Vistaprint 2010 Annual Report Download - page 55

Download and view the complete annual report

Please find page 55 of the 2010 Vistaprint annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 145

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145

Form 10-K
Cost of revenue
Cost of revenue includes materials used to manufacture our products, payroll and related
expenses for production personnel, depreciation of assets used in the production process and in
support of digital service offerings, shipping and postage costs, and other miscellaneous related costs
of products sold by us.
The increase in cost of revenue from fiscal 2009 to fiscal 2010 was primarily attributable to the
production costs associated with increased volume of shipments of products during this period. The
decrease in cost of revenue as a percentage of revenue from fiscal 2009 to fiscal 2010 was primarily
attributable to improved pricing agreements in relation to purchases of materials and shipping costs,
productivity improvements at our manufacturing locations, and shifts in product mix including an
increase in sales of digital services. These improvements were partially offset by a decrease in
referral revenue and a strengthening of the Canadian dollar, which negatively impacted the raw
material and labor costs of our Canadian production operations.
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.
In thousands
2010 2009 2008
2010-2009
% Change
2009-2008
% Change
Year Ended June 30,
Technology and development
expense . . . . . . . . . . . . . . . . . $ 78,387 $ 60,921 $ 44,828 29% 36%
% of revenue ................ 11.7% 11.8% 11.2%
Marketing and selling
expense . . . . . . . . . . . . . . . . . $216,574 $159,143 $127,975 36% 24%
% of revenue ................ 32.3% 30.9% 31.9%
General and administrative
expense . . . . . . . . . . . . . . . . . $ 58,031 $ 42,236 $ 32,572 37% 30%
% of revenue ................ 8.7% 8.2% 8.1%
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, hosting of our websites, asset
depreciation, patent amortization and miscellaneous technology infrastructure-related costs.
Depreciation expense for information technology equipment that directly supports the delivery of our
digital services products is included in cost of revenue.
The increase in our technology and development expenses of $17.5 million for fiscal 2010 as
compared to fiscal 2009 was primarily due to increased payroll and benefit costs of $10.4 million
associated with increased headcount in our technology development and information technology
support organizations. At June 30, 2010, we employed 375 employees in these organizations
compared to 302 employees at June 30, 2009. In addition, to support our continued revenue growth
during this period, we continued to invest in our website infrastructure, which resulted in increased
51