SoLocal : H1 2023 financial results

Press release

Boulogne-Billancourt, 26 July 2023

H1 2023 financial results

H1 2023 financial results

• €186 million revenue, i.e -7.5% vs. H1 2022
• Recurring EBITDA down to €34 million, i.e. -39% vs. H1 2022
• €9.8 million operating free cash flows (excluding rents)
• €63.3 million cash on balance sheet as at 30 June 2023
• Net financial debt4 of €181 million as at 30 June 2023 with a leverage ratio of 2.4x4

Q2 2023

• €92.7 million revenue, i.e -7% vs. Q2 2022
• Order backlog at 211 million € as at 30 June 2023 (vs. €221.7 million as at 31 March 2023)
• Stable ARPA2 vs 31 March 2023 (c. 1,340 €)
• Decrease in customer base1 at 278k customers vs. 281k as at 31 March 2023
• Increase in churn5 rate to 18.3% (vs 14.9% as at 30 June 2022 and 17.4% as at 31 March 2023)

2023 outlook

• H2 2023 revenue expected slightly lower than H1 2023 revenue (€186 million), below 2022
• Despite continued cost control efforts, 2023 EBITDA margin is expected in line with H1 2023 EBITDA margin (c.18%)

Recent financial developments

• Obtention of the required majority of Bond and Mini Bond holders to defer to 30 September 2023 the payment of Bonds and Mini Bonds coupons due on 15 June and 15 September 2023
• Opening of mandat ad hoc proceedings in order to facilitate discussions with financial creditors
• Discussions with financial creditors are scheduled to begin in September 2023 on the basis of a strategic plan currently in progress

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1. Revenue and backlog analysis

In million euros	H1 2022	H1 2023	Change	Q2 2022	Q2 2023	Change
Total revenue	201.2	186.0	-7.5%	99.7	92.7	-7.1%

H1 2023 consolidated revenue amounts to €186.0 million, down -7.5% compared to H1 2022. Q2 2023 amounts to €92.7 million (-7.1% compared to Q2 2022).

In H1 2023, revenue from renewal of existingcontracts contributes to €103.4 million, i.e. 56% of the revenue, up +€10 million compared to H1 2022. In Q2 2023, this contribution amounts to 55% of the revenue, compared to 53% in Q2 2022.

Revenuefromacquisition (new customers, development and migration of old contracts into subscription mode) amounts to €82.6 million and represents44%oftherevenue,down -€25 million compared to H1 2022.

These trends are mainlydriven by:

• a sales performance impacted by difficulties in hiring and retaining fieldsales force;
• an increase in churn rate not yet reflecting the efforts in term of customer relations.

In million euros	30/06/2022	30/09/2022	31/12/2022	31/03/2023	30/06/203	Change
Digital order backlog	239.9	234.5	221.6	221.7	211.0	-4.8%

Order backlog amounts to €211 million as at 30 June 2023, down -4.8% compared to 31 March 2023.

Based on Management best estimate, approximately 59% of this order backlog should flow into H2 2023 revenue, 38% in 2024 and 3% in 2025.

Solocal revenue for Q2 2023 and H1 2023 is presented below:

In € million	Q2 2022	Q2 2023	Change	H1 2022	H1 2023	Change	Allocation
Connect	23.8	25.0	7.5%	47.5	50.5	6.2%	27%
Booster	60.6	53.0	-14.8%	123.2	106.3	-13.7%	57%
Websites	15.3	14.7	-4.4%	30.5	29.2	-4.2%	16%
Total revenue	99.7	92.7	-7.1%	201.2	186.0	-7.5%	100%

NB: Solocal group has modified the presentation of Ranking" offer is now included in the "Booster offers"

its revenue break-down. The full contribution of the "Priority range (formerly split between Connect & Booster).

Booster activity (57% of revenue) which includes advertising activities is down -13.7% compared to H1 2022 due to:

• a decline in the contribution of Priority Ranking offer,
• an acquisition of new customers below expectations,
• an uncertain economic environment.

In Q2 2023, Booster revenue amounts to €53 million, down -14.8% compared to Q2 2022.

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In H1 2023, Connect activity which includes digital presence grew by 6.2% compared with H1 2022, driven in particular by the Connect Essentiel offer. It represents 27% of H1 2023 revenue. Q2 2023 contributes to this growth with revenue up +7.5%.

Websites activity represents 16% of H1 2023 revenue. It is impacted by a slight decrease in Q2 2023 (-4.4%) due to difficulties encountered by the salesforce in acquiring new customers and maintaining existing ones.

2. Sales performance, customer base, churn and ARPA

H1 2023 sales performance measured by order intakes amounts to €177.5 million euros compared to €197.2 million in H1 2022. Renewal order intakes decreased from €112.5 million in H1 2022 to €106 million in H1 2023. Order intakes from the acquisition decreased by -16% and amount to €71.4 million (more than half of which comes from the enterprise segment).

Solocal customer base1 evolved as follows in Q2 and H1 2023 :

			Q2 2022	Q1 2023	Q2 2023	Change
Customer base - BoP	(a)	304k	288k	281k	-7k
+ Acquisitions		9k	8k	12k	3k
- Churn		-14k	-16k	-15k	-
Customer base - EoP	(a)	299k	281k	278k	-4k
Net change BoP - EoP	-5k	-7k	-4k	3k
(b)	- in %		-14.9%	-17.4%	-18.3%	-0.9pts
Churn

1. BoP = beginning of period / EoP = End of Period
2. Churn rate : number of churned customers on a LTM basis divided by the number of customers BoP

Customer base1 stood at 278k customers as at 30 June 2023, down -1.3% compared to 31 March 2023, resulting from:

• a level of new customers acquisition below expectations (+12k customers);
• a loss in customers (- 15k customers) slightly down compared with 31 March 2023.

