SoLocal : Press release - 27th July 2022 - 2022 first half results

PRESS RELEASE

Boulogne-Billancourt, 27th July 2022

2022 first half results

Recurring EBITDA comparable with prior year at €56 million

despite revenue down 6%

€10 million RCF repayment in cash

Adjustment of 2022 guidance given first half performance

2022 Q2 revenue amounting to €99.7 million down 7.5% vs. Q2 2021

• Revenue of €99.7 million, i.e. -7.5% vs. Q2 2021 and -1.7% vs. Q1 2022
• Slight erosion of customers base1, at 300,000 customers vs. 304,000 as at 31st March 2022, resulting from an increase, as expected, of churn rate at 14.9% vs 13.7% as at 31st March 2022
• Flat ARPA2 at c. €1 350 vs. 31st March 2022 (-1%)
• Flat order backlog at €239.9 million (-1.1%vs. 31st March 2022)

First half results 2022 : EBITDA margin improvement thanks to continued cost control

• Revenue of €201.2 million, i.e. -6.2%vs. H1 2021
• Flat recurring EBITDA of €55.8 million compared to H1 2021 (-1.3%)
• Recurring EBITDA margin improvement to 27.7% vs. 26.4% In H1 2021
• Operating income: €28.8 million vs. 34.2 million in H1 2021
• Cash on balance sheet : €82.3 million as at 30th June 2022
• Flat net debt4 at €171 millions as at 30th June 2022, with a net leverage ratio of 1,6x4
• Confirmation of the partial and mandatory repayment of the RCF of €10 million as of 30th September 2022 (fully in cash), as committed during the financial restructuring

2022 Outlook adjustment

• 2022 revenue expected at -5% compared to 2021 revenue
• Continued cost control in order to generate a 2022 recurring EBITDA slightly lower than 2021 recurring EBITDA (c. -5%)
• Operating free cash flows3 of c. €30 million in 2022

Outlook

Despite longer time taken to implement the new business model and the economic uncertainty, Solocal's mid-termstrategic plan remains unchanged. Mid term objectives will be updated at year-end.

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When releasing revenue of the first semester 2022, Hervé Milcent, Solocal Chief Executive Officer, said:

Since the launch of our strategic plan in October 2021, we have been fully mobilized on its execution, which should allow us to return to sustainable growth. The positive effects of the measures we are implementing will materialize gradually, as shown by the evolution of our main operational and financial indicators in the first half of 2022. To assess these developments, still today in the form of weak signals, it is important to have a reading of the trends as close as possible to the field. Thus, over the period, we observe some encouraging performances. These first preliminary results are not yet fully visible in all regions. This situation, still contrasting, will penalize and hinder us this year, but it also encourages us to intensify the measures taken to relaunch our dynamic activity everywhere.

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The Board of Directors approved the Group's consolidated financial statements as at 30th June 2022. Limited review procedures on the half-yearly accounts were carried out. The limited review report is to be released.

Financial performance indicators are commented on the scope of continuing operations. The financial elements presented in this press release for 2020 are revised in light of the scope of activity as at 30th June 2022.

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1. Revenue and order backlog analysis

Solocal revenuein the second quarter of 2022 and over the first half of 2022 are as follows:

En millions d'euros	T2 2021	T2 2022	Variation	S1 2021	S1 2022	Variation
Chiffred'affaires	107.9	99.7	-7.5%	214.6	201.2	-6.2%

Second quarter 2022 consolidated revenue amount to €99.7 million, down -€8.1 million (- 7.5%)compared tothe second quarter 2021revenueand down -€1.8million(-1.7%)compared to the first quarter of 2022 (€101.5 million).

Firsthalf2022consolidatedrevenue amount to €201.2 million, down -6.2% compared to the first half 2021 revenue.

This decrease in revenue mainly includes:

• « hunters » salesforce recruitments below expectations;
• a constrasting hunters' productivity depending on the regions, with three regions
  (representing 73% of Q2 2022 order intake) which deliver performance in line with expectations and three others (representing 27% of Q2 2022 order intake) below expectations, requiring additional efforts over the coming months ;
• Field saleforce's activity in line with objectives.

The order backlog is flat at €239.9 milion as at 30th June 2022, i.e. -1.1% compared to 31st March 2022. This stability is explained by the order intake5 recorded in Q2 2022 comparable with revenue booked over the same period.

In million euros	31/03/2022	30/06/2022	Variation
Digital order backlog	242.6	239.9	-1.1%

Approximately 60% of the €239.9 million order backlog will flow into revenue for in the second half 2022, approximately 28% over the first half of 2023 and approximately 12% thereafter.

