The 7 years that I've been here and in the 20 years Scott's been here, we still get questioned about the viability of our model, questioned about our ability to sustain the j2 acquisition system and therefore our overall growth. I believe the past 20 years should resolve for any rational observer these questions. My favorite indicator of our success is the 5 times ratio of our cumulative acquisition spend divided by our annual adjusted EBITDA. It demonstrates our ability to spend capital intently and wisely, as well as the means to properly integrate these assets once they are in J2's portfolio. And we should continue to get better in the allocation of our capital.
We have evolved our management structure, M and A team and process, which has produced more ideas, greater deal flow and more managers to integrate deals and create value. The amount of capital available to us only grows as we continue to increase cash flows and the amount of leverage we can assume without much change to our credit ratings. Our portfolio has never been more diversified, yet our businesses share a common tailwind, which is the ongoing shift from analog to digital. We've expanded our capital allocation to include share buybacks, and we're pleased to have acquired 600,000 shares in Q4 of 2018 and expect to continue to be opportunistic going forward. We have conviction in our model and hold a firm belief that the next 20 years will be as bright, if not brighter than the first 20.
So if this sounds a bit like a full throated defense of our model and company, it is. We're very proud of what our organization has accomplished over the past 2 decades, and there are certain foundational elements that will continue to guide our company. 1st, we expect to remain an active acquirer of businesses. We are well positioned to grow our company through strategic and disciplined investing. 2nd, we will continue to focus on maximizing EBITDA and free cash flow generation, while investing in tangible organic growth opportunities.
Lastly, we will opportunistically expand our portfolio, particularly in spaces that we feel are fragmented and would benefit from a capital partner with a proven track record. This nimbleness resulted in the evolution of j2 from being just a digital fax company to our current position as a diversified portfolio of over a dozen business units. All of these tenants give us confidence in our future. Before I hand the call back to Scott, I wanted to spend a few moments on themes for each of our business segments from Q2. At Digital Media, we continue to see growth out of display advertising of nearly 4%, with subscription revenues up over 30%, continuing to be a major driver of overall Digital Media subscription revenues at cloud services and Digital Media now account to 65% of total revenues.
As you know, it's been our long held strategy to increase the amount of recurring revenues at j2, and we're obviously making tremendous progress. Gave a bit back on Digital Media EBITDA margins, which were down approximately a point year over year, but still up through the first half. You'll recall that we had some expenses shift from Q1 to Q2, as well as higher allocations of our corporate overhead. At cloud services, we continue to see big opportunities in the security and privacy space. As you know from the last call, we added VPN technology to our core offerings and are off to a good start in the Q1 of our ownership of IPVanish and its related properties.
We have many opportunities for synergies with our email protection, endpoint security and backup solutions that we're beginning to explore. I'd also note that our cloud services management continues to do a very nice job at managing EBITDA margins. Our EBITDA margins were a bit better than last year's notwithstanding our investment in personnel and product enhancements. Also, this is one of the strongest revenue growth quarters for cloud services in recent memory with revenue growth close to 13% with the acquisition of the VPN assets being a key driver. Now, let me hand the call back to Scott who will go into greater detail on our results.
Thanks, Vivek.
Q2 2019 set a number of financial records for j2 including revenue, EBITDA and non GAAP EPS. These results were driven by several areas of strength in our portfolio of companies, notably continued improvement in the display advertising portion of our business, our continuing strong growth in our media subscriptions, as well as the addition of our VPN business unit acquired early in Q2. In addition, we remain cost conscious resulting in strong EBITDA margins for the first half of the year. We ended quarter with approximately $259,000,000 of cash and investments after spending $242,000,000 in the quarter on acquisitions and dividends. Now let's review the summary quarterly financial results on Slide 5.
For Q2 2019, j2 saw a 12% increase in revenue from Q2 2018 to $322,400,000 Gross profit margin, which is a function of the relative mix of our 14 business units, remained strong at 81.5%. We saw EBITDA grow by 10.3 percent to 125,200,000 dollars Finally, adjusted EPS grew 6.7 percent to $1.60 per share versus $1.50 per share for Q2 2018. I would note EPS growth was impacted by a 21% tax rate in Q2 2019 versus a lower than usual tax rate of 18.5% in Q2, twenty eighteen. As you know, fundamental to our philosophy at j2 is generate strong free cash flow. Turning to Slide 6.
