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Vistaprint Q3 Profit Rises, Lifts FY11 Outlook

Monday, May 02, 2011

Press release from the issuing company

Vistaprint N.V., a leading online provider of professional marketing products and services to micro businesses and the home, today announced financial results for the three month period ended March 31, 2011, the third quarter of its 2011 fiscal year.

"Vistaprint just completed a very strong third quarter," said Robert Keane, president and chief executive officer. "Earnings exceeded our expectations for three reasons: total revenue that was higher than our previous guidance, gross margin improvements that are the result of prior decisions to invest in manufacturing and procurement capabilities, and a delay in the timing of planned operating expenses."

Keane continued, "Additionally, though it is still very early, we are progressing against the multi-year growth strategy we outlined at our recent investor day in New York. During the quarter, we researched and tested initiatives to deliver greater value to our customers; we moved forward to further drive manufacturing excellence; we invested more in established marketing channels; and we tested investments in new marketing channels."

Financial Metrics:

-- Revenue for the third quarter of fiscal year 2011 grew to $203.7
million, a 23 percent increase over revenue of $166.0 million reported
in the same quarter a year ago. Excluding the estimated impact from
currency exchange rate fluctuations, total revenue grew 22 percent from
the same quarter a year ago.
-- Gross margin (revenue minus the cost of revenue as a percent of total
revenue) in the third quarter was 65.3 percent, compared to 64.1 percent
in the same quarter a year ago.
-- Operating income in the third quarter was $25.6 million, or 12.6 percent
of revenue, which was a 44 percent increase compared to $17.8 million,
or 10.7 percent of revenue in the same quarter a year ago.
-- GAAP net income for the third quarter was $22.9 million, or 11.3 percent
of revenue, a 42 percent increase compared to $16.2 million, or 9.7
percent of revenue in the same quarter a year ago.
-- GAAP net income per diluted share for the third quarter was $0.51, a 46
percent increase versus $0.35 in the same quarter a year ago.
-- Non-GAAP adjusted net income for the third quarter, which excludes
share-based compensation expense and its related tax effect, was $28.2
million, or 13.8 percent of revenue, a 31 percent increase compared to
$21.5 million, or 12.9 percent of revenue in the same quarter a year
ago.
-- Non-GAAP adjusted net income per diluted share for the third quarter,
which excludes share-based compensation expense and its related tax
effect, was $0.63, a 37 percent increase versus $0.46 in the same
quarter a year ago.
-- Capital expenditures in the third quarter were $4.2 million or 2.1
percent of revenue.
-- During the third quarter, the company generated $33.7 million in cash
from operations and $27.8 million in free cash flow, defined as cash
from operations less purchases of property, plant and equipment,
purchases of intangible assets, and capitalization of software and
website development costs.
-- The company had $208.1 million in cash and cash equivalents as of March
31, 2011.
-- During the third quarter, the company purchased 32,852 of its ordinary
shares for $1.5 million, inclusive of transaction costs, at an average
per-share cost of $44.94, as part of the share repurchase program
authorized by the Supervisory Board in November 2010.


Operating Metrics:

-- Vistaprint acquired approximately 1.8 million new customers in the third
fiscal quarter ended March 31, 2011, compared with 1.6 million in the
same quarter a year ago.
-- Repeat customers generated approximately 68 percent of total bookings in
the third quarter, compared with 67 percent in the same quarter a year
ago.
-- Total order volume in the third quarter of fiscal year 2011 was
approximately 5.8 million, reflecting an increase of approximately 21
percent over approximately 4.8 million orders in the same quarter a year
ago.
-- Advertising and commissions expense was $43.4 million, or 21.3 percent
of revenue in the third quarter, compared to $33.2 million, or 20.0
percent of revenue in the same quarter a year ago.
-- The U.S. market contributed 54 percent of total revenue in the third
fiscal quarter, down from 55 percent in the same quarter a year ago,
representing a 19 percent increase in revenue year over year. Non-U.S.
markets contributed 46 percent of total revenue in the third quarter, up
from 45 percent in the same quarter a year ago, representing a 27
percent increase in revenue year over year and 25 percent in constant
currency.
-- North American, European and Asia-Pacific revenue contributions in the
third quarter of the fiscal year 2011 were 57, 38, and 5 percent of
total revenue, respectively.
-- Average order value in the third quarter, including revenue from
shipping and processing, was $36.03, compared with $34.79 in the same
quarter a year ago.
-- Website sessions in the third quarter were 79.4 million, a 3 percent
decrease from 81.9 million in the same quarter a year ago.
-- Conversion rates were 7.3 percent in the third quarter of fiscal 2011,
compared to 5.9 percent in the same quarter a year ago.


