Solocal Group · EURONEXT:LOCAL
Solocal — FY2019 Earnings Presentation
39 slides from Solocal's earnings presentation, Feb 27, 2020
Slide 1: Annual Results 2019
Annual Results 2019 27 FEBRUARY 2020
Slide 2: Disclaimer
Disclaimer This document contains forward-looking statements. Any forward-looking statement does not constitute "profit forecasts" as defined in European regulation (EU) 2019/980. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events
Slide 3: Highlights 2019
Highlights 2019 ✓ Growth in Digital sales in Q4 2019 (vs. Q4 20181): +7.4% ✓ 2nd consecutive quarter of growth after Q3 2019 at +5.3% ✓ Stabilisation in Digital order intake in 2019 (vs. 20181): +0.1% ✓ Moderate growth in recurring EBITDA 2019 (vs. 20181): +2.2% ✓ After 9 years of consecutive declin
Slide 4: Operational success in 2019
Operational success in 2019 >100,000 Presence / Priority • Recurring Digital EBITDA margin1: 32% Ranking customers (i.e. 30% before IFRS 16, vs. 26% in 20182) • Strong adhesion of our customers3 to the new digital services: Migration rate >85% in Q4 2019 >90,000 Digital advertising campaigns • Subsc
Slide 5: Contents
Contents 1 Business review p. 6 2 Financial Results p. 16
Slide 6: Business review
Business review Eric BOUSTOULLER Chief Executive Officer
Slide 7: Q4 2019: 2nd consecutive quarter of growth
Q4 2019: 2nd consecutive quarter of growth In million euros Q4 2018 Q4 2019 Change • +7.4% growth in Digital order intake: - Successful roll-out of Priority Ranking offer Digital order intake 137 147 +7.4% - Acceleration in Presence and Booster Contact offers • Digital revenues were down -11% as a D
Slide 8: New digital services for VSEs/SMEs: a successful roll-out
New digital services for VSEs/SMEs: a successful roll-out A unique application on the VSE/SME market: > 100 000 Priority Ranking customers customers Migration rate1 Q4 2019 Presence customers 85k >85% 71k 35% of the customer base migrated 55k 35k Development rate1 Telesales2 Field sales3 14k 12k +20
Slide 9: ARPA on the rise, churn reduction and focus on migration
ARPA on the rise, churn reduction and focus on migration Digital • Customer base average ARPA on the Customer customer Digital ARPA2,4,6 Churn2,4 rise: +12% segments4 base6 - New customers ARPA +31% 2018 20195 2018 20195 Change 2018 2019 vs. ARPA of churned customers Micro-businesses - ARPA micro-bu
Slide 10: Target 2020: Stabilisation of the customer base
Target 2020: Stabilisation of the customer base Fall in churn of -2 pts and increase in new customers of x2 ACQUISITION OF NEW CUSTOMERS RETENTION OF THE CUSTOMER BASE Reallocation of sales time freed up by the subscription model Focus on product quality: customer satisfaction - Field: +40% of sales
Slide 11: Cross-selling strategy: Solocal ARPA & customer ROI on the rise
Cross-selling strategy: Solocal ARPA & customer ROI on the rise Case study: Duvillard Sarl, a heating company in Draguignan 2018 ARPA x2.6 from €3 k to €7 k: Goal: be visible historically a print customer: cross-selling Privilege website Result: 18,000+ multi-diffusion displays and Presence subscrip
Slide 12: Large Accounts and Networks range
Large Accounts and Networks range Digital Présence +400%1 vs. 2018 on the Intermediate networks Framework agreement for all members of the Five Star Bodywork network, offering visibility for 500 centres Development of the Booster Networks offering: + 500%1 10 points of 1 100 points of 230 points 160
Slide 13: PagesJaunes traffic on the rise: +19% in 2019
PagesJaunes traffic on the rise: +19% in 2019 In millions of visits • Partnerships success thanks to rich content: Bing, Apple, Leboncoin, Amazon, etc. +19% 2,040 • Increase in qualified contacts: +6% in 2019 1,718 • Priority Ranking : improved relevant search results 1,117 Desktop 960 • New feature
Slide 14: 2020: Enhancement of Solocal's product offering
