SOLOCAL (EPA:LOCAL) - Q3 2020 Revenues

Transparency directive : regulatory news

22/10/2020 07:30

PRESS RELEASE

Boulogne-Billancourt, 22nd October 2020

                             Third Quarter 2020:
  Digital Revenue decrease by 13.6% in line with the operating plan 77% of
               Digital customer base in subscription mode(6)
                  Financial restructuring plan achieved
                          2020 Guidance confirmed

Q3 2020 activity: encouraging signs of recovery

- 81% of Digital order intake have been signed in subscription mode over the
  quarter
- Customer migration rate(3) of 90% over the quarter
- As of 30th September 2020, 218,000+ customers on new Digital service offer
- ARPA(7) up +1.8% compared to 30th June 2020

Revenue reflecting the lockdown effects in France

- Digital revenue : EUR106.8 million in Q3 2020, i.e. -13.6%(1) vs. Q3 2019
- Total revenue : EUR112.6 million in Q3 2020, i.e. -17.9%(1) vs. Q3 2019
- Digital order backlog of EUR293 million as at 30th September 2020, decreasing
  by -5.6% vs. 30th June 2020 (mainly due to a seasonality effect of order
  intake in August(2))

2020 Guidance

- EUR419 million already secured Digital revenue for 2020 as at 30th September
  2020
- The group confirms its objectives i.e. -15% Digital revenue vs. 2019(1) and a
  Group EBITDA of over EUR130 million.

Update on Financial position

- Cash on balance sheet of EUR46 million as at 30th September 2020 (including
  EUR32 million of "Prêt Atout" loan drawdown and a bond issue of EUR16
  million(4) in August 2020 and before the rights issue proceeds)
- The Capital Increase, completed on 7th October 2020, has secured a EUR85
  million cash injection and allowed a Group's debt reduction by half

When releasing Q3 2020 revenue, Pierre Danon, Solocal Chairman of the Board and
Chief Executive Officer, said:

"Given the exceptional context of these past months, we achieved a
satisfactory performance over this quarter, with Digital revenue in line with
our business plan assumptions. But satisfaction mostly stems from the evolution
of our main operational KPIs. The increasing proportion of subscription-based
products in our order intake figures cogently reflects the transformation
implemented and the successful roll-out of our new Digital offer. Step by step,
we are moving towards a more recurring model with better retention. These
changes free up resources in order to better focus on customer satisfaction,
revenue development of the existing customer base and new client acquisition.
These three topics are key takeaways for the future growth of the company,
which is now underpinned by a strengthened financial structure. There is still
a long way to go, but the groundwork has been laid to get through the crisis
and seize the opportunity to take advantage of the upcoming recovery.

Quarterly financial statements have not been audited. Financial items presented
in this press release for Q3 2019 are revised in light of the scope of
continued activities as at 30th September 2020.

1. Revenue and order backlog

Solocal revenue(1) in the third quarter of 2020 are as follows:

In million euros  Q3 2019  Q3 2020 Change     YtD 2019  YtD 2020 Change

Digital revenues    123.7    106.8  -13.6%      379.3    332.1    -12.5%
Print revenues       13.4    5.8    -57.0%       49.4     25.2    -48.9%
Total revenues      137.1    112.6  -17.9%       428.7   357.3    -16.6%

Consolidated revenue(1) in the third quarter 2020 amounted to EUR113 million,
down -17.9% compared to revenue in the third quarter 2019(1). It breaks down
into EUR107 million in Digital revenue and EUR6 million in Print revenue. Print
activity now represents no more than 5.1% of total revenue of the quarter.

Digital revenue of EUR107 million in the third quarter 2020 decreased by -13.6
% compared to the third quarter of 2019(1) mainly due to a volume effect
impacted by the decrease of business activity in the context of Covid-19 health
crisis but also because of the improvement in the average maturity of the
products sold, which therefore convert more slowly into revenue.

Digital revenue are composed of three activities: Advertising (58% of the first
nine months of 2020 Digital revenue), Websites (15%) and Digital Presence
(27%).

Secured Digital revenue for 2020 amount to EUR419 million, 69% coming from 2018
and 2019 order intake and 31% from order intake generated since 1st January
2020. In the first semester of 2020, Digital revenue already secured for 2020
amounted to EUR388 million.

