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CafePress Reports Fourth Quarter and Fiscal Year 2012 Results



CafePress Reports Fourth Quarter and Fiscal Year 2012 Results

                  Annual Net Revenues Increase 24% Over 2011

      Completed EZ Prints Acquisition to Drive Corporate Shops Expansion

LOUISVILLE, Ky., Feb. 13, 2013 (GLOBE NEWSWIRE) -- CafePress Inc.
(Nasdaq:PRSS), The World's Customization Engine®, today reported financial
results for the three and twelve months ended December 31, 2012.

"CafePress ended 2012 with a strong holiday season highlighted by solid
performance across all of our brands. We are encouraged by the key indicators
of our growth; revenues from social media and mobile channels were up
approximately 100% and corporate shops grew significantly, over 2011 levels,"
said Chief Executive Officer Bob Marino. "During 2013 we plan to introduce
additional on-demand customizable products, expand CafePress' presence across
the web via strategic partnerships and continue to make prudent investments in
technology and operations to drive long-term revenue and margin growth."

Fourth Quarter 2012 Financial Highlights

  o Net revenues totaled $87.2 million, compared to $69.5 million in the
    fourth quarter of 2011. CafePress' existing brands represented $79.6
    million of revenues, while EZ Prints contributed $7.6 million.
  o Adjusted EBITDA was $9.4 million, compared to $11.5 million in the fourth
    quarter of 2011.
  o Gross profit margin was 39.7% of net revenues, compared to 43.9% in the
    fourth quarter of 2011.
  o GAAP net income was $3.1 million (including stock-based compensation,
    amortization of intangible assets, and acquisition costs), compared to
    $5.1 million in the fourth quarter of 2011.
  o GAAP net income per diluted share was $0.18, compared to $0.32 in the
    fourth quarter of 2011.
  o Non-GAAP net income (excluding stock-based compensation, amortization of
    intangible assets and acquisition costs) was $5.4 million, compared to
    $6.7 million in the fourth quarter of 2011.
  o Non-GAAP net income per diluted share was $0.31, compared to $0.44 in the
    fourth quarter of 2011.
  o Net cash provided by operating activities of $18.4 million, compared to
    $15.5 million in the fourth quarter of 2011. At December 31, 2012, cash,
    cash equivalents, and short term investments totaled $40.6 million.

Fourth Quarter 2012 Operating Metrics (Excluding EZ Prints)

  o Transacting customers totaled 1,245,338, a 9% year-over-year increase.
  o Orders totaled 1,600,952, a 14% year-over-year increase.
  o Average order size was $50, a 2% year-over-year increase.

Financial Year 2012 Highlights

  o Net revenues totaled $217.8 million, compared to $175.5 million in 2011.
  o Adjusted EBITDA was $17.6 million, compared to $18.7 million in 2011.
  o Gross profit margin was 41.0% of net revenues, compared to 42.9% in 2011.
  o GAAP net loss was $(0.1) million (including stock-based compensation,
    amortization of intangible assets and acquisition costs), compared to net
    income of $3.6 million in 2011.
  o GAAP net loss per diluted share was $(0.01), compared to net income per
    diluted share of $0.16 in 2011.
  o Non-GAAP net income (excluding stock-based compensation, amortization of
    intangible assets and acquisition costs) was $8.0 million, compared to
    $8.4 million in 2011.
  o Non-GAAP net income per diluted share was $0.48, compared to $0.56 in
    2011.

Financial Year 2012 Operating Metrics (Excluding EZ Prints)

  * Transacting customers totaled 3,086,857, a 15% year-over-year increase.
  * Orders totaled 4,159,230, a 17% year-over-year increase.
  * Average order size was $51, a 2% year-over-year increase.

Recent Operating Highlights

  * Completed the acquisition of EZ Prints, Inc. to further drive the
    expansion of corporate shops.
  * Launched new corporate shops for partners including online retailer
    Michaels®, and entertainment brands ESPN, Sprout and VIZ Media.
  * Expanded the number of products available for on-demand customization by
    adding more than 200 new base goods during 2012 highlighted by additions
    to categories including mobile device cases, home, apparel, travel and
    accessories bringing the total number of on-demand products to more than
    550.
  * Debuted a number of new social media programs including "Likeable Gifts"
    and a licensed A Christmas Story online store on Facebook.
  * Launched myinstacard.com, connecting social photo sharing and the creation
    of personalized stationery products.

