Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - LOCAL Corp | d253499d8k.htm |
 Local Corporation Overview
November 2011
Connecting Local Merchants with Online Consumers
EXHIBIT 99.1 |
 Local Corporation Presentation | 11-2011
Safe Harbor Statement; Non-GAAP Financial Measures
2
and non-recurring items. Adjusted Net Income/Loss, as defined above, is not a
measurement under GAAP. Adjusted Net Income/Loss is reconciled to net loss
and loss per share, which we believe are the most comparable GAAP
measures, at the end of this presentation. Management believes that Adjusted
Net Income/Loss provides useful information to investors about the company’s
performance because it eliminates the effects of period-to-period changes in
income from interest on the company’s cash and marketable securities,
expense from the company’s financing transactions and the costs associated
with income tax expense, capital investments, stock-based compensation
expense, warrant revaluation charges, and non-recurring charges which are
not directly attributable to the underlying performance of the company’s
business operations. Management uses Adjusted Net Income/Loss in
evaluating the overall performance of the company’s business operations. A
limitation of non-GAAP Adjusted Net Income/Loss is that it excludes items that often have a
material effect on the company’s net income and earnings per common share calculated in
accordance with GAAP. Therefore, management compensates for this limitation by using Adjusted
Net Income/Loss in conjunction with GAAP net loss and loss per share measures.
The company believes that Adjusted Net Income/Loss provides investors with
an additional tool for evaluating the company’s core performance, which
management uses in its own evaluation of overall performance, and as a base-
line for assessing the future earnings potential of the company. While the
GAAP results are more complete, the company prefers to allow investors to
have this supplemental metric since, with reconciliation to GAAP (as noted
above), it may provide greater insight into the company’s financial results. The
non-GAAP measures should be viewed as a supplement to, and not as a
substitute for, or superior to, GAAP net income or earnings per share.
Certain matters being discussed by Local Corporation’s management today
include forward looking statements which are made pursuant to the Safe
Harbor provisions of section 21-E of the Securities Exchange Act of 1934.
Investors are cautioned that statements which are not strictly historical
statements, including statements concerning future expected financial
performance, management objectives and plans for future operations, our
relationships with strategic or other partners, the release of new products or
services or enhancements to existing products or services, our expectations
regarding potential acquisitions and the future performance of past acquisitions
including our ability to realize expected synergies, trends in the market for our
current or planned products or services, and market acceptance of our
products or services, constitute forward looking statements. The
forward looking statements include, but are not limited to, any statements containing the words
“expect”, “anticipate”, “estimates”, “believes”, “should”,
“could”, “may”, “possibly”, and similar expressions and the negatives
thereof. These forward looking statements involve a number of risks and uncertainties
that could cause actual results to differ materially from the forward looking
statements. Those risks and uncertainties are detailed in the company’s filings
from time to time with the Securities and Exchange Commission. The
information contained in the forward looking statements is provided as of the
date of such oral statements and the company disclaims any obligation to
update such statements. This
document includes the non-GAAP financial measure of “Adjusted Net Income/Loss”
which we define as net income/loss excluding: provision for income
taxes; interest and other income (expense), net; depreciation;
amortization; stock based compensation charges, warrant revaluation charges |
 Local Corporation Presentation | 11-2011
Local Corporation Overview
•
History
»
Founded in ’99; IPO’d in 2004 (NASDAQ: LOCM)
»
Transitioned from search network to local search in 2005
•
We generate revenues from local online advertising. Our customers
include… »
About 30 million consumers per month looking for products and services
locally »
Over 31,000 local merchants wanting to advertise to those consumers
»
Over 100 channel partners that help us to reach merchants and consumers
•
Our Major Partners/Customers
»
Google, Yahoo, Supermedia (superpages.com), ATTi (yellowpages.com)
»
Morris Communications, CNHI, GateHouse Media, EW Scripps
•
Financials (non-GAAP)
»
40% CAGR 2006-2010
»
3Q11 Revenue: ~$21MM (up 34% QoQ) and $1.1MM Adjusted Net Loss
»
4Q11 Revenue guidance: $24MM (up 15% QoQ) and break-even Adjusted Net
Income »
FY11 Revenue guidance: ~$78MM
3
“Over the next five years…
39% ($5.1 billion) of the ad
spending on print yellow pages
will VANISH
as small businesses shift
marketing budgets online.”
