre-submitted and live questions. [Operator Instructions]

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

We also have published non-GAAP reconciliations for our financial results on our IR website. We invite you to read them.

And now I'll turn things over to Robert.

Thanks, Meredith, and thank you to our investors for joining today.

Before Sean goes into a review of the Q1 financial results, I'm going to recap several of the strategic and operational themes that we covered in detail in our annual letter of July 29 and at our September Investor Day. And I'll provide a few examples from the first quarter of progress we've made in these areas.

First, elevated products are driving a step function improvement in Cimpress' per customer lifetime value, especially at Vistaprint. By elevated products, we mean products that customers value more highly than our legacy products for building their brands and growing their businesses. Note as well that elevated products are typically still in the early stages of the web to print and the mass customization market disruption curve, and that means there's still a long runway for future market gain and market share gains by Cimpress. Elevated products make up a high percentage of product categories like signage, logo apparel, promotional products, packaging, labels and multipage small format products like books, catalogs, magazines and booklets. With these products, we are earning customer trust for a much larger portion of their needs, which means they become higher lifetime value customers, the customers with higher lifetime value. And we're achieving this both with businesses who were already Cimpress customers as well as with newly acquired customers.

In the first quarter, Vistaprint grew revenues from promotional products, apparel and gifts, as well as packaging and labels at double-digit rates year-over-year. In our September Investor Day, I gave an example of custom paper cups and the impact that those products had to take one customer's lifetime value and multiply it fivefold in terms of gross profits. In the first quarter, Vistaprint started to optimize that new product offering, and that optimization drove an increase of more than 50% to the average item quantity.

Another example is that, we are capitalizing and executing on our past and ongoing investments in our mass customization platform and our growing scale in the elevated product categories in order to reduce our cost of goods sold and to increase the velocity of new product introductions. Doing so expands upon our already significant scale-based competitive advantages, which we have in manufacturing, and it explains why we're investing significant CapEx in our production operations this year. At the same time, we are consolidating volumes of similar products from multiple Cimpress businesses into focused production hubs, which further reduces costs and increases the returns on our capital expenditures.

A key enabler of this is MCP-enabled cross-Cimpress fulfillment. XCF connects the fulfillment operations of each of our businesses to the customer-facing operations of each of our other businesses. And it drove an incremental $15 million of gross profit in our last fiscal year, and we remain in the early stages of a multiyear layering of cross-Cimpress fulfillment-driven gross profits on top of last year's results.

So here are a few examples from this last quarter, Q1 FY '26 of how manufacturing excellence is driving both cost reductions and benefits to our customers. First, all segments grew their cross-Cimpress fulfillment revenue by double-digit or triple-digit growth rates this quarter. And that's now a material part of the volume growth for Upload & Print, National Pen and BuildASign segments, and it shows up in their revenues. And XCF is also very importantly, a material driver of how Vistaprint is rapidly expanding into elevated products, which, as I just mentioned, help us expand our wallet share of the Vistaprint customer base.

In terms of improved value for our customers, MCP's newest fulfillment software has enabled Vistaprint to launch next-day delivery of business cards in the U.S. in the last quarter. And National Pen migrated to the MCP shipping and logistics platform for National Pen's largest production facility, which immediately improved its ability to predict delivery dates and improve the accuracy of all the related customer communication around delivery. It also supports network-wide optimization and smarter decision-making across Cimpress since National Pen is a very important fulfiller to other Cimpress businesses.

Third, shared technology, organizational delayering and artificial intelligence are helping us constrain operating expenses while improving customer value. For example, in Q1, Exaprint migrated its Spanish site to MCP e-commerce infrastructure, and that is paving the way to migrate all of Exaprint's geographies in the coming year, which will lower technology costs and improve the Exaprint site functionality.

In another Q1 example, Vistaprint rolled out generative AI chatbot, agent assist and customer self-service features that have collectively improved customer care efficiency by 6% year-over-year.

And fourth, we have a strong financial future with a path to FY '28 EBITDA of at least $600 million, coupled with very significant delevering on our balance sheet. The cost reductions, which we took in the second half of fiscal '25 are already supporting operating expense leverage in both Vistaprint and National Pen. We see many more opportunities, big and small that will allow us to deliver on the $70 million to $80 million of annualized adjusted EBITDA improvements that we expect to have exiting fiscal '27 as part of our bridge to FY '28 targets. A portion of these savings will come from improvements in our cost of goods as we continue to progress in manufacturing and supply chain excellence via our CapEx investments across Cimpress fulfillment and focused production hubs. Another portion will come from opportunities to further reduce operating expense via organizational simplification and generative AI.

Next, our tech modernization and the operating model, which it enables has continued to mature, and this has made the capabilities and the strengths of each of Cimpress' businesses more and more extensible to other Cimpress businesses, thanks to more standardized and shared software services. Cross-Cimpress fulfillment has been an early example of shared product catalogs -- cross-Cimpress fulfillment with its examples of shared product catalogs and supply chain has been the first instance of this. But over time, this approach will also allow us to consider new approaches to how we allocate our resources in areas like advertising and operating expense in support of both revenue growth and efficiency.

So we're excited about the opportunities ahead to fulfill our multiyear financial objectives, and we're actively working to chart an even stronger financial course over this time period.

Now, I'll turn things over to Sean, who can discuss the financial results for the quarter as well as our outlook.

Great. Thanks a lot, Robert, and thank you to everyone for joining us today on the call. As we noted in last night's release, our first quarter marked a strong start to the fiscal year. Our revenue growth rate improved sequentially, exceeding our annual guidance range. And when you couple that with strong profitability, this provides a good foundation for achieving or exceeding our fiscal 2026 financial objectives. So let me walk through some of the details.

Our consolidated Q1 revenue grew 7% on a reported basis and 4% on an organic constant currency basis. For those that joined us for our September Investor Day, there I had said our organic constant currency growth at that time was tracking to about 5% that was in September. We ended at 4.4% with backlog a little higher than we had planned. So we maintained that pace. The main sources of growth in the quarter were from Vista and our PrintBrothers segment. In Vista, we drove continued strength in elevated products and specifically within promotional products, apparel and gifts and packaging and labels, which each grew significantly year-over-year. These product categories contribute to our ability to attract and retain high-value customers.

Turning to our legacy products, there in the business cards and stationery category, we declined 1% this quarter in constant currency versus a 4% decline in Q1 of last year. So that was an improvement as well. And there, we're benefiting from the work that we've done over the last year to improve the offering, but also to optimize after the organic search algorithm changes that we experienced last year, as well as the passing of the anniversary of the reallocation of some of our advertising spend away from that category based on incrementality testing that we had done.

Turning to our other segments. Upload & Print delivered solid growth through customer growth and also order volume growth. Reported growth there was 15% and constant currency growth was 8% combined. And in National Pen and BuildASign there, the revenue growth was driven through their growing role as a key fulfillment partner for Vista.

Turning to profitability. Our adjusted EBITDA increased $10.9 million year-over-year. That was our highest ever EBITDA for Q1 period. It was an 11% improvement over our previous high, which was in Q1 of fiscal '24, and it was a 12% increase over last year. So strong profitability result for the quarter. In Q1, gross profit dollars grew 5% on a consolidated basis from the continued success that we've seen in elevated products, as I mentioned previously, and gross margins at the same time contracted 80 basis points, partially due to the ongoing product mix shift that we've been talking about for some time now.

In Vista, as we continue to move Vistaprint to be the preferred print provider for a broad set of customer needs, especially with high-value small business customers. It's important that we're able to acquire and grow the wallet share of these customers. Robert referred to this a bit earlier. We added a new metric for Vistaprint in the earnings document, also in our financial and operating metrics spreadsheet that we published on our IR site, which is our variable gross profit per customer as one way for investors to be able to understand our progress over time and also sort of look back at how that's trended over the last years. As noted in our release, that variable gross profit per customer grew 7% year-over-year. And consistent with what we covered at our Investor Day, nearly all of this growth in Q1 is coming from our top 2 customer deciles and in particular, the top decile, which we think is a positive signal relative to the areas of our strategic focus.

The net impact of tariffs on our gross profit was minimal this quarter. I saw a question just come in on that. So we'll cover that in a bit in some more detail. There, we were able to offset almost all impact through pricing adjustments. Our largest tariff exposure remains at our National Pen business, and we continue to focus on mitigation there through pricing and supply chain optimization.

We also continue to execute against our plan to drive advertising efficiency. Advertising spend as a percent of revenue was down 80 basis points.

And then lastly, currency had a $2.9 million benefit to our adjusted EBITDA during the quarter as well, and we do expect to have some further year-over-year currency benefits over the remainder of the year.

Adjusted free cash flow improved year-over-year, too, but was an outflow of $17.8 million, driven by the typical seasonality of our net working capital, but also planned higher capital expenditures and capitalized software expense versus the prior year.

And from a balance sheet perspective, our net leverage at the end of Q1 was 3.1x trailing 12-month EBITDA as calculated under our credit agreement. That's flat from last quarter, and our liquidity position remains strong with cash and cash equivalents just over $200 million at the end of the quarter and our $250 million revolving credit facility remained undrawn at the end of the quarter as well.

Turning to our guidance. We've reiterated our expectations for the fiscal year, which is that we expect revenue growth of 5% to 6% or 2% to 3% organic constant currency revenue growth, net income of at least $72 million and adjusted EBITDA of at least $450 million. We expect operating cash flow of approximately $310 million and adjusted free cash flow of approximately $140 million. And we expect net leverage to decrease slightly by the end of the fiscal year, and we expect to drive more significant decreases in our net leverage in fiscal '27 and fiscal '28 as we execute on our multiyear plans. That all while still being able to allocate capital to the repurchase of shares along the way. So our Q1 results position us well to meet or exceed these FY '26 expectations that we've reiterated.

At our September Investor Day, we also discussed and Robert referred to this earlier, our outlook through fiscal '28. And the reason -- one of the reasons we did that is that's the first full year that we expect to see approximately $70 million to $80 million of benefits from efficiency gains that we described at the start of the year. The successful execution of our plans would result in Cimpress delivering at least $200 million of net income and at least $600 million of adjusted EBITDA in fiscal '28 with approximately 45% conversion of adjusted EBITDA to adjusted free cash flow. As Robert said, we have goals and aspirations to chart an even stronger financial course over this time period. That's something that we're actively working to do.

And with that, why don't we turn it over to questions, Meredith?

[Operator Instructions] So our first question is for Robert. Congratulations on a strong quarter. How was consolidated revenue "only up 4% on an organic constant currency basis if Vista was up 5%, PrintBrothers up 8%, Print Group up 8%, National Pen up 8% and all other businesses up 8%, again, all on an organic constant currency basis?" I'm sure I'm missing something.

Thank you for the question. It's a good question, and it's also important to understand one of the core parts of our strategy. This is due to cross-Cimpress fulfillment where businesses get revenues and profits from fulfilling for each other. But that revenue for a business selling to another Cimpress segment is eliminated in our consolidated results. And you can see that at the table at the top of Page 5 of last night's release. This is the intersegment eliminations line just above the total revenue line. Our segment reporting follows our internal management reporting to incentivize our teams to drive cross-Cimpress fulfillment.

Now let me step back again and just touch on cross-Cimpress fulfillment and say why we're so excited about this because it is very beneficial to Cimpress as a whole. And this change in how we do the internal accounting and financial incentives has been one of the pillars of driving this growth because it incentivizes the teams to look beyond their own business. And we're channeling very strong manufacturing and supply chain capabilities that come from a given part of Cimpress towards other parts of Cimpress who have customers and customer bases who want those products. And this is happening in many different directions, including Vistaprint supporting other parts of Cimpress. But it's happening most significantly where National Pen, BuildASign and Upload & Print are fulfilling for Vistaprint and driving or helping Vistaprint drive into elevated products and the service of high-value customers. So we do expect this to continue to increase, and it's a great example where we are leveraging synergies across all of Cimpress.

Thank you, Robert. Next question is for Sean. Sean, what is the current status of your dealings with Spruce House, who filed as an activist over the summer? Have you talked to them?

Sure. We have that with Spruce House, and we appreciate their feedback. We appreciate the feedback of all of our shareholders and debt holders, many of which we've also spoken to in the normal course over the last quarter.

I think as we wrote in our annual letter in July, we believe that the recent share price doesn't reflect our intrinsic value. And so, that's where all of our focus is. And we believe that as we execute against the plans that we outlined both in September at our Investor Day, but also we've reiterated last night and today, we think that, that's what can change that paradigm. And so, that's where all of our focus is and -- but we certainly appreciate their feedback and the feedback of any of our investors in terms of how we can best do that. And yes, that's where all of our focus is.

Great. Thank you. Sean, I'm going to stick with you. So a question, on the fiscal 1Q guide, which you reiterated, I think that's for the fiscal year that we reiterated. Can you unpack a bit more how the first quarter of '26 results position you for the remainder of the year and how you're thinking about the shape of the year?

Yes. I mean, we didn't give quarter-by-quarter guidance, but I think clear -- obviously, our revenue growth rate was ahead of the annual growth range that we provided. So we're off to a good start there. I think you all have less visibility to the pacing of -- from an EBITDA perspective in terms of what's required to hit that at least $450 million. And I think it's fair to say that our Q1 results were kind of ahead of the pace needed in our plans to do that. And that's why you see language like Q1 being a strong foundation for us to be able to achieve or exceed our plans for the full year.

So I think the main takeaway should be off to a good start. We feel confident -- very confident about our plans to meet or exceed this guidance. And listen, like we put that guidance in place with a clear understanding that we have a very strong commitment and a need to meet or exceed that. And so, off to a good start. Q2 is obviously a very important quarter for us. And so, we need to make sure that we continue that execution through Q2, and of course, the remainder of the year as well. But let's get through a strong Q2. And we'll update everyone again in a few months on that, and we'll go from there. But I think the takeaway should be off to a good start and the pacing is ahead of the pacing needed to meet the guidance that we provided for the full year.

Thank you, Sean. All right. Next question, I'll stick with you, Sean. Can you speak to the impact of tariffs during the quarter? Was it something that had an initial shock and then normalized throughout the quarter? Or was the overall impact relatively muted?

Yes, sure. A lot happening and continues to happen on this front. I think the headline here is that, as I mentioned briefly in my remarks earlier, the impact of tariffs was pretty minimal, less than $1 million on a net basis for the quarter. And there was no -- in terms of like was there an initial shock and then normalization, I would say no. It was -- there was not any sort of strangeness in the profile of how that happened in the quarter. There's -- one of the things that changed during the quarter was the removal of the minimis exemption, and we really didn't see anything of any material nature there as a result of that change, which is good to see. And we continue to be very focused on our risk mitigation efforts there.

Taking a step back, we -- the overall picture really hasn't changed from what we outlined even back in the April time frame, and we've updated since then, which is that, there are a large part of our revenue base in terms of things that are fulfilled outside of the United States for United States customers that are excluded or exempted under IEEPA, but also USMCA. And so, that broad coverage still exists. And so, we feel quite good about where we're positioned right now. That doesn't change the fact that we'll continue to make sure that from a supply chain perspective that we're doing everything we can in terms of risk mitigation. But really no overall change to our position from what we would have updated 3 months ago. We feel good about our position and yes, very minimal impact in the quarter.

Thanks, Sean. All right. So, Sean, we've had a couple of questions about the holiday quarter as well. So is there a framework that you can provide for how to think about the upcoming holiday season? Past experience has shown that competition for holiday-related consumer products has put pressure on your revenue growth as others try to compete more forcefully on price? And how are you thinking about the business' position heading into the holiday season, especially the consumers?

Sure. Yes, there's a lot here. It's obviously a very important time of the year for us, and there's a lot of planning that goes into it. I think last year, we had a number of headwinds that were from a macro perspective or kind of outside of our control. We also had just structurally in terms of how the calendar was set up, the most unfavorable setup, also a presidential election, which tends to be unfavorable because it kind of distracts from some of the buying season, especially the early part of the buying season. And then we had the organic search changes, which were a real headwind last year as well.

So if you sort of fast forward to this year and how those things change, I think, of course, there continues to be some volatility from a macro perspective, and it's impossible to know exactly what impact, if any, that can have on consumer behavior, but also things like the postal system in Canada, for example. But I think structurally, it's better than last year. We have 1 extra buying day. The headwinds that we faced in organic search, we feel very good about the progress that we've made there. The growth in the organic search channel for a number of reasons, but we put a lot of emphasis there has been showing very nice results even heading into the holiday season. So we feel good about having addressed that material headwind last year.

So we're confident in the plans as we head in. I think it's one of the things that we've really -- the question refers to just some of the competition that really spikes in those peak weeks. What we've really tried to do is take a step back this year and think about how do we really lean into our strengths, our areas of strategic focus that have been driving success outside of the holiday season as well and where is their relevance in the holiday season to really lean in further to those areas. So we feel really confident about the plans. The team is ready to execute. And like I said, I think we're lapping what were some structural headwinds last year or some other headwinds that we feel like we've addressed. And so, we feel good heading into the holiday season.

Excellent. Thank you, Sean. I'm going to stick with you again, and this is a question that I don't think you've seen yet. So why was tax expense so high at $17.8 million, eating up most of the $24.4 million income before tax? Can we expect high tax rates in the future?

Yes. Listen, I think our GAAP tax expense and our GAAP tax rate, to be honest, are, I think, are difficult to understand quarter-by-quarter because of a number of things, both in our structure, but also the ways that the accounting rules require us to handle certain things quarter-by-quarter, especially with the seasonality of our profitability as well.

