Vistaprint 2012 Annual Report Download - page 41

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• World Class Manufacturing. We believe our manufacturing processes are best-in-class when it comes to
the printing industry. But when compared to the best manufacturing companies in the world, we believe
there is significant opportunity to drive further efficiencies and competitive advantages. By focusing
additional top engineering talent on key process approaches, we believe we can make a step-function
improvement in product quality and reliability, and significantly lower unit manufacturing costs.
Our strategy to drive longer-term growth by addressing market adjacencies is to develop our business in the
following areas:
• Digital Marketing Services. We estimate that less than 50% of micro businesses have a website today, but
digital marketing services, including websites, email marketing, online search marketing and social media
marketing, are a fast-growing part of the small business marketing space. We believe there is great value in
helping customers understand the powerful ways in which physical and digital marketing can be combined.
Our current digital offering includes websites, email marketing, local search visibility, blogs, search engine
optimization, and personalized email domain names. Since we launched digital marketing services in April
2008, our number of unique paying organic digital subscribers has grown to approximately 351,000. On
December 28, 2011, we acquired Webs, a leading provider of do-it-yourself websites, Facebook pages and
mobile presence solutions for small businesses, to significantly expand our ability to develop and deliver
innovative, customer-focused online marketing solutions. Webs has a base of approximately 100,000
paying customers, as well as millions of non-paying users of its products.
• Geographies outside North America and Europe. For the fiscal year ended June 30, 2012, revenue
generated outside of North America and Europe accounted for approximately 6% of our total revenue. We
believe that we have significant opportunities to expand our revenue both in the countries we currently
serve and in new markets. We intend to further extend our geographic reach by continuing to introduce
localized websites in additional countries and languages, expanding our marketing efforts and customer
service capabilities, and offering graphic design content, products, payment methodologies and languages
specific to local markets. To support our expansion into global emerging markets, we opened offices in
Singapore and Mumbai, India, and acquired assets of Printbell, an India based printing business during the
year ended June 30, 2012. We also made a capital investment in a Chinese business in July 2012.
• Home and Family. Although we expect to maintain our primary focus on micro business marketing products
and services, we also participate in the market for customized home and family products such as
invitations, announcements, calendars, holiday cards, embroidered products, and apparel. This year we
added new products and services targeted at the home and family market. We believe that the economies
of scale provided by cross sales of these products to our extensive micro business customer base, our
large production order volumes and our integrated design and production software and facilities support and
will continue to support our effort to profitably grow our home and family business. On October 31, 2011, we
acquired Albumprinter, a leading provider of photo books and other photo products to the home and family
market in Europe. Additionally, during the year ended June 30, 2012, we launched a strategic partnership
with Nickelodeon to offer licensed character content to Vistaprint customers.
• Up-market Customers. We serve customers across the spectrum of micro businesses with fewer than 10
employees, but our strength has traditionally been in the smallest and most price sensitive of these
customers. In comparison to our customer base, which is concentrated in businesses with 2 or fewer
employees, the micro businesses in the “up-market” portion of this spectrum tend to have more
sophisticated marketing needs and typically spend more per year on their marketing activities. We believe
that as we continue to research customer needs and make customer value proposition improvements for
our traditional core customer base, we will develop a stronger ability to focus on “up-market” small business
customers. We expect this adjacency can serve as a driver of growth in future years.
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with U.S. generally accepted accounting principles
(“GAAP”). To apply these principles, we must make estimates and judgments that affect our reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. In some
instances, we reasonably could have used different accounting estimates and, in other instances, changes in the
Form 10-K