Shutterfly Management Discusses Q2 2012 Results - Earnings Call Transcript

| About: Shutterfly, Inc. (SFLY)

Shutterfly (NASDAQ:SFLY)

Q2 2012 Earnings Call

July 25, 2012 5:00 pm ET


Michael Look - Vice President of Investor Relations

Jeffrey T. Housenbold - Chief Executive Officer, President and Director


Mark May - Barclays Capital, Research Division

Paul Judd Bieber - BofA Merrill Lynch, Research Division

Kevin Kopelman - Cowen and Company, LLC, Research Division


Good day, ladies and gentlemen, and thank you for standing by. And welcome to the Shutterfly, Inc. Second Quarter 2012 Financial Results Conference Call. [Operator Instructions] As a reminder, today's conference may be recorded. And now it's my pleasure to turn the call over to Michael Look, Vice President of Investor Relations. Sir, the floor is yours.

Michael Look

Thank you, operator. Good afternoon, everyone, and Welcome to Shutterfly's Second Quarter Fiscal 2012 Conference Call. With us today are Jeff Housenbold, Chief Executive Officer of Shutterfly; and Brian Manca, Chief Accounting Officer. By now, you should have received the copy of our earnings press release, which crossed the wire approximately 1 hour ago. If you need a copy of the press release, you can go to under the Investor Relations link to find an electronic copy. We have also released a presentation that we will use as we go through this call.

Call participants are advised that the audio of this conference call is being recorded for playback purposes and that a recording of this call will be made available on our website within a few hours. You can access the replay of this call through the Investor Relations section of our website at

Before we begin, I'd like to note that our discussion today will include forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements include statements about our business outlook and strategy and statements about historical results that may suggest trends for our business. For more information regarding these and other risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements, as well as risks relating to our business in general, we refer you to the sections entitled "Risk Factors" in the company's most recent annual report on Form 10-K and its other filings with the SEC.

I would also like to note that any forward-looking statements made on this call reflects information and analysis as of today. This presentation contains certain financial performance measures that are different from the financial measures calculated in accordance with GAAP and may be different from calculations or measures made by other companies.

A quantitative reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is available on our second quarter fiscal 2012 earnings press release, which is posted on the Investor Relations section of our website at

Now I'd like to turn the call over to Shutterfly's CEO, Jeff Housenbold. Jeff?

Jeffrey T. Housenbold

Thanks, Mike. Good afternoon, everyone, and welcome to our second quarter earnings call.

As you can see from our Q2 press release, Shutterfly has continued the positive momentum in 2012 and delivered another quarter of solid revenue growth and improved profitability.

In the second quarter, net revenues increased 31% to $99 million, and more significantly, above the high end of our guidance range. However, effective revenue growth was largely driven by strong demand for our core Consumer products during Q2's key gift giving occasions, primarily Easter, Mother's Day, Father's Day and graduation, as well as continued robust growth in our Enterprise business.

Adjusted EBITDA for the second quarter was a positive $3.6 million and also above the high end of our guidance range of an adjusted EBITDA loss of $2 million to an adjusted EBITDA loss of $4 million. Our positive variance in adjusted EBITDA was driven by increased efficiencies in our material, labor and shipping costs, Q2's higher revenue and corresponding unit volumes, and better than expected average selling prices, along with some delays in expenditures associated with the Kodak migration and holiday preparation that will now occur in the third quarter.

This quarter's significant improvement in profitability demonstrates the leverage and competitive advantage that our vertical integration can generate as scale is increased. We believe that by leveraging our competitive advantages, we are best positioned to transform the multi-billion dollar social expression and personal publishing market.

We are delighting customers by introducing them to dynamic, online, personalized content-based experiences in categories that have been historically generic and retail based.

In Q2, we continued to leverage our scale and scope economy, vertical integration, solid balance sheet and profitable business model to extend our market position and further transform these multi-billion dollar markets.

In April, we launched our one-to-one greeting card service, Treat. is a destination dedicated to easily personalizing and sending the perfect greeting card. Treat offers an integrated scheduling and reminder service that connects directly with Facebook and offers cards that reflect style, personality and unique relationships for as little as $1.99 per card.

Treat offers thousands of designs for consumers to choose from, including hundreds of designs, styles and sentiments from our new partner, Hallmark. We believe Treat offers a more compelling value proposition to consumers and can transform what is currently a $6 billion offline market in the U.S. to an online market.

