Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - LOCAL Corp | d316727d8k.htm |
 Local
Corporation Overview March 2012
Connecting Local Merchants with Online Consumers
Exhibit 99.1 |
 Local Corporation Presentation | March 2012
Safe Harbor Statement; Non-GAAP Financial Measures
2
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 and non-recurring items. Adjusted Net
|
 Local Corporation Presentation | March 2012
Shifting Ad Spend
3
We all know digital is growing, but did you know digital media is going local?
|
 Local Corporation Presentation | March 2012
Local Corporation
Founded 1999, IPO 2004: NASDAQ: LOCM
1.
We specialize in connecting online consumers with local businesses
2.
Advertising revenue model
3.
A network that reaches one million consumers a day across search, display, email &
mobile 4.
A unique, proprietary technology platform covered by 8 patents, 11 pending
5.
Partners include Google, Yahoo, Supermedia, ATTi, ReachLocal, Marchex and many others
4
Five acquisitions in 18 months have expanded our technology platform and product portfolio,
allowing us to serve emerging, high growth local ad markets
|
 Local Corporation Presentation | March 2012
Powered by our Proprietary Technology Platform
What We Do
5
Consumer
Properties
Business
Solutions
Media
Services
30MM+ MUVs
‘Local businesses,
products & services’
Local.com
Krillion.com
Spreebird.com
1,000+ Site Network
27,000 SMB
Subscribers
Digital Media Suite
Subscription, CPM &
Performance Pricing:
Web Hosting
Social Media
SEO, Search,
Display, Mobile,
Daily deals and more
We connect consumers with the
local businesses, products
and services they seek
Flagship Property
Direct SMBs
White Label Sites
Organic Traffic
Business Listings
Daily Deals Markets
Publisher Partners
MUVs in 4Q11
Channel SMBs
Daily Deal Members
Impressions Dec. ‘11
100 Publishers,
Agencies
Platform Solutions
Private Label Search &
Digital Media Products
Production
Creative Services
Ad Management &
Distribution
We enable local businesses to target those
consumers with digital media products
We enable publishers & agencies to participate
in the local media revolution via our platform
1
10
30%
100
1,000+
9,000
27,000
300,000
12MM
94MM
1B |
 Local Corporation Presentation | March 2012
Consumer Properties
6
•
Owned & Operated plus 1,000+ regional media sites
»
A record 94MM monthly unique visitors in 4Q11
–
Up 18% Y/Y with record monetization of traffic
–
Over 30% of traffic was organic
–
High buying intent
–
Balance of traffic via SEM from major engines
•
Local businesses, products and services
»
Business name/category search
»
Coupons, specials, daily & travel deals
»
Events, activities, topics, reviews & more
»
Real-time product search
–
70k products in 70k retail locations
•
Rapidly going mobile
»
Five mobile products launched 2H11; more coming
»
40% of Spreebird.com traffic is mobile; 10% of Local.com
Data published across
Consumer Properties |
 Local Corporation Presentation | March 2012
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
Los
Angeles
$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
Advertisers
Pay More For Local Consumers
•
57% of Local.com and 80% of Spreebird traffic is the ‘Soccer Mom’
demo
»
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
»
~70% of revenue is CPC; 20% subscriptions; 10% display
7
* Bids
as
of
January
6,
2011
**
TMP/Yahoo-comScore
study
–
2007
Pay-per-click rates for local versus national keyword terms…
Search Term |
 Local Corporation Presentation | March 2012
Business Solutions
8
•
A ‘do it for me’
digital media package for SMBs
»
Exact Match suite priced at ~$200 per month
»
Guaranteed multi-channel access to consumers
–
SEO, social media, email, display and mobile
•
Adding new features all the time
»
Many exciting product developments in the near-term pipe
•
Sold primarily via telesales
»
Overall sales force tripled to 70 during 2011
We help local businesses reach online consumers |
 Local Corporation Presentation | March 2012
9
•
Regional media sites: Private label local search
»
100 publishers representing 1,000+ sites
»
Revenue share from a variety of ad types
•
Channel Partners: Private label business solutions
»
Over 9,000 units sold by our publisher partners
»
Subscription pricing
»
Local rich media ads that incorporate real-time ‘in
store’
product, inventory and pricing data
»
Web-based, agency quality creative with drag & drop
interface and cloud storage of digital assets
»
CPM pricing
»
Targeting existing digital media spend and helping
transition it to local ad spend, managed through us
»
Revenue derived from a variety of ad types
Media Services
Our platform enables our
clients to author rich media
ads with real-time shopping
data embedded to drive
higher conversions
Our technology platform powers a range of sophisticated media services,
enabling our clients to participate in the local online advertising revolution
•
Agencies
&
National
Brands:
Rich
media
authoring
•
Moving
towards
‘Fortune
5,000’
market |
 Local Corporation Presentation | March 2012
Spreebird Daily Deals
10
•
Deal side of the business mirrors Groupon
»
We partner with a business, craft a great deal, agree to a revenue
share, then send it to our user base
»
We generate revenue when a user buys the deal
•
How we acquire customers is different
»
1) Partner with school PTA for fundraising (they promote us)
»
