Cimpress plc (CMPR) Q4 2008 Earnings Report, Transcript and Summary

Thank you Peter, and welcome to everyone joining us. VistaPrint not only just turned in another very strong quarter, we also finished up yet another very strong fiscal year. So I will start with a review of our multi-year financial performance, followed by operating highlights from the past twelve months. Then I will turn to our strategy and some of our goals for the upcoming fiscal year. Last but not least, I will discuss our continued efforts to address the needs of our three key interdependent constituents: our customers, our employees, and our shareholders. After that, Harp will comment on the year and go over our financial highlights, and then Mike will review our financial and operating results in detail along with our financial guidance. Later, at 5:00 p.m. Eastern, we will host a separate question and answer session that you can access through a link on the Investor Relations section of www.vistaprint.com. Now, let’s review the fiscal year that we just ended. VistaPrint was very successful in fiscal year 2008: revenues grew 57% versus fiscal year 2007, with record growth in absolute dollar terms. In spite of the macroeconomic headwinds we have all heard so much about, VistaPrint added almost as much incremental revenue this year as we generated in all of fiscal 2006. Fiscal 2008 was also another banner year for profits. We believe this reflects the strong financial discipline which is a core element of VistaPrint’s culture. Non-GAAP net income, which excludes share based compensation, grew 53% to $55 million. Our GAAP net income grew 47% to almost $40 million, up from $27 million in the prior year. Looking back over the past six years illustrates the magnitude of VistaPrint’s growth. Our revenues are up more than tenfold and our net income has increased about a hundredfold. The more recent past is remarkable as well. We have multiplied both revenues and net income, excluding share based compensation and by about 2.5 times over the past two fiscal years. Since our IPO in September 2005, we have targeted both high revenue growth and very strong profit growth. We have consistently delivered on these objectives. Our results demonstrate the thriving good health and competitive strength of VistaPrint’s business. In each of the last three years, we have increased net income by over 40% per year, and we expect to continue to show strong earnings growth in fiscal 2009 and beyond. Turning to earnings per share, consistent with our strategy, we have shown strong and steady growth here as well. We think EPS and high returns on capital are among the most important long term drivers of share price appreciation. Over the last two fiscal years, we have increased non-GAAP EPS by 119% and GAAP EPS by 93%. In the year just ended, we increased our GAAP EPS by 45% and our non-GAAP EPS by 51%, which are the fastest rates, on a full year basis, in our history as a public company. Beyond our strong and disciplined financial performance, FY 2008 was very strong operationally. We acquired approximately 4.5 million new customers at stable per customer acquisition costs. This was an increase of approximately 50% over FY 2007, and a demonstration of the power of our expanding value proposition and the large size of our market opportunity. We also expanded our reach by rolling out our strategic partnership with OfficeMax and entering a new strategic partnership with Intuit. We expect both to drive incremental order volumes and provide a foundation for additional strategic partnerships. We greatly expanded our talent base, and the strength of the organization, by recruiting a record number of executives, engineers, marketing professionals and other valued employees. We reorganized our business into two geographically focused business units to capitalize on our worldwide market opportunity. Growth was strong in the US, but even stronger elsewhere. Our non-US revenue growth rate in fiscal 2008 was 84%; currency adjusted, which excludes the revenue benefit we gained from the falling dollar, it was 66%. We credit much of this success to the work done in our Barcelona office and our Dutch facility, and believe that our European growth opportunity remains in its early stages. As I will discuss in a few moments, we broadened our customer value proposition to offer a turnkey marketing solution for small businesses, which we believe puts us in an even stronger competitive position and delivers value beyond the sum of its parts to our customers. As part of this effort, we launched a number of significant new products which I will also review in a moment. As proud as we are of these FY ‘08 successes, we are focused on the future. So, I will spend the rest of my time today discussing our growth strategy and how that strategy has evolved to continue to meet the needs of our three key constituents: our customers, employees and shareholders. When we launched our US website over eight years ago, we offered only business cards. During the following years we expanded into a number of other high quality printed products, all sold in small quantities at market-leading prices. This was a strong value proposition that generated substantial growth. We then expanded our customer value proposition through better, easier, self-service graphic content, and improvements to our browser-based design software. Customers continued to buy more from us, driven by these value-added differentiators and by a constantly broader set of printed products that enabled them to benefit from an integrated brand identity. Over the past two years, we have expanded once again, this time to offer turnkey marketing solutions that help small businesses grow their business. By expanding our scope, we believe we have made our value proposition more attractive to our customers and harder for our competitors to replicate. In fact, we know of no other significant competitor offering a comparably broad set of products and services, much less a turnkey marketing solution for small businesses. We have implemented this strategy by introducing a wide variety of new products and services that address an increasing subset of our customers’ total marketing spending. Shareholders who have been following our progress for several years may remember that we first introduced this type of chart in November 2006. It represents the breakdown of spending categories in our customers “marketing wallet”: what they purchase not only from VistaPrint but also from other companies as well. As recently as in 2006, VistaPrint sold only print products and we are only just beginning to scale our small business holiday product line. Since then, we have steadily developed and launched new products and services that broaden our market reach. Not too long ago, we were limited to market categories that accounted for slightly more than half our customers’ marketing spending. Now, thanks to the rapid-fire introduction of new products and services, we address a significantly greater percentage of their marketing spending. In the last 18 months, we have expanded our scope of services to include apparel, promotional products, calendars, creative design services, mailing services, signage, and website design and hosting. We have successfully entered new product categories and launched new products by leveraging our cross selling expertise, our powerful content matching technologies, our advanced production facilities, our sophisticated technology infrastructure, and our high volume customer service operations. Our value proposition continues to evolve and to impress our customers. Our vision is to transform the ability of small businesses to design and procure coordinated, cohesive and highly effective marketing products and services across many different categories. Because of this unique value proposition, and because of continuous improvements in our more established product lines and capabilities, we have continued to rapidly and profitably increase our market share and our competitive advantages. We believe that we have gotten bigger, faster, than any of our competitors. Looking forward to fiscal 2009, we expect more of the same. First and foremost, we expect a continuation of our many-year trend of strong growth in profitability and revenues. Operationally, we look to acquire yet another record number of new customers at attractive costs, to develop and deploy an even more compelling customer value proposition founded on the continued expansion of our turnkey marketing solutions, including more products and more services, and to make continued progress in developing new channels and strategic partners. We also plan to substantially increase our customer service and “do-it-for-you” graphic design and copywriting capabilities. We believe VistaPrint is already strong in customer service but that, in the future, we can make service quality yet another major competitive differentiator. VistaPrint enjoys significant cost advantages in our service operations thanks to our high quality labor force in Jamaica, our large scale of daily customer interactions, and our proprietary technologies. By expanding to provide do-it-for-you design and copywriting services, and by ramping up the level of our traditional customer service activities, we seek to leverage our cost-competitive service resources to further improve VistaPrint’s value proposition. We believe that this can, in-turn, drive more revenues and more profit for our shareholders. To do so, in Fiscal year 2009 we expect to make multiple service-focused investments. For English-speaking markets, we will be expanding our already significant operations in Jamaica by beginning construction on a new, state of the art service center facility in Montego Bay. This new facility is expected to meet our English-speaking market needs for several years to come. In non-English speaking markets, we have not previously provided the same levels of support that we do for Anglophone countries. However, at VistaPrint’s current scale and volume in Europe, we believe the economics now justify the opening of service centers to support many of our non-English speaking European markets as well, such as Italy, the Netherlands, Germany, France, and Spain. In all of these markets, as well as in our Anglophone markets, we intend to expand and improve our service levels to attract and retain customers. Our experience in the US market has shown that service investments are well worth the investment. We are proud of the accomplishments of fiscal 2008 and we are excited about fiscal 2009. We are most excited by our steadfast belief that we are building an enduring business institution that can transform the way small businesses market themselves. We said many times that we think we are just at the beginning of what we expect to be a long and rewarding journey. We know that success requires the support of three interdependent groups: our customers, our employees and our shareholders. We believe that the more we satisfy all three, the more successful we will become. For our customers, we seek to continuously improve and expand our value proposition, and in doing so, transform small business marketing. Serving our customers helps us meet our employees’ needs by offering rewarding career opportunities, personal growth and competitive remuneration. In doing so, VistaPrint seeks to be an employer of choice who demands excellence in return. We believe satisfying our customers and employees is required to run a healthy business that builds lasting shareholder value, which we expect to grow over time in line with our anticipated high returns in capital and earnings per share growth. In each of the twelve quarters we have reported as a public company, we have achieved our revenue and earnings goals, generally meeting or exceeding the top end of our EPS and revenue guidance ranges. The past quarter was another example of the health of our business and our ability to deliver, even against challenging prior-year comparisons, tough macroeconomic conditions and adverse currency movements which materially reduced our gross margins. Once again, we exceeded our top and bottom line guidance. Our net margins expanded. Our cash flows from operations remained very strong. Our ROIC was excellent. We have begun generating positive free cash flow, despite funding substantial facilities expansions in each of the last two years which are required as part of our disciplined, profitable drive for market share. The guidance that Mike will walk you through shortly shows that once again our business model works. We are guiding to continued high growth in revenues, earnings and EPS, with stable operating and net margins, at stable to potentially lower capital intensity with higher free cash flow. VistaPrint has a strong culture of financial discipline, and a many-year track record of meeting our strategic and financial objectives. We certainly expect that both our financial discipline and our track record will continue into fiscal year 2009, and well beyond. Now I will turn the presentation over to Harp and to Mike for their comments. Harp?

