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 shutterfly.com. 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. Treat.com 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 Treat.com 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. Read the rest of this transcript for free on seekingalpha.com