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Vistaprint N.V. (VPRT) declared second quarter 2012 adjusted earnings of 97 cents per share, comprehensively beating the Zacks Consensus Estimate of 61 cents. The better-than-expected results were driven by double-digit growth in the top line.

Reported earnings per share (EPS) also increased from the year-ago level of 89 cents and exceeded the company’s guided range of 73–85 cents. On a GAAP basis, EPS was 82 cents versus 75 cents in the comparable quarter of last year. This was also way ahead of the company’s guided range of 57–69 cents.

The company registered a 28% year-over-year growth in revenues to $299.9 million, including the impact of foreign currency as well as a contribution of $15.7 million from Albumprinter. However, the other acquisition, Webs was not accretive to revenue during the reporting quarter. Revenues were within management’s guidance range of $285 million to $306 million. Geographically, Vistaprint derived 47%, 48% and 6% of revenues from North America, Europe and Asia-Pacific markets, respectively.

Behind the Headline Numbers

In the second quarter, gross margin rose 50 basis points (bps) from the year-ago quarter to 66.8%. Operating income came in at $32.5 million, reflecting a downside of 15% from the prior-year quarter. Operating margin plunged 540 basis points from the prior-year quarter to 10.9%.

However, total order volume increased roughly 28% year over year to 8.3 million in the second quarter of fiscal 2012. Vistaprint added 2.9 million new customers in the quarter.

Financial Position

At quarter end, the company had $67.5 million in cash, cash equivalents and short-term marketable securities. Total assets of the company were $590.4 million while total liabilities amounted to $322.5 million.

Guidance

For the third quarter of 2012, Vistaprint expects adjusted EPS in the 14–29 cents range. On a GAAP basis, loss per share is expected in the range of 19 cents to 4 cents and revenues in the range of $246 million to $261 million. The company expects constant-currency organic growth of approximately 16–23%.

For full-year 2012, the company expects adjusted EPS in the range of $1.71 to $1.83 (versus $1.74 to $1.86 as provided earlier) per share. On a GAAP basis, EPS is projected between 86–98 cents (versus $1.08–$1.20 as provided earlier). Revenue is expected in the range of $1006–$1,036 million.

Our Take

Vistaprint remains on track to grow inorganically. While the company’s recent acquisition of Albumprinter has somewhat contributed to the total revenue in the second quarter, Web will likely add a small amount of revenue in the back half of the year. Additionally, the company has a share repurchase program in place to boost its full-year earnings.

However, 2012 could prove to be a challenging year for Vistaprint as there are a few planned investments, which will weigh on its bottom line. The fact can be validated from management’s cut in full-year guidance. Acquisitions will also be dilutive to earnings. To add to the worry, an unfavorable exchange rate will also take a toll on Vistaprint’s revenue.

Vistaprint, which competes with Sykes Enterprises Inc. (SYKE - Snapshot Report) and TeleTech Holdings Inc. (TTEC - Snapshot Report), currently retains a Zacks #5 Rank, which translates into a short-term Strong Sell rating. We are maintaining our long-term Underperform recommendation on the stock.

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