BOULOGNE-BILLANCOURT, France--(BUSINESS WIRE)--Regulatory News:
SoLocal Group (Paris:LOCAL)
Q1 2018 revenues (continued activities):
- Digital revenues: € 152 million, +1%
- Total revenues: € 168 million, -4%
Q1 2018 digital sales (continued activities) declining by -8%: the profound and rapid transformation process impacted Q1 2018 sales
Further implementation of the strategic and transformation project « SoLocal 2020 » and of the cost-cutting plan:
- Cost-cutting plan: continued effort to reduce the cost base
- Simplification of the organization: ongoing information and consultation process with the employee representatives in the context of the redundancy plan (« Plan de Sauvegarde pour l’Emploi ») which was announced on February 13th, 2018
- A new broad range of digital product offerings: roll-out of the new range of simplified, richer and packaged services confirmed for next fall
Renewal and strengthening of the strategic partnership with Google: new 2-year agreement aiming at doubling the resources devoted by both partners to drive digital growth for French VSBs, SMBs and networks.
When releasing the Q1 2018 results, Eric Boustouller, Chief Executive Officer of SoLocal Group, quoted: « The increase in the digital turnover confirms the relevance of our strategic plan ‘SoLocal 2020’. We are determined to commit all our energies, individual and collective, to implement our ambitious transformation and cost-cutting plans. So is the in-depth transformation of our model. This ambition also translates into the move to a smarter, more digital organization and more connected to our customers. In this context, we are committed to conducting a qualitative social dialogue with social partners and we have set up an information-consultation process with them regarding the 'SoLocal 2020' project, which will end on June 21, 2018. To succeed, we have fundamental strengths that I see every day. The strengthening of our partnership with Google, with a goal of annual growth on Google products of + 50% over the period 2017-2020, is the proof of the vitality of SoLocal Group. »
I. Revenues, sales and order backlog
The revenues under IFRS 15, sales and order backlog of SoLocal Group in Q1 2018 are as follows:
|In millions of euros||Q1 2017||Q1 2018||Change|
|Digital order backlog1||398||394||-1%|
|Print order backlog2||75||55||-27%|
Total order backlog3
Note : scope of continued activities
The Group recorded total revenues4 of € 168 million in Q1 2018, down -4% vs Q1 2017.
The digital revenues3 of € 152 million in Q1 2018 increased by +1% compared to Q1 2017 driven by the success of Premium websites, Booster Contact offerings and Pack Presence. The digital business accounts for 90% of total revenues this quarter.
The print revenues3 of € 16 million in Q1 2018 decreased by -37% compared to Q1 2017, as clients and users are continuing to migrate towards digital supports. The print business accounts for 10% of total revenues this quarter. The Group decided to terminate publishing a few directories of PagesJaunes for non-profitable and advanced digitalized geographic areas, i.e. in Ile-de-France, and in three large urban departments (Rhône, Bouches-du-Rhône and Nord) after the 2018 edition. For other departments, the edition of paper directories will continue. The Group will review each year, department by department, the opportunity to continue or not the directory publishing. In parallel, tests are underway to assess new concepts of "printed" guide highlighting the know-how of professionals and which make the link with digital content through augmented reality.
Total sales3 amounted to € 174 million in Q1 2018 down -11% compared to Q1 2017.
Digital sales declined by € 13 million, or -8%, while the print sales are down by € 8 million, or -28% in Q1 2018 vs Q1 2017.
In a context of profound and rapid transformation, at least three factors affected significantly the sales dynamics:
- the calendar involving, in the first quarter of 2018, both fewer days worked and more employee vacation time than in 2017 due to the timing of school holidays, has an estimated impact of € 6 million,
- the two strike days triggered in February and March following the announcement of the redundancy plan (“PSE”), combined with a higher level of absenteeism than in 2017, resulted in a shortfall of at least € 5 million,
- a significant decline in overall productivity affecting the whole company.
1 The new digital scope is similar to the old Internet scope
2 The new print scope is similar to the old Print & Voice scope
3 Order backlog corresponds to the outstanding portion of revenues still to be recognized as of March 31st from sales orders validated and engaged by our clients. Regarding evergreen contracts, only the current commitment period is taken into account
4 Scope of continued activities
The order backlog3 reached € 449 million in Q1 2018, down -5%. This decrease is mainly due to the strong decline of the print business (-27% decrease in Q1 2018 vs Q1 2017). The digital order backlog is slightly eroding by -1% due to a heterogeneous revenue recognition pattern of products sold.
The operational KPIs of SoLocal Group in Q1 2018 are as follows :
|Q1 2017||Q1 2018||Change|
|Number of visits (in millions)||614||600||-2%|
|Evergreen sales (as of % of total sales)||9%||17%||+8pts|
Note : scope of continued activities
The Internet visits3 are down -2% and stood at 600 million in Q1 2018 compared to Q1 2017; the audience of the PagesJaunes media is stable over the period. Furthermore, the contacts generated for our clients increased by +5%. Those visits are generated through our own brands (PagesJaunes, Mappy, Ooreka), our continued SEO optimization (Q1 double digit audience growth) and our privileged partnerships (Bing (Microsoft), Yahoo!, Apple...). The slight erosion in number of visits is mainly driven by the increased competition on Ooreka's health and housing markets, as well as the decline in non-mobile visits on Mappy. Meanwhile, the mobile audience increased by +5% and now represents 41% of the total audience.
