Judy Krandel of Juniper Investment, InvestPitch presentation produced by sumzero and Institutional Investor on the long case for CafePress Inc (NASDAQ:PRSS).
Also see: Jordan Giancoli of Kerrisdale Capital: Long on Dongbu
Investment Thesis
CafePress Inc (NASDAQ:PRSS) is a leading ecommerce platform enabling worldwide customers to create, buy and sell a wide variety of customized and personalized products. Products include clothing, accessories, art, photography, posters, stickers, home accents, and stationary. There are currently over 500 base goods available to design. This is truly crowd-sourced or user generated content. The company serves its customers and content owners through its portfolio of e-commerce websites, led by its flagship site CafePress.com. Customers include millions of individuals, groups, businesses and organizations who use CafePress Inc’s innovative and proprietary print-on-demand services to create customized products. There are currently 19MM registered members, 3MM individual shops that offer CafePress’ services and over 3MM current customers. The company works with content owners (individual designers, artists, and branded content licensors) to leverage its platform to reach a broad consumer base and monetize their content. The company’s technology allows for single unit and small quantity orders on a when-ordered-basis. The company ships over 8MM items per year and growing.
The personalized segment is extremely fragmented, with most of it served through offline businesses. Industry estimates range from $25B to $1Trillion depending on which category of products and which geographies one includes. Today, CafePress Inc (NASDAQ:PRSS) is mostly a domestic business with only 15% of the business overseas, mostly in Europe. The business is highly seasonal with about 40% of business coming in the fourth quarter. There is a large retail component and of course holiday giving is a big season.
The company tracks total number of customers, total number of orders, and average order size (AOS). AOS has traditionally run $50 – $53, and has been relatively stable. With the most recent acquisition of EZ Prints, the AOS has declined to $38 due to mix. EZ Prints business has a much lower order value, including many orders below $10. One of the company’s goals is to raise AOS through new higher priced items such as home goods and logo sportswear.
H/T Curry Goat
