VENLO, Netherlands - Consolidated Balance Sheets table, Deferred tax assets for December 31, 2016 of release dated January 25, 2017, should read: 18,344 (instead of 35,155).

The corrected release reads:

CIMPRESS REPORTS SECOND QUARTER FISCAL YEAR 2017 FINANCIAL RESULTS

• Second quarter 2017 results:
  • Revenue grew 16 percent year over year to $576.9 million
  • Revenue grew 8 percent year over year excluding the impact of currency exchange rate fluctuations and revenue from businesses acquired during the past twelve months
  • GAAP income from operations was $33.7 million in the current period versus $67.6 million in the year-ago period, due in part to planned increases in investments
  • GAAP net income per diluted share was $1.07 in the second quarter of 2017 versus $1.81 in the year-ago period
  • Adjusted net operating profit after tax (adjusted NOPAT) was $50.6 million versus $82.5 million in the year-ago period

Cimpress N.V. (Nasdaq: CMPR), the world leader in mass customization, today announced financial results for the three month period ended December 31, 2016, the second quarter of its 2017 fiscal year.

"We delivered another solid quarter and we continue to execute well against our plans to invest in a broad spectrum of long-term organic investments as outlined at the beginning of the fiscal year," said Robert Keane, president and chief executive officer. "Our largest business unit, Vistaprint, continued to gain traction as customers recognize an improved customer value proposition from its expanded product and service offering and reduced shipping prices. Vistaprint repeat revenue continued at double-digit growth, and our first-time customer count and revenue grew again for the third quarter in a row.

"Importantly," Keane continued, "we achieved a significant milestone with our mass customization platform this quarter against our goal to materially increase platform order flow in fiscal 2017. The Vistaprint business unit fulfilled approximately 2.5 million orders for holiday products across the platform and Cimpress managed that volume across a network of more than a dozen third-party fulfillers and multipleCimpress-owned production facilities."

Cimpress' increased use of third-party fulfillers was intended to test the platform, facilitate more rapid new product introduction, and reduce the need for capital expenditures to provide capacity for the seasonal peak. Keane added, "The MCP technology worked very well during this first large-scale demonstration of the mass customization platform, allowing us to manage volumes across multiple internal and external production facilities, launch 350 new Vistaprint products, and reduce capital expenditures year over year."

Sean Quinn, chief financial officer, said, "Our revenue results were in line with our expectations, while revenue growth continues to be pressured in the near-term by the loss of certain partner revenue, as we described at the beginning of the year. This loss of partner revenue coupled with our increased investments continues to weigh on near-term profitability. However, we remain confident that our investments will strengthen our competitive position and improve the intrinsic value of our business, consistent with our fundamental approach to capital allocation.

"One noticeable aspect of this quarter's results is the decline in gross margin of about 800 basis points year over year," continued Quinn. "About three-quarters of this impact is from a combination of the increased weighting of our Upload and Print business units, planned investments, and unfavorable currency changes that are offset elsewhere in the income statement. The remainder was primarily caused by a tight temporary labor market impacting our Canadian production facility that increased our internal costs and also drove us to turn quickly to more expensive fulfillment alternatives during our seasonal peak."

Cimpress closed its previously announced acquisition of National Pen on December 30, 2016, which impacted the balance sheet and cash flows from investing and financing activities for the second quarter of fiscal year 2017. However, other than customary professional fees, there was no impact to the income statement and adjusted NOPAT as the post-closing activity was immaterial in the quarter.

GAAP operating income was negatively influenced by the following year-over-year items in the second quarter:

• Increased organic investments in fiscal year 2017 compared to fiscal year 2016, which materially weigh on profitability. These investments include costs that impact our gross margin, including shipping price reductions, expanded design services, and new product introduction.
• The impact of about 200 basis points on consolidated gross margin described above that we believe resulted from production inefficiencies during the quarter.
• Approximately $6 million of profit decline due to the termination of two partner contracts as previously described.
• An increase in share-based compensation expense of $5.2 million, due to the August, 2016 implementation of our previously described long-term incentive program, partially offset by a roll-off of expenses from past grants.
• An increase in earn-out related charges of $3.6 million. The second quarter fiscal year 2017 charge is primarily associated with the acquisition of WIRmachenDRUCK, due to a $6.7 million increase in fair value of the liability as a result of its continued strong performance.
• A significant year-over-year currency impact, which is offset in "other income, net" by the year-over-year change in realized gains on currency hedges.

Cimpress also announced today in a separate press release that it plans to decentralize its operations in order to improve accountability for customer satisfaction and capital returns, simplify decision-making, and improve the speed of execution. In that press release, as well as in our supplemental earnings documents posted on ir.cimpress.com, the company outlines expected restructuring charges and savings.

Sean Quinn concluded, “The net financial impact of the reorganization we announced today is likely to be relatively small in fiscal year 2017 as the expected in-year savings will be offset by expected charges. However, in addition to the organizational benefits that we hope to achieve, we expect this to result in material annualized savings that will drive higher returns on our invested capital and free up funds for additional value creation activities.”