2020: Enhancement of Solocal’s product offering Instant messaging Quotation • Extension of the Presence offer Appointments - New entry level offer to accelerate acquisition - New top of the range offer richer in transactional features: - Appointment scheduling - Reservations & quotation Today - Cust
Slide 15: 2020: Boosting of the Websites range
2020: Boosting of the Websites range 3 Essentiel Premium Privilege Websites Do It Yourself 2 Customer relationship management + database 4 E-commerce websites 1 ✓ PERFORMANCE ✓ QUALITY ✓ PRODUCTION AI SEO, optimised UX/UI, Monitoring & unique Reviewed and optimised rich content optimisation tool on
Slide 16: Financial results
Financial results Olivier REGNARD Chief Financial Officer
Slide 17: Financial Highlights
Financial Highlights Acceleration in EBITDA growth Solocal: a fixed cost model Significant generated operational cash flow Focus on revenues due to the shift to a subscription model P.17
Slide 18: Stabilisation of Digital order intake – deferred revenues recognition
Stabilisation of Digital order intake – deferred revenues recognition Quarter-on-quarter order intake growth rate Digital order intake (% of growth of quarterly order intake year n vs. quarterly order intake year n-1) +0.1% 518.8 519.5 +5,3% +7,4% 136,7 146,8 -5,0% -5,8% -21,7% 95,9 101,0 -25,4% Q3
Slide 19: Shift to the subscription model makes the order intake KPI obsolete
Shift to the subscription model makes the order intake KPI obsolete • Conversion of order intake into revenues - 2/3 of order intake in 2019 are transformed into revenues within 12 months - Improved conversion rate over 12 months of +3 pts vs. 2018 • Order intake / Order booking: leading indicator t
Slide 20: Key indicators: Revenues and Customer Base
Key indicators: Revenues and Customer Base Guidance 2020 (Digital) ✓ Digital revenues ✓ Customer base Other published information (Digital) ✓ Acquisition of new customers ✓ ARPA1 ✓ Order backlog (with breakdown of order intake conversion into revenues per year) 1 Average Revenue Per Advertiser P.20
Slide 21: Overview of Solocal revenues
Overview of Solocal revenues TOTAL Digitale Digital New Presence Websites Adverstising Services Digital Print FY 2019 €127 m €105 m €281 m €8 m €520 m €64 m FY 2018 €131 m €107 m €326 m €8 m €571 m €98 m “FULL WEB” | ALL DEVICES | MULTICHANNEL IN SUBSCRIPTION MODE | WITH DIGITAL COACHING P.21
Slide 22: Back to positive net income
Back to positive net income 2019 • Revenues mechanically impacted by the In millions of euros 2018 Change 2019 (before IFRS 16) (IFRS 16) decrease in sales in HY2 2018 and HY1 2019 Digital Revenues 571 520 -8.8% 520 ▪ • Moderate growth in recurring EBITDA1: €175 m ▪ Print Revenues 98 64 -35.4% 64 vs
Slide 23: An EBITDA up +2% despite a decrease in revenues
An EBITDA up +2% despite a decrease in revenues • A savings plan initiated in 2018 to “finance” the impact of the strategic end of the Print business (-€28 m in 2019) • Reduction of Digital variable costs margin following the order intake decrease in H2 PRINT DIGITAL 2018 and to a lesser extent in H
Slide 24: Recurring Digital EBITDA margin up +4 pts
Recurring Digital EBITDA margin up +4 pts In millions of euros 2018 2019 Change Digital Print Total Digital Print Total Digital Print Total Revenues 571 98 669 520 64 584 -8.8% -35.5% -12.7% Variable costs (55) (19) (74) (51) (12) (63) -8.3% -37.4% -15.7% Margin on variable costs 516 79 595 473 52 5
Slide 25: A fixed cost model that is very profitable in a growth context
A fixed cost model that is very profitable in a growth context For +€10 in revenues generated Example: figures illustrating the fixed costs model = +€8 EBITDA in million euros Base Increment Income Any additional revenues Revenues 100 10 110 +10% generated… Variable costs -11 -1 -12 Gross margin 89
Slide 26: Capex focused on our strategic goals
Capex focused on our strategic goals OTHER MEDIA PLATFORMS 6 IT & CLOUD Investments in Group media IT infrastructure modernization 13 • Pages Jaunes and Move to Cloud • Search engine 6 • Voice search 2019 Capex • Mappy MaaS (mobility as a service)… DATA €43m Big Data and artificial intelligence 5 5
