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Sean Quinn

Great. Thanks a lot, Robert, and thanks to everyone that's joined us today. We did provide a lot of information in the document yesterday. I'll try and keep my remarks brief, just so we can get to the questions. There's a lot of questions that will come in.
Bob, we were disappointed with (inaudible) Q2 results and of course, that's altered our outlook for the full year as we outlined last night. Robert commented on our strategic focus. I'm going to turn to an overview of our financial results and let me just start a little bit more big picture as an overview.
And there are a lot of onetime items, including the lapping of significant benefits that we had last year which, frankly, was more than normal, and that does create some noise. We've quantified those things. And so hopefully, that was clear in what we've provided.
But beyond that, the vast majority of what drove the weakness relative to our plan was in the United States. And the biggest dollars are in Vista, but that was also present for a National Pen for BuildASign as well. In Vista, there's a few things to call out first. As we noted in the US overall, we saw lower performance in organic search, and that was impacted by changes to the Google core algorithm and search engine results page in the US.
That impacted new customer acquisition, and that was most notable in business cards and consumer which in terms of customer count from a new customer acquisition perspective, those are the largest categories in Q2 for new customers. We've been optimizing now against those changes.
In our December quarter, the revenue mix in Vista changes to about 25% of our bookings coming from the consumer category. It's actually a higher percentage in Europe than it is in North America. And we had planned for only slight growth in that category on the back of really two things: one, strong holiday season last year and also the shortened holiday season this year just in terms of the number of buying days between American Thanksgiving and Christmas.
In the US, it was also a less favorable environment than last year just overall. The cost of performance advertising was significantly higher, nearly 50% higher, and the competitive intensity was also higher from discounting from some of our competitors, particularly in some of our legacy products. For business cards and holiday cards in the US, we do see market demand down, and that's also factored into our multiyear forecast.
So there was not necessarily anything new there. But that was further accentuated by these other topics that I just mentioned that were particularly there in Q2. As a point of reference, business cards in Europe were stable year-over-year, and consumer in Europe was slightly up versus last year and actually a little bit ahead of our plan. Also, as we turned to the month of January, which is now nearly complete, consumer in North America is back to modest growth.
In National Pen and BuildASign, there are some specifics there tied to go-to-market channels. But overall, we don't see a dramatic change that cuts across the US market despite the fact that that's where most of the weakness was in the quarter, so nothing new that indicates that something has changed. There were a number of specific drivers.
As we talked about at our September Investor Day, business cards and consumer, have been growing more slowly in the last years than other categories. And in the case of business cards, more recently had a slight decline. We do expect that to continue, but there are other additional factors at play this quarter.
As for the specific results, our consolidated revenue 2% on both a reported basis and organic constant currency basis, but adjusted EBITDA declined just over $34 million. We were expecting a slight decline in adjusted EBITDA because of the extent of onetime benefit in last year's Q2 results, which is about $12 million last year.
And we, of course, are copying those, but we also had the short holiday buying season, so we had factored that into our forecast. Beyond that, we also had unfavorable onetime impacts to our profitability this quarter as well that weighed on adjusted EBITDA by another nearly $5 million, and we outlined those in the release last night. That leaves about $18 million of year-over-year EBITDA declines this quarter outside of those onetime items.
And as previously outlined, most of that coming from the US market with weaker sales of consumer-related holiday products like holiday cards and home decor, not just specific to Vista as well as year-over-year declines in business cards in Vista. Signage, promotional products and packaging categories had strong growth globally.
That strength was not enough to overcome the weakness in those higher-margin legacy products in the US market. And with that weakness concentrated in free channels like organic search, the shortfall had a more direct impact on EBITDA than we would typically see given advertising spend and operating expenses increase year-over-year. We have a lot of improvements in flight already in addition to the examples of progress against our strategic objectives that Robert will get to some of those in the questions.
As for our outlook, we remain committed to multiyear growth in revenue, EBITDA and free cash flow. However, in light of our Q2 financial results, we are setting our expectation for the year to incorporate our Q2 underperformance. For the second half of the year, we expect revenue in constant currencies to grow at least 4%.
We expect adjusted EBITDA to be at least $220 million and adjusted free cash flow to be at, at least $50 million. We have initiated multiple actions to improve performance, reduce operating expenses or slow their growth and to optimize our pricing. Again, we'll get into some more of that in the questions. That's factored into our updated fiscal 2025 guidance as is some prolonged effect from just some of the weakness that we experienced this past quarter. We also now expect to exit this year with net leverage of approximately 3.0 times our trailing total bond EBITDA as calculated under our credit agreement.
We do remain committed to our plans to reduce net leverage to our target of approximately 2.5 times or below, but that will be slightly delayed from our prior expectations.
With that, Meredith, let's open it up for questions.