With and our soon-to-be released mobile application, no longer will consumers have to drive to their local drugstore to buy a generic greeting card costing $4 to $5. Whilst early in this transformation, we recently completed our own customer satisfaction survey, which confirms that users believe that Treat is a better overall experience than the current traditional retail alternative.

In early May, we completed our acquisition of Kodak Gallery's customer accounts and photos, further consolidating our market leadership. After allowing Kodak Gallery customers an opportunity to opt out of the account migration and to complete projects they had already started, Kodak Gallery shut down their website on July 2.

Immediately thereafter, we began migrating Kodak Gallery customer accounts and data over to Shutterfly. While we are only a couple of weeks into that migration, I am pleased to report that the migration is proceeding smoothly and remains on schedule.

In late May, we acquired Israel-based Photoccino. With Photoccino's advanced image analysis and selection technology, customers will be able to rapidly sort through large collections of photos and identify the pictures that best match user-specified criteria, such as which photos are in focus, which photos have people smiling or which photos were taken at the beach.

Photoccino's technology applied proprietary algorithm, ranks them and automatically creates photo products like photo books, using the customer's best images. We believe Photoccino can address a major hurdle for our customers today, reducing the time it takes to curate a large number of photos.

In addition to our acquisition of Kodak Gallery customers, the launch of and the acquisition of Photoccino during Q2, we enhanced several of our products and services based upon user feedback. Some examples include the introduction of double spread layouts in our photo books, new store pages on Shutterfly Share sites, new personalized plates, cups and water bottles and the ability to compare products across multiple sessions.

In addition to our new products and services, we continue to partner with other leading brands to increase the awareness and trial of our products.

During the second quarter, we signed deals with Coke, Hallmark, Disney, Post, Kimberly-Clark, Symantec, Leapfrog and Great Wolf Lodge.

And finally, earlier this month, the PTO allowed our 53rd patent, our IP portfolio covers a broad range of front- and back-end innovations. Our continued focus on innovation is instrumental as we continue to create best-in-class products and solutions for our customers.

These are just a few examples of our ongoing efforts to improve our product and technology platform, enhance our customer's user experience, and remain a disruptive force in the social expression and personal publishing market.

With these initial thoughts on our Q2 performance as a backdrop, I will review our second quarter results in greater detail. However, before I begin my discussion, I would like to take a moment to review with you the disclosure approach we will be using for this quarter's conference call, as well as future earnings calls.

Last quarter, we announced that we would end our disclosure of Tiny Prints-specific metrics and that we would evaluate our current disclosure practices to determine if changes should be made to better describe the market and opportunity that we are addressing, and the results we are generating without disclosing any competitively-sensitive information. Our Q2 press release and earnings presentation reflects the changes we have made to our disclosures. Revenue will now be reported according to the types of customers that we serve, Consumers and Enterprises. We believe this nomenclature change and our new disclosure approach more accurately describes the markets that we serve and more closely reflect the way we manage our business.

Using this new approach, financial results from our Tiny Prints, Wedding Paper Divas and brands along with Shutterfly prints, and personalized products and services results will be consolidated and presented under the heading of Consumer.

Commercial printing results will now be reporting under the new heading of Enterprise. Accordingly, customer metrics such as number of orders, average order value and transacting customers will now only be presented for the Consumer category as a whole.

In an effort to smooth the transition to this new disclosure approach, we will be providing some qualitative commentary and historical metrics during this call and in our press release so that the financial community can update their models as appropriate.

With that said, let me now review our second quarter financial results.

As I indicated earlier, total net revenues for the quarter were $99 million, an increase of 31% year-over-year on a reported basis and 21% year-over-year on a pro-forma basis. This represents the 46th consecutive quarter of year-over-year net revenue growth. These results do not include any direct revenue from our Kodak Gallery transaction which began in early July.

Net revenues from our Consumer category totaled $94.4 million, an increase of 29% year-over-year. The increase in our Consumer category revenues was largely driven by strong sales of our core Consumer products, mainly greeting and stationery cards, photo books and prints, during Q2's key gift giving occasions, primarily Easter, Mother's Day, Father's Day and graduation.

As a bridge to our historical reporting, Shutterfly Consumer net revenues grew 19%, and on a pro-forma basis, Tiny Prints' new net revenues grew 24% on a year-over-year basis.

