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CafePress Reports Fourth Quarter and Fiscal Year 2012 Results

(February 13, 2013)


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




  • 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.


  • Adjusted EBITDA was $9.4 million, compared to $11.5 million in the fourth quarter of 2011.


  • Gross profit margin was 39.7% of net revenues, compared to 43.9% in the fourth quarter of 2011.


  • 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.


  • GAAP net income per diluted share was $0.18, compared to $0.32 in the fourth quarter of 2011.


  • 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.


  • Non-GAAP net income per diluted share was $0.31, compared to $0.44 in the fourth quarter of 2011.


  • 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)




  • Transacting customers totaled 1,245,338, a 9% year-over-year increase.


  • Orders totaled 1,600,952, a 14% year-over-year increase.


  • Average order size was $50, a 2% year-over-year increase.



Financial Year 2012 Highlights




  • Net revenues totaled $217.8 million, compared to $175.5 million in 2011.


  • Adjusted EBITDA was $17.6 million, compared to $18.7 million in 2011.


  • Gross profit margin was 41.0% of net revenues, compared to 42.9% in 2011.


  • 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.


  • GAAP net loss per diluted share was $(0.01), compared to net income per diluted share of $0.16 in 2011.


  • 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.


  • 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

December 31,

Year Ended

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 income taxes

4,332

7,680

(71)

5,307

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

December 31,

Year Ended

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 2011; liquidation preference of $0 and $17,902 as of December 31, 2012 and 2011

 -- 

22,811

 

 

 

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 and outstanding as of December 31, 2012 and 2011, respectively

2

1

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 STOCKHOLDERS' EQUITY 

 $ 157,532

 $ 88,982








































































































































































































































































































































 

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 liability 

 100

 137

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 through acquisitions

 $ 116

 $ 529

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 business acquisitions

7,111

 2,784







































































































 

CafePress Inc.

User Metrics Disclosure

 

 

 

 

 

 

Three Months Ended

December 31,

Year Ended

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

December 31,

Year Ended

December 31,

 

2012

2011

2012

2011

 

(Unaudited)

(Unaudited)

 

 

 

 

 

Net income (loss)

 $ 3,105

 $ 5,100

 $ (82)

 $ 3,606

Non-GAAP adjustments:

 

 

 

 

Interest and other (income) expense 

 38

 41

 126

 138

Provision for income taxes 

 1,227

 2,580

 11

 1,701

Depreciation and amortization 

 1,845

 1,429

 6,294

 5,836

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

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

December 31,

Year Ended

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

December 31,

Year Ended

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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