And so, I would -- so the headline to your question is tax expense increased because our year-over-year increase in profitability. I would encourage you to focus more on cash taxes because I think that's both a more straightforward story, but also one that, as you think about how you model it, I think, is one that you can more consistently model those economic drivers in relation to our profitability. And there, cash taxes were lower than the P&L expense, but they're higher year-over-year, and we talked about this in some of our remarks at the end of July that we expected cash taxes to be higher this year, and that was one of the principal drivers of that is that, we received some refunds last year that won't repeat. And so, that was one of the drivers for Q1. But we do expect that for the full year, our cash taxes will increase, also driven by profitability increases that we expect this year as well.

Great. Thank you. That is all of the pre-submitted and live questions that we have received. So I'm going to turn things back to Robert to wrap the call up.

Right. Thank you, Meredith. As I hope you've heard, Cimpress is off to a great start for fiscal '26, and we are progressing in the 3 key areas that I discussed briefly today, and we covered in much more detail both in our Investor Day and in the July letter.

So first, elevated products are driving a step function improvement to Cimpress' per lifetime customer value, and that's especially true in Vistaprint.

Second, we are capitalizing on our past and ongoing investments in our mass customization platform and our growing scale in elevated product categories to reduce our cost of goods sold and to increase the velocity of new product introductions.

Third, shared technology, organizational delayering, simplification and artificial intelligence are helping us to constrain operating expenses while improving our value that we deliver to our customers.

And finally, we have a strong financial future with a clear path to fiscal '28 EBITDA of at least $600 million, accompanied by very significant debt deleveraging.

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

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

Hello, and welcome to Cimpress' 2025 Investor Day. My name is Meredith Burns, Vice President of Investor Relations and Sustainability. I'm so happy that you're here with us to learn about the progress we're making cross-Cimpress.

Today, we will hear from executives representing Cimpress, Vista, Upload & Print and BuildASign. It's a great lineup. There are management bios available in the speaker bio tab of the webcast viewer.

All right. So let's talk about how we will spend the next roughly 3 hours together. Robert will start with some perspective on our advantages and how the businesses cross-Cimpress are leveraging each other's strength. Next, Florian will demonstrate the progress we're making in Vista. Then Paolo will discuss how we are bringing our Upload & Print model to North America. Then Sean will review our financials, capital allocation and outlook.

At that point, we'll all take a short break and then come back for three panel discussions on elevated products and manufacturing and supply chain excellence, design enablement and technology and AI.

Finally, we'll finish with a Q&A session to cover any other questions beyond our panel discussion topics. In terms of what to expect today, we will cover both pre-submitted and live questions in the event. You can submit questions any time using the Q&A chat button, and we will take as many as we can in the Q&A session at the end of the event. A replay and supporting content will be available on our website after the event.

Some of the numbers that we will show or discuss today are non-GAAP, and you can find reconciliations to GAAP measures posted on ir.cimpress.com or in the download section of the live webcast viewer.

And finally, you can expect that we will be sharing our thoughts on the future. So this is a great time to note that our actual results may differ materially from these statements about the future, due to risk factors that are outlined in detail in our SEC filings and also here on this slide. We invite you to read them.

Now with that, I'd like to turn the presentation over to Robert Keane. Robert?

Thank you, Meredith, and good morning, everyone. Welcome. Today's Investor Day complements the annual letter that we published on July 29. So today, we're going to illustrate how we're serving customers and driving per share value by showing you additional data and examples beyond what we shared in that letter.

Today, we're going to show you three important aspects of Cimpress. First, elevated products are driving a step function improvement of our per customer lifetime value. Second, our past and ongoing investments in MCP and manufacturing capabilities are reducing both our cost of goods and our OpEx, while they are also increasing the velocity for new product introductions and user experience improvements.

Artificial intelligence is actually super-charging these impacts. And you will hear, especially in the roundtable, how we are already successfully implementing AI applications in many different parts of Cimpress.

Third, as Sean is going to walk you through, we have a strong financial future ahead of us with a clear path to fiscal 2028 EBITDA of at least $600 million with significant deleveraging along the way. For those reasons, and as I stated in the very first paragraph of my annual letter, we believe that our shares are fundamentally undervalued at this time and we really trust that today's event is going to help convince investors of why that is the case.

So let's jump straight into today's presentation starting with what Cimpress does for our customers. We help millions of businesses build their brands, stand out and grow via custom, print and promotional products. We are already best-in-class at this mission, and we are proving every quarter that we have great growth opportunities by expanding our product range to serve customers with everything they need.

Customers love what Cimpress does because we help them build their brand, we get them their products fast, we offer a very broad selection, we have highly competitive prices, we have great quality, we combine all that with the convenience of e-commerce. And we let our customers order in the quantity, which is right for their business, even low quantities. We delivered that very strong customer value, thanks to our mastery of web-to-print mass customization.

That means producing custom products with the reliability, quality and the affordability of mass production. We invented this business model and we excel at it. Web-to-print customization is not easy to do. Cimpress is able to be the best in the world at this discipline because of our high-quality talent, our focus and because we have advantages of scale across our value chain. That makes the Cimpress system very hard to build and very hard to replicate.

We have a focused deep, experienced and talented team cross-Cimpress, who every day serve our customers and our shareholders. That talent pool is simply unmatched by anyone else in the web-to-print industry and our leaders are unified in our commitment to attract and to retain excellent first-rate team members across the Board. We value entrepreneurial thinking, continuous improvement and, most importantly, customer focus.

Our learning and our development programs reinforce these cultural traits. Some of our best leaders joined when they're young and they've grown up on the front lines of Cimpress over the past 2 or more decades. We complement that internally developed talent with great additional talent that we regularly recruit from the outside.

For example, in the past a few years, we've recently attracted top talent from the leading companies whose logos you can see at the bottom of this slide. This combination of homegrown and recruited talent strengthens our culture and our capabilities across all aspects of our business. Our customer value, our business model and our team member talent have worked together to build a long history of growth and profitability.

These two sharp charts show revenue and EBITDA for the 20 years since our IPO. We have consistently taken market share in our large addressable market and Cimpress has remained both EBITDA profitable and cash flow positive even under pressures like the major pandemic-driven revenue declines we faced, the post-pandemic supply chain inflation and supply chain disruption, and the recent U.S. tariffs.

The right-hand chart shows our EBITDA history as well as our FY '26 EBITDA guidance. And the last column to the right shows the minimum EBITDA we believe we'll deliver in fiscal '28 that I just mentioned a few moments ago of at least $600 million.

In today's presentation, including a specific discussion of that financial perspective that Sean is going to walk you through, we believe we will show you why this is a realistic and very achievable minimum objective. The charts on this page illustrate a clear opportunity for us to continue to gain wallet share and market share for years to come.

The left-hand chart is from third-party research and it shows that there is a strong web-to-print penetration in business identification products. That's the largest -- the largest subcategory of that is business cards, which has been Vistaprint's largest and most profitable legacy product. Although it's not shown in this particular study, the same type of deep market penetration of web-to-print is true for most of our other legacy products, for example, quality cards, canvas prints, photo mugs and return address labels.

And furthermore, societal shifts are reducing total market demand. By that, I mean the total of online and offline demand for legacy categories like business cards, holiday cards and return address labels, which just are not used as often as they were in the past.

On the other hand, the left-hand chart also shows that web-to-print penetration for other product categories remains very low. And in many cases, macro demand for these categories continues to grow. If you look to the right-hand side of this slide, that chart shows that Cimpress plays in a $100 billion total addressable market for products like signage, multipage small format, promotional products, apparel, packaging and labels.

We refer to these types of products as being elevated because customers value them more highly than our legacy products in terms of being a core media on which they can convey their brand and other messages. Elevated products greatly expand our addressable market and our wallet share opportunity. Elevated products are a key reason why our upload and print average lifetime gross profit has always been higher than Vistaprint.

And our Upload & Print businesses have shown the rest of Cimpress, the growth opportunity we have in elevated products, especially at Vista. That is also why we've been investing to bring those Upload & Print elevated products and new categories like promotional products and apparel to our business. We are most focused on growing elevated products of Vistaprint because we know that accelerating revenue growth in Vista would be transformative for Cimpress, including enhancing our enterprise value multiple.

This slide shows Cimpress-wide revenue growth by product category. Over the past 5 to 7 years, we have had headwinds from high gross margin legacy products that have been flat or falling in terms of revenues. And that has been offset by tailwinds from high lifetime value elevated products that we've been successfully growing. The headwinds have diluted our near-term growth rates and diluted our gross profit percentage margins. But the tailwinds are starting to overcome the headwinds, which will lead to a future of ongoing growth of per customer lifetime value, gross profit dollars and EBITDA.

We are expanding our manufacturing capabilities to better serve high-value customers through elevated products and faster delivery, again, we want to provide everything our customers need in this area. We've invested in new capabilities for a wide range of paper bags, corrugated boxes, paper cups, flexible packaging, sophisticated signage, roll labels and stickers, as well as multipage small format products like booklets, books, catalogs and magazines.

We're introducing next-day delivery for certain products and we've engineered a massive expansion of apparel products through an inventory light just-in-time management supply chain model. This slide provides a case study based on a real customer of how Cimpress synergies related to elevated products are driving significant wallet share gains in our flagship brand, Vistaprint.

Our Upload & Print teams at PrintBrothers established Cimpress' first capabilities for printed paper cups when WIRmachenDRUCK acquired a small startup in this area 5 years ago. PrintBrothers then subsequently introduced custom printed paper cups to its own customer base. And after that, via cross-Cimpress fulfillment to Vistaprint in Europe.

Last fiscal year, fiscal '25 through a collaboration between PrintBrothers, BuildASign and BoxUp, we established a focused production hub for paper cups in North America. Now this is still a small proof-of-concept U.S. production operation, but it's already very competitive, and we have clear investment plans to drive down costs further and to expand this product range. That Cimpress wide collaboration continued when the Custom Paper Cup team went on to work with Vistaprint to launch that product on the Vistaprint U.S. and Canadian sites.

One of the early customers was a small maple syrup farm who'd been a Vistaprint customer for about 5 years. Their average annual purchases from fiscal year 2020 to 2024 were about $250 each year. And this was for products like labels, business cards and signs. Then in Q4 of fiscal '25, so less than 6 months ago, the customer placed a test order or several test orders for our new paper cups.

This increased their fiscal '25 revenues with Vistaprint to $451, but the real impact came very recently. In this current quarter, Q1 of fiscal '26, this customer placed repeat orders for over $4,000 in paper cups. In doing so, that -- those repeat orders of paper cups multiplied this customer's lifetime variable gross product by more than 5x. In other words, 5x more than the entire gross profit we had generated in the prior 6 years of this particular customer's life. But this is a real-life example, and it clearly demonstrates how expanding our products through elevated products, which we can do both directly within a business and through cross-Cimpress fulfillment as well as our focused production hubs are helping us drive growth at Vista by capturing a much larger share of the customer's wallet for print and promotional products. The same thing can be true -- said to be true across all of our businesses.

Now please note, this is a small family-owned maple serve farm. This is not a big business. And that's important because it illustrates how our wallet share gains in small and medium businesses represent an enormous opportunity for Cimpress. High-value customers who are predominantly high value because of elevated products now drive our growth. And that's a very big change from the traditional Cimpress of 6 to 10 years ago.

That transformation has been most profound at Vista. So I will use the Vista data in this slide to illustrate what we're achieving cross-Cimpress. Florian in the next presentation is going to speak in a lot more detail about the Vista-specific success that we've been achieving.

So the left-hand chart on this slide shows the total variable gross profit or VGP for each of the past 4 fiscal years, and we've grouped them into three subsets of Vista's customers. The cluster of columns at the far left are the top 2 deciles. In other words, the top 20% of customers in terms of their variable gross profit generated for each fiscal year.

Last fiscal year, that top 2 decile group generated about $750 million in VGP and accounted for more than 100% of recent VGP growth. The cluster of columns -- at the right of the left-hand chart represent the top 2 centiles, our top 2% of Vista customers. We generated over $300 million in VGP. The middle cluster of columns, again on the left-hand chart are the 8 bottom deciles. And you can see that the top 2% of customers contribute just about as much total VGP as the bottom 80% combined.

Now the chart on the right is a different perspective on this, and it shows the same customer groups, but with per customer average values. And you can see that the top 2% of customers of VGP per customer of over $1,400. That small family-owned maple serve farm, which I just described, in the last case study is a new member of this group of very high-value customers. This illustrates the fundamental transition of Cimpress' per customer lifetime value.

For the past 6 to 10 years, we've been successfully building on our foundational capabilities that traditionally addressed only a relatively small portion of the print and promotional product market via our legacy products, thanks to our investments, which have introduced many new elevated products and our investments to improve the customer experience, we are earning customer trust for a much larger portion of their wallet, which means they become higher lifetime value customers for Cimpress.

Let's turn to the significant growth investments we've been making to successfully drive these wallet share gains. First, our mass customization platform or MCP, is a technological backbone that enables everything else, including the technology migrations in Cimpress businesses. Next, manufacturing and supply chain excellence ensures that we have the best-in-world production capabilities for web-to-print mass customization. Design enablement is crucial as customers increasingly want to be involved in the design process, but they still really value customer assistance from Cimpress.

And finally, advertising, which positions our brands for our high-value customers and attracts those high-value customers. I'll spend time on each one of these in the coming slides. So let's start with MCP.

Because about half of our revenues come from businesses which we've acquired, we have been operating on different tech stacks cross-Cimpress. And this meant we typically had both decentralized costs and central costs. It also meant that we had varying levels of technology functionality and only limited interoperability of our supply chain activities, which also remained very decentralized. MCP is how we are changing that paradigm. Over the past 6 years, we've migrated Vistaprint, National Pen and several of our Upload & Print businesses to the MCP-based technology staff, and there are more migrations currently underway. And we are upgrading MCP every year.

That investment is now unlocking major opportunities to improve functionality, OpEx and new product introductions and our cost of goods. In terms of improved functionality, MCP leverages Cimpress' scale to amortize an unrivaled suite of web-to-print, mass customization micro services. And those are across the domains you see on the left-hand side of this chart. Because the marginal cost of an additional tenant on the software services is close to zero, all of Cimpress' businesses can then deploy these services to get best-in-class capabilities for a fraction of the cost that we take to develop them independently.

Next, MCP is enabling OpEx efficiency by eliminating duplicative software development. For example, Vistaprint's prior migration to MCP-based software infrastructure led to a material portion of more than $100 million of OpEx reductions we did in the fiscal years '23 and '24, thanks to the elimination of duplicative software development, combined with the improved functionality of the MCP-based Vistaprint technology staff.

An example that we're working on right now is to build shared MCP services in the order management and again, we are going to use that shared service across multiple Cimpress businesses to eliminate duplicative software development while improving functionality.

In terms of accelerated new product introduction lowered cost goods, I'm going to wait until the next several slides where I'll provide some very tangible examples of how MCP-enabled, cross-Cimpress fulfillment or XCF underpins these opportunities. Looking ahead, we are confident that MCP and MCP-based technology migrations in our businesses have unlocked in concert with the investments we've been making in focused production hubs and artificial intelligence applications, great opportunities in terms of both customer value and shareholder value.

These investments are already powering improved customers experienced revenue growth, a very significant savings to our cost of goods and significant operating expense savings. And that's why, as we described in my annual letter at the end of July, we believe the savings alone will provide an annual run rate adjusted EBITDA improvement of $70 million to $80 million by the end of fiscal year 2027.

The second area of growth investment beyond MCP is our long-standing focus on manufacturing excellence. Cimpress is the world's largest web-to-print company with deep expertise in manufacturing innovation, in quality and efficiency. Our manufacturing leaders and team members achieve production efficiencies that have literally rewritten the rules of the printing industry.

We do a lot to achieve that, but one of the ways we do it is we work in unusually close collaboration with our suppliers of capital equipment, our printing press and other CapEx suppliers. So for a moment, I'd like to go to a video and hear from one of those suppliers, HP.

[Presentation]

So as you've just heard, our collaboration with partners like HP is a real testament to Cimpress' industry-leading innovation, scale, efficiency and cost leadership. And we are going to be showing you some other videos from other equipment suppliers, which further underscore this really unique manufacturing leadership that we have and why it's such a major competitive advantage.

Now let's go to Cross-Cimpress Fulfillment or XCF. This is when our businesses procure from each other or fulfill for each other and XCF directly supports our manufacturing and supply chain excellence by accelerating new product introductions and lowering cost of goods sold. This is because we can route the -- to the location within Cimpress that is most competitive for a given customer's order at a given time in any given location.

And that consolidates volume into what we call focused production hubs, where we have equipment and processes, which we tailor to a specific product category.

In fiscal year 2025 alone, XCF drove over $15 million in incremental gross profit from cost of goods savings and much more when factoring in the gross profit from incremental revenue. While XCF currently represents a relatively small portion of our total cost of goods, we expect significant growth in the coming years as we continue to optimize our production network.

This slide here highlights the significant success of the Cross-Cimpress Fulfillment collaboration between National Pen and Vistaprint for promotional products. In fiscal year 2025, this MCP-enabled collaboration led to impressive synergies. We had 25% increase in product stock keeping units, or SKUs that National Pen fulfills for Vista. We drove a 28% increase in Vista revenues for products fulfilled by National Pen and the average variable gross profit or VGP per order at Vista is far above the Vista average.

