Vistaprint 2012 Annual Report Download - page 48

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44
In thousands
Year Ended June 30,
2012 2011 2010 2012 vs. 2011 2011 vs. 2010
Cost of revenue . . . . . . . . . . . . . . . . . . . $ 355,205 $ 287,806 $ 240,195 23% 20%
% of revenue . . . . . . . . . . . . . . . . . . . . . . 34.8% 35.2% 35.8%
Technology and development expense $ 129,162 $ 93,626 $ 78,387 38% 19%
% of revenue . . . . . . . . . . . . . . . . . . . . . . 12.7% 11.5% 11.7%
Marketing and selling expense . . . . . . . $ 375,538 $ 271,838 $ 216,574 38% 26%
% of revenue . . . . . . . . . . . . . . . . . . . . . . 36.8% 33.3% 32.3%
General and administrative expense . . $ 105,190 $ 70,659 $ 58,031 49% 22%
% of revenue . . . . . . . . . . . . . . . . . . . . . . 10.3% 8.6% 8.7%
Cost of revenue
Cost of revenue includes materials used to manufacture our products, payroll and related expenses for
production personnel, depreciation of assets used in the production process and in support of digital marketing
service offerings, shipping, handling and processing costs, third-party production costs, production of costs of free
products and other related costs of products sold by us.
The increase in cost of revenue from fiscal 2011 to fiscal 2012 was primarily attributable to the increased
volume of product shipments during the current year period, including those from Albumprinter. The decrease in the
cost of revenue as a percentage of total revenue from fiscal 2011 to fiscal 2012 was primarily attributable to higher
overhead absorption resulting from increased product sales and increased labor efficiency, partially offset by
inflation and shifts in product mix.
The increase in cost of revenue from fiscal 2010 to fiscal 2011 was primarily attributable to the increased
volume of product shipments during the current year period. The decrease in the cost of revenue as a percentage of
total revenue from fiscal 2010 to fiscal 2011 was primarily attributable to favorable shifts in product mix including an
increase in sales of digital services, improved pricing in relation to shipping costs, and productivity improvements at
our manufacturing locations. These improvements were partially offset by lower overhead absorption resulting from
the opening of our new production facility in Deer Park, Australia in June 2010.
Technology and development expense
Technology and development expense consists primarily of payroll and related expenses for our employees
engaged in software and manufacturing engineering, information technology operations, content development,
amortization of capitalized software, website development costs and certain acquired intangible assets, including
developed technology, hosting of our websites, asset depreciation, patent amortization, legal settlements in
connection with patent-related claims, and other technology infrastructure-related costs. Depreciation expense for
information technology equipment that directly supports the delivery of our digital marketing services products is
included in cost of revenue.
The growth in our technology and development expenses of $35.5 million for fiscal 2012 was primarily due
to increased payroll and facility-related costs of $28.4 million associated with increased headcount in our technology
development and information technology support organizations, an integral part of our long-term growth strategy. At
June 30, 2012, we employed 657 employees in these organizations compared to 454 employees at June 30, 2011.
In addition other technology and development expenses increased $4.1 million as compared to the prior
comparative period due to increased employee travel and training costs, recruitment costs and increased
depreciation, hosting services and other costs related to continued investment in our website infrastructure.
Furthermore, the year ended June 30, 2012 includes amortization of certain acquired intangible assets related to
the Albumprinter and Webs transactions of $2.3 million. The increase in other website related expenses during fiscal
2012 was partially offset by a legal settlement of a patent claim in fiscal 2011.