Eniro Sees Growth in a Post-PYP Future

 

 

 

The Nordics search and directory company Eniro needs to grow its digital revenue by roughly 5 percent to 6 percent in order to bring its entire business back to growth. Not a bad position for a company that not so many years ago was known primarily for publishing print Yellow Pages in some of the world’s most digitally advanced markets.

Today, Eniro’s CEO Johan Lindgren describes the company as, “An aggregator that organizes, filters and presents local information. We are in the same part of the market as Google, except that Google does global search, and we do local search.”

On last week’s 2013 earnings call, Eniro executives noted that the decision, announced last year, to stop producing printed Yellow Pages directories in 2014 helps explain why the company is poised for a return to growth. In 2013, print revenues declined by 29 percent, and represented 14 percent of total revenue.

Once regional Yellow Pages books stop printing, the company will be left with its much healthier hyperlocal directories business, which generated revenues of SEK333 million (US$51 million) in 2013, about 9 percent of Eniro’s group revenue. Regional Yellow Pages revenues totaled SEK174 million (US$27 milion) in 2013. The regional Yellow Pages business, once the crown jewel, was on the verge of becoming a rounding error for Eniro.

“I don’t think we will see the same kind of decline in print as in 2013 because these hyperlocal books have a better usage,” Lindgren said. “We will see a slight decline, bot not as dramatic as big, regional books.”

Lindgren said early indications are sales are going more smoothly in the post-PYP environment.

“The perception of the company is better [post PYP], and it makes sales calls more simple,” he said. “It is easier to sell the digital portfolio without having to explain the presence of print.” The hyperlocal books are sold by a separate sales force.

Eniro is not quite where it needs to be on the digital side. In 2013, digital revenues (mobile and desktop) grew by 2 percent organically, improving to 4 percent in  the fourth quarter. One reason for the lagging digital revenues was a sub-par revenue performance in Norway, which Lindgren says was addressed through a management change last year. The CEO said on Eniro’s Q3 earnings call that digital would begin to pick up in Q4 and that’s exactly what happened.

Lindgren is also encouraged by Eniro’s strong digital traffic growth, which is directly tied to monetization. In 2013, “unique browsers per week” grew by 10 percent companywide. The company has 8 million weekly uniques across all of its digital properties and markets. Eniro currently has online properties in Sweden, Norway, Denmark and Poland.

The entire Eniro business, which includes directory assistance and print directory revenues, declined by 8 percent, though adjusted for currency effects and publication changes, the fall was a more modest 5 percent. The company ended the year with total revenue of SEK3.7 billion (US$564 million) and EBITDA of SEK956 million (US$147 million). 

Mobile is central to Eniro’s digital growth prospects. The company grew mobile revenue by 95 percent in 2013, to SEK287 million (US$44 million), and expect to more than double mobile revenue to SEK600 million (US$92 million) this year, Eniro projects mobile to reach SEK900 million (US$139 million) by 2015. Currently, 34 percent of searches on Eniro properties come in via mobile devices.

Eniro plans to expand its product set, adding new offerings during 1H 2014 in navigation, video, social media and e-commerce.

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