Because of the cost competitiveness of the National Pen fulfillment, Vista revenue growth from these XCF products is coming with a very significantly reduced cost of goods compared to previous fulfillment sources. And that illustrates why we believe we can, over time, increase gross margins on elevated products just as we did in the past for our legacy products.

Let's look at four examples. For Pens, Vista saw a 35% COGS reduction, a 27% bookings growth in an average variable gross profit order of $141 for the products which they bought through XCF for the first time from National Pen.

For tote bags, Vista realized an 18% cost of goods reduction, a 32% increase in bookings and an average VGP per order of $209. For water bottles, Vista achieved a 23% reduction in COGS, alongside a 30% growth in bookings and an average VGP of $240. Key chains also saw a strong performance with a 34% COGS reduction, 37% bookings growth and average VGP per order of $190.

These figures clearly illustrate how leveraging National Pen's manufacturing capabilities, expand Vista's product range to drive growth while also driving considerable cost savings for these popular promotional products. Later today, we're going to host a panel discussion on elevated products and manufacturing supply chain excellence, where our leaders can describe in more detail additional XCF success. That ranges from roll labels to large format, paper bags, corrugated boxes, and how various Cimpress businesses are leveraging the fulfillment capabilities of other Cimpress businesses across our MCP platform.

Each of these represents a successful collaboration that has driven value for our customers and efficiency and cost savings with our operations. Design is a fundamental element of the products we sell. So the next area we're investing in is what we call design enablement. Customers often have a greater need for help with elevated products, which are more complex to design and used in more brand-critical applications.

Every year, design becomes easier due to this proliferation we all see of great design tools, coupled with a digital-first approach of the younger generation. Artificial intelligence is only accelerating that trend. And Cimpress is uniquely poised to benefit from this. As design becomes further democratized, we believe it's going to drive even higher demand for the physical products we sell.

And meanwhile, we continue to offer comprehensive design support services because many of our customers still find design to be the most challenging part of their order. We're actively integrating AI into our processes to help our designers and our customers be more efficient today, and we anticipate even greater efficiencies in the future.

So it's important to note that while we are sure that AI will and actually is already enhancing our design capabilities, we don't expect it to fully replace Cimpress' or even to replace at all our core customer value proposition in our business model, which again is to help businesses build brands and grow via the broadest selection of physical products at great prices with high quality and fast delivery.

So our strength lies in being the physical back end in this rapidly evolving world of graphic design. Advertising is the fourth area where we've been investing and where we've seen significant evolution and efficiency gains. Over time, advertising as a percentage of Cimpress revenues has decreased from 17% to 13% as a result of a combination of factors, our evolving business mix, our growing emphasis on higher-value products and customers with higher LTV. Technology and data-driven efficiency gains on how we run our campaigns.

Even as we've strategically invested in brand marketing and for Vistaprint to reposition Vista as the leading destination for small business customer print needs, we've achieved greater effectiveness per dollar spend. And looking ahead, even -- we see even more room for economic gains as we continue to cultivate deeper loyalty from our higher-value customers, their lifetime value increases should make our advertising investments even more impactful.

And as we drive more unit cost improvements through focused production hubs and XCF, this will give us more choices about how to best advertise our advertising spend in service of the highest LTV to cost of customer acquisition opportunities. The four investment categories I've just reviewed, MCP, manufacturing excellence, design enablement and advertising form the foundation of Cimpress' ability to rapidly expand our portfolio into elevated products and in turn, create high-value customers by increasing our wallet share.

That in turn, drives Cimpress towards our mission to help millions of businesses, build brands, stand out and grow with print and promotional products. And when we fulfill that mission, we drive growth and financial success.

So I will close my portion of today's presentations by showing the same slide I started with to summarize what we will be showing you today. First, elevated products are driving a step function improvement in our per customer lifetime value.

Second, our past and ongoing investments in MCP and manufacturing are reducing both our cost of goods and our OpEx while also increasing the velocity of new product introductions and user experiences. And the artificial intelligence wave is supercharging these impacts. We already have successfully implemented AI applications in many different parts of Cimpress.

Third, as Sean is going to walk you through, we have a strong financial future with a clear path to fiscal 2028 EBITDA of at least $600 million and significant deleveraging.

So before I turn it over to Florian, the CEO of Vista, let's hear from another one of our print equipment suppliers, Heidelberg.

[Presentation]

Awesome. Good morning, everyone. I'm Florian, the CEO of Vista. We've made significant progress over the last years, and we're seeing the results of that work shine through in how we serve our customers and also in key performance metrics. So I'm excited to share the progress with you today on behalf of the entire Vista team.

I'll start the presentation today by taking a step back to remind you all of our strategy and provide some context on the evolution of our performance over time. Before focusing on the specific levers that will continue to deliver meaningful value to our customers and to our investors. But first, at Vista, we really, really like to put our customers first. They are at the heart of everything we do, and I would, therefore, like to kick off our presentation today by highlighting the incredible small business owners that we have the privilege of serving every day. Let's play the video role, please.

[Presentation]

Yes. As you can see, customers inspire our amazing, hard-working team every day, and they're truly at the heart of everything we do here at Vista. Now, luckily, that feeling seems to be neutral. You can see here from our global trust pilot scores as well as our Net Promoter Score, which is at around 60, that time and again, customers feel that they can rely on us. They love our product quality. They love our customer service, the delivery experience, the breadth of assortment, the design support. And we see that come through in both their reviews and also in how they are starting to grow their wallet share with us, which I'll discuss in detail shortly.

Let's first jump in by taking a look at our strategy and how our performance has evolved at a high level over the last several years. Our strategic ambition is actually very simple. We want to be the leading destination for small business custom print needs. In many markets, we are already the leading destination as measured by our size and scale and brand recognition. But this ambition refers to the idea that we want to be our customers' sole print provider where they spend their entire custom print budget across all categories and never leave.

The second statement on this chart describes our purpose, why we exist as a company. We bring their ideas to life, win their hearts, earn their trust and make them fans for life. And I think we all just saw some evidence of that in the video that we play. What sets us apart is the combination of the four differentiators that you see before you on this chart.

So number one, we are truly a one-stop shop. Our growing breadth of assortment allows us to serve the diverse needs of all types of small business customers with different promotional and marketing goals. And we make it really easy for customers to find exactly what they're looking for all in one place.

The second key differentiator here is on the chart that you can see is, we empower our customers to design any way that works best for them. Whether they prefer to design themselves, using a powerful suite of design tools, find a human designer to work with or simply upload a print-ready file, they can do it all with these on Vistaprint.

We also offer assurance and advice, no matter where our customers are in their journey and whether that's through our world-class customer service or the numerous self-help tools and resources that we make available to them.

And finally, we invest in and harness the power of the Cimpress manufacturing and supply chain network that Robert described earlier already to ensure we're unmatched in assortment, quality, speed and cost.

Let's take a look at our evolution over the past decade. We've built a great foundation. And so before diving into our recent results, I would love to anchor ourselves just in how the situation today is different from what it was 10 years ago across a number of important dimensions. I know there's a lot of data on this chart, so let me just highlight three key takeaways here.

The first takeaway is that revenue and VGP, variable gross profit were at 64% or 57% higher, respectively in FY '25 than they were in 2015, but importantly, that growth hasn't been coming from business cards and other products that were the source of our success in the decade before.

Secondly, the foundations of how we operate the business today and what we are known for have fundamentally changed. We now have a modern tech stack and moved away from being known from discounter business cards. And that's enabled a dramatic shift in our execution focus on the differentiators that I just mentioned before.

And third, as a part of that shift in focus, we're now serving fewer customers. We intentionally shed unprofitable customers and instead focused on increasing the share of wallet and serving high-value customers. And that's clearly visible in our per customer economics. VGP per Vistaprint customer increased nearly 2x. The number of Vistaprint customers with more than USD 100 in variable gross profit per year is now 50% higher, and the number of customers with over USD 1,000 in available gross profit per year is actually now more than 4x higher than what it was in 2015.

Let's delve into these very high-value customers a little more, because I think they're very important to understand our value creation potential and our direction of travel. So let me first orient everyone on this chart. What we're looking at here is our top 2 customer centiles by VGP. And as Robert noted earlier, these top 2% of customers at the top of Vista's value pyramid in FY '25 contributed about the same amount of variable gross profit as the bottom 80% of our customers. So that's roughly 215,000 customers with an average of USD 1,400 in gross profit.

Now as you can see, both the absolute dollar variable gross profit left-hand side. And the VGP per customer chart in the middle have been growing by almost 10% annually in the last 3 years. And what's really interesting and important to note. These customers shop across our entire product assortment as the pie chart on the right-hand side of the chart demonstrates.

We think of these customers as representative of our direction of travel and what we can achieve with our value proposition because as we have expanded our range of elevated products, build out our capabilities to serve a broader set of customer needs and taking the friction out of our customer experience, we've demonstrated our ability to grow and attract these more profitable customers.

And again, that's markedly different from a decade ago when Vista was perceived first and foremost, as serving a high volume of very low LTV customers with high churn rates and advertising led growth.

Before we continue, I wanted to acknowledge that we often get the question, "Hey, what metrics are we looking at to evaluate our progress?" And there are four broad set of metrics that we're using to assess the business, and I will touch upon a subset of our KPIs as I walk you through the presentation today. And those four broad sets are, firstly, on the left, per customer economics, and I already just shared some important proof points with you. Then category growth, particularly the growth in categories with a higher concentration of elevated products, metrics reflecting the trust our customers put in us time and again, I've briefly mentioned our Net Promoter Score.

And then, of course, there's a host of cost efficiency metrics, some of which we'll review today as part of this presentation.

Improvements across all of these metrics will drive shareholder value, which brings me to our next section, our key value creation levers. And I'll be covering three drivers in this section. First, how we're growing wallet share and are driving variable gross profit through growth in elevated products. Secondly, how we're growing and retaining high-value customers. And then third, how we're driving cost efficiency across the P&L.

So let's dive in and start with how we're growing the wallet share and variable gross profit of our customers via elevated products. And to kick us off, I first want to make it very clear that it's important for you all to note, it's elevated products that have become the source of our growth, both for bookings shown here, but also for VGP variable gross profit.

We're looking at absolute booking dollar year-over-year changes, by the way, here on this chart. The solid growth of these categories with a higher concentration of elevated products is showing through, particularly in PPAG, signage, packaging and labels and marketing materials, which have a higher concentration of these products, but it's actually true in consumer products as well, although the new products we're launching there are mostly offsetting the decline in holiday currency.

Now, if you could stay on the chart, please for a second. Thank you. The one thing obviously that stands out here is the bar on the very left-hand side, business cards. And so let me just spend a minute here to explain why that is pointing downwards or why that has been pointing downwards in the last year. So business cards remain very important to our business today. And in FY '25, as you can see here, business cards underperformed, declining 6% year-over-year. Now why is that?

First of all, business cards are shrinking as a category, both for Vistaprint and the market overall, but that wasn't the only reason. In addition, we had made intentional changes to our performance marketing spend based on extensive incrementality testing. And we also faced some challenges in organic search in the first half of last fiscal year.

We're protecting our business cards category, of course, and so we've turned around organic search performance. And we've also launched several campaigns among them and try Vistaprint campaign that makes it really easy to try us at everyday fair prices, particularly for business cards, and we're also increasing speed to customer for these products.

Nevertheless, in FY '26, we continue to expect the bookings and variable gross profit impact from business cards to be negative, though less so than in FY '25. And just to give you the most recent numbers there. Quarter-to-date in Q1, business cards are down only 2%, which is in line with our expectations. Our future, however, please make no mistake there, is not to be the #1 destination for business cards. It's to be the #1 destination for all custom print needs that small businesses have.

Let's dive a little bit more into these categories with a high share of elevated products. What you can see here clearly is the categories where we are focused on introducing elevated products show solid year-over-year growth in percentage terms, left-hand side of the chart. And these elevated products really help us grow the wallet share of our existing customers, not just because they serve a broader set of needs, but they also offer higher average order values, which you can see on the right-hand side.

In fact, in categories with a higher concentration of elevated products, we also see higher repeat rates. For instance, in packaging, the repeat rate is about 25% higher than the average repeat rate. And despite our double-digit growth in a number of these categories, we are just getting started.

Our market share in these categories remains low, owing largely to the fragmentation of these market segments and that creates ample room for us to grow. And already, we're seeing promising new customer growth in these categories. For instance, 29% year-over-year growth in new customers for packaging, 7% for signage and 3% for PPAG promotional products on a year-over-year basis.

Let's zoom out now. Let's zoom out and look at our customer base overall. We see that we're capturing more spend and, therefore, more wallet share for both new and repeat customers. Variable gross profit from new customers placing their first order is up 4.6% year-on-year and variable gross profit per repeat customer is up as well by 6% year-over-year.

And as I mentioned earlier, what you see here is our strategy at work. We've deliberately shifted our focus from a high volume of low-value customers to growing the share of wallet of high-value customers. Taking it all together, we had yet another year in which we increased the cumulative per customer value of our cohorts.

And with the introduction of more elevated products, we're seeing this foundational shift in our product mix towards categories with a higher average order value and variable gross profit per customer than business cards, which are declining in our product mix.

With that, let's move on to our second value creation driver, acquiring and growing high-value customers. So again, a few key facts. We have a solid track record of increasing the value of our most valuable customers. As you can see on the chart, since FY '21, the total estimated variable gross profit from top 2 customer deciles by VGP has been growing at a 5.4% CAGR and variable gross profit per customer for our top 2 deciles has been growing at an 8.2% CAGR.

These customers represent 71% of our variable gross profit and 105% of our variable gross profit year-over-year growth. I mentioned earlier that business cards are shrinking as a percent of bookings. And I know that a natural concern may arise from this about Vistaprint's perceived dependence of business cards, including on the importance of business cards for customer acquisition.

And historically, that was true. But societal trends have slowed the use of business cards and holiday cards. And both already have a high penetration of online providers. Therefore, in 2019, we stopped chasing those customers who were often unprofitable, especially after advertising costs.

Instead, we have been and will continue to transform Vistaprint to be the preferred print provider for a broad set of customer needs, especially those of high-value customers. And the data on this chart again shows that our strategy is working. So what are we looking at here?

Here, we are looking at our new customer VGP deciles, even the centiles on the very right-hand side. And we're asking the question on what category was a customer in this decile first acquired? And what you can see is that only a small share of new customer VGP, 23% for our top 2 deciles and 17% for our top 2 centiles comes from business cards as an acquisition category. So these top deciles and centiles are, in fact, acquired on a much broader set of products, including across categories with a higher portion of elevated products.

And for your reference, we've also put at the top of these column charts, the numbers that are already referenced earlier that speak to the incredible profound importance of the top 2 deciles and even the top 2 centiles in terms of our total VGP composition. What I'd like to do in the following now is to go into a few specific examples, just to illustrate the work that's going on to help grow and retain our high-value customers.

And I'm going to start with a topic that probably doesn't come as a surprise and that assortment expansion. We've made significant improvements in our ability to introduce new products at a fast throughput. And that's obviously extremely important because it is those product categories with a high concentration of elevated products that help us serve a broader set of needs and therefore, the capability to quickly launch assortment is extremely important.

We can do this fast and at scale, thanks to our Cimpress-wide fulfillment network that Robert already talked about, our ability to leverage third-party manufacturers seamlessly and our own scaled manufacturing plants. We're also delivering a continued stream of customer experience improvements that make shopping more seamless and straightforward.

One example is personalization and CRM, customer relationship management, and we see significant opportunity here to continue improving the experience going forward. One example from the recent past, we launched a brand shop, which allows our customers to browse our catalog with their brand already applied to thousands of printed products as you can see on the right-hand side of the screen.

And when a customer gives us access to key elements of their brand, we call that a brand kit, we see these customers go on to generate about 3x the variable gross profit of customers who don't. A few minutes ago, we already talked about how the acquisition of high-value customers is already happening.

And of course, none of this will be possible if we didn't do everything every day to win and maintain our customers' trust, because a happy customers, one who comes back time and again. And our customer support plays a key role in that. Our customer support is personal and we made it even more accessible throughout the customer journey.

For high-value customers, specifically, we even started a program, which internally we call the Vista Advisor program. And what we do there is proactive, personalized outreach to high-value customers to check in with them post order, follow-up on abandoned cards and even follow up on significant events the customer was shopping for, such as a trade show.

As Robert already alluded to, the world of design is changing very rapidly. And our response really has always been and will continue to be to offer customers a number of flexible and easy design paths including some AI tooling, partnering with a human designer or doing it yourself on our site. A few specific examples there. We've evolved our packaging design capabilities, in particular. So what it means customers can now create a pattern from a prompt using GenAI.

These patterns are intricate. Customers can choose from over 20 style options such as vintage, geometric or water color. They can also address the scale and position of the pattern once it's generated. They could also simply upload their logo, and we will turn it into a pattern for them printed all over a mailer box and the customer can then make adjustments on their template, all the while seeing a live 3D animation that ensures they will love how it looks.

We also by now have the largest library of patterns and templates for packaging in the industry with over 6,300 unique options. And that's just packaging. There are more examples like this, just mentioning it real quick in PPAG, promotional products. We launched a design assistant where customers can use prompts or a combination of prompts and their own logos to create a complete product design.