Question and Answer Session

Meredith Burns

(Event Instructions)
Sean, I'm going to ask this question to you. To what do you attribute the underperformance in business cards and holiday cards? Should we be thinking about this as incremental secular pressure on those product lines, what trends in these categories are baked into your multiyear outlook?

Sean Quinn

Yeah, thanks. I touched on a little bit of this in the remarks just now, but it's an important topic. Let me try and get a little bit more specific I'll start on the consumer side. We said overall that Vista consumer revenue declined 3% that was in the release last night. That's about $4 million when you play through the math year-over-year.
and nearly $3 million of that was attributable to the Canadian postal strike, which is not indicative of normal market demand. And by the way, we see Canada kind of snap back to more normal expected performance once that strike was over. and including in January. We did have growth in part of that consumer category, but the main driver of the decline was holiday cards and to a lesser extent, calendars.
I covered this earlier, but there were a number of factors at play that impacted that the shorter holiday season, the higher cost of performance advertising. I mentioned it was up 50% of the peak weeks in the US competitive behavior was different than last year. As I said earlier, that consumer products grew overall in Vista's European markets, including from holiday cards. Holiday cards as a subcategory is more mature, and we don't expect it to be a growth product based on market demand.
We do have some credit card data that we have visibility to that indicates it was -- there was a decline for most of our competitors in the US in that area of the season and that lower rates to ours. And some of those competitors are quite intense with discounting and advertising. We can see that.
But in our multiyear outlook, we don't assume growth from those specific products. For BuildASign, sticking with consumer, we build a sign Canvas Print revenue is down year-over-year about $5 million. And this is part of a trend we've seen really since going back to the pandemic, there was a pretty tremendous acceleration of demand in those products. And then since then, we've seen some decline, those are still relevant products. We have strong capabilities, but that was down year-over-year this quarter.
Q2 is seasonally important for consumer, of course, but these -- the weight of consumer does come down in the next during the rest of the year. So as we noted in our earnings document outside of the holiday period, this has been growing revenue for consumer products modestly outside of the holiday period, when it's not the concentration of holiday cards, calenders, canvas print and so on. And we did see that continue in January once we're out of the holiday season. We're back to modest growth in consumer across this. We did receive another question.
I just kind of touch on here while we're on the consumer topic just around competitive behavior and on the marketing front, if we tighten marketing investment in response to higher advertising costs. And on the competitive behavior, it does change every year. Last year was overall a more benign environment, I would say. We set our plans in terms of promotions that we run in our advertising and so on for the season and then we make adjustments along the way. But we don't chase if we see behavior changing that we view to be irrational when it comes to just thinking about the impact on unit economics.
That's what we did from an ad spend perspective this year as well. The increase in our ad spend this quarter in North America was mostly in display and TV channels. So that was not specific to consumer. We held to our marginal return thresholds and that spend in performance channels was therefore a good return, but it didn't go as far as last year because the unit pricing was far higher. So it just had less impact overall in terms of especially new customer acquisition.
The question asked about business cards as well. This is business cards and stationery category was down about $5 million year-over-year in Q2 in the US. We don't think that there's any sort of sudden change in demand for that product that happened -- we have been seeing pretty stable trends over many years where our boys were decreasing slowly over time, but that was being offset by more feature enhancements or change in order sizes as we attract different types of customers, but also optimizing net pricing discounts had come down from where they were some years ago. As I mentioned in my earlier remarks, in Q2, business cards in the U.S. were also impacted by organic search.
And I won't go into that again, but like that definitely had an impact on business cards. We'll continue to make improvements and optimizations in that category, whether it be in the product offering, how we merchandise, design services and how that's integrated into the offering acquisition offers and a number of other things, all with the goal to protect that profit pool. That's what we talked about at our Investor Day as well. Our H2 guidance that we've outlined does factor in modest growth consumer for Vista, and we're back to that in January. It does factor in continued pressure in BuildASign in terms of their end market.
And then for business cards, it does factor in a decline, that's a bit more modest than what we saw in Q2. And by the way, that's also consistent with what we're seeing so far in January bookings. From a on-tour outlook perspective on business cards, we don't assume growth. We do factor in some modest consumer growth, as I said, outside of the holiday group.

