YP Canada Says Goodbye to Julien Billot

YP Canada has parted ways with CEO Julien Billot amid concerns the company’s path to digital transformation has stalled, with digital growth not keeping pace with expectations. Billot’s departure was announced last week and CFO Ken Taylor was named interim CEO. No permanent replacement has yet been named.

Robert MacLellan, Chairman of the Board of Directors of Yellow Pages, said this in the corporate announcement of Billot’s departure, “Yellow Pages is a profitable business that delivers innovative digital products to small and medium-sized enterprises across Canada, with strong cash generation and a leading market position. We believe that Yellow Pages can do more to deliver on its potential by placing greater emphasis on operational performance, execution and shareholder returns.”

The company’s stock price has faltered in recent months. Today’s closing price was 6.54, down from the 52 week high of 22.24.

Billot’s departure is the second major recent upheaval in the North American directory industry. In early July, Dex Media acquired YP to create DexYP, a long anticipated but often delayed consolidation play. The expected outcome of that deal is a much leaner, more efficient combined organization with a sustainable strategy built around CRM for SMBs.

Billot’s departure also represents a sharp turnaround in YP Canada’s fortunes, given how well regarded Billot was in the industry and how well his transformation strategy appeared to be working, at least until recently. Billot was named CEO in late 2013 and moved quickly to unveil a return to growth strategy that promised topline growth by 2018.

Billot, who came from France’s Solocal Group, moved YP Canada in a vertical direction with acquisitions like Bookenda and and invested in its mobile advertising capabilities with JUICE Mobile. Most recently the company made a minority investment in MyTime, a scheduling and CRM platform for SMBs, which hinted at a move more in the direction of delivering platform services to SMBs.

For the full year 2016, YP Canada’s total revenue decline was 1.4%. In 2015, the revenue decline had been 5.4%. For the full year 2016, YP Canada reported print declines of 23.6%. However a 24.8% Q4 print decline suggested accelerating print losses, pushing up against the range of what YP Canada considered a sustainable decline. In Q4, total revenue declined by 2.8%, again suggested a reversing trend.

YP Canada was making progress on customer growth under Billot, adding 41,000 new customers, with a net decline of 3,500 customers, down from net losses closer to 30,000 per year before the return to growth plan was implemented. Retention was trending downward however, at 82% in 2016, versus 85% the prior year. The company attributed the lower retention rate to naturally higher churn among digital only customers.

The trend downward trend from Q4 2016 continued in Q1 2017, with digital revenue growth of 2.4% and a total revenue decline of 6.9%. Low single digit online growth is too weak to sustain a return to growth strategy, even when digital accounts for more than 70% of total revenue.

Margins were also under steady pressure, a reflection of lower profitability of some digital products, particularly those involving reselling inventory on Google and Facebook. The company ended 2015 with a 31.4% EBITDA margin. By the end of 2016 the margin was 28.6% and in Q1 of this year it had fallen to 24.5%.

YP Canada’s leaders clearly felt a change was needed after seeing its numbers starting to trend backwards after the initial progress under Billot. The real question is where does YP Canada go from here? Will it shift gears and follow a strategy more like DexYP, which is offering its customers a software platform called Thryv that promises to level the marketing automation playing field with enterprise businesses.

The DexYP approach is in line with the research LSA is doing with its Tech Adoption Index, which is tracking and measuring SMBs’ shift to using cloud based tools to operate their businesses across multiple functions, from marketing and advertising to payroll to supply chain. DexYP is a TAI charter sponsor.

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