Now, let's move on to cost efficiency, where I will be covering four areas: advertising, efficiency cross-Cimpress fulfillment, manufacturing efficiency and AI-enabled simplification and automation. I'm going to kick it off with advertising efficiency, very much in line with what Robert already shared with you in his presentation. At Vista, advertising spend as a percent of revenue is down for the third year in a row.

We're building a much healthier funnel to create demand, attract the right prospects, onboard them effectively and nurture them through ongoing engagement to turn them into fans for life. And our key external marketing media spend investments happen in brand media across different platforms, such as TV, CTV and paid social. And we've also done significant mix optimization as part of which we've shifted our spend toward upper funnel brand spend with an eye toward AI discoverability.

Despite the reduction in our advertising spend as a percent of revenue, our focused investments have allowed us to maintain and more recently even to strengthen our brand awareness for custom print. As you can see here, we're the #1 in print awareness among small businesses in the U.S., France and the U.K. comfortably ahead of the competitive set which includes custom print providers on and offline as well as design platforms.

And speaking of recent progress, we've just started to be known for a much wider product assortment beyond business cards, for example, awareness for promotional products has been growing and is now at 39% for prompt and awareness in the U.S., up from 32% as recently as fiscal Q2.

Cross-Cimpress Fulfillment or XCF, accelerated in FY '25, both with Vista as a fulfiller and as a merchant. And let me use bags as an example to illustrate what we mean by that. So when we say Vista as a fulfiller and you take the example of bags. In Europe, what we've done is we've launched a highly competitive production line for paper bags that are growing very fast in volume. Thanks to volume from both Vistaprint and Cimpress' Upload & Print businesses.

And the fact that we can share this production line drives higher scale-based advantages that we could not achieve alone. The higher utilization means we can financially justify to invest in equipment that drastically lowers the per unit cost of production, which benefits multiple Cimpress businesses and our customers.

For Vista as a merchant, the example that I'm going to use here is National Pen. National Pen has very strong manufacturing and supply chain capabilities for promotional products and we have been rapidly leveraging that capability to support our own PPAG growth. For example, in FY '25, Vistaprint revenue from the cloth bags that you see here on the right-hand side, which we source from National Pen grew 43% year-over-year.

Speaking briefly about manufacturing, cost efficiency projects delivered about USD 12 million in cost savings in FY '25, and they included a very broad set of initiatives from in-sourcing products across multiple categories in both Europe and North America to procurement, cost reductions, productivity projects, software optimizations, for example, in our gaming software and shipping cost reductions.

I want to now briefly talk about AI-enabled simplification and automation. We have rolled out a holistic program four in AI-enabled simplification and automation across the entire organization. And while this is already leading to some cost efficiencies, it's also helping us enhance the customer experience, and it's leading to the upskilling of our workforce as a whole.

For example, we've curated nearly 50 AI courses available company-wide. More and more team members are using Gemini in their daily work, and we have plans to shortly launch further AI-focused upskilling programs, including dedicated time for team members to allow them to deep dive into AI learning. And some examples of recent productivity wins include, again, examples from across the Board. For example, in merchandising, we saw a 39% year-over-year increase in our photo retouching throughput through automation. And again, when you want to launch new assortment really, really quickly, that's, of course, coming in very handy.

In customer care, we saw a 19% reduction in our cost per chat contact through real-time language localization and automated reply recommendations based on GenAI. And in marketing, specifically content creation, we've been able to unlock a 53% reduction in creative cycle time for certain marketing campaign types using AI tools and creative ADAM Libraries. We'll dive deeper into these AI-enabled simplification and automation efforts shortly in our panel discussions.

So let me summarize. We have a robust strategy with a clear set of differentiators that set us apart in the marketplace. As we've demonstrated through the data shared today, we've been making clear progress behind our strategy and in winning with higher-value customers. And that has been an intentional multiyear journey enabled by the investments we have made in our technology modernization, improved customer experience, expanded design offerings and product assortment.

We have deep conviction that there is a significant opportunity ahead as we continue to execute on the strategy and expand our relationship with our customers in FY '26 and beyond. And before I turn things over to Paolo from the Print Group, let's watch a short video from another of our equipment suppliers, Kevin. Thank you all.

[Presentation]

So why Pixartprinting? Pixartprinting brings rich history of innovation and manufacturing excellence. We serve a broad range of businesses and our product expertise is highly complementary to other Cimpress businesses already operating in North America.

It is important to note the books, catalogs and magazines or multipage products are a significant category for Pixartprinting in Europe, representing about 25% of our revenue. They allow our customers to communicate, tell a story, illustrate their products or talk about their identity.

As you saw in the video, there are many options for size, cover type, binding type and embellishments that enable us to serve a wide variety of needs. These products drive higher per customer value in terms of revenue and gross profit and ad spend as a percentage of revenue becomes more efficient as a result.

A typical Pixartprinting customer for multi-page products generates more than 2x the first year bookings and nearly 3x the first year variable gross profit compared to customers for more traditional products. And labels, another product we will manufacture in Warrendale generates more than 50% more first year revenue and nearly twice the first year variable gross profit compared to customers for more traditional products. And advertising is very efficient.

So why now? The adoption of Cimpress' mass customization platform, MCP, has truly unlocked the connection between Cimpress businesses, as well as our ability to launch a new e-commerce site in North America. Cross-Cimpress Fulfillment matters because we can now scale more quickly than we could on our own. And that alone changes the economics of making an investment like this.

Additionally, our e-commerce platform based on MCP micro services is flexible. That has allowed us to more easily launch a website to the North American market that is tailor-made for our approach, which is quite different from the approach we have in our established markets in Europe today. The market opportunity is very large and very real in the North American market.

This market is large and fragmented like the European one, but there are fewer work to print competitors compared to Europe. Critically, Pixartprinting's capabilities and economics in multipage printing labels are truly unmatched in this market. This gives us a significant competitive advantage from the outset.

Now, let's look at how we are scaling operations efficiently. Being part of Cimpress enables us to drive greater value faster than we could on our own. Collaborating with Cimpress teams in procurement, real estate, finance and tax, helped us identify and build out our production facility quickly. We are leveraging complementary Cross-Cimpress Fulfillment between Pixartprinting in North America, Vista, Bill Design and National Pen.

To start, Pixartprinting will be fulfilling multipage booklets with plans to add more products in fiscal year '26. In turn, Vista, Bill Design and National Pen will be fulfilling various marketing materials, signage and promotional products for Pixartprinting in North America. We are also fulfilling for another market participant, which adds to our production volumes. By leveraging established Cimpress wide supplier relationships in North America for shipping and other key inputs, we can achieve greater scale advantages and profitability faster than if we try to do everything on our own. This also drives significant cost savings for Vista.

We've seen initial unit cost savings of more than 10% on average relative to the former third-party fulfillers with concrete plans to increase this with additional equipment in the future.

Launching our brand in the North -- as we launch the Pixartprinting brand into the North American market, the fulfillment volumes from other Cimpress businesses and partners allow us to achieve great unit cost from the very beginning. Meanwhile, we are actively developing our customer value proposition and branding for our direct customers.

While direct customers will be a minority of our orders in the near term, we expect to grow and take share in this large market opportunity over time, complementing the other Cimpress businesses in the North American market. Looking ahead to fiscal year '26, our focus areas include installing new production lines for additional products and higher volume orders, executing our marketing plans and most importantly, driving returns on the fiscal year '25 and fiscal year '26 investment into this launch, which totals $23 million in free cash flow investment.

We expect to have start-up costs through fiscal year '26, though less than in fiscal year '25, as production volumes ramp up with the goal of becoming EBITDA positive in fiscal year '27. This type of investment does have a longer payback period than CapEx or capabilities investments in our scaled businesses in established markets.

But leveraging Pixartprinting's manufacturing capabilities that are the best in the world for products like the wide variety of multipage products and labels and leveraging the strength of the Cimpress network allows us to expand a new opportunity and drive new product introduction for Cimpress' largest brand, Vista, in the largest market with relatively little start-up investment.

Before closing, I'd like to zoom out and remind everyone of the broader Upload & Print segment, of which Pixartprinting is a key part. Upload & Print has been a consistent growth engine for Cimpress in Europe, combining product innovation, Cross-Cimpress fulfillment and strong customer value creation. What we shared today is just one vector of that proof of success now extended into North America.

Thank you. And before I hand it over to our CFO, Sean, let's first hear from one of our key equipment partners, RICOH.

[Presentation]

Good morning, everyone, and I'm excited to be with you all today to cover a few topics in this session. First, we'll take a brief look back at our fiscal '25 financial performance, then we'll cover our capital allocation as we always do. Including this year, I want to go into a bit more detail on our CapEx given the focus there. And then finally, we'll cover our outlook and guidance for fiscal '26, including as part of that, an update on how we're progressing in Q1 and then also discuss, as Robert referred to, our commitments through fiscal '28, which will be new for you all.

As you've heard in the prior sessions, and I think you'll hear more tangible examples of this coming up in our panel discussions, we have a lot to be excited about. This past fiscal year, we described as disappointing from a financial perspective, and it was including some one-off items through the year, especially in Q2.

We have a strong foundation on which we can continue to grow our profitability and cash flow, fueled by our strategic objectives, and our extensive competitive advantages, like those outlined earlier by Robert, Florian and just now by Paolo, and you'll see how that impacts our expectations for the years ahead. So let's get started.

First, I wanted to reiterate our commitment to maximizing free cash flow per share over time, which is what we consistently state as our financial focus. We strongly believe that we can continue our track record of growing multiyear cash flows net of year-to-year volatility and also reducing our share count, which we'll talk more about later.

Turning to this next slide, you'll see here a summary of our P&L results, and I'll add some context, but I'll keep this brief because this is all looking backwards. Revenue grew 3% on an organic and constant currency basis in fiscal '25, that was fueled by growth in all segments of our business, but primarily driven by our elevated product categories and also progress with higher-value customers that you've already heard about in some detail today.

There were some headwinds during the year like the Canadian postal strike, and overall sluggish peak season during the December quarter and also challenges in the organic search channel following changes to the Google algorithm in Q2. We've made good progress to address that specific topic, and I'm actually happy to report that organic traffic so far this quarter has been very strong year-over-year.

Adjusted EBITDA decreased $35.5 million in fiscal '25 that was driven by our performance in the first half of the year. And there were quite a few material one-off expenses or the nonrecurrence of prior year benefits, that totaled about $17 million of that total decrease.

Turning to our cash flow here on this slide. You can see our cash flow from operations, adjusted free cash flow and cash interest expense in the middle there, so that you can get back to our lever free cash flow. And then on the right, our CapEx and capitalized software over the past 5 years. Our annual adjusted free cash flow decreased year-over-year, and that was coming off of a quite strong cash generative FY '24, including the sale of a building, and also significant inflows from working capital.

Free cash flow during fiscal '25 was impacted by lower cash from operations, including working capital outflow, but also significantly higher CapEx and capitalized software, as you can see on the right, and we view that FY '25 level of CapEx and cap software to be higher than normal as we continue to invest in capabilities and efficiency driving enhancements, particularly in manufacturing.

Again, I'll cover CapEx in more detail later. On the next slide is a 5-year look at the components of our net debt and our net leverage ratio. Just looking there at the left, you'll note that net debt has moved down over the last 2 years due to free cash flow generation, less the capital that we've allocated to share repurchases.

And that, combined with significant EBITDA expansion from fiscal '23 to fiscal '24 has brought our net leverage down as well and we have plans for further significant delevering that I'll cover at the end of the presentation. I should mention quickly here that our Term Loan B has a 2028 maturity and our bonds have a 2032 maturity. And so we have no near-term maturities that we need to deal with.

Turning to the next slide. Here, you can see our financial results by segment for the past 5 years. I think this is just a helpful reference even just visually. We go into further detail on our earnings documents on all this stuff, so I won't go into it in detail here. But again, I think just visually you can get a quick picture of the trajectory of each of our segments, but also the relative contribution of each.

The next slide here, and this is new information, shows a breakdown of our segment P&Ls as a percentage of revenue. We, for the first time in our 10-K in August, we provided a 3-year breakdown of this with dollar amounts. And that's something that we'll provide going forward as well. It's a new required disclosure actually.

And given it's new, I thought it just included here because we also get questions about the P&L structure of each of our various businesses. And I think this helps with that. I think the other thing here is you can see some of the structural differences between our cost of goods sold and advertising as a percentage of revenue, in particular, for each of our segments.

And that results from differences in business models. But as we've modernized our technology and also as our operating model has matured, I think this slide also gives a sense for where some of the opportunities are to drive cost efficiencies as we better leverage our capabilities across the group.

Turning to capital allocation. I'm just going to give an overview of our recent capital allocation and Robert touched on this in his annual letter to investors. The midpoint estimate of our organic growth investments has fluctuated over time. But in the past year, you can see that it has decreased on a cash flow basis, including our capitalized software and CapEx. And it's decreased actually even more so on an EBITDA basis, which you don't see on this slide.

High probability, high-return organic investment is our priority for our capital allocation. But the hurdle rates there do change based on other opportunities, most notably where we're at in terms of share repurchase opportunities relative to the share price. But organic investment will continue to be our priority, first and foremost, where there are high return, high probability investments we can make.

Share repurchases have and will continue to feature in our capital allocation, especially when we believe our shares are undervalued. And while M&A and equity investments has been a significant use of capital over the last roughly decade, in the last couple of years, we've only pursued tuck-in M&A, in line with the guidance that we provided over the last few years. And we believe that there are a number of attractive opportunities to continue with a small number of tuck-ins each year at pro forma multiples of profitability and cash flow that are highly attractive and also directly support our strategic initiatives.

I would expect that to be the case in fiscal '26 as well. The return and payback profiles for those types of smaller tuck-in M&A are oftentimes more like CapEx investments. And finally, debt repurchases is also featured at times during the past 5 years. I don't see this as a priority when we're thinking about near-term capital allocation, also informed by where our debt is currently trading.

So to double-click on the organic investments we're making that in our judgment, aren't necessary to maintain a steady state. This is something we publish each year, in Robert's annual letter. And so this information has already been disclosed at the end of July. But here, you can see the impact on the left of our growth investments on our EBITDA and on the right, the impact of our growth investments on our unlevered free cash flow.

If you just pan back a little bit to try and see what's happening here, I think there's two things that really stand out, which have been true for the last few years. One is that outside of Vista and MCP, our growth investments are not that significant, especially on an EBITDA basis. The second one, is that you'll note that our organic growth investments have continued to come down meaningfully since fiscal '22, and that's mostly as a result of the refocusing connected to the cost reduction exercise that we undertook back in March of 2023.

But our organic investments, of course, do remain significant. We expect that the impact of organic investments on our unlevered free cash flow will increase during fiscal '26 because we have high-probability, high-return CapEx investments that directly support our strategy and our financial objectives.

And given the significance of capital expenditures, both in fiscal '25, but also as part of our fiscal '26 guidance, I wanted to put that into context, and this slide shows our capital expenditures and new finance leases, which we need to take account of here as well, as a percentage of revenue. What you can see here is that CapEx has fluctuated over time, although it's been in this range of 2% to 3% of revenue for the last 8 years, it was higher than that previously.

And if you go back even more so, is even higher at times, FY '26 will be a more intensive year at approximately $100 million, and that's about 3% of revenue. I would characterize fiscal '25 and fiscal '26 as high years of CapEx, and that doesn't need to be a constant every year going forward. We've actually held the bar, I think, quite high for what we were going to approve for CapEx in fiscal '26, same in fiscal '25.

And even despite that, these higher levels to us makes sense because we're confident in the returns that this CapEx will produce. The other factor here is that a significant portion of our fiscal '26 CapEx is what we would consider to be replacement CapEx. Actually, more than half of that $100 million is replacement CapEx or maintenance CapEx. That true goes in waves.

In fiscal '25 and as I said, in fiscal '26, those happen to be years of higher intensity of maintenance or replacement CapEx. And just to make that tangible as there's a few examples, we're replacing one of our original offset presses in Windsor in fiscal '26. We're replacing a significant part of our directed garment fleet in North America, that's end of life. Those things don't happen each year. So there will be some waves to this. And fiscal '26 is on the higher end of that and actually probably above the range that I would expect going forward.

As we do that, though, we're not replacing like-for-like because we're adopting new machinery that improves our capacity, it improves our unit cost, it improves quality and other attributes as well. And so there are a lot of benefits to this, even though it is a significant amount of maintenance CapEx.

I do expect, going forward, so beyond FY '26 that you should be able to think about maintenance CapEx typically to be 1% to 1.5% of revenue. So fiscal '26 is above that range. I think a fair question that one might ask is, why are you spending $100 million on CapEx when your constant currency revenue growth outlook is for 2% to 3% growth in fiscal '26? I think it's a fair question.

That answers twofold. The first one, we have significant replacement CapEx in fiscal '26. I just talked about that. The second one is that our growth CapEx is delivering efficiency and unlocking opportunities for elevated product growth, mostly after FY '26, but including FY '26 by making the investments to be able to really break -- fundamentally break the cost curves and drastically decrease the marginal unit cost of production.

You heard about some of the examples of that from Robert, from Florian, from Paolo, and I think even if you look back to one of the charts that Florian showed of the evolution of Vistaprint from 2015 to 2025, you'll see that there's significant growth in the nonbusiness card and non-holiday piece and of course, that is driven by some portion of the CapEx investment that we've been making here.

