CafePress: An Old Dot-Com IPO Worth Considering (VPRT, SFLY)

CafePress Inc. is one of the latest dot-com players that has filed to come public.  What is interesting is that CafePress is far from an unknown internet player and it actually has a longstanding reputation that goes back to 1999 before the dot-come bubble of 2000.  The company’s paperwork filed with the SEC does not list terms but it does plan to raise up to $80 million dollars in its initial public offering. No ticker was assigned and no exchange listing has yet been made.

CafePress’s product offerings include a wide array covering t-shirts, hats, canvas art prints, banners, stickers, iPhone and iPad cases, mugs, water bottles, GPS units, cards and calendars.  It develops its products through such activities as: screen printing and garment printing; creative photo merchandising; promotional product marketing; and mass-customization services for retailers and product manufacturers.  It is involved in E-commerce and a variety of other distribution channels. Company sales are subject to seasonal influences.  Fourth quarter revenues regularly lead the year owing to holiday sales.

The company lists substantial competition, but the two most widely recognized competitors listed are going to be VistaPrint N.V. (NASDAQ: VPRT) for small businesses and Shutterfly, Inc. (NASDAQ: SFLY) for photographic products. Other competitors are Etsy, CustomInk, Spreadshirt, Threadless and Zazzle.

Upon completion of this IPO the company anticipates 28.4 million in outstanding shares.  This total is subject to certain common share exclusions specified in the offering document including: 4.2 million shares subject to exercisable options; shares reserved for the company’s stock incentive plan and employee stock purchase plan; and conversion of 11.1 million shares of preferred stock).

CafePress’s net revenues had doubled from $64.1 million in 2006 to $127.9 million in 2010.  Meanwhile net income tripled from $1.02 million in 2006 to $33.3 million for 2010.  Net revenues and income rose roughly 40% for the quarter ending March 31, 2011 compared with March, 2010.

The selling stockholders are offering the shares through underwriters. J.P. Morgan Securities LLC and Jefferies & Company, Inc. and Cowen and Company, LLC with Morgan and Jefferies acting as joint book-running managers.

As far as a use of funds, it listed “to increase our working capital, create a public market for our common stock and facilitate our access to the public capital markets” and “…for general corporate purposes, including working capital and capital expenditures.”

The co-founders are Fred Durham with a 19.0% stake and Maheesh Jain with a 17.3% stake; Sequoia Capital Funds is also listed as a 20.4% owner.

The full preliminary IPO filing can be seen here.

JON C. OGG