Business Outlook

"Looking ahead, we expect to drive solid growth in 2013. Our revenue growth
outlook of approximately 16% at the midpoint of our range is slightly above
the average rate of e-commerce growth as we integrate our recent acquisitions
with our e-commerce platform," said Chief Financial Officer Monica Johnson.
"Our Adjusted EBITDA guidance includes consolidation of manufacturing
operations into our Louisville plant which will result in an impact of
approximately 2 percentage points for the year. We expect this consolidation
to lead to margin expansion as we exit 2013."

For the first quarter of 2013:

  * Net revenues are expected to be in the range of $44 million to $48
    million.
  * Adjusted EBITDA ranging from a loss of $(1.5) million to income of $0.2
    million.
  * Non-GAAP net loss per diluted share of $(0.15) to $(0.08).
  * Weighted average fully diluted shares estimated at 17.5 million.

For fiscal year 2013:

  * Net revenues ranging from $246 million to $259 million, a year-over-year
    increase of 13% to 19%.
  * Adjusted EBITDA of $11 million to $16 million.
  * Non-GAAP net income per diluted share of $0.07 to $0.22.
  * Weighted average fully diluted shares of approximately 17.7 million.
  * Total capital expenditures in the range of $12 million to $14 million.

Fourth Quarter 2012 Conference Call

Management will review the fourth quarter 2012 financial results and its
expectations for the first quarter and full year 2013 on a conference call on
Wednesday, February 13, 2013 at 2:00 p.m. Pacific Daylight Time (5:00 p.m.
Eastern Time). To participate on the live call, analysts and investors should
dial 1-877-941-1427at least ten minutes prior to the call. CafePress will also
offer a live and archived webcast of the conference call, accessible from the
"Investors" section of the Company's Web site at
http://investor.cafepress.com/.

Non-GAAP Financial Information

This press release contains certain non-GAAP financial measures. Tables are
provided at the end of this press release that reconcile the non-GAAP
financial measures to the most directly comparable financial measures prepared
in accordance with Generally Accepted Accounting Principles (GAAP). These
non-GAAP financial measures include Adjusted EBITDA, non-GAAP income, and
non-GAAP net income per diluted share. For a reconciliation of these non-GAAP
financial measures to the most directly comparable GAAP measures, please see
the information provided at the end of this press release.   

To supplement the Company's consolidated financial statements presented on a
GAAP basis, we believe that these non-GAAP measures provide useful information
about the Company's core operating results and thus are appropriate to enhance
the overall understanding of the Company's past financial performance and its
prospects for the future. These adjustments to the Company's GAAP results are
made with the intent of providing both management and investors a more
complete understanding of the Company's underlying operational results and
trends and performance. Management uses these non-GAAP measures to evaluate
the Company's financial results, develop budgets, manage expenditures, and
determine employee compensation. The presentation of additional information is
not meant to be considered in isolation or as a substitute for or superior to
net income (loss) or net income (loss) per share determined in accordance with
GAAP.

Notice Regarding Forward-Looking Statements

This media release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which involve risks and
uncertainties. These forward-looking statements include, among other matters,
all statements regarding the Company's financial expectations as to growth and
profitability for the first quarter and full year 2013 set forth under the
caption "Business Outlook." These forward-looking statements are not
guarantees of future results and are subject to risks, uncertainties and
assumptions that could cause our actual results to differ materially from
those expressed in these forward-looking statements. Factors that might
contribute to such differences include, among others, economic downturns and
the general state of the economy; intense competition, which could lead to
pricing pressure among other effects; our ability to expand our customer base
and meet production requirements; risks and uncertainties arising from the
integration of EZ Prints following the Merger with CafePress; our ability to
retain and hire necessary employees, including seasonal personnel, and
appropriately staff our operations; the impact of seasonality on our business;
our ability to timely develop new product and service offerings, as well as
consumer acceptance of new products and services; our ability to develop
additional adjacent lines of business to complement our growth strategies; and
unforeseen changes in expense levels. For more information regarding the risks
and uncertainties that could cause actual results to differ materially from
those expressed or implied in these forward-looking statements, as well as
risks relating to our business in general, we refer you to the "Risk Factors"
sections of the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2012 as filed with the Securities and Exchange Commission on
November 14, 2012 and in other reports filed by the Company with the
Securities and Exchange Commission from time to time, which are available on
the Securities and Exchange Commission's Web site at www.sec.gov. These
forward-looking statements are based on current expectations and speak only as
of the date hereof. The Company assumes no obligation to update these
forward-looking statements.