Each year, we'll consider how much growth investment we want to pursue. And each year, that's a choice. As I said, the feedback loops, importantly for CapEx are very tight. So our future plans can be informed by the results that we're seeing over the next year from these fiscal '25 and fiscal '26 CapEx investments.

But I just want to make sure it's clear that this is not -- doesn't need to be a new level of required intensity. These are choices we'll make every year, and those feedback loops are very tight, not only for us, but frankly, for all of you as well.

On the next slide, I thought it might be helpful just to provide some specific examples of CapEx to make it more tangible because I realize that from an external perspective, it's difficult for all of you to have a view on the returns on the spend and also, frankly, the wisdom of this higher CapEx.

And so I've just picked three examples here. These are not cherry-picked to be the best ones, but I think they're representative of a few different archetypes of this CapEx, just to give you more sort of tangible examples of what that looks like. The first example is replacement CapEx. And this is for equipment that was end of life. It's for a growing category. And that CapEx investment here improves on our old capabilities, increases output efficiency and it also results in COGS savings.

It's maintenance CapEx, but it gives us very clear benefits. The payback period for that set of equipment is 17 months, has a 3-year return of 45%. So it's a very obvious decision and a $1.9 million investment. The second example in the middle there is for a new product line in one of our European facilities. The new product line is going to be leveraged by multiple Cimpress businesses. We'll deliver new revenue and profit streams that are highly aligned to our strategic focus areas with higher value customers, and this will serve as a production hub for our European businesses for that product.

That leads to COGS efficiencies. It also speeds up the time to pay back and attractive returns. That's just over a $2 million investment payback period just over 2 years and that has a 3-year return of 36%. So again, no brainer.

Those two examples are not outliers. Again, I didn't pick the best ones. There are plenty of other examples like that with payback periods and returns that are similar. So let me contrast that with a third example, and that's an approximately $6 million investment in another focused production hub for key elevator product line in Europe that is very innovative but it's a very CapEx-heavy process to achieve breakthrough unit cost of production.

This is something that's been in an R&D phase, I would say, for a little bit of time and is now being executed. The payback and the return profile for that looks different. The payback period is longer. It's about 3 years, maybe just beyond that. And it will take the growth expected beyond 3 years to see the strong returns that we expect for this one, which are over 25%, but it's a longer time to achieve those returns.

This one requires, of course, a belief in delivering the volumes that are required, but we're confident in that. And that confidence has increased because those volumes are coming from many of our European businesses, not just one. If it was just one business that was looking to invest in this CapEx, we most likely would not have been able to justify the case.

Of course, there's also the U.S. plant that Paolo just went through another plant expansion in fiscal '26. And those are also things that have longer time to pay back, sometimes have near-term EBITDA losses, but very strong returns on invested capital as volume ramps. And those are truly foundational capabilities. So anyway, hopefully, that paints is sort of a picture of the range of the type of CapEx here, but also why we feel confident pursuing that.

Turning to the next slide, you'll see our history of M&A returns and about half of Cimpress' fiscal '25 revenue and a substantial portion of our EBITDA was from businesses that we've acquired and that we've subsequently grown. Our Upload & Print businesses, National Pen and Bill Design are the larger businesses there and all three groups have demonstrated their ability to leverage Cimpress' strategic capabilities to help drive improved financial results.

You'll see here the trailing 12-month revenue and EBITDA at the time of acquisition for each of these and then that's compared to the fiscal '25 revenue and EBITDA and also we see here the cumulative free cash flow generated by these businesses or groups since the time of ownership and that number as a percentage of the total consideration paid for each group or business.

Under Cimpress ownership, we've talked about this for the last years, our Upload & Print businesses have generated cumulative cash flows that now exceed the total capital that we've invested, and we believe still have quite strong prospects for future growth. The unlevered free cash flow in fiscal '25 alone represented 16% of the total consideration that was paid for those businesses. And the combined Upload & Print revenue for the first time in fiscal '25 eclipsed $1 billion last fiscal year. So very strong returns for what was collectively our largest investment from an M&A perspective over the last decade.

As for BuildASign and National Pen, the estimated return on capital approximates our cost of capital. So those are not winning investments today. We believe that we can improve those outcomes and are working to do just that over time, especially as a significant focus of each of those businesses is supporting Vista's gross profit growth through fulfillment and a portion of that value is represented in the Vista results, not in their stand-alone results, so keep that in mind.

With the benefit of time, I think the -- and Robert mentioned this in his annual letter, the patterns of successes and failures from an M&A perspective have become much clearer to us and that will inform any future capital allocation to M&A. We continue to evaluate small tuck-in opportunities. I talked about that before. And we don't have plans for individually material near-term M&A, although we do believe that we're the consolidator of choice in a large fragmented market. And so we do believe that remains a viable long-term avenue for capital deployment with high returns if we wanted to pursue that.

Next, share repurchases. It's been a large use of capital for us. Suppressed all-time share repurchases represent $1.7 billion in capital allocation and a reduction of 28 million shares outstanding. That represents an average price per share of $60. We've clearly had learnings over the years, particularly on how to buy and specifically, the need to match the intensity of repurchases to the price-to-value gap as we see it. The period just prior to the start of the pandemic was, of course, build times for repurchases, but the main learning there was on the intensity relative to the value gap.

We take these learnings forward and that will guide both the pace of repurchases that we do, but also the importance of preserving the value of balance sheet flexibility. We expect share repurchases to continue to feature in our capital allocation and given the free cash flow that we generate, we believe we have significant opportunity to continue to reduce our share count while also delevering. And I'm going to go through that momentarily.

Next, I'll leverage. Nothing new on this slide. I just wanted to reiterate our leverage policy. As I mentioned earlier, we remain committed to our leverage target of 2.5x trailing 12 months EBITDA as defined by our credit agreement. From time to time, we may increase our leverage to as high as 3.0x for investments that we see have a good return and a clear path to delever back to 2.5x. And so nothing new there. And of course, we've been operating higher than that stated policy. And so I'll talk in a moment about how we get back down.

Next, I just want to reiterate our fiscal 2016 guidance, and this is all set out in our Q4 earnings document. The first is that reported revenue growth, we expect to be 5% to 6% or 2% to 3% organic constant currency revenue growth. Net income, we expect to be at least $72 million and adjusted EBITDA of at least $450 million. When taking into account the impact of additional start-up losses at Pixartprinting in the U.S. which Paolo talked about and also other manufacturing projects connected with our higher expected capital expenditures in fiscal '26, that we believe will drive material benefit in fiscal '27 and beyond, as I'll talk about in a moment.

We'll also have about $14 million of annualized savings from cost reduction actions that we implemented in the back half of fiscal '25. So that will help to reduce our operating expense growth in fiscal '26. We expect operating cash flow of $310 million, adjusted free cash flow of approximately $140 million. And we expect the year-over-year impact of currency on our EBITDA to be slightly favorable in fiscal '26.

From a CapEx perspective, I mentioned a number of times, we expect that to be approximately $100 million. We expect capitalized software to be approximately $70 million. And we expect cash taxes to increase in fiscal '26 to $55 million to $60 million as we received tax refunds last year that won't repeat. And that's obviously also impacted by the impact of profit growth.

And then in fiscal '26, we expect leverage to slightly decrease where -- from where we ended last year when considering fiscal '26 planned investments and CapEx and so on and also leaving room for share repurchases if our share price continues to remain attractive from that perspective. So that's all a reiteration of what we outlined in our Q4 release.

Let me update you now on sort of how we're progressing against that FY '26 outlook so far in Q1, there's only 2 weeks left in Q1, and so I wanted to share a brief update. Quarter-to-date organic constant currency revenue growth is tracking at about 5%. That's organic constant currency revenue growth, so the reported growth would be higher. So we're tracking about 5%.

That's, of course, ahead of the annual constant currency growth guidance of 2% to 3% that I just outlined. Importantly, and as Florian referenced earlier, business cards in Vista, are down about 2% versus last year. That's an improved trend from the minus 6% in fiscal '25. And that's been driven by the specific improvement initiatives we've had in place. I referenced earlier the progress that we've made from an organic search perspective, and we're seeing good traffic flow and year-over-year growth there in Q1.

So that's important in terms of product mix. Based on the results to date, we remain confident in the delivery of our full year adjusted EBITDA of at least $450 million. We didn't give quarterly adjusted EBITDA guidance, but what I can say is that we're tracking slightly ahead of our internal plan for Q1 and our annual plan is not surprisingly higher than our guidance. So, so far, so good in Q1, and we'll give you an update in -- at the end of October on how the quarter finished.

Okay. So let's get into some wholly new things here. And as we look beyond fiscal '26, we're planning for significant adjusted EBITDA and cash flow expansion and that's supported by our recent organic investments, including the significant CapEx investments that I talked about earlier. I think it's really important for shareholders to understand how this all comes together over the next 3 years.

And so we're providing a framework today for how we will achieve at least $600 million of adjusted EBITDA, $270 million of free cash flow and achieve a significant decrease to our net leverage. So let me walk through this, and then I'm going to go through a more specific bridge of adjusted EBITDA on the next slide.

So in FY '28, we expect constant currency revenue growth to be 4% to 6% as we continue to drive growth in new and elevated products as we capitalize on our investments in the Upload & Print U.S. expansion, and other planned CapEx projects like the ones I mentioned earlier, all of this while assuming continued declines in business cards.

So 4% to 6% constant currency revenue growth. We expect adjusted EBITDA will be at least $600 million as we grow gross profit dollars as we gain advertising leverage as the start-up costs for new plants that are burdening fiscal '26 rolls off. And we see some benefit of tuck-in M&A along with some other drivers, I'll go through in a moment in the bridge.

As we disclosed in Robert's annual letter to investors, and he referred to this earlier, one of the important drivers of this is our expectation of achieving $70 million to $80 million of annual run rate improvement by the end of fiscal 2027 through cost savings.

Now on this range, we believe that we provide a sufficient margin of safety relative to our own plans. And we'll give updates along the way, so you can track our progress, which we expect will start to have a more material impact in fiscal '27 along the way to the full run rate as we exit fiscal '27.

When we've had similar cost improvement plans in the past, I would note that we have delivered on that commitment or more. And so I expect the same here. And again, we'll update along the way as we make that progress.

And finally, we expect adjusted free cash flow conversion will be roughly 45% from adjusted EBITDA expansion, moderated levels of CapEx and cap software and also structural working capital inflows, and that will be partially offset by higher cash taxes. There, of course, can be some variability in cash flow timing, but we think that's a good expectation. So with at least $600 million, that would mean at least approximately $200 million of free cash flow.

So just to recap what's on this slide, that would mean constant currency organic revenue growth improved to 4% to 6%. It would mean consolidated adjusted EBITDA margins go from less than 13% in fiscal '25 to 15% in fiscal '28, and it would mean free cash flow generation of at least $270 million.

So let's now go through a bridge of this framework for the adjusted EBITDA component of this, at least $600 million. And I need to emphasize here that this is a framework for achieving a minimum of $600 million. So I want to demonstrate why we believe that, that's a high probability commitment.

And if we just walk this from the left to the right, if we start with our fiscal '25 reported results and then we start to bridge to the fiscal '26 guidance of at least $450 million, that's all information that's already been provided. So from there, the first bar is the midpoint of the $70 million to $80 million of cost savings that I spoke about on the prior slide, and we'll see the full -- the first full year benefit of that in fiscal '28. So to reiterate, we believe we've include a sufficient margin of safety in that estimate. We'll update you on our progress. That's the midpoint of that range.

Next, we have $15 million of plant start-up costs that are burdening our fiscal '26 outlook. Those will roll off as operations ramp and so that will be a benefit to adjusted EBITDA. We have benefits from tuck-in M&A, and we feel confident there based on the current pipeline, so we wanted to represent that.

And then we expect $10 million of favorable currency impact. We wouldn't normally include this, but we're already partially hedged for our fiscal '28 exposures for the euro and the pound because we -- for those two, we average in over a 2-year period. And so we have good visibility to that. That leaves us confident to include that their contracted rates in that period are quite a bit higher.

Mathematically, we then need to deliver at least $40 million of net contribution from organic growth beyond these other items. That is not our target. It's what is mathematically required to get to at least $600 million. We expect our incremental margins to be higher than what would be implied by the $40 million. So needless to say, we have goals and aspirations to walk in even better path over this time period and we will be working tirelessly to do so.

Finally, the adjusted EBITDA expansion through fiscal '28 that I just went through and the result in cash flow, will provide for significant delevering. We expect to be meaningfully below 2.0x net leverage ending this 3-year period, subject to capital allocation choices such as share repurchases.

And that math is quite straightforward based on the numbers that I just outlined. Along that path, because we're not really talking too much about fiscal '27, so I just wanted to say, along this path, we expect to end fiscal '27 at approximately the 2.5x net leverage expressed in our policy, which still allows for ample room for share repurchases.

Again, that math is quite straightforward and other capital allocation, if we wanted to pursue it, but included in that math of delevering, including for fiscal '27 is an expectation of meaningful adjusted EBITDA expansion in FY '27 as well along the way to at least $600 million in fiscal '28.

So with that, thank you very much for your time. And Meredith, I'll turn it back to you.

Great. Thank you, Sean. So we are going to be taking a 10-minute break before we come back for our panel discussions and Q&A session. So there's going to be a handy timer on the screen of the webcast. We will see you at 09:57.

[Break]

Welcome back, everyone. I hope you're enjoying the event. I'd like to note that the PDF of slides that we have just presented is now available in the webcast viewer for download. All right. Next up, we are going to have three panel discussions. Let's roll the video for the first one, and then Robert is going to moderate that first discussion.

[Presentation]

Hi, everyone. So I'm really happy today to have the people you see on the screen here joining me. These are really the frontline leaders for a lot of our success in elevated products and in manufacturing supply chain excellence.

So what I'd like to do is ask three, if we have time for questions. I'm going to start out by saying, I'll ask Michael, Bryan and Paolo, if you could, in your own words, describe why you see elevated products is so important. And then provide maybe one specific example of something that you or your teams have been working on in elevated products.

So, Michael, maybe I'll start with you.

Yes. Hello, everybody. Elevated products are so important for Cimpress because they are really the next wave of web-to-print mass customization. Those products are complex. We have not been in reach of manufacturing technology in the past and now they get accessible, we implement them.

We have the scale as a company to implement really industrial size solutions and by pooling all the demand that we can drive with all our different business units, we can, on the one hand, drive volumes that make industrial solutions viable and on the other hand, use many different routes of market access to get to our customers and leverage the large customer base that we have across all the Cimpress businesses.

And thus, we are able to provide those products with really new and highly important features for our customers. They can be faster. We can provide delivery within days where today you might see weeks of delivery, we can provide small quantities. We can provide on-demand ordering and manufacturing instead of warehousing. And we can also help design those products to make them really accessible to a broad range of customers.

Great. Do you want to give one specific example, I think -- you've...

Yes. For example, speaking about paper bags, we have implemented a fully industrial paper bag manufacturing solution that is driven by digital print capabilities. We have multiple bag sizes. We are able to fully print and fully individualize different kinds of paper bags, very fast delivery between 3 to 5 days delivery. We can offer 25 as a starting quantity, and we intend to go even lower on that.

And since we've introduced that, we've tripled the volume within the current year that we are selling to our customers. And what is even more interesting seeing that from a Vistaprint lens, roughly half of the volume that we produce in the Vistaprint side is actually coming from other Cimpress business units across Europe. So we are really creating a focused production hub for that product and leverage the volume, the market access that all the other Cimpress business units have.

Great. Well, thank you, Michael. Bryan, why don't I turn to you about what you see as both the importance of elevated products, but also the -- any example you want to talk about?

Yes, sure. Well, I think the quintessential example of an elevated product is anything surrounding custom printed packaging overall because it really takes a very functional and necessary product for so many businesses and turns it into something much more special and a means to turn really a transactional moment for one of our customers into a selling moment for their customers.

Robert, you touched on paper cups. I think earlier, I think that's a great example. I'll touch on corrugated boxes at its core, the functional use of a corrugated box is to protect the product. But thanks to the creation of a breakthrough mass customization production process, we have figured out how to offer small quantities of custom printed boxes at an extremely affordable price.

Our customers have quickly realized how much real estate a box provides them for a fantastic marketing opportunity to further build a relationship with their customers, especially due to the fact that we offer the ability to print on both the inside and outside of the box. It's great when you walk out to the production floor and you can just see some of the uses of that our customers have realized for custom printed boxes, they've used them to further develop their brand, educate their customers on the product itself.

Many of them have QR codes with additional information about the product and even entertain their customers through some very funny and creative designs. So overall, I think our customers have realized the power of custom packaging, and we've seen tremendous growth in North America. We're actually actively partnering with Vista in the Europe team to collaborate on the next iteration of a game-changing production process for corrugated boxes, which we'll launch later this year to serve the European market. So all this is to say that custom packaging is -- these are all the reasons why it's so important to Cimpress and our customers.

Thanks, Bryan. Paolo, I'm going to turn it over to you. Same question. What's important about these products? And any examples you want to talk about?

Sure. Why are elevated products important? For two reasons. They bring growth and they bring margin, higher margin. And also customers of elevated products tend to have a higher lifetime value. And also because the revenues are higher per customer, normally, the ad spend is very efficient, as explained also in my previous input.

