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Local's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: LOCM

Mobile traffic results are up sharply reaching 19 million MUVs during the second quarter, up 60% from the first quarter and over 350% from the year ago period. We’ve grown our network from 700 sites to over 1,200 sites over the past few years and we expect that to continue into the future. We clearly have momentum on the traffic side of the equation.

Turning to monetization, we see great momentum here also. As many of you know we suffered monetization challenges about 18 months ago, which we addressed by contracting with a leading ad supplier a year ago. Largely due to this partnership, second quarter 2012 monetization was near record levels at $300 per 1,000 visitors, up nearly 72% from the year ago period.

Our visibility in the third quarter this year was limited as we didn’t have a full year’s worth of data from our current blend of ad partners and this blend drives the majority of our monetization. As a result of that we’re softer on revenue and margin guidance and we expect it to be for the third quarter, but we feel confident in our visibility post Labor Day. We fully expect to gain monetization momentum in our seasonally strong fourth quarter period.

Overall, momentum is strong in both traffic and monetization and to grow from here, we need to grow both traffic and monetization. Our long-term goals will get to 50% of our traffic organically and 50% of our revenue is from direct customers. Right now we are at about 40% organic traffic and we expect to end the year with a 25% direct revenues.

To grow organic traffic we need to do three things. First, grow the number of partners using our private label solutions; second, increase the traffic on each site by a better SEO and content syndication; and third, increase the number of products each partner uses. Today we have a single product reach partner.

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