VistaPrint Ltd. (VPRT, Financial) filed Quarterly Report for the period ended 2008-12-31.
VistaPrint is the leading online supplier of high-quality graphic design services and customized printed products to small businesses and consumers. It offers custom designed full-color low-cost printed products even in small quantities. It is the source for high-quality graphic design Internet printing and premium service. It also offers small businesses and consumers a convenient high-quality solution for graphic design services and full-color printing in small quantities without the premium price. VistaPrint Ltd. has a market cap of $806.42 million; its shares were traded at around $21.57 with a P/E ratio of 26.8 and P/S ratio of 2.01.
The increase in our technology and development expenses of $4.1 million and $8.8 million for the three and six months ended December 31, 2008, respectively as compared to the same periods in 2007 was primarily due to increased payroll and benefit costs of $2.0 million and $4.6 million, the write-off of certain long lived assets of $0.7 million and $0.7 million and increased share-based compensation costs of $0.2 million and $0.7 million associated with increased employee hiring in our technology development and information technology support organizations. At December 31, 2008, we employed 290 employees in these organizations compared to 213 employees at December 31, 2007. The increase in headcount has resulted in an overall increase in overhead of $0.4 million and $0.7 million for the three and six months ended December 31, 2008, respectively, as compared to the same periods in 2007. In addition, to support our continued revenue growth during this period, we continued to invest in our website infrastructure, which resulted in increased depreciation expenses of $0.5 million and $1.0 million for the three and six months ended December 31, 2008, respectively, as compared to the same periods in 2007.
The increase in our marketing and selling expenses of $8.6 million and $17.0 million for the three and six months ended December 31, 2008, respectively, as compared to the same periods in 2007 was driven primarily by increases of $6.8 million and $11.9 million in advertising costs related to new customer acquisition and costs of promotions targeted at our existing customer base, increases in payroll and benefits related costs of $1.2 million and $3.2 million and share-based compensation costs which remained constant for the three months ended December 31, 2008 and increased $0.2 million for the six months ended December 31, 2008. During this period, we continued to expand our marketing organization and our design, sales and services center. At December 31, 2008, we employed 622 employees in these organizations compared to 511 employees at December 31, 2007. In addition, payment processing fees paid to third-parties increased by $0.9 million and $1.8 million during the three and six months ended December 31, 2008, respectively, as compared to the same periods in 2007 due primarily to increased order volumes.
Operating Activities. Cash provided by operating activities in the six months ended December 31, 2008 was $72.7 million and consisted of net income of $26.8 million, positive adjustments for non-cash items of $28.3 million and $17.6 million provided by working capital and other activities. Adjustments for non-cash items included $16.7 million of depreciation and amortization expense on property and equipment and software and website development costs, $10.3 million of share-based compensation expense and $1.3 million of long-lived assets written off. The change in working capital and other activities primarily consisted of an increase of $16.4 million in accrued expenses and other current liabilities, an increase of $3.8 million in accounts payable and a decrease of $1.0 million in accounts receivable, offset by an increase of $2.0 million in prepaid expenses and other assets and an increase in inventory of $1.6 million.
Cash provided by operating activities in the six months ended December 31, 2007 was $52.0 million and consisted of net income of $18.0 million, positive adjustments for non-cash items of $17.9 million and $16.1 million provided by working capital and other activities. Adjustments for non-cash items included $11.1 million of depreciation and amortization expense on property and equipment and software and website development costs and $6.7 million of share-based compensation expense. The change in working capital and other activities primarily consisted of an increase of $13.6 million in accrued expenses and other current liabilities, an increase of $5.4 million in accounts payable and a decrease of $1.4 million in accounts receivable offset by an increase of $3.1 million in prepaid expenses and other assets and an increase in inventory of $1.2 million.
Investing Activities. Cash used in investing activities in the six months ended December 31, 2008 of $32.1 million was attributable primarily to capital expenditures of $41.5 million, capitalized software and website development costs of $3.3 million partially offset by net sales of marketable securities of $12.8 million. Capital expenditures of $18.1 million were related to the purchase of equipment for our production facilities, $17.2 million were related to construction and land acquisition costs at our production facilities and $6.2 million were related to purchases of information technology and facility related as
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VistaPrint is the leading online supplier of high-quality graphic design services and customized printed products to small businesses and consumers. It offers custom designed full-color low-cost printed products even in small quantities. It is the source for high-quality graphic design Internet printing and premium service. It also offers small businesses and consumers a convenient high-quality solution for graphic design services and full-color printing in small quantities without the premium price. VistaPrint Ltd. has a market cap of $806.42 million; its shares were traded at around $21.57 with a P/E ratio of 26.8 and P/S ratio of 2.01.
