Welcome to the New York IDEAS Investor Conference. I'm Phillip Kupper with Three Part Advisors. Our next presentation comes from one of our investor relations clients, Cimpress. Cimpress is traded on the Nasdaq Exchange under their ticker symbol CMPR. They are a mass customization print business serving small and medium-sized businesses that fuel our economies. Presenting for the company today is Cimpress's Vice President of Investor Relations and Sustainability, Meredith Burns.
Great. Thank you, Phillip. Appreciate it. Hi, everybody. Welcome to folks that are here in the room and also to those that are on the webcast. Thank you for that introduction, and thank you for hosting us to the team at Three Part Advisors. I will be talking about Cimpress today, and there will be times when I talk about the future in the presentation and probably your questions after the presentation. Those are based on our expectations as of now, and it's possible that they will not come to fruition. We have risks that you can find here on this slide, but also in our SEC filings that you can access through our website. There are also non-GAAP measures that are in this presentation, and you can find reconciliations to those measures, to our GAAP measures on our website as well. All right. Let's get started.
At Cimpress, we help millions of businesses build brands, stand out and grow via custom and promotional products. This is a focus of ours for decades. The company was founded in 1995, and very early on, our founder and still Chairman and CEO today, Robert Keane, identified a need that small businesses, just because they're small, doesn't mean that they shouldn't have access to look just as professional as a large company looks. At the time that we started the company, they didn't have access to affordable beautiful marketing materials in quantities that were right for them. Over the last three decades, we've set out to change that. We've set out to change that through a variety of products.
You may know our brand, Vistaprint, which historically had been known for the first product that it launched, which is business cards, but we sell a very wide variety of these products in small format marketing materials like business cards or postcards or flyers, but also in signage, in promotional products and apparel, and increasingly, the newest product category that we've gotten into, which is packaging. A quick level set for everybody at Cimpress by the numbers. In the trailing 12-month period to March, our annual revenue was $3.7 billion. That was with 4% organic constant currency revenue growth. That generated $1.7 billion of gross profit in that trailing 12-month period, $461 million of adjusted EBITDA, and $123 million of adjusted free cash flow, with a little bit of a heavier investment in some of our manufacturing CapEx during this current period.
From a market perspective, and I'll get more into this in a second, it's a very large and fragmented market. We serve the market with largely our own production facilities. We have about 3 million square feet of production facilities in North America, Europe, Australia, India and Brazil, we have over 15,000 team members in 25 countries. We serve about 15 million customers annually, primarily businesses, but there are some consumers in the mix. It's pretty small as a percentage of our overall revenue, though, about 10%. Primarily business. We have 23,000 unique products offered with millions of variants when you add on sizes and finishing options and things like that. We fulfill over 30 million orders annually. Down at the bottom of the slide, you can see the various reportable segments that we operate in and the brands that fall under those segments.
Like I said before, Vistaprint is probably the one that most of you are most familiar with, but we also have great businesses in these other segments. The PrintBrothers and The Print Group are in segments that we refer to as upload and print. The customer is a little bit more professional. Maybe they are a marketing department in a medium-sized business or a larger company, but they still have need for relatively small quantities of things. They'll come to those businesses. You also have National Pen, which is primarily in the promotional products space. Largely writing instruments and hard goods, but some increasingly soft goods there. You have our other businesses, which are BuildASign, which is based here in the U.S. and does a lot of signage applications. Printi, which is our Brazilian business.
I mentioned a large and fragmented market. We think that the addressable space for us is about $100 billion annually, and it breaks down into the pie chart that you see on the right side of this slide, where you've got these product categories that I mentioned before, small format marketing materials, signage, promotional products, apparel and gifts, and packaging and labels.
This is obviously the commercial printing industry at large is much larger than $100 billion annually, but this is the part of the market that we see as ripe for disruption from companies with a mass customization model like our own, where customers want smaller quantities of this type of product, and they don't want to be told, "Hey, you can get that packaging, but you have to buy 50,000 quantity of it, and it's going to take you four to six weeks to get it in your hot little hands." Our small businesses don't want that. Over on the left side of the slide, you can see that there is definitely some differences in terms of how penetrated we are with bringing an online model to customers in this part of the market.
