SM: The strategic moves you implemented seemed to have allowed you to scale very quickly.
RK: They certainly did, especially in the 2003 to 2004 timeframe.
SM: What was your revenue ramp like based on your strategic moves?
RK: Our fiscal years end in June. In FY2001, which was June 2001, we had $6.1 million in revenues and 25 employees. In FY2002 we did $16.9 million and we had 50 employees. In FY2003 we did $35.4 million, in FY2004 we did $58.8 million, and FY2005 was $90.9 million. The following year we did $152 million and in 2007 we did $256 million. The growth has maintained as we did $401 million in FY2008. Our current guidance to Wall Street for FY2009 is $504 million to $510 million.
SM: That is an amazing story. You are scaling at this rate because of your viral programs?
RK: The viral programs drove us through 2003 and are still important to us today. I think one of the really exciting things about any good company is that it is constantly changing the rules of the game. The cutting edge in 1999 or 2003 is only good for three years or so.
Towards the end of 2004, we started going well beyond the business cards and into all things graphic design and printing for businesses. We got into brochures, presentation folders, and the like. We know that customers buy these products to market their own businesses, so in 2006 we did a lot of research to determine the core drive and motivation for companies coming to VistaPrint. We started introducing products in areas other than printing, which includes apparel and promotional products such as pens and magnets.
We also moved into websites for small businesses and have recently announced email marketing for small businesses. If you look at VistaPrint in 2009, we are the only turnkey marketing solution for small businesses. Our expansion into broad marketing products has fueled our growth from 2006 to 2009. We even do logo design, graphic design services, mailings to your customers, and some other services.
SM: What is the operational aspect of that? How many people do you employ doing all of this?
RK: Today we have over 1,600 employees worldwide. We have manufacturing facilities in two locations. Our North American facility is in Ontario, Canada and our European facility is in the Netherlands. We have our North American technology, marketing, and finance groups in Lexington outside of Boston. We have our European headquarters in Barcelona, Spain. We have a number of other locations and a service center with hundreds of people. It has grown into a relatively significant sized business.
Today’s VistaPrint crosses many different areas. We spent over 10% of our revenues on technology development. This year we will spend over $50 million on technology development. We spend about 20% of our revenues on online advertising, which equates to about $100 million in advertising for 2009. Our capital expenditure budget is 15% of revenues or $75 million. One of the things we have had to do operationally is be good at advertising, technology, and direct marketing while never losing focus on our manufacturing competency.