Cimpress, the mass customization giant, just delivered another strong quarter. Revenue is up, profitability is soaring, and the company is even buying back shares. But beneath the surface of these impressive numbers, a subtle shift is underway in Cimpress' Upload & Print segment, one that could reshape the entire printing industry.

Robert Keane, Cimpress' founder and CEO, insists these businesses are "healthy, not ailing." He points to the segment's impressive 41% year-over-year EBITDA growth and its strong cash flow generation, exceeding the initial capital invested. But something else he said, almost in passing, hints at a deeper, more disruptive strategy.

Keane highlighted two "very important trends" constraining near-term revenue: the industry-wide shift to smaller print orders, and the "systematic" disintermediation of traditional print resellers. He sees both as long-term positives for Cimpress, and he's right. But the real story lies in how Cimpress is actively accelerating these trends, not merely reacting to them.

"Consider this: Keane noted that Print Group, the segment most heavily reliant on resellers, is seeing the biggest headwinds. Meanwhile, PrintBrothers, with a smaller reseller base, is still growing at a healthy 5% annually. The implication is clear: Cimpress is prioritizing direct-to-customer sales, even if it means short-term pain for Print Group's reseller-heavy business."

This isn't just about adapting to the digital age. Cimpress is actively pushing its Upload & Print businesses away from the traditional reseller model. This is a bold move, a calculated gamble that could pay off massively if executed correctly.

Here's why this is so significant: Print resellers, local print shops and graphic designers who act as intermediaries between customers and large printing facilities, represent the industry's legacy. They are the gatekeepers, controlling customer relationships and dictating pricing. But their grip is weakening as customers increasingly turn to online platforms like those offered by Cimpress' Upload & Print brands.

By deliberately pushing its Upload & Print businesses towards a direct-to-customer model, Cimpress is effectively cutting out the middleman. This gives the company greater control over its pricing, allowing it to capture more of the value chain. More importantly, it creates a direct relationship with customers, fostering loyalty and generating valuable data insights.

This strategy is evident in Robert Keane's vision of the future: "If you think out 10 years from now, where is the world going? The world is going more and more to direct relationships across the Internet with end customers… without going through intermediary." Cimpress is not just predicting this future; it's actively shaping it.

Cimpress EBITDA Growth

The following chart shows Cimpress's impressive EBITDA growth over the past year, demonstrating the company's financial strength as it navigates this strategic shift.

The Hypothesis: Cimpress is orchestrating a quiet revolution in the printing industry.

By aggressively prioritizing direct-to-customer sales in its Upload & Print segment, Cimpress is accelerating the demise of the traditional reseller model. This will likely result in:

- Increased market share for Cimpress: As resellers lose ground, customers will increasingly turn to online platforms like those offered by Cimpress, driving market share gains. - Enhanced profitability: Cimpress can capture a larger portion of the value chain by eliminating reseller margins. - Deeper customer relationships: Direct relationships allow Cimpress to gather valuable data, personalize offerings, and foster customer loyalty.

The Numbers:

- Print Group revenue decline: While not disclosed publicly, Print Group's reliance on resellers likely contributed to its weaker performance relative to PrintBrothers. - PrintBrothers 5% annual growth: This suggests the direct-to-customer model is a viable growth engine, even in the current market environment. - Cimpress' overall financial strength: Its robust profitability and cash flow generation provide ample resources to weather short-term revenue fluctuations in Print Group and invest in the direct-to-customer transition.

"Fun Fact: Cimpress' mass customization model actually originated from a simple idea - Robert Keane, a Harvard student at the time, wanted to offer small businesses affordable, high-quality business cards. This need became the seed for what is now a global printing powerhouse, demonstrating the power of fulfilling unmet customer needs."

The ghost in the Cimpress machine is not a bug; it's a feature. It's a strategic shift that could very well define the future of the printing industry. While other analysts are busy celebrating Cimpress' strong financial performance, they're missing the bigger picture. Cimpress is not just playing the game; it's rewriting the rules.