PRSS 2018 Proxy Statement

1 A Message from the Chief Executive Officer My fellow shareholders: 2017 was a challenging year for CafePress, and our full year 2017 results were disappointing. We are in the midst of a multi-year turnaround strategy designed to refresh CafePress.com, reenergize the customer experience, and return to profitable growth. CafePress reported $85.7 million in net revenue for 2017, a decline of 16% year over year. Most of the decline was driven by changes in Google search algorithms that adversely affected our search visibility and traffic through the legacy CafePress.com site. Revenue from CafePress.com declined 24%, while revenue from the Retail Partner Channel grew 16%. 72% of 2017 net revenues came from CafePress.com and 28% of net revenues came from the Retail Partner Channel, compared to 80% and 20%, respectively, last year. As the gap on the bottom line has widened in recent quarters, we have taken additional cost control steps to hasten closing that gap. In January, we took important actions in the first quarter to drive reductions of approximately $7 million in normalized, annual fixed costs. We will continue to align our cost structure, cash balances and operational objectives each quarter to maintain discipline while we work diligently to return the Company to profitable growth. The legacy CafePress.com website has not kept pace with change over the years, and we are focused on completing its rebuild. We believe as the new website is rolled out, crawled and pages are indexed by the search engines, we will see higher traffic and rankings, which will result in revenue improvement through CafePress.com from the search engine optimization channel in the second half of 2018. Retail Partner Channel continues to be a valuable growth driver, and we are excited to have entered new geographies and launched with new partners throughout the year. We began expanding internationally within the Amazon marketplace, entering European domains in 2017, and we are planning a further expansion into their Australian domain. Looking to 2018, we will continue to build out the product catalog through Walmart.com and enter the eBay marketplace. We expect growth in the Retail Partner Channel from further optimization of existing partners as well as the contribution of new partners and expansion into new geographies. We made significant progress improving our operations, technology and production workflow throughout the year to drive further efficiency. Our quality fulfillment capabilities are a valuable asset that we feel can be leveraged to provide new growth opportunities. We have the capability and capacity to provide fulfillment services to third parties, and we have already begun building this service for both major participants in the custom, on demand e-commerce space as well as smaller customers. Our fulfillment services business is in its infancy, but we are excited by the opportunity and look forward to building momentum. A great deal of work has been completed over the past few years to return CafePress to a leading e-commerce provider with the best assortment of engaging merchandise inspiring people to express themselves. We continue to make steady, methodical improvements across the business, and we look forward to increasing our momentum. While we heeded some challenges in 2017, our team remains focused on executing our long-term strategies to enhance our core consumer business, focus on profitable growth channels and optimize our customer experience. Looking to 2018, I am excited to launch our fully rebuilt CafePress.com and the expansion opportunities within the Retail Partner Channel and our new fulfillment services business. Sincerely, Fred E. Durham, III Co-founder & Chief Executive Officer