Meredith Burns

Thank you, Sean. Excellent. Okay. My next question, Robert, is going to be for you. Why does it make sense -- why does it make more sense to have Pixartprinting enter the US market versus extending an existing Cimpress business with infrastructure already built stateside into Upload & Print?

Robert Keane

Well, at the highest level, our strong success we've had in Europe with the Upload & Print business model has taught us that it is very complementary to other segments we have in Cimpress, like Vista and National Pen. So let me explain that a little bit by speaking about two different perspectives.
First, let me talk to the customer need we're addressing with Upload & Print and then I'll turn more specifically to the production infrastructure that you're asking about. For the customer value that we need to deliver, of course, all the segments produce mass customized print. But the customers and the customer needs are typically different across our reporting segments.
They are concentric circles, they overlap each other. But in general, they serve different customers that we've spoken about for many years and to give a quick synopsis of Upload & Print customers. These are people who feel comfortable using professional graphic fine tools.
You can think of something like Adobe Illustrator or Adobe InDesign. And they use that with -- and the skills they have to create complex graphic design that is inherent in more complex products like packaging, booklet, catalogs, very large format, signage and other products. And beyond the graphic design, they often have higher quantity orders. They're still low by industry standards, but they're higher than Vistaprint.
So a focused business unit or business segment is very helpful in understanding these needs and serving them, given they differ from customers that typically come to Vista, National Pen or BuildASign. So that's, first and foremost, why we want to enter the market is to serve those customer needs.
And now as to the production operations or infrastructure, let me step back and we've talked about this for many, many years, but the mass customization of print, the economic and operational skill we've developed depends on aggregating together very large numbers of very similar orders in highly specialized production lines. And so you get a lot of repetitive production operations because we aggregate all these orders together.
And that specialization has a bunch of different factors. It could be by quantity with someone typically order 10 or 100 versus 1,000 or 5,000 or something by decoration type, is it embroidery versus laser versus print versus different types of print, sometimes by proximity to the customer that helps with shipping or proximity to suppliers, and all that specialization means that the production lines, although it's all mass customization of print can vary between our different businesses. For example, Vista is generally focused on smaller orders of relatively simple to produce products. And with orders that are -- where we very often ship multiple items put together in the same box and ship together.
On the other hand, Upload & Print businesses tend to focus on larger order quantities, again, still small compared to traditional competitors and more complex products. And so that second type of product, the Upload & Print products represent the type of production lines, which we are building out in our new Pennsylvania facility.
Now that being said, there's definitely overlap. I mentioned the concentric circles. And that overlap in some ways is growing over time, which is why we are pushing forward with the concepts you've heard us talk about across Cimpress fulfillment and why we are moving more and more towards focused production hubs to further aggregate volumes and get some of the benefits I just spoke about.
So to be clear, the new Pixartprinting facility in the US will produce products for Vista and national -- likewise, National Pen, BuildASign and Pixartprinting -- I'm sorry, National Pen, BuildASign and Vista will fulfill for Pixartprinting in the US. Hopefully, that helps you understand again why we're entering the market with this very successful brand and business, but also why we've chosen the operational footprint that we've described.

Meredith Burns

Great. Thank you, Robert. I'm looking forward to seeing that launch and grow in Q4. Next question is for Sean. Sean, we were surprised by the low growth experienced by both National Pen and all other businesses this past quarter. For National Pen, how material is their mail order business? And is that the main headwind facing that business? For all other businesses with the current growth and profit dynamics for each of BuildASign and Print G?

