Q2 2024 Cimpress PLC Earnings Call
Okay.
Welcome to <unk> Q2 fiscal year 'twenty 'twenty four earnings follow up call.
Meredith: Boy introduce Meredith.
Meredith: <unk>, Vice President of Investor Relations and sustainability.
Meredith: Thank you Michelle and thank you everyone for joining us are with US today are Robert Keane, our founder Chairman and Chief Executive Officer, and Sean Quinn, Our EVP and Chief Financial Officer, We really appreciate the time that you have dedicated to understand our results commentary and outlook. There's a live Q&A session will last about 45 minutes.
Meredith: We will answer both pre submitted and live question you can submit questions live via the questions and answers box at the bottom left of the screen.
Meredith: Before we start I will note that in this session. We will make statements about the future. Our actual results may differ materially from these statements due to risk factors that are outlined in detail in our SEC filings and in the documents we published yesterday on our website. We also have published non-GAAP reconciliations for our financial results and outlook on our <unk>.
Meredith: Our web site, you might you to read them and now I will turn things over to Sean for some brief remarks before we take questions Sean.
Sean E. Quinn: Thanks, a lot Meredith and thanks, everyone, who has joined US today on the recording before I take your questions along with Robert <unk> Meredith I, just want to highlight a few key points from the financial results and the updated outlook that we published yesterday.
Sean E. Quinn: First of all so perhaps deliver strong results in the second quarter. Our consolidated revenue grew 9% on a reported basis and 6% on an organic constant currency basis.
Sean E. Quinn: Adjusted EBITDA grew $55 million year over year in Q2 to $166 million.
Sean E. Quinn: And adjusted EBITDA margins were up nearly 500 basis points to 18, 1%. This year with gross margin expansion leverage in advertising spend and reduced operating expenses.
Sean E. Quinn: That was also helped by more favorable input cost compared to last year and there are also a few beneficial year over year improvements that will not repeat that we called out in the earnings document as well.
Adjusted free cash flow for the quarter increased significantly year over year by $96 million with the higher adjusted EBITDA, but also significantly more favorable net working capital compared to the year ago period, which was helped by the normalization of our working capital trends.
Sean E. Quinn: We had growth in EBITDA across all of our segments as you would've seen in the release <unk> experienced significant profitability expansion on strong results for its holiday peak Vista's revenue grew 9% on an organic constant currency basis, which was better than expected.
Sean E. Quinn: We saw strong growth across business product categories, but we also had 7% growth in our consumer products category.
Sean E. Quinn: We continue to benefit from the range of improvements made in recent years that we've talked about extensively in our last two investor days.
Sean E. Quinn: Total customer count and also gross profit per customer both grew this quarter. So we're continuing that multiyear trend of improved per customer value, but with growth in total customers as we did in the first quarter.
Sean E. Quinn: I think beyond the quarter its worth taking a step back for just a moment and reflecting on the last year.
Sean E. Quinn: One year ago, our trailing 12 months adjusted EBITDA was $228 million.
Sean E. Quinn: Now at the end of December is $438 million or 92% increase in one year and thats still with material year over year benefits ahead next quarter.
Sean E. Quinn: Our prior cost reductions that haven't yet impacted reported results.
Sean E. Quinn: One year ago, our net leverage was five five times trailing 12 month EBITDA as defined by our credit agreement.
Sean E. Quinn: Now, it's 287 times nearly half in one year importantly, we've achieved that while still maintaining significant organic investments.
Sean E. Quinn: With two quarters remaining in the fiscal year that puts us on a run rate that exceeds our prior profitability and net leverage guidance that we established for FY 'twenty for which we had already increased since we first introduced that more specific guidance one year ago.
Sean E. Quinn: And lastly, one year ago, we had cash and marketable securities of $214 million and we had no access to our revolving credit facility.
Sean E. Quinn: Now we ended December with cash and marketable securities of $291 million.
Operator: Welcome to the Simpsons. This is the Q2 fiscal year 2024 earnings follow-up call. I will introduce Meredith Burns, Vice President of Investor Relations and Sustainability. Thank you, Michelle.
Sean E. Quinn: We have full access to our $250 million revolving credit facility.
Sean E. Quinn: Over that time in the last year, we also used $70 million of our capital to purchase $78 million of notional value of our high yield notes.
Meredith Burns: And thank you everyone for joining us today. With us today are Robert Keene, our Founder, Chairman, and Chief Executive Officer, and Sean Quinn, EVP and Chief Financial Officer. We really appreciate the time that you have dedicated to understanding our results, commentary, and outlook. This live Q&A session will last about 45 minutes and will answer both pre-submitted and live questions. You can submit questions live via the questions and answers box at the bottom left of the screen.
Sean E. Quinn: Turning to our updated outlook for the full year, our organic constant currency revenue guidance for FY 'twenty four of at least 5% is consistent with what we experienced in the first half of the year and down slightly from our prior guidance of at least 6%. We think that's appropriate to reflect the lower than expected revenue growth that we have.
Sean E. Quinn: Scene.
Sean E. Quinn: Our upload and print businesses and build the site.
Sean E. Quinn: Given our strong profitability and cash flow performance, we've raised our FY 'twenty for adjusted EBITDA guidance to at least $455 million and we now expect that to convert to free cash flow at approximately 35%.
Meredith Burns: Before we start, I will note that in this session, we'll make statements about the future. Our actual results may differ materially from these statements due to risk factors that are outlined in detail in our SEC filings and in the documents we published yesterday on our website. We also have published non-GAAP reconciliations for our financial results and outlook on our IR website. We invite you to read them. And now I will turn things over to Sean for some brief remarks before we take questions. Okay, Sean?
Sean E. Quinn: That compares to our prior guidance of at least $425 million and conversion to free cash flow at approximately 40%.
Sean E. Quinn: If you do the math of our trailing 12 months adjusted EBITDA as of December and what we've already disclosed for year over year cost savings that we expect in the third quarter of approximately $25 million and you back off the unfavorable currency impact for the remainder of the year.
Sean E. Quinn: Thanks a lot, Meredith. And thanks, everyone who's joined us today, or on the recording. Before I take your questions, along with Robert and Meredith, just want to highlight a few key points from the financial results in the updated outlook that we published yesterday. First of all, SimPress delivers strong results in the second quarter. Our consolidated revenue grew 9% on a reported basis and 6% on an organic constant currency basis, adjusted EBITDA grew $55 million year over year in Q2 to $166 million, and adjusted EBITDA margins were up nearly 500 basis points to 18.1% this year with gross margin expansion, leverage in advertising spend, and reduced operating, That was also helped by more favorable input costs compared to last year, and there were also a few beneficial year-over-year improvements that will not repeat that we called out in the earnings document.
Sean E. Quinn: That we've also disclosed which is $8 $5 million that math will get you to $455 million and so you might ask why our guidance is in higher after the extent of year over year growth. We had in the first half of the year beyond those cost savings and unfavorable currency impacts.
Sean E. Quinn: The second half of the year is definitely a harder comp from a profitability perspective, I think if you look at the quarterly profile of last year's Vista segment EBITDA margins.
Sean E. Quinn: You'll see that.
Sean E. Quinn: There are also a few benefits in Q2, we called out in the earnings document that we won't have again.
Sean E. Quinn: Not to say theres not opportunity for further growth in the second half of the year, but we have maintained this at least construct and we want to be realistic about where we set that.
Sean E. Quinn: Whereas you know incentivize to continue improving our business and our financial results and Thats, what we will remain focused on.
