VistaPrint Limited (



F2Q 2012 Earnings Call

January 26, 2012 5:00 PM


Robert Keane – Chairman, President and CEO

Ernst Teunissen – EVP and CFO


Youssef Squali – Jefferies and Company

Mark Mahaney – Citi

Jason Helfstein – Oppenheimer

Shawn Milne – Janney Capital Markets

Mark May – Barclays Capital

Mark Zgutowicz – Piper Jaffray

Jim Friedland – Cowen and Company

Mitch Bartlett – Craig-Hallum

Kevin Steinke – Barrington Research

Victor Anthony – Lazard Capital Markets



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Ladies and gentlemen, welcome to the Vistaprint Fiscal Year 2012 Second Quarter Q&A Earnings Conference Call. My name is Deanna and I will be the 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, 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. As a reminder, today’s conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Robert Keane, President and CEO. Please proceed, sir.

Robert Keane

Thank you, Deanna . Hello, everyone, and thank you for joining us today. Before we open up the call to Q&A I wanted to make a few brief remarks about our quarter and also our outlook. We had a very good quarter in Q2 with revenue and earnings per share in line with our expectations, but we were particularly pleased with two of our operating metrics: new customer growth of 32% year-over-year; and growth in orders of about 28%.

We continue to execute very well against our long-term strategy, although it is still the early days. We progressed in each of early days. We progressed in each of the three initiatives that are focused on our core business. These are customer value proposition improvements, lifetime value-based marketing and world class manufacturing. We also made two acquisitions during the quarter which we’re very excited about, and we are convinced they will become foundations for our future growth.

Looking at our outlook, we have a lot of moving pieces in our guidance and I’m sure you’ll have questions which we’re happy to answer, the important message I really want you to take away is that our organic Vistaprint business is on track to deliver against our full-year targets, the same ones we laid out at the beginning of the year. All updates to our guidance are due to currency movements, acquisitions, the effect of our share repurchase activity and the $0.08 currency-related tax benefit this quarter.

Looking ahead longer term, we remain confident we’re putting the right strategy. We remain – in order to remain a strong growth company for years to come. It’s a multi-year effort so it’s far too early to declare victory, but we do believe in our ability to execute to our plans and to build what we believe will become a transformational and enduring business institution.

So with that, I’d like to open up the call to your questions. Deanna ?

Question-and-Answer Session


(Operator Instructions) And our first question will come from the line of Youssef Squali – Jefferies and Company. Please proceed, sir.

Youssef Squali – Jefferies and Company

Thank you again very much and good afternoon. I have a couple questions please, I guess starting with you, Robert. On the, on Q3 guidance it seems like hitting the low end of that range of 16% on an organic basis would basically imply a pretty dramatic slowdown in the business at a time when you’re actually trying to reaccelerate it. So I was just wondering what makes you cautious to that level? Are you seeing anything that could, and this is obviously organic so X FX, are you seeing anything that could make you get there? And then second, Ernst, gross margins are at an almost all-time high. It’s been years since it hasn’t had that level. What drove that? How sustainable is it? And just on G&A, what caused it to jump so much? Thanks.

Robert Keane

Sure, Youssef. To answer your first question, in Q3 guidance we really do think are in line with recent performance and we think it’s a realistic guidance. Of course there’s a low and a high end, and when we look at setting that we have headwinds that we see due to some of these value proposition-based investments, our value, proposition-based investments, reduced cross-selling, reducing e-mailing and the like.

That being said, when we look at the guidance, and where we’re looking at the guidance in terms of currency growth rates, constant currency growth rates were driving right down the middle of where we thought we would be at the beginning of the year. Ernst, do you want to talk about the gross margin?

Ernst Teunissen

Yeah, the gross margin, as you know, Q2 is always our larger gross margin month because of volume absorption. But as you correctly note, even if you compare it to Q2s in the last four years, we are, have done really well.

And it’s, the most important driver is, driver of that is actually volume absorption. So, we are seeing I guess in each Q2 that larger volume leads to larger margins, and that’s been the main, the main driver. And within that, obviously, better absorption, particularly in Asia Pacific, as that manufacturing facility is getting to more maturity as well. So, we’re very pleased with the results and the various puts and takes, but that’s the most important one.

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