CafePress Inc. (NASDAQ:PRSS)
Q1 2013 Earnings Conference Call
May 2, 2013 17:00 pm ET
Alex Wellins - Co-Founder and Managing Director, Blueshirt Group
Bob Marino - CEO
Monica Johnson - CFO
Bo Nam - JP Morgan
Aaron Kessler - Raymond James
Brian Fitzgerald - Jefferies
Andrew Marok - Cowen and Company
Good day ladies and gentleman and thank you for standing by. Welcome to CafePress’ First Quarter 2013 Earnings Call. During today’s presentation all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions). This conference is being recorded today, Thursday, May 2, 2013.
And I’d like to turn the conference over to Alex Wellins with the Blueshirt Group. Please go ahead.
Thank you for joining us on today’s call. With me today are CafePress’ CEO, Bob Marino; and the company’s CFO, Monica Johnson. After the market close CafePress announced results for the first quarter of 2013. Today’s call is being broadcast live over the web and can be accessed us on the Investor Relations page of CafePress’ website at cafepressinc.com.
During the course of this conference call, management may make projections or other forward-looking statements which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involves risks and uncertainties that could cause actual results to differ significantly from those projected.
You are cautioned not to place undue reliance on the forward-looking statements, which speak only to the date of this call. A detailed discussion of the material factors that may cause results to differ from the statements made can be found for example in the risk factor section of CafePress’ fillings with the SEC.
Certain supplemental financial measures that maybe used on this call such as adjusted EBITDA and non-GAAP operating income are expressed on a non-GAAP basis. Definitions and calculations of these financial measures and in the cases of adjusted EBITDA and non-GAAP operating income, a GAAP to non-GAAP reconciliation table can be found in the earnings release. These financial measures are not intended to replace any GAAP financial measure. You should rely primarily on our GAAP results with adjusted EBITDA and non-GAAP operating income only as a supplement to our GAAP results.
With that said I will turn the call over to Bob Marino. Bob?
Thank you, Alex. I would like to thank everyone for joining our call today, CafePress posted Q1 results that were ahead of guidance that we laid out for you on our last call highlighted by an especially strong top-line performance with quarterly revenue of $52.5 million. This represents a very healthy growth of 32% over the first quarter of last year. We were raising our annual revenue guidance based on that strong start for the year.
We came into the quarter in a position of strength with good momentum and consumer interest in our brands and products carrying over from a solid holiday period. Our results demonstrate this momentum continued during Q, revenue came in well above our forecast due to three primary factors. First, our shops business has doubled over the last year’s Q1, as we capitalize on a number of existing opportunities that were in our pipeline and new ones that emerged following our acquisitions of EZ prints.
Second, we had a great quarter from create and buy up 40% year over -- up 40% over the same period a year ago, including strong growth from our LogoSportswear business. And finally, our strategy of seeding our newer brands with traffic from cafepress.com is working. We are seeing a positive network effect resulting in stronger than expected performance from the brands that comprise the CafePress network or working together to deliver solid results.
Adjusted EBITDA was $0.1 million and was at the high-end of our range, bottom-line results would have been even higher. However, given that we are in the midst of our multi-plant consolidation, we are incurring some plants temporary redundant cost. As a reminder, we are investing approximately $6 million over the course of 2013, into manufacturing. This initiative will continue to impact margins this year, but it’s designed to streamline our operations and improve margins as we exit 2013, by increasing efficiency and reducing cost.
The desire for custom products is a key theme within ecommerce and CafePress continues to lead the market that we created. Today, we offer consumers more choices than ever before in terms of breadth and depth of products and more place to define those products as well, whether our customers are coming directly to cafepress.com or one of our partner sites, spending time on Facebook or social media outlets or on their own mobile devices, consumers are finding new ways to discover the incredible wealth of customizable products available to them by CafePress.
When they arrive, they find a fun, easy to use experience that is converting to sales and thereby driving our revenue. As we said, since our IPO, our goal is to [pair our] (ph) customization for ecommerce wherever it occurs. This means that over time, our business will evolve, so that a greater percentage of revenue will come from partner-related businesses including corporate shops.
