Solocal Group (LOCAL) H1 2024 earnings summary

Executive summary

• Revenue for H1 2024 was €163.8 million, down 11.9%–12% year-over-year, reflecting challenging sales and high churn among VSE/SME customers.

• EBITDA fell 26.9% to €23.8 million, with margin dropping to 14.5%–15.1% from 17.5% in H1 2023, mainly due to lower sales despite cost reductions.

• Net loss widened to €34.0 million from €23.6 million in H1 2023, driven by higher financial expenses and restructuring costs.

• Customer base decreased to 246k as of June 30, 2024, with churn rate at 19.8%.

• Major financial restructuring completed post-period, significantly reducing debt and bringing in new controlling shareholder Ycor, with new board appointments.

Financial highlights

• Revenue: €163.8 million (H1 2024), down 11.9%–12% year-over-year.

• EBITDA: €23.8 million, margin 14.5%–15.1% (down from 17.5%).

• Operating income: -€1.0 million (vs. €5.4 million in H1 2023).

• Net income: -€34.0 million (vs. -€23.6 million in H1 2023).

• Free cash flow: -€0.3 million (vs. +€3.6 million in H1 2023); operating free cash flow (excl. rents): €3.2 million (vs. €9.8 million in H1 2023).

• Net financial debt (excl. IFRS 16): €217 million at 30 June 2024 (up from €197 million at 31 Dec 2023).

• Cash position at June 30, 2024: €43.6 million (down from €55.7 million at year-end 2023).

Outlook and guidance

• 2024 revenue expected to decline by about 10% year-over-year, with focus on cost control to maintain EBITDA margin around 15%.

• Strategic roadmap targets €500 million revenue and 25% EBITDA margin by 2027, leveraging new product offerings and operational synergies.

• Consolidated revenue could reach €340 million with a 5-month contribution from Regicom.

• Strategic focus on salesforce productivity, product investments, and customer experience to limit churn.