“Say Goodbye to Yellow Pages”
A Borrell Associates report published July 2008
Our
mission
is
to
be
a
leader
at
connecting
local
merchants
with
online
consumers
Adjusted Net Income (Loss) = Net income (loss) before interest, taxes, depreciation,
amortization, stock-based compensation, warrant revaluation charges, and non-recurring Items |
 Local Corporation Presentation | 11-2011
Regional Media Publishers
-
Newspapers, TV, radio
Our Ecosystem
4
Flagship Property
Direct SMBs
White Label Sites
Organic Traffic
Business Listings
Daily Deals Markets
Publisher Partners
MUVs in 3Q11
Channel SMBs
Daily Deal Members
Consumers
Local Merchants
We Connect Local Merchants with Online Consumers
We generate revenue from ads, including pay-per-click,
pay-per-call, subscription, daily deals & display
1
14
40%
100
1,600
9,000
31,000
300,000
18MM
92MM
Search
Consumer Properties
-
Local.com
-
Krillion.com
-
White label sites
-
Portfolio of geo-cat. sites
Non-search
Deals
-
Spreebird
-
Facebook, Twitter
Display
(for merchants)
Ad Partners
-Google
-
Yahoo
-
SuperMedia
-
ATTi
Channel Partners
Direct
SMB Subscribers
-
Feet on the street sales
-
Telesales
stations, yellow pages
(for
merchants)
Ad Agencies
Social
Media |
 Local Corporation Presentation | 11-2011
Expanding Product Suite
5
Channel
Local Merchants
Consumers
•
Local Premium
»
Subscription ads on Local.com
•
Web Hosting
»
Basic product for ~$15/month
•
LocalConnect
Business Directory
»
‘Local businesses’
tab for
newspaper, tv, radio station
websites
•
Exact Match Suite of SMB Solutions
»
Four new ad products: Mobile, SEO,
display and social media ad packages
»
More coming soon
•
Deals
via Spreebird.com
•
Local.com
»
Local business search
•
Krillion.com
»
Local product search
•
Spreebird.com
»
Deal-of-the-day
»
Travel deals
•
Krillion
Product Directory
»
‘Local products’
tab for
newspaper, tv, radio station
websites
•
Rovion Ad Management Platform
»
Rich media ad management for
agencies and national brands to
localize national ad campaigns
•
White Label Exact Match Suite
»
Coming soon |
 Local Corporation Presentation | 11-2011
4Qs
Change,
Challenge,
Transformation
Return
to
Growth
6
Revenue
•
Diversified between partners
•
Diversified outside search
ecosystem
Products
•
Expanded range
•
Diversified outside search
ecosystem
Traffic
•
Record organic growth
Technology Platform
•
Expanded
•
Differentiated
Team
•
Refined
•
Streamlined
$0.0M
$5.0M
$10.0M
$15.0M
$20.0M
$25.0M
Q1-09
Q2-09
Q3-09
Q4-09
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
Q3-11
Q4-11E
Acquired
Octane360
–
SEO
& web hosting platform
Acquired Rovion rich media ad platform
Acquired Krillion shopping data platform
Launched Spreebird (daily deals)
Acquired Screamin’
Media Group
(daily deals)
Google ad feed begins
3Q09 introduced ad feed product
3Q10+ phase out feed product as non-core
4Q>2Q Yahoo/Bing impact |
 Consumer Properties
7
•
A record 92MM MUVs in 3Q11
»
Almost one-third of traffic was organic
»
Balance of traffic via SEM (Google/Yahoo/Bing)
»
All users doing local+commercial searches
•
100,000 Sites
»
Either owned or hosted on our platform
»
Business search and more on Local.com
»
Daily deals and travel deals on Spreebird.com
»
Local product info on Krillion.com
»
1,600 regional media websites
»
100,000 geo-category websites
•
Consumers Provided
»
Local business listings
»
Local product info for 70k products from 60k
retailers nationwide
»
Coupons, specials, daily deals and travel deals
»
Events, activities, topics, reviews & more
•
Apps & Mobile Web
»
Coming soon
Local shopping info
embedded in rich
media display ads
Engage via mobile
web & apps
(coming soon)
Data published across
Consumer Properties
Local Corporation Presentation | 11-2011 |
 Local Corporation Presentation | 11-2011
Expanding ‘Exact Match’
Small Business Product Suite
8
•
Exact Match suite of SMB ad products