About CafePress (PRSS):

CafePress is The World's Customization Engine®. Launched in 1999, CafePress
empowers individuals, groups, businesses and organizations to create, buy and
sell customized and personalized products online using the company's
innovative and proprietary print-on-demand services and e-commerce platform.
Today, CafePress' portfolio of e-commerce websites and companies includes
CafePress.com, CanvasOnDemand.com, GreatBigCanvas.com, Imagekind.com,
InvitationBox.com, Logosportswear.com and EZ Prints, Inc.

The CafePress logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=12183

 
CafePress Inc.
Condensed Consolidated Statement of Operations
(In thousands, except per share amounts)
(Unaudited)
                                                                     
                                      Three Months Ended Year Ended
                                      December 31,       December 31,
                                      2012     2011      2012       2011
                                      (Unaudited)        (Unaudited)
                                                                     
Net revenues                           $87,249  $ 69,537  $ 217,786  $ 175,482
Cost of net revenues                  52,584   39,029    128,599    100,191
Gross Profit                          34,665   30,508    89,187     75,291
                                                                     
Operating expenses:                                                  
Sales and marketing                   19,640   14,795    53,978     40,809
Technology and development            5,111    3,137     14,921     12,768
General and administrative            4,628    3,919     16,809     13,573
Acquisition-related costs             916      936       3,424      2,696
Total operating expenses              30,295   22,787    89,132     69,846
                                                                     
Income from operations                4,370    7,721     55         5,445
                                                                     
Interest income                       18       11        76         56
Interest expense                      (56)     (52)      (202)      (194)
                                                                     
Income (loss) before provision for    4,332    7,680     (71)       5,307
income taxes
Provision for income taxes            1,227    2,580     11         1,701
                                                                     
Net income (loss)                      $ 3,105  $ 5,100   $ (82)     $ 3,606
                                                                     
Net income (loss) per share of common                                
stock:
Basic                                  $ 0.18   $ 0.33    $ (0.01)   $ 0.17
Diluted                                $ 0.18   $ 0.32    $ (0.01)   $ 0.16
Shares used in computing net income                                  
(loss) per share of common stock:
Basic                                 17,113   8,941     15,021     8,798
Diluted                               17,280   9,573     15,021     9,403

 
Stock-based compensation is allocated as follows:
                                                                    
                                       Three Months Ended Year Ended
                                       December 31,       December 31,
                                       2012       2011    2012     2011
                                       (Unaudited)        (Unaudited)
                                                                    
Cost of net revenues                    $ 64       $ 46    $ 238    $ 164
Sales and marketing                    150        144     573      520
Technology and development             21         59      191      267
General and administrative             886        426     3,181    1,427
                                                                    
Total stock-based compensation expense  $ 1,121    $ 675   $ 4,183  $ 2,378

 
CafePress Inc.
Condensed Consolidated Balance Sheet
(In thousands, except par value amounts)
(Unaudited)
                                                                   
                                                     December 31, December 31,
                                                     2012         2011
ASSETS                                               (Unaudited)  (Unaudited)
CURRENT ASSETS:                                                    
Cash and cash equivalents                             $ 31,198     $ 27,900
Short-term investments                               9,403        8,437
Accounts receivable                                  10,390       2,210
Inventory                                            9,765        6,726
Deferred tax assets                                  2,794        1,842
Deferred costs                                       3,756        2,787
Prepaid expenses and other current assets            4,844        2,631
Total current assets                                 72,150       52,533
                                                                   
Property and equipment, net                          19,892       13,303
Goodwill                                             40,231       11,076
Intangible assets, net                               19,979       6,756
Deferred tax assets                                  4,417        2,115
Other assets                                         863          3,199
TOTAL ASSETS                                          $ 157,532    $ 88,982
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY                               
CURRENT LIABILITIES:                                               
Accounts payable                                      $ 15,088     $ 10,512
Partner commissions payable                          7,451         -- 
Accrued royalties payable                            6,724        6,454
Accrued liabilities                                  17,761       8,713
Income taxes payable                                  765          1,539
Deferred revenue                                     9,099        6,870
Short-term borrowings                                894           -- 
Capital lease obligations, current                   531          472
Total current liabilities                            58,313       34,560
Capital lease obligations, non-current               2,282        2,702
Other long-term liabilities                          3,628        3,289
                                                                   
