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8-K - FORM 8-K - LOCAL Corpd437920d8k.htm
CORPORATE OVERVIEW | 4Q2012
1
…………………………..…………………………………….
Local Corporation
We connect local businesses with online consumers
Corporate Overview: 4Q2012
Exhibit 99.1


CORPORATE OVERVIEW | 4Q2012
2
………………..…………………………………….
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; gain or loss on warrant revaluation; net
income (loss) from discontinued operations; impairment and
severance charges 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.


CORPORATE OVERVIEW | 4Q2012
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………………………………………………..
Local Corporation Overview
Founded
IPO Date
Ticker
Reach
Network of Websites
Direct SMB Subscribers
Patents
Headquarters
1999
2004
LOCM (NASDAQ)
~1 million consumers/day
Over 1,000
~900
10 issued + 11 pending
Irvine, CA
KEY FACTS
REVENUE IN MILLIONS


CORPORATE OVERVIEW | 4Q2012
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…………………………...………………….
The Opportunity
Digital media is going local....
…& we have assets in all areas


5
……………………………………...…….……….
Our Model
LOCAL BUSINESS DATA
(may include deals, coupons,
product info, business content,
events, activities, ratings &
reviews and more)
WE AGGREGATE & PUBLISH LOCAL CONTENT
THAT CONTENT IS INDEXED BY SEARCH ENGINES
WE MONETIZE TRAFFIC
FROM THOSE ENGINES
MAJOR
SEARCH
ENGINES
OUR
PARTNERS’
ADVERTISERS
PROPRIETARY NETWORK OF
1,000+ SITES
OVER 30MM
CONSUMERS
PER MONTH
DIRECT
CUSTOMERS
Traffic  x Monetization =
CORPORATE OVERVIEW | 4Q2012
5
Revenue


CORPORATE OVERVIEW | 4Q2012
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…………………………………………………….
The Challenge for SMBs
Only 33.4%
Only 22%
Just
6.7%
Only
6%
SMBs spend thousands
and need multiple vendors
to solve for their most basic marketing and advertising needs
have a local phone number on their home page
have an email address on their website
of SMB websites are mobile-compatible
have a Facebook business page
*Research by Vsplash and BIA/Kelsey: SMB Digital Scope and Audit Study


CORPORATE OVERVIEW | 4Q2012
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...………….….
Our SMB Solution
Monthly subscription sold to SMBs starting at $249 per month
Powered by our own proprietary technology
Launch by Local announced August  2012
SMBs could spend over $1,000/month with other providers to get
everything that is already included in our one solution.


CORPORATE OVERVIEW | 4Q2012
8
…………………………………………….…………….………………………..
Mobile
Mobile Apps and mobile-enabled available
for consumer sites:
Local.com
Spreebird.com
Launch by Local solution offers a
mobile-optimized website for SMBs
Source: BIA/Kelsey


CORPORATE OVERVIEW | 4Q2012
9
………….…………………..….
Local customers are worth more!
Search Term
Click Bids*
Premium
Plumber
$9.55
282%
Plumber
Los Angeles
$26.91
Credit Union
$0.91
235%
Seattle
Credit Union
$2.14
Restaurant
$1.39
139%
San Francisco
Restaurant
$1.93
Moving Company
$10.82
114%
Denver
Moving Company
$12.38
Wedding Florist
$1.92
147%
Orlando
Wedding
Florist
$2.82
Hotel
$1.80
200%
New
York
City
Hotel
$3.60
Pay-per-click rates for local versus national keyword terms…
Why Local Consumers Matter
* Bids as of June 25, 2012


CORPORATE OVERVIEW | 4Q2012
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Simple Growth Strategy
Number of sites
Volume of traffic per site
Mobile
..……………………………………………….………….
Grow Traffic
Increase Monetization
Direct customers


CORPORATE OVERVIEW | 4Q2012
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..……………..…………………………………….
Strategy Momentum: Traffic