Net revenues from our Enterprise category increased 68% year-over-year to $4.6 million. This strong growth in our Enterprise business was driven by robust organic growth at existing accounts, as well as the addition of new customers. While growth in this category of our business remains lumpy due to its early-stage nature, we are pleased with the progress that we're seeing in terms of revenue growth, repeat business and profitability improvements.

In terms of business category mix, Consumer represented 95% of Q2's total net revenues. Enterprise increased from 4% of total net revenues in Q2 of 2011 to 5% of total net revenues this quarter.

Moving on to second quarter customer trends. At the top of the funnel, we continued to see healthy double-digit growth in key customer engagement metrics, such as visits and uploaders, and an accelerating double-digit rate of growth in shares sent from our Share sites.

Consumer Q2 revenue mix between new and existing customers remained essentially in line with our historical levels of 25% and 75% for Shutterfly, and 67% and 33% for our Tiny Prints brands.

In our Consumer business, customer growth and order growth were up 14% and 15% year-over-year on a pro forma basis, respectively.

As you can see from our press release and conference call presentation, consumer average order value for the second quarter was $31.70, an increase of 5% year-over-year. Q2's significant change in AOV trajectory versus Q1 confirms our previous comment that we expect to see quarter-to-quarter changes in key metrics as we pull different levers to manage our short and long-term growth in response to the changes in seasonality, competitive dynamics and macroeconomic conditions.

Excluding, Q2's Consumer average order value increased 3% to $33.30, and is $1.60 higher than our Consumer category's overall AOV. The varying differences that your see between AOV with and AOV without from quarter-to-quarter reflect the early stage nature of our current one-to-one business and the seasonality of our one-to-many card offering.

Moving on to the cost of net revenues and gross margins. We reported a gross margin of 48.8% in Q2, which is meaningfully above the high end of our guidance range and 140 basis points higher than the 47.4% margin we reported last year.

Our better-than-expected gross margin reflects the combined effect of higher material, labor and shipping margins as a result of Q2's higher revenue and corresponding unit volume, and a favorable shift in product mix to higher ASP greeting cards. This was partially offset by the inclusion of the full quarter of Tiny Prints customer service and outsourced manufacturing costs and deeper discounting levels at some of our brands.

Turning now to Q2's operating expenses. Operating expenses, excluding stock-based compensation, totaled $57 million, reflecting the increased cost structure of the combined businesses and purchase accounting amortization, offset by a delay in the timing of various marketing programs and acquisition synergies.

Taking a closer look at our operating expense components. Technology and development cost totaled $20.9 million for the quarter or 21% of net revenues. Excluding stock-based compensation and depreciation, our technology and development spending increased approximately $3 million or 29% from the prior year. Q2's increase in technology and development spending reflects the incremental cost associated with our acquisition of Kodak Gallery's accounts and photos, including facilities cost, increased storage, power, bandwidth and technical support costs, as well as increased investments in engineering headcount.

Sales and marketing expenses totaled $30 million in the quarter, representing 30% of net revenues, compared to 33% in Q2 of 2011. Excluding stock-based compensation and amortization, sales and marketing expense increased approximately $5 million from the prior year and represented 24% of net revenues, essentially in line with Q2 of last year.

Q2's year-over-year increase in sales and marketing expense largely reflects the addition of the Tiny Prints marketing team. General and administrative expenses for the quarter totaled $15.2 million or 16% of net revenues. Excluding stock-based compensation and credit card processing fees, G&A expenses represented 9% of quarterly net revenues, down from 12% in Q2 of last year. The year-over-year decrease primarily reflects integration synergies that have resulted from the combination of both Shutterfly and Tiny Prints.

As I indicated earlier on this call, adjusted EBITDA for the quarter was $3.6 million, and better than our most recent guidance which projected an EBITDA loss of negative $2 million to negative $4 million. Our favorable Q2 EBITDA performance was driven by increased efficiencies in material, labor and shipping costs, stronger revenue growth and better-than-expected average selling prices, along with some delayed expenditures that we'll incur during Q3.

The effective tax rate for the quarter was 47%, which reflects the impact of disqualifying dispositions of incentive stock options during the quarter. On a GAAP basis, our net loss for the quarter totaled negative $9.5 million or a loss of $0.27 per share and is $0.08 better than the midpoint of our guidance range. The weighted average shares used to calculate the net loss per share totaled 35.8 million.