Sean Quinn

Yeah. I'll just -- I'll touch on each of these businesses briefly, and I'll start with National Pen. We have been and we've talked about this for the last few quarters, at least now, we've been reducing our direct mail advertising spend in National Pen and that's really focused around optimizing for profitability in that channel. And of course, when you do that, that does have some impact on revenue. and it was a lower growth channel in any case, and then that has a further impact on revenue, but we're optimizing for profitability.
From a profitability perspective, we do -- like in National Pen, we often see some timing differences in profitability because of the timing of mailings in that channel. We take the cost when we -- when the mailings happen and not when they have impact us early. So quarter-to-quarter, you see some different year-over-year trends. In Q1, we're favorable year-over-year in that regard. We see some of the opposite of that in Q2.
Just in terms of the weight of channels, e-commerce, call sales and then now the cross-Cimpress fulfillment, for that National Pen is doing. All those are growing well. And now those together are larger than direct mail alone. Direct mail is about 25% of National Pen revenue from a channel perspective.
And then the combination of e-commerce, telesales and across impress fulfillment is about 60% for National Pen and then the remainder is their distributor business for larger accounts. In Q2, the profit impact was weaker from direct mail sales. There is also some product mix and higher inbound freight costs, as we called out in the release. On BuildASign. BuildASign, we've continued to see growth in signage products. That was in Q2, offset by the declines that we saw, and I outlined earlier in home decor, which is consumer focused.
In the holiday quarter, that impact from home decor is bigger. That's what drove the year-over-year decline this quarter in their stand-alone business in terms of them serving end customers. The fulfillment for Vista that they're doing as part of the cross suppress fulfillment at significant growth. And so at a segment level, you still do see year-over-year slight growth. But in their stand-alone business, that was a decline and a lot of the growth driven from crossties fulfillment.
Outside of the December quarter for BuildASign, we expect that to ramp in cross-Cimpress fulfillment will continue, and that will continue to be a more dominant trend in the overall revenue number because of BuildASign strong production capabilities and signage in particular and also home decor products, we're moving most production volumes for Vista's US business to BuildASign and that not only saves cost and increase the rate at which Vista can introduce new products with a lot of focus there. But it's also freed up production space in Vista for new product introduction, which allows us to avoid future CapEx and then lead into these more focused production hubs that Robert was talking about earlier.
For Print G, just quickly, print small in our overall results. They've been putting the ingredients in place for a next chapter of growth, including necessary technology platforming, which is not unlike what most of our businesses have had to do at some point in time.
And then also expansion into new categories, which really modeled after the success that we've had in our European Upload & Print businesses. And so they're not recreating the wheel there, but if you will, importing some of the capabilities that we've seen [Vista] successful in Europe.
Print G's operating near breakeven, sometimes higher. But this quarter, some of these bigger changes that we're rolling out do cause some discrete disruption, but they open up opportunity for them in what's still a large and relatively untapped market. But those new capabilities have a lot of opportunity for growth. It just -- it's going to take a few quarters to get ramped up, especially from a production efficiency perspective.

Meredith Burns

Great. Thank you, Sean. I'm going to stick with you for the next one. This is a question that we got from multiple people, and so this is sort of a more combined question here. So in the letter, you called out that you're taking multiple actions to improve performance/reduce OpEx and optimize pricing.
Can you unpack that a bit and provide some color in terms of how we should be thinking in terms of the quantitative impact of these actions? And have you already baked that into your revised targets for the year? Or are these plans still being developed?

