Ladies and gentlemen, welcome to the VistaPrint second quarter fiscal year 2013 Q&A earnings conference call. My name is Keith and I will be your operator for today. This call is being hosted by Robert Keane, President, CEO and Ernst Teunissen, Executive Vice President and CFO. Before we take the first call, as noted in the safe harbor statement at the beginning of the earnings presentation, comments may include forward-looking statements, including statements regarding revenue and earnings guidance and actual results may differ materially. Risks that could impact these statements are described in the documents that are periodically filed with the Securities and Exchange Commission. Before we start with questions, I would like to turn the call over to Robert Keane a few brief comments.

Thank you, Keith and welcome to the call this evening. I hope by now you have had a chance to read through our earnings release and prepared information. For those of you who have not had that chance, I would like to provide a brief summary. Our Q2 revenues were in line with expectations. They were a continuation of the recent trend of really mixed revenue performance by geography. Earnings per share was ahead of our expectations. We are 18 months into the execution of the long-term strategy we have publicly in 2011 and we have much to be proud of. Our North American revenue performance has been strong and our manufacturing investments are improving product quality and production efficiency. Our technology investments are helping to improve our site experience around the world and we are better entertaining our customers through enhanced customer service. However our revenue weakness in Europe persists. We believe this has resulted primarily from our own execution challenges. So we are working hard to overcome the growth challenges that we face there in Europe in the recent quarters. That said, a sustainable turnaround in Europe will take time. In light of that, we have reduced our revenue outlook for fiscal 2013 by $30 million at the midpoint. However, we have narrowed our earnings per share guidance to the upper part of our prior guidance range. As stated in our prepared presentation, our continuing challenges in Europe have negatively impacted our long-term revenue outlook, so we no longer believe it is likely that we will achieve our original $2 billion organic revenue target in fiscal year '16, but we are still targeting our original 2016 net income guidance and we continue to believe there we have multiple leaders available to help us achieve significant margin leverage from '14 through fiscal '16. This is due in part to some of the successful strategy execution I described earlier and talk about more in our prepared presentation as well as the investment trade-offs and expense management that we believe is good both for near-term but for long-term. I also want to make sure the people saw our decision to postpone our upcoming Investor Day and I would like to apologize for any inconvenience this may have caused. But we do believe that holding the event at the beginning of our new fiscal year when we have actually completed our normal annual planning cycle and evolved our plan to address the European challenges and our profit goals will produce higher-quality event for you, our investors. Now we will take your questions.

(Operator Instructions) Now, we will proceed with the first call. It's from the line of Youssef Squali with Cantor Fitzgerald. Please go ahead.

Hi, thank you very much. Good afternoon, guys. Maybe two quick questions. First, Robert, on something you just said about your plans. Were the $2 billion goal in organic revenue by 2016 not achievable, but the EPS to be still achievable? I guess the first part to that question is, is there maybe a more realistic revenue goal by 2016 that you feel you can share with us at this point? Second, it looks like by that statement that there is no quick fix to Europe. The understanding was that Europe was may be the 12 months to maybe 18 months behind the U.S. and at the end of the day, it will get fixed and we would start seeing some acceleration in revenue growth. Your confidence in that doesn’t seem to be there. So maybe you can you can speak to that point, please? And then I have a follow-up question.

Sure, Youssef. You are right that there is no quick fix to Europe that we see. We do believe that the long-term opportunity in Europe is very significant. We believe it is an important market and we are very committed to that. Frankly we do believe, in light of the work that we have done in the last six months and the new marketing team, really our Chief Marketing Officer who used to be the President of the North American business unit, who is running now Europe and I and the rest of the executive team realize and believe, in light of what we have been looking at, we have to work on a two track growth for the foreseeable future where we have North America running very well. We have Australia and New Zealand doing very well and APAC broadly doing very well. But then we have Europe, where we believe that we are looking at a growth rate between where we ended up for the first half of the fiscal year, which is about 6% growth rate down to little growth rates, so that, i.e., low single-digit. So in that double track or double speed scenario of growth, we are focusing on continuing the successes which were really happening with North America and at the same time we see Europe is ready to shift to a foundation building and take the gun away from the team had to drive revenues up which could, we believe, comet the expense of building those solid foundations that we need. So we, as I started out in this comment thing, we believe Europe is a great opportunity for us long-term and will be a growth opportunity for us but we are not ready to say when that will be until we have really built some of the executional and operational foundations that we believe we need to do.