»
Four products released since May 2011
»
More products coming soon
•
Subscription pricing from $129-$199/month
•
Monetizing our ecosystem with direct advertisers
»
Expanded product suite +
»
Expanded sales capabilities =
»
More defensible business with
»
Recurring, higher margin revenues
Our Products Connect Local Merchants with Online Consumers
|
 Local Corporation Presentation | 11-2011
9
More Channel Products to Expand Channel Partners
•
LocalConnect
»
Business directory plus widgets
»
SEO-friendly increases publishers’
site traffic
»
Monetized by Local.com –
we share revenues
•
100 Publishers, 1,600 Sites
»
Primarily newspaper websites, but also tv, radio
stations and cityguides
•
Krillion product directory coming soon
Google users see
our search results |
 Local Corporation Presentation | 11-2011
10
•
RAMP+Krillion allows local rich media ads with real-time ‘in
store’
product, inventory and pricing data
•
Designed for national brands with local presence
»
Potential clients include big box retailers, automotive
brands, luxury goods retailers, regional and national
agencies/media brands
•
RAMP enables the development and management of…
»
Agency quality creative with web-based drag-and-drop
interface
»
Digital assets and content libraries
»
Expandable, floating, pre-page interstitial banners &
InPerson ad units
•
Saves time and money, improves ROI
»
No need for flash ad programmers
»
Lower cost, faster turnaround ad production
»
A unique, new local rich media ad product that captures
transitioning national-to-local ad spend
More Channel Products to Expand Channel Partners |
 Local Corporation Presentation | 11-2011
Search Term
Click
Bids*
Premium
Restaurant
$0.22
577%
San Francisco
Restaurant
$1.27
Credit Union
$0.45
116%
Seattle
Credit Union
$0.52
Plumber
$2.60
275%
Plumber
$7.14
Moving Company
$2.35
252%
Denver
Moving Company
$5.93
Divorce Attorney
$2.03
186%
Divorce Attorney
Las Vegas
$3.77
Auto Repair
$1.97
157%
Dallas
Auto Repair
$3.09
Wedding Florist
$0.51
278%
Orlando
Wedding Florist
$1.42
Hotel
$0.99
138%
New York City
Hotel
$1.37
Our Target Demographic
•
Over
half
of
our
traffic
is
the
‘Soccer
Mom’
demographic
»
Aged between 25-45 with one child or more at home
»
Controls significant portion of the household purse strings
»
Typically spends 80% of that money within 20 miles of home
•
89% of in-store purchasers in key categories have conducted online
research**
•
82% of people visiting local search sites follow-up with offline action
(store visit/call)*
•
Soccer mom + local + commercial = ad sponsors
•
Local.com site monetization ~$100+ RPM
11
* Bids
as
of
January
6,
2011
**
TMP/Yahoo-comScore
study
–
2007
Advertisers often pay more for local keywords…
Las Angeles |
 Local Corporation Presentation | 11-2011
Spreebird
‘Community
Daily
Deals’
–
It’s
Different
12
•
Daily deals closes the online-offline advertising gap: “Did my
online ad drive traffic to my store?”
»
“Did my online ad drive traffic to my store?”
»
SMBs
only
pay
when
we
drive
a
customer
to
their
register
•
Acquired Screamin’
Daily Deals July 2011
•
To us,
schools
are
a
‘hyperlocal
node’
because
our
target
demographic typically touches a school twice each day
»
Spreebird partners with a school, which then promotes us
»
Mom signs up to receive deals that will benefit the school
»
Mom gets a great deal from local merchants via Spreebird
»
Spreebird donates back to the school in the name of the
merchant
•
Halo effect
»
Merchant becomes ‘community hero’, leading to local
branding and repeat hyperlocal business from a desirable
demographic
Donation to school in
merchant’s
name
= Community Hero!!!
Hyperlocal node
Local merchant
Target: Soccer Mom
: Each time a soccer-mom saves money on great, hyperlocal Spreebird
deals,
we
donate
10%
of
our
revenue
back
to
the
kids’
school
in
the
merchant’s
name!
