hibu group investor presentation · 2017-05-23 · simple, timely, affordable one contact to manage...

Hibu GroupInvestor Presentation

10 May 2017

hibu confidential / © hibu 2017 1

2hibu confidential / © hibu 2017

DisclaimerThe financial projections, forecasts or forward-looking statements contained herein are based on assumptions or expectations which arebelieved by management to be fair and reasonable at the time they were prepared and were arrived at after careful consideration. Allstatements other than statements of historical fact are, or may be deemed to be, forward looking statements.

These assumptions or expectations concern, among other things, our results of operations, revenue, financial condition, liquidity, prospects,growth, strategies, new products, the level of product launches and the markets in which we operate.

Readers are cautioned that such financial projections, forecasts or forward-looking statements are not guarantees of future performanceand involve known and unknown risks, uncertainties and contingencies, many of which are beyond management’s control.

There are a number of factors that could affect the future operations of hibu including without limitation: changes in demand for hibuproducts, loss of market share and industry competition, legislative, fiscal and regulatory developments, economic and financial marketconditions in the various countries.

These factors and risks could cause actual results, performance or events to differ materially from those expressed or implied by thefinancial projections, forecasts or forward-looking statements contained herein.

We undertake no obligation publicly to update or revise any financial projections, forecasts or forward-looking statements, except as may berequired by law.

This document is in summary form and is not intended to form the basis of any investment decision and should not be considered as aninvestment recommendation. This document does not constitute an offer to sell or an invitation to purchase securities of Hibu GroupLimited (“Hibu”) or any of its subsidiaries.

No person shall have any right of action (except in the case of fraud) against Hibu or any other person in relation to the accuracy orcompleteness of the information contained in this document.

This document is directed solely at persons who (i) are persons falling with Article 49(2)(a) to (d) (“high net worth companies,unincorporated associations etc.”) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “FinancialPromotion Order”) or (ii) have professional experience in matters relating to investments, falling within Article 19(5) of the FinancialPromotion Order or (iii) are outside the United Kingdom (all such persons together being referred to as “relevant persons”). This documentmust not be acted on or relied on by persons who are not relevant persons.

Any matter, claim or dispute arising out of or in connection with this document, whether contractual or non-contractual, is to be governed byand determined in accordance with English law and the courts of England shall have exclusive jurisdiction to settle any dispute arising out ofor in connection with this document.

Agenda

• Hibu Group

• Hibu US

• Yell UK

• Financials – removed for confidentiality

• Questions

• Closing Messages


Hibu Group


Who We Are

• We are a leading provider of digital marketing solutions to local businesses

• Our approach is to deliver simple, unified, digital marketing campaigns combining presence, performance and social, offering demonstrated value, supported by a quality customer experience

• We operate in the US and UK with each business separate and optimized to its own market

• Through Yell.com, our consumer facing UK website, we help consumers find and connect to trusted local services

• Our legacy print books continue to generate valuable leads for many customers

• We have dramatically transformed over the last three years


Two Independent Geographies


• $265m digital marketing services business, one of the largest in US

• First US Facebook SMB and Google Premier Partner

• 132k digital customers• 1,100 person sales force, including 700 field

sales with national footprint

• #1 provider to local business of:• managed digital marketing services1

• managed Google Adwords• #1 directory website (Yell.com)• #1 printed directory (digital standalone from print)• 85%+ brand awareness• 133k digital customers• 750 person sales force including 350 field sales

FY17: $636m Revenue, 42% Digital , 25% EBITDA

Hibu (US)

FY17: £236m Revenue, 82% Digital, 32% EBITDA

DigitalMarketing

+8%Print

&Digital

Directories

-21%

Yell (UK)

DigitalMarketing

&Digital

Directories

+5%

Print

-30%

Corporate: Operational oversight, strategy, governance, financial consolidation (c. 20 people)1 Source: M-Brain, 2017 - #1 in terms of revenue from sales of managed digital marketing advertising services for all types of local businesses in the UK. Research focused on obtaining information on businesses who offered localised services using a range of public domain sources including industry rankings, companies’ websites and annual reports.