Our acquisitions of LogoSportswear and EZ Prints are two examples of how we have strategically engineered this shift. We are pleased with both the growth and the brand leverage from these deals. The mix towards partner revenue has had a meaningful impact on our quarterly metrics. The number of customers, for example, is far different. Large corporate accounts may represent hundreds or thousands of orders, but we see it only as one customer. This makes the customer count far less relevant than it was before, and given the integration of EZ Prints, as of this quarter, we are no longer providing it.
Orders, however, remain an important metric for us, and we believe a valuable way for you to track our progress. Q1 orders totaled over $1.4 million, a 70% year-over-year increase. Average order size or AOS was also significantly impacted with the consolidation of EZ Prints, reflecting the smaller order size of EZ Prints B2B business. As we have said on prior calls, a large part of EZ Prints business was photo gifts which carry an AOS typically below $10. We believe that over time, we can significantly increase that AOS as we add to the wealth of – as we add to it the wealth of CafePress products to these customers. With EZ Prints included, Q1 AOS was $35, a 27% decrease, but it should be noted that excluding the impact of EZ prints Q1 AOS was $53 which is up 7% sequentially and10% year-over-year.
Acquisition cost per order was also significantly impacted by the consolidation of EZ Prints and their B2B model. As most of EZ Prints orders are transacting through partners, they have substantially lower acquisitions cost per order. With EZ Prints included, our Q1 cost per order was $6, which was flat from Q4 and a decrease of approximately $2 a year ago. Without EZ Prints, Q1 cost per order was $10, this is up $2.50 from last quarter but well within our normal range. The majority of the increase in acquisition cost was purposely done to support our fast growing art and LogoSportswear businesses.
I will now review each of our key business areas. Our marketplace represented over half of our revenue and grew at 15% over Q1 of last year. The marketplace continues to grow nicely, and we believe that the user experience enhancements that we have recently made on our flagship site are making it easier for consumers to navigate incredible array of long-tail content and products we have available.
By exposing our brands on cafepress.com, they add to our marketplace. All of our properties are making good progress and we intend to continue to enhance the user experience unifying our brands, curating our vast product library, and simplifying the ways consumers browse and shop as we believe there is much more we can do to drive conversion.
Significant changes in user behavior driven by social and mobile have made these channels key parts of our customer acquisition strategy and our business. CafePress’ breadth of content uniquely positions us to win in these channels as we can be part of and add to almost every dialog and conversation happening in social media today.
During Q1, we enabled customers to log into CafePress using their social media credentials. When users log in using their Facebook or Google id, we can better curate their experience. That is, we can see what they like and what their interests are. Reflecting the importance of social to our company we hired Jason Falls as our Vice President for Digital Strategy, a well known social media expert. Jason was President and Owner of Social Media Explorer, one of the top social media marketing blogs. Jason’s expertise and connections have proven to be strong assets when it comes to gaining recognition for CafePress among digital influencers.
Jason’s is tasked with driving audience by making CafePress more of a social experience rather than just having social elements on our website. Jason has immediately contributed to our social efforts. In fact during Q1 CafePress was added to Facebook gifts. CafePress’ social media presence continues to show momentum, our likes on Facebook are up 270 year-over-year and recently surpassed the 400,000 mark and revenue from social media channels continues to improve up 122% over last year.
As Facebook has opened more advertising possibilities for brands, CafePress has been a leader in leveraging the opportunities. We have conducted impressive individual campaigns with strong ROI, and we will continue to experiment and capitalize on social commerce. We strongly believe that this progress is merely a taste of the socially driven ecommerce to come.
Social and mobile are tightly linked especially in our find it by experience, users are chatting, discovering things they like and sharing them with their friends using a combination of social media and mobile devices.
