Item 1A. Risk Factors
Our future results may vary materially from those contained in forward-looking statements that we make in this Report and other filings with the SEC, press releases, communications with investors, and oral statements due to the following important factors, among others. Our forward-looking statements in this Report and in any other public statements we make may turn out to be wrong. These statements can be affected by, among other things, inaccurate assumptions we might make or by known or unknown risks and uncertainties or risks we currently deem immaterial. Consequently, no forward-looking statement can be guaranteed. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Risks Related to Our Business and Operations
We manage our business for long-term results, and our quarterly and annual financial results often fluctuate, which has led, and may continue to lead, to volatility in our share price.
Our revenue and operating results often vary significantly from period to period due to a number of factors, and as a result comparing our financial results on a period-to-period basis may not be meaningful. We prioritize our uppermost financial objective of maximizing our intrinsic value per share even at the expense of shorter-term results. Many of the factors that lead to period-to-period fluctuations are outside of our control; however, some factors are inherent in our business strategies. Some of the specific factors that have caused, and/or could cause, our operating results to fluctuate from quarter to quarter or year to year include among others:
• investments in our business in the current period intended to generate longer-term returns, where the costs in the near term will not be offset by revenue or cost savings until future periods, if at all
• costs to produce and deliver our products and provide our services, including the effects of inflation and increased energy costs
• our ability to attract and retain customers and generate purchases
• shifts in revenue mix toward products and brands with lower profit margins, such as the decline of business cards and faster growth in elevated products like promotional products and packaging
• supply chain challenges
• our pricing and marketing strategies and those of our competitors
• variations in the demand for our products and services, including potential declines from pricing changes and/or surcharges related to tariffs or other trade policies of the U.S. or other countries
• currency and interest rate fluctuations, which affect our revenue, costs, and fair value of our assets and liabilities
• changes in U.S. and other countries' trade policies, including the types, amounts, and durations of any tariffs imposed on our products or our supply chain materials
• our hedging activity
• the commencement or termination of agreements with our strategic partners, suppliers, and others
• our ability to manage our production, fulfillment, and support operations
• general economic conditions, including volatility or economic downturns in some or all of our markets
• expenses and charges related to our compensation arrangements with our executives and employees
• costs and charges resulting from litigation
• changes in our effective income tax rate or tax-related benefits or costs
• costs to acquire businesses or integrate our acquired businesses
• financing costs
• impairments of our tangible and intangible assets including goodwill
• the results of our minority investments and joint ventures
Some of our expenses, such as building leases, depreciation related to previously acquired property and equipment, and personnel costs, are relatively fixed. As a result, we sometimes have been, and may in the future be, unable or unwilling to adjust operating expenses to offset any revenue shortfall. Accordingly, any shortfall in revenue may cause significant variation in operating results in any period. Our operating results have, at times, fallen below the expectations of public market analysts and investors, which has led to declines in the price of our ordinary shares in the past and may do so again in the future.
If we do not promote, strengthen, and evolve our brands, we could lose customers and revenue and fail to acquire new customers.
A primary component of our business strategy is to promote, strengthen, and evolve our brands to attract new and repeat customers, and we face significant competition from other companies in our markets who also seek to establish strong brands. To promote, strengthen, and evolve our brands, we must incur substantial marketing expenses and establish a relationship of trust with our customers by providing a high-quality customer experience, which requires us to invest substantial amounts of our resources. A negative incident or circumstance involving our products, services, advertising, or corporate conduct can damage our reputation, especially if the incident or circumstance is widely publicized or "goes viral," and causes customers to lose trust in our brands, which could negatively impact our revenues.
Our global operations and decentralized organizational structure place a significant strain on our management, employees, facilities, and other resources and subject us to additional ongoing risks.