This is some research that came from a third-party source within the last couple of years, where the one that is furthest along in terms of penetration is still only about 30% penetrated, but that is a business identity product, so that would be things like business cards. That is much more mature. We've been selling those things via an online model with mass customization for almost 30 years. That is a bit more mature. You can see as you go down the list that you get into some of these newer applications, they're hardly online at all today. That's where we see a lot of opportunity for future growth. All right. I've mentioned mass customization a couple of times, it's finally time to talk about what it is.
This is the concept where we want to produce custom products, even in small quantities, with the reliability and quality and affordability that you would get if you were mass producing something. There's usually a trade-off in these things, where if you want a very small number of custom things, you're going to pay a lot for it. If you want a very large number of custom things, all right, you can pay the unit cost much, much lower. We want to break that curve that naturally happens there. This is something that our customers care deeply about because it helps them build their brands. It allows them to have a broad choice of products with a fast turnaround. It allows for low prices compared to traditional sources of these things.
It gives them high quality, it gives them the convenience of e-commerce and in quantities that are right for them, as I mentioned before. It was really for this customer that we invented this mass customization model for print. How we do it is tricky. It's very hard to do because you actually have to be good at a lot of disciplines, orchestrate that across your customer base in order to get the benefits. You can't just say, "Hey, I have this printing equipment, I usually serve large customers, now I'm going to go serve small customers." How are you going to acquire the millions of customers that you need in order to get the economics that you need to get that look more like your large customer economics? Actually, they're better than the large customer economics.
You need to be great at manufacturing. You have to have software. You have to have the ability to help customers with designs. You need to have broad reach and great brand equity. You need to have great service operations to serve millions of customers a year all over the world. You need to think forward about product development and really making sure that you are serving those customers in the best way possible. Doing that well has enabled these financial results over time, where we have a long history of market disruption. What you see here on the left side is revenue, on the right side is adjusted EBITDA. The lighter blue bars are actuals. The darker blue bars are our guidance. For revenue, we've just got our guidance to this fiscal year that we're in right now. We're actually in our fourth quarter.
That is for 9%-10% reported revenue growth. That will bring us over $3.7 billion of revenue in this year. The organic constant currency growth rate that we have guided to is 4%-5%. We're getting a decent headwind, or sorry, excuse me, tailwind from currency this year, and we also have acquired a few businesses. Then on the EBITDA side, you see two bars. So one is for this year, which is at least $465 million in revenue that we just raised our guidance on with this last earnings announcement for the March quarter. Then we also have this longer term target, which is to have EBITDA of at least $600 million with 45% free cash flow conversion for our FY 2028.
I'll get into how we expect to get there in the coming slides. One thing that I think is important for potential investors to understand about the company is that our focus is on per share value creation. About 30% of the equity value of Cimpress is represented on our board of directors. That's between our founder, Chairman, and Chief Executive Officer. Also our largest shareholder has a representative that we invited to take a board seat over 10 years ago, and has been a wonderful partner. We have a history of organic investments that range. I talked about all of those different disciplines that you have to be good at and orchestrate well together. So it's technology, it's manufacturing, design, customer service, marketing, and all of that drives scale-based competitive differentiation and the financial track record that I showed on the earlier slide.
We also allocate capital to M&A. That has allowed us to, in some cases, expand our addressable market. There are some times that we will go out and specifically acquire a company that has a specific product capability, for example. In newer areas like packaging, that has definitely been the case for a couple of our tuck-in acquisitions recently. Then there are also some acquisitions that we've done that have brought us production capabilities or allowed us to vertically integrate in ways that help us get more efficient. The tuck-ins that we've done recently have a post-synergy base case return on capital of 20%+, and we feel really good about the ability to get those synergies. They're very obvious synergies in terms of bringing our purchasing power, also aggregating orders into standardized production flows, things like that.
