Local.com's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Local.com Corporation (LOCM)

Q1 2012 Earnings Call

May 10, 2012 5:00 pm ET

Executives

Janine Zanelli – Investor Relations

Heath B. Clarke – Chairman and Chief Executive Officer

Kenneth S. Cragun – Chief Financial Officer and Secretary

Analysts

Jon R. Hickman – Ladenburg Thalmann & Co. Inc.

Edward M. Woo – Ascendiant Capital Markets

Presentation

Operator

Good afternoon. My name is Sunny, and I will be your conference operator today. At this time, I’d like to welcome everyone to the First Quarter 2012 Local Corporation’s financial results conference call. (Operator Instructions)

Thank you. It is now my pleasure to turn the call over to Ms. Janine Zanelli. Please go ahead ma’am.

Janine Zanelli

Welcome to Local Corporation’s first quarter 2012 conference call. With me are Local’s Chairman and CEO, Heath Clarke; and our Chief Financial Officer, Ken Cragun. Heath and Ken will discuss our first quarter 2012 results and updated guidance for the full year 2012. We’ll then open the lines for questions.

Today’s discussion includes forward-looking statements that are subject to risks and uncertainties that can cause actual results to differ materially from those expressed in the forward-looking statement. These risks and uncertainties will be outlined at the end of this conference call and are detailed in Local.com’s SEC filings. Any forward-looking statements are only made as of the date of this conference call and we undertake no obligation to update such statements to reflect subsequent events or circumstances.

We use non-GAAP financial measures in evaluating our financial performance. Please refer to the press release we issued today for how we define such non-GAAP measures and our reasons for using them as well as a detailed review of our first quarter 2012 results including the corresponding GAAP financial measures and a reconciliation of our non-GAAP to GAAP financial measures.

This conference call is publicly available via audio webcast through our website and a replay of the call will be available for the next 90 days.

I’d now like to turn the call over to our CEO, Heath Clarke.

Heath B. Clarke

Thanks, Janine. Local Corporation continues to make great progress meeting our first quarter guidance and raising our adjusted net income guidance for the year. Three simple ideas that I’d like to share on this call execution, growth and platform.

So let’s start with execution. In the first half of last year, we experienced a revenue decline caused by the Yahoo!/Bing alliance. This decline ended when we deployed Google in August. Since then, Local Corporation has met our guidance for three consecutive quarters. As a team, we’ve executed well on many initiatives over the past nine months and this has yielded a rapid turnaround in our business we projected and delivered in the second half of 2011. We saw a revenue growth of 40% over the first half. We significantly improved our visibility since mid ’11 and we have confidence in our projection of a further 40% revenue growth in 2012.

That leads us to our second topic, growth. We’ve consistently delivered record overall organic and now mobile traffic in record monetization of our traffic. In the past year, we’ve greatly enhanced our technology platform, diversified our revenues, launched many new products and achieved record organic revenue. We believe we’ll see many new records achieved again this year, starting with record revenue of $27 million projected for the second quarter, up 73% from the year ago period.

Consistent with previous guidance, we expect a small adjusted net income, while we continue to invest for future growth, most heavily in our own sales engine selling our unique product off our proprietary platform.

And that brings me to my third point, platform. We’ve compiled a proprietary platform that’s uniquely powerful in the local online ad industry. Our platform provides three key solutions for an SMB, SM being small and medium-sized business. The three key solutions are presence, reach and engagement. This means a comprehensive online presence, highly targeted reach to potential new customers and now engagement tools for an SMB’s existing customers.

Let me give you an example of presence. One of our marketing consultants asks an SMB two simple questions, what do you sell and where do you sell in? With those questions answered, our platform acquires a domain name uniquely tailored for that SMB, and we create a beautiful website for them, plus a social media presence, and then we muggle enable everything, so consumers can find that SMB no matter what device they use.

To make it all fit, we ensure our SMB has brand consistency across all these online properties. Our highly automated platform completes this process in minutes. We then periodically publish fresh and interesting content across our SMB sites to keep their customers engaged.

Once the SMBs have presence, they want to reach more customers online. Our platform provides a variety of digital marketing solutions including pay per click, regeneration, site listings, superior display ads, search engine optimization in daily deals. So that our small-business customers can reach their potential customers efficiently and effectively. The final step in our platform in selling, I’m really excited about is what we call engagement. It’s how our SMB customers engage with their customers after the sale. This is new for us, but we anticipate three new products in the second half email, SMS and Rewards.

We have built and are now beta testing an email marketing product and we expect to integrate SMS, also known as text marketing into our platform later this year. As we announced today, we are now beta testing our Rewards program in two markets. Just like Rewards according to local supermarket, we provide our SMB customers with a card that they give to their best customers.

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