Sean Quinn

Yeah, there were a number of questions on this and some live questions or two. I think if you take a step back and you look at the second half of last year, about 90% of our adjusted EBITDA from a segment EBITDA perspective came from Vista and Upload & Print. So like that's where the vast majority of the profit came from last year, we expect that roughly that would continue this year, not that specific percentage, but that's where the weight of it will be.
So I'll focus on those two first. In Upload & Print, there was year-over-year puts and takes in Q2, but like those businesses have been executing well, investing in new product introduction, driving efficiency gains. Robert outlined, bringing the model to the North America market and we're going to continue on that path in the back half of FY25 and beyond. So we just stayed the course there in terms of our plans. Those businesses, in aggregate, were quite close to the plan that we set out in Q2. So we continue to course there.
In Vista in terms of the actions, we've already taken a number of actions or put things in place. There's more being worked on very actively, and that ranges across cost efficiency relative to our prior plans, prioritization of product road map focused on areas that we need to have the most impact relative to where we were seeing some of the sources of weakness in Q2. Some reallocation of our ad spend from a channel perspective, again, in response to where we see the biggest need and the big impact as well. Pricing optimization, and I could go on, there's other examples, too.
I think it's worth noting that we had already planned -- if you just think about the first half of the year versus the second half of the year, we had already planned, coming into the year that the year-over-year profile of our advertising spend would be lower in the second half of the year than it was in the first half of the year. And so that will have an impact as well just in terms of year-over-year profitability. That was already a more favorable setup for the second half of the year than the first half of the year.
That includes some large brand partnerships that we had last year if you recall. We won't have those in H2 this year, just one example of one of the drivers of that. We're not embarking in Vista or in Upload & Print and said we stay the course there.
We're not embarking on major changes or major cost reduction programs. It's really about driving focus and urgency against the areas where we see the most opportunity. Of course, we're driving cost controls along the way. And so that is absolutely a focus, but it's not in the form of large restructuring actions.
For National Pen and BuildASign, as I said smaller part of our overall profitability in the second half of the year. Where they're focused, especially is on continuing to grow fulfillment for Vista in North America having been executing well to find opportunities for scale-based efficiency gains, but also new product introduction, we've seen clear examples of that. That will continue in the second half of the year. And of course, they'll be focused on making sure from a cost perspective, we continue to optimize as well.
We haven't specifically unified what the aggregate impact of all that is. but it is baked into the at least framework of guidance that we provided for the second half of the year.

Meredith Burns

Thank you, Sean. Okay. Robert, the next question is for you. It's on a lot of people's minds. We have been getting this question.
If tariffs are put in place on Canadian goods and if the de minimis exemption on imports to the US is repealed and the asker does recognize that those are both big if, how might the company respond? What percentage of the company's US revenues come from the Ontario facility and how much of this could be shifted to other US plants?
How much do you estimate it would cost to recreate the Ontario facility in the US and how long would it take? And what is your US manufacturing footprint, and can it accommodate the volumes that you're currently producing in Canada and Mexico?

Robert Keane

Okay. Thank you all. I know there's a lot of questions to come in. I can first of all, step back and assure you that we've obviously been aware of this for a long time, even before knowing the election results. And we spend a significant amount of time doing scenario planning.
And as you said in one of your questions, these are big ifs. No one knows what's happening or what will happen and because there are so many unknowns, I can't outline specific plans, but we can provide you with some context in some of the background facts, which you're asking for. So let me start with the facilities we have. Our North American production is across Canada, the US and Mexico. In the US, we have four facilities, the Reno, Nevada; Tennessee, Austin, Texas and Indiana.
We have additional facility, as we mentioned, which we are fitting out outside of Pittsburgh, Pennsylvania. And you add up all those five facilities, and it's a little bit less than 400,000 square feet of production space. I believe, and I could be wrong, but I think everyone of those are leased, and they're in places where we could lease more facilities. It's not a capital expense if we were to expand them.
Our Canadian and Mexican facilities, we do own our Canadian facility, but we see Mexican facilities are collectively about 800,000 square feet roughly double the US facilities. Windsor is our biggest facility. And -- what we -- look at that -- given today, roughly two-thirds of our North American production space is in Mexico and Canada. The facilities that we have now or that we're about to open up in Pennsylvania, wouldn't, in their current form, be able to handle this volume without expansion.
That being said, in the case of, I'll call it the worst case of Trump tariff taxes, the -- it would not be a question of buying new capital equipment. It would be a question of moving the capital equipment, training up new teams or to expand that facility. We do not deny or ignore the fact that that's a possibility. I think it's -- personally, I think it's an unlikely possibility it would be that extreme, but we are taking that into our scenario planning.
Now to the extent we end up do moving facilities. We do have quite a bit of experience doing that. As an example, and again, we are not planning this. We are planning for scenarios and once we have more details, we would decide what we would do, more details about what actually happens in terms of the new tariff taxes. I think that the -- well, let me start with some experiences. We recently moved our Irish facility to the Czech Republic for National Pen.
We recently moved a very large amount of our production operations from Canada to Mexico for large-format production. And I can go into other examples. In Tennessee, we moved facilities, and we also moved part of the Tennessee facilities production out to Mexico.
So we have experience moving facilities, and we've done that for years. We would not be duplicating CapEx, again, we'd be shifting it. Now there's -- you asked a question about the de minimis exception -- exemption, excuse me, under Section 321. For those who are not familiar with it, that allows smaller value orders to be imported without -- with exemptions to tariffs. There's a lot of questions, including under the Biden administration, a question of looking into that.
And so we've been aware of that for quite some time. To the extent that, that changes for us, we do have plans to be able to work around that, not in place right now, but again, in our scenario planning. If 321 was in its worst case, permanently eliminated for all products, it would have a material impact on us in the near term until we were able to shift production resources.
And we would obviously consider things like pricing -- passing that pricing through to customers. To the extent we have pricing power. And I think that a lot of these changes we're talking about in tariffs could give us pricing power in different parts of our product line.
So I realize I'm touching on many different hypotheticals because that is where we are right now and that's where I think the entire US economy that works with imports is right now. But again, I'll go back to what I said at the beginning. We're spending a lot of time on this, understanding different scenarios and quote-unquote, war gaming, or what would happen under different scenarios.

