Redmond-based Smilebox, best known for its software for creating customized scrapbooks, invitations and photo albums, has inked a deal to buy Preclick Corp. for an undisclosed amount of cash and stock. The deal brings Smilebox new technology that allows customers to print their creations at some of the country's largest retailers, including Costco, Walgreens and Walmart.

Smilebox hopes to have the newly-branded service rolled out at select retailers by this holiday season so that customers can have customized holiday cards or invitations printed at nearby retail stores and then pick them up within the hour.

Smilebox Chief Executive Andrew Wright said the acquisition will give his company a new revenue stream, though he declined to say what percentage they will take of the print sales. The deal marks the first time that they have extended the model (historically online ad sales and subscriptions) into the print-on-demand business.

"Every product that is printed at retail, we get a commission on the transaction," said Wright, adding that they are getting "an attractive percentage" even though the retailer is in charge of the customer support, fulfillment and other functions. "

Wright estimates the new printing business could account for as much as 20 to 30 percent in additional sales over time.

It also marks the first acquisition for Smilebox, which has been firing on all cylinders this year despite the lousy economy. In an interview with TechFlash, Wright said the company is about $500,000 ahead of budget for the year and it should be able to reach positive cash flow on its last round of funding.

At the beginning of the year, Wright said he wasn't sure that would be possible. Now, he said, they don't need to raise cash if they don't want to.

Smilebox still may go after another funding round in order to fuel growth, especially with an international expansion on the horizon.

But Wright said he's very pleased with the growth of the business to date, noting that consumers are spending more time at home during the recession working on projects such as scrapbooks, collages and photo albums. They also are looking for lower-cost entertainment.

Meanwhile, Smilebox's media company partners -- rocked by the falling advertising rates -- are looking for new services to add to the mix.

"The downturn, frankly, has been a good thing for us," said Wright. "And I don't tell that to many people because there are some people whose businesses aren't strong, and it is not a nice thing to say. But, in general, it has been a very good thing for this company."

In addition to the nesting trend of consumers, Wright pointed out that it has become much cheaper for Smilebox to hire talent and acquire customers.

"Our direct-to-consumer economics have improved by about 75 percent over the last year," he said.

Because of those trends, Wright sees opportunity to grow the business further. And even with the Preclick purchase, which wasn't in the cards at the start of the year, the company is well ahead of pre-set milestones.

"We are running quite a bit ahead of where we expected," he said. "But our tendency, frankly, is to be aggressive in this environment."

Preclick employed seven people in Seattle, Portland and New Jersey, with six of those workers staying on board. (The Seattle workers have already moved to Smilebox's Redmond offices). Brian Smiga, the founder of Preclick, will remain in New Jersey for the time being serving as Smilebox's new vice president of business development and retail.

Smilebox -- which raised $7 million from Bessemer Venture Partners and Frazier Technology Ventures in 2007 -- employed about 40 people before the acquisition.