Sean E. Quinn: Adjusted pre-cash flow for the quarter increased significantly year over year by $96 million, with higher adjusted EBITDA, but also significantly more favorable net working capital compared to the year-ago period, which was helped by the normalization of our working capital. While we had growth in EBITDA across all of our segments, as you would have seen in the release, VISTA experienced significant profitability expansion on strong results for its holiday. Vista's revenue grew 9% on an organic currency basis, which was better than expected.
Sean E. Quinn: Our board also authorized share repurchases of up to $150 million, which doesn't have a defined timeframe set against that.
Sean E. Quinn: The progress that I've just outlined we're now in a position to have this as an option for capital allocation.
Sean E. Quinn: Any share repurchases in the remainder of this fiscal year will be done with the expectation of exiting FY 'twenty four with net leverage at or below approximately 3.0 times trailing 12 month EBITDA as defined by our credit agreement and I would note that thats an improvement from our prior net leverage guidance that we established at the beginning of the year.
Sean E. Quinn: We saw strong growth across business product categories, but we also had 7% growth in our consumer products category. We continue to benefit from the range of improvements made in recent years that we talked about extensively in our last two investor days. Total customer count and also gross profit per customer both grew this quarter. So we're continuing that multi-year trend of improved per customer value, but with growth in total customers as we did in the first quarter. I think beyond the quarter, it's worth taking a step back for just a moment and reflecting on the last year.
Sean E. Quinn: Of exiting FY 'twenty for at or below three five times.
Sean E. Quinn: With that Meredith why don't we open it up for questions.
Meredith: That's great. Thank you Shawn Okay. So we're going to jump in on a couple of questions about the quarter.
Meredith: So Sean I'll I'll take the first couple to you.
Meredith: First one which products or family of products has had the most impact on this just outperformance in the quarter.
Meredith: Sure Yes.
Meredith: We've made a few kind of directional comments about the.
Sean E. Quinn: One year ago, our trailing 12-month adjusted EBITDA was $228 million. Now, at the end of December, it's $438 million, a 92% increase in one year, and that's still with material year-over-year benefits ahead next quarter from our prior cost reductions that haven't yet impacted reported costs. One year ago, our net leverage was 5.5 times trillion (12 month) EBITDA as defined by our credit agreement.
A quarter in the release.
Sean E. Quinn: The revenue performance in Vista was it was strong across the board.
Speaker Change: I'll come to the product category question, but maybe to start.
Speaker Change: The growth was pretty similar across all of our regions North America Europe, Australia Europe was just slightly out ahead of the pack but.
Speaker Change: But really a balanced.
Speaker Change: Balanced growth story across regions.
Speaker Change: And then from a in terms of our incremental revenue, though in North America was definitely the largest and the over performance relative to our expectations was mostly in North America as well.
Speaker Change: In terms of product categories.
Speaker Change: All categories had double digit bookings growth other than business cards in consumer in Q2.
Sean E. Quinn: Importantly, we've achieved that while still maintaining significant organic investment. With two quarters remaining in the fiscal year, that puts us on a run rate that exceeds our prior profitability and net leverage guidance that we established for FY 24, which we had already increased since we first introduced that more specific guidance one year ago. And lastly, one year ago, we had cash and marketable securities of $214 million, and we had no access to our revolving credit facility. Now, we ended December with cash and marketable securities of $291 million. We have full access to our $250 million Revolving Credit Facility.
Speaker Change: Relative to our expectations, though.
Speaker Change: I'd say consumer was the product category that sticks out.
Speaker Change: Partly because we set pretty modest expectations, there because some of those products things like holiday cards or calendars, we don't get to experience throughout the year and so we had modest expectations, we exceeded them, but again strong across many categories.
Speaker Change: I think what might read the commentary and think consumer is what drove the quarter, but remember Vista had 9% organic constant currency growth overall, and so mathematically with consumer at 7% all of the other categories together grew more than 9%.
Speaker Change: And just in terms of the absolute dollars of growth Vista had $47 million of year over year.
Speaker Change: Incremental growth to put that in perspective.
Speaker Change: While consumer was really important in that it was a little more than $7 million of that growth and so there was a lot of strength elsewhere too.
Great. Thank you Shawn.
Speaker Change: Certainly a related question here, what drove the 7% growth in the consumer side.
Speaker Change: And kind of can see sustained mid to high single digit growth under the new model.
Sean E. Quinn: And over that time in the last year, we also used $70 million of our capital to purchase $78 million of notional value of our high yield. Turning to our updated outlook for the full year, our organic constant currency revenue guidance for FY 24 of at least 5% is consistent with what we experienced in the first half of the year and down slightly from our prior guidance of at least 6%. We think that's appropriate to reflect the lower-than-expected revenue growth that we've seen in our upload and print businesses and builders. Given our strong profitability and cash flow performance, we've raised our FY24 adjusted EBITDA guidance to at least $455 million, and we now expect that to convert to free cash flow at approximately 45%. That compares to our prior guidance of at least $425 million and conversion to free cash flow of approximately $40 billion.
Speaker Change: If they were there were a lot of contributors to.
Speaker Change: To start I think that the team really did a great job in the planning and execution.
Speaker Change: Always do a very extensive deep dive to assess what we can do better.
Speaker Change: And that's actually something that we are already well underway.
Speaker Change: Even for next year's holiday peak.
Speaker Change: But the team was able to take action on the things identified from last year and those are things that have to get worked on throughout the year to improve to improve the experience to add new features and new products above our go to market approach across our markets and so on and so I think the team did a really good job in all of that planning and execution.
Speaker Change: And that was really over the last over the last full year.
Speaker Change: There is also the fact that.
Speaker Change: It's not like consumer as a wholly separate business, we define it based on product carrier category, but these are customers that are interacting with the site and being put through the same experience improvements the same reduce friction in our checkout the same improvements to design help.
Speaker Change: Improvements in terms of how we're using data.
Speaker Change: And site search more efficient advertising all the other things that we've been talking about.
Speaker Change: That are actually a big part of why the other product categories had the strength I just mentioned too.
Speaker Change: I think the consumer categories also benefited from the fact that we've.
Sean E. Quinn: If you do the math of our trillion-12-month adjusted EBITDA as of December and what we've already disclosed for year-over-year cost savings that we expect in the third quarter of approximately $25 million, back off the unfavorable currency impact for the remainder of the year that we've also disclosed, which is eight and a half million dollars, that math will get you to four hundred and fifty five million. And so you might ask why our guidance is higher after the extent of year-over-year growth we had in the first half of the year beyond those cost savings and unfavorable currency. The second half of the year is definitely a harder comp from a profitability perspective.
Speaker Change: <unk> had healthier new customer acquisition cohorts in the last quarters and and there are many hybrid customers in there that are purchasing across categories. They tend to be some of the most valuable customers.
Speaker Change: In our customer file.
Speaker Change: So those are some of the things that impacted the revenue performance as.
Speaker Change: As we noted in the release it was the first time that we had year over year consumer products' growth. Since we started the transformation journey and Vista in 2019, and you may recall back then.
Speaker Change: Pretty significantly reduced discounting and advertising that was that had a big impact on consumer because there were some things that we're doing in that consumer category that were that were to shrink capital or we're not producing sufficient returns. So we've made some big changes there. So it's great to see that back to growth and doing what it's doing but it is.
Speaker Change: Actually goes beyond just revenue and so maybe just highlight a few other things.
