Solocal 3Q17 sales - Worrying trend in local search, guidance revised down once again
Solocal hosted an investor call this morning to discuss a weak 3Q17 performance and once again revised down its guidance for FY17. Revenue was down by 10% to €177m and we estimate that EBITDA came in 20% lower at €48m. Performance was particularly poor in the largest and most margin accretive segment, local search (60% of total revenue), where revenue gave up 11% on both lower average revenue per advertiser (ARPA) (-6% yoy) and continued customer erosion (-5% yoy). There is a timelag of a few months between orders and revenues and management argues that the bad press and uncertainties caused by the financial restructuring plan in 4Q16 resulted in a significant slow-down in new orders in October and November 2016, especially on large accounts with higher ARPA.
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