Okay, and then, I think you have also announced a reduction in advertising expense in the second half by some $35 million. What was the rationale there? Is that related to Europe? Was that $35 million that was going to Europe?

It was not $35 million. I am going to turn it over to Ernst.

The fee adjustment in our revenue guidance, Youssef, we said, a component of that will trim advertising a little bit, but definitely of that magnitude.

And is this year? Is this European advertising or all across?

It is across the board but I would say the bulk of where we are concerned is in Europe. In summary, we now have the hindsight of 18 months of investment in the lifetime of value based advertising. Frankly our volume numbers in Europe are looking fine but we spend per customer is not and that directly impacts the net present value calculations we do on lifetime value cash flow per customer. Because those spend per customer numbers in Europe are not where we expected to be, the DCF, discounted cash flow, of our investments in advertising, they are coming down, so we need to pull back to where we believe it is a sound and reasonable investment. The net result of that is a pull down in advertising. Again, it's not just in Europe, but that where the bulk of it is.

Okay, and maybe just one last one on the share buyback or the share repurchase. So you received shareholder approval, I think, a couple of months ago for $7.8 million in buyback. Where does that stand?

Okay, you are right. Just to describe it fully, because of our corporate roles we have to have shareholder preapproval. Two Novembers ago, at our annual shareholder they gave us authorization. You, our shareholders gave us authorization of which we had 327,000 shares remaining of that. We bought about 827,000 under that prior authorization. Your question is referring to the November 2012 shareholders' meeting where we have 20% authorization. That November meeting we hold our board meetings on the same days we hold our shareholder meeting. But the shareholder meeting, because we hold it at end of the day European time, it happened after our board meeting. Because of that we have not yet had board authorization to make those repurchases. We do expect that certainly the board would consider it the next regularly scheduled board meeting which is in February but where it stands, is we have shareholder authorization and under the prior shareholder authorization, we still have 327,000 shares approximately, which have been approved for repurchase by the board and we have this new authorization which has not yet been considered by the board but obviously the board asked the shareholders to approve it. So they may look favorably on it. I do want to say, that we strongly believe in share buybacks. Obviously we have bought back something like 10 million shares in the last year and half. But there are many factors that go into whether or not and how much we will buy. So shareholder authorization and board authorization should not be interpreted as we are immediately run and buy shares. We are strong believers in buying shares, as obviously evidenced by our history. But I wouldn’t draw a direct line between the date our board approves it and the date we will be back in the market position.

Your next question is from the line of Brian Fitzgerald with Jefferies. Please go ahead.

So how much of the top line growth from Europe came from the non-consumer business related effort? And then, maybe a follow on in terms of marketing. How does that compare to the marketing dollars that were spent in Europe? Thanks.

So your first question was what percent came from business and what percent came from consumer?

Yes and then how does that breakage can compare in terms of the marketing dollars that were spent on each?

So, we only give the splits of business consumer for the total. We don’t break that down for North America and Europe. The total consumer percentage was 35%. That is higher in Europe and it is lower in the North America. The average was 35%.

Okay, thanks, Ernst. Then, any color you can give in terms of near-term feedback you are receiving from customers, from the quality improvements that you have been making in paper stock and then customer service improvements?

Yes, we track that using net promoter score and we see very material and obvious improvement to NPS. NPS ratings vary by country. The Americans tend easier scores and different depending on the country you are in Europe, are more difficult across all companies. But if we look at our customer satisfaction scores and our NPS scores, they are clearly trending in the right direction.

Your next question is from the line of Mark May with Barclays. Please go ahead.

