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Vistaprint Q3 Fiscal Year 2012 Revenue Up by 26%

Friday, April 27, 2012

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, 2012, the third quarter of its 2012 fiscal year.

"We delivered another solid quarter of revenue growth in the third quarter," said Robert Keane, president and chief executive officer. "We continue to progress against our five-year objectives announced just nine months ago. Revenue was in the upper half of our guidance range with particular strength in new customer acquisition numbers and in North America, where we are further along with the execution of our long-term strategy initiatives. Our earnings per share upside was due to several factors, some of which are timing related, but some of which improve our earnings outlook for the full year."

Financial Metrics (include Albumprinter and Webs results unless otherwise stated):

  • Revenue for the third quarter of fiscal year 2012 grew to $257.6 million, a 26 percent increase over revenue of $203.7 million reported in the same quarter a year ago. Excluding Albumprinter and Webs combined revenue of $14.0 million, total third quarter revenue was $243.6 million.
  • Excluding the estimated impact from currency exchange rate fluctuations and revenue from acquired businesses, total revenue grew 21 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 65.5 percent, compared to 65.3 percent in the same quarter a year ago.
  • Operating income in the third quarter was $7.8 million, or 3.0 percent of revenue, and reflected a 69 percent decrease compared to $25.6 million, or 12.6 percent of revenue in the same quarter a year ago.
  • GAAP net income for the third quarter was $0.3 million, or 0.1 percent of revenue, representing a 99 percent decrease compared to $22.9 million, or 11.3 percent of revenue in the same quarter a year ago.
  • GAAP net income per diluted share for the third quarter was $0.01, versus $0.51 in the same quarter a year ago.
  • Non-GAAP adjusted net income for the third quarter was $11.2 million, or 4.4 percent of revenue, representing a 60 percent decrease compared to $28.2 million, or 13.8 percent of revenue in the same quarter a year ago. Non-GAAP adjusted net income excludes $2.4 million of amortization expense for acquisition-related intangible assets, $1.0 million of tax charges related to the alignment of acquisition-related intellectual property with global operations, and $7.6 million of share-based compensation expense and its related tax effect.
  • Non-GAAP adjusted net income per diluted share for the third quarter, which excludes amortization expense for acquisition-related intangible assets, tax charges related to the alignment of acquisition-related intellectual property with global operations, and share-based compensation expense and its related tax effect, was $0.29, versus $0.63 in the same quarter a year ago.
  • Capital expenditures in the third quarter were $8.5 million or 3.3 percent of revenue.
  • During the third quarter, the company generated $9.6 million in cash from operations and $(0.3) million in free cash flow, defined as cash from operations less purchases of property, plant and equipment, purchases of intangible assets not related to acquisitions, and capitalization of software and website development costs.
  • The company had $52.1 million in cash and cash equivalents as of March 31, 2012.

Operating Metrics (exclude Albumprinter and Webs results unless otherwise stated):

  • Vistaprint acquired approximately 2.4 million new customers in the third fiscal quarter ended March 31, 2012, compared with 1.8 million in the same quarter a year ago, reflecting an increase of 33 percent.
  • On a trailing twelve month basis, unique active customer count was 13.8 million. Unique active customer count is the number of individual customers who purchased from us in a given period, with no regard to the frequency of purchase. This compares to 11.1 million in the twelve month period ended March 31, 2011.
  • Total order volume in the third quarter of fiscal 2012 was approximately 7.0 million, reflecting an increase of approximately 21 percent over total orders of approximately 5.8 million in the same quarter a year ago.
  • Average order value in the third quarter, including revenue from shipping and processing, was $35.38, compared with $36.03 in the same quarter a year ago.
  • Organic advertising and commissions expense was $62.9 million, or 25.8 percent of organic revenue in the third quarter, compared to $43.4 million, or 21.3 percent of revenue in the same quarter a year ago. Including advertising and commissions expense from the acquired businesses, total advertising and commissions expense was $64.5 million, or 25.0 percent of total revenue.
  • Revenue from customers in North America was $142.0 million, or 55 percent of total revenue in the third quarter. This represents 23 percent growth year over year in both reported terms and in constant currency. Excluding Webs revenue of $2.3 million, revenue from customers in North America was $139.7 million, or 57 percent of total organic revenue in the third quarter. This represents 21 percent growth year over year in both reported terms and constant currency.
  • Revenue from customers in Europe was $100.2 million or 39 percent of total revenue in the quarter. This represents 29 percent growth year over year in reported terms and 34 percent growth in constant currency. Excluding Albumprinter revenue of $11.8 million, revenue from customers in Europe was $88.4 million, or 36 percent of total organic revenue in the third quarter. This represents 14 percent growth year over year in reported terms and 18 percent growth in constant currency.
  • Revenue from customers in Asia Pacific was $15.4 million, or 6 percent of total revenue in the third quarter. This represents 47 percent growth year over year in reported terms and 40 percent growth in constant currency.