The reason why they generate a higher margin is very simple. It's barriers to entry. If we look at booklets or multipage products, for example, these are elevated products, and these are more complex to produce. There is a wide variety of finishing different type of binding, the cover can be hard cover, it can be soft cover, all these multitude of features require not only production capabilities, but also investment, and this is a barrier to entry.

And also the fact that we have the size that allows us to invest and to grow the volumes gives us economies of scale. And also our relationship with the technology vendors that we call partners allow us to get technology that is stretched to the level that allows us to bring value to the customers.

Thanks, Paolo. Let me switch gears a little bit. It's related. Cross-Cimpress Fulfillment has been really growing rapidly. And each of you guys just mentioned examples we're selling between different parts of Cimpress and different businesses from one to another.

But maybe, Maarten, I can turn to you, you've been the real key leader in this driving what we can do, including MCP. So why -- in your own words, are we putting more of an emphasis on cross-Cimpress fulfillment in the relatively recent past. And why didn't we do it before? How is it going to benefit Cimpress in its businesses. So over to you, Maarten.

Yes, thanks. I mean, first of all, I'm super happy that everybody here is presenting so much about MCP. All my colleagues, it's everywhere now. And it just clearly shows that we have reached critical MCP adoption across the businesses. It's being used with most of the businesses more and more and it's really starting to bear its fruit.

The businesses can just transact much easier with each other than they could in the past when we were still building it. That is mostly because we've been removing hurdles. We've been dismantling like financial hurdles where the incentives might not be aligned to actually sell with each other or buy from each other technical hurdles on the MCP side, or they couldn't large quicker over MCP than just do it themselves.

But now that is really starting to bare its fruit, and we see just an explosion of cross-Cimpress fulfillment, which is very exciting. We're starting to focus really on cost transparency within MCP and the entire supply chain. So we're building systems to compare the cost cross-Cimpress. And more importantly, actually create a culture where digging into those numbers and expose them to each other is really something that helps accelerate even just the beginning of this, which will lead to just smarter supply chain choices across all of Cimpress.

So that for any given product, we can now weigh -- do we do this in-house? Or do we work with one of our amazing third-party fulfillers that we have. We have a tremendous network of third-party fulfillers. And in some cases, aggregating volume from a bunch of our businesses to one of these fulfillers gives us great negotiation power.

In other cases, we see that we really have a center of excellence within the Cimpress network itself and there then we aggregate our Cimpress volume, too. So yes, the Cimpress systems are really getting into place. We're getting the right culture for it. And I think we're just at the beginning of this optimization.

Great. Michael, Bryan, Paolo, let me come back to you and maybe you could also give some specific examples of what Maarten just described. So speaking specifically to cross-Cimpress fulfillment, as opposed to just elevated products. And for that, I may suggest two products, which I know have been successful.

Let's start with roll labels in Europe as the first example with Michael and Paolo, one of you, Michael, you were leading Vistaprint on the merchant side, buying the roll labels in a wholesale intercompany transaction from Pixartprinting and Paolo, your team was supplying. So Michael, maybe you can start from your perspective, how that -- what's been behind that roll label success in Europe?

So from the Vistaprint perspective, it's great that we can leverage the capabilities and knowledge that our colleagues at Pixartprinting have built over the years to really have a massively wide assortment of roll labels available. In all delivery speeds, substrates, everything that you need in the market, and we can easily leverage that assortment by using MCP and just plugging in the fulfillment capabilities from Pixartprinting into the Vistaprint fulfillment network.

And with the focus we have on crossties fulfillment, we've also adapted the way we interact economically, which makes the whole thing really attractive for Vistaprint.

And over the last years, we were able to massively drive growth as a merchant with this product. Customer growth of 90%, new customer growth even beyond 100%. And what we really like about roll labels is that it's really high-value customers with even high first order values, high repeat value, so we have a higher probability to repeat than other customers. So it's a really high-value customer group and on the manufacturing side, we get the full service from the colleagues in Pixartprinting, and that's great.

Thanks, Michael. Paolo, is the fulfiller in that relationship. Do you have any thoughts?

Yes, many thoughts. Many thoughts of gratitude to Michael. Actually, the collaboration has been great. On one hand, we were able to provide Vistaprint with a higher variety of products and more different types of qualities and finishing and substrates, and this enabled Michael to deliver and reach a product to their customers.

At the same time, the vast reach that Vistaprint has in Europe and also across the globe, allowed us to get more volume into our production and that helped us improve efficiency because efficiency comes with scale. And all sorts of benefit coming from being able to deliver more product to the customers. Also working with our vendors. At the moment you have a larger size of the revenues, you also have more control.

That means efficiency, lower cost. All this is a winner for the end customer for which -- for whom we deliver more quality at a lower cost and also for us because we made more profit. Therefore, it's -- this is the essence of the cross-fulfillment where we're able to put together our strengths and deliver a win-win situation for the company and for the customer.

Great. Bryan, let's come back to this side of the Atlantic and -- you and Michael, maybe you also can represent Vistaprint in this next question.

Over the past roughly a year, a little bit more than that, we've moved the vast majority of the U.S. volume for a large-format from the Vistaprint production facility to BuildASign production facility, which had higher volumes and more product variety for that. So can you describe -- from your perspective, again, maybe, Bryan first and Michael as the merchant, the whole signage opportunity in the U.S.?

Yes. So overall, in the U.S., we were able to generate significant savings and cost of goods by -- as you touched on consolidating the Vista and BuildASign volumes into our very cost-competitive signage focus production hub. From a fulfiller perspective, one of the huge benefits of this rapid growth in cross-Cimpress fulfillment was realized when the same product was going to be produced by two different businesses, whether it be a short period of time or even a longer period time, we realized that it was prudent to align our product specifications and production processes across those two businesses.

And there were -- this happened to varying degrees depending on the product, but I think two great examples or for feather flags and standing banners, two products that BuildASign began to fulfill for Vista over the past year. These are two products that have been produced by both businesses for over 10 years, each generating tens of millions of dollars in revenue, but just had slightly different product specifications and therefore, utilize slightly different raw materials.

I'd also add that these are products that tend to be a little more relatively expensive from a raw materials perspective, due to the feather flag stand and the cartridge required for the standing banner. But we knew as a team to truly unlock the total potential for production efficiencies and cost savings, we should standardize on one product design across the businesses.

So we collectively reviewed our cost data and customer feedback from both businesses and collaborated on actually a brand-new product design that combine the best attributes of the BuildASign product and the Vistaprint product.

With each business moving to the same raw materials, we were able to drive lower costs from our suppliers due to the increased buying power and overall purchase of higher volumes. And in the process, we also leveraged the feedback and reviews from our collective customers to design an even better and higher-quality products. So, overall, Cimpress and our customers benefited from cross-Cimpress fulfillment.

Michael, we're getting a little short on time. But from your perspective, from the Vista side, what were the advantages of that particular U.S. large-format cross-Cimpress fulfillment project?

So as Bryan already explained, certainly, that gave us the opportunity to get to better margins because we put volumes together in one place, and we're able to optimize the overall setup.

The second axis was being able to add new products to our North American offering. There were products that had a big impact on our growth ability in Vistaprint North America that had not been previously offered by Vistaprint, like step and repeat banners, real estate science, parking signs, all those products were available in the BuildASign assortment, and we were able to also sell them via the broad Vistaprint website and customer base. So that was a huge win for us.

Well, thank you. We're down to our last 4 or 5 minutes on my clock. So I'm going to just throw one more question. Let's -- I know there's a lot of questions that come in from shareholders and investors about capital expenditures, and Sean spoke a little bit about that.

They're increasing in FY '25. We said they'll grow again in FY '26. And I realize that there's two big categories of CapEx, it's not the exclusive totality of CapEx, but one is where we're replacing old equipment and therefore, driving lower cost, higher quality by bringing in the latest generation equipment.

And the second aspect is where we're driving innovation by working closely with partnerships with machine companies to break through to new areas. Let's take those one at a time and start with the first category of just driving lower cost by bringing in latest generation equipment.

And Paolo and Michael, could you just speak about some of the economics and the efficiencies that you've seen? Maybe let's use examples of the four CEOs from the various print equipment companies who provided videos today. So Paolo, maybe we can start with you for your thoughts?

Sure. As Peter Wolfe said in the video that was shown, we started our collaboration in 2018, so that is over 7 years ago. And we brought together the inject, WebFed high-speed inject on the market of commercial printing that was not used before. So this was opening the market for them for this kind of technology for our kind of products. And that meant that we put our best engineers of R&D together with their engineers.

And after several months of cooperation, we were able to codevelop a solution that allowed us at the end to deliver a product comparable to the product we were doing before and a fraction of the cost. The actual cost reduction, thanks to the new technology, faster speed, the in-line integration that we did with the finishing allowed us to reach up to 40% lower printing cost and that means, of course, higher margins for us.

So that is value for the shareholders and also quicker delivery of the product because from the moment the file would hit the Internet site, and through automatic process, processes go to our printers, in a matter of minutes, less than 10 minutes, the finished product was ready, and that means quicker delivery to the customers, that means also value for them. That's an example from Canon.

David Schmedding from Heidelberg also talked about the work we did together in some of our plants within the Print Group, and I'm thinking of the Exaprint plant in Montpellier, France, where the work we did together, again, our engineers and their engineers allowed us to achieve the highest overall efficiency for the equipment, the OEE, the efficiency of production, the highest in the market. And when you are efficient, it means your cost goes down and again, is a benefit for our margins.

Thanks. And just for this year, I know we are for both those Canon and Heidelberg Equipment, we are deploying those in other parts of Print Group and/or Cimpress.

Hey, Michael, maybe your thoughts on HP and RICOH, again, using that as an illustration of some of our CapEx to reduce costs or -- in the existing areas?

The story is very similar to what Paolo just explained. We have a very close relationship with HP and RICOH, we share engineering insights. We share our pain points. We jointly work on solutions. We are always testing the newest equipment, our test sites for the newest equipment and the overall engineering focus that we have in our print manufacturing and the engineering knowledge we have in the way we run our plans is outstanding in the industry and that's, I think, very helpful for our suppliers to really have the right thought partners in developing best-in-class equipment. And we, as first users are then able to profit from the newest equipment with higher throughput, better efficiency of shop floor use and so on.

Great. Well, in closing, let's briefly touch on another very important area for CapEx, which -- and also for our engineering resources is the innovation in new product categories, and you've touched on a few of them. But Michael, maybe over to you, how do you think about the innovation aspect of CapEx?

We have already spoken about elevated products and elevated products basically means we open our mass customization world and enable new product groups. And the way to do that is to create in the industrial manufacturing setups that are able to do very short runs and to be very flexible to our customer needs.

If you want to do that right, you need a substantial initial investment that shows up as CapEx in the beginning, but then provides you with very short throughput times with very low variable cost. And good versatility of the setup so that then you can really provide for a game-changing setup that we can sell to our customers. And so it kind of comes with our scale and our access that we need to make those big investments to get to a market-leading position in new technology.

Well, thanks. And I do see Vista specifically doing exactly we just said, Michael, in terms of paper bags, corrugated boxes, next generation for that as well as a lot of the sortation equipment. Paolo, let's close with your thoughts on what you've been doing to break through in different areas. Maybe you can speak about whatever subject you want as an example of what we've done in the past or present?

Yes, sure. Well, innovation is one of the core values of Pixartprinting and innovation, especially in the area of technology, manufacturing technology is where we focus a lot. I can say that out of the 100 different types of technologies we have in our production plant on the shopping floor, none of them is -- almost none of them is off the shelf. So they've all been codeveloped and we brought innovation at every level.

We talked about booklets and books and multipage, we are bringing this innovation to North America. We talked about labels. The examples we shared with Michael earlier. I can talk about packaging one of the other areas of elevated product that Bryan referred to.

In terms of packaging, we developed with an Italian provider of technology, special solution for cutting and folding in a digital way. So every single sheet that enters the machine can be a different recipe. Without having the recipe encoded, but read by the barcode that is taking the information from the order of the customer. And this allows us to get to a very low quantity minimum order quantity for packaging with customized formats.

That's great. Well, thank you. We are short on time. So I'm going to pass the microphone back to you, Meredith as we go to the next panel discussion.

Thank you, Robert. Thank you, everyone, for that great panel. We're going to move on to our next one, which is going to be on design enablement, and we'll introduce it with a video.

[Presentation]

All right. I like that video because I think it helps you visualize some of the things that we will be talking about on this panel right now. So as Robert mentioned in his presentation, design is a fundamental element of the products that we sell. And it's a continually evolving area.

So joining me on this panel today are Christina Wick from Vista, Paolo Roatta from the Print Group; and Maarten Wensveen from Cimpress Technology.

All right, guys. Let's get started. So first question, why is it that design enablement is so critical to our customer experience? And what are you doing in your part of Cimpress to ensure we get this right?

Let's start with Christina in Vista, please.

Thanks, Meredith. I mean design is at the heart of every product that we sell. And for many of our customers, it's the hardest part. Like most small businesses, they don't have design and print expertise. And even when they come to us with like their full upload to go upload and print, third of those files, are maybe like truly print-ready and do some adjustments around the tweaking of the size or rotation.

But more than half of them, they still do more to their -- that design, such as add text or shapes or objects or QR codes. And that gap creates frustration between that -- the design expertise and because it really holds customers back from realizing their ideas. I was designing some care packaging -- college care packaging for my daughter this past weekend.

And designing for print can be really intimidating, right? But it's our job to close that gap. And we do this by embedding the right touch points for assurance, offering like clear on-ramps to advice and design services and really making design simpler and more intuitive across the journey. And so for us, for example, we're using deductive design and AI and tools like our logo maker and design assistant to really be able to help customers speed up creation.

And we're also helping small businesses stay on brand, extracting logos, colors and fonts, so they can easily build brand kits, and visualize their identity across all the products. All of these steps increase customer confidence and success.

Thanks, Christina. Paolo, I'm going to throw it over to you because your customers are a little bit different. They're a bit more comfortable with the concept of design, but you're still investing in design capabilities as well. So...

Absolutely. As you say, our customers are -- have more designer skills in general because these are professionals. But we have seen that by providing them with tools that enable them to get quicker to the final design or that assist them in making sure the product they are ordering is correct.

Even before going to the whole system that of our preprice office that checks the files is a big advantage for them. First of all, it enhances their confidence that the product they're ordering is correct. And very often, our orders are very large and having this confidence enables them to place the orders. So we see that not only it increases satisfaction, but also it increases conversion to purchase.

One of the projects we've been working on in the course of the past year is what we call upload and chill that allows our customers in the most sophisticated product, which is multipage to see the whole spread of the booklet on one screen.

And this allows them to correct those possible errors that they have inadvertently loaded up into our system. And by correcting that before it gets into our system and then the file could be rejected or could be corrected by our own guys, this is done by the customer. And this means, they're able to fix the issue even before it's our systems. That means a quicker process for us to do the throughput and therefore, a quicker delivery do their homes.

I can certainly attest and relate to multipage booklets being difficult to design, having done them in my personal life as well. Because in MCP, we have capabilities that many of our businesses have adopted for the purpose of design enablement.

Yes. Absolutely, yes. But you see most of the businesses, they bring it all together to what is really relevant for their customer. But with MCP have been investing, and I spoke about it in previous Investor Days. But even going forward, there's continuous components that we're making that just make it easier for customers to design something.

A couple of examples that just recently been used by Vistaprint, but also now large by National Pen and more businesses, but seems to be very little things, but really make it much easier for customers to get through the design process. For instance, they upload their logo.

And the first funds and tax boxes that we give as an option to that customer are already in the primary colors of their logo. Or we -- instead of you have to drag a text box, above logo or below and have to finish with it, we automatically give you layout recommendation on like this the optimum spacing for it.

With the design approval process, right, where finally, this upload is done and then customers -- we make maybe some adjustments, how do we get automate as much as possible to get to the final proof that the customer says, this is perfect. And so all these components in the back end that the businesses stitch together to optimize for their customer, are very often powered by MCP, smaller components. They're very small in its size, but very mighty in its outcome across the Cimpress universe.

Excellent. Thank you, Maarten. All right. The next question that I've got for you all is how does design enablement support growth of elevated products and the higher-value customers who trust Cimpress businesses with thousands of dollars of annual purchases.

Maarten, we'll start with you on this one.

Well, I mean, look -- and I think some other people will also talk about this obviously. But like, for instance, packaging is one of the things that I think we have had a tremendous amount of success with. And I want to make sure there's credit in all kinds of businesses that actually brought all of those expertise flexible package sizing and all kinds of other methodologies, just deploy it way quicker across the network. So we're sort of then the intermediator, but I want to make sure that MCP is not always the originator of these things. We're going to help just make simpler stronger.

Thanks, Maarten. Christina, do you want to share stories from investor's perspective on this?

Yes, our high-value customers. They like to move fluidly between the different design methods as they shop. And we're investing to support them, like wherever they are in that journey, right, whether they're uploading their full design or they're starting from a template on our site or maybe even using our AI tools that we're providing.

And so I think I mentioned design assistant before we've expanded that to over 750 products. And we see that 40% of customers that are using it are high-value customers. That's double the rate of the average customer. And then packaging, like we're leveraging a lot of those capabilities that Maarten was talking about, like we've enabled pattern generation from uploaded logos and images.

And now with Generative AI on Vista customers can instantly create custom patterns for their packaging lines. And finally, we offer professional design services, especially in categories where customers are more likely to seek expert designers. And -- so this balance of intuitive tools and the professional support really gives our high-value customers confidence to adopt elevated products. It deepens their relationship with us, and they really interest us with more of their spend.