2) Pay a bounty to PTA when ‘Mom’
signs up for Spreebird
»
3) When Mom buys a deal, donate 10% of our revenue to school
of
Mom’s
choice
in
merchant’s
name
–
win/win/win
•
Once in a school, hard to dislodge us
»
Schools become reliant on income and really get behind program
»
Multi-year opportunity to target demographic
•
We’re in over a thousand schools in So.Cal. and headed North
•
We’re expanding our services
»
Product and travel deals launched
»
Loyalty/rewards
program
and
‘select
buyers’
club
coming
soon
Our customer acquisition strategy is intended to keep our costs down while building a
defensible market position |
 Proprietary
Technologies Power Our Platform 11
12 million SMB listings across multiple
databases to validate and enhance
business information
daily deals
personalization engine
highly scalable geo-category
domain acquisition based on
consumer usage analysis
real-time product
inventory directly from
manufacturers, retailers
8 patents issued, 11
pending in local, mobile,
data & display
feed syndication
real-time ad and data integration from multiple partners
web-based drag & drop rich
media production
product-based search feeds
integrated into multiple ad types
data aggregation and normalization technologies
web crawlers
content marketplace
Keyword
DNA™
technology
display ad production, management and serving
Our platform incorporates a unique combination of technologies that power an increasingly
differentiated suite of digital media solutions for a wider range of clients
web hosting
search engine
optimization
daily deals
geo-targeted
display and
subscription ads
private label solutions
search engine marketing
content procurement and
management
Local Corporation Presentation | March 2012 |
 Experienced Team with Strategy Discipline
12
Heath Clarke
*as drawn by Logan (age 8)
Founder, Chairman & CEO
20+ yrs exp
Founded Local in ’99
VP eCommerce LanguageForce
CEO/Founder AFP (Australia)
Erick Herring
SVP Technology
Founder Townloop
CTO Feedback.com
CTO, VP Product Webvisible
CTO Adapt Technologies
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
Founder, Fablistic
SVP/GM, Local Corporation
Sr. Management, Oracle Corporation
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
Systemhouse
Tullio Siragusa
SVP, Sales
Head of Sales, Ansearch Ltd.
SVP Global Sales, Operative Media
VP Strategic Accounts, Acxiom
Local Corporation Presentation | March 2012 |
 Local Corporation Presentation | March 2012
Financial Performance
13
•
64% growth between 2Q and 4Q2011
•
~40% CAGR 2006-2012
•
1Q12 Revenue guidance: $25MM and $200K Adjusted Net Loss
•
FY12
Revenue
guidance:
$110MM
–
40%
higher
than
2011
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 | March 2012
4Q11 Balance Sheet & Capitalization
14
O
Key Balance Sheet Items
(in thousands)
1.
Options and warrants represent approximately $32MM in cash
Capitalization
(in thousands)
1
1
December 31, 2011
Cash
$10,394
Accounts Receivable
13,456
Total Assets
75,811
Total Debt
8,000
Total Liabilities
26,103
Shareholders Equity
$49,708
December 31, 2011
Common stock
22,082
Options
(Avg. Strike $4.30)
5,006
Warrants (Avg. Strike $7.11)
1,478
RSUs
112
Fully Diluted
28,678
Additional
Data:
I.
In August 2011 the Company closed on a $12 million credit facility
II.
Total authorized shares 65,000,000 common and 10,000,000 preferred
III.
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 |
 Local Corporation Presentation | March 2012
Why Invest in Local Corporation?
15
•
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
An Attractive Position
in Fast Growing Markets
•
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
Strong Operating Model
with Experienced Leadership
Team
•
Four quarters of change, challenge and transformation –
completed
•
Not just a search engine –
a media business
•
Returned to strong growth with greater revenue diversification
Completed a Business
Transformation |
 Local Corporation Presentation | March 2012
16
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
HBC4 |
 Local Corporation Presentation | March 2012
P&L Trend
17
Actual
Actual
Forecast
Description
FY-10
FY-11
FY-12
Revenue
84,137
$
78,763
$
110,000
$
Sequential revenue growth
49%
-6%
40%
Gross Margin
37,620
29,444
Gross Margin %
45%
37%
Other Operating Expenses
33,908
46,042
Operating income (loss)
3,712
(16,598)
Interest and other income (expense)
(275)
(413)
Change in fair value of warrant liability
887
2,633
Income (Loss) before income taxes
4,324
(14,378)
Provision for income taxes
102
181
Net income (loss)
4,222
$
(14,559)
$
Adjusted Net income (loss)
13,775
$
(2,576)
$
1,100
$
Weighted average shares
16,788
21,384
23,000
Net income (loss) per share
0.25
$
(0.68)
$
Adjusted Net income (loss) per share
0.82
$
(0.12)
$
0.05
$
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 | March 2012
Reconciliation: Adjusted Net Income to GAAP Net Inc
18
Actual
Actual
Forecast
Description
FY-10
FY-11
FY-12
Adjusted Net income (loss)
13,775
$
(2,576)
$
1,100
$
Plus interest and other income (expense), net
(275)
(413)
(400)
Less provision for income taxes
(102)
(181)
-
Less amortization of intangibles
(5,734)
(5,447)
(3,500)
Less depreciation
(1,418)
(3,291)
(3,900)
Less stock-based compensation
(2,911)
(3,823)
(2,800)
Less revaluation of warrants
887
2,633
unknown
Less non-recurring charges
-
(1,461)
-
GAAP Net income (loss)
4,222
$
(14,559)
$
unknown |