And finally, capital expenditures during the quarter totaled $15.1 million, including $11.2 million for technology equipment and software; $1.1 million for manufacturing, equipment and building improvement; and $2.8 million in capitalized research and development cost.

Q2's increase in technology equipment and software CapEx reflects Shutterfly's increased data storage requirement associated with the migration of Kodak Gallery customer's accounts and data.

Cash and liquid investments at quarter-end totaled $118 million.

To complete my discussion today, I would now like to summarize our outlook for the third quarter and the full year 2012.

As we enter the second half of 2012, we are pleased with our results to date and encouraged by the success we had, had over the past 6 months. Despite concerns about the health of the U.S. economy, declining consumer confidence and an elevated promotional environment, we have been able to deliver solid results. Our ability to leverage our scale and scope economies, vertical integration, solid balance sheet and profitable business model has allowed us to expand our market position through organic growth and disciplined acquisitions, and clearly, is enabling us to differentiate ourselves from our competitors.

However, as a consumer-facing business, we are acutely aware of the current fragile state of consumer confidence and the numerous external factors that could affect consumer discretionary spending during the second half of this year. And while we have seen some abatement in promotional activity over the last several weeks, we continue to view the competitive environment as uncertain, with discounting still elevated from historical levels.

Lastly, we are also mindful of recent trends in our business, where the peaks have tended to be higher while the troughs have tended to be lower. All of these factors, combined with the relatively limited experience we've had so far in managing our newly acquired Kodak Gallery customer base, are incorporated into our Q3 and full year 2012 guidance.

In terms of Q3 net revenues, we expect consumer market activity to slow from Q2 levels as the typical summer seasonality kicks in with no major gift-giving events. Furthermore, we expect this seasonality may be exasperated by various events around the world, such as the London Olympics, the upcoming presidential election, the challenges in the Eurozone and the U.S.'s upcoming fiscal cliff, which may occupy consumers' mind share.

In addition to our already announced incremental Kodak Gallery costs, we expect to reinvest a portion of our profits from the first half of this year into additional growth initiatives during the third and fourth quarters.

These incremental investments fall into several categories, including customer-facing features and functionalities, back-end infrastructure, productivity tools, and awareness building and conversion marketing.

On the marketing front, our new Chief Marketing Officer, John Boris, is leading our efforts to reevaluate our mix of media investments and test new approaches to raising brand awareness.

On the technology front, we expect to increase our investment in user experience, new features, mobilization of our online experience, social media integration, storage technology, data warehouse enhancements, and integration of acquired assets.

With these comments as context, I will now summarize our guidance, starting with Q3. Currently, we expect Q3 net revenues to range from $89.5 million to $91.5 million, which reflects year-over-year growth of up to 20%. We expect our GAAP gross margin to range from 45% to 46% of net revenues, reflecting scale and scope efficiency in our production facilities, combined with lower Enterprise revenues in Q3.

Q3 GAAP operating loss is expected to range from negative $28.8 million to negative $30.3 million. Q3 adjusted EBITDA is expected to range from a loss of negative $6 million to negative $7.5 million. We expect our GAAP effective tax rate to be approximately 48%. And Q3 GAAP net loss per share to range from a loss of $0.41 to a loss of $0.44 based on approximately 36 million weighted average common shares.

Turning now to the full year 2012. We are increasing our net revenues guidance. We now estimate net revenues will total between $582 million and $592 million, which reflects year-over-year growth of up to 25% on a reported basis.

We are maintaining our full year GAAP gross margins guidance range of 52% to 54% of net revenues. We expect that our GAAP operating income will range from approximately $7.3 million to $14.9 million.

For the full year of 2012, we expect adjusted EBITDA margin to range from 16.6% to 17.6% of net revenues. This marks a slight increase in full year adjusted EBITDA profitability, while investing for the future and absorbing the increased operating costs of both the Kodak Gallery and Photoccino acquisitions.

The full year GAAP effective tax rate is expected to be approximately 45%. We expect full year GAAP net income per share to range from $0.11 to $0.21 per share based on 38.3 million weighted average diluted shares. And finally, we now expect that 2012 capital expenditures will range from 9.7% to 10.2% of net revenues.

Our increase in capital expenditures guidance reflects management's decision to purchase, rather than lease select growth-related equipment. Additionally, we are currently in the evaluation phase of expanding our East Coast manufacturing facility to handle future Consumer and Enterprise order and revenue growth for 2013 and beyond.

