When Life Gives You Lemons...

-By Josh S | [email protected]

You build a lemonade stand. That is what Yellow Meida (Some still refer to it as Yellow Pages) did last year in its marketing push to show consumers the might of Yellow's digital marketing efforts. Despite this push, Yellow has seen its digital results languish as Facebook and Google take a larger share of the digital marketing game. CEO, Julien Billot, said this last quarter: "I would underscore the fact that, it's also exactly what we see in the US, if you look at the US market in 2016, what we saw in the US market in 2016, is Facebook and Google capturing all the growth of the digital space."

Yellow's stock dropped near $5 after its Q1 results were released on May 10. Digital revenues grew only 2.4% year-over-year to $134.8 million and this was due to increased revenues from an acquisition from Juice Mobile. Excluding the acquisition, digital revenues declined. Revenues decreased 6.9% year-over-year and net earnings for the first quarter 2017 were $0.7 million, compared to $13.2 million for the same period last year. The company also provided its outlook for the year.

Total revenues between $770 million and $785 million;

Digital revenue growth of approximately 4%;

Adjusted EBITDA between $170 million and $180 million

Free cash flow between $50 million and $55 million

The company said print revenues would decline at, at least 25%. Investors are wondering about the large drop in digital growth expectations, considering Juice is adding to digital revenue. Therefore, the legacy digital business is now declining and EBITDA margins continue to decline.

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