In million euros           30/06/2019   30/06/2020  30/09/2019  30/09/2020
Secured Digital revenue
for current year               444         388         480         419

Solocal's order backlog(2) as at 30th September 2020 breaks down as follows:

In million euros        30/06/2020   30/09/2020   Change
Digital order backlog       310.8      293.4      -5.6%
Print order backlog           6.0        1.3     -78.3%
Total order backlog         316.9      294.7      -7.0%

The total order backlog(2) amounted to EUR295 million as at 30th September
2020, down -7.0% compared to 30th June 2020. The Digital order backlog(2)
amount results from order intake seasonality in the third quarter (very low
order intake in August) compared to the almost linear revenue recognition over
the same period.

The Digital order backlog of EUR293 million will be converted into revenue in
the following quarters as follows:

DDigital Backlog 30/09/2020      Q4 2020      Q1 2021      Q2 2021     Q3 2021
Conversion into revenues           31.3%       24.3%        18.9%       13.3%

Q4 2021      Q1 2022      Q2 2022      Q3 2022      Q4 2022      Q1 2023
  5.5%         3.1%         2.2%         1.0%         0.3%         0.1%

2. Key operational performance Indicators

Solocal's performance indicators as at 30th September 2020 are as follows:
                                   Q3 2019    Q3 2020    Change    H1 2020
Subscription-based order intake
(as a % of Digital order intake)    55,0%      81,0%    +26pts      79,0%
Digital ARPA LTM                       -     c. 1520        -     c. 1493
Digital customers EoP(a)               -     c. 329k        -     c. 336k
Churn over the quarter in thousand   -24k       -20k        -         -
of customers
Traffic : number of PagesJaunes
visits                                504        493     -2,2%       944
(in million)

(a) Average of the last twelve months, at Group level excluding QdQ

81% of order intake(5) over the third quarter were subscription-based, i.e. an
increase of +26 pts compared to the third quarter of 2019. These order
intake(5) mainly include Priority Ranking and Presence offers, Websites and
Booster Contact. This subscription-based order intake rate has been constantly
increasing since the full roll-out of new digital Presence and Priority Ranking
services in July 2019. This increase in subscription-based order intake is a
structural element of the transformation of the business model because it
allows (i) the decrease in churn (ii) but above all, it must allow the increase
in acquisition of new clients and cross- selling of existing clients by freeing
up time for the salesforce historically dedicated to the renewal activity

As of 30th September 2020, the Presence & Priority Ranking offers in
subscription mode have more than 218,000 customers. The migration rate of
VSEs/SMEs is stable compared to previous quarters, 90%(3) in the third quarter
of 2020. Including the other products, 77% of the customer base is now in
subscription mode(6).

The Digital customer base decreased by c. -7,000 clients at the end of the
third quarter of 2020 compared to the end of 2019, to 329,000 customers. This
trend is mainly due to the health crisis and lockdown measures which have
slowed down the expected acquisition momentum due to the temporary or
definitive closures of many businesses.
Churn remained stable over the last twelve months. Solocal lost -20,000
customers and gained +13,000 new customers over the third quarter of 2020.

Despite the health crisis, the ARPA(7) slightly increased by +1.8% vs. the end
of the second quarter of 2020 and reaches c. EUR1,520 at the end of the third
quarter of 2020, thereby demonstrating the first beneficial effects of
subscription mode on upselling and cross- selling.

PagesJaunes traffic is down -2.2% in the third quarter of 2020 compared to the
third quarter of 2019, impacted by the health crisis and lockdown having
penalized the entire French economy. This decrease is about -7.1% in the first
nine months of 2020 vs. the same period in 2019.

3. Reminder on Group strengthening financial structure plan

All resolutions related to the financial structure strengthening plan were
largely endorsed, with more than 93% votes in favour, at the Combined General
Meeting ("CGM") of the shareholders which took place on 24th July 2020 in
Paris. As a reminder, this plan relied on a EUR347 million capital increase,
thus securing a EUR85 million cash injection and allowing a EUR244 million to
EUR262 million debt reduction.

In order to cover the short-term liquidity needs, it has been completed by an
additional EUR32 million financing, consisting of a EUR16 million "prêt ATOUT"
loan granted by BPI France and the issuance of a EUR16 million Bond(4)
subscribed by some of the Bondholders.

These transactions have been settled in August and September 2020.

The share capital increase with shareholders' preferential subscription rights
for a total amount of EUR335,957,607.87 (including issuance premium) has been
completed at the very beginning of October 2020 via the issuance of
11,198,586,929 new shares including around:

o EUR84.64 million subscribed in cash by the market;
o EUR0.94 million subscribed in cash by certain members of the ad hoc
   committees of the Bondholders in accordance with their subscription
   commitments;
o EUR58.25 million converted by GoldenTree and Financière de la Clarée by
   set-off against their receivables by exercising their preferential
   subscription rights;
o EUR192.12 million converted by the bondholders by set-off against their
   receivables.