Thanks Robert. As some of you know, this is my final quarterly call as CFO of VistaPrint. As previously announced, I will be stepping aside as CFO on September 2nd and Mike Giannetto will assume the role of CFO, so I would like to take a moment to reflect on the business, the quarter and the time I have spent working here. First, I would like to thank Robert and the company for the tremendous experience I have had as CFO over the last two years. VistaPrint is executing on a far-reaching plan intended to deliver considerable benefits to millions of small businesses on a worldwide basis. Robert leads a highly talented team including, among others, Janet Holian, Wendy Cebula and Mike Giannetto. They and the many other employees working at VistaPrint continue to execute in building an enduring transformational company during what are unquestionably challenging times for many companies. I believe VistaPrint remains at the early stages of a long growth cycle, thanks to its technology, its marketing prowess, and a superior turnkey marketing solution versus more limited alternatives in a market that is large and underserved in Europe, in North America, and beyond. The disciplined financial strategy that the company has defined and executed to has allowed us to balance revenue growth, longer term investments, and near term profit growth. In doing so, the company has consistently met or exceeded the high end of our revenue and EPS guidance. Fiscal year 2008 results show continued high revenue growth, generally stable non-GAAP operating and net margins even while absorbing the adverse impact of fluctuations, the highest reported non-GAAP EBITDA margin as a public company, lower capital intensity and significantly higher free cash flow. The last quarter, meanwhile, demonstrated the ability of our business model to deliver against, and in this particular case exceed, high revenue growth and EPS targets. Furthermore, in comparison to the same quarter last year, Q4 showed operating and net income margin expansion.. We achieved the Q4 margin expansion thanks to efficiencies in marketing and general and administrative expenses, which offset gross margin challenges related to lower referral fees, currencies, and shifting product mix. These results underscore the efficacy of the company’s financial model. Now to the highlights of the quarter and the year, VistaPrint generated revenues of $110.4 million in the fiscal fourth quarter, reflecting a 52% increase over the fourth quarter of the prior year. During the fiscal year, revenues were $401 million, reflecting a 57% increase over the prior year. All of our geographies performed well and revenue from websites targeting non-US markets comprised 39% of total quarterly revenues. Non-US revenues increased 84% nominally year over year. Excluding the impact of currencies, non-US revenues increased 66% year over year. Revenues from our US website increased 37% year on year. As previously discussed, referral revenues are trending lower and are expected to range between 2% and 5% of total revenues sometime in fiscal 2010 to fiscal 2012. During Q4 fiscal year 2008 referral revenues were 6.4% of total revenue, 190 basis points lower than year ago levels, and decreased 30 basis points sequentially. During the fiscal year referral revenues generated 6.9% of total revenue, 110 basis points lower than in fiscal year 2007. First looking in GAAP terms, quarterly net income was $10.3 million reflecting a 91% increase over the fourth quarter of the prior year. These quarterly GAAP results translate to a 9.4% net income margin in the quarter versus 7.4% in the fourth quarter of the prior year. Quarterly EPS was $0.22, also a 91% increase over the fourth quarter of the prior year. During the fiscal year, net income was $39.8 million, reflecting a 47% increase over the prior year. The fiscal year GAAP results translate to a 9.9%net income margin versus 10.6% in the prior year. Annual EPS was $0.87 reflecting a 45% increase over the prior year. In non-GAAP terms, quarterly adjusted net income was $15.0 million reflecting a 61% increase over the fourth quarter of the prior year. These quarterly non-GAAP results translate to a 13.6%net income margin versus 12.8% in the fourth quarter of the prior year. Quarterly non-GAAP adjusted EPS was $0.32, reflecting a 60% increase over the fourth quarter of the prior year. During the fiscal year, non-GAAP net income was $55.1 million, reflecting a 53% increase over the prior year. The fiscal year non-GAAP results translate to a 13.8% net income margin versus 14.0% in the prior year. Annual non-GAAP EPS was $1.18, reflecting a 51% increase over the prior year. Now, let me turn the presentation over to Mike Giannetto. Mike?

