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Vistaprint Q2 Revenue Up 6% in Q2

Thursday, January 30, 2014

Press release from the issuing company

VENLO, the Netherlands - 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 December 31, 2013, the second quarter of its 2014 fiscal year.

“Our second quarter financial results reflect strong year-over-year earnings growth as anticipated,” saidRobert Keane, president and chief executive officer. “Revenue results continue to be consistent with our range of expectations, albeit at the low end of that range. Our holiday performance was solid across all major geographies, especially in light of continued improvements we are making to the customer experience, which are meant to drive long-term value and loyalty, but have dampened near-term revenue growth. This is reflected in a year-over-year reduction in order volume offset by strong growth in value per order.”

Keane continued, “We are pleased with our execution of our strategic initiatives including customer value proposition and manufacturing improvements, and are patient regarding the resulting near-term revenue headwinds. We are confident we are making positive changes to our business that support our ability to drive customer loyalty and lifetime value, and that lay foundations in new areas such as geographic expansion and customers with more sophisticated marketing needs. Even as we continue to invest in these strategic initiatives we have been able to deliver significant earnings growth and margin expansion as past investments have begun to bear fruit and we have gained efficiencies in advertising and leverage in other operating expenses. For instance, in Europe we saw an important shift in our customer base toward higher order values and improved per customer profitability. While this change has suppressed our near-term revenue, we believe it creates a solid basis for future profitable growth.”

Consolidated Financial Metrics:

  • Revenue for the second quarter of fiscal year 2014 grew to $370.8 million, a 6 percent increase over revenue of $348.3 million reported in the same quarter a year ago. Excluding the estimated impact from currency exchange rate fluctuations, total revenue grew 6 percent year over year in the second quarter.
  • Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the second quarter was 67.4 percent, up from 67.2 percent in the same quarter a year ago.
  • Operating income in the second quarter was $52.5 million, or 14.2 percent of revenue, and reflected a 59 percent increase compared to operating income of $33.0 million, or 9.5 percent of revenue, in the same quarter a year ago.
  • GAAP net income for the second quarter was $40.9 million, or 11.0 percent of revenue, representing a 78 percent increase compared to $23.0 million, or 6.6 percent of revenue in the same quarter a year ago.
  • GAAP net income per diluted share for the second quarter was $1.18, versus $0.66 in the same quarter a year ago.
  • Non-GAAP adjusted net income for the second quarter, which excludes amortization expense for acquisition-related intangible assets, tax charges related to the alignment of acquisition-related intellectual property with global operations, unrealized currency gains and losses on currency hedges and intercompany financing arrangements included in net income, and share-based compensation expense and its related tax effect, was $52.7 million, or 14.2 percent of revenue, representing a 47 percent increase compared to non-GAAP adjusted net income of $35.9 million, or 10.3 percent of revenue, in the same quarter a year ago.
  • Non-GAAP adjusted net income per diluted share for the second quarter, as defined above, was$1.50, versus $1.02 in the same quarter a year ago.
  • Capital expenditures in the second quarter were $24.6 million, or 6.6 percent of revenue.
  • During the second quarter, the company generated $95.0 million of cash from operations and$67.8 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.
  • As of December 31, 2013, the company had $62.3 million in cash and cash equivalents and$204.5 million in short-term and long-term debt. After considering debt covenant limitations, as ofDecember 31, 2013 the company had $289.7 million available for borrowing under its credit facility. The company has subsequently amended its credit facility to increase its debt capacity, as announced on January 22, 2014.
  • The company did not repurchase shares during the second quarter.

Operating metrics are provided as a table-based supplement to this press release. Starting in the first quarter of fiscal 2014, all operating metrics reflect the consolidated business including past acquisitions, and post-acquisition prior-period comparisons have been adjusted to reflect the same consolidated view.

Fiscal 2014 Outlook as of January 29, 2014:

Ernst Teunissen, executive vice president and chief financial officer, said, “Now that we have completed our second quarter, we are updating our full-year guidance to reflect our current outlook. As anticipated and described at our Investor Day last August, we continue to make changes in our business to improve our customer value proposition and our European marketing execution, which we expect will continue to positively impact profitability while resulting in lower top-line growth in fiscal year 2014. In the first half of our fiscal year, we delivered revenue growth at the lower end of our expectation range across geographies, and we expect this to continue in the back half of the year. Therefore, we are lowering and narrowing our revenue guidance range around the original low end of the range. We have executed very well on our fiscal year-to-date profitability targets, and we continue to remain confident in our ability to drive meaningful growth in our profit margins and earnings per share this fiscal year. We have raised and narrowed our EPS guidance as a result.”

Financial Guidance as of January 29, 2014:

As previously stated, beginning with fiscal year 2014, the company is providing revenue and earnings guidance on an annual basis. Based on current and anticipated levels of demand, the company expects the following financial results:

Fiscal Year 2014 Revenue

  • For the full fiscal year ending June 30, 2014, the company expects revenue of approximately$1,235 million to $1,265 million, or 6 percent to 8 percent growth year over year in reported terms and on a constant-currency basis. Constant-currency growth expectations assume a recent 30-day currency exchange rate for all currencies.

Fiscal Year 2014 GAAP Net Income Per Diluted Share

  • For the full fiscal year ending June 30, 2014, the company expects GAAP net income per diluted share of approximately $1.55 to $1.80, which assumes 34.5 million weighted average diluted shares outstanding.

Fiscal Year 2014 Non-GAAP Adjusted Net Income Per Diluted Share

  • For the full fiscal year ending June 30, 2014, the company expects non-GAAP adjusted net income per diluted share of approximately $2.68 to $2.93, which excludes expected acquisition-related amortization of intangible assets of approximately $8.9 million or approximately $0.25 per diluted share, share-based compensation expense and its related tax effect of approximately$28.4 million or approximately $0.81 per diluted share, tax charges related to the alignment of acquisition-related intellectual property with global operations of approximately $2.3 million, or$0.07 per diluted share. Based on a recent 30-day currency exchange rate for all currencies, we estimate that changes in unrealized gains and losses on currency forward contracts and estimated unrealized currency transaction gains and losses on intercompany financing arrangements will have an immaterial impact on our full-year results. This guidance assumes a non-GAAP weighted average diluted share count of approximately 35.0 million shares.

Fiscal Year 2014 Capital Expenditures

For the full fiscal year ending June 30, 2014, the company expects to make capital expenditures of approximately $80 million to $90 million. Planned capital investments are designed to support the planned growth of the business and will include various investments in new manufacturing capabilities.

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

 

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