Investor Presentation - Q1 2016 Available in English Only - Yellow Pages
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Investor Presentation
Q1 2016
Available in English Only
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 and the markets we operate in, and on
various estimates and assumptions. Our actual results could be materially different
from our expectations if known or unknown risks affect our business, or if our
estimates or assumptions turn out to be inaccurate.
As a result, we cannot guarantee that any forward-looking statements will materialize.
Forward-looking statements do not take into account the effect that transactions or
non-recurring items announced or occurring after the statements are made may have
on our business.
We disclaim any intention or obligation to update any forward-looking statements,
except as required by law, even if new information becomes available through future
events or for any other reason.
Risks that could cause our actual results to differ materially from our current
expectations are discussed in section 6 of our May 10th, 2016 Management's
Discussion and Analysis.
2
The Way Consumers and Merchants Are Interacting is Evolving
The vast majority of Canadians are connected
online (web and mobile)
More than ever before, Canadians are researching
online before making a purchase decision…
…and turning to their smart devices to transact
directly within their neighbourhoods
1.2 million small and medium-sized businesses call
Canada home
The majority do not have a comprehensive
digital presence, let alone a website
They also continue to struggle with digital
marketing, given its complexity and personal
time constraints 3
Our Mission
We aim to champion the digital economy by offering consumers and merchants
media and marketing solutions that help them interact and transact
4
Acting as the Chief Marketing Officer for SMEs
Owned & Operated Solutions
Paid advertising on Yellow Pages’ verticalized network of digital and print media
Comprehensive Digital Services
Full suite of digital solutions that attract consumers wherever they search
5
Uniquely Positioned to Capture Further Growth in the
Canadian Digital Marketing Landscape
* Size of bubble denotes approximate
advertising revenue in Canada
Serving over 20% of
the Canadian SME
market
Search Engine People
Local Digital
Product Offerings
Marketing
Boutiques
Breadth of
Self-Serve
Website Local
Platforms Newspapers
Self-Serve Full Serve
Service Level
6
Acting as a Leading Digital Advertising Agency for National Brands
Creating one of Canada’s leading digital advertising agencies, leveraging
proprietary programmatic technologies and an extensive publisher network to
connect Canadians with the brands they love
Network of Brand Relationships Extensive Publisher Network
Publisher Network Attracting Over 15B
National Revenues in Excess of $60M in 2015
Impressions Annually
7
A Verticalized Digital Experience for Consumers
Business & People Search Retail
YP App YP Shopwise
Discover everything the local Everyday shopping app to help Canadians save time
neighbourhood has to offer and money
Canada411 & 411.ca
RedFlagDeals
Network of Canada’s most frequented and
Canada’s leading provider of online and mobile
trusted online and mobile destinations for
promotions, deals, coupons and shopping tools
personal and local business information
Real Estate Dining
ComFree/DuProprio Network YP Dine
C2C marketplace offering homeowners a Discover, search for and book local restaurants
professional and cost effective service to based on time of day, mood and expert suggestions
market and sell their properties
YP NextHome Bookenda
Provides Canadians with valuable real estate Leading online transaction platform for users and
information to help them make the right merchants to easily interact and manage bookings
buying, selling, and/or renting decision
dine.TO
Connecting users in the Greater Toronto Area with
an extensive database of restaurant listings, as well
as real-time online ordering capabilities
Attracting Over 458 Million1 Visits to Our Network of Digital Properties Annually
1 Excludes the contribution of the ComFree/DuProprio Network, which attracted 25.2 million visits during the first quarter of 2016. 8Uniquely Positioned to Capture Audience Growth in Key Verticals
Further Differentiating Our Properties Via
Key Search Verticals Remain Underpenetrated1 Rich Content and Transactional Experiences
Total Unique
Reach
Visitors (in M)
Proven C2C
Marketplace
1. Google 29 M 96%
3. Facebook 24 M 79%
5. eBay 19 M 63%
7. 18 M 60%
19. Yellow Pages 11 M 37%
24. Trip Advisor 10 M 32%
52. Yelp 6M 19%
Integrated
65. Expedia 5M 17% Booking Engine
1 As per comScore Media Metrix, March 2016. 9We Are Starting from a Position of Strength
Canada’s Most Comprehensive Provider of Digital Marketing Solutions
A Leader in Dedicated Chief Marketing Officer for 244,000 local businesses
Digital Marketing Largest national network of sales, customer service and digital fulfillment professionals
A leading digital advertising agency for national brands
One of Canada’s Most Adopted Digital Properties for Local Discovery
A Rich, Diversified
Over 458 million visits executed across our network of digital properties annually
Digital Media
Network Over one third of online Canadians consult our verticalized network of digital media
properties to interact and transact with merchants in and around their neigbourhoods
Profitable Digital Revenue Growth, with Low Indebtedness
A Strong $526 million in annualized digital revenues, currently representing 65% of total revenues
Financial Profile Highly profitable digital operations
Lean capital structure, with net debt-to-latest twelve-month Adjusted EBITDA of 1.8x
10Our Path to Growth is Clear
Debt Free
Capital
Structure
Growth in
Adjusted
EBITDA
Growth in
Revenues
Growth in
the Customer
Count
2017 2018
11Significant Deceleration in Net Customer Count Decline
Annual Customer Acquisition1 Net Customer Count Decline1,2
(in thousands) (in thousands, unless otherwise noted)
34.6 26
30.8 23
27.2 20
24.8 19
23.7 17
22.1
20.2
18.4 14
11
7
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2014 TTM 2015 TTM 2016 2014 TTM 2015 TTM 2016
TTM TTM
Customer
Count
265 260 256 251 248 246 245 244
Customer
Renewal
85% 85% 84% 85% 85% 85% 85% 84%
Renewers
Upselling
26% 27% 31% 35% 40% 44% 44% 42%
With only 1,000 net customers lost between December 31st, 2015 and March 31st, 2016
we are close to stabilizing the customer count
1 YP Core only, excludes the contribution of Mediative, JUICE Mobile, 411 Local Search Corp., Yellow Pages Homes Limited and the ComFree/DuProprio Network.
