Vistaprint N.V. (VPRT)

Q4 2011 Earnings Call

July 28, 2011 4:20 pm ET


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


Meredith Mendola

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Welcome to the Vistaprint Fourth Quarter Fiscal Year 2011 Earnings Presentation. This is Meredith Mendola, Vice President of Investor Relations. With us today are Robert Keane, our President and Chief Executive Officer; and Ernst Teunissen, our Chief Financial Officer.

Before we start, please note that our comments include forward-looking statements, including statements regarding revenue and earnings guidance and our long-term goals and actual results may differ materially. Risks that could cause actual results to differ materially from those statements are described in the documents that we periodically file with the Securities and Exchange Commission including our Form 10-K for the fiscal year ended June 30, 2010, or Form 10-Q for the quarter ended March 31, 2011, and our other recent SEC filings, which are available on the Investor Relations

page at

As a reminder, a detailed reconciliation of GAAP and non-GAAP measures is posted in the appendix of the Q4 fiscal 2011 earnings presentation that accompanies these remarks.

Now I'd like to turn the presentation over to Robert Keane. Robert?

Robert Keane

Thank you, Meredith, and welcome to everyone joining us. As you've all seen in the press release issued this afternoon, we have a lot to talk about today. Therefore, we'll just spend a small amount of time in the quarter and the year just completed. Bypassing the typical detailed commentary and metrics on this call.

Of all our metrics -- all of our metrics are available on our website and we'll be happy to answer any questions you have about them subsequent to this webcast. We'll spend the bulk of this time during the prepared remarks discussing our long-term growth strategy and investment approach. After that, Ernst will review our financial guidance for 2012.

Later at 5:30 p.m. Eastern Time, we'll post a separate question-and-answer session that you can access through a link on the Investor Relations section of

[Audio Gap]

Next, now is the right time to evolve our strategy to further capitalize in our large market opportunity to deliver significant value to our customers, to maintain high revenue growth rates and to deliver substantial, long-term value to our shareholders.

Next, we are publicly introducing today our internal long-term organic financial targets, which are to achieve $2 billion or more in annual revenue by the end of fiscal 2016, and approximately $5 of GAAP EPS that same year. On a compounded annual basis, this is more than 20% growth from the GAAP EPS we just delivered for fiscal year 2011. To achieve these long-term targets, we will need to execute successfully on the operational strategy we first talked about publicly at our February 28, 2011 Investor Day.

A new financial approach is also required. To that end, we expect to make disciplined but significant profit and loss investments in fiscal 2012 and '13, which we believe will cause our EPS to decline significantly in the near term, before accelerating again in fiscal year 2014.

As I mentioned, FY 2011 was a strong year. We are pleased with our Q4 performance, exceeding the high end of our revenue guidance and coming in at a high end of EPS guidance. For the full year, revenue grew 22% in both reported terms and on a constant currency basis. EPS grew 23% for the full year. We entered fiscal 2011 with slowing revenue growth rates and some execution issues that we were able to tackle and resolve quickly.

The organizational changes that we announced in October set the stage for developing a stronger focus on our customers by better aligning marketing resources around key customer groups. As we deepened our understanding of what our customers value, and of the value that our customers bring to us over the long term, we asked, how can we incorporate those insights into our strategy? This in turn became a catalyst for us to undertake a comprehensive and strategic review in order to position ourselves for continued strong growth for years to come.

An important component of our strategic review was to analyze our market opportunity and our competitive position. Based on that analysis, we believe there is significant room for further growth, and that we have a strong market position on which we can and should capitalize now.

Let's take a few minutes to look at that opportunity starting with our core, the market for micro business marketing solutions. Our strategic investigations confirm what we already knew: There are a huge number of small businesses in the world, who have a need for marketing solutions and the market is highly fragmented. Based on the latest census information and other similar types of business reporting, we believe there are about 60 million businesses with fewer than 10 employees in North America and Europe. The large majority of spending on marketing needs for small businesses is still offline. A major source of growth has been through attracting offline customers to Vistaprint, and we believe this will continue to be a major source of growth in the future.

Within that overall market, our approach of mass-market advertising through online channels and our offering of a single uniform experience has made us very successful in our sweet spot of micro businesses, typically, one person or part-time businesses. These firms account for 80% or 90% of the total number of small businesses and our success there, has allowed us to build unmatched scale advantages.

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