Hi, thanks for taking my questions. First on the consumer holiday business. Wondering if you could just comment a bit on the performance of that business in the U.S.? I certainly would be interested in your commentary around order growth, new customer growth and COCA for that segment of your business. Then, there is a slide that has implied retention rates. I think it's worldwide. Its not broken up by geography but it looks like that that number in the low 40s has been not improving, sort of stable to maybe pinching down a little bit. I am wondering if you could give us some examples of things that you are doing to try to improve the repeat or retention rates. Thanks.

Why don’t I take that last one first and turn the mic over to Ernst for the first one. So, you are definitely right in that we have seen a relatively flat repeat rates and it is defined as, and I am sorry, I am trying to find the slide which you are referring to. Bear with me one moment. This is on our slide 14 in prepared and we have been basically at 42%. Now what we have actually found is that the repeat rates, in retrospect, that we are having both in North America and Europe are not growing in a tighter correlation as we would have expected related to improvements in net promoter scores and customer satisfaction. In retrospect, what we see there, and this again, is not just in Europe. We see this in North America as well. As we pull down a lot of the aggressive or more aggressive advertising that we have done in the past and we have pulled down the more promotional aspects of discounted advertising, where in the past we would have been pushing, say, very quickly a 90% off for someone who would come in. Those prior market practices did incite near-term purchases. Now what we are finding is the value of our customers is fine but they are coming in with less frequency. The overall trend is, we believe, positive when we look at the value per customer and especially in the U.S. market, the North American market including Canada, those metrics are hard are doing fine. We do see headwind in the repeat rate but we attribute that to the fact that we are less aggressive in our marketing tactics. Do you want to take the first?

Yes, I said before that for our organic business, this excludes Albumprinter, it's higher with Albumprinter for our organic business about 35% of our revenues in the quarter were in North America, were in consumer and that’s a little lower in North America, that percentage but the holiday season in North America performed very well against our expectations. It was a strong performance for our holiday products in North America. So it was definitely something we were very pleased with.

And do you happen to have the year-on-year growth roughly for the U.S.?

We don’t break out the consumer segment for the U.S. growth. The overall growth for North America with 18%. We don’t breakout the growth for consumer.

But you can see, Mark, that because the percentage of total revenue went up year-over-year, that business continued, especially, in Q2 the growth factor than the revenue from the small business. That was true in all regions.

Okay, the mix did go up on a year-on-year basis. Then, any interesting commentary around COCA for that U.S. consumer? Did you see the leverage there?

(inaudible) detail. That’s beyond what we disclose. We disclose a lot of numbers but that type of detail we don’t get into. We are very happy with the consumer business. It's growing faster than the rest of our businesses in all geographies and it’s a very profitable business. But we don’t want to get into detail on that.

And if I could squeeze in one more. So the digital business, does that revenue contribution increasing as a percent of revenue, I realize that this past quarter may have been an anomaly with the holidays but when you spread it out over a multi-quarter period, is that growing and is that helping your margin profile of the overall business?

It is roughly growing in line with the rest of the business.

That has not been the reason. These has not been a mix shift towards digital which has impacted the gross margin improvements. The gross margin improvements have been driven by our manufacturing improvement and other aspects not by a shift towards digital.

Your next question is from the line of Carter Malloy with Stephens. Please go ahead.

Hi, guys. It is actually Ben on for Carter. Can you take us through some of the high-level differences between your European business and your U.S. business and why you are having trouble in taking what's been working in the U.S. over there?

