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ReachLocal Reports Third Quarter 2012 Results

ReachLocal, Inc. (NASDAQ:RLOC), a leader in local online marketing solutions for small- and medium-sized businesses (SMBs), today reported financial results for the third quarter ended September 30, 2012.
  • Revenue growth of 21% over the third quarter of 2011, highlighted by 47% growth in international markets and 22% growth in the direct local channel
  • International revenue expanded to 29% of revenue from 24% for the prior year period
  • Adjusted EBITDA grew 59% to $7.2 million, compared to $4.5 million for the prior year period
  • Active Advertisers grew 18% to 22,100 and Active Campaigns grew 22% to 32,900 from the prior year period
  • Repurchased $1.4 million or 114,000 shares of stock ($13.1 million or 1,600,000 shares to date) under the company’s $20 million buy-back authorization

Management Commentary

“We had another great quarter driven by strong demand for our online marketing solutions for SMBs highlighted by continued robust growth in our international markets,” said Zorik Gordon, CEO. “We are also excited to announce that we are launching in Brazil, one of the most dynamic internet markets and economies in the world. With the addition of Brazil, ReachLocal’s global footprint will span eleven countries.”

Quarterly Results at a Glance

(Table amounts in 000’s except key metrics and per share amounts)
  Q3 2012   Q3 2011   % Change
Revenue $118,891 $98,629 21%
Net Income (Loss) from Continuing Operations $836 $(1,329) 163%
Net Income (Loss) from Continuing Operations per Diluted Share $0.03 $(0.05) 163%
Net Income (Loss) $836 $(4,601) 118%
Net Income (Loss) per Diluted Share $0.03 $(0.16) 118%
Non-GAAP Net Income $4,458 $2,757 62%
Non-GAAP Net Income per Diluted Share $0.15 $0.09 70%
Adjusted EBITDA $7,221 $4,530 59%
Underclassmen Expense $11,441 $11,591 (1)%
Cash Flow from Continuing Operations $9,027 $6,187 46%
Cash Flow from Operating Activities $9,023 $5,723 58%


Revenue by Channel and Geography:
Direct Local Revenue $93,537 $76,814 22%
National Brands, Agencies and Resellers (NBAR) Revenue $25,354 $21,815 16%
International Revenue (included above) $34,679 $23,561 47%

Key Metrics (at period end):
Active Advertisers 22,100 18,700 18%
Active Campaigns 32,900 27,000 22%
Total Upperclassmen 407 344 18%
Total Underclassmen 450 464 (3)%
Total IMCs 857 808 6%

Business Outlook

“We are raising our fourth quarter and 2012 guidance based on strong results in the first nine months of the year. Our guidance reflects our typical fourth quarter seasonality, in particular spending reductions by our NBAR channel clients, the required new investment to launch our operations in Brazil and a continuing uncertain economic environment,” said Ross Landsbaum, Chief Financial Officer.

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