Thanks Harp. Now I will review our operations, detailed financial results, and guidance. Our key operating metrics were as follows: We acquired approximately 1.2 million new customers in the fourth quarter ended June 30, 2008, which translates to approximately 35% more than we acquired in the same quarter one year ago. Approximately 65% of our bookings in the fourth quarter came from repeat customers, approximately 200 basis points higher than the percentage we recorded in the same quarter a year ago. We processed approximately 33,000 orders per day, approximately 50% more than the approximately 22,000 orders per day we averaged in the fourth quarter of fiscal year 2007. Approximately 39% of revenue in the quarter came from our websites that target markets other than the US. In aggregate, more than 20 channels and partnerships contributed to our total bookings in Q4 of fiscal 2008. As noted, approximately 65% of bookings came from repeat customers. The largest channel for repeat customers remains our own outbound permission-based email, which is also one of our lowest cost channels. New customers represented 35% of bookings, which is down on a sequential and year over year basis. Paid search represented about 16% of total revenues, consistent with previous quarters. Our near-term growth catalysts continue to be increased share of wallet, new customer acquisitions, and European growth. New customer acquisitions, at approximately 1.2 million, remained strong and our cost of customer acquisition was stable on a sequential basis. The number of new customers added in Q4 was consistent with our Q3 additions, which primarily reflects a higher allocation of marketing resources to customer retention, which presented more profitable revenue opportunities, over new customer acquisition. During the year we acquired approximately 4.5 million new customers, up approximately 50% from the approximately 2.9 million new customers we acquired in the prior year. During the quarter, non-US revenues were 39% of total revenue, up slightly on a sequential basis and up from 32% year over year. During the full fiscal year, non-US revenues were 38% of total revenue, up from 32% in fiscal year 2007. This increase was driven by the strong performance of our Barcelona-based European marketing team and the weakening of the US dollar during the year. Web sessions increased to 47.8 million in Q4 2008, a 37% increase versus the 34.9 million we generated in the fourth quarter of the prior year. Conversion rates increased to 6.4% in the fourth quarter of fiscal 2008 from 5.9% in the fourth quarter of 2007. Average order value was $34.00 in Q4 2008, an increase of 5% over the $32.33 recorded in the prior year’s fourth quarter. As we have noted in the past, each of these metrics will vary up and down based on a number of factors, including new product introductions, product mix, geographic expansion, mix of consumer and small business customers, channel mix, marketing campaign testing, seasonality and the like. As such, they should be considered together by looking at the product of the three factors, not individually. Now to gross margin, which we define as revenue minus the cost of revenue. Gross margin in the fourth quarter was 60.6% and reflects a 70 basis point sequential decrease and a 390 basis point year-over-year decrease. Gross margin changes were primarily influenced by the following drivers: On a year over year basis, quarterly gross margins were adversely impacted by currency fluctuations, higher pass-through postage revenues relating to mailing services, and lower referral revenue fees. Collectively, those factors reduced reported gross margins by approximately 300 basis points. Other factors that impacted gross margins include product mix shifts and higher shipping costs, which were partially offset by improving labor efficiencies and leverage in overhead costs. On a sequential basis, quarterly gross margins were adversely impacted primarily by product mix shifts, higher shipping costs, and lower referral fees. For the full year, gross margins were adversely impacted by currency fluctuations, higher pass-through postage revenues related to mailing services, and lower referral fees. Collectively, those factors reduced reported gross margins by approximately 250 basis points. Other factors that impacted gross margins include product mix and higher shipping costs, which were partially offset by improving labor efficiencies, lower overhead, low material costs, and other factors. Looking forward, we plan to pursue several strategies designed to improve long term gross margins, including selling more high margin services and continuous focus on manufacturing efficiency and cost reduction. We are pursuing a number of gross margin improvement strategies that leverage the high daily order and unit volumes that VistaPrint is now reaching. These scale-based gross margin improvement opportunities include projects to raise per-unit productivity, to drive supplier efficiencies, and to increase automation levels throughout our operations. We believe that VistaPrint’s very large scale relative to our known competitors allows us to pursue cost-saving strategies that are not available to others, and as such, further our competitive advantage. In addition, many of these scale-based gross margin opportunities require the development of proprietary technologies which may require longer-term project initiatives. One reason we are maintaining an aggressive level of technology spend, is to fund these types of GM-improvement technology projects. If successful, we expect these to enhance our position as a low cost provider while improving our already strong quality metrics. Our GAAP net income margin for the fourth quarter was 9.4%, compared to 7.4% in the prior year’s fourth quarter. Our non-GAAP adjusted net income margin for Q4 increased to 13.6% versus 12.8% during the fourth quarter of fiscal 2007, reflecting margin expansion year-over-year. While product mix, adverse currency conditions and the reduction of referral revenue has adversely impacted our gross margins, leverage in other parts of our business has allowed us to meet the profit targets we set over a year ago. In particular, scale based efficiencies in both marketing and selling, and general and administrative expenses have played an important role. Looking at the full FY 2008 income statement versus the prior fiscal year 2007, one can see that as a percentage of revenue, gross margins decreased by 330 basis points due to the reasons previously discussed. Marketing and selling expense meanwhile decreased by 240 basis points to 31.9%. External advertising expense decreased by 130 basis points, and personnel-related expenses decreased by 110 basis points. This leverage was a result of a higher percentage of bookings from existing customers, growing revenues from strategic partnerships, and other cost efficiencies. Technology and development expense increased by 60 basis points to 11.2%. As previously noted, technology spending increased to develop new products, improve our customer experience, reliability, and to drive future production efficiencies. General and administrative expense decreased by 120 basis points reflecting ongoing cost-efficiencies. Operating margin decreased by 30 basis points due to lower gross margins and higher technology expenses, which were substantially offset by lower marketing and general and administrative expenses. Our tax expense increased by 10 basis points to 9.7% of pre-tax profits. Looking at the Q4 FY 2008 income statement versus Q4 FY 2007, one can see that as a percent of revenue, cost of revenue increased 390 basis points year-over-year, due to the reasons previously mentioned. Marketing and selling expense decreased 590 basis points to 30.6%, driven by a 250 basis point decrease in advertising expense year-over-year, and a 340 basis point decrease in personnel expense year-over-year. This leverage was a result of a higher percentage of bookings from existing customers, growing revenues from strategic partnerships, and other cost efficiencies. In addition, Q4 FY07 included a share based compensation charge of $1.2 million related to a functional reorganization. Technology and development expense