Speaker Change: In our production facilities. We also had really good execution just as an example of that last year in Europe. There were labor supply challenges in the holiday ramp which increased cost team did a really nice job. This year changing how we approach workforce management driving a lot of efficiency versus last year from a labor perspective.
Sean E. Quinn: I think if you look at the quarterly profile of last year's Vista segment EBITDA margins, you'll see that there were also a few benefits in Q2 we called out, and there are some documents that we won't have again. That's not to say there's not opportunity for further growth in the second half of the year, but we've maintained this at least construct, and we want to be realistic about where we set. We're, as you know, incentivized to continue improving our business and our financial results, and that's what will remain focused. Our board has also authorized share repurchases of up to $150 million, which doesn't have a defined time frame set against them.
Speaker Change: And doing all of that while maintaining high on time delivery to customers.
Speaker Change: Our customer care those teams another area, where we've made continuous improvements throughout the last year.
Speaker Change: But the team has really been focused on removing friction for customers improving training for our team members improving visibility of help on placement on the site and we've been able to reduce context as well because we've improved the site experience, but also we've improved DS.
Speaker Change: These elements of our care teams interact with customers and so on.
Speaker Change: All of that has led to about a 100 basis points savings just in our customer care versus last year. So.
Speaker Change: I'd mentioned those because it's not just revenue it really is across the board as a strong performance. There is a lot thats going into that.
Sean E. Quinn: Given the progress that I've just outlined, we are now in a position to have this as an option for capital allocation. Any share repurchases in the remainder of this fiscal year will be done with the expectation of exiting FY24 with net leverage at or below approximately 3.0 times trailing 12-month EBITDA as defined by our credit agreement. And I would note that that's an improvement from our prior net leverage guidance that we established at the beginning of the year of exiting FY24 at or below 3.25. With that, Meredith, why don't we open it up for questions? That's great!
Speaker Change: And hopefully that's been a theme you pick up over the last quarters, which is it's a lot of little things and.
Speaker Change: And improved execution and focus that ultimately has driven the results that's great. Thank you Shawn.
Speaker Change: Alright, im going to move over to Robert for one of our pre submitted question. So Robert what is ailing upload and print other than the tough year over year comps in the second half of the year and what are you doing to fix it and how should we think about it.
Robert Keane: The sustainable growth in that segment.
Speaker Change: Okay.
Robert Keane: Okay well. Thanks for the question first of all let me say Hello to everyone.
Robert Keane: Barrett I think Sean welcome you to the call.
Robert Keane: As to the question I will start by saying, we see these businesses the upload and print businesses is healthy not as early.
Meredith Burns: Thank you, Sean. Okay, so we're going to jump in on a couple of questions about the quarter. So Sean, I'll kick the first couple to you.
Also are asking how we can continue their success and make them even stronger.
Robert Keane: Which is an important question, but it's not a question of what we need to fix so of course I will come to this in a moment. We explained in our release that revenue growth was below our plan.
Sean E. Quinn: First one, which products or family of products had the most impact on VISTA's outperformance in the quarter? Sure. Yeah, we made a few kind of directional comments about the VISTA quarter and the release. The revenue performance of VISTA was strong across the board. I'll come to the product category question, but maybe to start, the growth was pretty similar across all of our regions, North America, Europe, and Australia. Europe was just slightly out ahead of the pack, but really a balanced balanced growth story across regions, and then, in terms of our incremental revenue, though, North America was definitely the largest and the overperformance relative to our expectations was mostly in North America as well. In terms of product categories, all categories had double-digit bookings growth other than business cards and consumers.
Robert Keane: That doesn't change the overall picture and let me explain that by starting with our success in driving upload and print EBITDA and cash flow.
Robert Keane: We've done a cross in price or we are focusing on driving bottom line expansion.
Robert Keane: Two one show the.
Robert Keane: The underlying power of what we have as a business, but also to help with the corporate level Delevering.
Robert Keane: The upload and print just expanded.
Robert Keane: Profitability EBITDA, 41% year over year.
Robert Keane: And we have strong bottomline prospects looking forward.
Robert Keane: Specifically.
Robert Keane: If you look at upload and print on a trailing 12 month basis.
Robert Keane: 150, that's over $150 million.
Robert Keane: Which is driving again increased cash flow and cumulatively.
<unk> generated cash flow from this group with exceeds the capital that we ever invested in them.
Sean E. Quinn: Relative to our expectations, though, I would say consumer was the product category that sticks out, partly because we set pretty modest expectations there because some of those products, things like holiday cards or calendars, we don't get to experience throughout the year. So we had modest expectations; we exceeded them, but again, strong across many categories. I think, you know, one might read the commentary and think the consumer is what drove the quarter. But remember, Vista had 9% organic constant currency growth overall. And so, mathematically, with consumer at 7%, all the other categories together grew more than 9%. And just in terms of the absolute dollars of growth, Vista had $47 million of year-over-year incremental growth. To put that in perspective, while consumer was really important in that, it was a little more than $7 million of that growth. And so there was a lot of strength elsewhere. Great, thank you, Sean.
Robert Keane: And of course, there is trailing in the business today going forward. So the returns have been already attractive and we're confident that those returns will continue to grow so what's your view there.
Speaker Change: As healthy businesses.
Speaker Change: Now as to revenue, yes, it was lower than I expected.
Speaker Change: It was in part due to making sure we drive the bottom line, but also.
Speaker Change: There were and you mentioned this in your question.
Speaker Change: High growth rates last year, we had a lab, but beyond that I think there's two very important trends, which we have spoken about in the past, which is important to keep in mind, which are constraining near term revenue, but which are good for surpluses upload and print.
Speaker Change: Our revenue outlook over the longer term.
Speaker Change: Are the undisputed European leader in selling direct to end customers through upload and print style.
Speaker Change: Commerce printing.
Speaker Change: These are small orders.
Speaker Change: Traditionally relative to the commercial printing industry and the industry continues to shift overall print not just online towards smaller orders and.
Speaker Change: We see that as playing to <unk> strength.
Speaker Change: And as those orders get smaller it's harder and harder for peripheral printers to play in that.
Speaker Change: Secondly, we do see we have headwinds from resellers resellers are typically professional graphic.
Speaker Change: Our graphic design professionals are local printers were like who have traditionally been how can even today or how the majority of the print industry transact businesses.
Sean E. Quinn: And certainly a related question here: What drove the 7% growth in the consumer segment and can it sustain mid to high single-digit growth under the new model? There were a lot of contributors to start. I think that the team really did a great job in the planning and in the execution.
Speaker Change: Especially in print group.
Speaker Change: Cross upload and print we have a pretty material.
Speaker Change: Business selling to those resellers, who in turn.
Speaker Change: And customer.
Speaker Change: But with the passage of time those <unk>.
Speaker Change: Resellers are kind of system systemically are systematically getting.
Speaker Change: This intermediate it and.
Speaker Change: A large part by Sempra upload and print growth as the leader in this space.
Sean E. Quinn: We always do a very extensive deep dive to assess what we can do better, and that's actually something that we've already as well underway, even for next year's holiday peak. But the team was able to take action on the things identified from last year. And those are things that have to get worked on throughout the year to improve the experience, add new features, add new products, evolve our go-to-market approach across our markets, and so on. And so I think the team did a really good job in all that planning and execution, and that was really over the last full year.
Speaker Change: So there is a channel shifts there but.
Speaker Change: If you step back.
Speaker Change: That excluding that.
Speaker Change: High concentration of reseller revenue.
