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Shutterfly, Vistaprint Morphing With The Social Web

Posted on Wednesday, Feb 23rd 2011

According to The U.S. Photo Industry 2010: Review and Forecast Report, the digital camera market is estimated to be worth $5.2 billion in the U.S., with 81% of the population owning digital cameras. The country is estimated to have generated 13.9 billion digital prints in 2010. As more 8-by-10 inch photos are now being printed at home, the growth in digital photo printing revenues is expected to be driven by photo cards. The latest holiday season saw a surge of photo cards and helped to boost the results of online photo services players.

Shutterfly’s Financials
Shutterfly’s (NASDAQ:SFLY) Q4 revenues of $166.2 million grew 27% over the year and exceeded the market’s expectations of $154.5 million. EPS of $1.09 was also significantly ahead of the market’s expected $0.95. The company ended the year with revenues growing 25% over the year to $308 million and 4 million active consumers.

During the quarter, revenues from personalized products & services grew 33% over the year to $123.8 million. Revenues from prints grew 10% over the year to $40.1 million and commercial prints revenues came in at $2.3 million.

Among other operating statistics, total transacting customers grew 23% over the year to 2.3 million. Total orders grew 21% over the year to 3.7 million and the average order value grew 5% over the year to $44.41.

For the current quarter, the company projects revenues of $52 million–$53 million compared with losses of $0.26–$0.30 per share. The Street was expecting revenues of $52.4 million in the quarter with a loss of $0.16 per share. For the year, they expect to report revenues of $363-$373 million and EPS of $0.77–$0.81. The Street was projecting annual revenues of $343.8 million with EPS of $0.69.

Shutterfly Expanding Offerings
Shutterfly continued to expand its offerings and enabled Simple Path photo books using photos from various sources, including Facebook, Picasa, and directly from the consumer’s computers. To simplify the photo card purchase process, it introduced attribute-based navigation tools. The tools help make it faster and easier for customers to find the right card.

Shutterfly Expanded Market Reach
It also tied up with other retailers to expand their market reach. Recently, through Shutterfly’s agreement with Sony, VAIO users will now have instant access to Shutterfly photo books. It has also enabled photo pick-up services by tying up with retailers including Target, Walgreens, and CVS/pharmacy. Buyers can now pick up photos from these stores. Further, Shutterfly is also offering Best Buy customers a free photo book when they purchase a qualifying digital camera or camcorder.

The stock is trading at $41.10, taking its market capitalization to $1.18 billion. It touched a 52-week high of $46.97 earlier this month. If you believe in the digital photography trend and the social Web trend, the stock will likely continue to rise over the long term. I own it, and I am holding on for the time being.

Vistaprint’s Financials
Vistaprint (NASDAQ:VPRT) the online print supplies and services retailer, also had a good run this holiday season. Q2 revenues of $234.1 million were 20% higher than the previous year. EPS of 0.89 grew 22% over the year. The market was expecting revenues of $224.4 million with EPS of $0.77.

Average daily order volume of 71,000 grew 25% over the year, and average order value fell marginally to $36.17 from $36.63 a year ago. The company added 2.2 million new customers during the quarter.

For the current quarter, Vistaprint expects EPS of $0.46–$0.49 compared with the Street’s expectations of $0.54. For the year, the company expects EPS of $2.19–$2.27 compared with the market’s expectations of $2.21.

Vistaprint’s Geographic Expansion
Its Sydney facility became operational and is now Vistaprint’s first physical location in Asia-Pacific. The new marketing and manufacturing facility in Australia is part of Vistaprint’s geographical diversification focus and will help the company to address the Asia-Pacific market by reducing shipping times in the region. Earlier, the Asia Pacific market was serviced by Vistaprint’s European manufacturing facility. The Sydney office will cater to marketing efforts in Australia, New Zealand, and Japan. Vistaprint also established localized websites to cater to these three markets.

Vistaprint’s Marketing Offerings
The company also expanded its marketing offerings by launching the search engine optimizer (SEO) tool and custom blogs. The new features are focused on the micro and home business segment and are desgined to be a simple way to help increase search engine rankings for these businesses. Vistaprint’s Internet marketing team has also set up specific accounts on social networking platforms to keep the growing number of Vistaprint customers up to date with the latest changes while educating them on best practices in the industry.

The stock is trading at $51.48 with a market capitalization of $2.2 billion. It touched a 52-week high of $62.77 in March of last year.

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