"With three quarters of good execution behind us, we believe that we will deliver stronger than previously anticipated revenue and earnings results for the full fiscal year," said Ernst Teunissen, chief financial officer. "Therefore, we are raising our fiscal 2011 revenue and earnings guidance to reflect our recent performance and outlook for the fourth quarter. Our guidance factors in our plan to make additional investments in the fourth quarter to drive longer-term growth that are in line with our well-established financial strategy of targeting annual, not quarterly, EPS objectives."

Financial Guidance as of April 28, 2011:

Based on current and anticipated levels of demand, the company expects the following financial results:

Revenue

-- For the fourth quarter of fiscal year 2011, ending June 30, 2011, the
company expects revenue of approximately $202 million to $207 million.
-- For the full fiscal year ending June 30, 2011, the company expects
revenue of approximately $810 million to $815 million.


GAAP Diluted Earnings Per Share

-- For the fourth quarter of fiscal year 2011, ending June 30, 2011, the
company expects GAAP diluted earnings per share of approximately $0.28
to $0.33, which assumes 44.7 million weighted average diluted shares
outstanding.
-- For the full fiscal year ending June 30, 2011, the company expects GAAP
diluted earnings per share of approximately $1.78 to $1.83, which
assumes 44.9 million weighted average diluted shares outstanding.


Non-GAAP Adjusted Net Income Per Diluted Share

-- For the fourth quarter of fiscal year 2011, ending June 30, 2011, the
company expects non-GAAP adjusted net income per diluted share of
approximately $0.38 to $0.43, which excludes expected share-based
compensation expense and its related tax effect of approximately $5.1
million, and assumes a non-GAAP weighted average diluted share count of
approximately 45.2 million shares.
-- For the full fiscal year ending June 30, 2011, the company expects
non-GAAP adjusted net income per diluted share of approximately $2.26 to
$2.31, which excludes expected share-based compensation expense and its
related tax effect of approximately $22.3 million, and assumes a
non-GAAP weighted average diluted share count of approximately 45.4
million shares.


Capital Expenditures

For the full fiscal year ending June 30, 2011, the company expects to make capital expenditures of approximately $40 million to $45 million. Planned capital investments are designed to support the planned growth of the business.

The foregoing guidance supersedes any guidance previously issued by the company. All such previous guidance should no longer be relied upon.

At approximately 4:20 p.m. (EDT) on April 28, 2011, Vistaprint will post, on the Investor Relations section of www.vistaprint.com, a link to a pre-recorded audio visual end-of-quarter presentation along with a downloadable transcript of the prepared remarks that accompany that presentation. At 5:15 p.m. (EDT) the company will host a live Q&A conference call with management, which will be available via web cast on the Investor Relations section of www.vistaprint.com and via dial-in at (866) 543-6407, access code 74429982. A replay of the Q&A session will be available on the company's website following the call on April 28, 2011.

About non-GAAP financial measures

To supplement Vistaprint's consolidated financial statements presented in accordance with U.S. generally accepted accounting principles, or GAAP, Vistaprint has used the following measures defined as non-GAAP financial measures by Securities and Exchange Commission (or SEC) rules: non-GAAP adjusted net income, non-GAAP adjusted net income per diluted share, free cash flow, and constant currency revenue growth. The items excluded from the non-GAAP adjusted net income measurements are share-based compensation expense and its related tax effect. Free cash flow is defined as net cash provided by operating activities less purchases of property, plant and equipment, purchases of intangible assets, and capitalization of software and website development costs. Constant currency revenue growth is estimated by translating all non-U.S. dollar denominated revenue generated in the current period using the prior year period's average exchange rate for each currency to the U.S. dollar.

The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of Non-GAAP Financial Measures" included at the end of this release. The tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliation between these financial measures.

Vistaprint's management believes that these non-GAAP financial measures provide meaningful supplemental information in assessing our performance and when forecasting and analyzing future periods. These non-GAAP financial measures also have facilitated management's internal comparisons to Vistaprint's historical performance and our competitors' operating results.

Management provides these non-GAAP financial measures as a courtesy to investors. However, to gain a more complete understanding of the company's financial performance, management does (and investors should) rely upon GAAP statements of operations and cash flow.

 

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