Earnings call transcript: Yellow Pages Q1 2025 sees revenue decline, stable customer metrics

Yellow Pages Limited reported a 7.6% year-over-year decrease in revenue for Q1 2025, totaling $50.8 million. Despite the decline, the company highlighted improvements in customer metrics and maintained stable renewal rates. The stock closed at $11.22, slightly down by 0.09%. According to InvestingPro analysis, the company maintains a "GREAT" financial health score of 3.21, supported by strong cash flow metrics and solid balance sheet management. The current valuation suggests the stock is modestly undervalued based on InvestingPro’s Fair Value calculations.

Key Takeaways

• Revenue for Q1 2025 fell by 7.6% compared to the previous year.
• Adjusted EBITDA stood at $11.9 million, representing 23.4% of revenue.
• The company is focusing on expanding its sales force and improving customer retention.
• Digital and print revenues decreased, but at a slower rate than in previous quarters.

Company Performance

Yellow Pages continues to navigate a challenging market environment, marked by a 7.6% decline in total revenues for Q1 2025. The decline was primarily driven by decreases in both digital and print revenues. However, the company has managed to slow down the rate of customer count decline and maintain stable renewal rates, which it attributes to strategic investments in its sales force and customer engagement efforts.

Financial Highlights

• Revenue: $50.8 million, down 7.6% year-over-year
• Adjusted EBITDA: $11.9 million, 23.4% of revenue
• Net Income: $5 million, down from $8.4 million in the previous year
• Cash Balance: Approximately $49 million as of April 2025

Outlook & Guidance

Looking ahead, Yellow Pages plans to continue investing in its sales force, which is expected to exert pressure on margins. The company declared a dividend of $0.25 per common share, payable on June 16, 2025, maintaining its impressive 8.91% dividend yield. InvestingPro data shows the company has raised its dividend for 5 consecutive years, with a 25% growth in the last twelve months. Despite the challenging environment, Yellow Pages remains committed to optimizing operations and enhancing customer relationships.

Executive Commentary

• CEO David Deckert stated, "This quarter we again report a favorable what we call bending of the revenue curve."
• President Cherilyn King expressed satisfaction with the company’s progress, noting, "We continue to be very pleased with our progress on our metrics underlying our revenue generation."
• CFO Franco Chonamblo highlighted future challenges, saying, "Revenue pressures and continued investments in our TELUS sales force capacity, partially offset by continued optimizations, will continue to cause some pressure on margins in upcoming quarters."

Risks and Challenges

• Continued revenue decline in both digital and print segments.
• Margin pressures due to ongoing investments in sales force capacity.
• Potential macroeconomic factors affecting customer spending and advertising budgets.

The earnings call did not include a Q&A session, leaving some investor questions unanswered. Nevertheless, Yellow Pages remains focused on strategic initiatives to stabilize and grow its revenue base.

Full transcript - Yellow Pages Limited (Y) Q1 2025:

Conference Operator, Yellow Pages: Good morning, ladies and gentlemen. Welcome to Yellow Pages First Quarter twenty twenty five Earnings Release Call. Today’s conference call contains forward looking information about Yellow Pages’ outlook, objectives and strategy. These statements are based assumptions and are subject to important risks and uncertainties. Yellow Pages actual results could differ materially from expectations discussed.

The details of Yellow Pages caution regarding forward looking information, including key assumptions and risks, can be found in Yellow Pages Management Discussion and Analysis for the First Quarter twenty twenty five. This call is being recorded and webcast, and all of the disclosure documents are available on the company’s website and on SEDAR. I would now like to turn the meeting over to Mr. David Deckert, Chief Executive Officer. Please go ahead, sir.

David Deckert, Chief Executive Officer, Yellow Pages: Thank you very much. Good morning, everyone. Welcome to our first quarter twenty twenty five analyst call. Really appreciate your continued interest. As usual, today, I’m joined by Franco Chonamblo, our Chief Financial Officer and by Cherilyn King, our President.

I’ll begin with some overview comments, and Cherilyn will provide some comments, and then Frank will provide a bit more detail for you. After that, we’d be happy to answer any questions that you might have at the end. This quarter we’re quite pleased with our results that we were reporting this morning, particularly for the fifth consecutive quarter. This quarter we again report a favorable what we call bending of the revenue curve as our rate of change in revenue was better than the change rate reported for the previous quarter. This is really, really important as we drive toward ultimate strong stability.

We also report solid quarterly earnings. Our adjusted EBITDA for the quarter was 23.4% of revenue even with our still continued investments in revenue initiatives including the steady continued expansion of our sales force. We have also have strong cash balance Despite certain regular seasonal normal disbursements during the quarter, cash still stood at approximately $49,000,000 at the April. I will pass the microphone on to Cherilyn King now to provide some additional overview comments.