increased by 90 basis points to around 12.0% of revenue. As previously noted, we have increased technology spending to develop new products, improve our user experience, reliability, and future production efficiencies. General and administrative expense decreased by 230 basis points year-over-year primarily due to leverage derived from other cost efficiencies as well as the higher than normal expense last year related to an organizational consulting project. Operating margin increased 340 basis points due to lower marketing and selling and general and administrative expenses, which were substantially offset by higher costs of revenue and higher technology expenses. Tax expenses were 9.3% of pre-tax profits or 1% of revenue. This compares with 5.7% of pre-tax profits during Q4 of the prior fiscal year which was lower due to a true-up of tax expenses paid through the fiscal year. Looking sequentially at the Q4 income statement versus the prior quarter, Q3 of FY ’08, one can see that as a percentage of revenue cost of revenue increased by 70 basis points due to reasons previously discussed. Marketing and selling expense decreased by 130 basis points, to 30.6% driven primarily by lower advertising expense. Technology and development expense increased by 120 basis points to 12.0% due to reasons previously discussed. General and administrative expense decreased by 40 basis points due to reasons previously discussed. Operating margin decreased by 20 basis points due to lower gross margins and higher technology spending, which were partially offset by lower marketing and selling expenses and lower general and administrative expenses. Share-based compensation expense increased to $4.6 million during the fourth quarter of 2008 and was higher than our previous forecast due to the impact of the previously disclosed transition agreement for Harp. Excluding share based compensation expense charges related to this transition agreement, the quarter’s share based compensation would have been $4.2 million. Share based compensation expense was 3.8% of full fiscal year 2008 revenue, versus 3.4% of revenue in fiscal year 2007. Share based compensation expense in fiscal year 2008 includes tax expense related to share comp expense. Our balance sheet remains strong, with cash and equivalents of approximately $130 million. During the quarter, VistaPrint generated $18.7 million in cash from operations and made capital expenditures of approximately $13.9 million, or about 13% of revenue. During the year, VistaPrint generated $87.7 million in cash from operations and made capital expenditures of approximately $63 million, or about 16% of revenue. Free cash flow was $3.1 million in the quarter and $18.0 million full fiscal year. On a trailing twelve-month basis, return on invested capital excluding share based compensation expense as of June 30, 2008 remained high at 33.8%. For the full fiscal year, 4% of revenue, or approximately $16 million of the $63 million in capital expenditures, was for additional presses; approximately 7% of revenue, or $28 million, was for land and facilities; approximately 2% of revenue, or $8 million, was for new products, and the remaining 3% of revenue, or $12 million, was for other uses including IT infrastructure. Capital expenditures as a percentage of revenues fell for presses due to improving productivity, scale, and changes in our product mix. During the quarter, the company made $13.9 million in capital expenditures, which equates to approximately 13% of quarterly revenues. Quarterly CapEx breaks down as follows: 23% of capital expenditures went into presses and the remaining 77% went for other uses. Now, let’s go over our financial guidance as of July 31, 2008. This guidance reflects our market opportunity, profitability objectives and ongoing commitment to growth investments. VistaPrint previously announced the Company’s intention to eliminate the use of non-GAAP financial measures in its financial reporting and guidance beginning with the first quarter of the fiscal year ending June 30, 2009. However, based on subsequent investor feedback, management has concluded that many investors believe they would continue to benefit from referring to these non-GAAP financial measures in assessing VistaPrint’s performance and when forecasting and analyzing future periods. Therefore, the Company intends to continue to use non-GAAP financial measures in its financial reporting and guidance in fiscal year 2009 and will reevaluate for future periods. VistaPrint specifically disclaims any obligation to update any forward-looking statements, which should not be relied upon as representing our expectations or beliefs as of any date subsequent to July 1, 2008, the date of this presentation. With this in mind, our expectations for the first quarter of fiscal year 2009 are as follows: Revenue is expected to be in the range of $112 to $116 million, an increase of 41 to 46% year over year. GAAP EPS, on a fully-diluted basis, is expected to be between $0.15 and $0.18 based on about 46.1 million weighted shares outstanding. GAAP EPS is expected to be adversely impacted in the first quarter by the share-based compensation related to the transition agreement with Harp. There are no charges related to the transition agreement after the first quarter of FY 2009. Capital expenditures in the first quarter are expected to be approximately 18 to 22% of revenue. For the full fiscal year ending June 30, 2009, we expect revenue to be $540 to $570 million, an increase of 35 to 42% year over year. Full fiscal year GAAP EPS, on a fully-diluted basis, is expected to be between $1.10 and $1.20 based on about 46.5 million shares outstanding. Capital expenditures for the year are expected to be approximately 14 to 17% of revenue, reflecting a similar percentage of revenues as in fiscal year 2008. During FY 2009, we anticipate that most capital investment categories will show leverage as a percentage of sales versus FY 2008 with the most significant exception being a service center investment in Montego Bay. We are providing the assumptions noted on our guidance slide to facilitate comparisons with non-GAAP adjusted net income for fully diluted share. Based on these assumptions, for Q1 of fiscal 2009, non-GAAP EPS, excluding share-based compensation, is expected to be between $0.25 to $0.28 based on an estimated share-based compensation expense of $5.2 million. Full fiscal 2009 non-GAAP EPS, which excludes share-based compensation expense, is expected to be between $1.50 to $1.60 based on an estimated share-based compensation expense of $20 million. Reviewing our seasonal patterns can provide some color on our full year guidance. We target annual earnings objectives, and investors should be aware that quarterly fluctuations, when they occur, are primarily reflective of our disciplined financial decision making, our strategy, and the seasonal nature of portions of our business. Our holiday products are seasonal in nature so they accelerate our sequential growth rate in our fiscal second quarter, which ends in December. The holiday business goes away in the third quarter. As we look to the coming year, if we do very well in this year’s holiday business, this pattern of seasonality could result in a sequential revenue decline between the December and March quarters. For the revenue guidance just provided, we still expect very strong year over year growth, both on a full year basis and in every quarter when compared to the same quarter in the prior year. The seasonality also has an impact on our quarterly earnings pattern, which we expect to rise significantly in the second quarter and then trend lower. As with revenue growth, we still expect to see strong year over year growth in EPS throughout fiscal 2009. Another driver of our earnings pattern is that we make growth investments on a steady basis throughout the year. We believe that doing otherwise would introduce costly operational complexities and would lower our overall rate of earnings growth. Historically, the investments we make in the first quarter tend to lower net margins until our revenues step up in our second quarter. We expect those general trends to continue in fiscal 2009. Now, let me turn the call back to Robert.

