Vistaprint N.V.'s CEO Discusses Q1 2012 Results - Earnings Call Transcript

Vistaprint N.V. (VPRT)

Q1 2012 Earnings Call

October 27, 2011 5:15 pm ET

Executives

Meredith Mendola - VP of Corporate Communications

Ernst Teunissen - Chief Financial officer, Executive Vice President and Director of Management Board

Robert Keane - Founder, Chairman of the Management Board, Chief Executive Officer and President

Analysts

Mayuresh Masurekar - Collins Stewart LLC, Research Division

Mark May - Barclays Capital, Research Division

James H. Friedland - Cowen and Company, LLC, Research Division

Shawn C. Milne - Janney Montgomery Scott LLC, Research Division

Mitch Barlett - Craig-Hallum Capital Group LLC, Research Division

Youssef H. Squali - Jefferies & Company, Inc., Research Division

Mark J. Zgutowicz - Piper Jaffray Companies, Research Division

Ingrid Chung - Goldman Sachs Group Inc., Research Division

Zachary Arrick - Morgan Stanley, Research Division

Presentation

Question-and-Answer Session

Operator

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Ladies and gentlemen, welcome to the Vistaprint Fiscal Year 2012 First Quarter Question-and-Answer Earnings Conference Call. My name is Laura, and I will be your operator for today. This call is being hosted by Robert Keane, President and CEO; and Ernst Teunissen, Executive Vice President and CFO.

Before we take the first call, as noted in the Safe Harbor statement at the beginning of the earnings presentation, comments may include forward-looking statements, including statements regarding revenue and earnings guidance, and actual results may differ materially. Risks that could impact those statements are described in the documents that are periodically filed with the Securities and Exchange Commission. Now we'll proceed with the first call. Your first question comes from the line of Youssef Squali.

Youssef H. Squali - Jefferies & Company, Inc., Research Division

So a couple of questions. First, I guess starting with you, Robert, if I look at Q2 and fiscal 2012, particularly at the low end, it basically implies year-on-year growth, which is below that 20% CAGR you're hoping to achieve through 2016. Maybe can you just walk us through the different growth dials that you can basically tweak to reaccelerate growth, which you'll obviously have to do starting, I guess, in second half of -- or starting in 2013 to get there? And then the other thing is on the Albumprinter acquisition. It seems to us that that's mostly a B2B2C cost play, which is different than what you guys have done so far. It looks like the majority of the revenues are not direct to consumers. So can you speak to the rationale behind that deal and what you're hoping to achieve with it?

Robert Keane

Why don't I start with that, then I'll go to your growth question. Obviously, the growth forecast, just to be clear, that I'll talk about in a moment, are excluding Albumprinter's. So I will answer the Album question, but just to be clear, the following one does not include that. So you're right. They have a significant amount of B2B2C. In other words, they sell to one of the largest retailers, a retail brand in the Netherlands, who then sells on as well. But they have approximately half and half between direct to consumer and going to consumer, a little bit like we do with our FedEx Office. We now are Staples approach. We're selling through another brand. So the logic behind the deal was really -- what we liked about Albumprinter is they have a great product, great team, great software, but the reality is 75%, 80% of their revenues are in the Netherlands. And we have excellent distribution and customer base from Poland to Portugal and Ireland to Turkey, across Europe. And so their product line, they've recently translated into a number of different European languages. We can translate it into more. So what we were buying was something which was being valued predominantly on their existing Dutch business, which, to your point, is half via strategic partnership-type relationships. But we felt that in terms of getting up to a high quantity of production so we could have economies of scale and having a top-quality software, they gave us a much faster time to market that we could then push through other parts of Europe. In terms of the growth numbers, you're right. If you look at the guidance of where we are, it comes in -- for the Q2 guidance, I think it's 15% to 24% constant currency and reported currency right now. And you could have similar types of ranges when you route into the second half. Obviously, that's our guidance range. We stick by the guidance range we gave, but we, of course, would like to be above -- the middle of that range or if we can, certainly, I don't want to say the guidance range did anything different than the full range. But we're quite early in the year, and we think it's best to keep that type of breadth. We still very much do feel committed that we can stay above this 20% annualized CAGR growth and would like to do that this year. We said many times that these investments are long-term investments, and we do know that we are having some revenue headwinds we've seen in the last quarter by some of the things we are doing that we believe will increase customer loyalty. So as we've turned down e-mail marketing or as we've reduced cross-selling or as we've done other types of things which reduce revenues in the near-term, we believe that will come back, and the other -- the year and beyond. But there's not variability around those forecast, so we felt it was better to have this breadth of forecast range.

Operator

[Operator Instructions] Your next question comes from the line of Ingrid Chung from Goldman Sachs.

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