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| 8-K - FORM 8-K - LOCAL Corp | d473415d8k.htm |
 CORPORATE OVERVIEW | 1Q2013
1
…………………………..…………………………………….
Local Corporation
We connect local businesses with online consumers
Corporate Overview: 1Q2013
Exhibit 99.1 |
 CORPORATE OVERVIEW | 1Q2013
2
………………..…………………………………….
Forward looking statements
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; gain or
loss on warrant revaluation; net income (loss) from discontinued
operations; gain on sale of Rovion; impairment charges; LEC receivables
reserve and severance charges.
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.
|
 CORPORATE OVERVIEW | 1Q2013
3
………………………………………………..
Local Corporation Overview
REVENUE IN MILLIONS
Founded/IPO
Ticker
Reach
Flagship Site
Network
Patents
Headquarters
Employees
1999/2004
LOCM (NASDAQ)
~1 million consumers/day
Local.com –
Top 100 US Site
Over 1,000 local sites
11 issued + 9 pending
Irvine, CA
~100
KEY FACTS
*2012 Preliminary; 2013 Estimated |
 CORPORATE OVERVIEW | 1Q2013
4
Local searchers are often further along in the buying process,
so they tend to convert to buyers at a higher rate.
Higher conversion rates means businesses will often
pay a premium
to advertise to local searchers.
Pay-per-click rates for local versus national keyword terms…
What is ‘Local Search’?
Implicit
No location, but local
Explicit
Actual location
Local searchers are worth more! |
 CORPORATE OVERVIEW | 1Q2013
5
…………………………...………………………………………….
The Opportunity
Offline is going digital, and digital is going local
We have assets in all areas
Source: BIA/Kelsey, January 2013 |
 CORPORATE OVERVIEW | 1Q2013
6
Our Model
We aggregate local business, product and service
content and syndicate it across over 1,000 sites.
Search engines index this content and show those sites
in their search results, driving local search traffic to us.
We monetize that traffic with various ad units from ad
partners, and we keep most of the revenue generated.
Traffic
‘Consumer Properties’
Traffic x Monetization = Revenue
|
 CORPORATE OVERVIEW | 1Q2013
7
Consumer Properties
Business directories powered by Local Corporation include…
A private label local business directory provided to over 1,000
regional media sites nationwide –
typically local newspapers
Network
Local.com
Our flagship
property
Arizona Daily Star
Arkansas News
Boston Herald
Columbia Daily Herald
Cumberland Times News
Daily Herald -
Utah
Daily Princetonian
Daily Tarheel
East Valley Tribune
Honolulu Star Advertiser
Journal Star
Knoxville News Sentinel
LaCrosse Tribune
NC Times
Newsday
Norwich Bulletin
Observer-Reporter
Orange County Register
Pittsburgh Post-Gazette
San Diego Union Tribune
Santa Ynez Valley News
Savannah Morning News
St. Louis Post-Dispatch
Star Banner
The Arizona Republic
The Augusta Chronicle
The Commercial Appeal
The Dispatch
The Examiner
The Florida Times Union
The Gazette
The Record Searchlight
The State Journal-Register
The Telegraph
Treasure Coast
Triangle411
Valley News
Ventura County Star
Vermont Today
Washington Post |
 CORPORATE OVERVIEW | 1Q2013
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 | 1Q2013
9
•
Multi-year traffic growth
•
Organic
traffic
is
low
cost/high
margin
–
at
record
levels
•
Mobile
traffic
at
record
levels
–
still
figuring
out
monetization,
but
we
think
we
have
key
IP
………….................................……………………………….
Great Momentum |
 CORPORATE OVERVIEW | 1Q2013
10
…………………………………………...………………………..
IP & Technology
•
Proprietary platform and know-how
»
Real time business, product and services data integration
»
Large scale local/commercial content production and syndication
»
Very large scale CPC ad-serving and distribution
»
Web indexing and local search relevance
»
Very large scale SEO, SEM campaign expertise
»
Local display ad production and syndication
»
Web hosting and local/commercial domain name acquisition
•
11 patents issued, 9 pending
»
Key patents
–
Local web indexing (for indexing local web sites across the web)
–
Pay per call for local and commercial searches via a mobile device (multiple
patents) •
The billion dollar industry question: How do we monetize mobile?
–
Dynamic
cascading
menu
search
(for
product
search
on
tablets
and
smart
phones)
–
Bulk domain registration and content management (for very large scale SEO)
|
 CORPORATE OVERVIEW | 1Q2013
11
……………………..……….……….
