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Annual result underscores Yellow’s transformation into leading digital agency

Contributor:
Fuseworks Media
Fuseworks Media

An encouraging financial result for Yellow shows its transformation to a digital marketing agency is continuing to reap benefits.

The results for the year ending 30 June 2018 show the percentage of Yellow’s revenues derived from digital services grew significantly - up from 39% in FY17 to 43% in FY18.

The company substantially reduced its net loss, from $15.2m in FY17 to $3.3m in FY18, while at the same time returning $19.5m to shareholders.

"This result is very gratifying and proves our strategy is working," says Yellow CEO Darren Linton.

"Yellow continues to deliver to its customers and its shareholders, and we are well on our way to transforming the business to become the largest digital marketing agency for small business.

"We’ve made a strong effort to improve operational efficiencies over the past year and the results are positive."

Linton says Yellow is establishing multiple opportunities for growth in the digital sector.

"We are creating greater efficiencies, bringing inhouse some key digital fulfilment that has improved our customer service. Where we need specialist capabilities, we have formed the right strategic partnerships that have reduced overheads. We’ve removed legacy systems in favour of cloud-based systems, which saves money.

"Yellow is continually optimising whilst simultaneously being able to offer our SME customers optimal digital solutions that are world class.

"Our aim is to transform the small business community by delivering the world’s best marketing technology to Kiwi SMEs, making it easily affordable for them to navigate the ever-evolving digital world. The end game is to create a more productive local SME community.

"We have been right-sizing the business and, over the next three years, we will invest $7 million in new technology and strategic acquisitions to cement our position as New Zealand’s leading digital agency. We will make an exciting announcement in this regard early in 2019."

Over the past year, Yellow reduced its debt significantly, from $50.6m to $37.2m.

Total expenses were also down significantly, from $81.7m in FY17 to $67.3m in FY18.

While total trading revenue was down from $98.4m in FY17 to $80.0m, Linton says the business has the ability to scale its operations to retain a positive cash position and take advantages of opportunities as they arise.

"We envisage overall revenue will continue to decline in the short to medium term off the back of ongoing pressures on the legacy print side of the business, however we believe it will stabilise in the longer term."

The results in summary:

- EBITDA - $19.5m

- Total trading revenue - $80.0m

- Trading profit - $12.7m

- Cash return to owners - $19.5m

- Other key highlights

Digital Revenue 43% (39% FY17)

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