2022 first half revenue is presented in three business lines:

In € million	Q2 2021	Q2 2022	Change	H12021	H12022	Change	Allocation
Connect	30.7	36.1	17.8%	61.8	72.4	+17.1%	36.0%
Booster	61.5	48.3	-21.4%	121.4	98.3	-19.0%	48.9%
Websites	15.7	15.3	-2.0%	31.3	30.5	-2.6%	15.2%
Total revenue	107.9	99.7	-7.5%	214.6	201.2	-6.2%	100%

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Connect activity which includes Digital Presence activities represent 36% of H1 2022 revenue. It was up +17.1% compared to H1 2021, driven by the retention offer proposed to customers and a slight price increase.

Booster activity which includes activities related to advertising represent 49% of H1 2022 revenue. It showed a -19.0% decrease over the semester coming from (i) weaker activity in the large accounts segment, for which a new offer will be deployed from Q3 2022 and (ii) an unfavorable product mix in particular.

Websites activity, which includes all the ranges of websites sold (Essentiel, Premium, Privilège) represents 15% of H1 2022 revenue. It is down -2.6% compared to H1 2021, in particular with a deliberately more aggressive commercial policy on creation costs and a non recurring effect of -€0,7 million in the first quarter of 2022.

2. Customersbase,churn,ARPAandotheroperationalkeyperformance indicators

Solocal customer base1 evolved as follows in the second quarter of 2022:

				Q1 2022	Q1 2022	Change
Customer base - BoP	(a)	309k	304k	-5k
+ Acquisitions		9k	9k	0k
- Churn		-14k	-13k	2k
Customer base - EoP	(a)	304k	300k	-4k
Net change BoP - EoP	-5k	-4k	-
Churn	(b)	- in %		13.7%	14.9%	-
		(c)		1 362	1 349	-1.0%
Digital ARPA

1. BoP = beginning of period / EoP = End of Period
2. Churn : number of churned customers on a LTM basis divided by the number of customers BoP ;
3. ARPA calculated as revenue divided by the average customer base over the past 12 months,

The group customer base1 is slightly down (-1.2%) at 300 000 customers as at 30th June 2022 vs. 304 000 customers the previous quarter . This trend is linked to:

• A level of new customers' acquisition still below expectations in Q2 2022 (9 000 customers) and stable compared to Q1 2022, pending the full effect of the overhaul of the commercial approach,
• A loss of customers (-13 000 customers) similar to the loss in Q1 2022.

The Group's churn rate(b), is still controlled at 14.9% as at 30th June 2022 compared to 13.7% as at 31st March 2022, as expected.

GroupARPA2 reaches €1,349 as at 30th June 2022, i.e. almost stable compared to ARPA2 as at 31st March 2022 (-1%) and up +2.1% compared to 30th June 2021 (€1,321). This slight increase in

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ARPA2 is due to the slight price increase on the Connect offer during the second half of 2021 and a higher acquisiton ARPA2 (ARPA relating to new customers).

Solocal's other operational performance indicators for Q2 2022 and H1 2022 are as follows:

	Q2 2021	Q2 2022	Change	H1 2021	H1 2022	Change
% order intake generated by autorenewal	46%	60%	+14 pts	45%	46%	+1 pts
Traffic : number of searches PagesJaunes - in million	437	407	-7.0%	861	819	-4.9%

The revenue is now composed of first-year engagement order intake5 (54% in the first half of 2022) and order intake3 generated by autorenewal (46% in the first half of 2022). These figures were respectively at 74% and 26% in the first half of 2021.

3. Profit and Loss

In € million	H12021	H12022	Change	Change
Total Revenue	214.6	201.2	(13.4)	-6.2%
External expenses	(58.6)	(55.1)	(3.5)	-6.1%
Personnel expenses	(99.4)	(90.3)	(9.1)	-9.1%
Recurring EBITDA	56.6	55.8	(0.8)	-1.3%
Non-recurring items	5.9	0.8	(5.1)	n.a.
Consolidated EBITDA	62.5	56.6	(5.9)	-9.5%
Depreciation and amortisation	(28.2)	(27.8)	0.5	-1.7%
Operating income	34.2	28.8	(5.4)	-15.9%
Financial income	(14.0)	(14.4)	(0.3)	+2.3%
Income before tax	20.2	14.5	(5.8)	-28.5%
Corporate income tax	(8.7)	(3.8)	4.9	n.a.
Consolidated Netincome Group	11.5	10.6	(0.8)	-6.6%

Recurring EBITDA reaches €55.8 million in the first half of 2022, flat compared to the first half of 2021 (-1.3%).Therecurring EBITDA margin in relation to revenue thus amounts to 27.7%, up +1.4pts compared to the first half of 2021. This increase is mainly linked to the reduction in personnel expenses of -€9.1million in H1 2022 compared to H1 2021, which mainly comes from the decrease in salesforce capacity (higher turnover than anticipated).

Recurring external expenses thus amounts to €55.1 million in the first half of 2022 almost down -6.1% compared to the first half of 2021. This decrease is explained by a mechanical effect of reduction in variable costs including "media spend" linked to the booster ranges and websites (c.€3 million) as well as by the continued costs control.

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