Thanks, Christina. And Paolo?

Same as Christina just said, the products that are more -- the elevated products are more complex and therefore, require more expertise and more support from our people. So also in the area of design. We do use the tools that Maarten and the team has developed in MCP that allow us for the most complex products to provide a better service to our customers in terms of visualizing the final product on the screen.

And typically, this is in the case of packaging, where a 3D product on screen is difficult to understand unless you are able to provide a 3D view of all the angles.

And as Christina just mentioned, we also use human design services as we call them, to allow our customers to get into those products that are more -- most difficult. All of this, we've seen increases the satisfaction of our customers and the purchase of our products and normally, the average order value of our revenues.

Thanks, Paolo. All right. One more question on this panel before we move on to the technology and AI panel. And this question is a good segue because we can't talk about design without talking about AI.

So design is rapidly changing. And it's a big part of our offering. It is a fundamental part of what the value is that we provide to our customers. So how are we embracing and preparing for this rapidly changing future? I'll go with Maarten first.

Well, I mean, especially with AI, again, if you're following the previous investor days, I've been talking about that until now. But I think there's a special new kit on the blocks, obviously, with LLMs being all over, and they are tremendously powerful.

It's awesome. It's an exciting time. And so we're starting to implement that everywhere. Before I go there, we've always been using multiple types of AIs to enhance our images to correct images that go into line and just make it easier for customers and also really control the cost on reprints and what we do on the other side and how much time we spent on design, right, finding that right mix.

And so we've been using that. But with all of the new Generative AI, there's really interesting things that's starting to happen, like we see with Vista logo makers or to Generative AI patterns for packaging that Florian was showing and so happening with Adam and Christina and their team is like very, very exciting times in it. So we're embracing it just in full and implementing it wherever it immediately makes sense.

Thanks, Maarten. So let's talk about where it immediately makes sense within Vista?

Well, I was just going to say, we've talked about a lot of these things and AI is transforming design, right? And we do see it as a huge enabler both for our customers, but also for our teams, right? And so you heard me talk about places, Maarten just mentioned like local maker too and the Generative AI features that we have in packaging.

But at the same time, we're putting it into the hands of our own designers and our support agents as well. And this allows them to serve customers faster at lower costs and with even higher quality products. And we're using it also to enhance our design engine that not only powers our design experience on the website, but it's also leveraged by our template designers.

So they can use AI to expand and enrich our content library, giving customers really like fresh inspiration across our assortment more efficiently. The space will keep evolving quickly. And we're building the capabilities we need to stay ahead, supporting customers however they want to design while making our own teams more efficient, productive and powerful as well.

Fantastic. Thank you so much to Maarten and Christina and Paolo.

I am going to play a video next, and we're going to go into the third panel discussion, which Sean will be moderating.

[Presentation]

Excellent. Let's get into our last panel. I'm excited to also introduce you to a few new folks as well that you haven't heard from yet. So we'll get right into it.

And hopefully, it's clear both in the elevated products panel, but also in the last one here on design enablement that the role of technology modernization and also the role of AI, as we just ended the last session, is having a big impact in so many places.

But here in this panel, I really want to focus it on technology and really specifically AI and the progress that we're making. There's a lot to cover here. So why don't we jump right in and start with an area, which I think, as I talk to people and you just even hear in sort of the new stream, I think customer care is one of the most prevalent areas for early adoption that we hear about in terms of GenAI capabilities, whether that be chatbots or other ways to facilitate interactions. We're making a lot of progress there.

And so let's start with that. And Adam, can I kick it over to you, and let's just start on the Vista side. Just give an overview of where we're making progress and also how we're seeing that impact customers and also our results?

Yes, absolutely. Thanks, Sean. Hey, everyone. So I thought I hit on a few key areas from some early investments on the care side, just to show some of the progress we've made. First is we're doing something called case summarization. So imagine taking a transcript from a call, automatically summarizing that transcript, putting that back into the CRM automatically, creating a lot of efficiencies in our care team, reply recommendations is another capability that we've launched.

So imagine the ability to automatically understand contacts, reply to customers more effectively, just make that whole interaction much more effective for customers. We're doing a lot around real-time language translation. So imagine as a care agent being able to support any customer in any language in real time.

That gives us a ton of scale and time of efficiency in the process. And right now, overall, what we're seeing is about 19-ish percent reduction of cost per chat contact in care through all these Gen AI capabilities. So really just the tip of the iceberg, it's one of the earlier areas where we've made a lot of innovation and certainly a lot more to come in this space for us.

Great. Exciting stuff, Adam, thank you. And Paolo, maybe let's step outside of the Vista example, and I'll kick it over to you for your businesses. Can you just do the same and touch on kind of where you've made progress and what impact you're seeing?

Absolutely. We've been using AI in many areas in the company. In the area of customer care, we use it to assist our agents so that they are supported and they can respond faster, more consistently. We use it for the language translation, so automatic translations across all of European many languages are done through AI.

We use generative AI to respond to customers with the chatbot. And this allows us to have a 24/7 coverage that we were not able to offer before that.

And also, it allows our in-person agents to be dedicated to higher value tasks. As a result of all these introductions, we have today, 40% of the chat sessions are fully managed by AI and we have now 82% lower cost when a coal is managed by AI versus a person.

The rate of missed chats is dropped by over 80%. Our first contact rate solution has more than doubled and with a positive feedback from our customers. So not only we're able to achieve a good cost efficiency result by using AI, but also we are faster, more customer-centric. Agents can focus more on design help, cross-sell and business growth. This delivers more margin at the end of the story. And so AI enables us to drive higher sales and deeper customer relationship.

Great. Thanks, Paolo. I mean, that's -- it's a great area to start because it's so tangible what we're doing there. So thank you both.

Let's move now to personalization of customer experience. I personally believe that this is a huge opportunity. We're always just scratching the surface of making the experience easier and for all of our customers. So Christina, maybe again, I'll start with you on the Vista side.

And maybe you could just talk about kind of where we've had some recent examples of progress. Obviously, this is a big area of investment for us. But specifically as it relates to personalization, including personalization that's enabled by AI. So I'll kick it to you.

Yes. Look, I mean, personalization is not optional. Customers today expect it. And when we get it right, it pays off. So on Vista, for example, customers who engage with personalized or model-driven features, like our site recommendations. They shop 10% more frequently and buy 40% more subcategories than the average customer.

And in the past year, we've done things like improved our logged-in visitor rate by 13% year-over-year, which means we can really better understand our customers and tailor their experiences. And we've launched more personalized product recommendations that are driving meaningful revenue. And then we've introduced features that let customers see their own logos and company name across like our templates. And now we rank those templates based on how each customer interacts with the designs of the templates in our gallery and the features that we have in gallery.

Important stuff. And I think one of the things that sometimes in conversations with shareholders, I try and get across, is that like what we can see internally is that I think the pace of our progress there in terms of customer impact is really starting to pick up.

And we had a number of years in our recent history here where I would say we were more focused on foundational things, which weren't necessarily having a customer impact. So can you just talk a little bit about that, given you're overseeing a big part of this team, just like where we're able to start moving faster on this journey here in terms of customer impact and maybe just a few things in terms of what's on the near-term road map from that standpoint?

Yes. I mean what's exciting is that after years of moving off of our monolith and modernizing our technical architecture, we're really at that point where we can accelerate, right? We've done that foundational work and it's enabling us now to go deeper on personalization. And we could not have done that before on the previous model with the architecture.

So looking ahead, we're going to -- we'll expand trade-based recommendations. We will adapt our experiences and we'll have personalized design assistance across the entire shopping journey. And importantly, we'll carry that personalization across our channels. So that context that a customer builds in marketing flows will seamlessly flow into their site experience as well.

Well, thanks, Christina. A huge opportunity there, in my opinion. We cover care, we covered customer experience. Let's now go to advertising. Obviously, a significant line item for us. To put it in perspective, we spent nearly $450 million across the Cimpress Group last year in advertising. Most of that's in Vista.

And so why don't we drop into Vista? And let me turn it to you, Florian, and let's just start with -- maybe you could give a sense of, from an AI perspective, what AI capabilities we're using in advertising today?

And then also a common question we get is how do we see this evolving as we utilize AI and LLMs to drive traffic to our websites, but also to make sure we're winning traffic in AI-based search?

Yes, sure. So first of all, of course, we are using AI to automate parts of our paid search and social media advertising. And in the future, this is a place where we will personalize product placement and offers using our own data, but also using data from third-party providers.

As to -- I think the second part of your question, I mean, that's, of course, the multibillion dollar question out there. So let me just say that, of course, in terms of how advertising will evolve, I think it's absolutely imperative that we ensure Gen AI-enabled chatbots and browsers and whatever else there might be in the future, we'll prioritize Vistaprint in their responses.

And that means we have to do great at the inputs that their underlying LLMs, we'll use for learning, we'll use for accessing information on the Internet, et cetera. And personally, I'm a very strong believer that what it comes down to is delivering an amazing customer experience because that will then be reflected in reviews and comments or even just sentiment on certain platforms that these LLMs and chatbots will use as inputs. So we'll stay focused on the customer experience. I think that's going to be a major input to the recipe that we'll be using.

Yes, agreed, agreed. So that's on the advertising spend piece of it, again, a huge number for us. And then just on the marketing side more broadly, could you just talk about a few areas where AI is being leveraged. I think like most functions, there's a lot of progress that has been made there. And so maybe just talk a little bit about examples of those.

Yes. It's true. It's removing roadblocks or things that used to be roadblocks prior in so many places. So for example, this year's holiday photography will be completely generated using Gen AI backgrounds. We're also using AI-powered machine translation in our new product introductions to reach all markets much more quickly.

It's helping our next best action models, it's helping from a CRM perspective to drive personalization and relevance, leveraging customer data and traits that are indicative of high-value customers. And all of that really I have to say we're really just getting started with, as Christina was describing now that we were past sort of the foundational developments in our underlying Tech Stack.

Excellent. Another exciting area. Thank you. So let's move to manufacturing now. And Maarten and your team, one of the largest areas of your team is built around manufacturing information systems, obviously, a critical part of our competitive advantage. Can you speak to just the capabilities that we're adding there that were changing augmenting and manufacturing software, especially as it relates to AI?

Good point. We're actually modernizing a bunch of that. We're modernizing our are so -- sort of modernizing our MES, manufacturing execution system, with the latest capabilities, especially around like end-to-end simulation that is like what you need before you get into the full-blown AI capabilities, which include forecasting demand, modeling labor, machine and work cell configurations and then providing visibility into the current recent and the projected performance.

And it basically gives us a little bit of what is now called like a digital twin, right, a virtual version of manufacturing place where you can simulate all kinds of things and really apply things that one or group of humans can come to that conclusion except when you apply these kind of techniques.

Great. Yes, those simulation capabilities would be huge. And then kind of adjacent to manufacturing, obviously, like should we spend a lot of money on shipping, outbound shipping and it's also an area that's highly data-intensive. So can you just again give a flavor of kind of what we're doing to leverage AI in that domain?

Yes. I think especially on the shipping side, we already have a pretty modern technology for that. But I would say, it was a little bit isolated away from the MIS systems. And so we're making sure that they live much closer together in terms of their data structures.

And then like I mentioned before, we're going to have much better bird-eye view of an entire manufacturing plant and do all of these simulations and buy more businesses using it. It actually starts applying on the whole supply chain of Cimpress at large, which is just very exciting how close we are to that reality, but we try at all those layers to come together, which we are right now getting at the early starts of that phone, which is exciting. Lots of work in the best where we're now finally starting to bear the fruit from.

Yes, precisely. Yes. Okay. Thanks a lot, Maarten. And I'm trying to sort of give everyone in the audience a flavor of how these impact throughout the P&L.

And so let's turn to OpEx now. And I think there's a significant opportunity for efficiency there, but also greater productivity, and we've provided guidance of course, that incorporate some of those efficiencies over the next few years. So let's do just a little bit of a rapid fire around the horn here, and I'm going to ask maybe Florian to start with you. If you can just highlight some of the efficiencies that you're seeing from an OpEx perspective and just -- which is where we're focused there right now in Vista.

Right. So let me just, first of all, in fact, say that or repeat myself, as part of our FY '26 objectives at Vista, we've launched a company-wide program to drive simplification and automation using Gen AI, which touches all areas of the company from pricing to creative, to merchandising, to advertising, to customer care, et cetera. And importantly, this isn't just about OpEx reductions, but also about improving the customer experience and upscaling our workforce.

Yes. I think that's a critical piece. Obviously, that's where a lot of the value will come, improving the customer experience and getting more from what we already have as an installed base. Adam, from an engineering perspective, obviously, a hot topic as it relates to AI capabilities and improving productivity. Can you just touch on what we're doing in terms of engineering productivity?

Yes, absolutely. Software engineering is obviously changing at a very, very rapid pace. So we have a few initiatives and also just a little bit of, I guess, forward-looking thought. Obviously, right now, our focus is on tool enablement. So we've launched, obviously, a bunch of AI-augmented cold tooling tools for all the engineers across the organization.

We're also building infrastructure internally that allows more democratization of model access. So innovation is happening at very different speeds for anthronpic versus Open AI. We want to make sure engineers can use the right model for the right job. So we actually have a lot of tooling that we've built to allow us to use the right technology for the purpose that they're trying to solve.

I think looking forward, the way we're really kind of evolving is this idea of like asynchronous software development. So imagine you've got these agents running in the background. Addressing security issues or addressing accessibility issues or fixing bugs and they're just kind of always running and allow engineers to review code.

That's really going to be our next big investment in this area, and we think that's also going to be the next really big paradigm shift for how software engineering gets done. So that's kind of where we're focusing on from an innovation standpoint.

Well, thanks, Adam. And then I'll just add from a G&A perspective, generally, I think there's a lot of opportunities here, whether it be in some of the financial topics like conversational analytics and from a legal perspective, contract reviews, but also things like how we use data to identify procurement opportunities and a lot of those things are in flight.

So G&A, also an opportunity there. So before we round out here, I just -- maybe want to step outside of these specific topics and talk about a really, really important topic, which is that in order to excel in all of this and also to move with speed, we, of course, need to make sure our team members are evolving their mindset and learning new skills and constantly challenging status quo, which is not easy. And so -- and we obviously need to continue to attract great talent. Robert talked about that in his session.

Louise, can I turn it over to you and just ask you to highlight some of the things that we're focused on from a people perspective in our Vista business that are relevant to all the stuff that we're talking about so far in this session?

Yes, absolutely. Thank you, Sean. Yes. So we have a significant people agenda for how we're integrating AI into every aspect of our operations and our employee life cycle. So the core philosophy is quite simple. AI is a partner that's empowering every team member.

And so our approach is about getting our people excited and curious about AI to start learning and practicing, adopting and integrating it into their daily work. And so this approach is distinctively people-first and hands-on. And we're starting with a comprehensive learning agenda to develop these kind of future-ready skills across the entire company.

So this starts with upskilling. So we're investing heavily in upskilling team members, both on the technical hard card skills with AI, like prompt engineering, but also the essential human soft skills like emotional intelligence, communication, leadership. And we're also focused on practical application.

So we've built an AI learning hub with curated resources for different skill levels. And we have workshops that are practical and real-world AI use cases that help lead to improved workflows and practices in each organization.

Another important aspect that we think is really fundamental is our community and leadership engagement. And so we have created a strong community of engagement through slack channels and team events, where we're really encouraging peer-to-peer learning and experimentation. And also our leaders are role-modeling this by encouraging and showcasing what they're learning and how they're kind of adapting this in their roles. We've also identified AI champions in each organization so we have this peer-led approach for applying AI in the most relevant ways for each team.

And then finally, commitment. Commitment is really key. So to show our organization that we're serious and committed to AI, and that we're making the time for people to learn their new skills. We have a dedicated AI investing yourself day coming up end of September, where each organization and Vista will focus on how they're applying AI to improve their work.

And then let me just kind of add with perhaps the most important element of all this is how AI is deeply impacting our culture. So we already have a very strong entrepreneurial foundation, and we're intentionally strengthening that to align with this AI-driven future. And what this means is how we focus on AI unlocking velocity and efficiency for our teams and how intentional or design can really help increase speed, remove layers and get team members closer to customers to solve their problems.

And we see also innovation and learning being further unlocked with our culture in AI as teams will have more time and capacity to innovate and embrace this kind of always on growth mindset.

So overall, we're excited and ready to start this next chapter and see the benefits for our people.

Thanks so much, Louise. Obviously, we can't be successful without that. So thanks for your leadership there.

And thanks, everyone, for the time of the panel. I think my hope is that it's clear to everyone that this is a significant area of opportunity, which may already be obvious. But also that importantly, we're making a lot of tangible progress really across all the value chain, and we look forward to updating on progress as we continue to go there.

So with that, back to you, Meredith.

Great. Thank you, Sean. Thank you, everybody on the panel discussion. Really great to hear all of the conversation between you all. We have had a number of live questions during the entire event. And so we're going to go through them now. It does mean that we're going to go into the 11:00 hour, but we are committed to answering these questions. So let's get started.

So, the first one is a question on tariffs. Sean, I'm going to throw this one to you. Fuzzy as to where the company stands regarding tariffs. So, if you could please address that at the present time.