We have also allocated capital over time to share repurchases. Since 2009, we have reduced our share count by 50%. So that is something that we have been opportunistic about, and at times have aggressively repurchased our shares because we are focused on that per share value creation. Then the successful execution of our financial targets are expected to reduce our net leverage to, we're at 3x right now, 2.5x trailing 12-month EBITDA by the end of our fiscal 2027, and 2x by the end of 2028. We still think that that will leave some room for some of this type of capital allocation that I talked about on the slide. So those investments, those places that we have allocated capital to, are the foundations for that guidance that I gave for FY 2028.
We have really been gaining traction along several areas here. I think the first thing that is super important to understand is that our technology platform is modern. Though we started the company in 1995 and we moved online in 1999, the first generation of the technology stack has been replaced with all modern technology, and that has enabled multiple things. It has enabled Vistaprint, in particular, our largest business, to get back to the business of launching new products for customers. It has enabled them to personalize the customer experience in ways that people expect to see in 2026. It also has allowed all of our businesses to access each other's product capabilities and production capabilities. It allows us, instead of just optimizing our manufacturing within a plant, it allows us to optimize our manufacturing across a region.
Right now, that is something that is allowing us to get more efficient in our COGS, and it will also allow us to launch new products. I mentioned business cards earlier, and business cards are great and beloved, but they are no longer growing. It is not going to be the future source of growth for our business. It's really good that we have continued to launch new products, in what we call elevated product categories or elevated products, where the product itself is something that was hard to access for small businesses before something got unlocked from a technology and manufacturing perspective, or from a design perspective.
We've been able to launch packaging, like you can see some packaging on this slide here, but also more complicated signage applications like trade show backdrops or canopy tents or things like that, and do it in ways that are more efficient than where folks currently access these products. It allows us to capture more wallet share with our customers. That is something that we have some metrics in our earnings documents, in our investor presentations, that you can see where we really are driving wallet share gains with higher value customers, particularly in the Vista business, but this happens in our other businesses as well.
It also allows us to attract new customers more efficiently, because the lifetime value of that customer that we're acquiring is going to be higher than it was two years ago, five years ago, certainly 10 years ago. Lastly, but super importantly, I've talked about manufacturing a bit here. It is our economic engine. It's very important that we continue to have a really broad selection of products that are high quality and that we continue to launch new products, and we drive the cost of manufacturing down. That moat that we have built on the manufacturing side is not going to be negatively impacted by AI.
In fact, we think that on a net basis, as AI continues to drive the democratization of design, that was happening before AI, but it has accelerated, and it is just easier and easier for people to come up with something beautiful that is a great design. They want to put that on more stuff. We make our money on the actual physical production of things and selling those to customers. The idea that AI will cause more people to have more designs that they love, we think is a positive thing for us. If you look at our segment in geo mix, here you have our different segments on the left side of the slide. Vistaprint is just a little over half of our overall revenue. That is the organic business that Robert started all those years ago, and it is growing.
It is a fantastic business. From a branding perspective, it's probably the one that you are most familiar with. The next two segments here are in what we call upload and print. These are businesses where the customer, as I mentioned before, is a little bit more professional. Maybe the quantities are a little bit higher, but they're still lower than you'd get with a commercial printer. These are businesses that we acquired into starting in 2014, really 2014 through 2017 time period. Then we've done some small vertical integration or product capability tuck-ins since then. The cash flows that we have generated cumulatively from these acquisitions has already surpassed the amount of money that we paid to acquire them, and they still have a lot of growth opportunity in the future. These have been great investments for us.
National Pen is about 11% of revenue. As I mentioned, that's in the promotional product space, and our all other businesses is about 6% of revenue. We have traditionally managed these businesses mostly autonomously. In fact, in some cases, we really like to see some ownership of the businesses, particularly in that PrintBrothers segment where there is ownership of about 9%+ of all of the businesses in that group by the folks that are running that segment. That we think really aligns their interests and their behavior with what's right for long-term investors for the company as well. There are a couple of places where the customer base is a little bit more similar than not between Vistaprint, National Pen, and BuildASign.