Speaker Change: It is a overall positive picture and.
Speaker Change: We look to upload and print and the teams there as being very they are very innovative they're very focused on being low cost producers.
Speaker Change: They have incredible supply chains and production capabilities are they serve customers incredibly well.
Speaker Change: And you can see in cohort value, especially defined as cash flow not revenues you see the strong.
Sean E. Quinn: There's also the fact that, you know, it's not like the consumer is a wholly separate business. We define it based on product category, but these are customers that are interacting with the site and being put through the same experience improvements, the same reduced friction in our checkout, the same improvements to design help, improvements in terms of how we're using data, improvements in site search, more efficient advertising, all the other things that we've been talking about that are actually a big part of why the other product categories have the strength I just mentioned too. I think the consumer category has also benefited from the fact that we've had healthier new customer acquisition cohorts in the last quarters, and there are many hybrid customers in there that are purchasing across categories.
Speaker Change: <unk> recurring so we're going to keep doing what they're doing there's.
Speaker Change: There's a lot of good things happening there and we don't see this is assigned.
Speaker Change: The multiyear strength, we've had in upload and print is anywhere near the end.
Speaker Change: Great. Thank you Robert.
I'm going to shift to Shaun for a.
Shaun: Technical question.
Shaun: Sean what accounted for the big share based compensation jumped in the second quarter and is that an appropriate run rate.
Shaun: Sure, Yes always good to have a couple of technical questions in here.
Shaun: The grants that we made this year.
Shaun: A combination of instruments.
Performance share units or psus.
Speaker Change: And also our issues.
Speaker Change: In terms of why the why the increase in share based compensation expense the total grant value for.
Speaker Change: For all of our annual grants, we do is a little bit higher than last year, but there is there's really two things that drove the higher expense in Q2. The first one is that.
Speaker Change: For the Psus and.
Sean E. Quinn: They tend to be some of the most valuable customers in our customer database. So, those are some of the things that impacted revenue performance. As we noted in the release, it was the first time that we had year-over-year consumer products growth since we started the transformation journey in VISTA in 2019. You may recall back then, we pretty significantly reduced discounting and advertising, and that had a big impact on consumers because there were some things that we were doing in the consumer category that were destroying capital or not producing sufficient returns. We made some big changes there, so it's great to see that back to growth and doing what it's doing. But it actually goes beyond just revenue. And so, I'll just highlight a few other things.
Speaker Change: The.
Speaker Change: In terms of like Robert myself other.
Speaker Change: Other executive officers have all of our long term incentives of psus.
Speaker Change: A large part of the overall.
Speaker Change: Share based compensation for this year.
The way that those are required to be accounted for as on an accelerated basis.
Speaker Change: So what ends up happening to spare you. The details is that about 50% of the expense gets taken in year, one and that compares to like if there is an <unk> with.
Speaker Change: With a four year vesting period about 25% of the expense we get taken in year. One. So so you do get just in terms of how it is accounted for a higher a higher cost in year, one than our past profile.
The second one is that the the psus and the <unk>.
Speaker Change: Expense that we take for Psus is variable depending on our attainment against the performance conditions.
Speaker Change: Performance conditions are based on our revenue EBITDA and Unlevered free cash flow for this year.
Speaker Change: And we updated those estimates are a team of percentages based on our results.
Speaker Change: Which were strong and so that the team a percentage a bit higher and so that also played a role youll see in our non-GAAP reconciliations we actually walk this and so.
Sean E. Quinn: In our production facilities, we also had really good... Just as an example of that last year in Europe, there were labor supply challenges during the holiday ramp, which increased costs. The team did a really nice job this year, changing how we approach workforce management, driving a lot of efficiency versus last year from a labor perspective, and doing all that while maintaining a high level of on time in our customer care. Those teams, another area where we've made continuous improvement throughout the last year, but the team's really been focused on removing friction for customers, improving training for our team members, and improving visibility of help on placement on the site. And we've been able to reduce contacts as well because we've improved the site experience, but we've also improved these elements of how our care teams interact with customers.
Speaker Change: We increased our full year expectation for share based compensation expense for from $60 million to $65 million for FY 'twenty four.
And again, just remember that.
Speaker Change: Some of that is driven by this feature of accelerated expensing for the psus with 50% of that cost in year one.
Speaker Change: As to I think the question I was asked if that's a good reflection of the run rate I think it really depends on sort of the instruments that is.
Speaker Change: For naphtha.
Speaker Change: A fair run rate.
Speaker Change: Yes.
Speaker Change: Youre one of an accelerated basis, so that all kind of more and more be layered into the to the expense profile.
Speaker Change: Great. Thanks, so much on okay.
Speaker Change: This next question is from Roberts Rob.
Speaker Change: Robert can you update us on customer experience enhancements in Vista that are driving improvements in customer satisfaction, and new customer acquisition cohorts and customer lifetime value.
Sean E. Quinn: And so all of that has led to about 100 basis points in savings just in our customer care versus last year. So I mentioned that because it's not just revenue; it really is across the board. It was a strong performance. There's a lot that's gone into that, and hopefully, that's been a theme you pick up over the last quarters, which is it's a lot of little things and improving execution and focus that ultimately have driven that. Great. Thank you, Sean.
Roberts Rob: Sure, Let me say first of all the main.
Robert Keane: Point about these customer experience improvements.
Robert Keane: Is that we are increasing the cadence of the velocity of continuous improvements of many small things not relying on step function changes.
Robert Keane: And that's very powerful but there are too many to cover all of these I will give you some very specific examples, but theres a lot of them.
Robert Keane: Sean also covered this to some extent in his response to the consumer question earlier.
Robert Keane: I'll come to that you mentioned, specifically acquisition cohorts and customer lifetime value.
Robert Keene: All right, I'm going to move over to Robert for one of our pre-submitted questions. So, Robert, what is ailing upload and print other than the tough year-over-year comps in the second half of the year? And what are you doing to fix it?
Robert Keane: And customer satisfaction, I think that in terms of cohorts.
Robert Keane: We have there's two major factors how much values here per customer LTV, how many customers and.
Robert Keane: The improvements we've been making for the last five years have consistently driven up the value per customer I think a lot of what's happening is we are continuing that with that.
Robert Keene: And how should we think about it, about sustainable growth in that sector? Okay, well, thanks for the question. First of all, let me say hello to everyone and, like Meredith and Sean, welcome you to the call.
Robert Keane: That trend with the consumer.
Robert Keane: Our customer facing experience improvements.
Robert Keane: But very importantly, the second factor the number of new customers are now starting to get traction and.
Robert Keane: Certainly an important part of customer experience is certainly an important part of that but it also has a lot of great work in the marketing teams and others to find ways to drive that.
Robert Keane: So.
Robert Keane: In terms of some examples.
Robert Keene: As to the question, I will start by saying we see these businesses, the upload and print businesses, as healthy, not as ailing. We are also asking how we can continue their success and make them even stronger, which is an important question, but it's not a question of what we need to quote-unquote fix. So, of course, and I will come to this in a moment, we explained in our release that revenue growth was below our plan. But that doesn't change the overall picture.
Robert Keane: You really have to look back for the last four or five years and see we started with some very large brute force changes.
Robert Keane: Moving.
Robert Keane: Our discount levels down dramatically.
Robert Keane: We still discount, but much less certain in the past are changing how we advertise changing how we talk about our business.
Robert Keane: The customer value we deliver.
Robert Keane: We spent more than three years migrating the technology stack and only finished that up 18 months ago, we invested in talent and a lot of different areas.
