Vistaprint Releases Its Five-Year PlanJuly 28, 2011
Market Adjacencies—lay foundations for continued rapid growth five and more years in the future by seeking to expand on initial successes in the four market adjacencies of home and family personalized products, digital marketing services, geographic expansion outside North America and Europe, and higher-value small business customers.
Vistaprint believes that if it executes this strategy well, by fiscal 2016 it will grow organically to $2 billion or more in annual revenue and to annual GAAP earnings per share of approximately $5.00. Success in meeting these objectives would reflect five-year compound annual growth rates of 20 percent or better from the results achieved in fiscal 2011.
In addition to requiring solid execution by Vistaprint on its operational strategy, hitting those targets by fiscal 2016 requires a new investment approach: namely heavier up-front investments in fiscal 2012 and fiscal 2013. The company expects this will cause earnings per share to decline significantly from fiscal 2011 to fiscal 2012, and to grow only modestly from fiscal 2012 to fiscal 2013.
The company does not expect to achieve annual GAAP earnings per share above its fiscal 2011 results until fiscal 2014. Organic constant currency revenue growth is expected to accelerate from the company’s fiscal 2011 growth rate of 22% beginning as early as fiscal 2012, and to average 20% or better over the next five years.
Since Vistaprint is planning to invest up-front to fuel this strategy (instead of its past practice of constraining high-return investments to deliver a minimum EPS target each year) the company also does not expect to pursue its past practice of reinvesting all earnings power above the targeted EPS for the year if it outperforms against annual earnings targets.
Another component of the new strategy is to leverage Vistaprint’s strong balance sheet and cash flows, including repurchasing shares when deemed appropriate. Vistaprint also expects to be more proactive in assessing potential merger and acquisition targets, though it will continue to be prudent and selective. The company expects to target firms with less than $100 million in annual revenue which possess technology, market presence and/or expertise in the market adjacencies identified in its strategy. Vistaprint cannot predict the timing and magnitude of potential transactions, and the financial targets and expectations outlined above do not incorporate the financial impact of any future acquisition activity.
“We began fiscal 2011 with a goal to understand our customers better and to look more deeply at our levers for future growth,” said Ernst Teunissen, executive vice president and chief financial officer. “By the end of the year, we had compelling data that convinced us that we have a real opportunity to capitalize now on the current strength of our market position, balance sheet, and scale advantages. By doing so, we believe we can deliver the greatest long-term value to customers, employees and shareholders. We do not take lightly the decision to step up our near-term investments, but we are confident that it is the right thing to do, and now is the right time to do it.”
Vistaprint N.V. (Nasdaq:VPRT) empowers more than 11 million micro businesses and consumers annually with affordable, professional options to make an impression. With a unique business model supported by proprietary technologies, high-volume production facilities, and direct marketing expertise, Vistaprint offers a wide variety of products and services that micro businesses can use to expand their business. A global company, Vistaprint employs over 2,800 people, operates 24 localized websites globally and ships to more than 130 countries around the world. Vistaprint’s broad range of products and services are easy to access online, 24 hours a day.