Eniro Shakes Things Up After “Disappointing” Q2

The Swedish search company Eniro has replaced the management of its Swedish online property following a “disappointing” second quarter, in the words of CEO Johan Lindgren, who addressed the issue head on during today’s earnings call. The biggest outcome of the weak quarter was to shave about SEK100 million off of Eniro’s full year 2014 EBITDA guidance.

The culprit in the weaker than expected sales performance is Eniro’s Swedish online property, Eniro.se. Eniro’s other digital products in Sweden, which it calls “campaign” products, fared better, as did the full digital products portfolio across its other markets, Denmark, Norway and Poland.

Eniro, once predominately a print publisher, is now primarily a digital business, with mobile being an increasingly important piece of search traffic and revenue. Eniro has discontinued Yellow Pages in its biggest markets (Sweden, Norway and Denmark), though it continues to publish local directories. Eniro also has operations in Poland.

For the group, organic revenue declined  by 10 percent organically in the second quarter. Digital or “multiscreen” revenue fell by 5 percent organically in Q2. “We need that to be positive in order to compensate for declines in print and voice,” Lindgren said.

Lindgren was very direct and blamed the weak Q2 performance on poor management, and hence poor sales execution, as well as Eniro’s decision to move some existing contracts from the first into the second quarter. The latter, according to Lindgren, “proved to be a strategic mistake, because we had too much volume in the second quarter.” The result was that the sales organization had to scramble to cover all of its renewals, which undermined the quality of sales interactions as well as crowding out new sales.

Lindgren announced the following measures to address the weak performance. First, he replaced the management of Eniro.se, bringing in Eniro Denmark CEO Stefan Kercza to take control of Eniro.se. Mattias Wedar, will run all other operations within Sweden. This is reminiscent of last year, When sales performance in Noway was weak, Lindgren acted swiftly to change management in that market, bringing in Pierre Martensson to run Norway, which has since returned to growth.

Lindgren also announced some changes to the sales organization in Sweden to address the weak performance. When sales resume August 4 (following Sweden’s summer holiday season), Eniro will experiment with packaging its search and campaign products for higher spend customers, will do more segmentation to match products with customers more effectively and will emphasize new customer acquisition, among other changes.

For the first half of 2014, Eniro produced total revenues of SEK 1.58 billion, an 11 percent decline. Mobile remains the bright spot, growing 73 percent to SEK 202 million, or about 13 percent of total revenue.