Meredith Burns

Thank you, Robert. I'm going to stick with you for the next question. It's a quicker one. In reviewing past transcripts, in the May 2 call, management said of the new customer acquisition cohort for Vista, it was the sixth quarter in a row of growth. But cohorts was not mentioned in this last quarter's announcement. Are you seeing a decline in new customer cohorts? And if so, what is driving that?

Robert Keane

So yes, actually, Q2 customer cohort at Vista was down slightly. It's continuing to grow on a trailing 12-month basis. We don't give our cohort data every quarter. So that wasn't an intentional -- it was not an intentional [omission] I mentioned earlier, in Q2, we -- and Sean talked a lot about these, there are a number of different specific impacts that were related to our channels.
And we don't see that as a longer-term change to the cohort growth. The cohort growth, just for those who are not familiar, we define the value of cohort as the gross profit we generate from customers acquired in a given quarter or a given year. And we look at that gross profit over the first quarter of acquisition or over a longer period, like a one- or two-year period.
And the improvements we've been making and here I'm focusing specifically on Vista, which was the question, but it's true across Cimpress, is to grow customer value, and that comes from a number of different areas, but the underlying trends we see at Vista remain consistent. And so I certainly expect this to -- us to continue the long-term trend of cohort expansion.
Importantly, I'm certainly not making a prediction here, but you have to understand that a cohort, because it's a measure of value over time, is the first quarter value of gross profit. But then there's the slope at which that grows over time through repeat business.
And we've generally increased the slope of cohort value growth, the rate at which it increases as you move into the future, as we move to higher-value customers in just in -- I certainly expect that to continue, which, again, without getting into the specifics of the Q2 cohort, it means that sometimes that you can start at a lower value, but still catch up to others because of higher -- steeper slope.
This particular quarter did have the unique characteristics, again, that we've talked about in this call. So that may or may not be the case. But overall, that should be the case, and we don't expect to change from the general trend we've been seeing in the increase in the value of each cohort going forward.

Meredith Burns

Thank you very much, Robert. Okay, Sean. Next one's for you. Vista Print advertising spend as a percentage of revenue has increased year-over-year for the past three quarters. What is driving that? Is it also due to your competitors? As a follow-up, is there inflation on advertising costs? Are customers harder to reach? Do they need to see an advertisement more time to make a purchase decision? And if so, why?

Sean Quinn

Yeah. I covered some of this earlier. Maybe just to add on to that, I think there's a number of things in this question. There's -- in Q2, certainly, there were impacts from the free channels that I mentioned before. But we did plan to increase advertising spend also in Q1. If you go back to Q1, you can see that, too.
Yeah, that was consistent with our plans. And as I mentioned earlier, our plan also was that in the second half of the year, the year-over-year growth in advertising spend would be less. I think stepping back way back for a second, over the last years, we've said in a number of different public forums that the range of advertising spend as a percentage of revenue would be in that 15% to 17% on an annual basis. We were operating on the low end of that, actually sometimes even slightly below that. And then -- but we said that, that would vary quarter by quarter, year by year.
And so I think we're still kind of in that range. We have added more spend into our mid- and upper funnel channels in some regions from time to time. So over the aggregate of this year, that's the case. That doesn't really show through so much on a consolidated basis this quarter. But that's one of the drivers.
And so that won't change quarter-to-quarter, but I think we're still in this range that we expected and that will come down likely in Q3 and Q4 as a point of comparison. In terms of the increased advertising costs or the inflation -- potential inflation (inaudible) said in Q2, in the US, cost per click during the peak holiday week was up about 50% for -- in the consumer category, and that's a huge increase. That was not something that we see across the board. And actually, as a point of comparison, in Europe, cost per click was actually down.
And so these things change from time to time. I think the direction of travel in the cost of advertising and performance channels is an upward one. But there, we're continuing to work on efficiency. And again, that's a multiyear trend. So I don't think there's anything necessarily to read into that in the back half of the year. We'll see a slightly different picture, again, consistent with what we had planned coming into the year.