We are a global company with production facilities, offices, employees, and localized websites in many countries across six continents, and we manage our businesses and operations in a decentralized, autonomous manner. We are subject to a number of ongoing risks and challenges that relate to our global operations, decentralization, and complexity including, among others:
• difficulty managing operations in, and communications among, multiple businesses, locations, and time zones
• challenges of ensuring speed, nimbleness, and entrepreneurialism in a large and complex organization
• risk of internal competition or brand cannibalization where multiple brands operate with overlapping offerings in the same geography
• difficulty complying with multiple tax laws, treaties, and regulations and limiting our exposure to onerous or unanticipated taxes, duties, tariffs, and other costs
• our failure to maintain sufficient financial and operational controls and systems to manage our decentralized businesses and comply with our obligations as a public company
• the challenge of complying with disparate laws in multiple countries, such as local regulations that may impair our ability to conduct our business or impact the willingness of third parties to conduct business with us, protectionist laws that favor local businesses, and restrictions imposed by local labor laws
• the challenge of maintaining management's focus on our strategic and operational priorities and minimizing lower priority distractions
• disruptions caused by political and social instability and war that may occur in some countries
• exposure to corrupt business practices that may be common in some countries or in some sales channels and markets, such as bribery or the willful infringement of intellectual property rights
• difficulty repatriating cash from some countries
• changes in governmental trade policies, particularly across North America, China and Europe, difficulty importing and exporting our products and supply chain materials across country borders and difficulty complying with customs regulations in the many countries where we produce and/or sell products
• increasing prices, disruptions or cessation of important components of our international supply chain
• failure of local laws to provide a sufficient degree of protection against infringement of our intellectual property
The trade and tariff environment continues to evolve and is highly unpredictable. The U.S. presidential administration has announced and/or implemented, and could continue to announce and/or implement, new and/or increased tariffs on goods imported into the United States, which has generated, and could continue to generate, various trade and tariff-related responses from other countries. Certain of the recent tariffs were imposed pursuant to the International Emergency Economic Powers Act (50 U.S.C. § 1701 et seq.) (IEEPA), and 50 U.S.C. § 1702(b)(3) explicitly precludes the President from regulating the importation of "informational materials" under IEEPA. Any change to the statutory basis upon which the U.S. presidential administration relies for imposing tariffs could materially and adversely impact our financial results if we are unable to rely upon the "informational materials" exclusion for most of our U.S. imported printed products and such products were not otherwise exempt from tariffs under the United States-Mexico-Canada Agreement. The recently adopted bill H.R. 1, Pub. L. 119‑21 provides for the elimination of the de minimis exemption from import taxes and duties codified in 19 U.S.C. § 1321(a)(2)(C) for commercial shipments, which currently benefits our business, effective July 1, 2027; however, we currently expect the de minimis exemption to end even sooner, on August 29, 2025, based on a recently signed Executive Order. We operate manufacturing facilities throughout the world, including one in Ontario, Canada that primarily services our Vista business, and others in Mexico, the United States, Australia, Brazil and throughout Europe. If the United
States, whether based on statutes or through trade agreements, imposes and enforces significant tariffs applicable to imports from Canada, Mexico, China or any of the other countries in which we manufacture our products and/or source materials for any meaningful period, we would incur increased costs in operating our business and our financial results could be materially and adversely affected. In addition, if other countries impose and enforce increased or additional tariffs for any meaningful period, our business could be materially and adversely affected. In addition to changes in U.S. trade policy, other changes to U.S. policy may impact, among other things, the U.S. and global economy, international trade relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. At this time we cannot predict the impact, if any, of any of these potential changes to our business. Until we know what policy changes are made and enforced and how those changes impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.
In addition, we are exposed to fluctuations in currency exchange rates that have impacted, and may continue to impact, items such as the translation of our revenue and expenses, remeasurement of our intercompany balances, and the value of our cash and cash equivalents and other assets and liabilities denominated in currencies other than the U.S. dollar, our reporting currency. The hedging activities we engage in sometimes have not mitigated, and may in the future not mitigate, the net impact of currency exchange rate fluctuations, and our financial results sometimes have differed, and may in the future differ, materially from expectations as a result of such fluctuations.
Our hedging activity could negatively impact our results of operations, cash flows, or leverage.
We have entered into derivatives to manage our exposure to interest rate and currency movements. If we do not accurately forecast our results of operations, execute contracts that do not effectively mitigate our economic exposure to interest rates and currency rates, elect to not apply hedge accounting, or fail to comply with the complex accounting requirements for hedging, our results of operations and cash flows could be volatile, as well as negatively impacted. Also, our hedging objectives may be targeted at improving our non-GAAP financial metrics, which could result in increased volatility in our GAAP results. Since some of our hedging activity addresses long-term exposures, such as our net investment in our subsidiaries, the gains or losses on those hedges could be recognized before the offsetting exposure materializes to offset them, potentially causing volatility in our cash or debt balances, and therefore our leverage.
Failure to protect our information systems and the confidential information of our customers, employees, and business partners against security breaches and thefts could damage our reputation and brands, subject us to litigation and enforcement actions, and substantially harm our business and results of operations.
Our business involves the receipt, storage, and transmission of customers' personal and payment information, as well as confidential information about our business, employees, suppliers, and business partners, some of which is entrusted to third-party service providers, partners, and vendors. We and third parties with which we share information have experienced, and will continue to experience, threats to and breaches of our and their data and systems, cyberattacks and other malicious activity, including physical and electronic break-ins, computer viruses, ransomware attacks, and phishing and other social engineering scams, among other threats. Security threats continue to evolve and become more sophisticated and more difficult to detect and defend against, including by the increased use of artificial intelligence to enhance attacks, and our vulnerabilities may be heightened by our decentralized operating structure and many of our employees working remotely. our efforts, a hacker or thief may our security measures, or those of our third-party service providers, partners, or vendors, and obtain confidential or personal information, and we or the third party may not discover the security and theft of information for a significant period of time after the occurs or at all. We may need to significantly increase the resources we expend to protect security and thefts of data or to address caused by or thefts, and we may not be to anticipate cyber attacks or implement adequate preventative measures. Any compromise, or of our information systems or the information systems of third parties with which we share information could result in, among other things:
• interruptions in our operations
• misuse of our and our customers' and employees' confidential or personal information
• failure to comply with legal and industry privacy regulations and standards
• exposure to losses, costs, litigation, enforcement actions, and other liability
• damage to our reputation and brands
• loss of revenue and profits and other negative financial results to the extent existing and potential customers believe that their personal and payment information may not be safe with us or those third parties
We are subject to the laws of many states, countries, and regions and industry guidelines and principles governing the collection, use, retention, disclosure, sharing, and security of data that we receive from and about our customers and employees. Any failure or perceived failure by us to comply with any of these laws, guidelines, or principles could result in actions against us by governmental entities or others, a loss of customer confidence, and damage to our brands. In addition, the regulatory landscape is constantly changing, as various regulatory bodies throughout the world enact new laws concerning privacy, data retention, data transfer, and data protection including possible limitations on our ability to use customer data and regulating the use of artificial intelligence and machine learning. Complying with these varying and changing requirements is challenging, especially for our smaller, more thinly staffed businesses, and could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business and operating results.
