Slide 1: Q1 2017 Investor Presentation and Strategy Update
Q1 2017 Investor Presentation and Strategy Update May 10th, 2017
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements about the objectives, strategies, financial condition, results of operations and businesses of Yellow Pages Limited. These statements are considered “forward-looking” because they are based on current expectations about our business an
Slide 3: Agenda
Agenda 1 Overview of Q1 2017 Financial and Operating Results 2 Update on Corporate Strategy 3 Overview of the Market 4 Operational Plans 5 Outlook 3
Slide 4: Key Financial Metrics
Key Financial Metrics Digital Revenues Total Revenues in millions in millions YoY Change YoY Change 17% 22% 8% 11% 2% (1%) 3% (4%) (3%) (7%) 142.5 138.6 143.1 210.5 131.6 134.8 203.6 201.1 202.7 189.5 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2016 2017 2016 2017 Print Revenues Adjusted EBITDA in millions in mil
Slide 5: Key Operational Metrics
Key Operational Metrics Customer Acquisition Customer Count in thousands and on a trailing twelve month basis in thousands and on a trailing twelve month basis 40.2 41.1 41.7 38.6 244.0 244.0 243.0 241.5 239.5 34.6 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2016 2017 2016 2017 Digital Only Customers Total Digita
Slide 6: Overview of Capital Structure and Net Debt
Overview of Capital Structure and Net Debt in millions, unless otherwise noted Dec. 31, 2012 Dec. 31, 2015 Dec. 31, 2016 March 31, 2017 Senior Secured Notes1 800 407 310 310 Exchangeable Debentures2 87 90 92 93 Obligations Under Finance Leases 2 1 0 0 Total Debt 888 498 402 403 Cash and Cash Equival
Slide 7: Our Mission
Our Mission We create opportunities for buyers and sellers to discover, find, interact and transact in the local economy 7
Slide 8: The Local Digital Marketing Ecosystem is Rapidly Evolving
The Local Digital Marketing Ecosystem is Rapidly Evolving The Sunset of the Online Reaches Digital Offline Era Critical Mass Fragmentation Surges 2008 2010 2012 2014 2018 2020 Offline Still Dominates Search is King Social Reaches “Prime Time” Internet = Desktop Transition to Mobile Begins Internet =
Slide 9: SMEs Require Expertise & Lack Time and Resources
SMEs Require Expertise & Lack Time and Resources Level of Digital Marketing Knowledge 100% “It would be nice to have an outside source to 80% manage that side of the business for me” Extensive Knowledge “To be quite honest, I don’t know enough about 60% Understand digital marketing” Different Tactic
Slide 10: Large Market Opportunity
Large Market Opportunity Local Digital Advertising Spend to Grow by $1 Billion in the Next Two Years 1.165 Million SMEs in Canada Total Canadian SME-marketing Spend (CAD Billions, estimates) 10.9 10.8 10.9 4.7 ; 43% 5.0 ; 46% 5.7 ; 52% 5.8 ; 54% 6.2 ; 57% 5.2 ; 48% 2016 2018F 2019F Digital Offline S
Slide 11: Creating Local Opportunities
Managing the SME “Digital Headache” by Offering Simple, Digital Solutions Google Ecosystem Sellers Buyers Apple Ecosystem Creating Local Opportunities Yellow Pages Network Be active on the digital Find relevant local properties where customers information, products, are, where conversations services
Slide 12: Five Key Initiatives
Five Key Initiatives 1 Reshape the Customer Value Proposition 2 Implement New Ways of Selling 3 Redefine the Customer Journey 4 Continue Growth in Subsidiaries 5 Build the Future State of the Business 12
Slide 13: Customer Value Proposition: Simpler, Content-Driven Offering
Customer Value Proposition: Simpler, Content-Driven Offering Small to Very Small Businesses Medium Sized Businesses Entry Point for Customers Free Basic Plus Premium Basic Plus Premium •1 Facebook Couponing Social Reputation •2 Social Presence Management •3 Reputation Management •1 Syndication on Lo
Slide 14: Upsell Potential: Tiered Service Levels with Targeted Add-ons
Upsell Potential: Tiered Service Levels with Targeted Add-ons New Customer Value Proposition Add-ons Boost Your Facebook Management Engagement Reputation Management Free Basic Plus Premium Universal Need Tiers Booster Social First Position on YP, Website Boost Your Management, Content Creation, Repu