Absolutely. And hopefully, fuzzy just because time has passed and not because of our lack of disclosure. But let me just remind everyone where we stand. And I think if you go back to our Q3 release from last year, that's where we had first provided a lot of detail. And in that, we talked about kind of like the base cost that was relevant for potential impact from tariffs in terms of U.S. orders that were fulfilled from Canada or Mexico, and we said that was about $230 million. And so that's still like a helpful, like baseline to be thinking about if you're trying to refresh yourself.

And then we said that we have 2 main sources of exclusion or exemption. The first one is that there's this exclusion for informational products that is statutorily included in IEEPA. IEEPA is basically the statute that's being used to provide for the presidential authority for most of these tariffs. And then we also have a vast amount of our products that are USMCA compliant.

So when you take those 2 things together, it's about 90% coverage on that cost for U.S. orders fulfilled from outside of the U.S. So that's still a good framework to use as a starting point.

I think in terms of what's changed recently, the main thing is that, and this is actually since our last earnings is that the de minimis exemption went away at the end of August. And so that's been a change that we've experienced. We haven't had any operational issues. I'm happy to report as a result of that, just in terms of on-time delivery to customers and just from -- there's all sorts of compliance stuff there, we feel comfortable that we've been able to pivot there. The team has done a great job.

Financially, we haven't seen any notable impact from the de minimis going away. So that's maybe the most important kind of update. Overall, we're on track to continue with our mitigation plans. There's still some work being done in terms of evolving sourcing or -- and where we do experience cost increases, we will seek to address that through pricing where applicable. I think that as the tariff environment sort of settles in, which is still obviously dynamic, I do expect that we'll hear from some of our suppliers about increased cost or proposed increased cost. That will be an ongoing discussion and one where we're going to bring our scale and procurement capabilities, but also our contracts to bear there. And there's nothing material to note there to date. So -- but there may be some more of that.

And then maybe just like specifically from a financial perspective, in Q4, we had said there was $3 million of net negative impact primarily from National Pen. And that was during the month of -- primarily during the month of May when the tariff rates on Chinese sourced goods accelerated to 145%. In Vista, we were able to, we think, cover the increased cost through pricing.

Based on everything that we know today, we do expect and we've included in our outlook that there is some additional net cost that we'll experience for the full year, recognizing that we only really had to live with that for part of Q4 of last year. So for the full year, we do expect that year-over-year, there will be some net impact. I would put that in the sort of roughly $5 million range year-over-year. Again, that's included in our fiscal '26 outlook.

And so in summary, still a very relevant topic. Obviously, we're very focused on it. It feels more like sort of almost business as usual in terms of like day-to-day operations as opposed to having a lot of senior level attention on this on a day-by-day basis. The exemptions and inclusions that I talked about under USMCA and Information Materials, those still provide very broad coverage for us. And there's still impact, but most of that is adjusted through pricing. So not too material from a P&L perspective.

Thank you, Sean. Robert, I'm going to ask you a question now, an important one. Can you please talk about how you're thinking about share repurchases as you execute your plan to grow profits and delever?

Sure, absolutely. I would say, first of all, we recognize that -- excuse me, I'm just having a little trouble with my microphones. Okay. Yes. So we recognize and we are very committed to reduce our net leverage. And I'll come to share repurchases in a moment, but leverage and share repurchases are tightly related. So because we have said and we will deliver end of '26 reduction in a year-over-year versus where we were at the end of fiscal '25, just today, Sean pointed out, we will, by the end of FY '27, plan to be in line with our policy of 2.5x leverage. That does create some constraints. In the next 21 months or so, through June when we get down to that 2.5x below or let me say it a different way, until we're at that level, we plan to limit buybacks to what we can achieve while still hitting those leverage targets.

Second, I'd say, as mentioned in my presentations, in many of our letters, we do think that the share price is very attractive and that we are undervalued. So when we're in that type of situation, we do want to try to do share repurchases subject to that leverage target.

Third, I'd say that share repurchases are very important to us because we, as Sean said in his presentation opening, look very much at free cash flow per share. And we've used our strong profits and our strong cash flow over the years and over the decades to take our weighted average diluted share count from about $43 million at our IPO -- and 43 million shares at our IPO down to the current 26 million. At that same time, as Sean pointed out, we've grown our 3-year trailing free cash flow from 0 to $432 million. So the cash flow per share was much higher because we had reduced our share count by 40% over the years.

So long term, I think we are going to remain in the game of share purchases, but we will, as again, Sean pointed out, ensure that it's subject to more rigor as to the pace of those repurchases to ensuring we hold dry powder for the times when we have very obvious price to value gaps and when we can remain within our leverage policy that we've set up and we want to get to.

So last thing I'll say, as Sean pointed out, that by the end of FY '28, in the absence of capital allocation to share repurchases or any other large CapEx -- capital allocation, we would be meaningfully below 2.0 net leverage. And so that certainly gives us opportunity over the mid and long term.

Thank you, Robert. Okay. I got a question for Paolo. Paolo, how big is the market opportunity you think you're unlocking with Pixartprinting in the U.S. How much of that 2028 4% to 6% guide is predicated on the success of this new revenue segment? And how do margins here compare with Vista's?

Well, the market is very big. Just as an example, in Europe, Cimpress Upload and Print is significantly larger than Vistaprint. Also, the category of booklet is a very relevant category for Pixartprinting is the #1 product, while in the U.S. is underrepresented. As to profit margins, Sean showed a slide where the Print Group EBITDA margins are on average 19%, similarly to those of Vista. And between now and fiscal year '28, the revenue contribution that Pixartprinting will have in the U.S. market, considering the relative size of Pixartprinting versus the total Cimpress revenue we have in the market is not going to be that visible.

I think what you will see is that these investments we do in Upload and Print in the U.S. will allow us to fulfill for Vista. So Vista will be able to grow fast by offering these elevated products to their customers. And by fiscal year '28, this will be a growing profitable business, which gives us a runway for future growth beyond fiscal year '28.

That's great. Thanks so much, Paolo. All right, Sean, what are the key components of the $70 million to $80 million in annual cost savings baked into the FY '28 guide?

Yes, I expected this one. When you say you're not going to provide the components of the breakdown, then the first question is what's the breakdown? But I certainly understand it. And this is a really important -- obviously, as I said in the bridge, this is a really important part of the other path to the -- at least $600 million. So certainly understand it.

I am not going to go through the details of it today. There are certain reasons for that. We can't get ahead of ourselves. As I said in my presentation, on this range here, the $70 million to $80 million, we believe that we provided sufficient margin of safety relative to our plans. We'll give updates along the way, so you can track our progress. And as I said, we do expect there to start to be more material impact in fiscal '27.

Maybe just a little bit of additional detail because I realize how important of a topic it is. I think just like -- just to frame where these costs come from, especially relative to, for example, the cost savings that we executed back in 2023, we do expect that a material portion of the savings will come from our cost of goods sold. And I would say that, that would have more weight in this range, like from a percentage perspective than, for example, we had in the 2023 savings. And of course, we're making a lot of CapEx investment, right? So that's connected to those savings. So maybe that's one thing to note.

And then from an OpEx perspective, that would be the other main component. And hopefully, it's clear from the last panel that I just led that there's a lot of opportunities there. But I think there's -- not just even from an efficiency perspective, I think there's a lot of opportunity to continue to drive focus, to continue to drive simplification. And then you've heard examples throughout today of how our technology has been modernized that has allowed us to do new things. Our operating model has matured. That's allowed us to do new things. And so I think making sure that we're reassessing how our resources are allocated as well and challenging that everywhere, there are new opportunities now for us to do that.

When we've had -- I said this before, too, when we had similar cost improvement plans in the past, we delivered on those commitments. I expect the same here. And just to put it in sort of the broader context, and I say this sometimes when we get questions on this topic, our revenue last year was about $3.4 billion. We had a little over $430 million of adjusted EBITDA. That means there's $3 billion of cost between revenue and adjusted EBITDA. And so this is just over 2% savings. That's what you need to believe. And again, we're committed to this, and we'll update you along the way. We know it's important, and we're committed to making sure that we deliver against that range.

Thank you, Sean. All right. Next question is for Robert. A question about your recent and planned CapEx. Aren't your competitors buying the same kinds of new equipment as you are? And if so, won't all or most of the benefit of those investments go to customers, not shareholders?

It's a good question. I would say, first of all, very strongly, we believe that returns will come to shareholders. And that is not exclusive of the fact that it's going to drive a lot of customer value because the way to drive the best shareholder returns is for us to keep growing, keep building our customer loyalty.

And I'm going to step way back to 20 years ago or more when we had this idea of buying offset presses for multiple millions of dollars each and cutting equipment and platemaking equipment for millions of dollars that previously was only being used in high-volume applications, think of like fast-moving consumer goods printing for pharmaceutical boxes or label production. And we applied that very expensive, but still relatively off-the-shelf capital equipment that anyone could buy to business cards. We also applied them to flyers and post cards. But if you don't have the volume, this model doesn't work. And that model remains exactly the same thing today. Just -- we're just applying it different products.

So the CapEx we're buying is usually designed at its core for very high-volume traditional printing applications. And still today, think of long runs of labels of packaging, of catalogs in the large format space, think of huge volumes of point of purchase displays that are used by the biggest retailers in the world or the biggest fast-moving consumer goods companies in the world. And you may have noticed that the -- most of the suppliers today mentioned the unprecedented Cimpress scale compared to our competitors. And this scale is, first of all, big even compared to traditional long-run printers. But at Cimpress, its scale, we -- that's composed of millions of customers per quarter, whereas traditional long-run competitors sell to dozens or maybe 100 customers per quarter.

So Cimpress' concentration of this massive volume of small orders into focused production hubs is even increasing further that scale, and we're doing it on a product line by product line basis. So that scale, besides having the equipment and the production operations requires total automation of every step of the value chain from design uploads or design creation through to shipping and delivery. It also requires a mastery of web-to-print online experience of e-commerce direct marketing of branding, has to have fully automated workflows that go not only into the printing operations, but to the graphic service teams we have in places like India and Tunisia. It requires follow the sun 24/7 customer service operations, which we have in low-cost countries around the world.

And finally, because we're almost always either the top 1 or 2 customers or potential customers of our print equipment partners as well as the most cutting-edge customer who works with their engineers to drive their capabilities forward, we're almost always able to negotiate best-in-market favorable pricing for the equipment. So yes, anyone can buy these machines probably at a higher price without the deep engineer-to-engineering co-development that we do, but a machine alone is only one of the many parts of the Cimpress value chain, and that was true when we were using -- when we first started using $4 million production lines to make business cards. It's true today.

Thanks, Robert. Great answer. I'll stick with you, Robert, for the next question. Can you give an example of using a third-party fulfiller to provide a product to your customers instead of using Cimpress to fulfill?

Absolutely. One that comes to mind is the area of promotional products and apparel. Customers love these products because you put your logo on it, it really helps you brand your business, you stand out, you grow. It's a core part of our value chain and our value proposition. From a business model perspective, it's a tough business because inventory takes a lot of capital. There can be obsolescence of inventory. There can be mismatches of inventory versus demand. And if you think about this, every single product has many SKUs.

So take the example of a wind jacket or a rain jacket. It comes in 5 sizes and 6 colors, men's and women's. And so [indiscernible], that's 60 stockkeeping units for 1 rain jacket product. So we partner with third-party fulfillers for this, and there's some really excellent apparel and promotional product suppliers who hold that inventory, who will do the decoration in many cases, especially for higher volume orders.

And then I mentioned in my presentation that we've engineered a massive expansion of apparel products through an inventory-light just-in-time management supply chain model for apparel. That is a perfect example of that. Sometimes we'll pull it in, in real time. We'll have -- we'll be digitally connected to the inventory systems of our suppliers, and we may just pull it in and decorate ourselves. Many times, we'll have them decorate it. But that's a perfect example even though someone like National Pen is very good and high-volume orders of a limited set of those promotional products. We find our third-party fulfiller partners to be a critical part of our value chain.

Thank you, Robert. Informative. All right. Next up is a question for Florian. So Florian, there's a Vista slide from our presentation today on brand awareness that referenced 5 competitors. Who are the competitors?

Yes. I'm afraid I'll have to disappoint you there, Meredith, and whoever asked the question. I'm not going to disclose the names of those 5 competitors, but let me add some background on the survey. And hopefully, that also helps just put what I said, and make sure you have the context there.

So we are obviously not running these surveys ourselves. We have a market research company, in this case, Kantar, who twice a year run a big branding study for us in various markets, among them, the markets that I've shown to you. And of course, the competitive set that we use there is much larger than just 5 companies. It's actually more than 10 that we use in every geography and that we carefully select based on local market conditions.

And as I said earlier, this competitive set doesn't just include online print providers, and it does include where they exist. And you've seen even in the earlier charts that Robert showed how it's still very fragmented the market is, it includes online and offline providers and also the competitive set does include design software platforms.

Let me -- maybe add a little bit here because maybe that's also where the question is coming from. Speaking of these design software platforms, I will be very explicit. We're getting a lot of orders from customers who use one or sometimes even more of these design software platforms. So net, this is great because they're helping democratize design. And as I explained earlier, our commitment to customers is we want to make it very, very easy for them to port their designs to us and then bring those designs to life through custom printed products. That's really our commitment. And so we really want to make that as easy as we can.

So coming back to the brand differentiation part for printing specifically, we remain comfortably ahead. Of course, we do see some competitors, including these design platforms growing in awareness. And so that means we have to continue to invest behind our print-specific capabilities, our print-specific brand attributes and ensure that we stay differentiated and ensure that our customers can create fantastic custom print products through our website, have a great print experience and create an emotional connection with our brand.

Excellent. Thank you, Florian. All right. Next question is for Paolo. A similar question, asking for clarification on something in a presentation. Paolo, who is Pixartprinting's North American partner that they're fulfilling for?

Yes. We are under nondisclosure agreements. So I won't be able to say the name, but I can say a few things. It is one of the biggest players in the market, in the U.S. market for multipage products. Having said that, it is much smaller than the production of multipage products for the Upload and Print in Cimpress in Europe. But this is a real win-win partnership that is already delivering value to both companies, them and us.

Thank you, Paolo. Okay. Next question for Sean, a quick one. Why not disclose aggregated growth rates and gross profit, EBITDA or EBIT margins for your elevated products and legacy products?

Yes. It's a fair question, and I wish it was that easy, but let me start with what we did disclose. So in the appendix to the Robert's annual letter that was published at the end of July, if you look at -- I think it's on Page 20, there's a table that shows a breakdown that gets all of to what you're talking about, but not quite fully there. And the reason that we chose to disclose it in that way versus just elevated versus legacy is that while it would be easier if that was -- if we could do that, the world is simply just not that binary. And most categories have examples of each.

So we sort of talk about it in a way that might, from the outside, feel binary. It's either this or it's that, but these categories actually have examples of each. So take your roll labels was used in the elevated products panel. Well, in the labels category, you have roll labels. You also have return address labels, which was one of the earliest legacy products.

In signage, there's basic rectangular vinyl banners, which are a legacy product. There's lawn signs, very simple products. Then there's also beautiful pop-up tents or step and repeat banners that are very much elevated products.

On consumer, there's the basic invitations and announcements. Then there's drinkware and apparel for consumer applications. PPAG, there's basic white T-shirts, which are legacy spreads. And then there's the -- all the other products more recently launched, and Robert talked a little bit about that. So that's why it's not so simple to say, here's legacy, here's elevated. It just doesn't -- is not that binary. So we'll try and pull that apart and make it clear for folks, but that's why -- and that's my personal -- I don't know if anyone else wants to jump in on this because we...

Sean, I'd love to jump in and just -- I see the question asked about EBITDA and EBIT margin. I think that is particularly difficult because the way we make those closer to the bottom line numbers is to maximize the cash flow per customer through serving them with all these additional elevated products and better service. So the gross margins, we can talk about. But when you get to what it does to EBITDA and EBIT, it really -- we amortize our software development and our advertising and marketing development across multiple products. So it's not -- increasing gross profit by x dollars doesn't translate directly down to EBIT. Often it's accretive, but it's not a simple process or even a feasible process to get to that profit level at the bottom line by category.

Thank you both. I will just add one thing to round that out, which is to say that just because the product is a legacy product, something that's been in the market for a very long time, doesn't mean that it is automatically in decline. We have, as Sean mentioned, a bunch of products like banners, lawn signs, basic white T-shirts that are growing at Cimpress. And so it is -- as Sean mentioned, it's not black and white, it's not binary. It is -- there's a spectrum here, and it doesn't automatically mean if something is categorized as a legacy product that it's in decline.

All right. That is all of the live questions that we got from investors for the call. And I'm going to turn it back to you, Robert, to close this out.

Okay. Well, thank you, Meredith. And most of all, thank you to all of you for the time you've invested today to learn more about Cimpress. I really hope that you'll take away the 3 core messages that I outlined in my opening presentation. Again, those were that elevated products are driving a step function improvement in Cimpress' per customer lifetime value. Second, our past and ongoing investments in MCP and in manufacturing capabilities are reducing our cost of goods sold and our OpEx, while they're also increasing the velocity of new product introductions and user experience improvements. As part of that, artificial intelligence is supercharging those impacts, and we're already successfully implementing AI applications in many different parts of Cimpress. And finally, as Sean showed in his presentation, we have a strong financial future with a very clear path to FY '28 EBITDA of at least $600 million with very significant deleveraging.

So thank you for your time, and have a great day, everyone.