Slide 27: Recurring operating FCF over €100 m
Recurring operating FCF over €100 m 2019 Dont impact • A €48 m deterioration in the WCR impacted by: 2018 (IFRS 16) IFRS16 En millions d’euros - A structurally negative net client WCR down by €40 m EBITDA récurrent 1 171,2 190,6 15,6 due to : Eléments non monétaires ² dans l’EBITDA 10,5 4,1 • -€20 m
Slide 28: €155 m non-recurring disbursements
€155 m non-recurring disbursements 2019 Dont impact 2018 (IFRS 16) IFRS16 • Recurring free cash flow > €60 m En millions d’euros EBITDA récurrent 1 171,2 190,6 15,6 • Disbursements linked to non-recurring Eléments non monétaires ² dans l’EBITDA 10,5 4,1 items for €155 m mostly due to the 2018 Variat
Slide 29: Redundancy plan 2018 & 2019: 73% of costs already paid
Redundancy plan 2018 & 2019: 73% of costs already paid €164 m already paid Planned disbursements €62 m of which €56 m in 2020 Extension 2019 60 PSE 2018 Redundancy plan 2018 38 €203 m 32 23 18 16 Extension 14 2019 9 10 5 €22 m 1 0 0 2018 T1 19 T2 19 T3 19 T4 19 T1 20 T2 20 T3 20 T4 20 T1 21 T2 21 T3
Slide 30: Temporary increase in net debt as at 31 December 2019
Temporary increase in net debt as at 31 December 2019 • Temporary increase in net debt following in millions euros 2018 20192 €164 m disbursed to date for the redundancy ▪ Gross debt 409 463 plan: ▪ Cash 82 42 - Use of the RCF: €50 m - Use of the working cap line: €8 m ▪ Net debt 328 422 • Financial
Slide 31: Guidance & Conclusion
Guidance & Conclusion Eric BOUSTOULLER Chief Executive Officer
Slide 32: Outlook 2020
Outlook 2020 Acceleration in new clients acquisition to stabilise the customer base Return to growth in Digital revenues in the second half 2020 - > 50% of 2020 revenues already secured (from order intake 2019 & 2018) - The shift to subscription mode enables to speed up the customer acquisitions, th
Slide 33: Appendix
Appendix solocal
Slide 34: Cumulated Digital order intake conversion into revenues
Cumulated Digital order intake conversion into revenues % of Digital order intake converted into revenues in the following quarters (average four quarters of the year) 20192019 29% 47% 66% 13% 16% 18% 19% 16% 9% 5% 4% 20182018 27% 45% 64% 11% 16% 18% 20% 17% 10% 5% 3% 0% 10% 20% 30% 40% 50% 60% 70%
Slide 35: 2019 Impact of the IFRS 16 standard on leases
2019 Impact of the IFRS 16 standard on leases IFRS 16 In million euros • Applicable as of 1st January 2019 Impact - Recognition on balance sheet of all lease commitments Revenues - currently recognised as off balance sheet commitments ▪ Net external expenses 15.6 and finance leases ▪ Personnel expen
Slide 36: Change in staff numbers
Change in staff numbers 31/12/2018 31/12/2019 Catégorie 31/12/2018 Proforma of PSE Proforma of PSE departures departures Telesales 849 684 555 Field Telesales 1 325 960 990 Sales support 330 222 235 Customer Satisfaction 343 244 224 Production 453 391 360 IT – R&D 364 329 306 Others 656 561 489 TOTA
Slide 37: Main features of 2022 bond
Main features of 2022 bond • Amount: €398m • Interests: 10% payable quarterly as of January 2020 3-month EURIBOR rate – with a minimum of 1 % + margin based on the BASKETS IN THE level of consolidated net financial leverage ratio (consolidated net BOND DOCUMENTATION debt/consolidated EBITDA) at the
Slide 38: A simplified VSE/SME digital offer
A simplified VSE/SME digital offer Developments Essentiel Premium Privilege 2020 • Enhancement of the Starting from Starting from Starting from Privilege offer Websites €70 Ex VAT/month €169 Ex VAT/month €355 Ex • Launch of the Do-It-Yourself VAT/month entry level offer • Launch of the Privilege com
Slide 39: Solocal Digital SME offer
Solocal Digital SME offer PRESENCE WEBSITES ADVERTISING Presence Presence Websites Booster Contact Booster Contact Awareness ESSENTIEL PREMIUM Websites & E-commerce ESSENTIEL PREMIUM MINI-SITE MINI-SITE Essentiel PRIORITY DISPLAY BOOSTER CONTACT CAMPAIGNS RANKING Premium Visibility on 9 websites, Vi