During Q1, we continued to enhance and streamline the mobile experience across all of our properties, our mobile traffic more than doubled and we continue to look for new ways to monetize this growing traffic source as well as gain mindshare with our users. We have had several mobile related programs that we’ll launch across many of our properties this year.
I will now turn to Create and Buy where individuals and groups create unique and customized products across more than 550 base goods. Create and Buy by revenue grew more than 40% compared to Q1 of last year. Billing on the strong pace of the last few quarters we continue to increase the number of on-demand customizable products available to customers and partners, highlighted by interesting editions in categories like home, electronics, and jewelry.
In the apparel category LogoSportswear had a great quarter with 36% year-over-year growth on a pro forma basis. During the quarter Logo also introduced a number of exciting higher end products from top brands including Eddie Bauer, Columbia and Carhartt.
We also had a strong create and buy quarter for canvas properties and stationery. All of our businesses are implementing social strategies as a way to drive customers and orders at a much more meaningful level than we were at just a year ago.
In addition to our ever expanding product line up, our engineering team, continues to drive innovation. For example in our campus business, we have developed a proprietary process that significantly reduces cost, while continuing to deliver exceptional quality. In another case, for the first time our team has expanded our corporate jazz platform from find and buy to now also include create and buy. This meaningful engineering effort is expected to drive revenue as we can now offer corporate partners a broader skill for products and long tail content.
Moving on the shops business, we were very pleased that shops more than doubled from a year ago quarter including revenue from EZ prints, after getting to the peak holiday season EZ Prints product offering and Shops platform has been fully integrated into our operations. All new corporate shops are running on the platform and we are in the process of supporting the existing shops to it as well. Given that progress, we have leveraged the EZ Prints platform and launched CafePress Services. This new group will provide turnkey services to enable unique ecommerce solutions for corporate partners across the web, this functionality works seamlessly with enterprise and our initial targets include media, companies, ecommerce, providers and retail brands.
CafePress Services built on the trusted partnerships that we have established with leading brands over the years including AVC Television, Paramount and Warner Brothers. Our new platform makes it easier than ever for corporations to increase revenue by selling a wide array of customized products to their online customers.
We continue to show substantial momentum in developing and enhancing business relationships with entertainment, corporate and retail partners. We are thrilled to recently establish the relationship with Marvel Entertainment own the Spiderman, Ironman and X-Men to develop corporate shops and a customer online shopping experience. We are launching a shop for the upcoming Ironman-3 movie and we expect to launch additional Marvel movie and character shops and portals throughout the year.
In addition to Marvel, we launch corporate shops for Paramount Pictures, including the highly anticipated Worldwar Z movie as well as the children’s entertainment provider Sprout. We begun to drive revenues from our relationship with interactive ecommerce provider delivery agent to provide them with the ability to offer customized products to more than 40 entertainment sites they manage.
As we strengthen our relationship with Peanuts for the Home of Snoopy to enhance and expand the shopping experience of products featuring these classic characters. As you can see our shops business is off to a strong start in 2013. And by launching CafePress Services, we are well-positioned to pursue the rich pipeline of opportunities in this area. We expect to see significant growth in our corporate shops revenue this year relative to 2012.
I will close out my session with the progress report on our operations. Manufacturing and operations were smooth in Q1 supporting the increased revenue level posted during the quarter with high levels of quality and customer satisfaction at CafePress is known for. The consolidation of many of our remote manufacturing operations to our flagship plant in Louisville is right on schedule.
We have several new printing lines up and running for our logo and campus businesses and we expect to be well-prepared for the 2013 holiday season. This rationalization of our operation is within the $6 million investment that we laid out for you last quarter. While these negatively impacted margins in Q1 and will continue to do so for the year. We strongly believe that it will set the stage for operating strength and margin expansion as we exit the year.
To sum up, we are excited about our Q1 results. Coming on the heels of a strong holiday performance, we believe we have solid momentum. The strategic social and mobile programs we put in place are contributing to our results and the launch of CafePress Services is a clear signal that we intend to seize the large opportunity presented by corporate shops.