Inability to attract new and repeat customers in a cost-effective manner has harmed, and may in the future harm, our business and results of operations.
Our various businesses rely on a variety of marketing methods to attract new and repeat customers. These methods include promoting our products and services through paid channels such as online search, display, and television, as well as leveraging our owned and operated channels such as email, direct mail, our social media accounts, telesales, and SMS messaging. When the costs of these channels significantly increase or the effectiveness of these channels significantly declines, such as from changes to algorithms or targeting rules and/or from shifts in consumer behavior in online search and shopping related to artificial intelligence (AI)-based discovery tools and chatbots, which we have experienced in the past and may experience in the future, then our ability to efficiently attract new and repeat customers is reduced, our revenue and net income decline, and our business and results of operations are harmed.
Shifts in online search behavior, including the rise of generative AI tools and agentic search technologies, may negatively impact customer traffic and acquisition efficiency and conversion rates, which could materially harm our business, results of operations, and financial condition.
Consumers are increasingly relying on generative AI tools and agentic search technologies, such as conversational search engines, autonomous shopping assistants, and AI-powered product recommendations, to discover, compare, and purchase products and services. These emerging tools represent a shift away from traditional search engine behavior and direct website visits, which have historically driven a significant portion of our customer traffic and conversion activity.
As generative AI and agentic search tools become more prevalent and integrated into consumers’ browsing and purchasing workflows, we may experience a decline in visibility within digital ecosystems we do not directly control. This could include lower rankings in AI-generated product summaries, reduced referral traffic from major platforms, or increased reliance on third-party interfaces that prioritize competing offerings.
These changes could adversely affect our customer acquisition cost, conversion rates, and overall brand control. Furthermore, our ability to adapt to new search paradigms may be limited by technology constraints, data availability, or platform interoperability, especially if generative AI search providers restrict access to their ecosystems or favor end-to-end platforms that control the full customer journey.
Failure to effectively navigate this shift could materially harm our business, results of operations, and financial condition.
Seasonal fluctuations in our business place a strain on our operations and resources.
Our profitability has historically been highly seasonal. Our second fiscal quarter, which ends on December 31, includes the majority of the holiday shopping season and typically accounts for a disproportionately high portion of our earnings for the year, primarily due to higher sales of home and family products such as holiday cards, calendars, photo books, and personalized gifts. In addition, our National Pen business has historically generated a large portion of its profits during the second fiscal quarter. Lower than expected sales during the second quarter, which we have experienced in the past and may experience in the future, have a disproportionately large impact on
our operating results and financial condition for the full fiscal year. Likewise, an inability of our manufacturing and other operations to keep up with the high volume of orders during our second fiscal quarter or other inefficiencies in our production or disruptions of our supply chains during the quarter, resulting in higher than expected costs, which we have experienced in the past and may experience in the future, have a disproportionately large impact on our earnings results and financial condition for the full fiscal year, as well as delays in order fulfillment and delivery and other disruptions, which negatively impact our ability to attract repeat customers, our reputation, and our future financial results.
Our businesses face risks related to interruption of operations and lack of redundancy.
Our businesses' production facilities, websites, infrastructure, supply chain, customer service centers, and operations are vulnerable to interruptions, and we do not have redundancies or alternatives in all cases to carry on these operations in the event of an interruption. In addition, because our businesses are dependent in part on third parties for certain aspects of our communications and production systems, we may not be able to remedy interruptions to these systems in a timely manner or at all due to factors outside of our control. Our suppliers, service providers (including shipping and logistics providers), third-party fulfillers, business partners, and customers face similar vulnerabilities to interruptions. Some of the events that could cause interruptions in our businesses' systems and operations, and those of our suppliers, service providers, third-party fulfillers, business partners, and customers, are the following, among others:
• fire, natural disaster, or extreme weather, which could be exacerbated by climate change
• pandemic or other public health crisis
• ransomware and other cyber security attacks
• labor strike, work stoppage, labor disruption or other workforce issues
• political instability, civil unrest, or acts of terrorism or war
• power loss or telecommunication failure
• attacks on external websites or internal networks by hackers or other malicious parties
• inadequate capacity in systems and infrastructure to cope with periods of high volume and demand
• lack of affordable materials available to manufacture our supplies or products
Any interruptions to our systems or operations, or those of our suppliers, service providers, third-party fulfillers, business partners, and customers, could result in lost revenue and/or increased costs, as well as negative publicity, damage to our reputation and brands, and other adverse effects on our business and results of operations. Building redundancies into our infrastructure, systems, and supply chain to mitigate these risks may require us to commit substantial financial, operational, and technical resources.