TOTAL LIABILITIES                                     64,223       40,551
                                                                   
Convertible preferred stock $0.0001 par value: 0 and
12,345 shares authorized and 0 and 5,535 shares
issued and outstanding as of December 31, 2012 and    --          22,811
2011; liquidation preference of $0 and $17,902 as of
December 31, 2012 and 2011
                                                                   
Stockholders' Equity :                                             
Preferred stock, $0.0001 par value: 10,000 and 0
shares authorized as of December 31, 2012 and 2011;   --           -- 
none issued and outstanding
Common stock, $0.0001 par value: 500,000 and 34,815
shares authorized and 17,114 and 8,943 shares issued 2            1
and outstanding as of December 31, 2012 and 2011,
respectively
Additional paid-in capital                           93,890       26,120
Accumulated deficit                                  (583)        (501)
                                                                   
TOTAL STOCKHOLDERS' EQUITY                            93,309       25,620
                                                                   
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND    $ 157,532    $ 88,982
STOCKHOLDERS' EQUITY 

 
CafePress Inc.
Condensed Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
                                                                      
                                                           Year Ended
                                                           December 31,
                                                           2012      2011
                                                           (Unaudited)
Cash Flows from Operating Activities:                                 
Net income (loss)                                           $ (82)    $ 3,606
Adjustments to reconcile net loss to net cash provided by             
operating activities:
Depreciation and amortization                              6,294     5,836
Amortization of intangible assets                          3,647     2,385
Loss (gain) on disposal of fixed assets                     (75)      (175)
Stock-based compensation                                    4,183     2,378
Change in fair value of contingent considerations           100       137
liability 
Deferred income taxes                                       (1,704)   (972)
Tax benefits from stock-based compensation                  (28)      269
Excess tax benefits from stock-based compensation           (142)     (472)
Changes in operating assets and liabilities, net of effect            
of acquisitions:
Accounts receivable                                         (6,057)   1,319
Inventory                                                   (2,136)   (2,079)
Prepaid expenses and other current assets                   (3,140)   140
Other assets                                                (172)     (336)
Accounts payable                                            3,351     371
Partner commissions payable                                 1,709     --
Accrued royalties payable                                   270       892
Accrued and other liabilities                               2,863     2,159
Income taxes payable                                        (774)     18
Deferred revenue                                            2,003     1,448
Net cash provided by operating activities                  10,110    16,924
                                                                      
Cash Flows from Investing Activities:                                 
Purchase of short-term investments                         (9,403)    (9,387)
Proceeds from maturities of short-term investments         8,437      10,983
Purchase of property and equipment                         (8,039)    (3,440)
Capitalization of software and website development costs   (2,973)    (1,933)
Proceeds from disposal of fixed assets                     94         235
Decrease (increase) in restricted cash                     255        (500)
Acquisition of businesses, net of cash acquired            (35,666)   (3,985)
Net cash used in investing activities                      (47,295)  (8,027)
                                                                      
Cash Flows from Financing Activities:                                 
Principal payments on capital lease obligations            (477)      (441)
Payments for deferred offering costs                       0          (2,182)
Proceeds from exercise of stock options                    298        1,878
Proceeds from issuance of common stock                     41,770     --
Excess tax benefits from stock based compensation          142        472
Settlement of contingent consideration                     (1,250)    --
Net cash provided by (used in) financing activities        40,483    (273)
                                                                      
Net increase in cash and cash equivalents                  3,298     8,624
Cash and cash equivalents — beginning of period            27,900    19,276
Cash and cash equivalents — end of period                   $ 31,198  $ 27,900
                                                                      
Supplemental Disclosures of Cash Flow Information:                    
Cash paid for interest                                      $ 201     $ 194
Income taxes paid during the period                         2,517     2,384
                                                                      
Noncash Investing and Financing Activities:                           
Property and equipment acquired under capital lease         $ 116     $ 529
through acquisitions
Conversion of preferred stock to common stock               22,811    --
Common stock issued for acquisition                         830       --
Accrued purchases of property and equipment                 32        408
Deferred offering costs not yet paid                        --        367
Contingent consideration recorded in connection with       7,111      2,784
business acquisitions