This strengthening financial structure plan brings EUR117 million of cash in
the Group and reduces its gross debt by approximately EUR260 million, so that
it now amounts to c. EUR256 million (before application of the IFRS 16
standard)

After all such transactions, GoldenTree becomes the first shareholder of the
Company by holding 26.00% of the share capital of the Company, while the
existing shareholders and new investors hold 31.45% of the Company's
outstanding share capital and the other bondholders hold the remaining 42.54%.

4. Cash position and perspectives 2020 & 2021

As at 30th September 2020, cash on balance sheet was EUR46 million, after the
drawdown of the additional financing line of EUR32 million used in August and
September 2020 in order to cover the short-term liquidity needs, as scheduled
in the strengthening financial structure plan.

This cash position doesn't include the cash proceeds scheduled in the share
capital increase completed on 7th October 2020, i.e. EUR85 million of
additional cash.

Overall, the strengthening financial structure plan has brought EUR117 million
of cash in the Group and has reduced the gross debt by approximately EUR260
million, so that it will amount to around EUR256 million (before application of
the IFRS 16 standard)

As previously announced, Solocal confirms its target, with a 2020 revenue(1)
decrease by c. -20%, including a 2020 Digital revenue(1) decrease by c. -15%
compared to last year, underpinned by more than 95% revenue already secured as
at 30th September 2020. The full year 2020 EBITDA1 is still expected above
EUR130 million at Group level.

For 2021, the roadmap is also confirmed with a return to Digital revenue
growth. 2021 EBITDA should amount to c. EUR 120 million, affected by the
decrease in 2020 order intake and the end of the Print activity.

Next major dates in the financial calendar

The next financial calendar dates are as follows:
* Combined General Meeting on 27th November 2020;
* Annual Results 2020 on 18th February 2021.

Notes

1 Comparable scope. 2019 and 2020 figures are restated from the figures of the
subsidiary QDQ, sold on 28th February 2020
2 Based on order intake net of cancellations. Order intake backlog EoP = Order
intake Backlog BoP + order intakes of the quarter - revenue of the quarter.
3 Migration Rate: number of clients migrated to the new Presence and Priority
Ranking offer vs. relevant customer base (excluding Large Accounts)
4 the Bonds have a nominal amount of EUR17.8 million while the amount received
by Solocal was EUR16 million (OID)
5 Digital order intake, Solocal SA scope, in value and net of cancellations
6 customers which subscribed to at least one product in subscription mode
7 Scope: Solocal SA order intake

Definitions

Order intake: Orders booked by the salesforce, that gives rise to a service
performed by the Group for its customers

Order backlog: The order backlog corresponds to the outstanding portion of
revenue yet to be recognised as at 30th September 2020 from order bookings such
as validated and committed by customers. For income from subscriptions, only
the current commitment period is considered

Traffic: Indicator of visits and of access to the content over a given period
of time

ARPA: Average Revenue per Advertiser, based on the last twelve months order
intake for Solocal SA

Secured Digital revenue: Digital revenue which will be generated in the
upcoming period basing on the order intake and excluding cancellations & churn

Solocal - www.solocal.com
We are the local digital partner for companies. Our job: advising and
supporting them to boost their activity thanks to our digital services (Digital
Presence, Digital Advertising, Websites, New Print Solutions). We also provide
users with the best possible digital experience with PagesJaunes, Mappy and
Ooreka, and our partners (Google, Facebook, Apple, Microsoft/Bing, Yahoo!,
etc.). We provide professionals and the public with our high audience services,
geolocalised data, scalable technology platforms, unparalleled order intake
coverage across France, our privileged partnerships with digital companies and
our talents in terms of data, development, digital marketing, etc. We gather
330,000 companies all over France and 2.7 billion visits on our services.
Solocal moreover benefits from the "Digital Ad Trust Classique" label for its
PagesJaunes and Mappy digital services. To know more about Solocal (Euronext
Paris "LOCAL"): let's keep in touch @solocal.

Press contacts

Charlotte Millet
+33 (0)1 46 23 30 00
charlotte.millet@solocal.com

Edwige Druon
+33 (0)1 46 23 37 56
edruon@solocal.com

Investor contacts

Julie Gualino-Daly
+33 (0)1 46 23 42 12
jgualino@solocal.com

Colin Verbrugghe
+33 (0)1 46 23 40 13
cverbrugghe@solocal.com

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SOLOCAL (EPA:LOCAL) - Q3 2020 Revenues

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