Please note that these forward-looking statements reflect our opinions only as of the date of this presentation, and we undertake no obligation to provide or publicly release the results of any revision to the forward-looking statements in light of new information or future events. We also use non-GAAP numbers in our presentation. The definition of those numbers and their reconciliation to GAAP numbers is available in today’s press release on our website and as filed with SEC today on Form 8-K.Now here, Steve. Steve Swad Thanks, Steve and welcome everyone. overall I think the quarter came in largely as expected. If you recall in May, I said my strategic focus for the company is based on three pillars: leveraging the brand, innovating the platform, and expanding distribution. In pursuing these priorities, I committed to you that we would do it in a fashion that balances margins with growth. Since we last spoke, we have made progress internally along each of these three priorities. As it relates to Q2 however, the best evidence of our progress was in the improvement in margins, which makes sense, because it takes time to meaningfully drive these other priorities. Adjusted EBITDA came in at a positive $1.1 million versus a negative $1.3 million a year ago, which represents a positive margin of 2%. this performance fits into the 2% to 3% margin range that I outlined for the full-year 2012, and compares favorably to a negative margin of 2% a year ago. To drive margins, we took a number of actions. For example, we reduced global headcount by about 5%. We closed over 100 low yielding kiosks since Q2 of last year. We removed low performing SKUs. We pulled back on lower yielding media. We reduced our cost structure in Europe by streamlining our operations in the UK and Germany. And we closed low yielding retail locations in Japan. These actions clearly made the company more efficient. However, some of these actions, particularly those around media and kiosks also resulted in lower revenues year-over-year.
Overall revenues for the second quarter declined 9% with our global consumer business off 11% and our institutional business off 2%. In North America, our consumer business faced somewhat weaker consumer demand, which we managed through some promotions that lasted longer than originally planned. Revenues in the quarter were 4% lower than last year and were influenced by several factors.The first is that revenues from our kiosks were down, as we operated an average of 74 fewer kiosks this year compared with last year. While this impacted revenues by over $2 million, revenues per kiosk continue to increase year-over-year as we’ve made progress in optimizing this channel. Despite an overall decline that was mainly driven by our reduced kiosk footprint, our direct-to-consumer channel was up nearly 10% as a solid lift in website traffic offset a slightly lower conversion rate. On the International Consumer side, revenues declined primarily from our operations in Asia. Previously, I’ve indicated that our challenges in Asia were not likely to be resolved in the near-term, and that perspective was not changed in the second quarter. Because our international challenges are not universal, but rather more country-specific, let me touch on each geography. Results in Japan were down because of declines in our kiosk retail and DTC channels. Part of the decline was due to our efforts to reduce poor performing kiosks and retail locations. In addition, our important DTC channel has not yet stabilized. While our Japanese business continues to struggle and we are still searching for the right pricing and marketing mix to return to growth, we still think Japan and Asia in general are very attractive markets for language learning. Read the rest of this transcript for free on seekingalpha.com