We may not be successful in advancing the use of artificial intelligence, which involves significant risks, and competitors may develop new or better products using artificial intelligence that take market share, which could adversely affect our business, brand perception, or financial results.
We use artificial intelligence (AI), including generative AI, in many parts of our value chain. There can be no assurance that we will be successful in using AI to enhance our products or services or otherwise benefit our business, including our efficiency or profitability, and there are significant risks involved in developing and deploying AI. For example, our AI-related efforts may give rise to risks related to harmful content, accuracy, bias, discrimination, intellectual property infringement or misappropriation, data privacy, and cybersecurity, among others. New laws, rules, directives, and regulations governing the use of AI, new or enhanced governmental or regulatory scrutiny, litigation, or other legal liability, ethical concerns, negative consumer perceptions as to automation and AI, or other could also affect our business, brand perception, or financial results. Further, we face competition from other companies that are developing their own AI products and technologies that may have a impact on our value chain, including in the areas of design services and content creation. These AI- products and technologies are evolving quickly, can influence customer behavior and preferences, and may allow other companies to become more than us and/or to more effectively acquire and retain customers. In addition, AI tools are rapidly shifting consumer behavior in online search and shopping, particularly relative to traditional search engines, which may require rapid strategic and technical adaptations and investments, including further standardizing and optimizing our data structures, all of which could increase our costs or otherwise affect our business or financial results. Moreover, the pace of in AI and developments related to its use, together with the breadth of its potential applications to our industry, make it to identify or predict all of the risks related to using AI or all of the AI-related risks to our business.
Failure to meet our customers' price or other expectations adversely affects our business and results of operations.
Demand for our products and services is sensitive to customers' expectations, particularly as to price for almost all of our businesses, and past changes in our pricing strategies had a significant impact on the numbers of customers and orders in some regions, which in turn adversely affected our revenue, profitability, and results of operations. Many factors impact our pricing and marketing strategies, including the costs of running our business, the costs of raw materials, our competitors' pricing and marketing strategies, and the effects of inflation. We may not be able to mitigate increases in our costs by increasing the prices of our products and services. More recently, customer expectations have evolved as to shipping speeds, as well as speed and creative control from rapid developments in digital design tools. Failure to meet our customers' price or other expectations in the future would adversely affect our future business and results of operations.
Acquisitions and strategic investments may be disruptive to our business, may fail to achieve our goals, and can negatively impact our financial results.
An important way in which we pursue our strategy is to selectively acquire businesses, technologies, and services and make minority investments in businesses and joint ventures. The time and expense associated with acquisitions and investments can be disruptive to our ongoing business and divert our management's attention. In addition, we have needed in the past, and may need in the future, to seek financing for acquisitions and investments, which may not be available on terms that are favorable to us, or at all, and can cause dilution to our shareholders, cause us to incur additional debt, or subject us to covenants restricting the activities we may undertake. There also is an opportunity cost that capital allocated to an acquisition, minority investment, or joint venture is no longer available for other uses.
An acquisition, minority investment, or joint venture may fail to achieve our goals and expectations and may have a negative impact on our business and financial results in a number of ways including the following:
• The business we acquired or invested in may not perform or fit with our strategy as well as we expected.
• Acquisitions and minority investments can be costly and can result in increased expenses including impairments of goodwill and intangible asserts if financial goals are not achieved, assumptions of contingent or unanticipated liabilities, amortization of certain acquired assets, and increased tax costs. In addition, we may overpay for acquired businesses.
• The management of our acquired businesses, minority investments, and joint ventures may be more expensive or may take more resources than we expected. In addition, continuing to devote resources to a struggling business can take resources away from other investment areas and priorities.
• We may not be able to retain customers and key employees of the acquired businesses. In particular, it can be challenging to motivate the founders who built a business to continue to lead the business after they sell it to us.
The accounting for our acquisitions and minority investments requires us to make significant estimates, judgments, and assumptions that can change from period to period, based in part on factors outside of our control, which can create volatility in our financial results. For example, we often pay a portion of the purchase price for our acquisitions in the form of an earn out based on performance targets for the acquired companies or enter into obligations or options to purchase noncontrolling interests in our acquired companies or minority investments, which can be difficult to forecast and can lead to larger than expected payouts that can adversely impact our results of operations.
Furthermore, provisions for future payments to sellers based on the performance or valuation of the acquired businesses, such as earn outs and options to purchase noncontrolling interests, can lead to disputes with the sellers about the achievement of the performance targets or valuation or create inadvertent incentives for the acquired company's management to take short-term actions designed to maximize the payments they receive instead of taking actions that benefit the business over the long term.