Thanks Mike. VistaPrint’s 2008 fourth quarter and full fiscal year were very strong. In the big picture these were just two events in a very long history of executing on our strategy. That track record stretches back for many years and has certainly continued since our public offering in 2005. In every one of the three fiscal years since our IPO, VistaPrint has grown EPS by over 35% per year. We have just guided, once again, to a significant increase for fiscal year 2009. There are few other companies in the public market who so consistently deliver this type of earnings growth. VistaPrint has done so thanks to the talents and enormous efforts of our employees, our market defining leadership position, and our deep-rooted culture of financial discipline. We are at the beginning of what we believe will be a long, rewarding and, ultimately, transformational journey. We intend to continue to meet the needs of our customers, employees, and shareholders by executing quarter after quarter, year after year, just as we have done in the past. We believe each of these three important constituencies is positioned to both contribute to and to benefit from our ongoing success. We would like to thank you for your time and attention, and we look forward to answering questions and comments on our live call at 5pm Eastern time. That concludes our prepared presentation.

Ladies and gentlemen, welcome to the VistaPrint Fourth Quarter and Full Fiscal 2008 Q&A Earnings Call. My name is Amanda, and I will be your operator for today. This call is being hosted by Robert Keane, President and CEO, Harpreet Grewal, Executive Vice President and Chief Financial Officer and Mike Giannetto, Senior Vice President of Finance. Before we take the first call, as we noted in the Safe Harbor statement at the beginning of the earnings presentation, comments made include forward-looking statements, including statements regarding revenue and earnings guidance and actual results may differ materially. Risks factors that impact those statements are described in the documents that are periodically filed with the Securities and Exchange Commission. Now I will proceed with the first call. Your first question comes from Youssef Squali with Jeffries and Company. Please proceed. Youssef Squali - Jeffries & Co.: Thank you very much. Good afternoon. I have a couple of questions, first for Robert. Robert, in your prepared remarks I think you talked about how new products or you launched a number of products which now help you address more than 50% of the companies or of your client's annual spending. How far are we, or how much higher than that 50% are we, how close are we to that 100%. Because arguably as we get close to that you are CapEx related to new products should start coming down. In that same vein, if I were to look at your CapEx guidance of 14% to 17%, why such a big range when in '08 it was I think you have guided to 17% to 18%. So clearly a deceleration we are happy to see that, but we are still trying to just give us a little insight into the makeup of that, and then why the big range?

Sure, absolutely. So I will say that I fully agree there is a lot of leverage in our CapEx and you are seeing that this year. I will leave it to Mike or Harp to talk of the specifics of the range. Let me talk about your question in terms of new products and what percentage of the total pie are we looking to address. The pie chart that we show there talks about categories. So for instance, in the promotional products category we are in the well over 50%, really 75%. I am sorry, the promotional products category is one example where we intend and we are not in, let's say custom stress balls. In the promotional products, I think we will be interesting a lot of new additional products in the future. However, for the percentage of the pie chart you see there we are more than 50% around them, the chart in terms of participating in those slices, not specifically in covering a 100% of those given slices. So, I think you will see us introducing a lot of additional products and services in those additional markets. That being said, I think your question was more focused on the CapEx and a lot of those new products and services were entering are not as CapEx intensive as previous we have entered. So, although I think you will see us continuing to introduce a lot of new products and services, you will not see necessarily the type of CapEx intensity you have seen in the past. In terms of the percentage spread in our CapEx guidance, let me turn that over to Mike to speak to that.

Sure, Youssef, last year when we gave our full year guidance actually on the CapEx for '08, we gave a range of 15% to 20%. That was the range we did a year ago. In terms of this year, the 14% to 17%, we feel it is a range we could land in. We do have some larger construction projects where timing can change on them. We have two of them in this year's plan that we talked about in the prepared remarks. So, we think the range is a good one and because of the size of some of the projects we could see payments shift and move a bit.

Maybe the last thing I will add to that is that we have often talked about the fact that there is leverage in our CapEx. In our CapEx plans we continue to see leverage in almost all categories whether its regarding individually presses, or whether it is new equipment. The one area which is a little lumpy in this fiscal year, which Mike highlighted during the prepared remarks, is that we are building out a facility, a call service center in Montego Bay. That is something that is a fairly significant investment that we are making, but almost across the board all other line items continue to show the sort of leverage that I think one anticipates. Youssef Squali - Jeffries & Co.: Thanks, and just one final question. If I look at your GAAP EPS guidance for Q1, it came to 18 that is versus 22% for Q1 on nice higher sequential revenues. Can you walk us through what should cause that to happen?

Sure. This is Mike again. In terms of Q1, you are going from Q4 to Q1. In the prepared remarks I talked about the seasonality of the business, which we have seen develop over the last couple of years and we will continue to see it this year. Seasonality being focused around Q2, our December quarter, we have a spike in a highest growing quarter due to the holiday period. This year, I think we will see that seasonality once again, and in Q1, we are making investments as we did last year, but this year again. To prepare for that increase in revenue, so we are making investments across the company but especially focused in manufacturing, to be sure we can meet the demand of Q2. So I think we will see a little bit more profit in terms of percentage for the full year in this Q2 as opposed to prior years.

Maybe partially extending on what Mike is saying, is in the first half of the year, you will see is about the same profit contribution on EPS basis in the first half as we have in previous years as well, which I think is important to note. Youssef Squali - Jeffries & Co.: Okay, thanks. Congratulations.

Thank you.

Your next question comes from the line of Jennifer Watson with Goldman Sachs. Please proceed.

Great. Thank you. Can you talk about the number of active customers that you had in fiscal '08 and what the trend has been in gross bookings for active customers since you expanded the product category? Also, if you can talk a little bit about how successful you have been at bringing former customers back to the side? I know you mentioned marketing has been shifted to really focus on retention.

Sure, absolutely. We do not plan on updating the specifics of the number of active customers until our Analyst Day in the autumn. That being said, I can tell you both those numbers trended in the same up into the right direction they have for years. I do not want to give precision yet because that is something we have traditionally given out at our Analyst Day. However, the trends remain positive and strong. In terms of bringing former customers back, I think we were very happy with retention and the repeat customer contribution this last quarter and the year. We think we have very high customer satisfaction rates and you are starting to see that in some of the repeat rates we are getting. I would also say that we are always making adjustments in terms of where we are making a given set of investments in a quarter or year, and this last quarter we had some great opportunities to sell to our existing customer base. We pursued more heavily there than we get our new customer acquisitions. That is like many things we do an output of our philosophy and our culture of constantly testing and going where the low-high intrude is. I think it is now come of great customer satisfaction and repeat customers coming back was very strong for this quarter, but I think all of our customer spend be it new or repeat remains up into the rightly as it has in the past.

Mike, just a housekeeping question. With the G&A expense decline sequentially quarter-on-quarter, can you just touch on that a little bit?

Sure, year-over-year or sequentially?

Sequentially.

Yes. Really, there was nothing specific other than increased leverage that we would expect to see. There was no one time charges in Q3 to really call out. Other than that we continue to see leverage in different parts of the business including G&A.

Okay. Thank you.

You are welcome.

Your next question comes from the line of Jim Friedland with Cowen and Co. Please proceed.

Thanks first a product question. With the launch of websites first in US and then just recently, it is too early to call international. However, can you tell us what the uptake on that product looks like and maybe some expectations around that and then I had two quick numbers follow ups.

Sure Jim. Websites are on plan and we certainly expect them to grow as a percentage of revenues. However, in the US or elsewhere it's still too early to talk more specifically about them. Apart from saying that we think websites and other electronic services are very exciting opportunities for us.

Okay great, just a numbers question. First on R&D, it was about after stock or excluding stock-based comp, it was 10.8% of revenues in fiscal Q4 and as we look ahead with our models, should we think that the energy idea that you will grow R&D roughly in line with your projected revenue growth?