Sure, if I step way back and look at the strategy we announced 18 months ago, of the four parts, the first and foremost was to reinvigorate growth in our core and some of those things are working worldwide very well, the manufacturing I have mentioned several times. However, there were two other components of that which we don’t think have been executed as well. One was the value to customer. We call it, how do we improve our customer value proposition? And we have been not as effective as an organization in Europe in applying that shift in the tone and tenor of our advertising and the moving away from a deep discount free offer to more of a value based offer based on the qualities that we were delivering to the customers. Now there are several reasons why we have been slower. One is that we believe, it is more difficult across 17 countries and many different languages and many different currencies to make those changes because in making that shift, we do create headwinds to our revenues. We have less cross-selling, less e-mailing and those, in isolation, will reduce revenue per customer. In North America, we have been successful in making that shift and creating positive tailwinds. That lower revenue per customer has a secondary follow-on effect in the area of lifetime value investments. I mentioned this earlier in this call. In that we judge whether or not to make any investment including advertising of any sort, investments based on a DCF and when the spend per customer is coming down, as I just described because we are not making the transition effectively. That means the advertising spending that we thought we would help payoff is not valuable. So that has a secondary impact. Then, third, we say this quite openly, we think we could have and should have done a better job in execution and just the core blocking and tackling. This is something we have talked about now for six months. It’s a complex issue. We have made changes we think are appropriate there but we have a new structure that’s being put in place. So when you combine the slower uptake on the strategy of the value towards our customer and the value delivery, the LTV spending and the execution issues, we believe that those in aggregate are the bulk of our problems,

Okay, thanks. Then on the Asian investment, can you give us an update on where we are there?

Sure, we are very enthusiastic and bullish on Asia-Pacific, but it is important to recognize that Asia-Pacific is a very big part of the world and VistaPrint's world has three very different geographies. Australia and New Zealand are very mature economies but also they are very strongly penetrated by VistaPrint. Today the bulk of our revenues in APAC come from those markets, as I said before, if I include our Chinese investments. So first is Australia, New Zealand. Strong growth but it is a market where expect growth to be coming down in percentage terms because we are more penetrated in Australia as a percentage of GDP or Internet population than anywhere else in the world. We even have Japan. It’s a small market. Obviously a very well-to-do and sophisticated technology market. But it’s very small for us. It's growing quickly but it's also small base. Then we have China and India which are enormous long-term markets. India is a very much startup. We acquired a startup company and only in the last five months have started taking revenues there. We believe over the five or ten year period that will become a very material business but it is not going to in the near-term. China, similar story to India. It’s a long-term business. It's bigger than India but it is still a small business and it is growing very quickly but off a small base and it doesn’t come through our revenue line because we have a minority investment there. So, we believe we have an exclusive option to acquire a majority ownership stake in 2016. We will see whether or not we trigger that option. It depends on the performance there. But until that time those revenues don’t come through. The only thing you see from China is a loss on our participation and equity which comes below the operating line. So you add all that up Australia, Japan, India and China, manage that out of our Singapore APAC headquarters, it's really a very heterogeneous region. It's 7% of revenues. The revenues will continue to grow strongly but until China and India and Japan start getting big enough to overcome the natural maturation of Australian market, we see that we will see slowing growth rates, albeit a very robust growth rates in APAC for the coming year.

Your next question comes from the line of Kevin Steinke with Barrington Research. Please go ahead.

Hi, good afternoon. Just a couple questions. I wanted to get an update on just progress of the acquired businesses. You made some commentary about Webs growing in line with expectations but I was just wondering if you could offer additional commentary in terms of perhaps progress towards just customer acquisition or cross-selling. Any comments along those lines?

Sure, you asked for acquisitions part but focused on Webs. Let me focus on Webs and then if you want, I can speak to our Albumprinter.

Yes.

Both are doing as planned and they are very different types of businesses. We see Webs as something which the real pay off is going to come in about six months or so when we get the final integration or the full integration in both directions of our joint technologies. So we will be taking the really phenomenal website builder product which Webs has developed and integrating it into the VistaPrint business and vice versa. We will be taking the international payment systems, the translation systems, scalability we have in our systems in to the Webs business. Webs has a revenue base that’s quite small. It's growing but we think until we have that technology integration up and running we won't see material financial results happening there. Another thing that you see is that some of the early indicators are good. So we have one of the products which Webs has developed, it is called Pagemodo and under the VistaPrint brand, we now had white labeled that and launched that as Facebook business pages for our small business customers. That is a small product, just launched but it is very much ahead of internal objectives in terms of revenue and profitable growth. So we are in the early days. We are excited about it. We fundamentally believe that the intersection of physical and digital small business marketing is important to small businesses who will be more important in the future and that we have a unique collection of assets to play there. But it’s a long-term investment.