In Q2, we generated $85,800,000 of free cash flow, which was slightly down from Q2, 2018 due to additional tax payments of approximately $5,000,000 versus Q2, 20 $189,000,000 in comparison to Q1, 2019. Due to the timing of such estimated tax payments, we believe that it is better to look at the trailing 12 month free cash flow and the conversion of trailing 12 month EBITDA to trailing 12 month free cash flow. On a trailing 12 month basis, we generated 300 and $57,300,000 of free cash flow for a 69.7 percent conversion of our $512,400,000 of EBITDA. Now let's turn to the 2 businesses, Cloud and Digital Media for Q2 as outlined on Slide 7. The cloud business grew revenue and a slower rate of decline in our backup business.
Reported EBITDA increased by approximately 12.6 percent to $85,200,000 dollars compared to $75,600,000 in Q2 twenty allocations, slightly up from the EBITDA margin in Q2 of 2018. Our media business grew revenue 11 0.4 percent to $153,300,000 and produced $42,600,000 of EBITDA or 6.9% growth. EBITDA margin declined by about 1 percentage point from Q2 2018 due to certain license fees paid for games in Q2, 2019 that did not occur in Q2, 2018 as we discussed on the last earnings call. We are reiterating our revised guidance range for the year as outlined on slide 9. To remind you, our original high end of our range was 1.3 $3,000,000,000 of revenue, dollars 540,000,000 of EBITDA and $6.95 in non GAAP earnings per share.
As we stated last quarter, this becomes the low end of our new range of guidance, which we reiterate today. We expect our revenues now to be between $1,330,000,000 $1,370,000,000 of res, EBITDA to be between 540,000,000 dollars $556,000,000 and non GAAP EPS to be between $6.95 per share $7.15 per share. Following this guidance slide are various metrics and reconciliation statements for various non GAAP measures to the nearest GAAP equivalent. Before turning it over to the operator for questions, I would like to draw your attention to slide 12 and specifically the cloud metrics. You will note a 27.5 percent sequential increase in our cloud customer base and a resulting decrease in average monthly revenue per customer.
This is due to the inclusion of the VPN customer base, which has an average monthly revenue per customer of less than $7 We include the VPN customer base as if it existed on March 31 for purposes of calculating the average base for the AMR per customer measurement. In addition, the increase in cancer rate is also due to the inclusion of the VPN customer base, which has a somewhat higher cancel rate than the other cloud services. Excluding our VPN business, the cancel remained flat at 2.2%. Finally, for our digital media metrics, I would note that the sequential and year over year declines in visits and page views are substantially attributable to declines in our Snapchat traffic, which constitutes a minute amount of our digital media revenue. I would now ask the operator to rejoin us and to instruct you on how to queue for questions.
Thank you. We will now be conducting a question and answer Our first question is from Shyam Patil with Susquehanna. Please go ahead.
Hey, guys. Good morning. Congrats on a great quarter. I had a few questions. First, I guess for you, Vivek.
When you look at the M and A incentives for the GMs, do you see any kind of waiting first half or second half in terms of M and A transactions in the year? And then a follow-up to that is when you look at the M and A pipeline, particularly for digital media subscription deals, can you just talk about kind of how that looks, midsize deals versus large deals?
Sure. So on the first part of your question in terms of the incentive structure for the general managers, there's 2 components. So in terms of their annual incentive, their bonus compensation, it is entirely EBITDA based. It is a function of the EBITDA goals we set for the business unit at the beginning of the year. When M and A occurs that is incremental to what's in that goal and that target, that EBITDA contribution will count less a capital charge for the asset.
And so we look for things that can be immediately accretive visavis that capital charge. And so there really isn't a timing benefit. It isn't per se you should do it earlier, you should do it late. It really comes down to can you move your scale. And then the second piece of their compensation is they're all shareholders.