Developing and deploying our mass customization platform is costly and resource-intensive, and we may not realize all of the anticipated benefits of the platform.
A key component of our strategy is the development and deployment of a mass customization platform, which is a cloud-based collection of software services, APIs, web applications and related technology offerings that
can be leveraged independently or together by our businesses and third parties to perform common tasks that are important to mass customization. The process of developing new technology is complex, costly, and uncertain and requires us to commit significant resources before knowing the extent to which our businesses may adopt and/or continue to utilize components of our mass customization platform or the extent to which the platform may make us more effective and competitive. As a result, there can be no assurance that we will find new capabilities to add to the growing set of technologies that make up the platform, that our diverse businesses will realize further value from the platform, or that we will realize expected returns on the capital expended to develop the platform.
We are subject to safety, health, and environmental laws and regulations, which could result in liabilities, cost increases, or restrictions on our operations.
We are subject to a variety of safety, health and environmental, or SHE, laws and regulations across the jurisdictions in which we operate. SHE laws and regulations frequently change and evolve, including the addition of new SHE regulations, especially with respect to climate change. These laws and regulations govern, among other things, air emissions, wastewater discharges, the storage, handling and disposal of hazardous and other regulated substances and wastes, soil and groundwater contamination, and employee health and safety. We use regulated substances such as inks and solvents, and generate air emissions and other discharges at our manufacturing facilities, and some of our facilities are required to hold environmental permits. If we fail to comply with existing or new SHE requirements, we may be subject to monetary fines, civil or criminal sanctions, third-party claims, or the limitation or suspension of our operations. In addition, if we are found to be responsible for hazardous substances at any location (including, for example, offsite waste disposal facilities or facilities at which we formerly operated), we may be responsible for the cost of cleaning up contamination, regardless of , as well as for for to health or property or for natural resource arising out of contamination or exposure to substances.
Complying with existing SHE laws and regulations is costly, and we expect our costs to significantly increase as new SHE requirements are added and existing requirements become more stringent. In some cases we pursue self-imposed socially responsible policies that are more stringent than is typically required by laws and regulations, for instance in the areas of worker safety, team member social benefits, and environmental protection such as carbon reduction initiatives. The costs of this added SHE effort are often substantial and could grow over time.
The failure of our business partners to use legal and ethical business practices could negatively impact our business.
We contract with many suppliers, fulfillers, merchants, and other business partners in multiple jurisdictions worldwide. We require our business partners to operate in compliance with all applicable laws, including those regarding corruption, working conditions, employment practices, safety and health, and environmental compliance, but we cannot control their business practices. We may not be able to adequately vet, monitor, and audit our many business partners (or their suppliers) throughout the world, and our decentralized structure heightens this risk, as not all of our businesses have equal resources to manage their business partners. If any of them violates labor, environmental, or other laws or implements business practices that are regarded as unethical or inconsistent with our values, our reputation could be severely damaged, and our supply chain and order fulfillment process could be interrupted, which could harm our sales and results of operations.
If we are unable to protect our intellectual property rights, our reputation and brands could be damaged, and others may be able to use our technology, which could substantially harm our business and financial results.
We rely on a combination of patents, trademarks, trade secrets, copyrights, and contractual restrictions to protect our intellectual property, but these protective measures afford only limited protection. Despite our efforts to protect our proprietary rights, unauthorized parties may be able to copy or use technology or information that we consider proprietary. There can be no guarantee that any of our pending patent applications or continuation patent applications will be granted, and from time to time we face infringement, invalidity, intellectual property ownership, or similar claims brought by third parties with respect to our patents. In addition, despite our trademark registrations throughout the world, our competitors or other entities may adopt names, marks, or domain names similar to ours, thereby impeding our ability to build brand identity and possibly leading to customer confusion. Enforcing our intellectual property rights can be extremely costly, and a to protect or enforce these rights could our reputation and brands and substantially our business and financial results.
Intellectual property disputes and litigation are costly and could cause us to lose our exclusive rights, subject us to liability, or require us to stop some of our business activities.
From time to time, we receive claims from third parties that we infringe their intellectual property rights, that we are required to enter into patent licenses covering aspects of the technology we use in our business, or that we improperly obtained or used their confidential or proprietary information. Any litigation, settlement, license, or other proceeding relating to intellectual property rights, even if we settle it or it is resolved in our favor, could be costly, divert our management's efforts from managing and growing our business, and create uncertainties that may make it more difficult to run our operations. If any parties successfully claim that we infringe their intellectual property rights, we might be forced to pay significant damages and attorney's fees, and we could be restricted from using certain technologies important to the operation of our business.
Our business is dependent on the Internet, and unfavorable changes in government regulation of the Internet, e-commerce, and email marketing could substantially harm our business and financial results.
Because most of our businesses depend primarily on the Internet for our sales, laws specifically governing the Internet, e-commerce, and email marketing may have a greater impact on our operations than other more traditional businesses. In particular, laws covering pricing, customs, privacy, consumer protection, or commercial email may impede the growth of e-commerce and our ability to compete with traditional “brick and mortar” retailers. Unfavorable changes in, interpretations of, or developments with respect to, these types of laws or related or similar government regulation could substantially harm our business and financial results.