Thanks for your attention today. I’ll now ask Monica to review our financials and guidance before taking your questions. Monica?
Thanks Bob. I’ll now review our financial results and provide our outlook for the second quarter and fiscal 2013. All comparisons would be year-over-year unless otherwise noted.
Net revenues for the first quarter were $52.5 million representing a 32% increase overall. We’re encouraged by both the performance of our domestic business which grew 34% during Q1 and the return of growth in our international operations which grew by 11% over last year. Our Q1 adjusted EBITDA at $0.01 million was at the high-end of our guidance and compared to $2.8 million in the previous year. As a percentage of revenue, EBITDA defines with 7.1% to 0.1%. Within our guidance for Q1, we have factored in both the flat consolidation costs Bob mentioned as well as the seasonality of EZ prints.
As a remainder, the shift in mix for its corporate shop buying the legacy EZ Prints business is more seasonal than CafePress percent. Historically, EZ has earned all of their profits during the fourth quarter of the year. In 2013, this seasonality would also impact the timing of our consolidated profitability and then in the long-term, we expect to see change over time as we continue to blend EZ B2B be model with their own corporate shop.
Specifically, the change in our EBITDA from Q1 2012 to Q1 2013 was the result of the following. First, gross margin on non-GAAP basis were 37.5%, a 5.2 percentage points decline year-over-year which approximately 2 points since due to lower gross margins associated with the EZ Prints B2B business and other remaining decrease approximately 2 points was due to the plant consolidation investments that we have discussed.
With the remainder attributable to product mix and pricing, the sequential of increase in gross margins compared to Q4 2012 was 2.3 points of which 1 point was due to the full quarter of EZ Prints. The remainder of the sequential decrease for attributable to approximately 1 point increase in plant consolidation investments, it was some seasonal changes across our other properties.
In addition to the decrease in gross margins compared to Q1 2012 non-GAAP operating expenses increased by 1.8 percentage points year-over-year and of this increase in our operating expenses 1.8 percentage points was driven by increased sales and marketing since we report our higher growth businesses specifically 1.8 increase in sales and marketing then resulted from a higher mix of our products which continued to have a higher average order value and higher growth with the remainder from the higher cost (border across) the other product lines. Our technology and development expenses increased by 0.9 percentage points year-over-year of which 0.5 points came from investments in rcp.com website and the remaining 0.4 points was due to spend on EZ Prints technology platform.
And finally, our general and administrative expenses decreased by 0.9 percentage points primarily from scale and optimization of our overhead cost. As a result of these planned investments, Q1 non-GAAP operating loss was $2.1 million compared to operating income of $1.4 million. This non-GAAP operating loss includes depreciation expense of $2.1 million compared to $1.4 million, a 0.5 percentage point increase resulting from increased capital investment over the last few quarters as we’re looked to consolidate our facilities and (senior) investing in our technology. Q1 non-GAAP net loss was $1.4 million versus net income of $0.9 in the previous year and Q1 non-GAAP diluted loss per share was $0.08 compared to income for share of $0.06 in the previous year.
On a GAAP basis, Q1 operating loss was $5.9 million and we posted a GAAP net loss of 4 million for the quarter or loss of $0.23 per fully diluted share that compared to the GAAP net loss of $0.5 million or loss of $0.06 per fully diluted share in Q1 2012. Included within GAAP operating expenses and accounting for the $3.8 million difference in GAAP versus non-GAAP operating income are the following.
First, $1.1 million of stock-based compensation and that compared to $0.8 million flat as a percentage of revenue and with the dollar increase coming primarily from acquisition related stock brand. Second, $1.3 million in amortization expense compared to $0.07 million, a 0.08 percentage point increase due to amortization of intangible assets from acquisitions of both Logo and EZ Prints. This was ratable amortization expense and the sequential increase of $0.02 million resulted from (free launch) of EZ Prints in Q1 2013 versus two months in Q4 2012. And lastly, $1.4 million in acquisition related costs and that compared to $0.07 million, a one percentage point increase and that was attributable to our Logo and EZ Prints acquisitions are out, both of which performed as expected in Q1.