Churn rate(b), stands at 18.3% as at 30 June 2023, vs 14.9% as at 30 June 2022 and up from 17.4% as at 31 March 2023.

Group ARPA2 stands at €1,340 as at 30 June 2023, stable compared to 31 March 2023 and 30 June 2022 (approx. €1,350).

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3. Profit and Loss

In € million	H1 2022	H1 2023	Change	Change
Total Revenue	201.2	186.0	(15.2)	-7.6%
External expenses	(55.2)	(60.5)	(5.3)	+9.7%
Personnel expenses	(90.3)	(92.5)	(2.2)	+2.4%
Recurring EBITDA	55.8	34.0	(21.8)	-39.1%
Non-recurring items	0.9	(1.4)	(0.5)	+58.6%
Consolidated EBITDA	56.6	32.6	(24.0)	-42.4%
Depreciation and amortisation	(27.8)	(27.1)	0.7	-2.4%
Operating income	28.8	5.4	(23.4)	-81.4%
Financial income	(14.4)	(16.9)	(2.5)	+17.4%
Income before tax	14.5	(11.4)	(25.8)	-178.7%
Corporate income tax	(3.8)	(12.1)	(8.3)	n.a.
Consolidated Net income Group	10.6	(23.6)	(34.2)	-

H1 2023 EBITDA amounts to €32.6 million, and recurring EBITDA to €34 million (down -39.1% compared to H1 2022).

Recuring EBITDA margin as a percentage of revenue amounts to 18.3%, a -9pts decrease compared to H1 2022. This decrease results from an increase in personal expenses (+€2.2 million compared to H1 2022). The reduction in support functions headcount did not offset the increase in personnel expenses resulting from the increase in salesforce headcount in H1 2023.

External expenses amount to €60.5 million in H1 2023, compared to €55.2 million in H1 2022. Restated for expenses related to PagesJaunes advertising campaign and the increase in "media spend" (due to an unfavorable product mix), external expenses remained stable compared to H1 2022.

Non-recurringitems amount to -€1.4 million in H1 2023

Depreciation and amortisation amount to -€27.1 million in H1 2023, stable compared to H1 2022 (-€27.8 million).

Financial result amounts to -€16.9 million in H1 2023, mainly composed of "cash-out" financial interests on financial debts (-€11 million).

Income before tax amounts to -€11.4 million in H1 2023 vs. +€14.5 million in H1 2022.

Corporate income tax booked in H1 2023 amounts to -€12.1 million, mainly including an impairment of deferred tax assets on tax loss carry forward.

Consolidated net income stands at -€23.6 million in H1 2023 vs. €10.6 million H1 2022.

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4. Cash Flow Statement and Debt

In € million	H1 2022	H1 2023	Change	Change
Recurring EBITDA	55.8	34.0	(21.8)	-39.1%
Non-monetary items included in EBITDA	0.2	(1.4)	(1.6)	n.a.
Net change in working capital	(14.9)	(11.3)	3.6	24.2%
- Of which change in receivables	(2.3)	(4.3)	(2.0)	87.0%
- Of which change in payables	(5.3)	(8.1)	(2.8)	-52.8%
- Of which change in other WCR items	(7.4)	1.2	8.6	n.a.
Acquisitions of tangible and intangible fixed assets	(15.4)	(11.6)	3.8	24.7%
Recurring operating free cash flow (excluding rents)	25.6	9.8	(15.8)	-61.7%
Non-recurring items	(1.6)	(0.7)	0.9	56.3%
Disbursed financial result	(9.2)	(6.0)	3.2	34.8%
Corporate income tax paid	(2.2)	0.4	2.6	n.a.
Others	0.1	0.2	0.1	n.a.
Free cash flow	12.8	3.6	(9.2)	-71.9%
Increase (decrease) in borrowings	(2.0)	(2.0)	-	n.a.
IFRS 16 & Others	(8.6)	(9.1)	(0.5)	-5.8%
Net change in cash	2.1	(7.5)	(9.6)	n.a.
Net cash & cash equivalents BoP	80.2	70.8	(9.4)	-11.7%
Net cash & cash equivalents EoP	82.3	63.3	(19.0)	-23.1%
Operating free cash flows3	15.5	0.1	(15.4)	(1.0)

Change in working capital requirements amounts to -€11.3 million in H1 2023 compared to -€14.9 million in H1 2022. This negative change in working capital comes from:

• -€4.3million change in receivables working capital due to a low sales performance in H1 2023 and a churn of former customers whose payment terms were more favorable;
• -€8.1million change in payables working capital slightly up compared to H1 2022
• +€1.2 million change in "Other" working capital items. As a reminder, H1 2022 was impacted by the repayment of "passif fiscal et social" of -€4 million.

Capex amounts to €11.6 million in H1 2023, down -24.7% compared to H1 2022.

The recurring operating free cash flow (excluding rents) is positive, at +€9.8 million in H1 2023 compared to +€25.6 million in H1 2022, resulting from a strong decrease in recurring

EBITDA.

Cashed-outfinancial expenses amount to -€6 million in H1 2023 vs. -€9.2 million in H1 2022. It corresponds to the payment of Bonds and Mini Bonds coupons, interests on RCF and interests on "Prêt ATOUT". Despite the increase in interest rates, the decrease results from the

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