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Yellow Media Limited Reports Second-Quarter 2013 Financial Results
• Company reports Q2 2013 basic net earnings per share of $1.81 and free
cash flow of $68.5 million
• Continued progress on Yellow Media Limited’s digital transformation, with
digital revenues growing 10% year-over-year and representing 40% of total
revenues
• Company expands its dedicated advertiser acquisition strategy to increase
valuable advertiser leads and conversions
• Company makes a $26 million debt repayment, reducing net debt to
$664 million
Montreal (Quebec), August 8, 2013 — Yellow Media Limited (TSX: Y) (the “Company”)
released its operational and financial results today for the second quarter ended June
30, 2013. The Company continues to invest in its digital transformation, and remains
focused on becoming the leading digital media and marketing solutions provider for
small and medium sized businesses nationwide.
Revenues for the second quarter ended June 30, 2013 were $243.2 million compared to
$286.5 million for the second quarter in 2012. The 15.1% decline is due principally to
lower print revenues and the discontinuation of duplicate directories published by
Canpages. On a comparable basis, excluding Canpages, revenues decreased by 11.2%
versus last year’s results.
Digital revenues for the second quarter of 2013 grew to $98.4 million compared to $89.7
million the year prior, representing growth of 9.7%. On a comparable basis, excluding
Canpages, digital revenues grew 12.8% versus the same period last year. Digital
revenues represented approximately 40.5% of total revenues during the second quarter
of 2013, compared to 31.3% for the same period in 2012.
Digital revenue growth is currently unable to offset print revenue declines. This is
principally due to a decline in the acquisition of valuable advertisers, and challenges
associated with migrating print revenues from larger advertisers towards digital products.
EBITDA declined to $107.2 million during the second quarter of 2013, as compared to
$144.9 million last year. This decline is due to continued print revenue pressure and a
lower EBITDA margin. The EBITDA margin declined from 50.6% in the second quarter
of 2012 to 44.1% in 2013, and continues to be impacted by investments required to
advance the Company’s digital transformation and product mix changes.
Free cash flow for the second quarter of 2013 declined to $68.5 million compared to
$96.2 million last year, mainly due to lower EBITDA. The Company continues to
generate adequate free cash flow to service its financial obligations and invest in its
digital transformation.
For the quarter ending June 30, 2013, the Company recorded net earnings of $50.3
million compared to $65.7 million last year. The decrease is due primarily to lower
EBITDA and a higher provision for income taxes, partly offset by lower financial charges
and a lower depreciation and amortization expense. The provision for income taxes in
2012 was lower compared to 2013 due to the impact of the impairment of goodwill. 2
For the quarter ending June 30, 2013, the Company recorded basic net earnings per
share of $1.81, which compares to basic net earnings per share of $2.15 the year prior.
Delivering Value to Advertisers through the Yellow Pages 360° Solution
The Yellow PagesTM 360° Solution is the most comprehensive full-serve digital and
traditional media and marketing solution in Canada. Backed by a national team of
marketing experts, the Yellow Pages 360° Solution helps advertisers generate valuable
business leads through online, mobile and print media advertising, website services,
customized search engine marketing and search engine optimization, and performance
reporting tools.
As at June 30, 2013, the penetration of our 360º Solution offering among our advertiser
base, which we define as advertisers who purchase three product categories or more,
grew to 21.1%. This compares to 11.2% at the end of the same period last year.
Online priority placement is the Company’s highest penetrated digital offering. Online
priority placement penetration increased to 40% as at June 30, 2013, compared to 28%
last year.
Mobile priority placement and digital services (which includes websites and search
engine solutions) are the fastest growing components of the Yellow Pages 360º
Solution. Advertiser penetration of mobile priority placement and digital services each
grew from 5% last year to 10% and 8%, respectively, as at June 30, 2013.
Increased advertiser penetration across online priority placement products, mobile
priority placement products and digital services is due to the continued migration of print
revenues towards digital products and services, the successful execution of the Yellow
Pages 360o
Solution sales approach across our sales channels, and the introduction of
mobile and premium digital products throughout 2012.
Growing the Acquisition of Valuable Advertisers
The Company had 291,000 advertisers as at June 30, 2013. This compares to 326,000
advertisers, excluding Canpages, at the same period last year. Over the last twelve
months, the advertiser renewal rate fell slightly from 87% last year to 85% for the period
ending June 30, 2013. Advertiser acquisition declined from approximately 20,000 last
year to 12,400 for the twelve month period ending June 30, 2013.
“Our advertiser renewal rate remains among the strongest in the industry, however, we
are working to address challenges in advertiser acquisition. We’ve implemented effective
strategies to attract and retain valuable advertisers, as well as help small businesses
better understand the importance of digital marketing in today’s multi-channel society,”
said Marc P. Tellier, President and Chief Executive Officer of Yellow Media.
The Company recently expanded its dedicated advertiser acquisition strategy to
increase the number of valuable advertisers and protect its revenue base. The
Company’s acquisition strategy is centered on increasing advertiser leads and
conversions through the following key initiatives: 3
• Inbound: The Company is investing in traditional and digital advertising
campaigns to raise advertiser awareness around YPG’s products and services
and increase traffic towards its Yellow Pages 360º Solution business-to-business
website. An inbound call center was also established to support all incoming
leads.
• Outbound: An outbound call center was created to target prospective, smallerspend advertisers.
• Face-to-Face Network: A face-to-face network of over 100 media account
consultants was established to service larger-spend advertisers.
The Company also launched two new entry-level product packages designed exclusively
to help new, prospective advertisers gain a media presence. These include Business
Builder Bundle and Booster Packs, two fully-integrated media solutions which allow new
advertisers to boost ROI through the development of content-rich virtual business
profiles, priority placement across YPG’s network of digital properties and access to print
media products.
Differentiated Offering for Larger, High-Spend Advertisers
In order to support retention efforts, increase loyalty and optimize revenue growth from
larger advertisers, the Company established the PriorityPlus program in early 2012.
PriorityPlus offers a more attentive and specialized service by providing high-spend
advertisers with dedicated account teams, a thorough evaluation of account needs and
opportunities, and effective execution of their digital and traditional marketing strategy.
The Company also offers larger, high-spend advertisers a suite of premium products
designed to optimize their digital and traditional media presence.
PriorityPlus is now deployed across Canada and is made up of approximately 230
managers and media account consultants. Results to date remain positive as the
number of advertisers receiving the PriorityPlus service and purchasing high-end
products continues to increase.
Enhancing the User Experience
Improving the user experience and building valuable traffic towards our network of digital
properties is key in promoting the success of our advertisers. Our online properties
reached 8.7 million unduplicated unique visitors during the second quarter of 2013,
representing 31% of Canada’s online population.
Total mobile downloads exceeded 5.9 million by the end of the second quarter of 2013,
as compared to 4.3 million downloads at the same period last year. During the quarter,
the Yellow Pages application was also highlighted by the Apple Store as one of the top
25 most downloaded applications of all time.
During the second quarter of 2013, the Company developed a new search algorithm
designed to optimize user performance on YellowPages.ca (online and mobile) and
promote merchant ROI. The new algorithm provides more user-relevant search results,
as results are now dependant on features such as proximity of location, business
content, popularity, quality of reviews, etc. YellowPages.ca is now also equipped with
an enhanced auto-complete service, which allows for quicker results and reduced failed
searches.
http://www.ypg.com/images/ckeditor/files/2013_Q2_PR.pdf