Vistaprint's Q4, Fiscal Year 2014 Revenue Grew 21 percent Year Over Year to $338.2M
VENLO, NETHERLANDS—July 31, 2014—Vistaprint N.V., online provider of professional marketing products and services to micro businesses and the home, has announced its financial results for the three-month period ended June 30, 2014, the fourth quarter of its 2014 fiscal year.
“Our fourth quarter revenue growth and operating profitability improved meaningfully versus our third quarter results,” said Robert Keane, president and CEO. “Revenue performance improved in the markets in which we had implemented major pricing and marketing changes for the Vistaprint brand in fiscal 2014—the United States, United Kingdom and Germany. We still have more work to do to improve our results and our customer value proposition around the world, including in those three countries, but we are confident that our efforts will support long-term growth and profitability of our business. Our recent acquisitions of People & Print Group and Pixartprinting grew ahead of our expectations.”
Keane continued, “Our results for the quarter and the full fiscal year reflect good execution against our plan to expand operating profit margins. Yet even as we delivered margin expansion, we also invested heavily in proprietary technology, improvements to product quality and selection, customer service and user experience. As we have for the past several years, we made major investments in our industry-leading manufacturing and supply chain infrastructure, which we believe is an operational asset that can drive long-term scale advantage across our multiple customer-facing brands.”
Consolidated Financial Metrics:
- Revenue for the fourth quarter of fiscal year 2014 was $338.2 million, a 21 percent increase compared to revenue of $280.1 million reported in the same quarter a year ago. For the full fiscal year, revenue grew to $1,270.2 million, a 9 percent increase over revenue of $1,167.5 million in fiscal year 2013. Excluding the estimated impact from currency exchange rate fluctuations and revenue from businesses acquired in 2014, total revenue grew 4 percent year over year in the fourth quarter and for the full year.
- Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the fourth quarter was 60.5 percent, down from 64.6 percent in the same quarter a year ago. For the full fiscal year, gross margin was 64.5 percent, compared to 65.7 percent in fiscal year 2013. The year-over-year reduction in gross margin in both periods was primarily due to our recent acquisitions of People & Print Group and Pixartprinting, which have a different business model with lower gross margins than our Vistaprint-branded business.
- Operating income in the fourth quarter was $19.7 million, or 5.8 percent of revenue, and reflected a significant increase compared to operating income of $3.1 million, or 1.1 percent of revenue, in the same quarter a year ago. For the full fiscal year, operating income was $85.9 million, or 6.8 percent of revenue, an 86 percent increase compared to operating income of $46.1 million, or 4.0 percent of revenue, in the prior fiscal year.
- GAAP net income attributable to Vistaprint for the fourth quarter was $1.0 million, or 0.3 percent of revenue, compared to $2.3 million, or 0.8 percent of revenue in the same quarter a year ago. During the quarter, we recognized an income statement loss of $12.7 million related to the disposal of our minority equity interest in China. For the full fiscal year, GAAP net income attributable to Vistaprint was $43.7 million, or 3.4 percent of revenue, a 49 percent increase compared to GAAP net income of $29.4 million, or 2.5 percent of revenue, in the prior fiscal year.
- GAAP net income per diluted share for the fourth quarter was $0.03, versus $0.07 in the same quarter a year ago. For the full fiscal year, GAAP net income per diluted share was $1.28, versus $0.85 in the prior full fiscal year.
- Non-GAAP adjusted net income for the fourth quarter, which excludes amortization expense for acquisition-related intangible assets, the charge related to the disposal of our minority equity interest in China, tax charges related to the alignment of acquisition-related intellectual property with global operations, the change in fair-value estimate of our acquisition-related earn-outs, 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 $25.6 million, or 7.6 percent of revenue, representing an 82 percent increase compared to non-GAAP adjusted net income of $14.1 million, or 5.0 percent of revenue, in the same quarter a year ago. For the full fiscal year, non-GAAP adjusted net income was $102.6 million, or 8.1 percent of revenue, a 35 percent increase compared to non-GAAP adjusted net income of $75.8 million, or 6.5 percent of revenue, in the prior fiscal year.
- Non-GAAP adjusted net income per diluted share for the fourth quarter was $0.75, versus $0.41 in the same quarter a year ago. For the 2014 full fiscal year, non-GAAP adjusted net income per diluted share was $2.95, versus $2.15 in the prior fiscal year.
- Capital expenditures in the fourth quarter were $18.1 million, or 5.4 percent of revenue. During the full fiscal year capital expenditures were $72.1 million or 5.7 percent of revenue.
- During the fourth quarter, the company generated $50.5 million of cash from operations and $30.0 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. During the full fiscal year, the company generated $148.6 million of cash from operations and $66.5 million in free cash flow.
- As of June 30, 2014, the company had $62.5 million in cash and cash equivalents and $448.1 million of debt. After considering debt covenant limitations, as of June 30, 2014 the company had $172.6 million available for borrowing under its committed credit facility.