Jim, we do not give specific guidance within the P&L, but it is one area we have mentioned that we have invested this year and we will continue to invest heavily in it. So I do not want to get into specifics about guidance with a particular line item, but it is an area that we will continue to invest in over the next year and we have many initiatives including new products and some of the other initiatives we discussed on the pre-recorded remarks.

Sure, and then actually on the pre recorded remarks, Mike you said something I think about 1.2 million charge in Q4. Did I hear that right, and if so, what was it from?

That was actually last year. Jim, we are doing the doing the comparison Q4 '07 to '08, we had a share base comp charge from last year, which just trying to explain the year-over-year that was in the numbers in Q4 '07.

Okay, great, then one last quick one. When is the Intuit next round or the next version of software is supposed to launch that will incorporate the VistaPrint offering?

I do not want to answer that, because that is Intuit's launch plan and I personally do not know what they have as a specific date, but it is in the autumn of this year.

Okay. That sounds good thanks.

Thank you.

Your next question comes from the line of Randy Hugen with Piper Jaffray. Please proceed.

Thanks. It looks like new customer ads leveled off sequentially. Is this a new base level here, or do you think that metric is going to accelerate again next year, I guess, outside of the typical seasonality?

Okay, we do expect the total number of customers we acquire next year to be up significantly from this year, that being said overtime, we do expect new customer accounts to begin to slow. We do not think we are seeing that trend emerge yet. As I mentioned in the script acquiring 1.2 million customers is extremely healthy, especially at the low cost of acquisition we achieved. We drove more revenue from repeat customers which is a source of leverage for us, but we expect that we will continue to acquire greater numbers of new customers going forward as our marketing budgets allow. We can not rule out that it will be far or sometime in the future, I am not saying this in the next quarter, but sometime it will come down a little bit, but we see a significant runway in front with a broad trend up into the right will continue.

So was there any specific reason why things were somewhat flat this quarter?

No, it is really just a question that I answered a bit in the previous question which is we always make an allocation of marketing spend depending on the specific opportunities at hand, and we are pretty agile in moving from one to another. We had some great opportunities that were performing very well in repeat return customer marketing, hence we spent more there. I would not ascribe a general trend or a change in the general trend to this quarter.

Okay. Thanks. That helps a lot. Then your 2009 guidance revenue growth is exceeding earnings growth slightly. Is that mostly from a continuation of current currency and shipping cost trends, which have accelerated in the back half of the year or is there something else that is driving that?

In terms of the cost of the currency, we are planning for currencies based on current yield of currency, so we are assuming basically the currencies are staying where they are now based on where we sit in July.

One other thing that from a EPS targeting perspective what we do, we did establish the EPS target for fiscal year '09. I will articulate it in January of this year. The $1.10 to $1.20 is on a GAAP basis and in that respect, we have announced, formalized and our revenue range is resulting and what I think we would generally want to consider, depending where you go, and high point mid point of target. Basically what I think the emphasis is on stable margins, particularly when you look at on non-job basis.

So, now that we are through this fiscal year and seeing where currency rates are now. Should we expect a little more seasonality this year just would be tougher currency comps in the first couple of quarters of fiscal '09?

Seasonality in terms of what perspective?

So, if gross margins remain at similar levels to where there are in this quarter, that is very tough comps for the first half of fiscal '09 compared to where they were in the beginning of the year, maybe pushing more of the profitability towards the back half.

I think in terms of seasonality, we would expect this ear to look somewhat like last year. Although I made the comments about Q1 dipping down a bit, but we do expect to pick it up in Q2. So, when you look at how the quarters in ‘08 performed in terms of profitability. We would expect first half this year to look somewhat similar to the first half of last year. So I would not say its backend to the second half of the year. We would except to see more profits in our Q2 than we did in '08 and we think that will be tied to the seasonal success, we expect in the holiday product lines. One of the premises behind your question seems to be that if gross margins are down, that will bring down net margins. However, if you look at the quarter we just ended which had very low gross margins relative to earlier in the year. We still think they are very good gross margins our net margins were up. So there has been a lot of leverage in the business, and as we said many times, we would advise you to not to focus on any one part of our P&L. I think this quarter was a great example of that. We had a really great quarter and we think we have a really great year next year.

Okay, and then just one more here. As you move away from referral revenues, you mentioned you are using that real estate for other offerings. Can you just give us a general idea of the performance of some of those offerings and I guess their ability offset operating profit that was being delivered by the previous programs?

We are very happy with those types of diversifications, and there are a number of different of types of diversifications. One is just one-for-one, maybe a membership changed over to small business offering be it a Pitney Bowes or any of the other many offers we offer, and that is pretty transparent and equal. There are other things where let's say we sell a website subscription in that space, we are pushing the revenues out into the future, because we have a 90-day or 60-day free trial. You can have some timing differences, or we may have other things where if we sell a product which has better gross profit dollars, but a lower gross margin percentage. I can say we are very happy with where that trend is going. As Harp mentioned or maybe Mike did, the absolute trend is down in terms of referral programs. We are very happy with the economical Tardif that we are putting in place, and as we have said many times that trend down is a proactive and specific choice we are making, because we believe in the economic opportunities of the alternatives. It is not a reactive decline.

If I could extend on that just a little bit, I think it is useful to note that the economic alternatives plus the leverage of our business allowed us in fiscal year '08, if I look at non-GAAP operating margins basically to be constant, we came in at 14% operating income on net operating margin versus 14.1% where actual revenues came down fairly substantially. I think that in itself behind the numbers are flat that we are able to find that economical turn of leverage in the business even if we are facing the currency headwinds, we did that had a negative impact on the business as a whole.

Alright, thanks a lot. Congratulations.

Thank you.

Your next question comes from the line of Franco Turrinelli with William Blair. Please proceed.

Good afternoon gentlemen.

Good afternoon.

Three questions. One real small housekeeping item. Can you remind us what the amount associated with the stock-based comp for Hart's departure will be in the first quarter?

Looks like the total charge will be about $800,000. It is a combination of share-based comp and some cash as well, but that will be about the approximate total charge.

That is obviously included in the GAAP guidance that you have given us for the first quarter?

Correct.

More importantly, more strategically, one of the things that really struck us in this quarter was maintaining the conversion rate so high and if we look at the last several quarters, the trend in conversion rate just is very positive. Can you tell us -- is this something that you are doing better? In other words, is it better website design? Is it better product mix? Or is it also just the fact that repeat customers are taking more of a percentage? Just help us think through the conversion rate and maybe how you think the conversion rate going forward?