Okay, yes. Then on Albumprinter, how far along were they in the quarter to, I guess, contributing at the full rate that you would expect in the future? It sounds like you are still rolling that product out across Europe. So how did they contribute relatively?

They were 100% on plan. We have launched photo books under the VistaPrint brand name in nine countries across Europe. Very much in line and to the week on plan with the launch date. We have a very full suite of books. We took the Albumprinter technology which is white label and sells not only under the Albelli brand but to other retailers in Europe like HEMA and Tesco. We now have a full VistaPrint European brands. So very happy with it. The Albelli brand continues to do excellent. We like the photo book market. It’s a very different frontend but the backend and the operations are a very classic VistaPrint. So things are going on fine.

Your next question is from line of Paul Bieber with Bank of America Merrill Lynch. Please go ahead.

Hi, Robert and Ernst. Thanks for taking my questions. I was hoping that you can provide some color on the gross margin improvement in the quarter. What's driving the improvement given the focus on high-quality inputs in the manufacturing, and you also are launching new product categories like, you got iPhone cases? Then secondly, I think you are guiding to flattish or low, single-digit to 6% Europe" FX neutral. Does that depend on the improvement in the Europe macro environment?

So I will take the first question. If you look year-on-year, which I guess is your question about the gross margin, is what we have seen is that the most important thing that we see seen despite some of these investments that you correctly highlight, is strong performance by our manufacturing plant. As you know, we are on a multiyear process to improve our manufacturing costs as well as our quality. That’s paying off. So we see the labor productivity improvements really on a year-on-year basis that we are happy with. We haven seen shipping cost improve on a year-on-year basis. So overall this gives us 40 basis point advantage over a year ago, and as you point out, despite some headwinds like more investments. It's driven be our manufacturing crew. Sequentially, obviously there is a lot of volume absorption. We had 230 basis points increase over last quarter. But the story is really about the year-on-year. Your other question was on the guidance for Europe and if it assumes any economic improvements. We have not forecast any difference in the economic department we have really forecast. But we believe are based our forecast on how we see our ability to turn around the trajectory that we have seen so far and as Robert said before, as we don’t believe for the second half that we will meaningful difference from the growth rate that we have seen in the first half and the range really is a little better than we thought or we actually even less growth than we are currently projecting.

One quick follow-up. I think it was a 5% year-over-year increase in the AOV. Is that being driven by photo books in Europe?

It's driven by North America mostly. So we have seen very powerful improvements of or AOVs over last 12 months really in North America. This is what Robert talked about before. There is a lot of metrics where North American ability to make the change in the strategy very effective to seeing or growth lower than in previous years in North America but they will be very strong. In Europe we have seen over the last 12 month period rally a step down in our AOV. That’s been part of our problem in Europe and the manifestation of the fact that in Europe we have now been able to successfully make a strategic turn. So year-over-year, in Europe, it's a flabbering or lapping the AOV decreases but the positive growth has been really been driven by North America. And all these metrics AOV that we are talking about and also other metrics like COCA do not include Albumprinter. They are for VistaPrint, the common brand.

Your next question is from the line of Mitch Bartlett with Craig-Hallum. Please go ahead.

Hi, good afternoon. Just wanted to ask one more question on Europe and wondering if you have revamped the advertising strategy that you had in place two three quarters ago. For the changes, the slowness that you have seen, whether you have localization or the slowdown in the advertising spending that you were interested and you were going do, is because you haven’t done that and you are waiting to implement those. Where are we on that switchover in the marketing?