Robert Keane: Didn't do all of that right, but we've made a lot of good decisions and we are now seeing 18 months. After the tech migration about 15 months after committing to move to what are known as empowered product teams.
Robert Keene: And let me explain that by starting with the success in driving up upload and print EBITDA and cash flow. As we've done across Sympress, we are focusing on driving bottom line expansion to one show the underlying power of what we have as a business, but also to help with corporate level de-levering. And Upload & Print just expanded profitability even to 41% year-over-year, and we have strong bottom-line prospects looking forward, specifically if you look at Upload and Print on a trailing 12-month basis. It's 150, that's over $150 million, which is driving, again, increased cash flow, and cumulatively, we've generated cash flow from this group that exceeds the capital we ever invested in them, and of course, there's value in the business today going forward, so the returns have already been attractive, and we're confident that those returns will continue to grow. So as to revenue, yes, it was lower than I expected, but it was in Last year, we had a lap.
Robert Keane: We're seeing that.
Robert Keane: All of those things are starting to click.
They are able to be more focused on improvements rather than these big shifts.
Robert Keane: That.
Robert Keane: It comes down to things that matter to our customers. So as two examples.
Robert Keane: The.
Robert Keane: I can start with flight search.
It could be that's much better than it has been in the past and we think we can make it better mobile first design flows.
Robert Keane: <unk> the call friction of checkout, improving the layout of the homepage or some of the core merchandising page.
Pages to improve find ability.
Robert Keane: The pace of new product introduction is coming up dramatically from where it was a.
Robert Keane: A year ago. It is still not where we think it can be and its not at the pace, we see in our upload and print businesses, but it is improving.
Robert Keane: We've improved design service offerings.
Robert Keane: <unk> started to integrate those more deeply and experience we've taken learnings for Vista create and we're bringing those into the core vistaprint experience.
As I mentioned more customers.
Robert Keane: Certainly comes from.
Robert Keane: Great marketing improvement, but also very important.
Robert Keane: <unk> conversion rates because of the slight improvements.
Robert Keane: And so on.
Robert Keane: Finally, we've done a lot of work on product quality and on time to customer and customer service improvements which has.
Robert Keane: Multiple effects one is.
Robert Keane: It improves our retention rates, which has huge value to the value of the cohorts.
Robert Keane: And two.
Robert Keane: Driven down our credit rate.
Robert Keene: But beyond that, I think there are two very important trends, which we have spoken about in the past, which are important to keep in mind, which are constraining near-term revenue but which are good for CINPRES's upload and print revenue outlook over the longer term. We are the undisputed European leader in selling direct to end customers through upload and print style e-commerce printing. These are traditionally small orders, traditionally relative to the commercial printing industry.
Robert Keane: Still have a very customer centric approach to credit, but as we make fewer mistakes, we make how we issue fewer credits and that's healthy so I'll stop there, but really I would summarize by saying.
Robert Keane: There is no one silver bullet, which is change things that we see this as a overall got it.
Robert Keane: Acceleration of the velocity the faster cadence of new product.
Robert Keane: New customer facing improvements and we think that will continue.
Speaker Change: That's really great Robert.
Speaker Change: <unk>.
Robert Keane: Really exciting to see that inside the company, it's just like adding my own an editorial comment there alright lets now move to the next question.
Robert Keane: Robert I'm going to stick with you how far along are you in the process of integrating more robust design services into the Vista customer experience can you give us a progress update on this to create in terms of user growth and other key metrics that you're tracking.
Robert Keene: And the industry continues to shift overall print, not just online, towards smaller orders, and we see that as playing to Timpress's strength. And as those orders get smaller, it gets harder and harder for traditional printers to participate in that. Secondly, we do see that we have headwinds from resellers. Resellers are typically professional graphic design professionals or local printers or the like, who have traditionally been, and even today, are how the majority of the print industry transacts business.
Robert Keane: Great.
Speaker Change: There are a couple of questions, where there is design services overall and there is vista creates specifically so.
Robert Keane: Florida and in our most recent Investor day, we spoke about exposing design services from the 99 design community to Vistaprint customers.
Robert Keane: We have taken a slower approach, they're taking longer than I would have originally expected I think any of us would've, but again a lot of that was related to a need to fix some of the other things I just talked about in terms of tech migration, new product team structures and so on but we are seeing the benefits.
Robert Keane: Win by making that smoother for our customers, who need design help to get it and we're going to continue to test and learn and incorporate improvements into the experience and partly we are now working to say how can we make sure the flow between.
Robert Keene: And especially in the print group, but across Blood & Print, we have a pretty material business selling to those resellers who, in turn, sell to the end customer. But with the passage of time, those resellers are kind of systemically or systematically getting disintermediated, and in large part by Zimpress's upload and print group as the leader in this space. So there's a channel shift there, but if you step back, that, excluding that high concentration of reseller revenue, it is an overall positive picture. And we look to Upload & Print and the teams there as being very, they are very innovative. They're very focused on being low-cost producers.
Robert Keane: You can think of a spectrum from getting customer service getting customer service based design help to getting a professional to help you, making sure that that's a smooth transition back and forth for customers, who at different points in their customer journey need different types of service.
Robert Keane: <unk> also made.
Robert Keane: Design overall.
Robert Keane: More pervasive through the customer experience how design agents.
We know the design customer service agents, and we know that designers from the 99.
Robert Keane: Networks have.
Robert Keane: Much higher LTV.
Robert Keane: So making incremental improvement has helped.
Robert Keene: They have incredible supply chains and production capabilities, and they serve customers incredibly well. They, and you can see in cohort value, especially defined as cash flow, not revenues, you see these strong trends occurring. So we're, they're going to keep doing what they're doing. There are a lot of good things happening there, and we don't see this as a sign that the multi-year strength we've had in Upload & Print is anywhere near the end.
Robert Keane: I would put that in the category of what I spoke about for the prior question. It's an example of improving satisfaction conversion revenue profitability.
Robert Keane: If you go into the site Youll see a lot more offers for design help for custom bespoke design.
Robert Keane: <unk> on the homepage in the studio.
Robert Keane: In chat boxes that pop up.
Robert Keane: And on pages for more complex products. We also have the.
Robert Keane: Team.
Sean E. Quinn: Thank you, Robert. I'm going to shift to Sean for a technical question. So Sean, what accounted for the big share-based compensation jump in the second quarter? And is that an appropriate run rate?
Driving logo offerings with a range of design options and experiences which is very much related to <unk>.
Robert Keane: 99 designs and our work that we've done since we've acquired 99 designs.
Robert Keane: We are incorporating the vista create capabilities into the Vista design studio within Vistaprint.
Robert Keane: It is taking time because of the architectural underlying components, but we are on a trajectory of making incremental studio experiences to make it better for our customers.
Sean E. Quinn: Sure, yeah, always good to have a couple of technical questions here. The grants that we made this year were a combination of instruments, performance share units or PSUs, and also RSUs. In terms of why the increase in share-based competition expense, the total grant value for all of our annual grants we do is a little bit higher than last year, but there were really two things that drove the higher expense in Q2. The first one is that for the PSUs and, in terms of like Robert, myself, and other executive officers, we have all of our long-term incentives and PSUs. So it's a large part of the overall share-based compensation for this year. The way that those are required to be accounted for is on an accelerated basis. And so what ends up happening, to spare you the details, is that about 50% of the expense gets taken in year one. And that compares to, say, if it's an RSU with a four-year vesting period, about 25% of the expense would get taken in year one.
