For our latest recommendation, we travel in search of a quality fixed-income investment that provide...
11/17/2009 11:17 am EST
VistaPrint has turned its expertise in business cards into a lucrative and rapidly growing Internet franchise, writes John Christy in the Forbes International Investment Report.
Creating a $500-million-a-year business from scratch in less than ten years is an impressive feat. Of course, Internet startups do it all the time, but generating real profits is usually an after-thought. VistaPrint (Nasdaq: VPRT) is a rare example of a company that has grown both quickly and profitably. It’s Internet-based, but it also has a real business model, real earnings, and real cash flow.
VistaPrint has accomplished this with a lesson from Entrepreneurship 101: tap into an unmet customer need. Small companies need lots of printed materials—business cards, brochures, signs, letterheads, and so forth. But high-quality printers and graphic design services typically aren’t cost effective for small projects. VistaPrint has found a way to deliver these services over the Internet at a reasonable cost. A typical order costs about $30 and takes just a few days to turn around.
When the company began operations in 2000, it was mainly a business-card shop. As recently as 2004, business cards accounted for 60% of revenue. VistaPrint’s product line has since expanded to include a full range of customized items—from signs to mouse pads to gift items. Business cards are still important, but they now account for less than 40% of revenue.
VistaPrint has also expanded its horizons globally. Sales outside the US account for almost 40% of total Revenue, versus just 23% at the time of the company’s IPO in 2005. The company recently moved its headquarters to the Netherlands and has a significant European customer base. But ultimately it is a true online business.
Each quarter, approximately 1.5 million new customers discover VistaPrint via its Web site. And once customers are in the door, VistaPrint has done a good job keeping them happy. About two-thirds of revenue comes from repeat customers.
In its most recent fiscal year, ended June 30th, VistaPrint reported revenue of $516 million. It was a 29% increase during a period that includes some of the darkest days of the global financial crisis. Since 2006, the company’s earnings per share have grown at more than 40% on an annualized basis.
There’s an important caveat: Unlike its services, VistaPrint’s valuation isn’t exactly cheap. At a recent $51, the company sells for 21x estimated fiscal 2011 earnings. [Shares topped $54 Friday—Editor.] But for a company that is growing so rapidly—and one that has been able to throw off so much cash in a brutal economic environment—it may ultimately be worth the price.
Related Articles on GLOBAL
Beginning his career on Wall Street in 1938, Sir John Templeton pioneered the concept of internation...
The headline risk here, folks, is that if you wait for your central banker to give you insight into ...
The S&P 500 Index peaked on August 29 and has been treading water since then. (See chart below.)...