Vistaprint 2009 Annual Report Download - page 60

Results of Operations
The following table presents our historical operating results for the periods indicated as a
percentage of revenue:
Year Ended June 30,
2009 2008 2007
As a percentage of revenue:
Revenue ................................................................ 100.0%100.0%100.0%
Cost of revenue .......................................................... 37.2% 38.5% 35.2%
Technology and development expense ..................................... 11.8% 11.2% 10.6%
Marketing and selling expense............................................. 30.9% 31.9% 34.3%
General and administrative expense ....................................... 8.2% 8.1% 9.3%
Income from operations................................................... 11.9% 10.3% 10.6%
Interest income .......................................................... 0.4% 1.0% 1.8%
Other (expense) income, net .............................................. (0.1)% 0.1% 0.0%
Interest expense ......................................................... 0.3% 0.4% 0.7%
Income before income taxes .............................................. 11.9% 11.0% 11.7%
Income tax provision...................................................... 1.1% 1.1% 1.1%
Net income .............................................................. 10.8% 9.9% 10.6%
Fiscal Years Ended June 30, 2009, 2008 and 2007
In thousands
Year Ended June 30, 2009-2008
% Change
2008-2007
% Change2009 2008 2007
Revenues .............................. $515,826 $400,657 $255,933 29% 57%
Cost of revenue ........................ $191,944 $154,122 $ 89,971 25% 71%
% of revenue............................ 37.2% 38.5% 35.2%
Revenue
We generate revenue primarily from the sale and shipment of customized manufactured
products, as well as certain electronic services, such as website hosting and graphic design services.
We invoice our customers for our recurring electronic services on a monthly basis in advance and
recognize revenue as earned. 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 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, 2009, 2008 and 2007, we generated approximately $25.9 million, $27.6
million, and $20.5 million, respectively, of our revenue from these third party referral fees. We expect
that referral fee revenue from all sources will account for between 2% and 5% of our total revenues by
the end of calendar year 2010. Of that amount, we expect that referral fee revenue from membership
discount programs will decline in absolute dollar terms over that period, including possibly to as low as
zero. Referral fee revenue from membership discount programs for the fiscal years ended June 30,
2009, 2008 and 2007 was approximately 3.9%, 6.2% and 7.8% of our total revenues, respectively. 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
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