CORPORATE OVERVIEW | 4Q2012
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..…..…………………………………….
Strategy Momentum: Monetization


CORPORATE OVERVIEW | 4Q2012
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………..………..…………………………….
More balanced revenue
Higher margin
More predictable
Better visibility
Organic Traffic & Revenue Goals
Organic/direct revenue includes revenue from organic traffic and direct advertiser relationships


CORPORATE OVERVIEW | 4Q2012
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…...…..……….
Goal: Improved Higher Margins As We Grow Organic
Expected to be high-margin revenue
Expected to improve gross margins significantly
Note: Actual results could differ materially from these projections.
Organic/direct revenue includes revenue from organic traffic and direct advertiser relationships


CORPORATE OVERVIEW | 4Q2012
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…………………………………………………………...………………………..
Assets
10 Patents issued/11
pending
Aggregate & publish local
content
Proprietary platform for SMB
Solution
Greater than 30M MUVs
on our site and network
~ 300K daily deal
subscribers
Channel Partners
Regional media
publishers
SMB Solution
resellers
Google
Yahoo!
Super Media
ATTi
~ 900 Direct SMB
Subscribers


CORPORATE OVERVIEW | 4Q2012
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……………………..……….……….
Experienced with Strategy Discipline
Heath Clarke
Founder, Chairman & CEO
20+ yrs exp
Founded Local in ’99
VP eCommerce LanguageForce
CEO/Founder AFP (Australia)
Ken Cragun
CFO
20+ yrs exp
CFO Modtech
SVP MIVA
CFO ImproveNet
CFO NetCharge.com
CPA; Big 4 Exp.
Mike Sawtell
President & COO
20+ yrs exp
Chairman & CEO, DigitalPost Interactive
Pres. & COO , Interchange Corp. (now
Local Corporation)
COO & VP of Sales, Informative Research
Peter Hutto
SVP, Corporate Development
Co-Founder, ZeroDegrees
Managing Director, EDS & MCI
SystemhouseG
Erick Herring
SVP Technology
Founder Townloop
CTO Feedback.com
CTO, VP Product Webvisible
CTO Adapt Technologies
Rob Luskey
VP, Business Development
Director, Business Development,
go2 Systems, Inc.
Senior Manager, Internet Products and
Services, United Yellow Pages
Owner & Publisher, Local Impact
Publishing


CORPORATE OVERVIEW | 4Q2012
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…………………………………………..………….…….……….
Long Term Growth
20% YoY revenue growth (Q3’12 over Q3’11)
~40% CAGR 2006-2012
FY12 Guidance: ~$100M revenues: ~27% YOY growth and ~$750K Adjusted Net Income
Forward-Looking:
Increased
organic
revenue
=
higher
margins
and
improved
bottom
line
Note: See reconciliation of Adjusted Net Income to GAAP net income at presentation end.


CORPORATE OVERVIEW | 4Q2012
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………………………………...……….
3Q12 Balance Sheet & Cap. Table
Key Balance Sheet Items
(in thousands)
Additional Data:                                                
I.
$12 million credit facility.  Interest rate approximately 5%
II.
September 30, 2012
Cash
$3,706*
Accounts Receivable
13,954 
Total Assets
58,784
Total Debt
7,627
Total Liabilities
23,234    
Shareholders Equity
$35,550
September 30, 2012
Common stock
22,095    
Options
1  
(Avg. Strike $4.27)
4,448
Warrants
(Avg. Strike  $8.37)
1,239      
RSUs
367
PSUs
257
Fully Diluted
28,406
Capitalization
(in thousands)
Total authorized shares 65,000,000 common and 10,000,000 preferred
* Received $3.5 million proceeds from Rovion sale on October 19, 2012


CORPORATE OVERVIEW | 4Q2012
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…………………………..…….……….
Why Invest in Local Corporation?
Track record of growth
Strong management team with proven agility
Leverage via new and growing revenue streams
Proprietary platform


