Vistaprint Reports Q1 FY 2015 Year-Over-Year Revenue Growth of 21 Percent, to $333.9M
VENLO, NETHERLANDS—October 30, 2014—Vistaprint N.V., a leading online provider of professional marketing products and services to micro businesses and the home, has announced financial results for the three month period ended September 30, 2014, the first quarter of its 2015 fiscal year.
"We are off to a good start to fiscal 2015 and remain confident in our strategy and our ability to execute operationally," said Robert Keane, president and CEO. "Quarterly revenue was in line with our expectations for improved growth in our Vistaprint brand and strong growth from recent acquisitions. Profitability, operating cash flow and free cash flow were also strong. We continued to improve the customer value proposition for our Vistaprint brand, began to integrate our recent acquisitions, and accelerated investment in software for our mass customization platform."
Consolidated Financial Metrics:
- Revenue for the first quarter of fiscal year 2015 was $333.9 million, a 21 percent increase compared to revenue of $275.1 million reported in the same quarter a year ago. Excluding the estimated impact from currency exchange rate fluctuations and revenue from businesses acquired during the past twelve months, total revenue grew 6 percent year over year in the first quarter.
- Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the first quarter was 61.0 percent, down from 65.2 percent in the same quarter a year ago. The year-over-year reduction in gross margin was primarily due to its recent acquisitions of People & Print Group and Pixartprinting, which have lower gross margins than its Vistaprint-branded business. Excluding the businesses we acquired during the past 12 months, its gross margin increased slightly year over year.
- Operating income in the first quarter was $16.9 million, or 5.1 percent of revenue, a significant increase compared to $8.4 million, or 3.1 percent of revenue, in the same quarter a year ago.
- GAAP net income for the first quarter was $23.7 million, or 7.1 percent of revenue, compared to $0.4 million, or 0.1 percent of revenue in the same quarter a year ago. Part of the significant year-over-year growth in GAAP net income is due to below-the-line currency movements which created losses in the year-ago period but gains in the current period.
- GAAP net income per diluted share for the first quarter was $0.71, versus $0.01 in the same quarter a year ago, due in part to the currency movements described above.
- Non-GAAP adjusted net income for the first quarter, which excludes amortization expense for acquisition-related intangible assets, tax charges related to the alignment of acquisition-related intellectual property with its operational structure, the change in the fair-value estimate of its 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 $28.8 million, or 8.6 percent of revenue, representing a 79 percent increase compared to $16.1 million, or 5.9 percent of revenue, in the same quarter a year ago.
- Non-GAAP adjusted net income per diluted share for the first quarter, as defined above, was $0.86, versus $0.46 in the same quarter a year ago.
- Capital expenditures in the first quarter were $16.7 million, or 5.0 percent of revenue.
- During the first quarter, the company generated $52.6 million of cash from operations and $32.3 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 September 30, 2014, the company had $60.9 million in cash and cash equivalents and $447.9 million of debt. After considering debt covenant limitations, as of September 30, 2014 the company had $268.1 million available for borrowing under its committed credit facility.
Starting in the first quarter of fiscal 2014, all operating metrics include Albumprinter and Webs, and post-acquisition prior-period comparisons have been adjusted to reflect the same consolidated view. The recent acquisitions of People & Print Group, Pixartprinting and FotoKnudsen are not yet incorporated into its customer metrics.
Fiscal 2015 Outlook as of October 29, 2014:
Ernst Teunissen, executive vice president and CFO, said, "Our operational outlook for the full year remains unchanged. We continue to expect mid-to-high single-digit constant-currency revenue growth rates for the Vistaprint brand and double-digit revenue growth for our recently acquired brands. We also continue to expect higher operating margin, earnings, operating cash flow and free cash flow for fiscal 2015 versus fiscal 2014 even as we make important investments in our business. We have updated our revenue guidance to reflect recent currency movements since we last provided our outlook in July, but our constant currency growth expectations remain the same. Our non-GAAP EPS guidance is unchanged, as these currency movements are expected to have limited impact on the bottom line. We have increased our GAAP EPS guidance to reflect a few non-operational impacts from the first quarter change in items we exclude from its non-GAAP reporting."
Financial Guidance as of October 29, 2014:
The company provides revenue and earnings guidance on only a fiscal year basis, not quarterly. Its guidance incorporates completed acquisitions and share repurchases, and outstanding debt obligations, as of Oct. 29, 2014. Based on current and anticipated levels of demand, the company expects the following financial results:
Fiscal Year 2015 Revenue
- The company expects revenue of approximately $1,430 million to $1,500 million, or 13 percent to 18 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
- The company expects GAAP net income per diluted share of approximately $2.24 to $2.74, which assumes 33.3 million weighted average diluted shares outstanding. Based on a recent 30-day currency exchange rate for relevant currencies, we estimate that realized gains and losses on currency forward contracts, as well as natural hedges will largely offset the currency impact to revenue in its full-year net income results.
Fiscal Year 2015 Non-GAAP Adjusted Net Income Per Diluted Share
- The company expects non-GAAP adjusted net income per diluted share of approximately $3.46 to $3.96, which excludes its expectations for the following items: Acquisition-related amortization of intangible assets of approximately $21.7 million or approximately $0.64 per diluted share; share-based compensation expense and its related tax effect of approximately $22.9 million or approximately $0.68 per diluted share; the change in fair-value estimate of its acquisition-related earn-outs of approximately $3.7 million or approximately $0.11 per diluted share; 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; and an unrealized currency transaction gain of $8.0 million, or $0.23 per diluted share, based on a recent 30-day currency exchange rate for relevant currencies.
- 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 will have an immaterial impact on its 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
- The company expects depreciation and amortization expense to be approximately $100 million to $105 million. This includes the amortization of acquisition-related intangible assets described above in the company's non-GAAP earnings per share expectations, as well as its expectations for capitalized software development costs.
- The company expects to make capital expenditures of approximately $80 million to $100 million. The majority of planned capital investments are designed to support the planned long-term growth of the business. This fiscal year, we expect to invest about $20 million to build a new manufacturing facility in Japan as part of its joint venture there and about $20 million to $25 million in the expansion of its product lines 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 acquisitions made during the past year. 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 its minority investment in China, and the change in fair-value estimate of its 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 acquisitions during the past year excludes the impact of currency as defined above and revenue from People & Print Group, Pixartprinting and FotoKnudsen.
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 its performance and liquidity by excluding certain items that may not be indicative of its 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 its 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 its business. A global company, Vistaprint employs over 5,300 people, operates more than 50 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.