If we were required to screen the content that our customers incorporate into our products, our costs could significantly increase, which would harm our results of operations.
Because of our focus on automation and high volumes, many of our sales do not involve any human-based review of content. Although our websites' terms of use specifically require customers to make representations about the legality and ownership of the content they upload for production, there is a risk that a customer may supply an image or other content for an order we produce that is the property of another party used without permission, that infringes the copyright or trademark of another party, or that would be considered to be defamatory, hateful, obscene, or otherwise objectionable or illegal under the laws of the jurisdiction(s) where that customer lives or where we operate. If the machine-learning tools we have developed to aid our content review fail to find instances of intellectual property infringement or objectionable or illegal content in customer orders, we could be required to increase the amount of manual screening we perform, which could significantly increase our costs, and we could be required to pay substantial or monetary for any in our screening process.
Risks Related to Our Industry and Macroeconomic Conditions
Supply chain disruptions have impaired, and may in the future impair, our ability to source raw materials.
A number of factors have impacted in the past, and could impact in the future, the availability of materials we use in our business, including rising costs and other inflationary pressures, changes in trade policies such as new or increased tariffs on materials we use in our business, rationing measures, labor shortages, civil unrest and war, and climate change. Our inability to source sufficient materials for our business in a timely manner, or at all, would significantly impair our ability to fulfill customer orders and sell our products, which would reduce our revenue and harm our financial results.
We need to hire, retain, develop, and motivate talented personnel in key roles in order to be successful, and we face intense competition for talent.
An inability to recruit, retain, develop, and motivate our employees in senior management and key roles such as technology, marketing, data science, and production would significantly increase the risk that we may not be able to execute on our strategy and grow our business as planned. We have seen increased competition for talent in recent years that makes it more difficult for us to retain the employees we have and to recruit new employees and also drives up the cost of compensation, and our current management and employees may cease their employment with us at any time with minimal advance notice. This retention risk is heightened with respect to the leaders of certain of our businesses who have in the past or may in the future receive substantial payouts from either their redeemable non-controlling interests in those businesses or long-term incentive awards, as it may be
challenging to retain and motivate them to continue running their businesses. Although we believe our remote-first way of working, which allows many of our team members to work remotely with no expectation that they will commute to a company facility, is a competitive advantage, it can be more challenging to engage, motivate, and develop team members in a remote work environment, and our success depends on an engaged and motivated workforce and on developing the skills and talents of our workforce.
We face intense competition, and our competition may continue to increase.
The markets for our products and services are intensely competitive, highly fragmented, and geographically dispersed. The competitive landscape for e-commerce companies and the mass customization market continues to change as new e-commerce businesses are introduced, established e-commerce businesses enter the mass customization and print markets, and traditional “brick and mortar” businesses establish an online presence. With Vista's increased focus on design services, we now also face competition from companies in the design space, including those with AI-enabled design capabilities, some of which may be more established, experienced, or innovative than we are. Some of our current and potential competitors may have advantages over us, including longer operating histories, greater brand recognition or loyalty, broader customer reach, more focus on a given subset of our business, significantly greater financial, marketing, and other resources, production in lower-cost countries, speed of execution, or willingness to operate at a loss while building market share. Competition may result in price pressure, increased advertising expense, reduced profit margins, and loss of market share and brand recognition, any of which could substantially our business and financial results.
A major economic downturn or inflation could negatively affect our business and financial results.
If some or all of our markets enter a recession or other sustained economic downturn, demand for our products and services could be negatively impacted. An economic downturn could result in potential customers, especially small and medium-sized businesses, not being able to afford our products and rely more on free social media channels to market themselves instead of the products and services we offer. If demand for our products and services decreases, our business and financial results could be harmed. In addition, we experienced material cost increases in recent years that caused volatility in our financial performance. Although many costs have stabilized or come down in the last years, we cannot predict whether costs will increase in the future or by how much, our ability to offset such cost increases through pricing, and if our costs rise again there could be further impacts to our financial results.
Meeting our ESG goals will be costly, and our ESG policies and positions could expose us to reputational harm.
We face risks arising from the increased focus by our customers, investors, regulators, and others on environmental, social, and governance criteria, including with respect to climate change, labor practices, the diversity of our management and directors, and the composition of our Board. Meeting the ESG goals we have set and publicly disclosed will require significant resources and expenditures, and we may face pressure to make commitments, establish additional goals, and take actions to meet them beyond our current plans. If customers, potential customers, regulators, or other influential groups or individuals are dissatisfied with our ESG goals or our progress toward meeting them, or our positions on ESG issues, then they may choose not to buy our products and services, or to otherwise target us negatively, which could lead to reduced revenue, and our reputation could be harmed.
Risks Related to Our Corporate and Capital Structures
Our credit facility and the indentures that govern our notes restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.