Our Q1 effective tax rate was 33% and that was unchanged from the same period last year. Our capital expenditures for Q1, 2013 of $1.3 million was flat compared to $1.3 million spent in Q1 2012.
During Q1, we had free cash flow which we defined as adjusted EBITDA plus CapEx of negative $1.2 million and that compared to cash inflow of $1.5 million during Q1 2012. Our Q1 cash flow was impacted by investments in manufacturing consolidation and a profit seasonality of EZ Prints as outlined above.
During the quarter, we have operating cash outflow of $12.3 million and that compared operating cash outflow of $6.5 million of the same period last year, of the decrease in operating cash flows to $5.8 million, approximately $2 million was due to our EZ Prints seasonal working capital changes with another million coming from (inaudible) settlements of partner related balances in other businesses and the remainder attributable to our decrease in EBITDA.
You should note that Q1 of each year is typically our largest operating cash out for the year as we settled cables associated with our peak holiday season. On March 31, 2013, our cash, cash equivalents in short-term investments totaled $26.1 million, we’re comfortable with our cash position and we expect to generate significant cash in Q4 as we have historically living up with the solid balance sheet as we exit 2013. Our basic and fully diluted weighted average share outstanding was $17.1 million.
I’ll now conclude with our outlook for the coming quarter and full year. As Bob mentioned, we’re raising our full year guidance for 2013. As we look ahead to the coming quarters, so revenue guidance reflects the shift and the historical (weighting) of business due to the revenue seasonality of our newly acquired businesses that are more backhand weighted as well as the expected (inaudible) of new and existing partner programs.
And our EBITDA guidance matches the seasonality along with the increased investment and consolidation of our manufacturing and operations. We continue to expect these integrations with these higher gross margins as we exit 2013. By taking all that into account, for Q2 2013, we expect net revenues in the range of $50.5 million to $54.5 million. Adjusted EBITDA ranging from the loss of $0.2 million to an income of $1.3 million, non-GAAP net loss per diluted share is $0.11 to $0.04 and weighted average fully diluted shares estimated that $17.4 million. We also assumed the tax rate is 24% for the quarter.
For the full year 2013, we expect net revenue is ranging from $248 million to $261 million representing a year-over-year increase of 14% to 20% growth, adjusted EBITDA of $11 million to $16 million, non-GAAP net income per diluted share of $0.07 to $0.22, weighted average fully diluted shares of approximately $17.7 million and total CapEx – capital expenditures in the range of $12 million to $14 million.
With that said, we’ll now turn over to the operator for questions.
Thank you, ma'am. We will now begin the question-and-answer session. (Operator Instructions). Our first question comes from the line of Douglas Anmuth with JPMorgan. Please go ahead.
Bo Nam - JPMorgan
Hi, this is Bo Nam on for Doug. Thanks for taking our questions. Firstly, can you provide a little bit more color on the GAAP and increase in full-year revenue guidance, but flat EBITDA guidance and how that kind looks like on a quarterly basis? And then secondly, we understand that you’re not giving the customer numbers anymore, but can you kind of give us a little bit of directional guidance for where you think order growth through the year maybe some seasonal factors, and also on the average orders, size? And then lastly, if there is any commentary on your international business and what you are seeing there. Thank you.
All right. Thank you, Bo. I will let Monica tackle the first question about revenue and margin for the year, and then I’ll finish up with your AOS seasonality and order volume discussion.
Okay. So to start off with, we did increase the topline by a couple million for the full year. And so, we’ve increased that range by about $2.5 million. I think on the EBITDA side as we sit here at Q1 and we’re looking at EBITDA still very heavily weighted to the fourth quarter, and so I think it will get a little bit further into the year as we continue to look at that.
We are also somewhat cautious in terms of where we are with EBITDA and that we’re heavily into our investments in the plant consolidation, and so we want to get a little bit further into that until we assess the EBITDA again.
