Vistaprint Tops EPS; Lags Revenue

Zacks

Vistaprint N.V. (VPRT) declared first quarter 2013 adjusted earnings (including stock-based compensation expense of 24 cents per share) of a penny per share, beating the Zacks Consensus Estimate of a loss of 2 cents per share.

However, adjusted earnings fell from the year-ago level of 19 cents per share. On a GAAP basis, earnings per share (including stock based compensation expense) were a loss of 5 cents per share versus a gain of 19 cents per share in the comparable quarter of last year.

In the first quarter, the company registered an 18.0% year-over-year growth in revenues to $251.4 million, including the $18.0 million contribution from Albumprinter & Webs. Revenues lagged the Zacks Consensus Estimate of $255.0 million. Excluding the impact of currency fluctuations and revenues from acquired businesses, total revenue grew 13% year over year in the first quarter.

Geographically, Vistaprint derived 57% of consolidated revenues from the North America, 36% from Europe and 7% from the Asia-Pacific markets.

Behind the Headline Numbers

In the first quarter, gross margin grew 180 basis points (bps) from the year-ago quarter to 65.0%. Operating income came in at $0.2 million, reflecting a downside of 98% from the prior-year quarter. Operating margin plunged 450 bps from the prior-year quarter to 0.1%. Total order volume (organic) increased roughly 6.5% year over year in the first quarter.

Liquidity

The company exited the quarter with $59.3 million in cash, cash equivalents. Long-term debt stood at $259.3 million at the end of the quarter.

Total assets of the company were $620.5 million, while total liabilities amounted to $421.3 million.

Share Repurchase

During the quarter under review, the company did not buyback any share.

Guidance

For full-year 2013, the company expects adjusted earnings per share guidance (excluding stock-based compensation expense of 97 cents) in the range of $1.62–$1.92 per share. On GAAP basis, earnings per share are expected in the range of 40–70 cents. Revenue is expected in the range of $1,165.0–$1,215.0 million (previous range was $1,175.0–$1,225.0 million). Sluggish business environment in Europe led the company to lower its revenue guidance.

For the second quarter of 2013, revenues are expected in the range of $335–$355 million.

Our Take

Vistaprint’s solid long-term prospects along with the focus on inorganic growth and international expansion make us optimistic on the stock. The company’s Asian and North American operations are delivering strongly.

However, 2013 could prove to be a challenging year for Vistaprint as there are a few planned investments which will weigh on its bottom line. Moreover, lackluster business environment in Europe remains a concern given Vistaprint’s huge exposure to the European region.

Vistaprint, which competes with Sykes Enterprises Inc. (SYKE) and TeleTech Holdings Inc. (TTEC), currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are maintaining our long-term Neutral recommendation on the stock.

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