School Rewards |
 Local Corporation Presentation | 11-2011
Unique Local Technology Portfolio
13
•
Multiple databases with
millions of SMB listings to
validate business
information
•
We crawl the web and use
our proprietary Keyword
DNA™
+ web indexing
algorithms to generate all
our search results
•
Ingest real-time ad and
data feeds from multiple
partners
•
Syndicates those feeds to
over 100,000 sites
•
A fully featured group-
buying distribution
platform
•
Personalization engine
driving enhanced user
experience
•
API, RSS, widget
syndication for our
regional media network
and planned partners
•
Rich media ad
management and serving
platform
•
Automated creation,
production, management
and serving of ads
•
Rovion ‘in-person’
video
unit
•
Green screen studios &
network
•
Highly scalable geo-
category domain
acquisition
•
Automated website hosting
& mgt. features
•
Content marketplace for
the procurement, creation,
payment and management
of custom local content for
SMB websites
•
Pulls real-time product
inventory directly from
manufacturers, retailers
•
Data aggregation and
normalization technologies
and know-how
•
Product-based search
results
•
9 patents issued, 8 pending in
local/mobile/data/display |
 Local Corporation Presentation | 11-2011
Experienced Team with Strategy Discipline
14
Heath Clarke
Chairman & CEO
20+ yrs exp
VP eCommerce LanguageForce
CEO/Founder AFP (Australia)
Michael Plonski
CTO
15+ yrs exp
SVP/CIO & COO Digital Martha
Stewart Living Omnimedia
VP, CTO Tribune Information
Systems, Tribune Interactive
Ken Cragun
CFO
20+ yrs exp
CFO Modtech
SVP MIVA
CFO ImproveNet
CFO NetCharge.com
CPA; Big 4 Exp.
Malcolm Lewis
SVP, GM Social Buying
15+ yrs exp
Founder, Fablistic
SVP/GM, Local Corporation
Sr. Management, Oracle Corporation
Mike Sawtell
COO
20+ yrs exp
Chairman & CEO, DigitalPost Interactive
Pres. & COO , Interchange Corp. (now
Local Corporation Corp.)
COO & VP of Sales, Informative Research
Management, Northrop Grumman Corp. &
General Dynamics |
 Local Corporation Presentation | 11-2011
Financial Performance
15
Q4-2011 annualized revenue = $96.0M
Adjusted Net Income (Loss) = Net income (loss) before interest, taxes, depreciation,
amortization, stock-based compensation, warrant revaluation charges, and
non-recurring Items $14.2M
$21.5M
$38.3M
$56.3M
$84.1M
$77.3M
$(0.63)
$(0.33)
$0.21
$0.82
$(1.10)
$(0.60)
$(0.10)
$0.40
$0.90
$1.40
$0.0M
$10.0M
$20.0M
$30.0M
$40.0M
$50.0M
$60.0M
$70.0M
$80.0M
$90.0M
2006
2007
2008
2009
2010
2011 Fcst
$100.0M
$(0.96) |
 Local Corporation Presentation | 11-2011
3Q11 Balance Sheet & Capitalization
16
Key Balance Sheet Items
(in thousands)
Capitalization
September 30, 2011
Common stock
22,009
Options
(Avg.
Exercise
Price
$4.65)
4,566
Warrants
(Avg.
Exercise
Price
7.11)
1,478
Fully Diluted
28,053
1.
Options and warrants represent approximately $31MM in cash
Additional
Data:
I.
II.
III.
(in thousands)
In August 2011 the Company closed on a $12 million credit facility
Total authorized shares 65,000,000 common and 10,000,000 preferred
In January 2011 the Company completed a public offering of 4.6 million shares at a
price of $4.25 per share. Net proceeds of $18.2 million 1
1
September 30, 2011
Cash
$10,119
Accounts Receivable
13,018
Total Assets
76,478
Total Debt
8,000
Total Liabilities
23,978
Shareholders Equity
$52,500 |
 Local Corporation Presentation | 11-2011
Why Invest in Local Corporation?