Our senior secured credit facility that governs our Term Loan B and revolving credit and the indenture that governs our 7.375% Senior Notes due 2032, which we collectively refer to as our debt documents, contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit how we conduct our business, execute our strategy, compete effectively, or take advantage of new business opportunities, including restrictions on our ability to:
• incur additional indebtedness, guarantee indebtedness, and incur liens
• perform certain intercompany activities
• grant liens on assets
• pay dividends or make other distributions or repurchase or redeem capital stock
• prepay, redeem, or repurchase subordinated debt
• issue certain preferred stock or similar redeemable equity securities
• make loans and investments
• sell assets
• enter into transactions with affiliates
• alter the businesses we conduct
• enter into agreements restricting our subsidiaries’ ability to pay dividends
• consolidate, merge, or sell all or substantially all of our assets
A default under any of our debt documents could have a material adverse effect on our business.
Our failure to make scheduled payments on our debt or our breach of the covenants or restrictions under any of our debt documents could result in an event of default under the applicable indebtedness. Such a default could have a material adverse effect on our business and financial condition, including the following, among others:
• Our lenders could declare all outstanding principal and interest to be due and payable, and we and our subsidiaries may not have sufficient assets to repay that indebtedness.
• Our secured lenders could foreclose against the assets securing their borrowings.
• Our lenders under our revolving credit facility could terminate all commitments to extend further credit under that facility.
• We could be forced into bankruptcy or liquidation.
Our material indebtedness and interest expense could adversely affect our financial condition.
As of June 30, 2025, our total debt was $1,604.5 million. Our level of debt could have important consequences, including the following, among others:
• making it more difficult for us to satisfy our obligations with respect to our debt
• limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, or other general corporate requirements
• requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions, and other general corporate purposes
• increasing our vulnerability to general adverse economic and industry conditions
• exposing us to the risk of increased interest rates as some of our borrowings, including borrowings under our credit facility, are at variable rates of interest
• placing us at a disadvantage compared to other, less leveraged competitors
• increasing our cost of borrowing
Subject to the limits contained in our debt documents, we may be able to incur substantial additional debt from time to time, and if we do so, the risks related to our level of debt could intensify.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital, or restructure or refinance our indebtedness. Refinancing our debt may be particularly challenging in a high interest rate environment. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all, and if we cannot make scheduled payments on our debt, we will be in default.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.
Borrowings under our credit facility are at variable rates of interest and expose us to interest rate risk, and any interest rate swaps we enter into in order to reduce interest rate volatility may not fully mitigate our interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even if the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our
indebtedness, will correspondingly decrease. As of June 30, 2025, a hypothetical 100 basis point increase in rates, inclusive of our outstanding interest rate swaps, would result in an increase of interest expense of approximately $8.3 million over the next 12 months, not including any yield from our cash and marketable securities.
Challenges by various tax authorities to our international structure could, if successful, increase our effective tax rate and adversely affect our earnings.
We are an Irish public limited company that operates through various subsidiaries in a number of countries throughout the world. Consequently, we are subject to tax laws, treaties and regulations in the countries in which we operate, and these laws and treaties are subject to interpretation. From time to time, we are subject to tax audits, and the tax authorities in these countries could claim that a greater portion of the income of the Cimpress plc group should be subject to income or other tax in their respective jurisdictions, which could result in an increase to our effective tax rate and adversely affect our results of operations.
Changes in tax laws, regulations and treaties have affected, and may in the future affect, our effective tax rate and our results of operations.
Changes in tax laws, treaties or regulations, or their interpretation, of any country in which we operate have had in the past, and may have in the future, a materially adverse impact on us, including increasing our tax burden, increasing costs of our tax compliance, or otherwise adversely affecting our financial condition, results of operations, and cash flows. There are currently multiple initiatives for comprehensive tax reform underway in key jurisdictions where we have operations, and we cannot predict whether any other specific legislation will be enacted or the terms of any such legislation. Furthermore, with the change in the U.S. presidential administration and composition of the U.S. Congress, the administration have made, and may in the future make changes to U.S. tax law, regulations, treaties and policies. Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business. In addition, the application of sales, value added, or other consumption taxes to e-commerce businesses, such as Cimpress, is a complex and evolving issue. When and if a government entity claims that we should have been collecting such taxes on the sale of our products in a jurisdiction where we have not been doing so, we have incurred, and may in the future incur, substantial tax liabilities for past sales.
Our intercompany arrangements may be challenged, which could result in higher taxes or penalties and an adverse effect on our earnings.
We operate pursuant to written transfer pricing agreements among Cimpress plc and its subsidiaries, which establish transfer prices for various services performed by our subsidiaries for other Cimpress group companies. If two or more affiliated companies are located in different countries, the tax laws or regulations of each country generally will require that transfer prices be consistent with those between unrelated companies dealing at arm's length. Our transfer pricing arrangements are not binding on applicable tax authorities. If tax authorities in any country were successful in challenging our transfer prices as not reflecting arm's length transactions, they could require us to adjust our transfer prices and thereby reallocate our income to reflect these revised transfer prices. A reallocation of taxable income from a lower tax jurisdiction to a higher tax jurisdiction would result in a higher tax liability to us. In addition, if the country from which the income is reallocated does not agree with the reallocation, both countries could tax the same income, resulting in double taxation.
