LOUISVILLE, Ky.–(BUSINESS WIRE)–CafePress Inc. (NASDAQ: PRSS), The World’s Customization Engine®, today reported financial results for the three months and full year ended December 31, 2013.
“CafePress announced today that its Board of Directors has authorized the review of various strategic alternatives to enhance value for stockholders. Raymond James & Associates has been retained as exclusive independent financial advisor to assist the Board of Directors in the evaluation of various strategic alternatives”
Fourth Quarter Results and Management Commentary
“Sales of CafePress’ customized e-commerce offerings in the fourth quarter resulted in 2013 revenue growth of 13% over 2012,” said CEO Bob Marino. “Product categories including art and home were notably strong during the holiday period, as were custom apparel sales to groups. We also saw strong growth in CafePress Services, which provides scalable e-commerce solutions for large partners including media companies such as CBS and Warner Bros., showing that our strategies in this area are making progress. Additionally, our major initiative to consolidate the majority of our remote manufacturing into our flagship plant during 2013 went well. Our fourth quarter results, however, were negatively impacted by a decrease in average order size, lower conversion rates, as well as higher costs related to the short holiday season.”
Fourth Quarter 2013 Financial Highlights
- Net revenues totaled $90.5 million, compared to $87.2 million in the fourth quarter of 2012.
- GAAP net loss was $4.7 million (including stock-based compensation, amortization of intangible assets, acquisition costs, and $8.9 million charge for deferred tax valuation allowance) or adjusted net income, excluding the non cash deferred tax valuation allowance, of $4.2 million, compared to net income of $3.1 million in the fourth quarter of 2012.
- Adjusted EBITDA was $7.2 million, compared to $9.4 million in the fourth quarter of 2012.
- Gross profit margin was 37.3% of net revenues, compared to 39.7% in the fourth quarter of 2012.
- GAAP net loss per diluted share was $(0.27) (including a $0.52 impact from the deferred tax adjustment), compared to net income of $0.18 in the fourth quarter of 2012.
- Non-GAAP net income (excluding stock-based compensation, amortization of intangible assets, acquisition costs, and $8.9 million charge for deferred tax valuation allowance) was $3.0 million, compared to non-GAAP net income of $5.4 million in the fourth quarter of 2012.
- Non-GAAP net income per diluted share was $0.18, compared to non-GAAP net income per diluted share of $0.31 in the fourth quarter of 2012.
- At December 31, 2013, cash, cash equivalents, and short-term investments totaled $36.8 million.
Fourth Quarter 2013 Operating Metrics
- Orders totaled 2,564,418, a 10% 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 7% year-over-year decrease, reflecting the smaller order size of the EZ Prints B2B business. AOS excluding the impact of EZ Prints was $48, a 4% year-over-year decrease.
Fourth Quarter Operating Highlights
- Launched a marketplace fan store for Summit Entertainment’s highly anticipated film Divergent, based on the first novel in author Veronica Roth’s best-selling trilogy
- Launched a curated selection of crowd-sourced CafePress apparel, home goods and accessories on Sears.com and Kmart.com, working with leading integrated retailer Sears Holding (NASDAQ: SHLD)
- Expanded relationship with Paramount Pictures to add official merchandise for Anchorman 2: The Legend Continues to ParamountStore.com
- Unveiled a campaign to support American Red Cross Tsunami Relief in the Philippines
- Launched the official online store for Annoying Orange, a YouTube sensation and top rated show on Cartoon Network
- Revealed new Signature Series by Imagekind.com featuring individually signed and numbered prints by contemporary artists Eric Joyner and Marcia Baldwin
- CafePress’ fundraising platform TFUND added additional product options and built an API for partner websites
- CafePress’ Facebook following surpassed 500,000 fans, partially driven by a popular monthly social “share and win” contest
“Looking ahead to 2014 we expect to see strong performance from the properties and categories that drove our fourth quarter results. Those gains, however, are expected to be offset by lower growth rates on CafePress.com and slower than expected program and merchandise ramps with certain new partners. We expect that the combination of these factors will result in slower revenue growth in 2014 than in prior years,” said Marino.
For the first quarter of 2014:
- Net revenues in the range of $47.5 million to $51.5 million.
- GAAP net loss ranging from $(7.1) million to $(5.9) million.
- Adjusted EBITDA ranging from a loss of $(1.8) million to $(0.2) million.
- GAAP net loss per diluted share of $(0.41) to $(0.34). GAAP net loss includes an estimated $0.7 million to $0.8 million restructuring charge for severance and facilities consolidation.
- Non-GAAP net loss per diluted share of $(0.16) to $(0.11).
- Weighted average fully diluted shares estimated at 17.3 million.
For fiscal year 2014:
- Net revenues ranging from $244 million to $256 million.
- GAAP net loss ranging from $(12.4) million to $(9.2) million.
- Adjusted EBITDA of $7.0 million to $11.0 million.
- GAAP net loss per diluted share of $(0.71) to $(0.53).
- Non-GAAP net income (loss) per diluted share of $(0.13) to $0.01.
- Weighted average fully diluted shares of approximately 17.6 million.
- Total capital expenditures in the range of $11 million to $14 million.
Chief Financial Officer Transition
CafePress also announced that Chief Financial Officer Monica Johnson will begin a transition from the company. Beginning in the second quarter, Chief Information Officer Garett Jackson will become interim Chief Financial Officer. Ms. Johnson will continue in consulting and advisory roles with the Company for the rest of the year. “Monica has been a great partner and a tireless contributor in the myriad of growth channels for CafePress for the past 8 years and we support her decision to begin a transition from her current role. We are very fortunate to have Garett, based in Louisville and with significant CFO experience, on board,” added Marino.
Exploration of Strategic Alternatives
“CafePress announced today that its Board of Directors has authorized the review of various strategic alternatives to enhance value for stockholders. Raymond James & Associates has been retained as exclusive independent financial advisor to assist the Board of Directors in the evaluation of various strategic alternatives,” said Marino.
The Company notes that no decision on any particular alternative has been reached at this time and cautions that there can be no assurances as to whether any strategic alternative will be recommended by the Board or implemented and under what terms and conditions. The Company does not intend to disclose developments with respect to the progress of its evaluation of strategic alternatives until such time as the Board has determined an appropriate course of action or otherwise deems disclosure is necessary.