17
•
Rapidly growing company in a rapidly growing market
•
Beneficiary of secular trend towards online ad spend by SMBs
•
Extensive technology platform and differentiated product portfolio
•
Growing revenue streams with considerable future growth potential
•
Proprietary products that improve operating leverage over time
•
Experienced executive team focused on execution with strategy discipline
•
Four quarters of change, challenge and transformation
•
Not
just
a
search
engine
–
a
media
business
with
greater
product
differentiation
•
Projecting a return to strong growth with greater revenue diversification
An Attractive Position
in Fast Growing Markets
Strong Operating Model
with Experienced
Leadership Team
Completing a Business
Transformation |
 Local Corporation Presentation | 11-2011
18
Thank You
Heath Clarke
Chairman & Chief Executive Officer
hclarke@local.com
Ken Cragun
Chief Financial Officer
kcragun@local.com
949.784.0800
http://corporate.local.com |
 Local Corporation Presentation | 11-2011
We Operate in the High Growth Online Advertising Market
19
JiWire; Q1 2011
•
We compete in several high-growth local ad segments…
»
Local search –
14.2% 2011-2012
»
Display/rich media –
15.5% 2011-2012
»
Deal-of-the-day
–
extreme
growth
Borrell Associates; 2010
Kelsey Group; March 2011
Deal of the Day/Group Buying |
 Local Corporation Presentation | 11-2011
P&L Trend –
Quarterly
20
Adjusted Net Income (Loss) = Net income (loss) before interest, taxes, depreciation,
amortization, stock-based compensation, warrant revaluation charges, and
non-recurring Items Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Forecast
Description
Q1-10
Q2-10
Q3-10
Q4-10
FY-10
Q1-11
Q2-11
Q3-11
Q4-11
Revenue
18,631
$
23,004
$
22,457
$
20,045
$
84,137
$
16,795
$
15,584
$
20,877
$
24,000
$
Sequential revenue growth
14%
19%
-2%
-12%
49%
-16%
-7%
34%
15%
Gross Margin
7,829
9,828
11,752
8,211
37,620
5,807
4,772
8,370
Gross Margin %
42%
43%
52%
41%
45%
35%
31%
40%
Other Operating Expenses
7,354
8,750
9,754
8,050
33,908
8,618
10,506
12,639
Operating income (loss)
475
1,078
1,998
161
3,712
(2,811)
(5,734)
(4,269)
Interest and other income (expense)
(56)
(61)
(79)
(79)
(275)
(55)
(30)
(227)
Change in fair value of warrant liability
(272)
335
1,830
(1,006)
887
1,559
411
513
Income (Loss) before income taxes
147
1,352
3,749
(924)
4,324
(1,307)
(5,353)
(5,353)
Provision for income taxes
13
122
-
(33)
102
11
51
48
Net income (loss)
134
$
1,230
$
3,749
$
(891)
$
4,222
$
(1,318)
$
(5,404)
$
(4,031)
$
Adjusted Net income (loss)
2,575
$
3,451
$
4,595
$
3,154
$
13,775
$
8
$
(1,903)
$
(1,093)
$
-
$
Weighted average shares
15,918
17,342
17,202
16,576
16,788
20,241
21,254
21,940
Net income (loss) per share
0.01
$
0.07
$
0.22
$
(0.05)
$
0.25
$
(0.07)
$
(0.25)
$
(0.18)
$
Adjusted Net income (loss) per share
0.16
$
0.20
$
0.27
$
0.19
$
0.82
$
0.00
$
(0.09)
$
(0.05)
$ |
 Local Corporation Presentation | 11-2011
Reconciliation:
Adjusted
Net
Income
to
GAAP
Net
Inc
-
Qtrly
21
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Forecast
Description
Q1-10
Q2-10
Q3-10
Q4-10
FY-10
Q1-11
Q2-11
Q3-11
Q4-11
Adjusted Net income (loss)
2,575
$
3,451
$
4,595
$
3,154
$
13,775
$
8
$
(1,903)
$
(1,093)
$
-
$
Plus interest and other income (expense), net
(56)
(61)
(79)
(79)
(275)
(55)
(30)
(227)
(150)
Less provision for income taxes
(13)
(122)
-
33
(102)
(11)
(51)
(48)
(50)
Less amortization of intangibles
(1,230)
(1,454)
(1,561)
(1,489)
(5,734)
(1,198)
(1,210)
(1,371)
(1,700)
Less depreciation
(246)
(259)
(330)
(583)
(1,418)
(649)
(703)
(850)
(920)
Less stock-based compensation
(624)
(660)
(706)
(921)
(2,911)
(972)
(1,020)
(955)
(800)
Less revaluation of warrants
(272)
335
1,830
(1,006)
887
1,559
411
513
unknown
Less non-recurring charges
-
-
-
-
-
-
(898)
GAAP Net income (loss)
134
$
1,230
$
3,749
$
(891)
$
4,222
$
(1,318)
$
(5,404)
$
(4,031)
$
unknown |