The evergreen sales3 in percentage of total sales reached 17% and increased by +8 points in Q1 2018. This increase is driven by the growth of Premium sites, the launch of an offer created to retain our customers with low ARPA and the rise of Presence Management.
II. Impacts of the IFRS 15 adoption on revenues
|In millions of euros||IAS 18||IFRS 15||IAS 18||
Note : scope of continued activities
The adoption of IFRS 15 in the Group's accounts has led to a change in the path of revenue recognition, with a greater spread over time. The recognition of revenues is thus slightly delayed compared to the previous method under IAS 18.
III. Further implementation of « SoLocal 2020 » strategic and transformation project and cost-cutting plan
Eric Boustouller, Chief Executive Officer of SoLocal Group, presented on February 15th his strategic plan “SoLocal 2020”, approved on February 12th by the Board of Directors. It focuses on three value-creating drivers and a cost-cutting plan. This plan aims at making SoLocal one of the digital services champions in France.
1. Develop a new and broad offering of digital services for all businesses
As the digital needs of small and medium-sized businesses and network groups are changing, SoLocal aims to be the digital reference platform for all businesses, integrating a digital coaching approach adapted to each market segment. This new offering is being structured around five service ranges: Digital Presence, Digital Advertising, Digital Website, Digital Solutions and Print to Digital. In Q1 2018, SoLocal launched new offerings for network accounts via the Pack Presence and for the VSBs via the new Facebook offerings.
5 Being currently reviewed by the auditors
The roll-out of the new range of simplified, richer and packaged services will begin in the next fall 2018.
2. Reinvent PagesJaunes media
The revamping of PagesJaunes has two priorities: enhance the relevance of local search for users by offering greater customization and increase their engagement through new services (reviews, recommendations, appointments, etc.). During the month of April, PagesJaunes took an important step towards the modernization of its service with the launch of the single field search. Other features aiming at improving the UX (user experience) and UI (user interface) are under development and will be launched by the end of the first half of 2018:
- loyalty program
- bookings through partnerships
- reshaping of basic content
- conversational – natural language
3. Simplify the organization
To better meet the needs of our customers, gain agility and efficiency, and strengthen our competitiveness, the organizational structure would be redesigned around, in particular, the removal of Business Units, the centralization of support functions, the rationalization of locations, the simplification of the management line and the consolidation of selected activities.
The information and consultation process with employee representatives will carry on until June 21st, 2018.
4. Cost-cutting plan
The Group continues its efforts to reduce its cost base.
- Cautious management of the workforce illustrated by the non-replacement of employees leaving the company and a hiring freeze.
- Non-staff costs: procurement under control (ongoing diagnostic on all purchases), prioritization and optimization of IT expenditures and cut in seminar and event costs.
- Divestment : disposal of Netvendeur, on 9th March, a company specialized in the estimation of real estate prices. Launched in 2014, following an intrapreneurial initiative, Netvendeur has developed a sales lead business model for real estate agencies. The impact of the sale of Netvendeur on the Group’s consolidated financial accounts is not significant.
IV. Strategic partnership with Google
SoLocal and Google announced a strengthening of their strategic partnership on 23rd April, 2018.
Initiated back in 2013 with the distribution by SoLocal of its first Google offer, this new 2-year agreement will double the resources devoted by both partners to drive online growth for French VSBs, SMBs and networks.
Through its online services Booster Site, Booster Contact and Booster Réseaux, SoLocal is offering a whole series of guaranteed performance products to enable businesses to optimize their visibility on Google.
The digital advertising campaigns (over 20,000 generated in 2017) are managed across a proprietary platform combining the expertise of certified media traders and the efficiency of algorithms that continually work on multiple indicators: key-words, auctions, etc. This unique association of industrialization and customization results in more traffic to the customer's website, online appointments, telephone calls or visits to the store depending on the customer’s choice.
This partnership underpins SoLocal’s ambition to achieve annual growth on Google products of +50% over the period 2017-2020.
V. Outlook for 2018
The Group confirms for 2018 its outlook of stabilization of recurring EBITDA.
VI. Next dates of the financial timetable
The next dates for the financial timetable are as follows:
- Ordinary General Meeting : 25th June 2018 at 2.30pm (Paris time) in Palais Brongniart
- H1 2018 result release: 25 July 2018 after market close
- Q3 2018 revenue release: 24 October 2018 after market close
About SoLocal Group
SoLocal Group is positioned as the trusted and local digital partner supporting business companies to accelerate their growth. To succeed in this transformation, it relies on its six key assets some of them being unique in France: media with very high audiences, powerful geolocated data, scalable technological platforms, commercial coverage throughout France, privileged partnerships with GAFAM and numerous talents (experts in data, IT development, digital marketing, etc.). SoLocal Group's activities are structured around two axes. First, a range of "full web & apps" digital services on all devices (PCs, mobiles, tablets and personal assistants), offered in the form of packs and subscriptions, ("Digital Presence", "Digital Advertising", "Digital Website"," Digital Solutions" and "Print to Digital"), and integrating a digital coaching service, to support clients success. Second, flagship owned media (PagesJaunes and Mappy) used daily by Frenchs and offering an enriching and differentiating user experience. With more than 460,000 customers across France and 2.4 billion visits on its media, the Group generated revenues of €756 million in 2017, 84% coming from Internet making it one of the leading European players in terms of online advertising revenue. SoLocal Group is listed on Euronext Paris (LOCAL). More information is available at www.solocalgroup.com.
Consolidated revenues in IFRS 15
|In millions of euros||
6 Q1 2017 figures restated in IFRS 15