Q1 2017 Investor Presentation and Strategy Update May 10th, 2017 - Yellow Pages
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Q1 2017 Investor Presentation
and Strategy Update
May 10th, 2017
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, 2017 Management's Discussion and Analysis.
2
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
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 millions
YoY Change Margin
(23%) (24%) (25%) (24%)
(23%) 30% 28% 28% 28% 25%
72.0 61.9
68.0 58.9
62.6 56.9 57.4
59.6
54.7 46.5
Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1
2016 2017 2016 2017
4
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 Digital Visits
in thousands and on a trailing twelve month basis in thousands and on a trailing twelve month basis
148.9 149.9
80.7
76.8
72.2
67.2
60.5 106.2 109.4
100.2
Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1
2016 2017 2016 2017
5
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 Equivalents 107 67 17 16
Total Net Debt 782 431 385 387
Total Equity 286 760 369 378
Net Debt / Adjusted EBITDA 1.4x 1.7x 1.6x 1.8x
Average Interest Rate on Debt 9.0% 9.0% 8.9% 8.9%
$490 million of Senior Notes has been repaid since issuance
Note: The Company 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 8.0% (or 12.0% paid in kind) Subordinated Unsecured Exchangeable Debentures due November 30, 2022 6
Our Mission
We create opportunities for buyers and sellers to discover, find,
interact and transact in the local economy
7
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 = Mobile
Digital Marketing = Digital Marketing = Digital Marketing =
Placement Keywords Content
Leading Local Platforms in Canada
8
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 Tactics
Familiar with
Basics Only “I don’t have time to sit there and learn Google.
40% Very Little I am a paralegal not a marketing guy”
Knowledge
“Should I go with something like AdWords or
20%
SEO? What is SEO?”
0%
Source: YP Consumer Research (April 2017, n=1,002) & YP Customers and Non-customers Interviews (March 2017) 9
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
Source: Key Small Business Statistics June 2016 : Innovation, Science and Economic Development Canada Small Business Branch (KSBS-PSRPE)
Source: Statistics Canada, BCG Customer Survey (July 2016, n=795), IDC 10Managing 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 and convenient
happen and where
ways to obtain them
transactions are made Facebook Ecosystem
Microsoft Ecosystem
Other Publishers
11Five 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
12Customer 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 Local Search Network
•2 Enhanced Organic Search Engine Visibility
Visibility
•3 Visibility Solutions
•4 YP Network Syndication
•1 Business Leader
Business
•2 Business Branding
Profile
•3 Business Essentials
•1 Free Call Support
Professional
Service
•2 On-demand Self Serve
13Upsell 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,
Reputation Awareness SEO & Retargeting
Management
Print Presence in Local Directories
Visibility
+
Business Range of Meaningful
Profile Generate Contacts Across Platforms:
Performance Need
Leads Mobile, Desktop, YP,
Facebook & SEM
Professional
Service
Generate Expand Booking &
Transactions Scheduling Capability
Entry Point for Customers
14YP 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
15Implement 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
approach to sales approach to sales solutions for solutions for products for
and service, across and service, across specific business specific business specific business
portfolio of portfolio of objectives objectives objectives
products products
• Seamless • Responsive • Responsive
Service Level
• Clear point of • Clear point of experience across support and issue support and issue
contact for contact for multiple products resolution resolution
seamless delivery seamless delivery
and support and support
• Access to deep
product expertise
One-Stop Shop
16Redefine the Customer Journey:
Seamless Delivery and Flexible Relationships
Evergreen
Maximize Provide a Seamless
Contracts,
Self-serve & Product Delivery
Monthly
Auto-fulfill Experience
Subscriptions
17Continue 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
business line
18Build 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
Scheduling & customer relationship management software to be introduced shortly
19Operational 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
202017 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 Million
Please refer to the Outlook section of the May 10th, 2017 Press Release for the assumptions driving guidance 21Appendix
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, Facebook, Apple, etc.)
Nationwide Salesforce Extensive Proprietary Data
• Large sales team • Data on advertising, search and
(approximately 900 MACs) purchase behaviours of Canadian
• 239,500 local customers SMEs, consumers and global brands
• Strong ties to businesses in Canada
24YP’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%
650
597
-20%
-30%
600
-40%
550
498
-50%
-60%
500
-70%
450
402 403
-80%
-90%
400
-100%
350
-110%
-120%
300
-130%
250 -140%
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Mar. 31,
2012 2013 2014 2015 2016 2017
Yellow Pages has established a digital business while reducing debt
25Owned & 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 leading provider of online and mobile
online and mobile destinations for personal and promotions, deals, coupons and shopping tools
local business information
YP Grocery
Combs flyers and coupons to get Canadians the
most savings on their grocery list
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 market based on time of day, mood and expert
and sell their properties suggestions
YP NextHome
Bookenda
Provides Canadians with valuable real estate
Leading online transaction platform for users and
information to help them make the right buying,
merchants to easily interact and manage bookings
selling, and/or renting decision
26Digital 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 Solutions Management
27Gross 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: Mediative, JUICE, ComFree / DuProprio, 411, YP NextHome, Western Media Group and Totem 28You can also read