Experience 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 | 1Q2013
12
Growth Strategy
•
Grow margins in O&O business (largest revenue stream)
»
Margin optimization via new SEM tools
»
Gradually ramping in the UK
•
Grow revenues in Network (most profitable revenue stream)
»
Expand number of sites via business development team (more traffic)
»
New
products
planned…
product
directory,
‘Launch
by
Local’
SMB
private
label,
publisher
dashboard
»
Leverage platform to produce new local/commercial content to grow
traffic/site •
Reduce costs
»
Channel
sales
vs.
direct
sales
–
projected
2013
cost
savings
of
$4.6MM,
beginning
January
2013
•
Developing opportunities
»
Local
display
network
–
leveraging
our
existing
Network
»
Microsites
(insurance,
HVAC,
alarm
systems
and
more)
–
leveraging
out
platform
»
Improved
monetization
via
lead
generation
–
monetization
improvements
»
Mobile
–
leveraging
our
platform |
 CORPORATE OVERVIEW | 1Q2013
13
……………………………………..
We Believe the Inflection Point is Now
Note: See reconciliation of Adjusted Net Income to GAAP net income at presentation
end; 2012 Preliminary, 2013 Estimated; *Losses not to scale •
Five material challenges in
24 months withstood
»
Significant cost to the
company in revenue and
earnings
•
Highest revenue per
employee ever
»
Projected growth to about
$900k per employee by
EOY 2013
»
Running lean!
•
Returning to profit
»
Significant cost savings
starting 1Q13
»
Projecting 1Q13 Adjusted
Net Income
»
Forecasting positive cash
from operations from 2Q13
onwards
Material challenges over past 2 years |
 CORPORATE OVERVIEW | 1Q2013
14
………………………………...……….
3Q12 Balance Sheet & Cap. Table
Additional
Data:
I.
$12 million credit facility. Interest rate approximately 5%
II.
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 | 1Q2013
15
……………………….…….
Why Invest in Local Corporation Today?
•
Multi-year track record of 31% CAGR
•
Execs
are
buyers
–
exchanged
bonuses
for
182,000
shares
in
past
18
months
•
Proprietary platform plus IP
•
Well positioned for growth opportunities in a rapidly changing space
•
Expected ANI in 1Q13
•
We
believe
the
inflection
point
is
NOW |
 CORPORATE OVERVIEW | 1Q2013
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 |
 CORPORATE OVERVIEW | 1Q2013
17
Digital Media Landscape
*Partners |
 CORPORATE OVERVIEW | 1Q2013
18
…………………….
*Research by Vsplash and BIA/Kelsey: SMB Digital Scope and Audit
Study
The Challenge Our Platform Solves for SMBs
Only
33.4%
of
SMBs
have
a
local
phone
number
on
their home page
Only
22%
have
an
email
address
on
their
website
Just
6.7%
of
SMB
websites
are
mobile-compatible
Only
6%
have
a
Facebook
business
page
Google
changes
its
search
algorithm
500
times per year
Mobile
has
arrived
in
force |
 CORPORATE OVERVIEW | 1Q2013
19
Local SMB Customer: Fabi’s Hair Studio
Facebook and Twitter pages engage
customers and increase awareness
Beautiful site design and web hosting with
geo-targeted URL and custom content
Mobile-optimized site
features directions and
click-to-call
A consistent brand and user experience across multiple
channels adds small business credibility
(Murray Hill Hair Salon) |
 CORPORATE OVERVIEW | 1Q2013
20
…….
Reconciliation of Adjusted Net Income to GAAP Net Income
Actual
Actual
Actual
Actual
Actual
Actual
Prelim
Forecast
DESCRIPTION
FY-06
FY-07
FY-08
FY-09
FY-10
FY-11
FY-12
FY-13
Adjusted Net income (loss)
(8,882)
$
(7,217)
$
(4,658)
$
3,041
$
13,775
$
(1,734)
$
(600)
$
5,000
$
Plus interest and other income (expense), net
288
(7,030)
312
(27)
(275)
(413)
(400)
(400)
Less provision for income taxes
(1)
(1)
(1)
(158)
(102)
(178)
(100)
(200)
Less amortization of intangibles
(947)
(1,121)
(999)
(2,524)
(5,734)
(5,136)
(4,100)
(1,300)
Less depreciation
(1,213)
(1,085)
(814)
(734)
(1,418)
(3,277)
(3,800)
(4,500)
Less stock-based compensation
(2,531)
(1,748)
(2,402)
(2,364)
(2,911)
(3,663)
(2,800)
(3,800)
Less LEC receivable reserve
-
-
-
-
-
-
(1,400)
-
Less impairment charge
-
-
-
-
-
-
(6,500)
-
Less net loss from discontinued operations
-
-
-
-
-
(1,330)
(1,100)
-
Plus gain on sale of Rovion
-
-
-
-
-
-
1,400
-
Less revaluation of warrants
-
-
-
(2,981)
887
2,633
200
unknown
Less non-recurring charges
-
-
-
(520)
-
(1,461)
(1,100)
(500)
GAAP Net income (loss)
(13,286)
$
(18,202)
$
(8,562)
$
(6,267)
$
4,222
$
(14,559)
$
(20,300)
$
unknown |