CafePress Reports First Quarter 2013 Results

CafePress Reports First Quarter 2013 Results

Net Revenues Grew 32% Over First Quarter 2012

LOUISVILLE, Ky., May 2, 2013 (GLOBE NEWSWIRE) -- CafePress Inc. (Nasdaq:PRSS),
The World's Customization Engine®, today reported financial results for the
three months ended March 31, 2013.

"CafePress posted a strong first quarter with robust year-over-year net
revenue growth of 32%," said Chief Executive Officer Bob Marino. "We
experienced strong demand for customized products across all of our businesses
and particularly strong growth in our e-commerce activities for strategic
partners and corporate shops. Our manufacturing consolidation is on track and
our investment in operations should drive gross margin expansion as we exit
2013. Looking ahead, we intend to drive growth by exposing more consumers to
our wealth of customizable on-demand products via search, social and mobile
channels -- not only on the CafePress family of brands but by enabling
customization wherever e-commerce occurs."

First Quarter 2013 Financial Highlights

  *Net revenues totaled $52.5 million, compared to $39.9 million in the first
    quarter of 2012.
  *Adjusted EBITDA was $0.1 million, compared to $2.8 million in the first
    quarter of 2012.
  *Gross profit margin was 37.4% of net revenues, compared to 42.5% in the
    first quarter of 2012.
  *GAAP net loss was $(4.0) million (including stock-based compensation,
    amortization of intangible assets, and acquisition costs), compared to a
    loss of $(0.5) million in the first quarter of 2012.
  *GAAP net loss per diluted share was $(0.23), compared to $(0.06) in the
    first quarter of 2012.
  *Non-GAAP net loss (excluding stock-based compensation, amortization of
    intangible assets and acquisition costs) was $(1.4) million, compared to
    non-GAAP net income of $0.9 million in the first quarter of 2012.
  *Non-GAAP net loss per diluted share was $(0.08), compared to non-GAAP net
    income per diluted share of $0.06 in the first quarter of 2012.
  *At March 31, 2013, cash, cash equivalents, and short-term investments
    totaled $26.1 million.The Company is comfortable with its cash position
    and expects to generate significant cash from operations in the fourth
    quarter, ending 2013 with a strong balance sheet.

First Quarter 2013 Operating Metrics

  *Orders totaled 1,429,106, a 70% year-over-year increase, including the
    consolidation of EZ Prints, Inc. into CafePress' business.
  *Average Order Size (AOS) was $35 including the consolidation of EZ Prints,
    a 27% decrease year-over-year, reflecting the smaller order size of the EZ
    Prints B2B business. AOS excluding the impact of EZ Prints was $53, a 10%
    increase year-over-year.

Recent Operating Highlights

  *Announced CafePress Services to provide turnkey, unique e-commerce
    solutions for corporate partners.
  *Integrated CafePress products into the popular Facebook Gifts marketplace.
  *Signed agreement to develop corporate shop and custom online experiences
    for Marvel Entertainment, LLC, including the Iron Man 3 movie.
  *Launched new corporate shops for Paramount Pictures, including the
    upcoming movie World War Z, and for children's entertainment network
    Sprout®.
  *Enabled personalization and customization tools on consumer products
    company Jarden Corporation for Crock-Pot.com including designs showcasing
    all 32 NFL teams.
  *Expanded the relationship with long-time partner Iconix Brand Group, Inc.
    to create a state-of-the-art website and leverage the Peanuts® brand on
    CafePress.com and other channels.
  *Partnered with interactive ecommerce company Delivery Agent, Inc. to add
    customized products and technology tools to more than 40 entertainment
    sites including Discovery Channel, The History Channel and CBS.
  *Expanded relationship with Getty Images to include portfolio of work in
    the CafePress.com marketplace.
  *Added Fan Portals for fans to design and create user-generated
    merchandise, including both Elvis Presley and Army-inspired merchandise
    due to partnerships with Elvis Presley Enterprises and the US Army,
    respectively.
  *Increased the number of products and base goods on CafePress.com including
    categories such as home, apparel and automobile accessories.

Business Outlook

"Given the strong start to 2013, we are raising our full year revenue
guidance," said Monica Johnson, Chief Financial Officer. "Our second quarter
guidance reflects a shift in the historical weighting of our business due to
the revenue and profit seasonality of newly acquired businesses, the expected
timing of partner programs and the continued investment in the consolidation
of our manufacturing operations.All of these factors point toward a higher
percentage of revenue and profit in the fourth quarter for CafePress."

For the second quarter of 2013:

  *Net revenues in the range of $50.5 million to $54.5 million.
  *Adjusted EBITDA ranging from a loss of $0.2 million to income of $1.3
    million.
  *Non-GAAP net loss per diluted share of $(0.11) to $(0.04).
  *Weighted average fully diluted shares estimated at 17.4 million.

For fiscal year 2013, the Company revised its guidance as follows: 

  *Net revenues ranging from $248 million to $261 million, a year-over-year
    increase of 14% to 20%.
  *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.

