Vistaprint 2007 Annual Report Download - page 47

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
The following discussion and analysis of the financial condition and results of our operations
should be read in conjunction with the consolidated financial statements and the notes to those
statements included elsewhere in this Annual Report. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ materially from those
discussed below. Factors that could cause or contribute to such differences include, but are not limited
to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere
in this Annual Report.
Overview
We are the leading online supplier of high-quality graphic design services and customized printed
products to small businesses and consumers worldwide. Since the launch of our website in May 2000,
we have served over 10,000,000 paying customers in more than 120 countries. We offer a broad
spectrum of products and services ranging from business cards, brochures and invitations to mailing
and creative services. We seek to offer compelling value to our customers through an innovative use of
technology, a broad selection of customized printed products and services, low pricing and
personalized customer service. Through our use of proprietary Internet-based graphic design software,
localized websites, proprietary order receiving and processing technologies and advanced computer
integrated printing facilities, we offer a meaningful economic advantage relative to traditional graphic
design and printing methods. Our value proposition has allowed us to successfully penetrate the large,
fragmented and geographically dispersed small business and consumer markets.
We maintain a registered office in Hamilton, Bermuda and our websites are hosted in secure
co-location facilities in Devonshire, Bermuda. We own and operate printing facilities in Windsor,
Ontario, Canada and in Venlo, the Netherlands, and we operate a customer design, sales and service
center in Montego Bay, Jamaica. In January 2007, we opened a European marketing office in
Barcelona, Spain. Our technology development, marketing, finance and administrative offices are
located in Lexington, Massachusetts, United States.
Revenue. For the fiscal years ended June 30, 2007, 2006 and 2005, our revenue was $255.9
million, $152.1 million and $90.9 million, respectively. We generate revenues primarily from the printing
and shipment of customized printed products. Revenue is recorded net of a reserve for estimated
refunds. Customers place orders via our websites and pay primarily using credit cards. In addition, we
receive payment for some orders through direct bank debit, wire transfers and other payment methods.
We also generate revenue from order referral fees, revenue share and other fees paid to us by
merchants for customer click-throughs, distribution of third-party promotional materials and referrals
arising from products and services of the merchants we offer to our customers on our website. Unlike
printed products that we manufacture ourselves, these third party referral offerings do not require
physical production by us and have minimal corresponding direct cost of revenue. For the fiscal years
ended June 30, 2007, 2006 and 2005, we generated approximately $20.5 million, $13.1 million and
$5.6 million, respectively, of our revenue from these third party referral fees. A portion of our revenue
are derived from repeat purchases from our existing customers. This recurring component of our
revenue has grown to 63% of revenue for the fiscal year ended June 30, 2007 as compared to 62% of
revenue for the fiscal year ended June 30, 2006. To understand our revenue trends, we monitor
several key metrics including:
‰Website sessions. A session is measured each time a computer user visits a VistaPrint
website from their Internet browser. We measure this data to understand the volume and
source of traffic to our websites. Typically, we use various advertising campaigns to increase
the number and quality of shoppers entering our websites. The number of website sessions
varies from month to month depending on variables such as product campaigns and
advertising channels used.
Form 10-K
43