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VistaPrint Ltd. Reports Operating Results (10-Q)

January 28, 2011 | About:

10qk

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VistaPrint Ltd. (VPRT) filed Quarterly Report for the period ended 2010-12-31.

Vistaprint Nv has a market cap of $2.06 billion; its shares were traded at around $46.92 with a P/E ratio of 32.6 and P/S ratio of 3.1. Vistaprint Nv had an annual average earning growth of 41.6% over the past 5 years.Hedge Fund Gurus that owns VPRT: Whitney Tilson of T2 Partners Management, LP, Jim Simons of Renaissance Technologies LLC, Manning & Napier Advisors, Inc, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC. Mutual Fund and Other Gurus that owns VPRT: John Hussman of Hussman Economtrics Advisors, Inc., RS Investment Management, Pioneer Investments.

Highlight of Business Operations:

For the three and six months ended December 31, 2010, we reported 20% and 19% revenue growth over the same prior year periods to revenue of $234.1 million and $404.6 million, respectively. Constant-currency revenue growth was 23% and 22%, respectively, for these periods. Diluted earnings per share (EPS) grew 27% and 11% for the three and six months ended December 31, 2010 over the same prior year periods to $0.75 and $0.99, respectively. Our second quarter has historically been our strongest revenue and earnings period during the course of a fiscal year, due to the sale of seasonal products such as holiday cards and calendars. This typical seasonality was a significant driver of our stronger earnings performance in the second quarter compared to the first quarter of fiscal 2011. Revenue from seasonal products, which was a material portion of our total revenue in the second quarter of 2011, does not repeat during other quarters of the fiscal year although we do benefit from the higher rate of new customers acquired during the holiday season. We manage our business against annual targets, and believe investors should analyze our performance that way as well.

Total revenue for the three months ended December 31, 2010 increased 20% to $234.1 million from the three months ended December 31, 2009, due to increases in sales across our product and service offerings, as well as across all geographies. Revenue in each second fiscal quarter included a favorable impact from increased seasonal product sales. The overall growth during this period was driven by increases in website sessions, which grew by 8.9% to 87.7 million, and conversion rates, which grew by 90 basis points to 7.5%. These increases were partially offset by a decrease in average order value, which declined by 1.3% to $36.17, and referral fee revenue from membership discount programs, which was $1.8 million for the three months ended December 31, 2009, but zero for the three months ended December 31, 2010 as a result of the termination in the second quarter of fiscal 2010 of the third-party membership discount programs previously offered on our websites. In addition, the stronger U.S. dollar negatively impacted our revenue growth by an estimated 300 basis points in the three months ended December 31, 2010, as compared to the three months ended December 31, 2009.

Total revenue for the six months ended December 31, 2010 increased 19% to $404.6 million from the six months ended December 31, 2009, due to increases in sales across our product and service offerings, as well as across all geographies. Revenue in each second fiscal quarter included a favorable impact from increased seasonal product sales. The overall growth during this period was driven by increases in website sessions, which grew by 7.6% to 156.6 million and conversion rates, which grew by 90 basis points to 7.4%. These increases were partially offset by a decrease in average order value, which declined by 0.1% to $35.53, and referral fee revenue from membership discount programs, which was $5.2 million for the six months ended December 31, 2009, but zero for the six months ended December 31, 2010 as a result of the termination in the second quarter of fiscal 2010 of the third-party membership discount programs previously offered on our websites. In addition, the stronger U.S. dollar negatively impacted our revenue growth by an estimated 300 basis points in the six months ended December 31, 2010, as compared to the six months ended December 31, 2009.

The increase in our technology and development expenses of $1.8 million for the three months ended December 31, 2010 as compared to the same period in fiscal 2010 was primarily due to increased payroll, benefits and facility-related costs of $1.7 million associated with increased headcount in our technology development and information technology support organizations. The increase in our technology and development expenses of $7.3 million for the six months ended December 31, 2010 as compared to the same period in fiscal 2010 was primarily due to increased payroll, benefits and facility-related costs of $3.8 million associated with increased headcount in our technology development and information technology support organizations. At December 31, 2010, we employed 387 employees in these organizations compared to 330 employees at December 31, 2009. In addition, during the six months ended December 31, 2010, we continued to invest in our website infrastructure, which resulted in increased depreciation, hosting services expense and other website related expenses of $3.5 million. Other website related expenses include the impact of a legal settlement of a patent claim offset by expense related to the abandonment of certain acquired intangible assets recorded in conjunction with the Soft Sight acquisition in the prior year.

The increase in our marketing and selling expenses of $16.4 million for the three months ended December 31, 2010 as compared to the same period in fiscal 2010 was driven primarily by increases of $12.8 million in advertising costs and commissions related to new customer acquisition and costs of promotions targeted at our existing customer base, and increases in payroll, benefits and facility-related costs of $2.9 million. The increase in our marketing and selling expenses of $27.4 million for the six months ended December 31, 2010 as compared to the same period in 2009 was driven primarily by increases of $19.8 million in advertising costs and commissions related to new customer acquisition and costs of promotions targeted at our existing customer base, and increases in payroll, benefits and facility-related costs of $6.1 million. We continue to expand our marketing organization and our customer service, sales and design support centers and at December 31, 2010, we employed 917 employees in these organizations compared to 737 employees at December 31, 2009. In addition, payment processing fees paid to third parties increased by $1.2 million and $1.7 million during the three and six months ended December 31, 2010, respectively, as compared to the same periods in fiscal 2010 due to increased order volumes.

The increase in our general and administrative expenses of $2.8 million for the three months ended December 31, 2010 as compared to the same period in fiscal 2010 was primarily due to increased payroll, benefit and facility-related costs of $3.7 million resulting from the continued growth and change of our executive management, finance, legal and human resource organizations to support our expansion and growth. The increase in our general and administrative expenses of $3.8 million for the six months ended December 31, 2010 as compared to the same period in fiscal 2010 was primarily due to increased payroll, benefit and facility-related costs of $6.0 million resulting from the continued growth of our executive management, finance, legal and human resource organizations to support our expansion and growth. Both the three and six months ended December 31, 2010 includes a share-based compensation charge of $1.0 million related to the reorganization of our business announced in October 2010. This charge involved the accelerated vesting of restricted share units (RSUs) and was not related to executive officers or the announced CFO transition. At December 31, 2010, we employed 211 employees in these organizations compared to 161 employees at December 31, 2009. These increases were offset by decreased third-party professional fees of $1.1 million and $2.3 million for the three and six months ended December 31, 2010, respectively, as compared to the same periods in fiscal 2010 due to

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