First Quarter 2013 Conference Call

Management will review the first quarter 2013 financial results and its
forward guidance on a conference call on Thursday, May 2, 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 1-877-941-1428 at 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,
statements regarding the Company's manufacturing consolidation and investment
in operations, growth strategy and expectations regarding its cash position,
statements under the caption "Business Outlook," including the Company's
expected financial performance and outlook for the first quarter and full year
2013 with respect to net revenues, adjusted EBITDA, non-GAAP income and
non-GAAP net loss, weighted average fully diluted shares and capital
expenditures, and the Company's revenue and profit in the fourth quarter, as
well as statements regarding the benefits of the Company's non-GAAP financial
measures. 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 Annual Report on Form 10-K for the year ended December 31, 2012 as
filed with the Securities and Exchange Commission on March 18, 2013 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.

CafePress Inc.
Media Relations:
Sarah Segal
pr@cafepress.com

Investor Relations:
The Blueshirt Group
Alex Wellins
415-217-5861
alex@blueshirtgroup.com

CafePress Inc.                                                  
Condensed Consolidated Statement of Operations                  
(In thousands, except per share amounts)                        
(Unaudited)                                                     
                                                               
                                                 Three Months Ended March 31,
                                                 2013           2012
                                                 (Unaudited)
                                                               
Net revenues                                     $52,507       $39,881
Cost of net revenues                             32,866         22,938
                                                               
Gross Profit                                      19,641         16,943
                                                               
Operating expenses:                                             
Sales and marketing                               14,307         10,161
Technology and development                        5,221          2,964
General and administrative                        4,587          3,934
Acquisition-related costs                         1,395          654
Total operating expenses                          25,510         17,713
                                                               
Loss from operations                              (5,869)        (770)
                                                               
Interest income                                   11             8
Interest expense                                  (63)           (51)
                                                               
Loss before income taxes                          (5,921)        (813)
Benefit from income taxes                         (1,937)        (269)
                                                               
Net loss                                          $ (3,984)     $(544)
                                                               
Net loss per share of common stock:                             
Basic and diluted                                 $(0.23)      $(0.06)
                                                               
Shares used in computing net loss per share of                  
common stock:
Basic and diluted                                 17,119         8,944

                                                                
Stock-based compensation is allocated as follows:                
                                                                
                                                 Three Months Ended March 31,
                                                 2013            2012
                                                 (Unaudited)
                                                                
Cost of net revenues                              $71           $51
Sales and marketing                               112             155
Technology and development                        68              58
General and administrative                        832             566
                                                                
Total stock-based compensation expense            $1,083        $830

                                                                
CafePress Inc.                                                   
Condensed Consolidated Balance Sheet                             
(In thousands, except par value amounts)                         
(Unaudited)                                                      
                                                                
                                                      March 31,  December 31,
                                                      2013       2012
ASSETS                                                 (Unaudited)
CURRENT ASSETS:                                                  
Cash and cash equivalents                             $19,149  $31,198
Short-term investments                                6,913      9,403
Accounts receivable                                   5,482      10,390
Inventory                                             8,316      9,765
Deferred tax assets                                   2,794      2,794
Deferred costs                                         2,261      3,756
Prepaid expenses and other current assets             5,582      4,844
Total current assets                                  50,497     72,150
                                                                
Property and equipment, net                           19,500     19,892
Goodwill                                              40,231     40,231
Intangible assets, net                                18,662     19,979
Deferred tax assets                                   5,015      4,417
Other assets                                          1,248      863
                                                                
TOTAL ASSETS                                          $135,153 $157,532
                                                                
LIABILITIES AND STOCKHOLDERS' EQUITY                             
CURRENT LIABILITIES:                                             
Accounts payable                                      $7,890   $15,088
Partner commissions payable                            5,191      7,451
Accrued royalties payable                              4,824      6,724
Accrued liabilities                                    14,765     17,761
Income tax payable                                     --        765
Deferred revenue                                       4,981      9,099
Short-term borrowings                                  --       894
Capital lease obligations, current                     540        531
Total current liabilities                             38,191     58,313
                                                                
Capital lease obligations, non-current                 2,144      2,282
Other long-term liabilities                           4,454      3,628
                                                                
TOTAL LIABILITIES                                     44,789    64,223
                                                                
Stockholders' Equity :                                           
                                                                
Preferred stock, $0.0001 par value: 10,000 shares
authorized as of March 31, 2013 and December 31, 2012; --       --
none issued and outstanding
Common stock, $0.0001 par value - 500,000 shares
authorized and 17,126 and 17,114 shares issued and     2          2
outstanding as of March 31, 2013 and December 31,
2012, respectively
Additional paid-in capital                            94,929     93,890
Accumulated deficit                                   (4,567)    (583)
                                                                
TOTAL STOCKHOLDERS' EQUITY                            90,364    93,309
                                                                
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $135,153 $157,532

                                                                   
CafePress Inc.                                                      
Condensed Consolidated Statement of Cash Flows                      
(In thousands)                                                      
(Unaudited)                                                         
                                                                   
                                                         Three Months Ended
                                                          March 31,