2 Represents the year-over-year change in customer count experienced during the period. 12Delivering Sustainable Print and Digital Revenue Performance…
Print Revenue Performance Digital Revenue Performance
(in millions, unless otherwise noted) (in millions, unless otherwise noted)
YoY Change YoY Change
(22%) (21%) (21%) (19%) (23%) +9% +7% +12% +11% +17%1
129 132
128
93
88 116
83 113
79
72
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016
Stabilization in print revenue decline rates supported by Long-term, sustainable digital revenue growth driven by
content enhancement and pricing initiatives that have accelerated customer acquisition, increased digital spending
encouraged renewal of print advertising spending among among renewing customers, and revenue growth across new
customers verticals and national channels
1 On a pro forma basis, digital revenues for the three-month period ended March 31, 2016 grew 8% year-over-year. Pro forma digital revenue growth adjusts digital revenues for the full inclusion of the
ComFree/DuProprio Network and JUICE Mobile during the three-month period ended March 31, 2015, as well as for the full inclusion of JUICE during the first quarter of 2016. 13…and Reducing Revenue and Adjusted EBITDA Declines
Consolidated Revenue Performance Adjusted EBITDA Performance
(in millions, unless otherwise noted) (in millions, unless otherwise noted)
YoY Change
YoY Change
(8%) (7%) (4%) (3%) (1%)1
(25%) (24%) (15%) (1%) (13%)
211 209
206 205 204
71
64 64
62 62
Adjusted
EBITDA
% Digital Margin
55% 57% 61% 62% 65% 34% 30% 30% 31% 30%
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016
1 On a pro forma basis, consolidated revenues for the three-month period ended March 31, 2016 declined 5% year-over-year. Pro forma consolidated revenue performance adjusts consolidated
revenues for the full inclusion of the ComFree/DuProprio Network and JUICE Mobile during the three-month period ended March 31, 2015, as well as for the full inclusion of JUICE during the first
quarter of 2016. 14Maintaining Strong Profitability During Our Digital Transformation
Relative Size of Gross Margins of our Local Digital Solutions
Print Cost structure is
High principally variable,
with profitability
Margin tracked on a
Online & Mobile Priority Placement book-by-book basis
Websites
Over 90% of traffic on Yellow Pages’
digital properties is direct or organic
Mid-
Margin
Search Engine Optimization
Presence Pro/Extended
Low Search Engine Leveraging YP traffic to deliver high-margin
Margin Marketing performance-based leads solutions
Placement solutions, which hold the highest profitability among our digital product suite,
represent ~2/3rds of YP Core’s1 digital revenues
1 Exclude the contribution of Mediative, JUICE Mobile, 411 Local Search Corp., Yellow Pages Homes Limited and the ComFree/DuProprio Network. 15Delivering Strong Free Cash Flow to Reduce Outstanding Debt
(in millions, unless otherwise noted) March 31, 2016 Dec. 31, 2015 Dec. 31, 2012
Senior Secured Notes1 407 407 800
Exchangeable Debentures2 91 90 87
Obligations Under Finance Leases 1 1 2
Total Debt 498 498 888
Cash and Cash Equivalents 35 67 107
Total Net Debt 463 431 782
Total Equity 748 760 286
Net Debt / Adjusted EBITDA 1.8x 1.7x 1.4x
LTM Free Cash Flow 86 122 198
~$393 million in debt repaid since the issuance of the Senior Secured Notes on December 20, 2012
Note: The Company currently has in place a $50 million Asset-Based Loan expiring in August 2018, which may be used for general corporate purposes.
1 9.25% Senior Secured Notes due November 30, 2018.
2 8% (or 12% Paid in Kind) Subordinated Unsecured Exchangeable Debentures due November 30, 2022. 16Strengthening Our Financial Profile in 2016
Stabilization of the Customer Count
YoY Pro Forma Digital Revenue Growth Between 9% and 11%
Improvements to Revenue and Adjusted EBITDA Declines
$100 Million in Principal Debt Repayment
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