Vistaprint 2011 Annual Report Download - page 43

companies in the world, we believe there is significant opportunity to drive further
efficiencies and competitive advantages. By focusing additional top engineering talent on
key process approaches, we believe we can make a step-function improvement in product
quality and reliability, and significantly lower unit manufacturing costs.
Our strategy to drive longer-term growth by addressing market adjacencies is to develop our
business in the following areas:
•Digital Marketing Services. We estimate that less than 50% of micro businesses have a
website today, but digital marketing services, including websites, email marketing, online
search marketing and social media marketing, are the fastest-growing part of the small
business marketing space. We believe there is great value in helping customers understand
the powerful ways in which physical and digital marketing can be combined. Our current
offering includes websites, email marketing, and local search visibility. Additionally, in fiscal
2011, we added several digital marketing services products or enhancements, including
blogs, a search engine optimization tool for website customers, and personalized email
domain names. Since we launched digital marketing services in April 2008, our number of
unique paying digital subscribers has grown to approximately 335,000.
•Geographies outside North America and Europe. For the fiscal year ended June 30, 2011,
revenue generated outside of North America and Europe accounted for approximately 5% of
our total revenue. We believe that we have significant opportunity to expand our revenue
both in the countries we currently service and in new markets. We completed construction of
a production facility near Melbourne, Australia and launched a marketing office in Sydney,
Australia in June 2010 to better support our business and customers in Asia Pacific. We
intend to further extend our geographic reach by continuing to introduce localized websites
in different countries and languages, expanding our marketing efforts and customer service
capabilities, and offering graphic design content, products, payment methodologies and
languages specific to local markets.
•Home and Family. Although we expect to maintain our primary focus on micro business
marketing products and services, we also participate in the market for customized home and
family products such as invitations, announcements, calendars, holiday cards and apparel.
We intend to add new products and services targeted at the home and family market. We
believe that the economies of scale provided by cross selling these products to our
extensive micro business customer base, our large production order volumes and integrated
design and production software and facilities support and will continue to support our effort
to profitably grow our home and family business.
•Up-market Customers. We serve customers across the spectrum of micro businesses with
fewer than 10 employees, but our strength has traditionally been in the smallest and most
price sensitive of these customers. The “up-market” portion of this spectrum tend to have
more sophisticated marketing needs, typically spend more per year on their marketing
activities and often have 3 to 10 employees in comparison to our current customer base
which is concentrated in businesses with 2 or fewer employees. We believe that as we
continue to research customer needs and make customer value proposition improvements
for our traditional core customer base, we will develop a stronger ability to focus on “up-
market” small business customers. We expect this adjacency can serve as a driver of
longer-term growth 3 to 5 years from now.
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with U.S. generally accepted accounting
principles (“GAAP”). To apply these principles, we must make estimates and judgments that affect our
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