Sure. I do think there is a slight impact from repeat customers, but if you look over the last two years, the percentage of business from repeat business has always been in that high 60s or in the mid-60s. So that is really not the fundamental driver. I would first and foremost as I have to say, you have to look at all three together and there maybe quarters where that will go down, because we have opportunities to get great session counts, which may have very good pricing for us to buy and therefore we are willing to buy even though conversion is lower. That being said, and we had to repeat that every time and we look at all three of those factors together, the conversion rate improvement I think are one of many examples of our willingness to invest in things, which then comeback and pay off. So, we have made major investments as everyone knows in new products and new services. I think that is one example where we are going to have more product and services to offer our customer, is more likely we can tighten to buy something. However, beyond that obvious introduction of new product and services, we have done a lot of things to improve what we are doing. So, in terms of it could be the quality of the products, or delivery of the products. However, it also is things like the user interface in the content. Recently we did a press release on a launch of a totally new version of our logo tool and if you go to our logo tool, it is really impressive it creates not only the logos for the customers, but then displays that and coordinates that across a whole series of products for a customer. That and many other user interfacing content improvements are the output of years of investment and continued investment in software development and content development and in user interface, which are starting to come back and pay for themselves very handsomely. So, I think its a combination of a lot of things, but I think that although there is a little bit of help from repeat customers, we do see a sustainable lift in our overall rate of conversion and that is coming from the investments we have made in new products, in product improvements, in software, in content and other areas.

Thanks. That is helpful. Similar question, we were pleased to see the average order volume increase a little bit, anything to be read into that, are you seeing any difference in kind of order behavior?

Once again I will start by saying average order value, session and conversion rate, really move back and forth, quarter-to-quarter and year-to-year, you have to look at all three together. However, all of those, if you look at a multiyear trend, especially the session counts and the conversion rates, have trended up to the right. Recently, we started to see some movement, it is not a huge movement, 5% up in our average order value. Once again, I think to the extent that becomes sustainable and I do not want to say it is perfectly sustainable, because we look at all three together. However, those are some of the investments coming back to pay for themselves where we had product improvements or user interface improvements, or we are cross-selling things that we used to not cross-sell in the past.

Just one more thing to add there, repeat revenue did tick up this quarter which tends to bring a higher AOB as well, so I think those pile what we saw in Q4?

Right. Yes, that is helpful Mike. Hey one final question before I let other people get into the queue. I can not possible not ask you about macroeconomic environment and whether or not you are seeing any changes in behavior, any weakness on the macro front. Thanks guys, congratulations.

Thank you. The answer to the macroeconomic question is no, we are not seeing this. We cannot rule out to that, it may not be having a impact on the global growth, but could we have grown faster? Possibly. However, based on looking at our sales of our business identity and promotional products as well as repeat customer bookings and new customer bookings, we do not see anything that we can specifically attribute to an economic impact at this time, and we can not rule them out but we do not see it and we have raised guidance on revenues multiple times in the last several quarter, we have exceeded those raised guidance every time. We have just given very healthy guidance for next year. So I think that is the bottom line answer.

Yes. Thank you. Thanks a lot.

Thank you.

Your next question comes from the line of Mark May with Needham & Company. Please proceed. Mark May - Needham & Company:

Hi Mark. Mark May - Needham & Company: Hi. Thanks. I would like to first thank Harp for helping me better understand the company over the past couple of years, thank you. This first question would probably be for Michael or Harp. If you excluded the working capital changes, is it possible for, and its probably not possible in the current quarter, but excluding the current quarter because you have some big projects going on, is it possible that for the remainder of fiscal '09 that the company could be positive free cash flow excluding working capital changes for say three of the four quarters this year? I am wondering if you could give us a breakdown I do not know if you did this in the prepared, I have not gone to the very end, but a breakdown of the CapEx under your three buckets for the quarter and give some flavor for what that breakdown may be in the September quarter.

Sure. So Mark, this is Mike. So in terms of free cash flow, we are not giving guidance on free cash flow and I do not want to give specifics by quarter either, but based on our plan and based on our guidance we do expect to be free cash flow positive next year. We would expect it to increase over the current year as well. So, that is what we are expecting at this point. In terms of your second question, in terms of the capital expenditure, we did talk about it within our prepared remarks, but for the year we ended up with $63 million total CapEX, about 16% of revenues and in terms of how it broke out. Mark May - Needham & Company: Since you have already addressed that maybe, can you just talk about how it may break out for fiscal '09?

We are not going to give specific guidance on that Mark in terms of what you will see in terms of different buckets. Qualitatively we did talk about an expansion in Windsor. Where we are expanding the manufacturing facility, as well as in Montego Bay, beginning work on our service center down there. So, there will be a good piece of the expenditures going into those facility expansions. I think in the rest of the traditional CapEx buckets you will see leverage, you should see leverage, we expect to see leverage next year, say in product and equipment, but you will see a fairly significant percentage of CapEx going into facilities. Mark May - Needham & Company: Okay. Great and last question, the order volume was flat sequentially but your AOV was up strong. Can you provide some color on what drove the higher AOV, maybe either specific products, mark up on customers, or more color?

Sure, I think what we did see this quarter and in our prepared remarks, we talked about it, repeat customer revenue was up to 65% this quarter which is the highest, I think has ever been actually. So repeat customers tend to have higher AOVs, which I think definitely played into the increase we saw quarter-over-quarter. I would say that is probably the biggest driver of the increase. We do continue to rollout new products, it is no AOV went up, but I think the repeat increase definitely had a positive impact on the AOV. Mark May - Needham & Company: Did you change your shipping prices at all during the quarter, or was it pure price mix, or customer mix space?

In terms of shipping prices, we are doing some testing, but within Q4 that really was not. We did not increase shipping prices in Q4, we are looking at testing it, but it did not have an impact in Q4. Mark May - Needham & Company: I promise last question. I believe DHL is one of your main shipping partners. If I recall earlier in the year, they made an announcement that they are getting out of I think the ground shipping business in the US over a one or two-year transition period. Do you see that, how are you reacting to that and how do you see that; is it at all impacting your business segment from a shippers sense?

So DHL is a provider, a shipping provider for us, and you are correct they did make an announcement. We do not see it having a major impact on our business. We work with other carriers as well, so we do not see it is disruptive to us in anyway and we are managing that.

Our systems are set up to for us to remain agnostic. Mark May - Needham & Company: Okay. Thanks for answering my questions.

Thank you.

Your next question comes from the line of Scott Devitt with Stifel Nicolaus. Please proceed.

Hi, thanks, and congrats on the quarter.

Thank you, Scott.

I had two questions and it is one following the other, but your incremental operating margins throughout this year have actually increased meaningfully if you look at it on a cash basis excluding stock comp, it was 18.3 this quarter or 400 basis points higher than your reported margins. So the vast majority of that is the sales and marketing efficiencies. I noticed in the prepared transcript that you cut or you lessened the marketing spend because of the loyalty dynamics, but you also cut back heads. I just wonder if you could add some color around that first, and then I have the follow on question? Thanks.

This is Mike. We did see leverage in the marketing and selling line and some of it within advertising and some of it within what we call internal marketing cost which is personnel cost as well as other overhead type costs. Just want to be careful we did not cut anything in terms of heads; what we did see is leverage in scale year-over-year and sequentially as well within marketing and selling. So it certainly was not a cut so to speak. We did see leverage there, but that was something that we had planned on.