Our early analysis shows that we can expand our manufacturing footprint while realizing meaningful operational costs savings. These savings would result from lower lease payments on a per-square-foot basis and through selective in-sourcing of some currently outsourced products that have achieved sufficient scale and volume, making in-sourcing economically beneficial. We expect to conclude our analysis in Q3 and provide additional guidance on the next earnings call.

In summary, we are pleased with our Q2 results and the continued strength of our business through the first half of this year. We remain confident of our market position and product offering, and intend on continuing to invest in innovation and growth.

So with that, we will now open the call for your questions.

Question-and-Answer Session


[Operator Instructions] Our first questioner in queue is Mark May with Barclays.

Mark May - Barclays Capital, Research Division

I actually had a nonoperational question. Just wondering, Jeff, if you could give us an update on the CFO search?

Jeffrey T. Housenbold

Sure. We're making really good progress. We've been fortunate to see many talented candidates who are attracted to our profitable growing business model and our consumer-facing business as well. And I think -- we're not ready to make an announcement here today, but what I can say is we're narrowing it down to 2 finalists, and we're approaching a decision over the next couple of weeks. So I'm excited to update you guys when we've made that decision.

Mark May - Barclays Capital, Research Division

And maybe a question around Kodak. Can you give us a sense of the early results of kind of opt-out on migration, and if the -- some of the consumer reaction to the conversion, if that's been in line, better or worse than your expectation?

Jeffrey T. Housenbold

Yes. The transition has been going ahead of plan on a number of fronts. First, we had less opt-outs than we had expected. Second is the testimonials and e-mails into customer service, from customers saying thank you so much for preserving my pictures, or I've always wanted to use you but it was a hassle to migrate myself, you're doing it for me. So overall, the consumer feedback has been very positive. We're just a couple, 20 days into kind of turning on the monetization engine here. And as I indicated in the prepared statement, things are on track. And then from migrating the photos over, there's 5 billion photos that we're going to add to our 10 billion photo repository, and that transition is ahead of schedule as well. So overall, I'm really pleased by the teams have taken on additional workload, and they're really executing flawlessly.


Our next questioner in queue is Paul Bieber with Bank of America Merrill Lynch.

Paul Judd Bieber - BofA Merrill Lynch, Research Division

If we segment the competitor landscape into Snapfish, American Greetings, and then Groupon or LivingSocial to your deal-related pressures, can you comment on trends within each segment? And then the second question is, under normal pricing environments and assuming we're not in a recessionary environment, do think you can return to your historical EBITDA margin at some point in the future?

Jeffrey T. Housenbold

From a competitive standpoint, let me break it down. American Greetings competes with us in the one-to-one greeting card category primarily, which is a very, very nascent business for us through our Treat brand. And so their level of competition there is fairly de minimis to the overall P&L impact. They also compete in the one-to-many category during holiday, but that is a very de minimis, less than 1% of their revenue business as well, and so it's fairly new. So we won't really see American Greetings pricing approach into the fourth quarter, but our understanding is that they lost a considerable amount of money on their approach last year. And they're really smart people who are very good at what they do, and so imagine they're reevaluating that. From Snapfish standpoint, I think we continue to outpace Snapfish in innovation, in quality, in design, in customer centricity. And as they've been kind of pulling the price lever, they've lost 2 of their 4 major white label partners in Costco and CVS. They still have Walgreens and Wal-Mart. And so it's not clear how that's impacting their overall financials. But if you look at the user metrics through comScore or Compete or Alexa, I think that gives you a good sense of how we continue to outpace the overall competitive environment. And then Groupon and LivingSocial are allowing a lot of very small nascent businesses to be able to, if you will, advertise and broadcast their products without having to front the money as historically through advertising. But that model has not been working for many. We've seen several go out of business in the last few months. One of our major photo book competitors did a 40% downsizing just a couple of weeks ago because of the use of flash sales and its unprofitable nature of acquiring coupon chasers and low-rank customers. So overall, I'm very, very pleased about our competitive positioning and how it's strengthening with the acquisition of Kodak, with the Tiny Prints, with our organic growth, with the launch of Treat, with the integration of Photoccino for the fourth quarter, and our investments in mobile and new innovation. So I feel good about the rest of this year, and certainly as we continue to transform these large multi-billion dollar markets. As it relates to historical EBITDA margin, if you look at just the core Shutterfly brand, which we don't break out for the Street, margins in that business has been expanding over the last 18 months. And if you look at Tiny Prints, we acquired them in 2010. They had a 2.5% EBITDA margin, and they were on a run rate of about negative 5% because of the investments they were making. We, by the end of last year, got that to about 14%. So that was about a 19 point turnaround, and we still plan on in-sourcing a much greater amount of their volumes during the fourth quarter. So we think the overall profit margin on Tiny Prints will continue to expand. Obviously, Treat is a small nascent business and so it's not a big impact. And then on Enterprise, that business, as it continues to scale, I'm very pleased about that trajectory and the nature of the programs that we're getting from Fortune 1000 customers, the profit margin in that is expanding as well. So what we're doing is we're taking that overage in the profitability, and we're reinvesting that into strategic projects, some of those are capacity-related, some of those are mobilization of our website and new mobile applications, some of those are new businesses like Treat. So I think that we will be able to continue to expand margins over the intermediate term here, and we think we'll get continued leverage out of our scale and scope economy.


