Vistaprint 2006 Annual Report Download - page 49

Table of Contents
In thousands
Year Ended
June 30,
2005−2006
% Change 2004−2005 % Change
2006 2005 2004
Technology and development expense $15,628 $10,839 $ 8,515 44% 27%
% of revenue 10.3% 11.9% 14.5%
Marketing and selling expense $51,174 $32,372 $19,138 58% 69%
% of revenue 33.6% 35.6% 32.6%
General and administrative expense $16,624 $ 5,813 $ 3,968 186% 46%
% of revenue 10.9% 6.4% 6.8%
Loss on contract termination $ — $21,000 $ —
% of revenue 0.0% 23.1% 0.0%
The increase in our technology and development expenses of $4.8 million for fiscal 2006 as compared to fiscal 2005 was primarily due to
increased payroll and benefit costs of $4.1 million and share−based compensation costs of $0.6 million associated with employee hiring in our
technology development and infrastructure support organizations, and increased website infrastructure and hosting costs of $0.6 million, offset by
an increase of approximately $1.5 million in the amount of internal−use software development costs capitalized.
The increase in our technology and development expenses of $2.3 million for fiscal 2005 as compared to fiscal 2004 was primarily due to
increased website infrastructure and hosting costs of approximately $0.3 million, increased payroll and benefit costs of $0.3 million as well as a
decrease of approximately $1.6 million in the amount of internal−use software development costs capitalized.
The increase in our marketing and selling expenses of $18.8 million for fiscal 2006 as compared to fiscal 2005 was driven primarily by
increases of $12.6 million in advertising costs related to new customer acquisition and costs of promotions targeted at our existing customer base,
increases in payroll and benefits related costs of $3.3 million, and share−based compensation costs related to share−based awards granted to our
sales and marketing personnel of $0.2 million. During fiscal 2006, we continued to expand our marketing organization and our design, sales and
services center. At June 30, 2006, we employed 343 employees in these organizations compared to 257 employees at June 30, 2005. In addition,
payment processing fees paid to third−parties increased by $1.7 million during this period due to increased order volumes.
The increase in our marketing and selling expenses of $13.2 million for fiscal 2005 as compared to fiscal 2004 was driven by increased
advertising costs of $5.1 million related to new customer acquisition and promotions targeted at our existing customer base, which drove
increased website sales. We also made significant investments in our marketing organization and our design sales and services support center
during this period, which resulted in an increase in payroll and recruiting related costs of $4.9 million in fiscal 2005, as compared to fiscal 2004.
Payment processing fees paid to third−parties increased by $1.2 million during this period due to increased order volumes. The remaining
increase in marketing and selling expenses is primarily infrastructure costs associated with the expansion of the design sales and customer
support center.
The increase in our general and administrative expenses of $10.8 million for fiscal 2006 as compared to fiscal 2005 was primarily due to
increases in payroll and benefit costs of $2.1 million and share−based compensation costs of $4.0 million, resulting from the continued growth of
our finance and human resource organizations and the charge associated with an option modification discussed below, as well as increases in
insurance costs of $0.7 million and third party professional fees of $3.6 million.
46