Highlight of Business Operations:
Revenue. For the three and six months ended December 31, 2008, our revenue was $138.9 million and $253.1 million, compared to $105.0 million and $184.5 million for the same periods in 2007. We generate revenue primarily from the printing and shipment of customized products. Revenue is recorded net of a reserve for estimated refunds. Customers place orders via our websites and pay primarily using credit cards. In addition, we receive payment for some orders through direct bank debit, wire transfers and other payment methods. We also generate revenue from order referral fees, revenue share and other fees paid to us by merchants for customer click-throughs, distribution of third-party promotional materials and referrals arising from products and services of the merchants we offer to our customers on our website, as well as certain electronic products such as website hosting. Unlike products that we manufacture ourselves, these third-party referral offerings do not require physical production by us and have minimal corresponding direct cost of revenue. For the three and six months ended December 31, 2008, we generated approximately $6.4 million and $13.4 million of our revenue from these third-party referral fees, compared to $6.6 million and $13.4 million for the same periods in 2007. A portion of our revenue is derived from repeat purchases from our existing customers. This component of our revenue was 65% and 66% of revenue for the three and six months ended December 31, 2008. To understand our revenue trends, we monitor several key metrics, including:The increase in our technology and development expenses of $4.1 million and $8.8 million for the three and six months ended December 31, 2008, respectively as compared to the same periods in 2007 was primarily due to increased payroll and benefit costs of $2.0 million and $4.6 million, the write-off of certain long lived assets of $0.7 million and $0.7 million and increased share-based compensation costs of $0.2 million and $0.7 million associated with increased employee hiring in our technology development and information technology support organizations. At December 31, 2008, we employed 290 employees in these organizations compared to 213 employees at December 31, 2007. The increase in headcount has resulted in an overall increase in overhead of $0.4 million and $0.7 million for the three and six months ended December 31, 2008, respectively, as compared to the same periods in 2007. In addition, to support our continued revenue growth during this period, we continued to invest in our website infrastructure, which resulted in increased depreciation expenses of $0.5 million and $1.0 million for the three and six months ended December 31, 2008, respectively, as compared to the same periods in 2007.
The increase in our marketing and selling expenses of $8.6 million and $17.0 million for the three and six months ended December 31, 2008, respectively, as compared to the same periods in 2007 was driven primarily by increases of $6.8 million and $11.9 million in advertising costs related to new customer acquisition and costs of promotions targeted at our existing customer base, increases in payroll and benefits related costs of $1.2 million and $3.2 million and share-based compensation costs which remained constant for the three months ended December 31, 2008 and increased $0.2 million for the six months ended December 31, 2008. During this period, we continued to expand our marketing organization and our design, sales and services center. At December 31, 2008, we employed 622 employees in these organizations compared to 511 employees at December 31, 2007. In addition, payment processing fees paid to third-parties increased by $0.9 million and $1.8 million during the three and six months ended December 31, 2008, respectively, as compared to the same periods in 2007 due primarily to increased order volumes.
Operating Activities. Cash provided by operating activities in the six months ended December 31, 2008 was $72.7 million and consisted of net income of $26.8 million, positive adjustments for non-cash items of $28.3 million and $17.6 million provided by working capital and other activities. Adjustments for non-cash items included $16.7 million of depreciation and amortization expense on property and equipment and software and website development costs, $10.3 million of share-based compensation expense and $1.3 million of long-lived assets written off. The change in working capital and other activities primarily consisted of an increase of $16.4 million in accrued expenses and other current liabilities, an increase of $3.8 million in accounts payable and a decrease of $1.0 million in accounts receivable, offset by an increase of $2.0 million in prepaid expenses and other assets and an increase in inventory of $1.6 million.
Cash provided by operating activities in the six months ended December 31, 2007 was $52.0 million and consisted of net income of $18.0 million, positive adjustments for non-cash items of $17.9 million and $16.1 million provided by working capital and other activities. Adjustments for non-cash items included $11.1 million of depreciation and amortization expense on property and equipment and software and website development costs and $6.7 million of share-based compensation expense. The change in working capital and other activities primarily consisted of an increase of $13.6 million in accrued expenses and other current liabilities, an increase of $5.4 million in accounts payable and a decrease of $1.4 million in accounts receivable offset by an increase of $3.1 million in prepaid expenses and other assets and an increase in inventory of $1.2 million.
Investing Activities. Cash used in investing activities in the six months ended December 31, 2008 of $32.1 million was attributable primarily to capital expenditures of $41.5 million, capitalized software and website development costs of $3.3 million partially offset by net sales of marketable securities of $12.8 million. Capital expenditures of $18.1 million were related to the purchase of equipment for our production facilities, $17.2 million were related to construction and land acquisition costs at our production facilities and $6.2 million were related to purchases of information technology and facility related as
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