Consolidated Financial Metrics:

• Revenue for the second quarter of fiscal year 2017 was $576.9 million, a 16 percent increase compared to revenue of $496.3 million in the same quarter a year ago. Excluding the estimated impact from currency exchange rate fluctuations and revenue from businesses acquired during the past twelve months, revenue grew 8 percent year over year in the second quarter. The previously described loss of partner revenue and the material reduction in shipping prices to Vistaprint customers continues to negatively impact revenue growth.
• Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the second quarter was 52.0 percent, down from 60.2 percent in the same quarter a year ago due to the increased weighting of our Upload and Print business units, planned investments in cost of revenue, production and outsourcing inefficiencies during our holiday peak, and significant unfavorable currency changes.
• Contribution margin (revenue minus the cost of revenue, the cost of advertising and payment processing as a percent of total revenue) in the second quarter was 34.0 percent, down from 41.2 percent in the same quarter a year ago. The year-over-year reduction in gross margin described above was partially offset by an 80 basis point reduction in advertising as a percent of revenue, which was also driven by the mix shift toward our Upload and Print businesses.
• GAAP operating income in the second quarter was $33.7 million, or 5.8 percent of revenue, a decrease compared to $67.6 million, or 13.6 percent of revenue, in the same quarter a year ago. The drivers of this significant decrease are described above, before the "Consolidated Financial Metrics" section of this release.
• Adjusted NOPAT for the second quarter, which is defined at the end of this press release, was $50.6 million, or 8.8 percent of revenue, down from $82.5 million, or 16.6 percent of revenue, in the same quarter a year ago. The profit impacts described above that also impact adjusted NOPAT are the increased organic investments, production inefficiencies, the reduction in partner profits, and the implementation of our new long-term incentive program.
• GAAP net income attributable to Cimpress for the second quarter was $35.0 million, or 6.1 percent of revenue, compared to $59.3 million, or 12.0 percent of revenue in the same quarter a year ago. In addition to the impacts described above, GAAP net income was positively influenced by year-over-year non-operational, non-cash currency impacts, and a gain on the sale of marketable securities, partially offset by a significant increase in our tax provision in the current period compared to the year-ago period. This year-over-year tax increase is due to the combination of a higher forecasted effective tax rate as a result of a less favorable mix of projected income for the full year, as well as the true-up effect from more volatile quarter-to-quarter earnings in fiscal year 2017 compared to 2016.
• GAAP net income per diluted share for the second quarter was $1.07, versus $1.81 in the same quarter a year ago.
• Capital expenditures in the second quarter were $16.9 million, or 2.9 percent of revenue, versus $19.2 million, or 3.9 percent of revenue in the same quarter a year ago.
• During the quarter, the company increased its ownership of Pixartprinting and its business in Japanto 100% for $24.0 million ($20.2 million through financing activities and $3.8 million through operating activities). As part of the transaction in Japan, Cimpress also sold its shares in the former joint venture partner for $6.3 million. The gain on the sale of those securities of $2.3 million was recorded in other income, net on the income statement.
• During the second quarter, the company generated $105.1 million of cash from operations and $77.3 million in free cash flow, a non-GAAP financial measure, which is defined at the end of this press release.
• As of December 31, 2016, the company had $49.6 million in cash and cash equivalents and $876.1 million of debt, net of issuance costs. Cimpress completed the previously announced acquisition of National Pen on December 30, 2016 for $206.2 million, net of cash acquired. This is subject to customary post closing adjustments based on acquired cash, debt and working capital balances. As discussed with the December 12, 2016 announcement of our National Pen acquisition, Cimpressexpected that its total leverage ratio (which is debt to trailing twelve month EBITDA) would increase above its long-term target of 3 times trailing twelve month EBITDA as defined by its debt covenants. Based on Cimpress' debt covenant definitions, its total leverage ratio was 3.43 as of December 31, 2016. As often described, Cimpress is willing to temporarily go above its long-term total leverage ratio target of 3 times trailing twelve month EBITDA for the right opportunity and with a clear path to de-lever below that target quickly, which in this case is expected to be within one year. After considering debt covenant limitations, as of December 31, 2016 the company had $220.7 millionavailable for borrowing under its committed credit facility.
• During the quarter, Cimpress purchased 593,763 of its own shares for $50.0 million inclusive of transaction costs, at an average price per share of $84.22.

Supplemental Materials and January 26, 2017 Conference Call Information
Cimpress has posted an end-of-quarter presentation with accompanying prepared remarks at ir.cimpress.com. On Thursday, January 26, 2017 at 7:30 a.m. (EST) the company will host a live Q&A conference call with management to discuss the financial results, which will be available via webcast at ir.cimpress.com and via dial-in at +1 (844) 778-4144, conference ID 49883566. A replay of the Q&A session will be available on the company’s website following the call on January 26, 2017.

Investor Meeting and Webcast on February 2, 2017
In addition to the investor conference call on January 26, 2017, Cimpress will also host a meeting with investors at its Waltham, MA USA office on February 2, 2017, to provide more details about our recent National Pen acquisition, the intended decentralization of its organizational structure, and take any other questions as time allows. The event will begin at 1:00 p.m. EST and conclude at 2:30 p.m. EST. A live webcast of the event will be available on the Investor Relations section of the Company’s website at ir.cimpress.com, and an audio replay will be available until February 2, 2018. Investors interested in attending should contact Investor Relations at [email protected]. Space is limited.

Important Reminder of Cimpress’ Priorities
We ask investors and potential investors in Cimpress to understand the upper-most objectives by which we endeavor to make all decisions, including investment decisions. Often we make decisions in service of these priorities that could be considered non-optimal were they to be evaluated based on other criteria such as (but not limited to) near- and mid-term net income, operating income, EPS, cash flow, EBITDA, and adjusted NOPAT.

Our priorities are:

• Strategic Objective: To be the world leader in mass customization. By mass customization, we mean producing, with the reliability, quality and affordability of mass production, small individual orders where each and every one embodies the personal relevance inherent to customized physical products.
• Financial Objective: To maximize intrinsic value per share, defined as (a) the unlevered free cash flow per share that, in our best judgment, will occur between now and the long-term future, appropriately discounted to reflect our cost of capital, minus (b) net debt per share.

To understand these objectives and their implications, Cimpress encourages investors to read Robert Keane’s letter to investors published on July 27, 2016 at ir.cimpress.com and to review materials presented at our annual investor day meeting on August 10, 2016.

Full Release