Vistaprint 2009 Annual Report Download - page 62

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Cost of revenue
Cost of revenue includes materials used to generate printed products, payroll and related
expenses for production personnel, depreciation of equipment used in the production process and in
support of electronic service offerings, shipping and postage costs, and other miscellaneous related
costs of products sold by us.
The increase in cost of revenue from fiscal 2008 to fiscal 2009 was primarily attributable to the
production costs associated with increased volume of shipments of products during this period. The
decrease in the cost of revenue as a percentage of total revenue for fiscal 2009 compared to fiscal
2008 was primarily driven by productivity improvements at our manufacturing locations, improved
pricing agreements in relation to purchases of materials and a weaker Canadian dollar, which
positively impacted the raw material and labor costs of our Canadian production operations. In
addition, shifts in product mix, including an increase in sales of electronic services, partially offset by a
decrease in referral revenue, contributed to a decrease in cost of revenue as a percentage of sales.
The increase in cost of revenue from fiscal 2007 to fiscal 2008 was primarily attributable to the
production costs associated with increased volume of shipments of products during this period. The
increase in the cost of revenue as a percentage of total revenue for fiscal 2008 compared to fiscal
2007 was primarily driven by a shift in our overall product mix, which includes the impact of postage
from our mailing services offering which has a higher cost of revenue than the majority of our product
and service offerings and a decline in referral fees as a percent of total revenue. The increase in cost
of revenue as a percentage of revenue was also driven by a strong Canadian dollar, which negatively
impacted the raw material and labor costs of our Canadian production operations.
In thousands
Year Ended June 30, 2009-2008
% Change
2008-2007
% Change2009 2008 2007
Technology and development expense. . . $ 60,921 $ 44,828 $27,176 36% 65%
% of revenue............................. 11.8% 11.2% 10.6%
Marketing and selling expense ........... $159,143 $127,975 $87,887 24% 46%
% of revenue............................. 30.9% 31.9% 34.3%
General and administrative expense ..... $ 42,236 $ 32,572 $23,694 30% 37%
% of revenue............................. 8.2% 8.1% 9.3%
Technology and development expense
Technology and development expense consists primarily of payroll and related expenses for
software and manufacturing engineering, content development, amortization of capitalized software
and website development costs, information technology operations, website hosting, equipment
depreciation, patent amortization and miscellaneous technology infrastructure-related costs.
The increase in our technology and development expenses of $16.1 million for fiscal 2009 as
compared to fiscal 2008 was primarily due to increased payroll and benefit costs of $8.8 million and
increased share-based compensation costs of $1.0 million associated with increased employee hiring
in our technology development and information technology support organizations. At June 30, 2009,
we employed 302 employees in these organizations compared to 239 employees at June 30, 2008.
The increase in headcount has resulted in an increase in allocated overhead of $1.7 million compared
to fiscal 2008. Allocated overhead consists primarily of facility-related expenses. In addition, to support
our continued revenue growth during this period, we continued to invest in our website infrastructure,
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