Earnings call transcript: Yellow Pages Q2 2025 reports revenue decline

Yellow Pages Limited (YLO) reported a 7.4% decline in total revenue to $51.7 million for the second quarter of 2025, compared to the same period last year. Despite the revenue drop, the company noted improvements in customer acquisition and retention strategies. The stock price saw a modest increase of 0.27% following the earnings release, closing at $11.03. According to InvestingPro analysis, the company currently appears undervalued, with a "GREAT" overall financial health score, suggesting market confidence in its strategic initiatives.

Key Takeaways

• Total revenue decreased by 7.4% year-over-year.
• Digital revenues fell by 6.4%, while print revenues declined by 11.2%.
• Adjusted EBITDA margin dropped to 20.7% from 26.5% last year.
• Workforce reduced by 6.1% to 566 employees.
• Dividend of $0.25 per share announced, payable on September 15, 2025.

Company Performance

Yellow Pages reported a challenging quarter with a significant drop in revenues, largely due to continued pressures in both digital and print segments. However, the company highlighted a deceleration in the decline rate of customer count and stable renewal rates, which are seen as positive signs amidst the broader revenue challenges. The company has been focusing on optimizing its sales force and implementing pricing strategies to counteract the decline in customer numbers.

Financial Highlights

• Revenue: $51.7 million, down 7.4% year-over-year.
• Digital revenues: $41 million, down 6.4% year-over-year.
• Print revenues: $10.7 million, down 11.2% year-over-year.
• Adjusted EBITDA: $10.7 million, decreased by 27.7%.
• Net income: $1.5 million, compared to $7.6 million in the previous year.

Outlook & Guidance

Looking ahead, Yellow Pages anticipates continued margin pressure in the coming quarters due to ongoing investments in sales force capacity. The company has planned a voluntary pension plan contribution of $4 million by June 2026, with $2 million approved for completion in 2025. A dividend of $0.25 per common share is set to be paid on September 15, 2025. InvestingPro analysis shows the company has raised its dividend for 5 consecutive years, with a current yield of 9.09%, making it an attractive option for income-focused investors.

Executive Commentary

CEO Sherwin King expressed satisfaction with the results, stating, "We are quite pleased with our results reported today for our second quarter in 2025." CFO Asunta Tortes highlighted the company’s strategic focus, noting, "The improvements were mainly due to the deceleration of the customer count decline rate." However, Tortes also acknowledged, "Revenue pressures and continued investments in our sales force capacity... will continue to cause pressure on margins."

Risks and Challenges

• Continued pressure on digital and print media margins could affect profitability.
• The reduction in workforce may impact operational efficiency.
• The broader economic environment and market saturation pose ongoing challenges.
• Investments in sales force capacity may not yield immediate returns, putting further pressure on margins.
• Potential volatility in customer acquisition and retention rates could affect future revenue stability.

The earnings call highlighted Yellow Pages’ strategic focus on stabilizing revenue and optimizing customer engagement, amidst ongoing industry challenges. The modest stock price increase suggests a cautiously optimistic market sentiment towards the company’s efforts to adapt and improve its financial performance. InvestingPro data shows the company maintains strong financial fundamentals with a current ratio of 2.35 and more cash than debt on its balance sheet. For detailed analysis and comprehensive metrics, including the company’s Pro Research Report, consider subscribing to InvestingPro.

Full transcript - Yellow Pages Limited (Y) Q2 2025:

Paul, Conference Moderator, Yellow Pages: Good morning, ladies and gentlemen, and welcome to Yellow Pages’ Second 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 on 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 2025.

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 missus Sherwin King, President and Chief Executive Officer. Please go ahead, madam.

Sherwin King, President and Chief Executive Officer, Yellow Pages: Thank you, Paul. Good morning, everyone. Welcome to our second quarter twenty twenty five analyst call. We really appreciate your interest today. Today I’m joined by Asunta Tortes, our Chief Financial Officer.

I will begin with some overview comments, and then Asunta will provide more details on our financials. We will both be available to answer any questions you have at the end of the call. We are quite pleased with our results reported today for our second quarter in 2025. Particularly for the sixth consecutive quarter, we report favorable progress in revenue stability, as our rate of change in revenue was better than the rate of change reported for the previous quarter. And this is key to our success.

We are encouraged by the continued momentum in our core metrics driving our revenue performance. These metrics include continued deceleration of our customer count decline rate, supported by new customer acquisition, stable renewal rates, and strong average spend per customer. We believe these fundamentals position us well for continued success in the medium and long term. We also report solid earnings. Our adjusted EBITDA for the quarter was 20.1% of revenue, even with our continued investments in our revenue initiative.