Transformation


FY15 FY16 FY17

• Emerged from capital restructuring

• Installed new management team and board

• Rationalised product set

• Eliminated unproductive expenses and investments

• Eliminated group HQ and most of group overlay

• Reduced headcount from 12,000 to 8,300

• Outsourced Asianoperations

• Sold Latin Americanbusinesses

• Rationalised Spanish business

• Separated the geos and raised local accountability

• Reduced and sold property

• Reduced headcount from 8,300 to 4,300

• Rolled out new sales and service models

• Implemented CRM systems

• Introduced new products and partners, including social

• Completed move to local brands

• Tightened operational and risk management

• Normalised capital structure

• Sold Spanish business

FY18+ • Restructuring essentially complete, solid platform in place, focusing on operational improvements

Strategic Priorities


• Deliver strong cash flow while making prudent investments in sales, service, products, partners, systems and people to protect and build future value

• Complete the transformation of the UK business into a pure play, digital marketing services business

• Manage the US print-to-digital transformation to glide to a stable, profitable digital marketing services business

• Continue to cultivate operational excellence, ownership, transparency, and alignment across the company

• Remain open to transformational transactions which benefit our owners and stakeholders

Hibu US


FY17 Progress


Digital1 Directories2 Operational

• $265 million / 8% YoY growth

• Extended service model to all digital customer onboarding (phase II)

• Selected as Facebook marketing partner for small business solutions (first in peer group)

• Launched unified digital marketing approach

• Continued digital product margin improvement (59% vs PY 53%)

• Rate of decline remained stable: -21% YoY

• Managed costs to protect margins (73% vs PY 75%)

• Published 973 directory titles

• Launched phase one print to digital acceleration

• SG&A costs reduced by $33m supporting improved EBITDA margin %

• Headcount reduced inline with revenue and margin reduction

• Continued to transition headcount to roles supporting digital business

• Modified sales reporting and comp to better align with digital performance

FY18+ • Continue glide to stable, profitable digital marketing services business

1 Excludes digital directories. 2 Print and digital directories

Unified Digital Marketing Approach


PRESENCE

WebsitesWe build professional websites which aretechnically strong, visually engaging, and

work at the centre of the marketing campaign

ListingsWe ensure our customers’ business listings

are correct wherever they appear on the web – and can be updated quickly

PERFORMANCE

SearchWe help our customers advertise and appear at the top of major search engines – Google,

Yahoo! and Bing

DisplayWe help our customers promote their business across hundreds of popular

websites, including mobile, driving traffic and raising brand awareness

SOCIAL

Social PagesWe build social

engagement pages for our customers on the major

social sites

Ratings & ReviewsWe help our customers manage their ratings and reviews, and

promote positive reviews across web and social channels

Social CampaignsWe run cutting edge social

media campaigns on Facebook, Instagram and Twitter for our customers

+

+

Synchronized Digital Presence

Website, social, digital listings & directories

Mobile, tablet, desktop, voice Consistent/accurate key business Info Consistent look & feel/content Reviews (collection & distribution) Commerce/conversion tools (i.e. appt

booking, shopping cart, form fills, etc)

Routine Updates Simple, timely, affordable One contact to manage digital

presence updates Ongoing management & protection of

digital presence

Dynamic & Relevant Content Establish & maintain online credibility Convert visitors to customers Promote organic

visibility/presence/rankings Articles, posts, blogs, photos, videos Positive reviews/testimonials Offers, coupons, specials, events

Drive Relevant Traffic

Key partnerships with Facebook, Google, Bing and others

Social, Display & SEM Retarget across media/presence to

maximize results Advanced SEO

Remarketing Existing customers Previous “visitors” “Look alikes” Email, text, social

Track, Measure, Adjust Clear, easy to understand reporting Fully managed A/B testing,

optimization and ongoing adjustments

Flexibility to shift media spend

Synchronized,optimized,dynamic


Sales & Service Model

Hibu confidential / © hibu 2017 13

Local Businesses• Existing clients• Targeted prospects• Enhanced data to improve targeting

Sales• Sales contact models for acquisition• Lead generation trials to support acquisition• Retention/upsell activities at critical times of

digital client lifecycle• Balance efforts between digital acceleration

and directory retention

Service Teams• Phase I: onboard all website clients• Phase II: onboard all digital clients• Phase III: rollout Q2FY18 - ongoing direct

engagement with assigned digital clients• Tiered service based on spend &

sophistication• QA Sales & Fulfillment teams

Fulfillment Teams• Primarily provided by offshore partner

Local Businesseshigher spend / sophistication

Local Businesseslower spend / sophistication

Field Sales Inside Sales / Auto Renew

Service Teams & Campaign Management

Fulfillment & Campaign Build / Optimization

Print to digital acceleration


Phase I Phase II Phase III

• First pilots just underway (small, low margin directories)