Okay, Bo. Let me hit first AOS. Even before EZ Prints, we’ve always said on our calls that AOS for us will fluctuate. The reason for that fluctuation is this. We are the world’s customization engine. Our obligation is to bring more and more products to market in a customizable way, and not all products are priced the same way. We’re not trying to convince people to buy new things. We’re trying to convince them to customize the things that they would already buy. And so, you’re going to see AOS float around as we add new products.
In the last 12 months, we’ve added about 170 new products, so you can see that it would have some impact on AOS. In terms of seasonality, we had a very strong fourth quarter last year, a good first quarter, let’s dig in a little deeper and look at the composition of that. Even before we acquired EZ Prints, we were growing our corporate shops business very strongly, and the reason that we acquired EZ Prints was to take their technology platform and really accelerate the growth of that business.
So, that’s a very strong, emerging business for us that has lots of runway in front of it. But it also comes with its own unique seasonality. It is much more back-end weighted, and so we expect to see our numbers being influenced by that.
Bo Nam - JPMorgan
You talked about order count as well. Let me just give you a little glimpse into that. As we found this shops platform at EZ Prints, their technology was what we found really inviting to which we can add our array of products. Our array of products have a higher rank on average associated with them. So, as we do more and more of the proliferation of the CafePress products into the corporate shops channel, you’re likely to see again AOS jump around, but then as a result also order count jump around. So, it’s a transitional year for us.
Yeah. And then I would just add, and it was orders, obviously we’ve taken significant a stair step here in terms of orders, so I think having taken that in with the consolidation, we would expect order growth to be more in line with growth overall with some fluctuations, but certainly not to the magnitude of what we saw this past quarter. And then, I think your last question was on international?
Bo Nam - JPMorgan
Yeah, that’s right.
Yeah, so we’re definitely pleased with international this quarter. I think you saw last year, we saw some decline and then we saw some improvement in Q4 which continued into this past quarter. So, I think, we have sort to stabilized where we were from last year, and so, what I’d say is we are seeing some modest growth right now and expect to kind of hold at that level.
Bo Nam - JPMorgan
Okay, thank you. Just one quick follow-on, did you by any chance mention how much of your revenue came from EZ Prints this quarter?
No, we didn’t as we’ve been saying for a couple of calls now. The business of EZ Prints was similar to the corporate shops that we did, and as soon as we acquired them, we really used their technology platform to be our shops platform for the entire company. We brought to their create and buy mix or find and buy mix , and that’s the business we’ve gone forward within Q1, and we will continue to go forward. So, it’s no longer something that we can distinguish between.
Bo Nam - JPMorgan
Understood. Thank you very much.
Thank you. Our next question comes from the line of Aaron Kessler of Raymond James. Please go ahead.
Aaron Kessler - Raymond James
Yes, hi guys. A couple of questions, first on the revenue upside, for I guess maybe both the quarter and guidance for the year, can you just maybe breakout if there was upside from one of the – between marketplace create and buy and shops, maybe the area of greatest upside. And in terms of, maybe you could just talk a little bit about. Bob, maybe your mobile app strategy, it seems like CafePress would fit nicely into having a nice mobile app and just what’s kind of your download strategy there as well? Thank you.
Sure. Monica why don’t you break apart the upside, and I will end with the mobile app.
Sure. And so we saw the $5 million in upside and I would break that down pretty evenly between create and buy and within create and buy strong performance in both our LogoSportswear as well as our art business, and that continued over the half of it, the other half was really strong performance in our shops business, the new corporate shops and integration of EZ, which we saw some upside from.
Thank you. You know, Aaron for us, we think that mobile and social are necessarily linked. We have a unique opportunity where we have all this content that would be at home, is at home with conversations happening on social media and so many of those interactions on social media are done on mobile devices. So, we look at it as really two opportunities, one to gain direct revenue from participating there, but also to gain mind share to be a part of all the conversations that occur.