Organizational Announcement

Vistaprint also announced today that Wendy Cebula, chief operating officer, has decided to step down from the COO role effective July 1, 2012 to assume an ongoing role in Vistaprint's executive development group. After twelve years of success as a leader of Vistaprint, Wendy chose to make this career move in order to spend more time with her family. Robert Keane said, "Wendy has built a deep and broad cadre of leaders who have a proven ability to execute against our strategy. Given this demonstrated strength in developing leaders, I am very glad that, even as she devotes more time to home and family life, Wendy will remain an active mentor to managers and executives throughout our business."

Wendy's responsibility for revenue performance across North America and Europe will be assumed by Trynka Shineman (Katryn Blake), currently chief customer officer and president of Vistaprint North America. Trynka's new title effective July 1, 2012 will be chief customer officer and executive vice president, Global Marketing. Concurrently, Nick Ruotolo, president of Vistaprint Europe, has decided to leave the company to pursue other opportunities, also effective July 1. Robert Keane said, "Nick has been instrumental in helping to grow our European business unit from its early stages of development several years ago to its current size and significance. I want to thank Nick for his many contributions to our success in Europe and to Vistaprint in general."

Outlook as of April 26, 2012

Ernst Teunissen, executive vice president and chief financial officer, said, "With just one quarter left in fiscal 2012, we are confident we will meet or exceed our financial expectations for the full year. We are updating our guidance for fiscal 2012 to reflect certain items. First, currency rates have moved favorably since we last gave guidance in January 2012, which primarily impacts our revenue guidance in U.S. dollars. Second, our GAAP earnings outlook has improved slightly based on better than expected below-the-line results from our acquired businesses. As a result, we are narrowing our revenue guidance range and raising the midpoint, and raising our GAAP EPS guidance range by $0.06. The non-GAAP earnings expectations remain the same, as our upside is in items that are excluded from non-GAAP results."

Financial Guidance as of April 26, 2012:

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

Fiscal Year 2012 Revenue

  • For the full fiscal year ending June 30, 2012, the company expects revenue of approximately $1,018 million to $1,034 million, or 25 percent to 27 percent growth year over year in reported terms. Excluding currency movements and acquired revenue, we expect constant-currency organic growth of approximately 20 percent to 22 percent. Constant-currency growth expectations assume a recent 30-day currency exchange rate for all currencies.
  • For the fourth quarter of fiscal year 2012, ending June 30, 2012, the company expects revenue of approximately $248 million to $264 million, or 19 percent to 26 percent growth year over year in reported terms. We expect constant-currency organic growth of approximately 16 percent to 23 percent.

Fiscal Year 2012 GAAP Net Income Per Diluted Share

  • We expect to generate GAAP net income for the full year fiscal 2012 but may be unprofitable on a GAAP basis for the fourth quarter of fiscal 2012 due to the dilution of our recent acquisitions and timing of organic operating expenses. As a result, full year net income per share will be calculated using weighted average diluted shares outstanding, but if we generate a loss in our fourth quarter, quarterly net income per share will be calculated using weighted average basic shares outstanding. Therefore, we expect the full year net income per share results will not equal the sum of the net income per share results of each quarter.
  • For the full fiscal year ending June 30, 2012, the company expects GAAP net income per share of approximately $0.92 to $1.04, which assumes 39.1 million weighted average diluted shares outstanding.
  • For the fourth quarter of fiscal year 2012, ending June 30, 2012, the company expects GAAP net (loss) income per share of approximately $(0.10) to $0.02, which assumes 36.5 million weighted average basic shares outstanding in the event of a net loss and 37.8 million weighted average diluted shares outstanding in the event of net income.