And so not unlike my own equity package, It is a mixture of time based restricted shares as well as performance based shares. And so they're incentivized to enhance the enterprise value and the per share price of the company. On the second question around media and media subscription businesses, we really are looking for businesses where we can leverage our media audiences to drive customer acquisition and really sort of bend the CAC to LTV equation, right. As you know in all subscription businesses that's the equation. And so if we can reduce the amount of 3rd party marketing spend that we have, then that becomes very interesting and we've seen that obviously in the gaming space.
And I wouldn't confine it just to media subscriptions. We're also looking for cloud subscription services that can benefit from having media audiences that are relevant. And in some ways you can argue that's what VPN is.
Great. Second question, interest rates are coming down. Just wondering does that impact kind of how you guys think about leverage and valuations?
I think there's 2 separate elements to that. As it relates to valuations, we have as you know fairly strict parameters that we adhere to irrespective of the market environment whether it's driven by interest rates or other valuations. So that remains unchanged in terms of what we're looking for in terms of rates of return. The second or the first part of your question in terms of the lower interest rates may give us opportunities to look at our capital structure and lower our average cost of capital. Now having said that, our capital structure really occurs in 2 separate pieces.
So we've got at the parent the converts which got about 22 to 23 months before their first put call date, but they are in the money. That's the $402,500,000 at 3.25 percent. Downstairs at the cloud business where we have most of our leverage, the 650 of 6% notes are currently non callable. Their first call date is in a year in July of 2020 at 104.5 and we have a modest amount of bank debt that's drawn about 100,000,000 that's around a 5% rate that sits on top of that. So we have much more limited opportunities downstairs from a refinancing standpoint.
And of course, we do have an unlevered media business, which could take advantage of either the bank debt market or the high yield market. But I would say that we remain given our cash flow characteristics, the cash balances that we maintain and the incremental amount that we have put on the line downstairs at the cloud, I think in a comfortable position to meet our M and A needs and our other capital allocation needs.
Thank you. And then just my last question. Scott, I know you guys don't guide quarterly, but any color on how we should think about gross margins and EBITDA margins by segment and for the year for 3Q and 4Q, as well as kind of where you guys are how you guys are thinking about free cash flow for the year as well?
Yes. So you're correct. We don't guide by quarter. But I think the general trends in the margin structure of the 2 segments remains consistent with the understanding that obviously the media business has dramatic leverage as we move from Q3 into Q4. So we would expect the margins of the media business in Q3 to be roughly consistent with where they have been in the first half of the year.
Same thing with the cloud and then an uptick in the margins in Media to the 40% range EBITDA margins in Q4, which would then bring us to close to the mid-30s EBITDA margin for the Media business for the year and right around 50% EBITDA margins for the Cloud business. In terms of free cash flow, we continue to look at our EBITDA conversion ratio very close to 70%, which would get us right to that 3.75% to 3.80% range of free cash flow. And as I pointed out in the prepared remarks, we do have some timing differences that affect the quarterly productivity of free cash flow. We had some benefits in Q1 that reversed out in Q2 based on the timing, the magnitude of some estimated tax payments. And that's why as I said in the prepared remarks, we always encourage you to look at the trailing 12 month free cash flow and the conversion of that free cash flow from its EBITDA, which is basically right around 70% on the trailing 12 months through the end of June 2019.
Great. Thank you, guys, and congrats again.
Thank you.
Our next question is from Daniel Yves with Wedbush Securities. Please go ahead.
Yes. Thanks and great quarter. My question is on the Digital Media business. Maybe just talk about the pipeline that you're seeing on the advertising side for healthcare pharma. I know sometimes you have pretty good visibility into next 3, 6 months or even longer.
Maybe talk about that first.
Yes. So the pharma market continues to be pretty strong for us. As I think I might have mentioned in the last call, the call before that, the pipeline at the FDA has never been stronger. And so the volume of drugs that are getting approved or have been approved and therefore have marketing budgets attached to them are pretty substantial. And so we are certainly a beneficiary of that and we're continuing to see that both on the direct to consumer side where pharma is looking to market its drugs to patients, but also on the provider side where it's looking to market to prescribers.
And so both sides of the market and it's one of the advantages we have I think that the Everyday Health Group is that we reach both consumer patient and provider prescriber. And so we're seeing that strength. And then more generally within the market, we're seeing some interesting things in the pipeline. We're thinking about other parts of the healthcare ecosystem. We have healthcare systems, hospitals themselves that are an interesting category for us.
