Vistaprint N.V. (VPRT) recorded its first quarter 2011 adjusted earnings of 36 cents per share, which declined 12% year over year but surpassed the Zacks Consensus Estimate of 19 cents. Earnings were at the high end of the guidance range of 27–32 cents per share. The better-than-expected results were driven by effective cost-control initiatives.
On a GAAP basis, earnings per share decreased 17% to 24 cents during the quarter. EPS was at the higher end of the guidance range of 15 –20 cents issued by the company.
The company registered an 18% year-over-year growth in revenues to $170.5 million, including the impact of currency exchange rate fluctuations. Revenues were above management’s guidance range of $159 million to $164 million and the Zacks Consensus Estimate of $163 million.
Behind the Headline Numbers
In the first quarter, gross margin declined 50 basis points (bps) from the year-ago quarter to 63.1%. Operating income was $12.3 million in the quarter, reflecting a decline of 14% from the prior-year quarter. Operating margin contracted 270 basis points from the prior-year quarter to 7.2%.
Turning to key metrics, Vistaprint noted 68.9 million website sessions in the quarter, representing a 6% increase from the prior-year quarter. Average daily order volume increased nearly 20% from the prior-year quarter to 54,000 orders per day.
Approximately 1.6 million new customers were acquired by Vistaprint in the quarter. Around 68% of the bookings came from repeat customers versus 67% from the year-ago quarter.
Financial Position
At the end of the quarter, capital expenditures were $14.1 million, cash from operations was $18.8 million and free cash flow was $2.9 million.
As of September 30, 2010, the company had $176.6 million in cash, cash equivalents and short-term marketable securities.
Guidance
For the second quarter of 2011, Vistaprint expects EPS to range within 69–80 cents, excluding expected share-based compensation expense and its related tax effect. On a GAAP basis, the company expects EPS in the range of 58 cents to 69 cents, based on revenues in the range of $210 million to $230 million. The Zacks Consensus Estimate for earnings is 60 cents per share and $217 million for revenues.
For full-year 2011, the company reiterated its earnings outlook. The company continues to expect adjusted EPS in a range of $2.09 to $2.24 per share. On a GAAP basis, EPS is projected to range within $1.65–$1.80. The company has raised its revenue guidance range to $755–$790 million from $750–$780 million. For the full year, the Zacks Consensus Estimate is $1.70 for earnings and $772 million for revenues.
Our Take
The company reported better-than-expected results, and thus estimates are likely to go up in the coming days. Vistaprint’s focus on small business markets provides it with ample opportunities for growth. Vistaprint is also strengthening its geographical footprint. It already has a strong international presence in Europe and Continental Europe and is poised to tap the immense growth opportunity in the Asian Market.
However, we believe that the ongoing economic uncertainty, coupled with substantial competition resulting in a slowdown in growth of new customer additions and increased cost structure from its TV Ad campaign will restrict significant improvements in its top line as well as bottom line.
We have a Zacks #2 Rank (short-term Buy recommendation) on the shares. Our long-term recommendation for the stock remains Neutral.
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