The ownership of our ordinary shares is highly concentrated, which could cause or exacerbate volatility in our share price.
Approximately 70% of our ordinary shares are held by our top 10 shareholders, and we may repurchase shares in the future (subject to the restrictions in our debt documents), which could further increase the concentration of our share ownership. Because of this reduced liquidity, the trading of relatively small quantities of shares by our shareholders could disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously if a large number of our ordinary shares were sold on the market without commensurate demand, as compared to a company with greater trading liquidity that could better absorb those sales without adverse impact on its share price.
Because of our corporate structure, our shareholders may find it difficult to enforce claims based on United States federal or state laws, including securities liabilities, against us or our management team.
We are incorporated under the laws of Ireland. There can be no assurance that the courts of Ireland would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities provisions of the U.S. federal or state securities laws or that the courts of Ireland would hear actions against us or those persons based on those laws. There is currently no treaty between the U.S. and Ireland providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters, and Irish common law rules govern the process by which a U.S. judgment will be enforced in Ireland. Therefore, a final judgment for the payment of money rendered by any U.S. federal or state court based on civil liability, whether or not based solely on U.S. federal or state securities laws, would not automatically or necessarily be enforceable in Ireland.
In addition, because most of our assets are located outside of the United States and some of our directors and management reside outside of the United States, it could be difficult for investors to place a lien on our assets or those of our directors and officers in connection with a claim of liability under U.S. laws. As a result, it may be difficult for investors to enforce U.S. court judgments or rights predicated upon U.S. laws against us or our management team outside of the United States.
We may be treated as a passive foreign investment company for United States tax purposes, which may subject United States shareholders to adverse tax consequences.
If our passive income, or our assets that produce passive income, exceed levels provided by law for any taxable year, we may be characterized as a passive foreign investment company, or a PFIC, for United States federal income tax purposes. If we are treated as a PFIC, U.S. holders of our ordinary shares would be subject to a disadvantageous United States federal income tax regime with respect to the distributions they receive and the gain, if any, they derive from the sale or other disposition of their ordinary shares.
We believe that we were not a PFIC for the tax year ended June 30, 2025 and we expect that we will not become a PFIC in the foreseeable future. However, whether we are treated as a PFIC depends on questions of fact as to our assets and revenues that can only be determined at the end of each tax year. Accordingly, we cannot be certain that we will not be treated as a PFIC in future years.
If a United States shareholder owns 10% or more of our ordinary shares, it may be subject to increased United States taxation under the controlled foreign corporation rules. Additionally, this may negatively impact the demand for our ordinary shares.
If a United States shareholder owns 10% or more of our ordinary shares, it may be subject to increased United States federal income taxation (and possibly state income taxation) under United States federal income taxation rules relating to certain non-U.S. corporations that are considered a controlled foreign corporation, or "CFC." In general, if a U.S. person owns (or is deemed to own) at least 10% of the voting power or value of a non-U.S. corporation, or "10% U.S. Shareholder," and if such non-U.S. corporation is a CFC, then such 10% U.S. Shareholder who owns (or is deemed to own) shares in the CFC on the last day of the CFC's taxable year must include in its gross income for United States federal income tax (and possibly state income tax) purposes its pro rata share of the CFC's Subpart F income, even if the Subpart F income is not distributed. Subpart F income consists of, among other things, certain types of dividends, interest, rents, royalties, gains, and certain types of income from services, and personal property sales. In addition, a 10% U.S. Shareholder's pro rata share of other income of a CFC, even if not distributed, might also need to be included in a 10% U.S. Shareholder’s gross income for United States federal income tax (and possibly state income tax) purposes under the Global Intangible Low-Taxed Income, or "GILTI," provisions of the U.S. tax law. In general, a non-U.S. corporation is considered a CFC if one or more 10% U.S. Shareholders together own more than 50% of the voting power or value of the corporation on any day during the taxable year of the corporation.
The rules for determining ownership for purposes of determining 10% U.S. Shareholder and CFC status are complicated, depend on the particular facts relating to each investor, and are not necessarily the same as the rules for determining beneficial ownership for SEC reporting purposes. For taxable years in which we are a CFC, each of our 10% U.S. Shareholders will be required to include in its gross income for United States federal income tax (and possibly state income tax) purposes its pro rata share of our Subpart F income, even if the Subpart F income is not
distributed by us, and might also be required to include its pro rata share of other income of ours, even if not distributed by us, under the GILTI provisions of the U.S. tax law. We currently do not believe we are a CFC. However, whether we are treated as a CFC can be affected by, among other things, facts as to our share ownership that may change. Accordingly, we cannot be certain that we will not be treated as a CFC in future years.
The risk of being subject to increased taxation as a CFC may deter our current shareholders from acquiring additional ordinary shares or new shareholders from establishing a position in our ordinary shares. Either of these scenarios could impact the demand for, and value of, our ordinary shares.
