Value creation

A large digital services group with a strong market position  

·         The digital advertising market which we operate in is expected to grow in France at a CAGR of 10% over the 2017-2020 period (Source: Zenith)

·         The French market is significantly under-digitalised compared with other European countries with only 13% of small and medium-sized companies which use digital advertising (Source: INSEE), which makes the market attractive 

·         We rank fifth in the Top 100 of French digital companies and third in the Top 30 of the Internet services segment in the annual ranking of Tech’In France and PWC

·         Our positions on those markets with high potential growth are strong and solid with: 

o   Our large media audience with 2.4 billion visits in 2017, with a 2.4% growth compared to 2016

o   Popular mobile apps (PagesJaunes and Mappy), used by about two million users per day on average

o   A significant reach; 55% of the total amount of Internet and mobile users in France browse on our media every month (Source: Médiamétrie Nielson) 

o   A significant market share with more than 10% of small and medium-sized businesses in France which are customers of Solocal

A unique positioning combining rich local content, powerful data, local coverage and strong partnerships

·         We are the only player on the French market to offer customers a complete range of services that addresses all their digital needs through a one-stop shop 

·         Our ability to deliver value for our customers lies in the richness of our data, which enables us to carry out effective and highly targeted advertising campaigns

·         These rich and relevant data enable us to enter partnership agreements with major global Internet players (Google, Apple, Facebook and Bing (Microsoft)) by providing them our local content

·         Those partnerships with the GAFAMs, which generate today the biggest part of the growth of the Internet ecosystem, contribute to the growth of our media audience. The deported audience, generated by those platforms, therefore contributes to the reinforcement of our customers’ digital presence. 

·         Our local presence and our omnichannel sale approach are key differentiating factors in our relationship with local customers; they represent a real barrier preventing our competitors and partners to enter our markets
 

Mutually beneficial partnerships with major global Internet players 

·         In addition to the agreements with the GAFAM mentioned above around local content, local search and campaigns on social media, we have developed partnerships to leverage our partners’ technologies (Google AdWords, BingAds, Facebook Ads) by integrating them in our packaged offerings

·         We bring value to those digital solutions and to our customers by leveraging on our cutting-edge expertise developed by Solocal: algorithm optimisation and real-time selection of key words, pricing tools…

·         These strong and mutually beneficial partnerships are an asset for Solocal in the sector in which we operate and represent a significant competitive advantage

High scalable technology platforms

·         Another asset of Solocal lies on our ability to grow on a large scale our product offering, while meeting the specific needs of each customer, from large accounts to smaller businesses, thanks to the quality of our platforms, internally developed or integrated into a SaaS mode

·         Our customers benefit from a wide range of programmatic tools developed by Solocal used to implement advanced visibility solutions, performance solutions and digital advertising on our proprietary media, on our partners’ media (GAFAMs) or on the local media

·         Our customers also have access to a full range of ranking tools, a strong expertise of Solocal, allowing businesses to appear ahead of their competitors on digital media

·         Our cloud integration capabilities enable us to further leverage our technology platforms and their scalability
 

A business generating recurring revenues 

·         We have developed packages of services on a subscription mode with automatic renewal which will be progressively deployed in the Fall 2018 and which will contribute to increase the visibility and the recurrence of our revenues 

·         In 2017, 10% of our sales were on an automatic renewal basis, with the objective to trend to 30% at the end of 2018 and above after the full deployment of our new offering 

·         Our strategy should increase the productivity and efficiency of our salesforce which will become omnichannel with, aside from the local salesforce, a reinforcement of telesales and at the beginning of 2019 the introduction of online sales through Solocal website 

·         Our new customer-focused approach, based on the lifetime management of the client and the follow-up by a digital coach, is key to develop long-term relationships and retain our customers
 

Attractive financial profile thanks to significant potential savings and scalability of our platforms 

·         Solocal has a strong financial profile, with a solid EBITDA margin. As at 31 December 2017, the Group’s EBITDA margin reached 23.3% (continued activities, restated under IFRS 15), a rate which reflects our ability to monetise our audience

·         The transformation project should allow Solocal to operate with significantly reduced fixed costs, to become more agile and to return to profitable growth from 2020 onwards. Cost savings are estimated at around €120 million (on a full year basis) from 2020 compared with the 2017 cost base

·         Our business model is highly scalable, driven by market growth and it should allow us to serve new customers with a limited increase in costs, which translates into a strong operational leverage and the potential for further margin improvement

Seasoned management team with recognised experience and digital expertise 

·         The management of Solocal is underpinned by a completely new Board of Directors, a new governance and a recently renewed management team whose interests are fully aligned with those of all stakeholders

·         In addition to the expertise of the new members who recently joined the team, the management team benefits from the experience of members who have been at Solocal for many years.

·         Éric Boustouller, Solocal’s Chief Executive Officer, joined Solocal in October 2017. He has developed a solid experience in the digital field thanks to his positions as Chairman and Chief Executive Officer of Microsoft France, Vice-Chairman of Microsoft International and Vice-Chairman of both Microsoft Corporation and Microsoft Western Europe

·         The leadership of our existing management team, combined with the recent contribution of new hiring, will help further improve our product offering, our competitive position as well as our financial results