We are still in the early days. This is all something we have already spoken about publicly. But we did do a organizational change about six months ago may have made a change nine months ago which went from geographic business units to a integrated functional organization between North America and Europe and that included marketing. So what we are doing right now and we are still in early stages of this is integrating into a unified team to North America and Europe. So the best practices, that frankly we are very, very content with and happy with in North America, were not applied in Europe for many different reasons, competitively of the multiple European markets, execution or slowness on our part. So the clear trend that you will see that happening in the European advertising practices is to go towards the North American practices in tone, tenor and the like. That being said, we obviously understand that what a German or British or a French customer identifies with in terms of what a small business looks like, is distinct to each country and distinct from the United States or Canada. So, we do need to great media and content which is locally produced. So what I know you will see us doing is a migration towards a common approach analytically in the core values of the messaging that we are coming through with a localized advertising that resonates with individual local European country. We have spent the last six or nine month among other things doing a lot of market research. We have done that in the major European markets, equally or even to a greater extent in terms of expenditure in North American market. We do fundamentally believe that the core values that customers are looking to buy from are the same. There are clearly differences. We are aware of those but we will be taking these learnings into Europe with a recognition of the distinctness of the European markets as based on what we know and based on the market research and that is taking time..

Got it. How about competitive conditions? Have they changed in Europe over the last few years or so?

No, Europe is an amalgam of multiple different competitive situations. We are very strong competitors relative to each other in a given country. So in Germany, in the Netherlands, in the UK, the strongest competitors are different competitors. So we have different players and there certainly are some differences between markets but we believe that the competitive situation has not intensified in the last 12 months.

And then finally, is the value proposition from your small business customers versus your consumer customers, has that diverged more acceptance from the consumer customers and a little more problematic from the business customers?

Are you still speaking as it related to Europe?

Just Europe.

Yes, it is true that we are much more successful in Europe home and family or consumer product than we are in the United States. We are very successfully but we see our strongest performance in consumer products in the European market. The inverse of that is as a percentage, our small business is a smaller percentage in Europe. It is still majority. It is still a very healthy business. We are concentrating and speaking a lot about Europe as being on a slower growth trajectory right now but if we go back in the context of last five to six years, it was always our high growth markets and it was, at that time and as of now, the majority of that growth was being driven by small businesses. So, consumer is more important but it is still a minority in Europe. Your next question is from the line of Victor Anthony with Topeka Capital Markets. Please go ahead.

Thanks. Just one question. In your presentation, you mentioned expense management as a means to achieve the fiscal 2016 goal of $220 million of net income. So I was wondering if you could discuss where that opportunity exists in the P &L?

Sure, absolutely. Ernst, you want to say anything?

Yes, as look across our P&L and look at our original plans and our plans, we always believe that we would see skill effects, skill benefits that leverage in our OpEx lines across all OpEx areas. Our tech and dev line, our marketing line, our general T&A line. As we evolve our plans and are 18 months in to our strategy, we believe that we see some upside to that leverage as we move forward, so that expense on advertising. We did bake in to our original five year model that we would, as our strategy for crating value of our customers pays off that we will, over time, see advertising as a percent of revenue come done and we still expect that as another expense item. Then, of course, our cost of goods sold, we see continued improvement in cost of goods sold as a percent of revenue.

Just one more question in terms of how do you view pricing across your different products as a means to drive growth as you move away from discounting?

I think that pricing is clearly an important component of the mix even from a gross margin perspective but we will always remain a value based brand. We certainly do not want to and do not have any plans to move away from what we know is very important for our customers which is a very good price. Now what we are doing is we are shifting the weight of getting to that price. So historically we would have had a price of $20 for product and we would have sold it for 90% off. We may now say it's jus $4 or whatever the math comes to. So there is a lot of shifting away where the ultimate total price would be paid is actually very similar. In some cases it is higher, some times it's lower. But how we get there, traditionally the VistaPrint model would have started at $100, discounted it down to $20 and then up-sold and cross-sold back up to $40 by paying for uploads, by paying for backside and the like. You seen in our advertising today, for instance our television advertising a much cleaner offer, $10shipping included 250 cards. That doesn’t translate to a price increase or decrease as much as it translate into a much more transparent offer which is frankly less effective in driving immediate impulse purchases but is much more effective in driving customer loyalty and confidence that they know what they are going to be charged under the VistaPrint brand.