Meredith Burns

Thanks, Sean. Another one for you. What was the $12 million of onetime favorable items in the year ago period?

Sean Quinn

Yeah. I'll probably won't list out all of them, but these are all things that we disclosed last year as well. So it's not like these are kind of new things that we discovered. Just as a couple of examples, yeah, there were some of these that impact the cost of goods sold and therefore, impacted gross margin favorably last year. Some of them were OpEx but a few examples we had a VAT refund last year because of a ruling that we got, that was $3 million that favorably impacted Vista's cost of goods sold last year.
We had some government subsidies that we received that was kind of in the aftermath of COVID, some of these things shaking out in Europe that favorably impacted PrintBrothers by a few million last year. We had some COGS timing differences we called out last year in PrintBrothers as well that had a favorable impact. So I won't go through all of them, but they were kind of these discrete things.
We don't -- I'd like to think we hold the bar high there in terms of the things that we would call out. And these, again, they are all things that we disclosed that are kind of one-off and across COGS and OpEx, but that adds up to $12 million year-over-year. And then, as I said, to earlier, and we called out in the release, there was another $5 million of impact, including from the Canadian postal strike in this year's Q2 as well.

Meredith Burns

Great. Thanks, Sean. I'm going to skip to Robert for this next question. Robert, what gives you confidence in Vista's ability to reignite growth in the US? And how should we think about the business card business from here on in?

Robert Keane

As to what gives us confidence, I'd point you to all the things we've highlighted certainly today, but also in our July Letter to Investors in the September Investor Day presentation. In summary, it's the growth of the more complicated but very important and very large product categories, which we've talked about for years.
And that includes Vista growing in that, where traditionally, they were more in our Upload & Print businesses. I'd also say Vista a point of confidence is Vista's continued success in improving its value proposition and across the board, but especially with higher value customers.
And again, what we've spoken about for multiple years the importance and the success that Vista is having in serving customers that are in its top couple of deciles and the value of those top deciles -- individual customers in those top deciles is growing over time.
As for business cards, we've spoken quite a bit about it today. I won't repeat all that for time, but I would summarize by saying something that Sean said just a few moments ago, which is we don't see this as a -- we see Q2 drop not as a fundamental change and suddenly after years of slow growth or a slight decline.
There was a rapid decline in the market. We see it as more a variety of short-term factors, and we do not plan on that market growing, but we do think that it's going to be returning to its multiyear slow, steady move away -- as society moves away from using that product just like in the past, there's been a slow steady way move away from people sending Christmas or other holiday cards.
So going back to what gives us confidence, I think that in the US, we have those tailwinds, which are quite strong, especially when you get out of the second quarter. In terms of reigniting growth, I'd actually reframe it slightly. In Vista, we grew 8% for each of the two quarters before this last quarter. And last year, we grew in Q2, 9%.
So again, there's always variation year-to-year. But we are addressing the specific drivers from this last quarter, as we've talked about today. And that I think will give us confidence in the Cimpress revenues overall, not just Vista.

Meredith Burns

Thanks, Robert. Sean, next one for you. Can you unpack the updated second half FY25 guidance as it pertains to Vista? How are you thinking about the growth cadence at Vista throughout the remainder of the year? And which businesses are most impactful to the second half of FY25 outlook and the growth rates that you expect to see in the second half?