We have moved into that business with healthy careers where we do recruiting services for hospitals, hospital looking to get doctors, physicians' assistants and nurses as well as our Catholic Connolly business where we're rating doctors and that may turn into some interesting opportunities with hospitals. And then the payers, right, so insurers as well as employers who are self insured is another interesting market for us to get into. So we like the pharma market, it continues to be strong for us and we are thinking about how we can expand more deeply into other parts of the healthcare ecosystem.
Got it. Yes. So when we look on the backup business, obviously we've seen some competitors continue to see softness. Any changes in thinking in the backup business in terms of any of the trends or maybe even more aggressive on M and A or the opposite? Thanks.
Yes. So as we've said, we backup for us is in sort of the state of managed decline where we're very focused on EBITDA and free cash flow generation. Having said that, Q2 was actually better than Q1. So sequentially, the decline was less. And so we feel good about that.
We do, to your point, see some tuck in acquisition opportunities that are attractive and fit our M and A requirements and hurdles. So look, we look at it as it is one of the frankly only drags within the J2 portfolio in terms of revenues. But it's actually possibly finding its bottom, which is a positive sign for us.
Thank you.
Our next question is from Will Power with Robert Baird. Please go ahead, sir. Great.
Thanks. Yes, I guess, first, just congratulations on the 20 year milestone and yes, great perspective there, Beck. Just a couple of questions. First, I guess on the VPN assets acquisition, maybe any color on how that's performed relative to expectations? It would be great to get any granularity on what the revenue contribution was, just kind of the outlook there?
And then I guess the other piece to that is, what kind of cross opportunities are you seeing on the revenue side? I think you've referenced opportunities for security backup. I assume that's early, but any further color there would be great too. Thanks.
Yes. So look, we're really pleased with the VPN assets. The core asset is IPVanish. We, I think acquired very strong business, a great leadership team under Nick Nelson, who's really made an immediate impact inside of the company. And look, 1, I think the VPN and privacy space is just the demand just continues to grow.
I think as there's more consumer and business concern and attention around social media and government surveillance and other forms of privacy violations and breaches, I think we just have a natural demand occurring. And in fact, I would put the VPN assets into the category of assets within our portfolio that I would refer to as our high growth assets. And so I put Ookla into that category and I put Humble Bundle into that category and I put Ekahau into that category and I would put IPVanish into that category which is exciting particularly for the cloud services side of the house to have something that has that kind of growth potential. It also is a highly fragmented market, the VPN market. There are 100 if not 1000 of solutions.
And so we think we have a strong one. We think we have one that earns high trust marks, which is absolutely vital and critical if you're providing a VPN service. So we see the opportunity I think to be opportunistic in this market. And then the last thing I would just say is that while the Q2 cloud revenue growth 12%, 12.5% was very strong and driven in large part by the VPN assets. The rest of cloud did very well and voice and Martech in particular had pretty strong year over year quarter.
So it is certainly a driver of what we saw in Q2, but I don't want that to discount some of the strength we're seeing in other parts of the cloud. Yes, I would just
add to that that we actually experienced in Q2 better performance in what I'll call the rest of the cloud business exclusive of VPN than we did in Q1. You remember that was a little under 2% growth in Q1. And then the second piece to take into account and it's something we're actually still working through is we do have deferred revenue haircuts for any set of customers that we acquire in a subscription business. In the VPN space, it is more typical than in some of our other spaces to have more than month to month contracts, some even going out as long as 3 years. So there's a larger base of deferred revenue than we would experience in other deals of similar size, but also a higher discount rate since on the margin there aren't as many costs to attribute to servicing those customers.
So we have a fairly big reduction in the book of revenue that we acquired this year and to a lesser extent next year through the deferred revenue haircut, which as I say, we're still working through. We've got an estimate for this quarter that I think is very solid, but we work with third parties to actually nail that down. And that will be finalized this coming well, the quarter we're in Q3.
Okay. All right. I appreciate that. Okay. I guess maybe just second question, just coming back, I guess, to the other growth drivers on the Digital Media side, thinking of Ookla, Humble Bundle, I think you've Vivek referenced growing north of 30%.