Fiscal Year 2012 Non-GAAP Adjusted Net Income Per Diluted Share

  • For the full fiscal year ending June 30, 2012, the company expects non-GAAP adjusted net income per diluted share of approximately $1.71 to $1.83, which excludes expected acquisition-related amortization of intangible assets of approximately $5.8 million or approximately $0.15 per diluted share, share-based compensation expense and its related tax effect of approximately $24.8 million or approximately $0.63 per diluted share, and tax charges related to the alignment of acquisition-related intellectual property with global operations of approximately $1.0 million, or $0.03 per diluted share. This guidance assumes a non-GAAP weighted average diluted share count of approximately 39.6 million shares.
  • For the fourth quarter of fiscal year 2012, the company expects non-GAAP adjusted net income per diluted share of approximately $0.15 to $0.27, which excludes expected acquisition-related amortization of intangible assets of approximately $2.3 million or approximately $0.06 per diluted share, and share-based compensation expense and its related tax effect of approximately $7.4 million or approximately $0.19 per diluted share. This guidance assumes a non-GAAP weighted average diluted share count of approximately 38.5 million shares.

Fiscal Year 2012 Capital Expenditures

For the full fiscal year ending June 30, 2012, the company expects to make capital expenditures of approximately $50 million to $60 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.

Preliminary Thoughts on Fiscal Year 2013

Vistaprint will provide guidance for fiscal 2013 in its fourth quarter earnings release in July 2012. Below are preliminary comments on our current view of certain expected drivers of earnings for fiscal 2013. These comments are as of April 26, 2012 and are subject to change as we complete our fiscal 2013 planning process:

  • We are on track to deliver against our organic long-term targets for fiscal 2016 of at least $2 billion in revenue (20 percent CAGR) and $5.00 of GAAP net income per share, excluding the impact of acquisitions and fiscal 2012 share repurchases.
  • As previously disclosed, our previously announced fiscal 2012 acquisitions and interest expense related to year-to-date fiscal 2012 share repurchases and acquisitions have impacted our fiscal 2012 financial results relative to our expectations at the beginning of the fiscal year. These items are incorporated in our fiscal 2012 performance year to date and the fiscal 2012 guidance described above. The combined dilution to fiscal 2012 GAAP net income resulting from these items is expected to be about $14 million, and non-GAAP net income dilution is expected to be about $2 million.
  • Additionally, as previously disclosed, we expect these fiscal 2012 acquisitions and interest expense related to year-to-date fiscal 2012 share repurchases and acquisitions will also impact our fiscal 2013 financial results. We expect these items to be dilutive to fiscal 2013 GAAP net income by $20 million to $24 million versus fiscal 2013 net income for our organic business alone. We also expect any non-GAAP net income dilution resulting from these items to be less than $4 million.

At approximately 4:20 p.m. (EDT) on April 26, 2012, Vistaprint will post, on the Investor Relations section of http://www.vistaprint.com, an end-of-quarter presentation along with a downloadable transcript of 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 http://www.vistaprint.com and via dial-in at (800) 510-0146, access code 56959467. A replay of the Q&A session will be available on the company's website following the call on April 26, 2012.

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, constant-currency revenue growth, and constant-currency organic revenue growth. The items excluded from the non-GAAP adjusted net income measurements are share-based compensation expense and its related tax effect, amortization of acquisition-related intangibles, and tax charges related to the alignment of acquisition-related intellectual property with global operations. Free cash flow is defined as net cash provided by operating activities less purchases of property, plant and equipment, purchases of intangible assets not related to acquisitions, 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. Constant-currency organic revenue growth excludes the impact of currency as defined above and revenue from acquired companies.

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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