In those businesses, we are looking at ways to work more efficiently across and really help tap into pools of expertise or capabilities like telesales or advertising or technology where we think that over time we can get more efficient and a better customer result by thinking across those businesses as opposed to purely business by business. Oh, sorry. Just from a geo perspective, 46% is North America, 50% in Europe, and 4% is in Australia, Brazil, and India. From a balance sheet perspective, we have no near-term maturities on our debt. In fact, we just refinanced last week. We closed on a $1.1 billion term loan B, and that is out to 2033. We also have a $525 million high-yield bond which is out to 2032. No near-term maturities on the debt. You can see the net leverage ratio here.
As I mentioned earlier, it's at 3x , but we have a policy and a financial plan that will help us take that under 2.5x or 2x over the coming two years. I mentioned our outlook earlier, I'm not going to spend a ton of time here. This is the outlook that we updated as of our last earnings announcement on April 29th. The revenue growth this year is high, higher than you should expect when you look at reported revenue growth. Part of that is currency, part of that is M&A. The organic constant currency growth expectation for this year is 4%-5%.
From a profitability perspective, we expect net income of at least $87 million and adjusted EBITDA of at least $465 million. From a cash flow perspective, operating cash flow of around $300 million and adjusted free cash flow of a little between $130 million and $135 million. As I mentioned earlier, we are making some significant investments this year, more significant than normal in CapEx, in manufacturing, in order to drive future efficiencies. Our CapEx this year is going to be a bit over $100 million, which is going to equate to about 3% of revenue. Our maintenance CapEx is about 1.5% of revenue, it's a little bit elevated this year. This is the framework for FY 2028, where at that time, we still expect our revenue to be growing in mid-single digits from an organic constant currency perspective.
We expect that profitability to be at least $600 million of adjusted EBITDA, 45% of that EBITDA to convert into free cash flow. That would be at least $270 million of free cash flow. How we get there is a combination of some cost efficiencies that all of the things that I've been talking about can drive for us, and we expect will drive for us on the COGS side, on the manufacturing side. That's a material piece of it. There's also a material piece from OpEx that's driven by just both efficiency gains, but also AI usage that can help us drive more efficiency in our OpEx base, also in our advertising base as well.
From a cash flow perspective, by FY 2028, we would expect the slightly elevated CapEx that we have now as a percentage of revenue to come down a bit as we complete some of these chunkier investments in manufacturing. There's about $70 million-$80 million of savings that we expect to get that's required to achieve these results. We have already announced some restructuring of $11 million annualized to get there. We've given examples of where we're making progress on the COGS side, where we're making progress on the AI side. You should expect us to continue to flesh that out as we execute over the course of the next year, such that exiting FY 2027, we would have this annualized savings of $70 million-$80 million.
The remainder of what's required, what you have to believe to get to the $600 million, some of it is some of the M&A that we've done since we launched this longer-term target. Some of it is some benefit from having the startup costs that are impacting our profitability last year and this year roll off with some of these new manufacturing locations as we scale them up. Some of it is currency benefit, the amount that you actually need of organic flow-through on a contribution profit perspective is actually fairly low given all of those other things in order to get to $600 million. We say it's at least $600 million. We haven't updated that number.
We have continued to reiterate that number. We have also talked about the fact that as we've executed through this year, it just makes that number that's required for the organic flow-through to be smaller. You don't have to believe as much. The biggest piece to believe is the savings. We are hyper-focused on that. Everything that we do, everything that we talk about internally, everything that we talk about with the board is like, "Here's the progress that we're making on the projects that are going to get us to these numbers." As I mentioned earlier, that leverage policy is to get below 2.5x , we think we can get there exiting FY 2027.
If FY 2028 plays out as we expect it to, just based on those minimum numbers, we would see that net leverage come below 2x , depending on whether there's any chunky capital allocation in that period of time, but in a significantly different position than we are today. All right. With that, I think we have a few minutes for questions if you have them. Yes.
I'm glad you had the last slide on the leverage policy. Can I ask you to talk a little bit more about how you think about debt?
I see the 2.5x target. Is that the optimal level?
Where is the optimal level? Does that previous slide about profitability targets depend on getting to that 2.5x or more?
How do you think about that?