 
CafePress Inc.
User Metrics Disclosure
                                                     
                      Three Months Ended  Year Ended
                      December 31,        December 31,
                      2012      2011      2012      2011
User Metrics                                         
                                                     
Customers             1,245,338 1,138,425 3,086,857 2,681,605
year-over-year growth 9%        27%       15%       29%
                                                     
Orders                1,600,952 1,401,126 4,159,230 3,545,305
year-over-year growth 14%       27%       17%       34%
                                                     
Average Order Value   $50       $49       $51       $50
year-over-year growth 2%        -2%       2%        4%

 
CafePress Inc.
Reconciliation of Net Income (Loss) to Adjusted EBITDA 
(In thousands)
                                                                   
                                                                   
                          Three Months Ended         Year Ended
                          December 31,               December 31,
                          2012          2011         2012         2011
                          (Unaudited)                (Unaudited)
                                                                   
Net income (loss)          $ 3,105       $ 5,100      $ (82)       $ 3,606
Non-GAAP adjustments:                                              
Interest and other         38            41           126          138
(income) expense 
Provision for income       1,227         2,580        11           1,701
taxes 
Depreciation and           1,845         1,429        6,294        5,836
amortization 
Amortization of            1,152         765          3,647        2,385
intangible assets 
Acquisition-related        916           936          3,424        2,696
costs 
Stock-based compensation   1,121         675          4,183        2,378
Adjusted EBITDA*           $ 9,404       $ 11,526     $ 17,603     $ 18,740
                                                                   
                                                                   
*Adjusted EBITDA is a non-GAAP financial measure which we define as net income
(loss) less interest and other income (expense), provision for (benefit from)
income taxes, depreciation and amortization, amortization of intangible
assets, acquisition-related costs, stock-based compensation and impairment
charges. Acquisition-related costs include performance-based compensation
payments, any changes in the estimated fair value of performance-based
contingent consideration payments which were initially recorded in connection
with our acquisition of substantially all of the assets of L&S Retail
Ventures, Inc. and LogoSportswear.com, and the business acquisition of EZ
Prints Inc. and third-party fees incurred as part of our acquisitions of L&S
Retail Ventures, Inc., LogoSportswear.com and EZ Prints Inc.

 
CafePress Inc.
Reconciliation of GAAP Operating Income to Non-GAAP Operating Income
(In thousands)
                                                                 
                                   Three Months Ended Year Ended
                                   December 31,       December 31,
                                   2012     2011      2012      2011
                                   (Unaudited)        (Unaudited)
                                                                 
Income from operations              $ 4,370  $ 7,721   $ 55      $ 5,445
Non-GAAP adjustments:                                            
Amortization of intangible assets   1,152    765       3,647     2,385
Acquisition-related costs           916      936       3,424     2,696
Stock-based compensation            1,121    675       4,183     2,378
Non-GAAP operating income           $ 7,559  $ 10,097  $ 11,309  $ 12,904

 
CafePress Inc.
Reconciliation of Net Income (Loss) to Non-GAAP Net Income and Non-GAAP Net
Income per Diluted Share
(In thousands, except per share        
amounts)
                                                                       
                                                                       
                                      Three Months Ended    Year Ended
                                      December 31,          December 31,
                                      2012       2011       2012      2011
                                      (Unaudited)           (Unaudited)
                                                                       
Net income (loss)                      $ 3,105    $ 5,100    $ (82)    $ 3,606
Non-GAAP adjustments:                                                  
Amortization of intangible assets      1,152      765        3,647     2,385
Acquisition-related costs              916        936        3,424     2,696
Stock based compensation               1,121      675        4,183     2,378
Benefit from income taxes              (903)      (798)      (3,131)   (2,681)
Non-GAAP net income                    $ 5,391    $ 6,678    $ 8,041   $ 8,384
                                                                       
Non-GAAP net income per share:                                         
Basic                                  $ 0.32     $ 0.46     $ 0.49    $ 0.58
Diluted                                $ 0.31     $ 0.44     $ 0.48    $ 0.56
                                                                       
Shares used in computing Non-GAAP net                                  
income per share:
Basic                                 17,113     14,476     16,428    14,333
Diluted                               17,280     15,108     16,823    14,938

CONTACT: CafePress Inc.
         Media Relations:
         Marc Cowlin
         650-655-3039
         pr@cafepress.com
        
         Investor Relations:
         The Blueshirt Group
         Alex Wellins, 415-217-5861
         alex@blueshirtgroup.com

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