We have a cash balance of approximately $49,000,000 at the July. As previously announced on May ’20 ’25, we completed the purchase of a group annuity contract for $210,000,000 from BMO Life Company. This transaction aligns with the plan to de risk our defined benefit pension plan as we annuitize approximately 50% of the pension liability. The company intends to voluntarily contribute an additional $4,000,000 to the defined pension plan by the June 2026. Yesterday, the Board approved $2,000,000 of this announced voluntary cash contribution to be completed by the 2025.

Also, our Board has declared a dividend of $0.25 per common share to be paid on 09/15/2025, to shareholders of record on 08/25/2025. Those are my comments for today, and I will pass it along to Asunta to provide some additional details on our numbers.

Asunta Tortes, Chief Financial Officer, Yellow Pages: Thanks, SK. Good morning, everyone. Let me take you through our financial results for the second quarter ended 06/30/2025. Our total revenues decreased by 4,200,000.0 or 7.4% year over year and amounted to 51,700,000.0 for the second quarter, an improvement from the decrease of 7.6% reported last quarter. The year over year decrease in revenues is mainly due 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 pressure on our gross profit margins.

Digital revenues decreased 6.4% year over year and amounted to $41,000,000 for the three month period ended 06/30/2025, an improvement from the decrease of 6.8% 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. Print revenues decreased 11.2% year over year and amounted to 10,700,000.0 for the three month period ended June 30. The decline in print revenue was mainly attributable to the decrease in the number of print customers, while the spend per customer has improved year over year year over year, driven by price increases. The decline rate of revenues improved during the quarter ended 06/30/2025 compared to the same period last year.

The improvements were mainly due to the deceleration of the customer count decline rate fueled by an increase in the new customer acquisitions, while renewal rates remained relatively stable and an increase in average spend per customer due in part to price increases. Adjusted EBITDA for the second quarter was impacted by pressures from lower revenue, change in product mix, continued investments in our 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 in cost of sales, and reduction in the operating costs, including reduction in our workforce and associated employee expenses. As a result, adjusted EBITDA decreased year over year by $4,100,000 or 27.7% to $10,700,000 for the quarter. Adjusted EBITDA margin decreased to 20.7% compared to 26.5 for the same period last year. The revaluation of cash settled stock based compensation liabilities resulted in a charge of $600,000 for the three month period ended 06/30/2025, compared to a recovery of $1,200,000 for the same period last year.

Revenue pressures and continued investments in our sales force capacity, partially offset by continued optimizations, will continue to cause pressure on margins in upcoming quarters. Adjusted EBITDA less CapEx for the second quarter decreased by $3,700,000 year over year to $10,400,000 mainly due to the decrease in adjusted EBITDA, partially offset by the decrease in CapEx spend year over year. As SK mentioned, on 05/21/2025, the company announced the purchase of the group annuity contracts of $209,900,000 from BMO Life Assurance Company, The defined benefit pension plan obligations for the group that are settled via the annuity purchase are $205,900,000 on an accounting basis. As a result, a non cash settlement loss of $4,000,000 was recognized during the ’25. As also announced, the company intends to voluntarily contribute an additional $4,000,000 to the remaining defined benefit pension plan by the June 2026, subject to board approval.

On 08/05/2025, our Board approved that 2,000,000 of the announced voluntary cash contributions be completed by the 2025. Net income for the quarter decreased to 1,500,000.0 compared to CAD7.6 million for the same period last year due to lower adjusted EBITDA, the settlement loss on the annuity purchase and the increase in restructuring and other charges partially offset by the decrease in depreciation and amortization and income tax. As at 06/30/2025, our total workforce decreased to five sixty six employees compared to six zero three at the same date last year, a decrease of 6.1%. As Cherilyn mentioned, our cash on hand at the July stood at approximately $49,000,000 The Board has also declared a cash dividend of $0.25 per common share payable on September 15 to shareholders of record as at 08/25/2025. This concludes our formal remarks.

Thank you for taking the time to join us this morning. We will now take your questions.

Paul, Conference Moderator, Yellow Pages: Thank you. Paul? We will now take questions from the telephone lines. If you have a question, please press star one on the device’s keypad. You may cancel your question at any time by pressing star 2 so please press star one at this time if you have a question there will be a brief pause while the participants register We thank you for your patience.

Once again, please press 1 on the device’s keypad if you have a question. There are no questions being registered on the telephone lines. I will turn the meeting back over to Mrs. King.

Sherwin King, President and Chief Executive Officer, Yellow Pages: Thank you, Paul. And I’d just like to thank everyone for your interest in joining our call today, and we look forward to speaking with you again in November. Thanks, everyone, and have a great day.

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

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