Now, in terms of a balance between our own mobile apps and also just bringing customization as the World’s Customization Engine to existing mobile apps, we intend to do both. We don't think that we will corner the market on all the apps that can participate in customization, so therefore we have made it our business to bringing our technology forward as we have done with Magic Moments. In this quarter, you will see significant releases on our flagship site cafepress.com, but also our other sites in areas of mobile, making it much easier for folks to navigate and find what they are after, but also be able to quickly share again into social media and really in that way carry the bag of sales for us.
Aaron Kessler - Raymond James
Can you speak a little to me what you are seeing kind of in the private company space? I think (inaudible)referenced on the call yesterday the (inaudible) is being approached by 40 plus companies up for sale. Are you seeing some shakeout, you think it maybe the smaller private companies?
Are you saying narrowly in the area of mobile or just in --?
Aaron Kessler - Raymond James
Generally kind of in personalize your photo product areas?
We definitely are seeing an increased dialog there, we feel though that there is plenty of work for us to do on our own and build our own business. So, right now that’s not something we are pursuing.
Aaron Kessler - Raymond James
Great, thank you.
Thank you. Our next question comes from the line of Brian Fitzgerald with Jefferies. Please go ahead.
Brian Fitzgerald - Jefferies
Thanks. I was wondering, if you could quantify any impacts from Easter in Q1 maybe across the different business components, find to buy create and buy and shops. And then you talked about top-line growth increasingly being driven by organic growth throughout the year, once if I have missed this, but still the case for the outlook for this year and what was organic growth in the quarter? Thanks.
Great. Monica, do you have any information on the impact of Easter because I must have missed– I would have to get back to –
Yeah. I mean, I think will be Easter at the end of this Q1 versus the beginning Q2, it definitely impacted us a little bit negatively this quarter. But it wasn’t significant. So that you know that’s not a holiday that we tend to monetize. So, we think, little bit impact there but I would say one of the significant.
In terms of what we call organic growth, I think the one acquisition we have out there that we haven’t lapped ourselves with that really is something we can sort of break apart is mobile and that as lapped itself as of April and so with that business, I would say added about 9, 10 points of growth for the quarter.
But, I would also add that’s a business that we work to for all of our clubs and groups business and its not only is this that number represent what they are transacting on that yard and also represents the traffic that we attend to it. When we encounter a customer looking for essentially an order size greater than a couple of items.
Brian Fitzgerald - Jefferies
Great. And then quick one on the – I know you said you are feeling good and you are on track with the Kentucky implementation, is that do we have a date for when you plan that to be finished, I assume its going to be a well ahead of kind of the holiday season?
Right. There is a lot of works still to do occur. But we have got a lot under our belt and we will be performing this consolidation all the way through the second and the third quarter and partially through the fourth quarter. Of course, what we have left to do in the fourth quarter will be less than what we will have to tackle on the second and the third quarter. But we are right on track.
Brian Fitzgerald - Jefferies
Thank you. (Operator Instructions). Our next question comes from the line of Kevin Kopelman with Cowen and Company. Please go ahead.
Andrew Marok - Cowen and Company
Hi, this is Andrew Marok for Kevin. I just had a one quick question. Can you comment on trends that you are seeing to-date in Q2 across your different product lines for marketplace created by shops and if you are seeing any incremental impact from Mother’s Day coming up here in a couple of weeks? Thank you.
Mother’s Day has traditionally been a good holiday for us and so has Father’s Day and so we are following a normal curve for that in our retail business and of course with the work that we have endeavored to do in the B2B channel and the number of accounts of that we are loading in this year, it’s difficult to see a trend due to the holiday impacting that channel. Once we elaborate ourselves and sure come obvious. Right now their growth in that channel and the work in that channel is just landing our pipeline and getting them set-up with new corporate shots.
Andrew Marok - Cowen and Company
I’m showing no further questions in the queue. Please continue with any closing remarks you may have.
Thank you all for joining us and look forward to our next call.
Ladies and gentlemen, this does conclude our conference for today. Thank you for your participation. You may now disconnect.
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