CORPORATE OVERVIEW | 4Q2012
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………………………………………………………
Digital Media Landscape


CORPORATE OVERVIEW | 4Q2012
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Thank You
Heath Clarke
Founder, Chairman & Chief Executive Officer
hclarke@local.com
Ken Cragun
Chief Financial Officer
kcragun@local.com
949.784.0800
http://www.localcorporation.com


CORPORATE OVERVIEW | 4Q2012
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Facebook and Twitter pages engage
customers and increase awareness
Mobile-optimized site
features directions and
click-to-call
Beautiful site design and web
hosting with geo-targeted URL
and custom content
A consistent brand
and user experience
across multiple channels
add to business credibility
CORPORATE OVERVIEW | 4Q2012
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Local SMB Customer: Fabi’s Hair Studio
(Murray Hill Hair Salon)


CORPORATE OVERVIEW | 4Q2012
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…..…….……….
Display ad and enhanced listing on
Local.com raise awareness in local markets
Search engine optimization ensures
page 1 placement by business category
and keyword on a major search engine
More direct customers =
»
Better monetization
»
Greater margins
»
Greater defensibility
»
More visibility
Local SMB Customer: Fabi’s Hair Studio
(Murray Hill Hair Salon)


CORPORATE OVERVIEW | 4Q2012
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……………………………………………………………….……….……….
P&L Trend
Actual
Actual
Forecast
Description
FY-10
FY-11
FY-12
Revenue
$ 84,137
$  78,259
$99,000-100,000
Sequential revenue growth
49%
-8%
27%
Gross Margin
37,620
29,001
Gross Margin %
45%
37%
Other Operating Expenses
33,908
43,629
Operating income (loss)
3,712
(14,628)
Interest and other income (expense)
(275)
(413)
Change in fair value of warrant liability
887
2,633
Income (Loss) before income taxes
4,324
(12,408)
Provision for income taxes
102
178
Net income (loss)  from continuing operations
$   4,222
$ (12,586)
Income (loss) from discontinued operations
(1,972)
Net income (loss)
$   4,222
$ (14,558)
Adjusted Net Income (Loss)
$ 13,775
$   (1,090)
$           750
Weighted average shares
16,788
21,384
23,000
Net income (loss) per share from discontinued operations
$     0.25
$     (0.68)
Adjusted Net Income (Loss) per share
$     0.82
$     (0.05)
$          0.03
Note: See reconciliation of Adjusted Net Income to GAAP net income slide
(in thousands, except per share amounts)


CORPORATE OVERVIEW | 4Q2012
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……..……….
Reconciliation: Adjusted Net Income to GAAP Net Inc
Actual
Actual
Forecast
Description
FY-10
FY-11
FY-12
Adjusted Net Income (Loss)
$ 13,775
$   (1,090)
$        750
Plus interest and other income (expense), net
(275)
(413)
(400)
Less provision for income taxes
(102)
(178)
(200)
Less amortization of intangibles 
(5,734)
(5,136)
(3,700)
Less depreciation 
(1,418)
(3,277)
(4,400)
Less stock-based compensation 
(2,911)
(3,663)
(3,000)
Less revaluation of warrants
887
2,633
unknown
Less non-recurring charges
-
(1,461)
(750)
Less impairment charge
(6,500)
Less Rovion assets held for sale
(1,972)
(1,600)
Gain on Sale of Rovion Assets
1,400
GAAP Net income (loss)
$   4,222
$(14,558)
unknown
Weighted Avg Shares
-
Adjusted Net income (loss)
16,788
21,384
23,000
Weighted Avg Shares
-
GAAP Net income (loss)
16,788
21,384
23,000
Adjusted Net Income (Loss) per share
$     0.82
$     (0.05)
$       0.03
GAAP Net income (loss) per share
$     0.25
$     (0.68)
unknown
(in thousands, except per share amounts)