Vistaprint Reports Second Quarter Fiscal Year 2013 Financial Results
Vistaprint Reports Second Quarter Fiscal Year 2013 Financial Results
Second quarter 2013 results:
- Revenue grew 16 percent year over year to $348.3 million
- Revenue grew 17 percent year over year excluding the impact of currency exchange rate fluctuations
- Revenue grew 14 percent year over year excluding the impact of currency exchange rate fluctuations and revenue from acquisitions
- GAAP net income per diluted share decreased 20 percent year over year to $0.66
- Non-GAAP adjusted net income per diluted share increased 5 percent year over year to $1.02
VENLO, Netherlands--(BUSINESS WIRE)-- Vistaprint N.V. (NAS: VPRT) , a leading online provider of professional marketing products and services to micro businesses and the home, today announced financial results for the three month period ended December 31, 2012, the second quarter of its 2013 fiscal year.
"Our second quarter results were solid," said Robert Keane, president and chief executive officer. "We delivered good results for our consumer and holiday business around the world. We continued to execute well in North America. Though our European growth rate improved versus our disappointing first quarter results, we believe this was primarily due to the seasonal strength of our holiday-related business in Europe, and we continue to expect our European marketing execution turn-around to take time and significant effort. Turning to profit, our gross margins continued to expand, despite incurring incremental costs associated with product quality improvements and new product launches. We believe a significant portion of this success is due to our strategic commitment to invest in world-class manufacturing capabilities. Our quarterly earnings per share were above our expectations, due in part to our strong gross margins and one-time favorability in our tax rate."
Financial Metrics (including Albumprinter and Webs results unless otherwise stated):
- Revenue for the second quarter of fiscal year 2013 grew to $348.3 million, a 16 percent increase over revenue of $299.9 million reported in the same quarter a year ago. Excluding Albumprinter and Webs combined revenue of $25.6 million, total second quarter revenue was $322.7 million. Excluding the estimated impact from currency exchange rate fluctuations and revenue from acquired businesses, total revenue grew 14 percent year over year in the second quarter.
- Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the second quarter was 67.2 percent, compared to 66.8 percent in the same quarter a year ago.
- Operating income in the second quarter was $33.0 million, or 9.5 percent of revenue, and reflected a slight increase compared to operating income of $32.5 million, or 10.9 percent of revenue, in the same quarter a year ago.
- GAAP net income for the second quarter was $23.0 million, or 6.6 percent of revenue, representing a 28 percent decrease compared to $31.7 million, or 10.6 percent of revenue in the same quarter a year ago. Despite improved operating income year over year, our GAAP net income declined due to several year-over-year differences in below-the-line items, including interest expense, other income, our tax provision, and the effect of our new indirect minority equity interest in China.
- GAAP net income per diluted share for the second quarter was $0.66, versus $0.82 in the same quarter a year ago.
- Non-GAAP adjusted net income for the second quarter, which excludes amortization expense for acquisition-related intangible assets, tax charges related to the alignment of acquisition-related intellectual property with global operations, and share-based compensation expense and its related tax effect, was $35.9 million, or 10.3 percent of revenue, representing a 5 percent decrease compared to non-GAAP adjusted net income of $37.9 million, or 12.6 percent of revenue, in the same quarter a year ago.
- Non-GAAP adjusted net income per diluted share for the second quarter, as defined above, was $1.02, versus $0.97 in the same quarter a year ago.
- Capital expenditures in the second quarter were $27.6 million, or 7.9 percent of revenue.
- During the second quarter, the company generated $88.5 million of cash from operations and $58.7 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 December 31, 2012, the company had $64.7 million in cash and cash equivalents and $230.5 million in long-term debt, with $157.0 million remaining under its credit facility.
- During the second quarter, the company purchased 827,346 of its ordinary shares for $24.8 million, inclusive of transaction costs, at an average per-share cost of $29.94, as part of the share repurchase program authorized by the Supervisory Board in February 2012.
Operating metrics are now provided as a table-based supplement to this press release.
Fiscal 2013 Outlook as of January 31, 2013:
Ernst Teunissen, executive vice president and chief financial officer, said, "Looking ahead to the second half of the fiscal year, we expect to continue to benefit from solid execution in North America and strong manufacturing results around the world. We continue to believe that our European marketing execution turn-around will take time, and our revenue weakness there will persist through at least the remainder of fiscal 2013. Given our continuing challenges in Europe, we expect that the shift from a strong seasonal consumer focus in our second fiscal quarter to small-business-oriented campaigns for the second half of the fiscal year will be more difficult than it has been in past years. Despite continued revenue weakness, we remain confident in our earnings per share outlook for the remainder of the year. Our guidance today reflects these factors. We are lowering and narrowing our revenue guidance range for the fiscal year, but narrowing our earnings per share guidance range to the upper part of the prior guidance range due to our strong earnings performance through the first half of the year."
