VistaPrint Surpasses by a Nickel

VistaPrint N.V.’s (VPRT - Analyst Report) first quarter earnings for fiscal year 2010 came in at 29 cents per share. Results were a nickel ahead of the Zacks Consensus Estimate of 24 cents. The company had earned 18 cents in the year-ago quarter. Results were driven by higher-than-expected revenue increases. Also, key operating metrics remained strong.

The company reported a 27% year-over-year increase in revenue to $145.1 million. Gross margin improved 290 basis points from the year-ago quarter to 63.6%. The results were impacted positively by lower shipping costs, including some one-time shipping-related rebates, labor efficiencies, favorable product mix shifts and improved materials pricing, which more than offset higher overhead costs and lower referral revenues.

Operating income was $14.4 million, reflecting an increase of 47% from the prior-year period. Operating margin was up 130 basis points to 9.9%.

Turning to key metrics, we note that website sessions were 65.1 million, representing a 39% increase from the prior-year quarter while average daily order volume increased nearly 29% from the prior-year period to 45,000 orders per day. Approximately 1.4 million new customers were acquired by VistaPrint in the quarter. Around 67% of bookings came from repeat customers.

Outlook

For the second quarter, the company expects earnings per share of 43 cents to 48 cents based on revenues in the range of approximately $167 million to $175 million. For the full fiscal year 2010, the company expects earnings of $1.39 to $1.49 a share on revenues of around $615 million to $645 million.

The company expects capital expenditures of around $80 million to $95 million in fiscal year 2010. This includes the expansion of its Canadian manufacturing facility, which is anticipated to be completed towards the end of fiscal year 2010, new manufacturing equipment to support the growth of the business and a new manufacturing facility in Australia, which is projected to become operational in the first quarter of fiscal year 2011.

The fact that the company again posted such an impressive quarter in the midst of extremely challenging economic conditions augurs well for its potential to weather the recession, in our opinion.

Some of the same products and services provided by Vistaprint are also offered at office supply and photocopy retail companies such as Office Depot (ODP - Analyst Report), Office Max (OMX - Snapshot Report) and Staples (SPLS - Analyst Report). However, we note that these companies are not expected to generate earnings growth anywhere near that of VisaPrint, and their margins are significantly lower as well.

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