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|Local Corporation Reports Preliminary Unaudited Fourth Quarter and Full Year 2012 Results; Provides 2013 Outlook|
The company previously provided 2012 revenue guidance of between
Based on preliminary unaudited results, the company expects record
revenue for full year 2012 of approximately
Adjusted Net Income is defined 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. An explanation of the company’s use of non-GAAP financial measures, including the limitations of such measures, relative to GAAP measures is included below and reconciliation between GAAP and non-GAAP measures, where appropriate, is included in the financial table attached to this release.
During the fourth quarter, the company undertook a strategic review of
operations and for 2013 intends to focus on expanding margins in O&O,
the company’s largest business by revenue, and on growing the Network
business, which is the company’s most profitable business. Due to the
significant financial commitment required to successfully scale a direct
sales model, the company intends to instead focus on channel sales
development for its ‘Launch by Local’ SMB solution, which the company
expects to provide annual cost savings of approximately
“We had a strong first half 2012, but second half growth was below
initial forecasts, due to unexpected revenue per click (RPC) declines
from our main ad partner coupled with previously announced fourth
quarter ad policy changes. Despite this, we expect to be back in growth
mode with first quarter 2013 revenue projected to exceed fourth quarter
2012, and overall 2013 revenue projected at about 12% higher than our
2012 exit run rate,” said
“As a result of our focus on improving bottom-line results, we expect to
swing to Adjusted Net Income in the first quarter of 2013 followed by a
return to positive cash flow from operations in the second quarter, and
steady cash flow growth through the remainder of the year. We expect at
In accordance with normal procedures, these unaudited preliminary revenue and earnings results are subject to further review and completion of year end accounting processes by the company and its auditors, which include the finalization of potentially significant items that could affect these results. The company will provide fully audited fourth quarter and full year 2012 results and announce its upcoming earnings call in due course.
Fiscal 2013 Financial Guidance:
Revenue - The company expects 2013
revenue to be between
Adjusted Net Income – Adjusted Net
Income for 2013 is expected to be at least
Projected 2013 Adjusted Net Income Factors:
* The valuation of the warrant liability is based in large part on the underlying price and volatility of our common stock during the quarter. Since we cannot predict this, we cannot project the non-cash gain or loss in connection with these warrants, and therefore cannot reasonably project our GAAP net income (loss). We therefore cannot provide GAAP guidance, but do report GAAP results.
As previously announced, the company will no longer provide quarterly guidance.
Forward Looking Statements
This press release contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Words or expressions such as 'anticipate,' 'believe,' 'estimate,' 'plans,' 'expect,' 'intend,' ‘project,’ ‘forecast,’ ‘potential,’ ‘feel’ and similar expressions and phrases are intended to identify such forward-looking statements. Any forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including, but not limited to, our advertising partners paying less revenue per click and revenues to us for our search results, our ability to purchase advertising from third parties to drive users to our sites, our ability to adapt our business following the shifts in our monetization partners, our ability to monetize the Local.com domain, including at a profit, our ability to retain a monetization partner for the Local.com domain and other web properties under our management that allows us to operate profitably, our ability to develop, market and operate our local-search technologies, our ability to market the Local.com domain as a destination for consumers seeking local-search results, our ability to grow our business by enhancing our local-search services, including through businesses we acquire, the integration and future performance of our Spreebird business and our Krillion business, the possibility that the information and estimates used to predict anticipated revenues and expenses associated with the businesses we acquire are not accurate, difficulties executing integration strategies or achieving planned synergies, the possibility that integration costs and go-forward costs associated with the businesses we acquire will be higher than anticipated, our ability to successfully expand our sales channels for new and existing products and services, our ability to increase the number of businesses that purchase our advertising products, our ability to successfully bill our monthly subscription customers, our ability to expand our advertiser and distribution networks, our ability to integrate and effectively utilize our acquisitions' technologies, our ability to develop our products and sales, marketing, finance and administrative functions and successfully integrate our expanded infrastructure, as well as our dependence on major advertisers, competitive factors and pricing pressures, changes in legal and regulatory requirements, and general economic conditions. Any forward-looking statements reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this paragraph. Unless otherwise stated, all site traffic and usage statistics are from third-party service providers engaged by the company.
Our most recent Annual Report on Form 10-K, subsequent Quarterly Reports
on Form 10-Q, recent Current Reports on Form 8-K and Form 8-K/A, and
Non-GAAP Financial Measures
This press release includes the non-GAAP financial measure of “Adjusted Net Income” and “Adjusted Net 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 income (loss) which we believe is the most comparable GAAP measure. A reconciliation of net income (loss) to Adjusted Net Income (Loss) is set forth at the end of this press release.
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 severance 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 net income (loss) and net income (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; 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.
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