Vistaprint 2011 Annual Report Download - page 46

Form 10-K
In thousands
2011 2010 2009 2011 vs. 2010 2010 vs. 2009
Year Ended June 30,
Revenue . . . . . . . . . . . . . . . . . $ 817,009 $ 670,035 $ 515,826 22% 30%
Cost of revenue . . . . . . . . . . . $ 287,806 $ 240,195 $ 191,944 20% 25%
% of revenue .............. 35.2% 35.8% 37.2%
Revenue
We generate revenue primarily from the sale and shipping of customized manufactured
products, as well as providing digital services, website design and hosting, email marketing services
and order referral fees. We also generate a small percentage of our revenue from third-party offerings,
which represented less than 1% of total revenue during the fiscal year ended June 30, 2011. Revenue
in our second fiscal quarter includes a favorable impact from increased seasonal product sales.
Formerly, we described fluctuations in revenue using three different metrics: sessions,
conversion rate and average order value. We have commenced using the combination of unique
active customers and average bookings per unique active customer to describe our revenue
performance as we believe this approach is more aligned with the way we manage our business and
our efforts to drive increased revenue. We believe that by providing unique active customers and
average bookings per unique active customer, we offer shareholders a more useful means of
assessing our execution against our strategy. Because changes in one of these new metrics may be
offset by changes in the other metric, no single factor is determinative of our revenue and profitability
trends and we assess them together to understand their overall impact on revenue and profitability.
We seek to grow revenue by increasing the number of customers who purchase from us
(“unique active customers”), as well as the amount our customers spend on our offerings (“average
bookings per unique active customer”). A number of factors influence our ability to drive increases in
these metrics:
•Unique active customers. The unique active customer count is the number of individual
customers who purchased from us in a given period, with no regard to the frequency of
purchase. For example, if a single customer makes 2 distinct purchases within a twelve-
month period, that customer is tallied only once in the unique active customer count. We
determine the uniqueness of a customer by looking at certain customer data. Unique active
customers are driven by both the number of new customers we acquire, as well as our
ability to retain customers after their first purchase. During our early growth phase, we
focused more resources on the acquisition of new customers through the value of our
offering and our broad-based marketing efforts targeted at the mass market for micro
business customers. As we have grown larger, our acquisition focus has been supplemented
with expanded retention efforts, such as email offers, customer service, and expanding our
product offering. Our unique active customer count has grown significantly over the years,
and we expect it will continue to grow as we see additional opportunity to drive both new
customers as well as increased retention rates. A retained customer is any unique customer
in a specific period who has also purchased in any prior period.
•Average bookings per unique active customer. Average bookings per unique active
customer is total bookings, which represents the value of total customer orders received on
our websites, for a given period of time divided by the total number of unique active
customers who purchased during that same period of time. We seek to increase average
bookings per unique active customer as a means of increasing revenue. Average bookings
per unique active customer are influenced by the frequency that a customer purchases from
us, the number of products and feature upgrades a customer purchases in a given period,
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