Robert Keane: And you can see some of this.
Robert Keane: Instance.
Robert Keane: <unk>.
Robert Keane: Logo maker, where you download the finished logo and brand kit.
Robert Keane: That's now available in Vista create as well.
So finally I'd say.
Speaker Change: Got it.
Speaker Change: We see.
Speaker Change: How we move forward with the Vista create.
Speaker Change: And 99 designs acquisition less of building them.
Speaker Change: And building on a stand alone businesses, but rather exposing the services and capabilities and using the talent, we acquired with that to improve the vistaprint experience overall.
Speaker Change: Where the real value is for our customers because of the size of the vistaprint and for shareholders because of the size of the revenues and cash flows out of Vistaprint.
Speaker Change: Thank you Robert.
Speaker Change: Stick with you for one more question before I, let you off the hook.
Speaker Change: Robert how is customer adoption of the Vista times with digital offering progressing.
Robert Keane: Well first of all we have a 100% completed the migration off of our legacy web.
Sean E. Quinn: So you do get, just in terms of how it's accounted for, a higher cost in year one than our past programs. The second one is that the PSUs and the expense that we take for PSUs are variable depending on our attainment against the performance conditions. Those performance conditions are based on our revenue, EBITDA, and our number of free cash flow for this year. And we've updated those estimates of attainment percentages based on our results, which were strong. And so the attainment percentage is a bit higher.
Robert Keane: Website builder product to the waived the Wix website builder, we finished that up in the first quarter.
Robert Keane: <unk>.
Robert Keane: It is just a much better.
Robert Keane: Customer experience full stop and we're happy with that.
Robert Keane: We also see the.
Robert Keane: <unk> per customer is materially better or value per customer in terms of cash flows.
Robert Keane: Progress has been good it's still.
Robert Keane: Situation, where most of our focus is continuing to optimize how we integrate.
Robert Keane: What is a third party holding controlled.
Robert Keane: Product experienced the wix.
Robert Keane: Experience, which we really see is great for our customers to make sure it integrates into our <unk>.
Sean E. Quinn: And so that also played a role. You'll see in our non-GAAP reconciliations, we actually walked this. And so we increased our full year expectation for share-based compensation expense from $60 million to $65 million for FY24.
Robert Keane: Right, well and making sure the funnel that drives customers. There is working we're removing friction for customers now that.
Robert Keane: The bulk of the effort, which was getting all of the legacy site builder customers migrated to Wix is over we can focus more on those things digitally.
Robert Keane: Digital bookings.
Sean E. Quinn: Again, just remember that some of that is driven by this feature of accelerated expensing for the PSUs with 50 percent of that cost in year one. I think the question also asks if that's a good reflection of the run rate. I think it really depends on the instruments that we use.
Robert Keane: Grew year over year.
Robert Keane: In Q2, just as we finished up they also did in Q1 and we expect it to our revenues to grow again on a full year basis.
Robert Keane: And as we move forward, we think we're seeing an uptick in customers, but again an uptick.
Sean E. Quinn: For now, I think that's a fair run rate. So that'll kind of more and more be layered into the expense. Great, thanks so much, Sean. Okay, this next question is for Robert. Robert, can you update us on customer experience enhancements in VISTA that are driving improvements in customer satisfaction, new customer acquisition cohorts, and customer lifetime value? Sure, let me tell you first of all, the main point about these customer experience improvements is that we are increasing the cadence and the velocity of continuous improvements of many small things, not relying on step function changes. And that's very powerful, but there are too many to cover all these. I will give you some very specific examples, but there are a lot of them. He covered this to some extent in his response to the consumer question earlier, and I' Now, you mentioned specifically acquisition cohorts and customer lifetime value and customer satisfaction. I think that in terms of cohorts, there are two major factors.
Robert Keane: A material uptick in the.
Robert Keane: Lifetime value of each customer. So in summary, we are happy with where the Vista times Wix digital offering is we have a lot of opportunity in front of us, but it's going in the right direction.
Speaker Change: Thanks Robert.
Alright, Sean I'm going to ask you a question now.
Sean E. Quinn: And that is.
Sean E. Quinn: What is the implied growth for Vista in the second half of the year in the 7%.
Speaker Change: Revenue guide to 7%.
Sean E. Quinn: Reported guide or 5% organic constant currency guidance.
Sean E. Quinn: Yes, we haven't given revenue guidance at a segment level for the remainder of the year.
Sean E. Quinn: So.
Sean E. Quinn: Maybe just a few things to cloud the comps in <unk> as you can see are different depending on the segment and when price changes were happening last year.
Sean E. Quinn: I think that I think you can assume that the expectations in the second half of the year or are close to the consolidated organic constant currency guidance that we gave up at least 5%.
Speaker Change: Probably won't get more specific than that.
Speaker Change: As for the reported revenue growth.
Speaker Change: In general there's going to be less based on the current rates, we expect less currency impact in the second half of the year and so right now for Vista I would expect that the reported growth organic constant currency growth would be quite close together.
Speaker Change: Great. Thank you.
Speaker Change: Alright, another one for you Sean as you mentioned input prices are lowering and revenue per customer is increasing what's the response from customers to price increases and how are you and how are you able to lower prices to attract upload and print.
Robert Keene: How much value is there per customer, the LTV, and how many customers? The improvements we've been making for the last five years have consistently driven up the value per customer. I think a lot of what's happening is we are continuing that trend with this, that trend with consumer and customer facing experience improvements. But very importantly, the second factor, the number of new customers is now starting to get traction. And it's certainly an important part; customer experience is certainly an important part of that, but there is also a lot of great work by the marketing teams and others to find ways to drive that. So, in terms of some examples,
Speaker Change: Yes.
Sean E. Quinn: From a price perspective, there hasn't really been much change over the last quarter.
Sean E. Quinn: The address increased decreased.
Sean E. Quinn: Yes.
Sean E. Quinn: Yes.
Sean E. Quinn: We find ourselves now in more kind of optimization loaded. So I don't expect any step function changes upward or downward based on what we see today.
Sean E. Quinn: More back into the continuous optimization testing based on price elasticity and so on.
Sean E. Quinn: So thats the mode that we're that we've been in I think.
Sean E. Quinn: One of the things to consider is that.
Sean E. Quinn: The pace of input cost increases and part of our business and take paper cost for example.
Robert Keene: I think you really have to look back on the last four or five years and see we started with some very large brute force changes, moving our discount levels down dramatically. We still discount, but much less than in the past, changing how we advertise, changing how we talk about our business, and the customer value we deliver. We spent more than three years migrating the technology stack and only finished that up 18 months ago. We invested in talent in a lot of different areas. We didn't do all that right, but we made a lot of good decisions.
Sean E. Quinn: Was extremely high and so we werent just passing that along.
Sean E. Quinn: There were parts of that business, where we were having to absorb a piece of that.
Sean E. Quinn: In paper cost for example in some regions go up.
Sean E. Quinn: 50% or more that is not something that you can just the next day pass on and so I think that over time.
Sean E. Quinn: <unk> costs have settled in combined with the pricing steps that we did take over the last 18 months or so.
Sean E. Quinn: We're at an equilibrium that right now feels like that's OK and again, we will continue to optimize.
Sean E. Quinn: Optimize within that.
Robert Keene: And we are now seeing 18 months after the tech migration, about 15 months after committing to move to what are known as empowered product teams. We're seeing that a lot of those things are starting to click, the teams are able to be more focused on improvements rather than these big shifts. And that comes down to things that matter to our customers. So, as two examples, I could start with site search.
