An explanation of the company’s use of non-GAAP financial measures, including the limitations of such measures relative to GAAP measures is included below and reconciliation between GAAP and non-GAAP measures, where appropriate, is included in the financial tables attached to this release.
Third Quarter Results Highlights
– Third quarter 2012 revenue was $24.8 million representing an increase of 20% over third quarter 2011 revenue of $20.7 million.
• GAAP Net Income (Loss)
– Third quarter 2012 GAAP net loss was $3.8 million, or ($0.17) per diluted share, compared to the third quarter 2011 GAAP net loss of $4.0 million, or ($0.18) per diluted share.
Adjusted Net Income (Loss)
– Third quarter 2012 Adjusted Net Income was $0.2 million, or $0.01 per diluted share, compared to third quarter 2011 Adjusted Net Loss of $0.4 million, or ($0.02) per diluted share.
– On Sept. 30, 2012, the company’s cash balance was $3.7 million, a decrease of $3.4 million over the prior quarter. The decrease in cash is due to cash used in operating activities of approximately $2.2 million, approximately $0.8 million of cash used for capital expenditures, and $0.4 million used in financing activities relating to the net repayments on the revolving line of credit.
• Debt –
On Sept. 30, 2012, the company had borrowings of $7.6 million outstanding under its Square One Bank revolving line of credit.
“The company exceeded revenue and bottom-line projections for the quarter,” said Ken Cragun, Local Corporation chief financial officer. “Early in the fourth quarter we closed the sale of the Rovion business for $3.9 million with $3.5 million cash at closing. The sale of Rovion also eliminated the $300,000 per quarter cash burn related to this business.”
Third Quarter 2012 Operating Highlights
Record Overall and Organic Traffic –
Overall traffic on the site and network was a record 101 million monthly unique visitors (MUVs) in the third quarter 2012, slightly up from second quarter 2012 and up 10.0% from the year ago period. Organic traffic on the site and network was a record 39.1 million MUVs in the third quarter 2012, up 1.3% from the second quarter 2012 and up 34.0% from the year ago period. Organic traffic is defined as all non-SEM sourced traffic. Overall mobile traffic was 24.6 million MUVs in the third quarter 2012, up 28.1% from the second quarter 2012.
Asset and Liabilities Held for Sale
– On Oct. 19, 2012, we sold all assets related to the Rovion business. The sales price totaled $3.9 million, of which $3.5 million was paid at the close with the remainder being held in escrow for a period of 18 months.
Owned & Operated (O&O):
– Third quarter 2012 total revenue related to the O&O business unit was $18.3 million, up 36% from third quarter 2011 O&O revenue of $13.5 million and down 11% from second quarter 2012 O&O revenue of $20.5 million.
Monetization of Traffic
– Revenue per thousand visitors (RKV) for third quarter 2012 was $276, up 9% from third quarter 2011 RKV of $254 and down 8% from second quarter 2012 RKV of $299.
– Third quarter 2012 total revenue related to the Network business unit was $5.0 million, up 14% from the third quarter 2011 Network revenue of $4.4 million and up 22% from second quarter 2012 Network revenue of $4.1 million.
Network Sites –
The Network business unit ended the third quarter 2012 with more than 1,000 regional media sites utilizing the company’s white label business directory solution.
– Third quarter 2012 revenue was $1.5 million, down 48% from third quarter 2011 revenue of $2.9 million and down 40% from second quarter 2012 revenue of $2.5 million. The reduction was primarily due to the previously disclosed phasing out of legacy customers.
Digital Media Enrollments –
The company ended the third quarter 2012 with approximately 900 Launch by Local subscribers. The company also has over 10,000 additional subscribers via self service, network and channel partners.
Legacy Small and Medium-Sized Businesses (SMBs) –
The company ended the third quarter 2012 with approximately
6,000 legacy subscribers. The company expects to cease billing all legacy subscribers by the end of 2012, as will be fully discussed in its Form 10-Q.
Recent News Highlights:
Rovion Sold for $3.9 Million
In the fourth quarter, Gannett Company, Inc. (“Gannett”) acquired the company’s Rovion business and all related assets. The company has licensed the Rovion technology as part of the agreement and will continue to use the technology in its Launch by Local product offering.
Krillion Licensed to Gannett
– In conjunction with the Rovion sale, Gannett will license the Krillion technology from the company. Krillion’s real time shopping inventory data has been integrated into the Rovion rich media ad platform, providing Gannett’s customers with access to real time shopping data.
New Yahoo! Five Year Agreement
– In the fourth quarter, the company and Yahoo! entered into an expanded five year search and advertising agreement, extending a seven year business partnership.
• Small Medium Business (SMB) Product Bundle
- “Launch by Local” (“Launch”) is the company’s new, full-service digital marketing and advertising solution for small and medium-sized businesses (SMBs). Launch is a complete, cost-effective digital marketing and advertising solution designed to help SMBs build online presence, reach new customers and engage with existing ones.
• Record Third Quarter Search Traffic
– The company reached over 101 million total monthly unique visitors (MUVs), up 10.0 percent from the year ago period.
• Record Third Quarter Mobile Traffic
– Mobile traffic represented over 24.6 million MUVs, up over 274 percent from the year ago period.
• Record Third Quarter Organic Traffic
– The company reached organic traffic of over 39.1 million MUVs, up 34.0 percent from the year ago period.
• Website Magazine’s Top 50 Digital Advertising Networks
– The company was ranked 8
“Top 50 Digital Advertising Networks”.
• Mobile App
– The company released its Local.com mobile app for iOS® and Android™ enabled devices. The new app enables mobile consumers to search for information on local businesses, including products and services.
• Corporate Name Change
- The company’s legal name has been changed to Local Corporation, from Local.com Corporation. The name change reflects the growth in the company’s operations beyond its flagship Local.com website and into a more diversified local media business.
Small Medium Businesses to Increase Digital Marketing Spend
- The company released a Small Business Sentiment Survey study conducted in October by Kelton, examining the factors that small business owners weigh when they consider their digital marketing spend.
Fourth Quarter 2012 Financial Guidance
Due to a combination of recent policy and CPC pricing changes and challenges from key monetization partners we are revising our fourth quarter fiscal 2012 guidance.