• Measure success rate; client/revenue retention, profitability

• Iterate and adjust plan as we learn – develop scalable plan

• Expand pilot to larger/low margin directories

• Expand to all low performing directories with product margins < digital product margins of ~60%

• Move up the directory margin portfolio

• Tipping point to full transition

• 100% digitally focused

• Further operational savings

• Potential to increase margin and improve revenue trends


Yell UK

Yell UK Business Platform


• Extend our position as the leading provider of managed digital marketing services to local businesses

• Simple, unified, digital marketing services that offer value and are supported by a quality customer experience

#1 for Local Businesses

• #1 provider to local business of managed digital marketing services1

• #1 provider of managed Google Adwords

• #1 directory website (Yell.com)

• #1 printed directory (digital standalone from print)

• 85%+ brand awareness

• 133k digital customers

• 750 person sales force including 350 field sales

1 Source: M-Brain, 2017 - #1 in terms of revenue from sales of managed digital marketing advertising services for all types of local businesses in the UK. Research focused on obtaining information on businesses who offered localised services using a range of public domain sources including industry rankings, companies’ websites and annual reports.

Market LandscapeDirectional - not to scale


Cus

tom

er N

umbe

rs2

Revenue2

20k independents

LOCAL MANAGEDMARKETING (SCALE)

DIY MEDIAPLATFORM

DIY WEBSITE PLATFORMS

MANAGEDMARKETING (SMALL)

MEDIA AGENCY(High Rev/Low Margin)

#1 Managed digital marketing services for local businesses in the UK1

Market Exits

INDEPENDENT WEB DESIGNERS

1 Source: M-Brain, 2017 - #1 in terms of revenue from sales of managed digital marketing advertising services for all types of local businesses in the UK. Research focused on obtaining information on businesses who offered localised services using a range of public domain sources including industry rankings, companies’ websites and annual reports. 2 Not to scale.

Sales Segmentation & Targeting


• 2.5m businesses on database (90%+ of active businesses)

• Proprietary profile and behavioural data (Over 100 attributes for each business - from market spend to no of employees, turnover etc)

• Advanced profiling, segmentation and modelling for optimal conv & ARPA

• Data driven sales model – segmented teams and territories

• Marketing automation and lead generation is the most significant driver of sales efficiency

• Recommendation engine that helps deliver consistent localised recommendations based on big data

Segmentation and Targeting


High

Low

CONVERSION

SIZE

Low High

High conv/size(e.g. Locksmiths)

10,596 vol£2,042 ARPA8.1% Conv

Range (2.2%-15.8%)

High conv/Low size(e.g. Day Nurseries)

7,292 vol£693 ARPA10.1% Conv

Range (2.7%-16.2%)

Low conv/Low size(e.g. Pubs)

17,027 vol£255 ARPA0.9% Conv

Range (0.4%-6.8%)

Low conv/High size(e.g. Health clubs)

3,686 vol£4,797 ARPA3.9% Conv

Range (0.7%-8.2%)

0.3m

1.2m 0.6m

0.4m

3 Key components – Size, Type/Fit & Engagement

Size of bubble = total volume of businesses

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Xxxxxxxx

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Xxxxxxxx

Xxxxxxxxxx

Xxxx

Xxxxxxx

Xxxxxx

Xxxxx Xxxxxxxxxxx

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Xxx Xxxxxxxxx

Xxxxxx

Xxxx Xxxxxx

Customers


Sales (Increasing New)• New sales heads• Marketing leads• Prospecting story

Service (Reducing Lost)• Retention team• Retention offers• C4C Processes

Improving Mix• Higher value customer focus• Established customers =

Improved retention • More growth & Life Time Value

Yell.com Consumer Platform


Strengthen Yell.com as the leading platform connecting consumers to trusted local services

Deliver a consumer first approach led by content, reviews and a first rate consumer experience

Content & Technology

TrafficConsumer experience

Consumer Market Landscape


Local online service directories Other sites

Usa

ge (v

isits

/mon

th)