Your next question comes from the line of Kevin Kopelman with Cowen and Company. Please go ahead.

Hi, thanks. Just a follow-up on the pricing question. You mentioned price testing in Canada. Could you give us some more color on what exactly you are testing and how it went? And you also said that you are planning on rolling that out in Australia and New Zealand, should we expect that to also be rolled out in the U.S. and Europe and what kind of impact with that have? Thanks.

Sure, I am glad to talk about it. So those are actually two different tests. I will just start with Australia and New Zealand. We went to almost a cold Turkey switch from the prior approach to a much more and even more transparent series of how we advertise and for instance the all in pricing and without getting into details because of our time. I would be glad to answer it if you are interested. That was a separate test run and change run by the Australian team out of Sydney. In Canada which is part of our North American team run from the U.S. offices, we have been testing even further increase to transparency. So some of things you can see if you go to our Canadian site is we are testing, they still sound like a small thing with all the prices being ending in just round zero, zero, rather than $0.99. The clarity of shipping prices, the level of discounting being reduced. We are happy with it. It does have negative impact in the early days in revenue. Now we are still obviously doing well. But we see it coming back through a trough on the revenue side and again we want to continue that test. We believe, for the bottom line, it is something that makes sense as well. So I can't say if and when we will roll that out to North America specifically or to the United States specifically but the basic tenets and premises of that type of shift in how we market will apply to where we go in the United States marketing in the future.

Okay, thanks a lot and a follow-up on advertising reduction. Was that across the board, across all media? Or was it more focused on a specific channel like television or online display or search or affiliate? Thanks.

It is more weighted specific to channels. It's not necessarily television but some other channels. But it is not very concentrated on any particular channel. So that’s all I can say about it.

Your next question is from the line of Andrew Ruud with Morgan Stanley. Please go ahead.

Hi, thank you very much for taking the question. I just wanted to dig in to the repeat revenue a little bit. As I think about it from a cohort basis, you have those customers are coming back year-after-year to buy from you. So is it that they are decreasing their level of spend with you or is it that there are more newer vintages are starting to spend less with you guys?

I know that I am trying to talk about statistics we publicly release. I think the answer is more towards the latter. That is the repeat rates we have had in the past have been in the early days after our acquisition of a customer heavily driven by promotional activity and those are coming down. Now, if you look at the average spend per customer, in slide 15 we have a spend per customer and you see that the repeat customers, the red line, these are people that been around from prior years, some is staying very consistent. It's come down a little bit. It is not 100 or 97 but it is not a significant fall off. You also see that the same could be said of the new customers. It is that the frequency of the repeat is coming down while the amount of purchases being made is staying relatively consistent per order. So we are seeing some negative trends there on the spend per customer but we are increasing gross margin that is a little bit offset.

I think in summary, what you see in the statistics that we have, relatively speaking, fewer small impulse buyers, fewer small orders and more larger orders. That’s why the AOV is ticking up.

Okay, and then I just have another one. It is more of maintenance. In your metrics, the other operating metrics, you guys show organic VistaPrint advertising and commissions at $93.9 million. Then over in your earnings release, you also showed that the advertising and commission expense consolidated to $93.9 million. So I was just wondering if that was correct or not?

We are going to.

Our total advertising indeed was $ 93.9 million for the quarter and it is probably that is.

And then what about just organic VistaPrint?

Hang on, we are just going to check.

We have not disclosed for the organic business et cetera.

You do that in the VistaPrint revenue and other.

It is 27%. So, hang on. We are getting it. Angela or Meredith, if you have it?

Sorry, it was $87.3 million for the organic.

$87.3 for the organic.

And we have no other questions at this time. I will turn it back over to Ms. Robert Keane.

Well, thank you everyone for joining on our call this evening. We appreciate your time and look forward to speaking to you in the next earnings release.