                                                         2013       2012
                                                         (Unaudited)
Cash Flows from Operating Activities:                               
Net loss                                                  $(3,984) $(544)
Adjustments to reconcile net loss to net cashused                  
inoperating activities:
Depreciation and amortization                            2,145      1,434
Amortization of intangible assets                        1,317      684
Gain on disposal of fixed assets                         --        (7)
Stock-based compensation                                 1,083     830
Change in fair value of contingent considerations         147       137
liability
Deferred income taxes                                    (598)     2
Tax short-fall from stock-based compensation             (78)      (3)
Changes in operating assets and liabilities:                        
Accounts receivable                                      4,908     (468)
Inventory                                                1,449     1,664
Prepaid expenses and other current assets                757       (1,552)
Other assets                                             (385)     (1,004)
Accounts payable                                         (7,335)   (5,053)
Partner commissions payable                               (2,154)   --
Accrued royalties payable                                 (1,900)   (1,798)
Accrued and other liabilities                            (2,745)   (566)
Income taxes payable                                      (765)     (1,539)
Deferred revenue                                         (4,118)   1,240
Net cash used in operating activities                    (12,256)   (6,543)
                                                                   
Cash Flows from Investing Activities:                               
Purchase of short-term investments                       --        (1,743)
Proceeds from maturities of short-term investments       2,490     3,285
Purchase of property and equipment                       (498)     (470)
Capitalization of software and website development costs (778)     (829)
Proceeds from disposal of fixed assets                   --        14
Net cash provided by investing activities                1,214      257
                                                                   
Cash Flows from Financing Activities:                               
Principal payments on capital lease obligations          (129)     (115)
Payments for deferred offering costs                     --        (651)
Proceeds from exercise of stock options                  16        6
Payment of short-term borrowings                          (894)     --
Net cash used in financing activities                    (1,007)    (760)
                                                                   
Net decrease in cash and cash equivalents                (12,049)   (7,046)
Cash and cash equivalents — beginning of period          31,198     27,900
Cash and cash equivalents — end of period                $19,149  $20,854
                                                                   
Supplemental Disclosures of Cash Flow Information:                  
Cash paid for interest                                   $44      $50
Income taxes paid during the period                      997       1,822
                                                                   
Noncash Investing and Financing Activities:                         
Property and equipment acquired under rent agreement      $321     $ --
Accrued purchases of property and equipment               170       36
Deferred offering costs not yet paid                      --        1,599

                                                        
CafePress Inc.                                           
User Metrics Disclosure                                  
                                                        
                                         Three Months Ended March 31,

                                         2013            2012
User Metrics                                             
                                                        
Orders                                    1,429,106       839,020
year-over-year growth                     70%             26%
                                                        
Average Order Value                       $35             $48
year-over-year growth                     -27%            -3%
                                                        
Average Order Value (excluding EZ Prints) $53             $48
year-over-year growth                     10%             -3%

                                                           
CafePress Inc.                                              
Reconciliation of Net Loss to Adjusted                      
EBITDA
(In thousands)                                              
                                                           
                                       Three Months Ended March 31,

                                       2013                 2012
                                       (Unaudited)
                                                           
Net loss                                $(3,984)           $(544)
Non-GAAP adjustments:                                       
Interest and other (income) expense    52                  43
Benefit from income taxes              (1,937)             (269)
Depreciation and amortization          2,145               1,434
Amortization of intangible assets      1,317               684
Acquisition-related costs              1,395               654
Stock-based compensation               1,083               830
Adjusted EBITDA*                       $71                $2,832
                                                           
*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 and third-party fees incurred as part of our
acquisitions.

                                                                
CafePress Inc.                                                   
Reconciliation of GAAP Operating Loss to Non-GAAP                
Operating Income (Loss)
(In thousands)                                                   
                                                                
                                                 Three Months Ended March 31,

                                                 2013            2012
                                                 (Unaudited)
                                                                
Loss from operations                             $(5,869)      $(770)
Non-GAAP adjustments:                                            
Amortization of intangible assets                1,317          684
Acquisition-related costs                        1,395          654
Stock-based compensation                         1,083          830
Non-GAAP operating income (loss)                  $(2,074)      $1,398

                                                                
CafePress Inc.                                                   
Reconciliation of Net Loss to Non-GAAP Net Income
(loss) and Non-GAAP Net Income (loss) per Diluted                
Share
(In thousands, except per share amounts)                         
                                                                
                                                                
                                                 Three Months Ended March 31,

                                                 2013            2012
                                                 (Unaudited)
                                                                
Net loss                                          $(3,984)      $(544)
Non-GAAP adjustments:                                            
Amortization of intangible assets                 1,317          684
Acquisition-related costs                         1,395          654
Stock based compensation                          1,083          830
Benefit from income taxes                         (1,241)        (717)
Non-GAAP net income (loss)                        $(1,431)      $907
                                                                
Non-GAAP net income (loss) per share:                            
Basic                                             $(0.08)       $0.06
Diluted                                           $(0.08)       $0.06
                                                                
Shares used in computing Non-GAAP net income                     
(loss) per share:
Basic                                             17,119          14,479
Diluted                                           17,119          15,129

CafePress Company Logo