7.9m

4.4m

71m

60m

7.1m

3.6m

1.2m

1m

900k

577k

54k

38k

217k

Source: Comscore comparisons of visits

Content and Technology drivesExperience and Traffic


Consumer Experience Traffic (Google ranking factors1)

1 Source:https://www.searchenginejournal.com/2017s-four-important-rankingfactors-according-seo-industry-studies/184619/ - Simplified based on Google 2017

2 Source (TBC): Yell internal statistic 2017 based on 130,000 listings on Yell.com

• Content, especially natural language and consumer generated

• High quality backlinks (often driven by people linking to content)

• Yell.com listings with reviews receive 4 times more traffic than those without2

• Reviews from similar people• Unique content you can't get

elsewhere• Quality images to visualise the

service• Registered access to unique

local deals with intelligent prompts to come back

• Easy mobile access • Advanced filtering & sorting to

quickly and easily find what you’re looking for

• Access to a complete business profile with direct contact & booking functionality

• Mobile first interface

• Page load speed

• Other technical aspects (e.g. HTTPS encryption)

CO

NTE

NT

TEC

HN

OLO

GY

0

5000

10000

15000

20000

25000

30000

2014

0120

1402

2014

0320

1404

2014

0520

1406

2014

0720

1408

2014

0920

1410

2014

1120

1412

2015

0120

1502

2015

0320

1504

2015

0520

1506

2015

0720

1508

2015

0920

1510

2015

1120

1512

2016

0120

1602

2016

0320

1604

2016

0520

1606

2016

0720

1608

2016

0920

1610

2016

1120

1612

2017

0120

1702

2017

03

Content example: Reviews


Today• Solid reviews platform• 1.2m reviews• 1.5m registered consumers

Acceleration Plan• Simplified reviews interface• Sales engagement• Promo packs• Email marketing• Yell for Business app• New consumer database• Target 2m new reviews by

Mar 19

2014

2015

2016

Over 25,000 new reviews in March 2017 and rising

Monthly average:11,650 (+10%)



Monthly new review growth rate

Print Plan


Phase 1In Progress

Anticipate final book cycle

Phase 2Sept 2017

Anticipate public announcement of print exit timing

Phase 3(2018 & 2019)

Customer and sales force incentives to

encourage migration

Hibu US


Over $250mdigital marketing

services business

Operational efficiency and low

capex supports cash flow

Print to digital acceleration opportunity

Strong product set and sales engine

Yell UK


Valuable service to local

businesses and consumers

Strong leadership position in large

fragmented market

Investing in Yell.com to materially

enhance user experience and

drive traffic

Assets, data and scale provide

defensible advantages

Investing in a sales engine supported by analytics and technology

Efficient Yell.com monetisation

engine, extensible

opportunity

Appendix


Financial Summary


FULL YEAR RESULTS

FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17

Digital 1 185 217 245 265 174 172 183 193change 18% 17% 12% 8% -4% -2% 7% 5%

Print and other 2 823 617 473 371 120 86 62 43change -19% -22% -23% -21% -30% -28% -28% -30%

Total revenue 1,138 945 848 799 1,008 834 718 636 295 258 246 236 190 168 124 73change -15% -12% -10% -9% -14% -15% -14% -11% -17% -12% -5% -4%

Adjusted EBITDA 175 192 217 217 151 164 184 162 55 61 80 76 37 24 14 16margin 15% 20% 26% 27% 15% 20% 26% 25% 19% 24% 32% 32%

Operating cash flow 159 168 215 208 190 180 237 188 20 30 52 53 31 25 5 15

1 includes Yell.com in the UK. Excludes digital directories in the US as often affi l iated with print.2 excludes Yell.com in the UK. Includes digital directories in the US as often affi l iated with print.

Revenue decline rates are at constant currency and exclude the impact of directory rescheduling and magazines (discontinued in FY15).

Adjusted EBITDA in the US & UK includes an allocation of central group costs as follows. FY 16: US $16m UK £8m. FY 17: US $18m UK £9m.

Adjusted EBITDA excludes exceptional operating items.

Operating cash flow is Adjusted EBITDA less exceptional operating cash flows, capital expenditure, changes in working capital and pension contributions.

DISCONTINUED OPERATIONS £mHIBU US $m YELL UK £mHIBU Group £m

hibu group investor presentation · 2017-05-23 · simple, timely, affordable one contact to manage...

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