Anything in particular you'd call out there? Is it just the same trends moving forward? One of those assets reporting better than the others or just continue to see kind of full steam ahead on both fronts?
Yes, I think they're both executing according to plan. We feel very good about where they are. I might just point out within the broadband assets, the Ekahau asset, which is still relatively new for us, is performing really well, lots of product enhancements, lots of pushes, looking at pricing models and ways in which we can generate more value from the customer base. And so that's doing very well for us. And then the other thing is I would just say in the Humble Bundle business, there's 3 parts to the Humble Bundle business.
You have the subscription business which we've talked about and continues to be a nice business for us. The store business which is more single unit sale transaction business. And then the publishing business. And the publishing business is one that we are leaning into where we work with indie developers to provide financing, to publish their games, to market their games, put them in the normal distribution channel where PC games are sold and we're making a very nice return on our investment just through those revenues and then have the ability to include those games within our subscription service some months down the road and that's also attractive because now we're including our own game versus licensing a third party game. So that is something that we're going to look to invest in more.
We've got a nice pipeline of games, but I think this is an area that we see real opportunity in these sort of indie games that aren't really on the radar of the larger game publishers. We're looking for AAA franchises that have multiyear value and are a very different part of the market. So that's maybe a new element to the Humble Bundle business for you to consider.
Great. Yes, thanks for the color.
Our next question is from Nick Jones with Citi. Please go ahead.
Hi, thanks for taking the questions. Just one on, I guess, kind of holes in your product portfolio. I think maybe the VPN acquisitions helped patch out some of the web security. Are there any other areas that are maybe obvious for improvement or some holes in products? And then secondly, on kind of bending this CACI TV equation, a lot of these pipelines for potential acquisition generated from where you're generating most of the traffic via kind of targeted advertising?
Or how should we think about how these types of acquisitions are targeted or sourced?
Yes. So just on the first question in terms of the product portfolio and components that are missing, I think in each of the market spaces we're in, we like the assets, it's fairly complete, but there are always opportunities for us to add components. And one thing I didn't answer on an earlier question, but is related to this, we are having success in bundling now. And that's been something that historically we haven't done as much on the cloud services side, but now the ability to bundle our endpoint security which is under the VIPER brand, our file sync and backup on the consumer side which would be SugarSync and IPVanish and the ability to give you one price for all three services make it a great value proposition and make it incredibly sticky. And in fact, we have moved the management of the SugarSync business from out from under the backup unit and put it actually into the VPN unit because it's very consumer set.
So we see opportunities in doing that. On the question relating to how do we leverage media audiences for subscriptions. It can be sponsored posts. It can be targeted advertising, it can be email list. Just think of it, right?
We get paid a lot of money by other providers to market their services. We essentially become our own customer, right. So we're able to do for ourselves the things that we do for 3rd parties, but at very little if no marginal cost to us and really no opportunity cost. It's not like we are shifting inventory that would have been monetized with a third party to us and losing that revenue. So it is truly all incremental.
Got it. Thank you. And one quick follow-up. I guess we focused on JT Global acquiring, but how should we think about potential divestitures? Is there any kind of areas or any way you guys think about this?
Well, look, I think the answer is and we saw this in 2017 is we're certainly open to it, right. So it's a portfolio and our view isn't we're just we're only buyers. We're certainly willing to entertain offers that value these businesses in excess of what the market may be valuing and where we may not feel it's strategic or where we may not feel we have have future growth opportunities or we may not feel we can execute the M and A program as well. So we're open to it. We get calls from time to time.
So we're certainly and I do think that's a little bit of a shift. I do think our openness and willingness to do it. But I don't right now, I wouldn't say there's anything active and I wouldn't say there's anything meaningful going on.
Our next question is from James Breen with William Blair. Please go ahead.
Thanks for taking the question. Just following up on the VPN business, obviously the ARPU was lower and the churn is a little bit higher, but can you talk about some of the economics there? And also, does this give you sort of a footprint in that space to do more M and A? Are there other companies out there where you can add customers to your current platform? Thanks.