Financial Guidance as of January 31, 2013:
As previously stated, beginning with fiscal year 2013, the company is providing revenue guidance on an annual and quarterly basis, and earnings guidance on an annual basis. Based on current and anticipated levels of demand, the company expects the following financial results:
Fiscal Year and Third Quarter 2013 Revenue
- For the full fiscal year ending June 30, 2013, the company expects revenue of approximately $1,145 million to $1,175 million, or 12 percent to 15 percent growth year over year in reported terms. Excluding currency movements and acquired revenue, we expect constant-currency organic growth of approximately 10 percent to 13 percent. Reported (USD) growth expectations assume a recent 30-day currency exchange rate for all currencies. Constant-currency growth is estimated by applying the respective prior year quarterly average exchange rates to all estimated non-U.S. dollar denominated revenue expected for future periods.
- For the third quarter of fiscal year 2013, ending March 31, 2013, the company expects revenue of approximately $275 million to $290 million, or 7 percent to 13 percent growth year over year in reported terms. We expect constant-currency organic growth of approximately 5 percent to 11 percent.
Fiscal Year 2013 GAAP Net Income Per Diluted Share
- For the full fiscal year ending June 30, 2013, the company expects GAAP net income per diluted share of approximately $0.50 to $0.70, which assumes 34.6 million weighted average diluted shares outstanding.
Fiscal Year 2013 Non-GAAP Adjusted Net Income Per Diluted Share
- For the full fiscal year ending June 30, 2013, the company expects non-GAAP adjusted net income per diluted share of approximately $1.79 to $1.99, which excludes expected acquisition-related amortization of intangible assets of approximately $8.4 million or approximately $0.24 per diluted share, share-based compensation expense and its related tax effect of approximately $34.6 million or approximately $0.98 per diluted share, and tax charges related to the alignment of acquisition-related intellectual property with global operations of approximately $2.4 million, or $0.07 per diluted share. This guidance assumes a non-GAAP weighted average diluted share count of approximately 35.2 million shares.
Fiscal Year 2013 Capital Expenditures
For the full fiscal year ending June 30, 2013, the company expects to make capital expenditures of approximately $85 million to $95 million. Planned capital investments are designed to support the planned growth of the business and are expected to include the expansion of our European production capacity in our Dutch (Venlo) facility and other investments.
The foregoing guidance supersedes any guidance previously issued by the company. All such previous guidance should no longer be relied upon.
At approximately 4:20 p.m. (EST) on January 31, 2013, Vistaprint will post, on the Investor Relations section of www.vistaprint.com, an end-of-quarter presentation along with a downloadable transcript of the prepared remarks that accompany that presentation. At 5:15 p.m. the company will host a live Q&A conference call with management, which will be available via web cast on the Investor Relations section of www.vistaprint.com and via dial-in at (800) 599-9816, access code 94030400. A replay of the Q&A session will be available on the company's Web site following the call on January 31, 2013.
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 organic revenue growth. 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, and tax charges related to the alignment of acquisition-related intellectual property with global operations. 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 foreign currency hedges recognized in revenue. Constant-currency organic revenue growth excludes the impact of currency as defined above and revenue from acquired companies.
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. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of Non-GAAP Financial Measures" included at the end of this release. The tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliation between these financial measures.
Vistaprint's management believes that these non-GAAP financial measures provide meaningful supplemental information in assessing our performance and when forecasting and analyzing future periods. These non-GAAP financial measures also have facilitated management's internal comparisons to Vistaprint's historical performance and our competitors' operating results.
Management provides these non-GAAP financial measures as a courtesy to investors. However, to gain a more complete understanding of the company's financial performance, management does (and investors should) rely upon GAAP statements of operations and cash flow.
Vistaprint N.V. (NAS: VPRT) empowers more than 15 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 4,400 people, operates more than 25 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 at www.vistaprint.com.
Vistaprint and the Vistaprint logo are trademarks of Vistaprint N.V. or its subsidiaries. All other brand and product names appearing on this announcement may be trademarks or registered trademarks of their respective holders.
