“Fiscal year 2013 was a year with mixed financial results,” said Robert Keane, president and CEO. “Our total revenue performance was disappointing relative to our expectations 12 months ago. Though our revenue growth in North America was strong with good execution of our strategic and financial objectives, our growth in Europe and Australia was weaker than expected. Moving to earnings, we were pleased with our higher than anticipated bottom-line performance for the year. This was due in part to actions we took throughout the year to improve advertising efficiency and moderate our expense growth in reaction to our lower revenue growth, reflecting our commitment to achieving our annual earnings target.”
Mr. Keane continued, “Our progress against the strategic initiatives set forth two years ago is also mixed. We are executing well in manufacturing globally, as well as advertising and customer value proposition improvements in North America. In Europe and Australia, our revenue growth has been weak, although we are encouraged by recent signs of stabilization. Finally, we are making good progress with our investments in longer-term growth initiatives including new markets in Asia, as well as with Webs and Albumprinter, and we continue to be enthusiastic about the potential long-term value of these initiatives.”
Revenue for the fourth quarter of fiscal year 2013 grew to $280.1 million, a 12% increase over revenue of $250.4 million reported in the same quarter a year ago. Excluding Albumprinter and Webs combined revenue of $18.6 million, total fourth quarter revenue was $261.5 million. For the full fiscal year, revenue grew to $1,167.5 million, a 14% increase over revenue of $1,020.3 million in fiscal year 2012. Excluding the estimated impact from currency exchange rate fluctuations and revenue from acquired businesses, total revenue grew 11% year over year in the fourth quarter and 12% for the full year.
Gross margin (revenue minus the cost of revenue as a% of total revenue) in the fourth quarter was 64.6%, flat versus the same quarter a year ago. For the full fiscal year, gross margin was 65.7%, compared to 65.2% in fiscal year 2012.
“Two years ago, we presented a plan that anticipated a ramp in the profitability of our organic business in fiscal 2014 after two significant years of investment in fiscal 2012 and 2013,” Ernst Teunissen, executive vice president and CEO, said. “We believe we are on track to deliver this in fiscal 2014, notwithstanding our more modest revenue growth expectations. We also expect to deliver improved profitability on a consolidated basis, including the combined negative impact of our acquisitions of Webs and Albumprinter, our investments in Asia, and the incremental accounting impact driven by our move to more performance-based executive stock option grants in 2012. We expect to deliver fiscal 2014 margin leverage via multiple income statement line items as a percentage of revenue, including gross profit, advertising expense and general and administrative expenses, consistent with our plan presented two years ago.
“Moving to revenue expectations, the fiscal 2014 guidance we are introducing today includes a range of constant-currency revenue growth of 7% to 11%.,” Mr. Teunissen added. “We have made important changes to our marketing organization and processes in Europe, but expect flat growth there from fiscal 2013 to fiscal 2014. This is a strategic choice to improve the marketing foundations, customer value proposition and customer economics in our top European markets before resuming more substantial advertising spend.”
For the full fiscal year ending June 30, 2014, the company expects revenue of approximately $1,235 million to $1,285 million, or 6% to 10% growth year over year in reported terms.