Yes. I'll have Scott talk on just some of the metrics because they show up a little bit in our customer accounts and ARPA. But on the second piece absolutely and I do think that the VPN space is fragmented, has many subscale providers who are going to find it difficult to compete with the likes of us and they're fairly straightforward migrations from a technology and customer experience point of view. And so we see pretty interesting opportunities from an M and A point of view. The other thing is we also have a white label version or portion of our VPN business where there are entities who may be interested in launching their own VPN for their own customer group and we're able to provide that and power that and there we just get paid a license fee or a per seat type fee from that provider.
So we can come at the market that way and that's a nice competitive advantage for us. But on the so on the metrics, most of the customer base that we acquired, and
as you know, it occurs under 4 or 5 different brands, would be at the smaller end of the spectrum, meaning they're either individual users or SOHOs in a B2B case. And so they've got an ARPU and there's different programs and as I mentioned to an earlier question, there are month to month subscribers, there are annuals, there's 2 year, 3 year subscribers. Based upon that mix, we're going to get an ARPU on a net net basis somewhere between $6 $7 per month. So that's a lower ARPU than we've historically gotten in the rest of our cloud business and it's why you see the $16 average ARPU in Q1 come down to $14 in Q2. And so that will move around a little bit based upon as we move forward, the relative mix between that SOHO customer versus the B2B on the one hand and the different packages on the other.
And from a profitability standpoint, the EBITDA margins for that business are in line generally with the cloud business around that 50% or are they better?
No, they're actually somewhat lower. It's a strongly profitable business and actually I would give as Vivek mentioned earlier, a lot of credit to the incumbent historic cloud business because the margins actually went up in Q2 despite the fact there was some drag from the VPN business because that's a business that right now at its scale is more around 40% EBITDA margin.
Great. Thank you.
And look, and the other thing
I'm just going to also point out is, it's a growth business. And so we are going to be aggressive in investing to generate future growth. Right. Its goal
is not necessarily to drive it to 50% in the near term.
Okay. Thank you.
Our next question is from Rishi Jaluria with D. A. Davidson. Please go ahead.
Hey, guys. Thanks for taking my questions. A couple ones here. First, I wanted to dig into some of the VPN assets and maybe particularly IPVanish. I think can you especially since we can see the impact on metrics from on the customer and on ARPU side, just help us understand directionally is the VPN business primarily actual SMB or is there a bigger consumer piece of that business?
Because my understanding is that most of your current cloud business is XMB with relatively low consumer exposure. So is this maybe a little bit of a different market focus?
It is. It is absolutely much more of a consumer brand called Encrypt Me where companies can buy VPN. A brand called Encrypt Me where companies can buy VPN for their teams and for their organizations, which they really ought to do, because when you consider about how many endpoints in the world that are business endpoints, whether those be laptops or phones that are connecting to in flight Wi Fi, airport Wi Fi, hotel Wi Fi, all of that's unsecured, coffee shops that's unsecured. It's a risk to the enterprise and those risks should be resolved. So we see an opportunity.
But with respect to the business as it is today, it is consumer. However, where I think we're leveraging our collective expertise is that about 60% of cloud services subscriptions are generated online. And so the discipline of online marketing, online customer acquisition, understanding sources of traffic, drivers of conversion, different testing of different funnel experiences, that's a common thing. Whether it's eFax, whether it's IPVanish, whether it's Line 2, also our understanding of how to sell through mobile devices and then through app stores is also sort of a common experience. So while a little bit of a different market for sure, I think a comment set of marketing practices and dynamics.
Okay, got it. That's helpful. And I think just to understand, I mean do you have any other cloud businesses that you can in the past that you can bring some experiences from? Or is there something that you can bring from what you've done with the Ookla and Humble Bundle, some best practice from that into kind of adapting your go to market and sales motion with the VPN assets?
Well, listen, again, I think on the customer acquisition side, yes, I think that it is the same whether it's paid search, organic search, content recommendation engines, affiliates. I wouldn't make such a big nuance between the SMB buyer and the consumer buyer because they are buying online. So I think that's still just people who are buying online and so there is a lot of collective experience. I also think on the customer service side, we have a fair amount of customer service infrastructure and knowledge across the company and are sharing lots of best practices around customer service. And then obviously, yes, on the media side, the Humble Bundle subscription business is entirely a consumer subscription business.
And so I think there are learnings there that we can apply.