Cherilyn King, President, Yellow Pages: Thank you, David. We continue to be very pleased with our progress on our metrics underlying our revenue generation. Those include the size of our sales force, the continued deceleration of our customer count decline rate, fueled by our new customer acquisitions, our stable renewal rates and our strong average spend per customer. We continue to believe these fundamentals bode well for our medium and long term future. Also, our Board yesterday has declared a dividend of $0.25 per common share to be paid on 06/16/2025, to shareholders of record as of 05/27/2025.

I will now pass it on to Franco to provide some additional details on our numbers.

Franco Chonamblo, Chief Financial Officer, Yellow Pages: Thanks, Eske, and good morning, everyone. Let me take you through our financial results for the first quarter ended 03/31/2025, Beginning with revenues, our total revenues decreased by 4,200,000 or 7.6% year over year and amounted to $50,800,000 for the first quarter, an improvement from the decrease of 8.1% reported last quarter. The year over year decrease in revenue is mainly attributable to the decline of our higher margin digital media and print products and to a lesser extent to our lower margin digital services products, thereby creating some pressure on our gross profit margins. Digital revenues decreased 6.8% year over year and amounted to $40,700,000 for the three month period ended 03/31/2025, an improvement from the decrease of 7.2% reported last quarter. The year over year decline was mainly attributable to a decrease in digital customer count, partially offset by an increase in average spend per customer.

For print revenues, it decreased 10.5% year over year and amounted to $10,100,000 for the three month period ended 03/31/2025, an improvement from the decrease of 11.5% reported last quarter. The decline in revenue was mainly attributable to the decrease in the number of print customers, while the spend per customer has improved year over year, driven by some price increases. The decline rate of revenues improved during the quarter ended 03/31/2025 compared to the same period last year. These improvements were mainly attributable to the deceleration of the customer count decline rate, fueled by an increase in new customer acquisitions, while renewal rates remained relatively stable and an increase in average spend per customer due in part to the price increases. On adjusted EBITDA for the first quarter, it was impacted by the pressures from lower revenue, change in product mix, continued investments in hotel sales force capacity and the impact of the company’s share price on cash settled stock based compensation expense, partially offset by price increases, the efficiencies from optimization and cost of sales and reductions in other operating costs, including reductions in our workforce and associated employee expenses.

As a result, adjusted EBITDA decreased year over year by $3,400,000 or 22.3% to $11,900,000 for the first quarter. Adjusted EBITDA margin decreased to 23.4% compared to 27.8% for the same period last year. The revaluation of cash settled stock based compensation liabilities resulted in a recovery of $1,300,000 for the three month period ended 03/31/2025, compared to a recovery of $1,900,000 for the same period last year. Revenue pressures and continued investments in our TELUS sales force capacity, partially offset by continued optimizations, will continue to cause some pressure on margins in upcoming quarters. On adjusted EBITDA less CapEx, for the first quarter, it decreased by 2,900,000 year over year to $11,400,000 mainly due to the decrease in adjusted EBITDA, partially offset by the decrease in CapEx spend year over year.

For net income, it decreased to $5,000,000 for the first quarter of twenty twenty five compared to $8,400,000 for the same period last year due to lower adjusted EBITDA and the increase in restructuring and other charges, partially offset by decrease in income taxes for the three month period ended 03/31/2025. On our workforce, as of 03/31/2025, it stood well, it decreased to five seventy two employees compared to six thirteen at the same date last year, a decrease of 6.7%. The sales force headcount actually increased by nine, while all other headcount decreased by 50. And as David mentioned earlier, our cash on hand at the April stood at approximately 49,000,000 As to dividends, the Board has declared a cash dividend of $0.25 per common share payable on 06/16/2025 to shareholders of record as at 05/27/2025. This concludes our formal remarks.

Thank you for taking the time to join us this morning. We will now take your questions, and I’ll pass it back over to our operator, Maude.

Conference Operator, Yellow Pages: Thank you. We will now take questions from the telephone lines. Please press 1. You may cancel your question at any time by pressing 2. Please press 1 at this time if you have a question.

There will be a brief pause while participants register for questions. We thank you for your patience. Once again, please press 1 at this time for any questions or comments. We have no questions registered at this time. I would now like to turn the meeting back over to David DeCurt.

David Deckert, Chief Executive Officer, Yellow Pages: Yes, thank you very much for your continued interest. We appreciate your support and look forward to seeing you here next quarter. Thanks very much. Have a good day. Bye now.

Conference Operator, Yellow Pages: Thank you. The conference has now ended. Please disconnect your lines at this time and we thank you for your participation.

Technical Operator: This conference is no longer being recorded.

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