Slide 15: YP Acts as SME's Hub and Plugs into Digital Ecosystems
YP Acts as SME’s Hub and Plugs into Digital Ecosystems Google Ecosystem Apple Ecosystem Sellers Buyers Customer YP’s Owned & Operated Value Proposition Yellow Pages Facebook Ecosystem Microsoft Ecosystem Other Publishers 15
Slide 16: Implement New Ways of Selling
Implement New Ways of Selling: Sales Effort to Address Five Customer Segments Higher Spend Customer Spend Potential Lower Spend 1 2 3 4 5 Customer Segment High Potential High Potential Mid Potential Mid Potential Low Potential • Comprehensive • Comprehensive • Guidance on • Guidance on • Guidance on
Slide 17: Redefine the Customer Journey
Redefine the Customer Journey: Seamless Delivery and Flexible Relationships Evergreen Maximize Provide a Seamless Contracts, Self-serve & Product Delivery Monthly Auto-fulfill Experience Subscriptions 17
Slide 18: Continue Growth in Subsidiaries
Continue Growth in Subsidiaries • Growth potential in • Focus on acquisition • New products offered in Canada with expansion and retention of high- Quebec, with continued plans for the US spend customers expansion to Ontario • Self-serve platform for and Western Canada agencies, opening a new busine
Slide 19: Build the Future State of the Business: Transactional Offerings
Build the Future State of the Business: Transactional Offerings YP Dine ComFree / DuProprio Providing YP Dine Customers with Access to a Proven Connecting Buyers to Solutions to Interact & Transact with Customers C2C Marketplace Our Advertisers Directly On Demand Ordering Integrated Booking Engine S
Slide 20: Operational Plan to Deliver Value Creation
Operational Plan to Deliver Success Drivers Value Creation • Customer Count • Organic Growth • Customer Retention • Grow Through Upsell • Sustainable Profitability • Improve Customer Economics • Free Cash Flow Growth • Improve Customer Experience and Referrals 20
Slide 21: 2017 Operational & Financial Guidance
2017 Operational & Financial Guidance Total Revenues Customer Count $770 Million to $785 Million 240,000 Customers Digital Revenues CAPEX 4% Growth Over 2016 Approximately $65 Million Net of Related Lease Incentives Adjusted EBITDA $170 Million to $180 Million Free Cash Flow $50 Million to $55 Milli
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Slide 23: Appendix
Appendix
Slide 24: Competitive Advantages
Competitive Advantages Unique Local Content Broad Consumer Reach • Extensive information on 1.8 million • Reach via owned & operated digital Canadian businesses media and third party platforms • Natural partner for global technology • Single access point to critical online leaders ecosystems (Google
Slide 25: YP's Path to a Digital-First Enterprise
YP’s Path to a Digital-First Enterprise in millions, digital revenues as a percentage of total revenues is on a trailing twelve month basis Total Debt Digital Revenues as a % of Total Revenues 1,000 90% 68% 70% 80% 59% 950 888 70% 900 50% 60% 42% 50% 850 33% 40% 30% 800 750 735 20% 10% 0% 700 -10% 6
Slide 26: Owned & Operated Media Properties
Owned & Operated Media Properties Business & People Search Retail YP YP Shopwise Discover everything your local Everyday shopping app to help Canadians save neighbourhood has to offer time and money Canada411 & 411.ca RedFlagDeals & RFD Forums Network of Canada’s most frequented and trusted Canada’s
Slide 27: Digital Marketing Solutions
Digital Marketing Solutions Mobile & Desktop Placement Content Syndication Across Professional Website Advertising Across YP Network 25+ Search Partners Fulfillment & Management Search Engine Optimization Digital Display Facebook Campaign Search Engine Marketing Presence on SERPs Advertising Solutio
Slide 28: Gross Profit Analysis by Business Segment
Gross Profit Analysis by Business Segment Gross Profit as a Percentage of Related Revenues Owned & Operated Segment (Includes Placement and Visibility Products [NetSync]) Indicative Margin Range Print Segment Subsidiaries1 Digital Services & Resale Segment Yellow Pages’ subsidiaries include: Mediati