Got it. Okay, thanks. That's helpful. And then speaking of the media subscription business, it looks like we've been kind of in the mid to high 20s range as a percent of the total media business. I know that's obviously been a focal point is growing that.
Now that was 13% a year and a half ago. It looks like it's kind of been in the same range for a while now. Just help us understand, I mean, is this kind of the steady state of where should we we should expect that or is there kind of other levers to seeing that kind of business as a percentage of total media business kind of continue to grow from here?
Well, look, I mean, I think if
the portfolio were to stay unchanged, you would continue to see the subscription portion of it be larger and larger. Now I will also point out the non subscription pieces are growing nicely. And so you have got that in the proportional question. But I think as we acquire in media to be very clear, we're interested in a full range of assets including display dependent assets that have performance marketing components to it, also performance marketing driven assets that we want to add to our performance marketing portfolio and subscription. So it's a little hard to answer without being able to know over the next 12, 24, and 36 months which of those assets and in what proportion they're going to be.
So I don't want to leave the impression that the performance marketing and display pieces are pieces that we're not interested in growing and acquiring into, we are, but subscriptions as well.
Okay,
got it. That's helpful. Wanted to turn to OCV. It looks like I think you had about $37,000,000 in investments there in terms of actual capital call. Last year, about $10,000,000 in Q1 and we'll see what the when the 10Q comes out, how much in Q2.
But maybe just help us understand to the extent that you can share where are those investments going and maybe your outlook on that?
Yes. So I think you pulled the information from the Q. So I think you're pretty close to the amount we have invested. You will see some additional investments that we made during Q2. What I would note is that now that the fund has been up and running for a while, they're starting to see some monetization events.
So in terms of their base of investments, they've got about 8 of them. They range from life sciences to mobile payments. So it's really a broad array. One of the companies that they invested in went public about 2, 3 months ago called Precision Biosciences. And you'll notice both in our financials and you'll see it also when we filed the Q at the end of this week that there's a gain posted.
In previous quarters you'll see that when we mark the market there's losses on the portfolio primarily for the fees that we pay. In this quarter you're going to see that's not only reversed out but there's a gain. Now that's not a realized gain because there's a lockup period and we don't control the disposition of those shares, OCV does. But one company has already gone public. I believe that there is at least one of the situation where there will be a pending transaction that will also create a monetization event.
So right now, as I say for where they're at in the life of a fund to have at least 2 of their situations already bearing fruit in terms of a return, even if not fully realized to us in cash, I think is positive. The other investments given the stage they're at are not quite right for either going public or monetization event. But I think that from our standpoint we're going to start to see some return of capital from these investments. I still budget that we will expend about $50,000,000 a year in terms of the investment into OCV to get to our full $200,000,000 commitment. We spent a little bit under that last year because they just didn't have breadth of deals and capital calls.
We may, I think, be probably a little bit under that number again this year, but that'll be in part a function of what they have in their pipeline between now year end.
Great, thanks. And then last one for me and I'll hop off. But from a housekeeping perspective, Scott, any impact on or drag from currency on growth rates in the quarter?
No. FX had very little impact in the quarter.
Our next question is from Jon Tanwanteng with CJS Securities. Please go ahead.
Hi, guys. Thank you for taking my questions. And again, congrats on the strong performance in the past 20 years and in the quarter. Thank you. First of all, can you talk about how the fax business performed and maybe break out the enterprise versus SMB performance and how your efforts to penetrate healthcare and enterprise are progressing?
Yes. So, fax revenues were up a couple of $1,000,000 sequentially, which was nice from Q1. The corporate business was up about 7% for the quarter and that's mostly in the healthcare space. And so things are going according to plan where we've deployed and continuing to deploy salespeople in the field to have the discussions to convince healthcare clients to shift from their analog solutions to cloud. It takes a while.
There's a fair amount of healthcare moves slowly, but when it moves it kind of moves in big ways. So we like the size of some of the opportunities that are in front of us. So it continues to be a pretty good growth business at about 7%. And then on the WebFac side, I would say that we haven't done a transaction.
25 months,
I think.