Sean E. Quinn: In terms of.
Sean E. Quinn: Are you able to lower prices to attract upload and print.
Sean E. Quinn: We haven't seen the need to do so again, we will continue to test and optimize.
Sean E. Quinn: Orders are still growing.
Sean E. Quinn: So in upload and print.
Sean E. Quinn: Really the things that Robert talked about earlier in terms of some of the headwinds there for growth.
Sean E. Quinn: So I don't expect.
Sean E. Quinn: I don't expect big changes in the near term and also we did not make the changes over the over the last quarter not only in upload and print but elsewhere too.
Robert Keene: It could be much better than it has been in the past, and we think we can make it better. Mobile-first design flows, reducing the friction of checkout, and improving the layout of the homepage or some of the core merchandising pages to improve findability. The pace of new product introduction is coming up dramatically from where it was a year ago. It's still not where we think it can be, and it's not at the pace we see in our upload and print businesses, but it's improving. We've improved design service offerings and started to integrate those more deeply in the experience. We've taken learnings from Vista Create, and we're bringing those into the core Vista print experience.
Sean E. Quinn: Yeah.
Speaker Change: Great. Thank you.
Speaker Change: Alright next one I'm going to ask Robert.
Robert Keane: Have you done the math on what upload and print growth rate was in the quarter, excluding the reseller channel.
Yes, we have done the math.
Robert Keane: We don't disclose that publicly.
Robert Keane: One because every business.
Robert Keane: And the World has overall results in province that contain a mix of different growth rates of different segments, but also for competitive reasons, but I can give you a little bit of context here now remember that our upload and print.
Robert Keane: Every single one of them have reseller business.
Robert Keane: Exit and trade print.
Robert Keane: Which are part of our print group, traditionally where 100% reseller and they're shifting away, but they really started with 100% retailer.
Robert Keene: We're acquiring, as I mentioned, more customers, which certainly comes from great marketing improvement, but also, very importantly, improved conversion rates because of the site improvement. And so finally, we've done a lot of work on product quality and on time to customer and customer service improvements, which have multiple effects. One is, it improves our retention rates, which has huge value to the value of the cohorts.
Robert Keane: Whereas we're marketing through Drouk print deal and Pixar printing.
Robert Keane: The first three of those executing Pixar printing are part of print brothers Pixar printing is part of the print group also has retailers, but it's a minority of their business.
Robert Keane: <unk>.
Robert Keane: We see the most headwinds.
Robert Keane: The print group because of the traditional focus of two other businesses on resellers now a good number to look at it as print brothers, where again, we do have.
Robert Keane: Retailer businesses, which are retail or customers that are material or not majority yes.
Robert Keane: Print brothers is still growing at.
Robert Keane: About 5% a year.
Robert Keene: And two, it's driven down our credit rate. We still have a very customer-centric approach to credit, but as we make fewer mistakes, we issue fewer loans, and that's helping. So I'll stop there, but really, I would summarize by saying that there's no one silver bullet that has changed things. We see this as an overall trend, and I think we're going to see an acceleration of the velocity, the faster cadence of new product or new customer-facing improvements, and we think that will continue. That's really great, Robert.
Robert Keane: So theres a mix within that of resellers and direct.
Speaker Change: I think I'd.
Speaker Change: I'd come back to the main point is that if you think out 10 years from now where is the world going.
Speaker Change: The world is going more and more to direct relationships across the internet with any customers.
Speaker Change: And.
Speaker Change: The ability to sell directly from our factory floors out to those customers without going through.
Speaker Change: Intermediary.
Speaker Change: Is long term good for the economics of synthesis.
Speaker Change: Thanks Robert.
Robert Keene: I It's just really exciting to see that inside the company as well. I'm just like adding my own editorial comments here. All right, let's move to the next question, Robert. I'm going to stick with you.
Speaker Change: Alright.
Speaker Change: Another question here for Sean on capital allocation question, John any plans to buy back more bonds.
Sean E. Quinn: No specific plans as we said in the.
Robert Keene: How far along are you in the process of integrating more robust design services into the Vista customer experience? Can you give us a progress update on Vista Create in terms of user growth and other key metrics that you're tracking? Great turn.
Sean E. Quinn: Released last night.
Sean E. Quinn: Obviously, we've been a buyer of our bonds over the last three quarters, we will continue to consider using excess liquidity to repurchase our debt that's not exclusive to bonds can be any of our debt.
Sean E. Quinn: And but no specific plans, but as you can see that's something that will we will regularly look at and we have been looking at and we'll.
Robert Keene: There are a couple questions there. There are design services overall, and there's VistaCreate specifically. So Florian, at our most recent Investor Day, spoke about exposing design services from the 99 design community to Vista customers. We have taken a slow approach there. It's taken longer than I would have originally expected. I think any of us would have.
Sean E. Quinn: We'll see where things go.
Sean E. Quinn: Fantastic.
Speaker Change: Alright, so with that we have come to the end of the question. There was another question that came on.
Speaker Change: The holiday season I think.
Speaker Change: The ask or maybe came on to the call little bit late because we did cover the <unk>.
Robert Keene: But again, a lot of that was related to a need to fix some of the other things I just talked about in terms of tech migration, new product team structures, and so on. But we are seeing the benefits of making that smoother for customers who need design help. And we're going to continue to test and learn and incorporate improvements into the experience. And importantly, we are now working to say, how can we make sure the flow between, you can think of a spectrum from getting customer service to getting customer service-based design help to getting a professional to help you, making sure that that's a smooth transition back and forth for customers who, at different points in their customer journey, need different types of service.
Speaker Change: Holiday season in quite a bit of detail at the beginning of the call.
Speaker Change: So I can write to that person after the comp.
Speaker Change: And you can always listen to the trends.
Speaker Change: We listen to the replay or read the transcript to catch our answer on that one so I'm just going to turn things over to Robert to wrap things up.
Speaker Change: Okay.
Robert Keane: Well. Thank you to all of you for joining the call and for continuing to.
Robert Keane: Entrust us with your capital we are really happy to be ahead of our plans for.
Robert Keane: The bottom line profit and cash flow and.
Robert Keane: By reducing our net leverage.
Robert Keane: I think a lot of options in front of us, but very importantly, and Sean said this before and we said this in the release.
Robert Keane: We are happy to do so while continuing to invest in key areas for the future and so we think that success.
Robert Keane: Is a.
Robert Keene: We've also made design overall, more pervasive through the customer experience, how design agents, we know the design customer service agents, and we know that designers from the 99 network have much higher LTV. So making incremental improvements has helped the, I would put that in the category of what I spoke about for the prior question; it's an example of improving satisfaction, conversion, revenue, and profitability. If you go to the site, you'll see a lot more offers for design help for custom or bespoke design support on the homepage, in the studio, in chat boxes that pop up, and on pages for more complex products.
Robert Keane: A combination of different factors, but stepping way back.
Robert Keane: Being able to focus on execution after a series of.
Robert Keane: Changes starting with the Vistaprint trends information five years ago that went through the pandemic, which went through a lot of fundamental changes in how we run the business, but we are seeing the benefits of that focus we look forward to continuing to build momentum from here.
Robert Keane: And we think we're on the right track to.
Robert Keane: Prove our intrinsic value per share for a long time to come.
Speaker Change: Thank you again.
Speaker Change: Ladies and gentlemen. This concludes today's conference. Thank you for your participation have a great day and you may now disconnect.