[Operator Instructions] Next questioner in queue is Kevin Kopelman with Cowen and Company.

Kevin Kopelman - Cowen and Company, LLC, Research Division

Could you give us any more color on the trends you've seen quarter-to-date? And to what extent would you say guidance for the quarter reflects conservatism versus an actual slowdown so far?

Jeffrey T. Housenbold

Yes. Kevin, we don't typically give inter-quarter updates, but I think what is driving our overall guidance is the notion that the third quarter does not have any natural gift-giving or card-giving occasions, right? So we benefit in the second quarter from Easter, Mother's Day, Father Day and graduation, and then we typically have this seasonal slowdown headed into the third quarter. As we exit that, we pop through Halloween, Thanksgiving, and then we're off to the races during the seasonally strong fourth quarter given Hanukkah and Christmas. And so I think, overall, our guidance is driven by the changing seasonality patterns of the business, where the peaks are getting peakier and the troughs are getting deeper. Keep in mind, if you look at our overall guidance and you could derive Q4 from that, because we gave you Q3, you have first half, and we gave you full year, that Q4 as a percentage of total year revenue is exactly equal to that last year. And so it gives you a sense it's really driven by patterns. On top of that, we are factoring in, as I said in my prepared remarks, we're all looking at the headlines, persistent high unemployment in the U.S., concerns about the Bush tax cuts expiration, Eurozone challenges, distractions by the Olympics, and just general malaise in the U.S. consumer and a slowdown in China. So all of that goes into our guidance for Q3. But what was important here is to note we had a nice performance in Q1, an acceleration from that performance in the second quarter, and we're raising full year guidance on both the top and the adjusted EBITDA line allowing us to free up additional dollars to invest to continue our growth in 2013 and beyond.

Kevin Kopelman - Cowen and Company, LLC, Research Division

Okay. And just a follow-up on that, on Commercial revs for Q3, you said lower, is that -- are you assuming those are going to be down Q-over-Q, is that what's in guidance?

Jeffrey T. Housenbold

Yes, in our Enterprise business, it looks more like a enterprise software sales business. It's typically lumpy. We had a new client come on board in the second quarter with a large project. The nature of that project extends from Q2 to Q3, but the Q2 portion of that was a larger percentage. So the overall year-over-year on Enterprise is doing quite nice. It was up 172% in the first quarter, 68% in the second. We expect meaningful growth on a full year basis and Q3 is just a nature of what we see in the pipeline today from existing customers.


And presenters, at this time, I'm showing no additional questioners in the queue. I'd like to turn the call back over to management for any additional or closing remarks.

Jeffrey T. Housenbold

Thanks, everyone, for joining us again on our Q2 earnings update. As I said in my prepared remarks, Q2 was a very solid quarter. We're looking forward towards the fourth quarter holiday season. The teams are very busy scaling up the business to meet the increasing demand. And that we will continue to grow through organic growth, through strategic partnerships and through disciplined acquisitions as we transform these large multi-billion-dollar markets that are still in the earliest days and largely transacted in a traditional retail world. And we think the 4 lifestyle brands that we're building are much better value proposition for customers as they naturally migrate from an offline generic-based world to an online personalized and dynamic world. So we're excited about the future. I look forward to seeing many of you on the road in the days and weeks ahead. Thank you.


Thank you, gentlemen. Again, ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a wonderful day. Attendees, you may disconnect at this time.

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