Vistaprint N.V. announced its financial results for the three-month period ended June 30, 2014, the fourth quarter of its 2014 fiscal year.
Revenue for the fourth quarter of fiscal year 2014 was $338.2 million, a 21% increase compared to revenue of $280.1 million reported in the same quarter a year ago. For the full fiscal year, revenue grew to $1,270.2 million, a 9% increase over revenue of $1,167.5 million in fiscal year 2013. Excluding the estimated impact from currency exchange rate fluctuations and revenue from businesses acquired in 2014, total revenue grew 4% year over year in the fourth quarter and for the full year.
“Our fourth quarter revenue growth and operating profitability improved meaningfully versus our third quarter results,” said Robert Keane, president and CEO. “Revenue performance improved in the markets in which we had implemented major pricing and marketing changes for the Vistaprint brand in fiscal 2014 – the United States, United Kingdom and Germany. We still have more work to do to improve our results and our customer value proposition around the world, including in those three countries, but we are confident that our efforts will support long-term growth and profitability of our business. Our recent acquisitions of People & Print Group and Pixartprinting grew ahead of our expectations.
“Our results for the quarter and the full fiscal year reflect good execution against our plan to expand operating profit margins,” Keane added. “Yet even as we delivered margin expansion, we also invested heavily in proprietary technology, improvements to product quality and selection, customer service and user experience. As we have for the past several years, we made major investments in our industry-leading manufacturing and supply chain infrastructure, which we believe is an operational asset that can drive long-term scale advantage across our multiple customer-facing brands.”
Gross margin (revenue minus the cost of revenue as a percent of total revenue) in the fourth quarter was 60.5%, down from 64.6% in the same quarter a year ago. For the full fiscal year, gross margin was 64.5%, compared to 65.7% in fiscal year 2013. The year-over-year reduction in gross margin in both periods was primarily due to our recent acquisitions of People & Print Group and Pixartprinting, which have a different business model with lower gross margins than the Vistaprint-branded business.
Operating income in the fourth quarter was $19.7 million, or 5.8% of revenue, and reflected a significant increase compared to operating income of $3.1 million, or 1.1% of revenue, in the same quarter a year ago. For the full fiscal year, operating income was $85.9 million, or 6.8% of revenue, an 86% increase compared to operating income of $46.1 million, or 4.0% of revenue, in the prior fiscal year.
During the fourth quarter, the company generated $50.5 million of cash from operations and $30.0 million in free cash flow. During the full fiscal year, the company generated $148.6 million of cash from operations and $66.5 million in free cash flow. As of June 30, 2014, the company had $62.5 million in cash and cash equivalents and $448.1 million of debt.
“Looking ahead to fiscal 2015, we have built our plan around three important expectations,” Ernst Teunissen, executive vice president and CFO, said. “First, we expect our ongoing efforts to reposition the Vistaprint brand will continue to create revenue headwinds for us. While we remain in this transition, we believe it is prudent to expect only modest revenue growth rates for the Vistaprint brand for the year. The second expectation is that our consolidated revenue growth will benefit from the addition of our recent acquisitions. We expect People & Print Group and Pixartprinting to continue to show healthy double-digit revenue growth during fiscal 2015, and we also will receive a timing benefit as we do not pass the anniversary of these acquisitions until the fourth quarter of fiscal 2015.
“The third expectation is that we can continue to improve operating margin, earnings and free cash flow due to a continued focus on productivity and efficiency efforts in G&A and manufacturing, and the non-recurrence of certain below-the-line items,” Teunissen added. “We expect these year-over-year gains will be partially offset by investments we are making in new geographies, product expansion and quality improvements, as well as modest dilution from our recent acquisitions.”
For the full fiscal year ending June 30, 2015, the company expects revenue of approximately $1,470 million to $1,540 million, or 16% to 21% growth year over year in reported terms and 15% to 20% growth on a constant-currency basis.