Robert Keene: We also have the team driving local offerings with a range of design options and experiences, which is very much related to 99designs and work that we've done since we acquired 99designs. We are incorporating the Vista Create capabilities into the Vista Design Studio within Vista Print. That is taking time because of the underlying components, but we are on a trajectory of making incremental studio experiences to make them better for our customers. And you can see some of this, for instance, the logo maker where you download the finished logo and a brand kit that's now available in Vista Create as well.
Speaker Change: Okay.
Robert Keene: And so, finally, I'd say. We see how we move forward with the Vista Crate and 99designs acquisitions, less building them, or not building them as standalone businesses, but rather exposing the services and capabilities and using the talent we acquired with that to improve the Vistaprint experience overall, where the real value is for customers because of the size of Vistaprint and for shareholders because of the size of the revenues and cash flows from Vistaprint. Thank you, Robert. Okay, I'm going to stick with you for one more question before I let you off the hook. Robert, how is customer adoption of the Vista Times Wix digital offering progressing? First of all, we have 100% completed the migration off of our legacy website builder product to the Wix website builder. We finished that in the first quarter.
Robert Keene: It is just a much better customer experience, full stop, and we're happy with that. We also see that the value per customer is materially better; our value per customer, in terms of cash flows, progress has been good. It's still a situation where most of our focus is continuing to optimize how we integrate what is a third-party holding control of the product experience, the Wix experience, which we really see is great for customers, make sure it integrates into our site well, and make sure the funnel that drives customers there is working, removing friction for customers. Now that the bulk of the effort, which was getting all the legacy Site Builder customers migrated to Wix, is over, we can focus more on those things.
Speaker Change: [music].
Robert Keene: Digital bookings grew year over year in Q2, just as we finished up, they also did in Q1. And we expect digital revenues to grow again on a full year basis. And as we move forward, we think we're seeing an uptick in customers, but again, an uptick, a material uptick, in the lifetime value of each customer. So, in summary, we are happy with where the Vista Times Wix digital offering is. We have a lot of opportunity in front of us, but it's going in the right direction. Thanks, Robert.
Sean E. Quinn: All right, Sean, I'm going to ask you a question now, and that is, what is the implied growth for VISTA in the second half of the year under the 7% Revenue Guide, so 7% Reported Guide or 5% Organic Compton Currency? We haven't given revenue guidance at a segment level for the remainder of the year. So maybe just a few things to call out. The comps in H2, as you can see, are different depending on the segment and when price changes were happening last year. I think you can assume that the VISTA expectations for the second half of the year are close to the consolidated organic constant currency guidance that we gave of at least 5%. I probably won't get more specific than that.
Sean E. Quinn: As for the reported revenue growth, in general, there's gonna be less. Based on the current rates, we expect less currency impact in the second half of the year. And so right now for VISTA, I would expect that the reported growth and the organic constant to be quite close together. Great. Thank you. All right. Another one for you, Sean.
Sean E. Quinn: As you mentioned, input prices are lowering, and revenue per customer is increasing. What's the response from customers to price increases, and how are you able to lower prices to attract uploads and print? Yeah, from a price perspective, there hasn't really been much change over the last quarter. In the direction of increased decrease, I said last, you know, we find ourselves now in more kind of optimization mode. And so I don't expect any step function change, upward or downward based on what we see today. It's more back to continuous optimization testing based on price elasticity and so on. So that's the mode that we're in.
[music].
Sean E. Quinn: I think, you know, one of the things to consider is that the pace of input cost increases in part of our business, and take paper costs, for example, was extremely high. And so we weren't just passing that all on. And there were parts of that business where we were having to absorb a piece of that; when paper costs, for example, in some regions go up 50% or more, that's not something that you can just, you know, the next day, pass on.
Sean E. Quinn: And so I think that over time, you know, as input costs have settled in, combined with the pricing steps that we did take, you know, over the last 18 months or so, we're at an equilibrium that right now feels like that's okay. And again, we'll continue to optimize within that. In terms of, are you able to lower prices to attract upload and print? We haven't seen the need to do so.
Sean E. Quinn: Again, we'll continue to test and optimize, but, you know, orders are still growing. And so it's in upload and print. It's really the things that Robert talked about earlier in terms of some of the headwinds there for growth. So I don't expect big changes in the near term. And also, we did not make big changes over the last quarter, not only in upload and print but also, Great, thank you. Alright, next one, I'm going to ask Robert, have you done the math on what the upload and print growth rate was in the quarter, excluding the reseller channel? Yes, we've done the math. But we don't disclose that publicly. One, because every business in the world has an overall result in profits that contains a mix of different growth rates in different segments, but also for competitive reasons. But I can give you a little bit of context here.
Robert Keene: Now, remember that our upload and print businesses, every single one of them has a reseller business. EGSA and Tradeprint, which are part of the print group, traditionally were 100% resellers, and they are shifting away, but they really started with 100% reseller, whereas Wermach and Druke, Druke Print Deal, and Pixar Printing, were the first three of those, excluding Pixar Printing, are part of Print Brothers. Pixar Printing is part of the print group, and it also has resellers, but it's a minority of their business. So, we see the most headwinds in the print group because of the traditional focus of two other businesses on resellers. Now, a good number to look at is Print Brothers, where again we do have reseller businesses, which are reseller customers that are material, although not the majority, yet Print Brothers is still growing at about 5% a year. So again, there's a mix within that of resellers and direct. I think so.
Robert Keene: I'd come back to the main point that, if you think out 10 years from now, where is the world going? The world is going more and more to direct relationships across the internet with end customers, and the ability to sell directly from our factory floors to those customers without going through an intermediary is long-term good for the economics of SEMPRA. Thanks, Robert. All right. Another question here for Sean. A fun capital allocation question. Sean, any plans to buy back more bonds? And no, there are no specific plans.
Sean E. Quinn: As we said in our release last night, you know, we've obviously been a buyer of our bonds over the last three quarters. We'll continue to consider using excess liquidity to repurchase our debt that's not exclusive to bonds. It could be any of our debt. And but yeah, no specific plans.
Sean E. Quinn: But as you can see, it's something that we will regularly look at, and we have been looking at, and yeah, we'll see where things go. Alright, so with that, we have come to the end of the set of questions. There was another question that came up about the holiday season. I think the asker maybe came on to the call a little bit late because we covered the holiday season in quite a bit of detail at the beginning of the call. So I can write to that person after the call, and you can always listen to the replay or read the transcript to catch our answer on that one.
Meredith Burns: So I'm just going to turn things over to Robert to wrap things up. Well, thank you to all of you for joining the call and for continuing to entrust us with your capital. We are really happy to be ahead of our plans for the bottom line profit and cash flow. And by reducing our net leverage, we have, I think, a lot of options in front of us. But very importantly, and Sean said this before, and we said this in the release, we are happy to do so while continuing to invest in key areas for the future. And so we think that success is a combination of different factors, but stepping way back, being able to focus on execution after a series of changes that started with the Vistaprint transformation five years ago that went through the pandemic, which went through a lot of fundamental changes to how we run the We look forward to continuing to build the momentum from here, and we think we're on the right track to improve our intrinsic value per share for a long time to come.
Robert Keene: Thank you again. Ladies and gentlemen, this concludes today's conference. Thank you for your participation. Have a great day, and you may now disconnect. ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Kendall Jones Doctor Who Flickr Spoofy alert, and and and and and and, ?? ?? ?? ?? ??