Right. Okay. The question for the folks on the webcast is about how we think about debt and whether the 2.5x Trailing 12-month EBITDA policy is an optimal level of debt to have. Do we need to have that in order to get to our FY 2028 targets? I think I got those right. How we think about it is we don't get some tax benefit from having our leverage at the same level. It's not really around optimizing in that way. It's more about where we feel comfortable operating. Post-pandemic, I would say that this policy was three times before the pandemic, and we've shifted that down, having learned the things that we learned during the pandemic, and also taking feedback from investors during that period of time as well.
The 30% of the shares that are represented on our board are very aligned with this. What we do from a capital allocation perspective is we look at all of the opportunities to allocate capital to things that we think will have good returns. Sometimes that's share repurchase, sometimes it's M&A, sometimes it's good old-fashioned organic investment. In a world where our profitability is much higher, and therefore the cash can build up on the balance sheet, this will naturally come down. Interest levels will be about the same. It's not required to get the leverage down in order to deliver those financial results. It's the other way around is how we think about it. Yes.
Could you expand on the capital allocation priorities between organic investment, M&A, share repurchase?
Sure. The question is around talking about the priorities for capital allocation between share repurchase, M&A, and organic investment. Our view is that as long as we have great opportunities to invest organically in good returning activities that benefit our customers and our shareholders, we want to take those opportunities as much as is reasonable in terms of what you can accomplish in a year. We can do that through the cash flow that we generate as a company. That's not really a place that we need to take debt on in order to make those investments, even in a deep investment year. That is a priority for us because we still see a ton of opportunity to keep launching new products, keep pushing on those wallet share gains with higher value customers.
From an M&A perspective, the current view on that front is nothing transformational. It's really that we have these opportunities to acquire in places that are highly rational, have these great returns, are really nice additions to the portfolio, either from an efficiency perspective or a product perspective, but they're going to be relatively small and nothing transformational. The amount that you can get done in a year depends on where you're doing it. It has helped us that in having the organizational structure that we have, these things get led by our businesses, as opposed to some central team that is thinking about how to justify their salary. It's really about can this tuck-in acquisition add value to this segment or to this business, and how much do we need to pay for it, and then help them get it over the line.
From a share repurchase perspective, obviously it has featured quite significantly in our capital allocation over time. That will continue to be the case, and it will continue to be opportunistic. There will be some times where we are, some times where we're not. It is really just the measure that we use to look at the other types of capital that we could allocate and say, "Should we spend the money, the next dollar here, or should we spend the next dollar repurchasing a share?" So. Mm-hmm. Yes.
I'm just kind of curious about your thoughts on geographic expansion.
Even to places like Canada and Mexico, it doesn't seem that much of a leap.
Yeah. The question for the folks on the webcast is our thinking on geographic expansion even to places like Canada and Mexico. I would say that the answer differs slightly depending on whether you're talking about markets that we serve versus where we operate. In our North American, that's 46% of our total revenue. Much of that revenue is in the U.S. because of the size of the market. Canada, though, is a pretty decent-sized market for our Vistaprint business. Mexico is there, but it is a little bit smaller. The U.S. is really the biggest market there. However, where we operate to serve the customers that are in the North American market is much more distributed. We have our largest production facility in Canada, just across the river from Detroit, Michigan, in Windsor.
We also have a few production facilities in Mexico, then we also have some production in the U.S. as well. I guess what I would say is that in terms of adding new geographies from a market perspective, that is not going to be a major focus for us. There was a period of time where we were pushing into some Asian markets. We also still have our Brazilian acquisition that we made, which is now sort of operating at breakeven, and it will scale from here. It's a good little company.
When we look at where we could choose to spend our time in terms of creating value, it is much better for us to optimize what we have and to spend time in the markets that we already are successful in because we think that there's a lot of runway than there is in figuring out new markets and how to push into them. We did, about 10 or 12 years ago, try to get into the Chinese market, for example. You just have to operate very differently there, especially in the printing industry. Ultimately, we pulled out because it was not paying back the way we expected it to.
Thank you.
Thank you so much, everyone.