- During the fourth quarter, the company purchased 1,044,136 of its ordinary shares for $42.0 million, inclusive of transaction costs, at an average per-share cost of $40.24, as part of the share repurchase program authorized by the Supervisory Board in May 2014.
Starting in the first quarter of fiscal 2014, all operating metrics reflect the consolidated business including our Albumprinter and Webs acquisitions, and post-acquisition prior-period comparisons have been adjusted to reflect the same consolidated view. The acquisitions of People & Print Group and Pixartprinting are not incorporated into our customer metrics.
Fiscal 2015 Outlook as of July 30, 2014:
Ernst Teunissen, executive vice president and CFO, said, “Looking ahead to fiscal 2015, we have built our plan around three important expectations. First, we expect our ongoing efforts to reposition the Vistaprint brand will continue to create revenue headwinds for us. While we remain in this transition, we believe it is prudent to expect only modest revenue growth rates for the Vistaprint brand for the year. The second expectation is that our consolidated revenue growth will benefit from the addition of our recent acquisitions. We expect People & Print Group and Pixartprinting to continue to show healthy double-digit revenue growth during fiscal 2015, and we also will receive a timing benefit as we do not pass the anniversary of these acquisitions until the fourth quarter of fiscal 2015. The third expectation is that we can continue to improve operating margin, earnings and free cash flow due to a continued focus on productivity and efficiency efforts in G&A and manufacturing, and the non-recurrence of certain below-the-line items. We expect these year-over-year gains will be partially offset by investments we are making in new geographies, product expansion and quality improvements, as well as modest dilution from our recent acquisitions.”
Financial Guidance as of July 30, 2014:
As previously stated, beginning with fiscal year 2014, the company provides revenue and earnings guidance on only a fiscal year basis, not quarterly. Based on current and anticipated levels of demand, the company expects the following financial results:
Fiscal Year 2015 Revenue
- For the full fiscal year ending June 30, 2015, the company expects revenue of approximately $1,470 million to $1,540 million, or 16 percent to 21 percent growth year over year in reported terms and 15 percent to 20 percent growth on a constant-currency basis. Constant-currency growth expectations assume a recent 30-day currency exchange rate for all currencies.
Fiscal Year 2015 GAAP Net Income Per Diluted Share
- For the full fiscal year ending June 30, 2015, the company expects GAAP net income per diluted share of approximately $2.15 to $2.65, which assumes 33.3 million weighted average diluted shares outstanding.
Fiscal Year 2015 Non-GAAP Adjusted Net Income Per Diluted Share
- For the full fiscal year ending June 30, 2015, the company expects non-GAAP adjusted net income per diluted share of approximately $3.46 to $3.96, which excludes expected acquisition-related amortization of intangible assets of approximately $20.3 million or approximately $0.60 per diluted share, share-based compensation expense and its related tax effect of approximately $22.9 million or approximately $0.68 per diluted share, and tax charges related to the alignment of acquisition-related intellectual property with global operations of approximately $2.2 million, or $0.06 per diluted share. Based on a recent 30-day currency exchange rate for relevant 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 33.8 million shares.
Fiscal Year 2015 Depreciation and Amortization and Capital Expenditures
- For the full fiscal year ending June 30, 2015, the company expects depreciation and amortization expense to be approximately $100 million—$105 million. This includes the amortization of acquisition-related intangible assets described in the non-GAAP earnings per share expectations, as well as our expectations for capitalized software development costs. Vistaprint now provides this expectation to aid investor understanding of cash flow drivers.
- For the full fiscal year ending June 30, 2015, the company expects to make capital expenditures of approximately $80 million to $100 million. The majority of planned fiscal 2015 capital investments are designed to support the planned long-term growth of the business. This fiscal year, we expect to spend about $20 million to build a new manufacturing facility in Japan as part of our joint venture there. We also are investing about $20 million—$25 million in the expansion of our product selection and other new manufacturing capabilities.
The foregoing guidance supersedes any guidance previously issued by the company. All such previous guidance should no longer be relied upon.
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 revenue growth excluding revenue from fiscal 2014 acquisitions. 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, tax charges related to the alignment of acquisition-related intellectual property with global operations, changes in unrealized gains and losses on currency forward contracts, unrealized currency transaction gains and losses on intercompany financing arrangements and the related tax effect, the charge for the disposal of our minority investment in China, and the change in fair-value estimate of our acquisition-related earn-outs. 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 and excludes the impact of gains and losses on effective currency hedges recognized in revenue in the prior year periods. Constant-currency revenue growth excluding revenue from fiscal 2014 acquisitions excludes the impact of currency and revenue from People & Print Group and Pixartprinting.
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.
Vistaprint’s management believes that these non-GAAP financial measures provide meaningful supplemental information in assessing our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results, which could be non-cash charges or discrete cash charges that are infrequent in nature. These non-GAAP financial measures also have facilitated management’s internal comparisons to Vistaprint’s historical performance and our competitors’ operating results.
Vistaprint N.V. (Nasdaq: VPRT) empowers more than 16 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 5,100 people, operates more than 30 localized Websites globally and ships to more than 130 countries around the world.