SM: What is your current operating margin?
RK: Our net profit after tax is about 10%. Our EBIDTA is about 23%. Our operating profit is in the teens.
SM: Where do you go from here? Where would you like to be in five years, and how do you get there?
RK: If you don’t mind, I would like to modify that to 15 years or 20 years. Great companies like FedEx, Swatch, eBay or Dell are built over decades. We are still only in the middle of our second decade. We have the aspiration to build a world-class and truly transformational business institution. If you look at the airlines, Southwest has transformed the industry over the last 30 years. Our aspiration and hope is to transform small business marketing as fundamentally as those companies I just mentioned have transformed their industries.
Five years from now, I would hope that we have continued to move along that path with the perspective of a multi-decade business institution. We talked about the growth that came when we expanded from business cards to all things small business marketing. The other big driver of our growth, which has been huge, is growing internationally. Today the US market is very healthy and is growing robustly, yet we are growing even faster outside the US.
We have 60% of our revenues in the US and 40% of our revenues outside of the US. Prior to 2000, we were obviously 100% outside of the US. When we restarted VistaPrint we did it with a focus on the US and expanded out from there. Our growth rate in the most recent quarter in constant currency was 30% year over year. The highest growth occurred outside of the US, although the US is still a robust growth market for us. We are putting in a lot of investment here because of that.
SM: You said earlier that your growth up to $500 million has been organic. How do you look at M&A in the upcoming decade?
RK: Very skeptically. We do look at it, and we have looked at many opportunities. We have tried to get some opportunities, but we had to turn them down when we could not come to an agreement. We are not opposed to acquisitions, but we have to be very selective. When we have the luxury of being a $400 million company growing 25% or more a year, even in a deep recession, we are skeptical that it is the best approach for us to become a M&A company.
Of course there will be opportunities wherein some companies have gotten a lead in a market we want to move into. If there is a win-win opportunity we will take it. We never say never. VistaPrint for a very long time will be an organic growth story that may have a few acquisitions here and there. If those do occur, they will be in select, strategic areas. They may be in no area at all as well. That is my viewpoint.