Vistaprint 2007 Annual Report Download - page 54

experience significant growth in purchases from existing customers. Revenue from repeat customers
increased from 57% of total revenue in fiscal 2005 to 62% of total revenue in fiscal 2006. Revenue
from our non-United States websites accounted for 29% of total revenues for fiscal 2006 as compared
to 27% of total revenue during fiscal 2005.
Cost of revenue increased by 80% from fiscal 2006 to fiscal 2007. The increase was primarily
attributable to the production costs associated with increased volume of shipments of printed products
during this period. The increase in the cost of revenue as a percentage of total revenue for fiscal 2007
compared to fiscal 2006 was primarily driven by a shift in our overall product mix and higher equipment
depreciation and production labor costs which are the result of our continuing efforts to expand the
printing capacity at our printing facilities in order to meet the increased demand for our products.
During the second half of fiscal 2007, we incurred approximately $1.0 million of consulting costs
relating to projects targeting further process improvements and efficiencies within the global
manufacturing operations. Additionally, during the second half of fiscal 2007, we identified certain
production equipment in our Ontario facility that would no longer be used, and thus were deemed
impaired. As a result, we recorded an impairment charge of $0.9 million to write the assets down to
their estimated fair value. We do not expect a significant impact resulting from the impairment on our
operations in future periods.
Cost of revenue increased by 36% from fiscal 2005 to fiscal 2006. The increase was primarily
attributable to the increased volume of shipments of printed products during this period. The decrease
in the cost of revenue as a percentage of total revenue for fiscal 2006 as compared to fiscal 2005 was
primarily driven by lower product costs at our Canadian printing facility as our transition from our former
third party print vendor, Mod-Pac, to our Canadian printing facility was completed in September 2005.
In thousands
Year Ended June 30, 2006-2007
% Change
2005-2006
% Change2007 2006 2005
Technology and development expense . . . $27,176 $15,628 $10,839 74% 44%
% of revenue ............................. 10.6% 10.3% 11.9%
Marketing and selling expense ........... $87,887 $51,174 $32,372 72% 58%
% of revenue ............................. 34.3% 33.6% 35.6%
General and administrative expense...... $23,694 $16,624 $ 5,813 43% 186%
% of revenue ............................. 9.3% 10.9% 6.4%
Loss on contract termination............. $ — $ — $21,000
% of revenue ............................. 0.0% 0.0% 23.1%
The increase in our technology and development expenses of $11.5 million for fiscal 2007 as
compared to fiscal 2006 was primarily due to increased payroll and benefit costs of $7.8 million and
increased share-based compensation costs of $1.6 million associated with increased employee hiring
in our technology development and information technology support organizations. At June 30, 2007,
we employed 175 employees in these organizations compared to 111 employees at June 30, 2006. In
addition, to support our revenue growth during this period, we continued to invest in our website
infrastructure, which resulted in increased depreciation and hosting service expenses of $1.8 million for
fiscal 2007 as compared to fiscal 2006.
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
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