Sean Quinn

Yeah. The -- earlier, I talked about how Vista and Upload & Print make up the vast majority of our segment EBITDA last year and the second half of the year and how we expect that would be similar for this year. But we're not going to give specific segment level guidance for the back half of the year ago.
But we all expect here to grow the (inaudible) in Q2, and we are expecting more meaningful year-over-year EBITDA growth in Vista as well in the second half of the year. I mentioned earlier that the year-over-year ad spend profile has already been planned to be a higher year-over-year increase in H1 compared to H2.
And so that is one of the drivers there, too, that helps that. One of the drivers of that, as I mentioned, too, is just that we had a significant brand partnership last year, and there was also media directed at that, and we don't have that in H2 this year. So that's just one of many of the drivers there.
For Upload & Print, I would expect to see more of what we've been seeing in terms of trends for growth and profitability. For National Pen and BuildASign, I would continue to expect to see more of their growth coming from cross impress fulfillment as that continues to ramp and be a more material part of what drives their revenue.

Meredith Burns

Great. Next question also for Sean, a housekeeping question. Why did the weight average share count go up sequentially by $738,000 despite the $533,000 in share repurchases this quarter?

Sean Quinn

Yes. This is a little bit more of a kind of a technical thing. Our weighted average shares outstanding decreased and actually a few -- compared to last year, our weighted average diluted shares are down -- or shares outstanding are down by over, I think, over 1.6 million shares year-over-year.
The sequential increase that you referred to is really an accounting topic. When you have a loss in your GAAP net income, what we did in Q1, largely because of unrealized losses that we had on our currency hedges, were required to use our basic shares as our diluted areas because otherwise, you're effectively reducing your GAAP EPS if you have a loss per share. So that's just the rule. So that's a little bit nuanced.
In terms of the actual trend, like the actual diluted shares outstanding, yes, it has come down with the repurchases. And if you look at the basic shares outstanding that we have, you'll see that sequential decrease because of the repurchases.

Meredith Burns

Great. Sean, sticking with you again here. Cimpress undertook a 50-basis point repricing and upside of its term loan in early December which closed on November 17. Certain lenders may be frustrated with lower prices today, with management not aware of the severity of the decline in EBITDA that far into the quarter, how is EBITDA tracking in October and November?

Sean Quinn

Yeah. I understand the question. The -- in Q2, which is unique to Q2, the holiday peak is a concentrated period of time, of course. And then the extent of our year-over-year profit impact this year, especially combined with the fact that it was a condensed buying period was really not known until we closed the books for December because December had the biggest impact. Certainly, relative to what we had planned December had the biggest impact relative to those plans.
And again, with the shift of the holiday season, that was more so the case this year and it becomes harder to forecast how that's going to profile from a consumer perspective. So relative to early December, certainly, the results were worse than we had expected and worse than what we were forecasting at that time.

Meredith Burns

Great. Last question. Here, given the 3.1 times net leverage versus your target of 2.5 times, combined with the weaker year-over-year EBITDA, do you anticipate buying stock if it remains in the '70s? Will the Board reevaluate its leverage policy and/or target if the stock declines into the 60s or lower? Sean, why don't you take that one?

Sean Quinn

Yes, we ended with 3.1x leverage, net leverage. Our fiscal '25 guidance now shows that we have a slight increase to EBITDA. Again, we've used this at lease framework. So using that at least framework, it implies a slight increase to EBITDA in the back half of the year. So EBITDA expansion also $50 million of free cash flow at least in the back half of the year.
And most of that would be used to bring the leverage back to the approximately 3.0 times that we've talked about in our guidance, ending the year end. So at those levels, there is some room for share repurchase, but we wouldn't expect it to be material. That would be somewhat dependent on our actual results relative to that guidance. We obviously can't comment on hypotheticals for what the Board might decide in the future, but there's no plan of changing that leverage policy as we sit here today.

Meredith Burns

Thank you, Sean. All right. With that, Robert, I'm going to hand the call back over to you to wrap things up.

Robert Keane

Okay. Thank you, Meredith. Let me summarize by saying we're continuing to execute on the plans and strategic plans and operational plans we laid out in September on our Investor Day. Although our Q2 results were not good, there are so many signs of progress happening across Cimpress today that we do see those Q2 results is an undesirable unwanted, but certainly addressable short-term turbulence, and we do not see them as a change to our overall trajectory.
So by staying focused on our plans by focusing on focus and on execution, we do expect to continue to deliver improvements to the value that we deliver to our customers that will in turn continue to support growth year-on-year in our financial results and the long-term trajectory that we've discussed so many times.
So let me wrap up by saying thank you to our investors for joining the call and to continuing to entrust your capital with us.