This press release contains statements about our future expectations, plans and prospects of our business that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995, including but not limited to our expectations for the growth and development of our business, especially in Europe, and our financial outlook and guidance set forth under the headings "Fiscal 2013 Outlook as of January 31, 2013" and "Financial Guidance as of January 31, 2013." Forward-looking projections and expectations are inherently uncertain, are based on assumptions and judgments by management, and may turn out to be wrong. Our actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including but not limited to flaws in the assumptions and judgments upon which our forecasts are based; our failure to execute our strategy; our inability to make the investments in our business that we plan to make because the investments are more costly than we expected or because we are unable to devote the necessary operational and financial resources; the failure of our investments to have the effects that we expect; our failure to acquire new customers and enter new markets, retain our current customers and sell more products to current and new customers; our failure to identify and address the causes of our revenue weakness in Europe; the willingness of purchasers of marketing services and products to shop online; our failure to promote and strengthen our brand; the failure of our current and new marketing channels to attract customers; our failure to manage growth and changes in our organization and senior management; our failure to manage the complexity of our business and expand our operations; currency fluctuations that affect our revenues and costs; costs and disruptions caused by acquisitions; the failure of our acquired businesses to perform as expected; difficulties or higher than anticipated costs in integrating the systems and operations of our acquired businesses into our systems and operations; unanticipated changes in our market, customers or business; competitive pressures; interruptions in or failures of our websites, network infrastructure or manufacturing operations; our failure to retain key employees of Vistaprint or of our acquired businesses; our failure to maintain compliance with the financial covenants in our revolving credit facility or to pay our debts when due; costs and judgments resulting from litigation; changes in the laws and regulations or in the interpretations of laws or regulations to which we are subject, including tax laws, or the institution of new laws or regulations that affect our business; general economic conditions; and other factors described in our Form 10-Q for the fiscal quarter ended September 30, 2012 and the other documents we periodically file with the U.S. Securities and Exchange Commission.
In addition, the statements and projections in this press release represent our expectations and beliefs as of the date of this press release, and subsequent events and developments may cause these expectations, beliefs, and projections to change. We specifically disclaim any obligation to update any forward-looking statements. These forward-looking statements should not be relied upon as representing our expectations or beliefs as of any date subsequent to the date of this press release.
Operational Metrics & Financial Tables to Follow
CONSOLIDATED BALANCE SHEETS
(Unaudited in thousands, except share and per share data)
|Cash and cash equivalents||$||64,728||$||62,203|
|Accounts receivable, net of allowances of $349 and $189, respectively||23,467||20,125|
|Prepaid expenses and other current assets||33,935||26,102|
|Total current assets||132,345||115,598|
|Property, plant and equipment, net||293,295||261,228|
|Software and web site development costs, net||6,965||5,186|
|Deferred tax assets||333||327|
|Intangible assets, net||37,050||40,271|
|Investment in equity interests||13,169||—|
|Liabilities and shareholders' equity|
|Deferred tax liabilities||1,686||1,668|
|Other current liabilities||621||—|
|Total current liabilities||182,410||141,979|
|Deferred tax liabilities||16,128||18,359|
|Preferred shares, par value €0.01 per share, 100,000,000 and 120,000,000 shares authorized, respectively; none issued and outstanding||—||—|
|Ordinary shares, par value €0.01 per share, 100,000,000 and 120,000,000 shares authorized, respectively; 49,950,289 shares issued and 33,525,856 and 34,119,637 shares outstanding, respectively||699||699|
|Treasury shares, at cost, 16,424,433 and 15,830,652 shares, respectively||(398,617||)||(378,941||)|
|Additional paid-in capital||296,942||285,633|
|Accumulated other comprehensive loss||(3,021||)||(10,732||)|
|Total shareholders' equity||209,895||189,287|
|Total liabilities and shareholders' equity||$||653,660||$||592,429|
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited in thousands, except share and per share data)
Three Months Ended
Six Months Ended
|Cost of revenue (1)||114,150||99,661||202,177||177,725|
|Technology and development expense (1)||40,045||29,792||77,702||56,466|
|Marketing and selling expense (1)||134,364||110,644||234,361||186,988|
|General and administrative expense (1)||26,712||27,223||52,213||48,755|
|Income from operations||33,041||32,542||33,275||42,288|
|Other (expense) income, net||(310||)||2,448||(819||)||2,898|
|Interest expense, net||(1,264||)||(422||)||(2,426||)||(339||)|
|Income before income taxes and loss in equity interests||31,467||34,568||30,030||44,847|
|Income tax provision||8,189||2,871||8,323||4,978|
|Loss in equity interests||(318||)||—||(443||)||—|
|Basic net income per share||$||0.69||$||0.84||$||0.63||$||1.01|
|Diluted net income per share||$||0.66||$||0.82||$||0.61||$||0.99|
|Weighted average shares outstanding — basic||33,377,045||37,638,224||33,525,669||39,439,181|
|Weighted average shares outstanding — diluted||34,544,965||38,654,740||34,754,574||40,474,021|
(1) Share-based compensation is allocated as follows:
Three Months Ended
Six Months Ended
|Cost of revenue||$||107||$||77||$||205||$||171|
|Technology and development expense||2,366||834||4,606||1,693|
|Marketing and selling expense||1,590||498||3,139||1,053|
|General and administrative expense||4,287||3,454||8,667||6,669|
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited in thousands)
Three Months Ended
Six Months Ended
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation and amortization||16,166||14,169||30,824||27,276|
|Share-based compensation expense||8,350||4,863||16,617||9,586|
|Excess tax benefits from share-based awards||
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