Vistaprint 2015 Annual Report Download - page 46

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Technology and development expense
Technology and development expense consists primarily of payroll and related expenses for our employees
engaged in software and manufacturing engineering, information technology operations and content development;
amortization of capitalized software, website development costs and certain acquired intangible assets, including
developed technology, hosting of our websites, asset depreciation, patent amortization, legal settlements in
connection with patent-related claims, and other technology infrastructure-related costs. Depreciation expense for
information technology equipment that directly supports the delivery of our digital marketing services products is
included in cost of revenue.
The growth in our technology and development expenses of $18.0 million for the year ended June 30, 2015
as compared to the year ended June 30, 2014 was primarily due to increased payroll and facility-related costs of
$13.9 million as a result of increased headcount in our technology development and information technology support
organizations. The increase in headcount is partly due to hiring in this strategic investment area, and partly due to
headcount from acquired businesses. At June 30, 2015, we employed 1,008 employees in these organizations,
inclusive of employees of the businesses we acquired in 2015, compared to 887 employees at June 30, 2014.
Amortization expense increased by $1.6 million primarily due to a full year of expense related to our fiscal 2014
acquisitions, as well as the fourth quarter impact of Exagroup and druck.at. Other technology and development
expense increased $9.3 million primarily due to increased consulting fees and severance related expenses. These
expenses were partially offset by a decline in share-based compensation expense of $2.9 million for the year ended
June 30, 2015, as the restricted share awards granted as part of our fiscal 2012 Webs acquisition were fully vested
as of December 31, 2013. Also during the year ended June 30, 2015, we had higher net capitalization of software
costs of $3.9 million due to an increase in costs that qualified for capitalization during the fiscal 2015 as compared
to fiscal 2014.
The growth in our technology and development expenses of $11.5 million for the year ended June 30, 2014
as compared to the year ended June 30, 2013 was primarily due to increased payroll and facility-related costs
of $9.5 million as a result of an increase in headcount in our technology development and information technology
support organizations. At June 30, 2014, we employed 887 employees in these organizations compared to
786 employees at June 30, 2013. Other technology and development expenses increased $4.0 million in fiscal 2014
as compared to the fiscal 2013 primarily due to restructuring charges of $1.3 million as well as increased
recruitment, hosting services and other costs related to continued investment in our infrastructure. In addition,
amortization expense increased by $1.1 million as a result of the Printdeal and Pixartprinting acquisitions. These
expense increases were partially offset during fiscal 2014 by a decline in share-based compensation expense of
$2.1 million as the restricted share awards granted as part of our fiscal 2012 Webs acquisition were fully vested as
of December 31, 2013. Also during fiscal 2014, we had higher net capitalization of software costs of $1.0 million due
to an increase in current costs that qualified for capitalization during the fiscal year.
Marketing and selling expense
Marketing and selling expense consists primarily of advertising and promotional costs; payroll and related
expenses for our employees engaged in marketing, sales, customer support and public relations activities;
amortization of certain acquired intangible assets, including customer relationships and trade names; and third-party
payment processing fees.
The increase in our marketing and selling expenses of $49.4 million during the year ended June 30, 2015,
as compared to the year ended June 30, 2014, was partially due to increased advertising costs of $18.5 million. Our
advertising cost increase was primarily due to the Vistaprint Business Unit as it launched its first brand-orientated
television ad in both the U.S. and UK, as well as increased activity from our acquired operations. Our payroll and
facility-related costs increased by $13.9 million, as we expanded our marketing and customer service, sales and
design support organization through our recent acquisitions and continued investment in Vistaprint Business Unit
customer service resources in order to provide higher value services to our customers. At June 30, 2015, we
employed 2,429 employees in these organizations, inclusive of employees of the businesses we acquired in 2015,
compared to 2,038 employees at June 30, 2014. Amortization expense increased by $10.1 million for the year
ended June 30, 2015 as a result of the customer and trademark related intangible assets related to our 2014 and
2015 acquisitions. Other marketing and selling expenses also increased by $10.0 million due to increased payment
processing fees, depreciation costs, employee travel, training, and recruitment costs. The increase in marketing and
selling expense was partially offset by decreased share-based compensation expense of $3.1 million during the