Okay. That is helpful and I misread the transcript. Then to follow on that question, if you look at the mid-points of your guidance in fiscal '09, I believe the top line is around 39% and the cash earning growth is 30%. Some of that, the difference in that is the fact that your interest income does not grow as fast as the remainder of the business, but despite the better income on operating margins here in the back half, you are losing some of that in fiscal '09 and that was the reason for the sales and marketing question. However, there are three levers and I know you are not going to touch on this in detail in terms of guidance, but either there is a bit of upside to the EPS guidance or gross margins are going to go down from current levels or sales and marketing as a percentage of revenue are going to go up. So, I was wondering if you talk about that a little bit. Thank you.

Thank you.

Thank you. Scott, you are correct, we are not going to talk specifically about individual line items. We did talk a bit about gross margins in terms of being stable in our range from current levels. In terms of the rest of the P&L, we are not going to get into the specifics, we are focused on the range, the EPS range we have provided and we are confident that we have a good plan that balances the investments we need to make and as well as drive the increased earnings.

One thing that I might add and also the fact of the question asked by a previous individual is relative to your free cash flow which is what we are generally talking about is in fiscal year '08, you had a great trend where our free cash flow as Mike pointed out in his prepared remarks equaled to $18 million. One of the underlying assets to the free cash flow growth was the stability in operating margins on a non-GAAP basis, CapEx coming down as a percent of revenues which for our guidance, there is potential for that. If you look at our EBITDA margins, there was a very nice pickup in EBITDA margins from 18.2% to 18.9%, a 70 basis point pickup on a non-GAAP basis. So, we believe within the guidance that Mike articulated, there are briefly stable margins with a revenue growth that we have worked within the range that we talked about and CapEx range we have talked about. There is the potential for that dynamic to complete play out.

Just to top off on what Harp just said that 18.9% EBITDA is the highest EBITDA we have had at anytime, any years since we have gone public, in another three years and so.

That is helpful and congrats again. Thanks.

Thank you.

Your next question comes from the line of Dom LaCava with Canaccord Adams. Please proceed.

Hi, thanks for taking my questions. I just tend to hop on and of, so you may have answered this. However, on the website solution, are you still giving 30-day free trial with the pricing still around $5 to $15, is there potential to lift that pricing, and then are there any other metrics now that you are supplying for people to track the progress of that product?

I did mention that websites are on plan and we expect them to grow as a percentage of revenues, but it is too early to talk more specifically about them. I think you are right, currently the pricing we offer is roughly three options of $5, $10 and $15 and we have a free trial which I believe we have tested various dates 30 days, 60 days, 90 days I am not sure what the current test is and we maybe testing multiple ones. However, we are very excited about it, it is a good product for us already, it is on plan, and we are very happy with it.

Okay, and on the referral partnerships, are there any recent referral partnerships that have transitioned to your strategic partnerships. I know that you had highlighted that as a core strategy in cycling people from referral to strategic partnerships, anything there you can talk about?

No, nothing specifically. The team that does strategic partnerships manages the same team that does the referrals and we are very excited about some of the things in the pipeline, but we have nothing to announce.

Okay, great. Than you.

Your next question comes from the line of Michael Weisberg with ING. Please proceed.

Yes. Hi, everyone.

Hi.

Let me start just with a small thing. You mentioned Mike there is an 800K charge for Harp in the September quarter, and I think you said half was stock-based, where is the other half is that G&A?

It is all is G&A, but more than half is share comps, about 75% of it is share comp the rest of will be a charge a non-SBC charge within G&A.

Okay. 75% stock based. The rest is G&A. When you talked about your CapEx, can you give us a sense in Windsor how much of a capacity expansion are you planning up there that will be completed by that third quarter I think you said?

It is just about a 120,000 square feet that we are looking to expand, so we have currently about 165,000 square feet.

And going from 165 to 285?

Yes. 285 approximately.

Okay. If that Canadian newspaper was right, some of that is office space so is that effectively a 70% increase in capacity?

You are right. Some of that is office space, but it is a large increase in capacity as well.

Great. Bob, you mentioned the possibility or probability of having customer service in foreign languages. Is there anything in the CapEx budget this fiscal year for that, or is that beyond this year?

No. Nothing of substance, I will turn it to Mike. I think that there is a lot in the CapEx budget for Anglophone customer service because of our long-standing history and success in our Jamaican operations, we are expanding that. However, the rest of it is there is some CapEx, computers and things that, but I think Mike you want to talk about it?

Yes. Bob is correct. There is a little very small amount in for the European-based centers in our plan but not to be to construct anything that would be in a lease situation.

The Jamaica thing which is taking 18 months, is that just a big new facility? Is that what are you doing there in Montego Bay?

Correct. It is a large new service center, office building which will allow us to expand over the coming years.

Great and Mike did you say that you thought gross margins would be roughly stable at the fourth quarter level in fiscal '09? Did I hear you say that?

That is correct and we are planning for that now, its factors that, it hit us pretty hard in '08, we are assuming they are not going to hit us hard in '09 that being mainly currencies. We also start to see in terms of shipping some fuel surcharges coming through higher oil prices have come in to a negative impact on our margins too which flows through our different inputs. So, assuming those two areas do not move on as significantly, we would expect to be in a fairly tight range of stability coming off of the Q4 number.

Great. Did you also say though that is part of the spend in the first quarter will be, it sounded like some of that spend would be on the gross margin line, in terms of preparing for the December quarter.

That is correct. This is part of the lumpiness of our CapEx preparing for Q2 as well, so we will be putting equipment in place which will start deprecating, but also will bring in more plant personnel, temp personnel that will need to be trained up before the Q2 increase. So, there will be investments in the cost of goods sold line in Q1.

Great. Thanks. One final thing Harp is this your last conference call?

It is.

Well, on behalf of many of us, you have done a great job in sometimes trying situation. So, thanks for all the help.

I appreciate for the kind words.

Your next question comes from Nate Swanson with ThinkEquity. Please proceed.

Hi, I jumped on late, so I assume most of my questions have been asked, but I am just wondering you have $125 million cash or $100 million of cash, and it seems like you should be cash flow positive. This is always been an organic growth story. Thoughts about uses of cash in the coming quarter?

Nate, it is Mike. We have no specific plans that we are prepared to share right now in terms of uses of the cash.

Okay. Thank you.

Thank you.

Ladies and gentlemen, that concludes our question-and-answer session for today's call and I would like to turn it now back to Robert Keane for closing remarks.

Thank you. Let me close by saying thank you to all of you for your interest in VistaPrint. Our last quarter, our last year and next year's guidance really affirmed that our model works and that our business is striving. We delivered high revenue growth and high earnings growth, stable margins, growing free cash flow, lower capital intensity and we are very excited about the coming year. We are very optimistic about where the business is going and we look forward to meeting with many of you in the coming quarter and in the coming year to report on our progress going forward. Thank you very much.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation, you may now disconnect. Have a good day.