25 months. So in 2 years, we haven't done one. And so that's still held together reasonably well without M and A. Historically, the WebFacts side has grown entirely through M and A, but we've been very focused on better customer acquisition, better customer attention. An interesting dynamic is the actual search query volumes when you look at facts and facts related terms is up.
So we're seeing that if that's a sort of proxy for interest in the solution and the service that we provide. So we're happy and the margins continue to be very strong. John Eberghal who runs that business for us does a very nice job and they're investing. So he's investing yet finding ways to improve margins in other
places. And then just going back to the topic of the margins in the VPN business, where can those go as you bolt on assets and what appears to be a target rich environment? Are they the same scaling opportunities and migration economics as in your traditional cloud businesses?
Yes. I think they're actually they're very, very similar to what we see we've seen in other cloud spaces. But again, I just think one of the things I want to continue to stress is, this is a business we've talked about this where we see tangible organic growth opportunities we are going to invest. And so we're not looking at a magic margin percentage. We're really looking to feed our growth engines and we view this as an engine.
Okay, fair enough. And then finally, can you just give us a little more color on the scope quality of M and A opportunities for second half and into 2020? I know you've done about $270,000,000 of deals this year. What looks like the close by year end? And kind of what does the mix look like in the pipeline?
Is it more cloud and VPN? Or is there a bigger balance towards media?
No, it's a mix. Look, I think we've got close to half of the business units participating in perspective M and A right now. So we've obviously had a run-in the first half of the year that's been dominated by the cloud although there was a small media deal done in Q2 that goes into our Zip Media Group. We have a balance on both sides. I think it's very hard to predict what the total outcome will be.
But as I said in the last earnings call, I feel very confident that we will spend clearly more than the free cash flow we will generate this year, which as I said earlier is about $375,000,000 to $380,000,000 whether that comes in a series of smaller deals spread across 5 or 6 BUs or is more concentrated as a function really of which deals get to the finish line and at what point in the year. But I think you're going to see a mix of deals between now year end.
Great. Thank you. Congrats again.
Thanks.
Our next question is from Pat Walravens with JMP Securities. Please go ahead.
Great. Thank you very much. And thank you for the 20 year perspective. Of the companies I covered back then are still in business.
So that's one indication.
So I have 2 big picture questions.
The first is just when you look at the M and A pipeline, do you feel like sellers' expectations are at a reasonable point these days? Yes. Look, I think it depends, right? You've got the range. And so the great thing about us is we'll look at all situations and we keep an open mind and we look for a path to value creation.
And I think some buyers may not have that. We have the ability to take a growth asset, leverage both our balance sheet and the assets within the company to accelerate that. And so we'll look at those assets. But we'll also look at assets where there's a profitable core and we need to shrink the asset to get to that profitable core and then look to grow it from there. And I don't know if all buyers could do both of those things for instance.
And so we've got versatility as a buyer. Is valued by a seller, then we're the buyer. Where it comes to someone's looking for the greater full, that's those aren't processes we're ever going to win and those will always exist. I've been in markets up, I've been in markets down and you'll always find assets like that. But I think the high level is that we are not seeing a shortage of interesting actionable opportunities for us.
All right, great. And then my second question is,
are you guys seeing any changes
in sort of the macroeconomic environment either on the media or the cloud services side?
No, I mean I feel like the macro things that happen often have nothing to do with our business, but we get swept into it. We're not we don't have much of a business in China. It's de minimis for us, but that wouldn't that doesn't stop us from getting pulled in to that tide. So I think the larger things often if one took a closer look at what we do and where we make our money and how we make our money don't apply to us, but it has an impact obviously on the company's stock price, right? But beyond that, I actually think the areas that with display having had challenges in the past, we feel good 3 consecutive quarters of display growth, which we feel good about.
So no, I don't see things specific to our businesses and our industries and our markets that worry me. We just worry about the larger market which we can't control.
All right, great. Thank you.
There are no further questions registered at this time. I would like to turn the floor back over to Scott Turicchi for closing comments.
Thank you, Claudio. We thank everyone for participating today in our Q2 earnings call. As usual, look for a press release soon about upcoming conferences, some beginning as early as next week. Then obviously there's a hiatus in the latter part of August and then there's a series of conferences beginning right after Labor Day in September. And we look forward to communicating again our Q3 results sometime in early November.
Thank you.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.