Yellow Pages Limited ((TSE:Y)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Yellow Pages Limited painted a mixed picture of the company’s financial health and strategic direction. While there were efforts to stabilize revenue decline and increase customer acquisition, significant challenges remain. The call highlighted declines in digital and print revenues, a substantial decrease in adjusted EBITDA and net income, and workforce reductions. Despite some positive strategic moves like pension plan derisking, the financial challenges are notable.
Improvement in Revenue Decline Rate
The company reported a slight improvement in the rate of revenue decline, with a 7.4% year-over-year decrease compared to 7.6% last quarter. This indicates a stabilization in revenue trends, which is a positive sign amidst the broader financial challenges.
Increased Customer Acquisition
Yellow Pages Limited saw an increase in new customer acquisitions, contributing to a deceleration in the customer count decline rate. This uptick in customer acquisition is crucial for the company’s efforts to stabilize its revenue streams.
Stable Renewal Rates
Renewal rates remained stable during the quarter, which supported the company’s revenue performance. Maintaining stable renewal rates is essential for sustaining revenue in the face of declining new customer counts.
Higher Average Spend Per Customer
The company experienced an increase in average spend per customer, partially driven by price increases. This boost in spending per customer is a positive development, helping to offset some of the revenue declines.
Pension Plan Derisking
A significant strategic move was the completion of a group annuity contract purchase for $210 million, annuitizing approximately 50% of the pension liability. This step is part of the company’s efforts to derisk its pension plan.
Cash Dividend Declared
The Board declared a dividend of $0.25 per common share, to be paid on September 15, 2025. This decision reflects the company’s commitment to returning value to shareholders despite financial challenges.
Revenue Decline
Total revenues decreased by $4.2 million or 7.4% year-over-year to $51.7 million, primarily due to declines in higher-margin digital media and print products. This decline underscores the ongoing challenges in the company’s core business areas.
Digital Revenue Decrease
Digital revenues saw a 6.4% year-over-year decrease to $41 million, attributed to a decrease in digital customer count. This decline highlights the challenges in maintaining digital revenue streams.
Print Revenue Decline
Print revenues decreased by 11.2% year-over-year to $10.7 million, driven by a decrease in the number of print customers. The decline in print revenue is part of a broader industry trend affecting traditional media.
Adjusted EBITDA Decrease
Adjusted EBITDA decreased by $4.1 million or 27.7% year-over-year to $10.7 million, with the margin decreasing to 20.7% from 26.5%. This significant drop in EBITDA reflects the financial pressures facing the company.
Net Income Decline
Net income for the quarter decreased to $1.5 million from $7.6 million the previous year, impacted by lower adjusted EBITDA and a $4 million noncash settlement loss. This decline in net income is a major concern for the company’s financial health.
Reduction in Workforce
The total workforce decreased by 6.1% to 566 employees compared to 603 last year. This reduction is part of the company’s efforts to manage costs amidst declining revenues.
Forward-Looking Guidance
Looking ahead, Yellow Pages Limited reported a notable progression in revenue stability, marking the sixth consecutive quarter of improvement. Despite declines in digital and print revenues, the company achieved an adjusted EBITDA margin of 20.1%. The strategic derisking of the defined benefit pension plan and the declaration of a dividend reflect the company’s focus on long-term stability and shareholder value.
In summary, the earnings call of Yellow Pages Limited highlighted a company facing significant financial challenges but making strategic moves to stabilize its revenue and manage costs. While the sentiment was mixed, with both positive and negative aspects, the company’s efforts to improve customer acquisition and derisk its pension plan are steps in the right direction.