LOCM (MM)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 of 15(d)

of the Securities Exchange Act of 1934

March 10, 2015

Date of Report (Date of earliest event reported)

 

 

LOCAL CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-34197		33-0849123
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

7555 Irvine Center Drive

Irvine, California 92618

(Address of principal executive offices)

(949) 784-0800

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the issuer under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 7.01

Regulation FD Disclosure.

On March 10, 2015, Local Corporation (the “Registrant”) updated its corporate presentation and posted it on the Registrant’s website available at ir.local.com. A copy of the presentation is attached as Exhibit 99.1.

The information in this Current Report on Form 8-K and accompanying exhibit is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

The presentation materials contain a reference to non-GAAP financial information and include a reconciliation of those non-GAAP financial measures to the comparable GAAP financial measures.

 

Item 9.01

Financial Statements and Exhibits.

Exhibit 99.1		Local Corporation Corporate Overview dated 1Q2015.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				LOCAL CORPORATION
Date: March 10, 2015				By:		/s/ Kenneth S. Cragun
						Kenneth S. Cragun
						Chief Financial Officer and Secretary

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Exhibit Index

 

Exhibit Number		Description
Exhibit 99.1		Local Corporation Corporate Overview dated 1Q2015.

Exhibit 99.1

 

 

LOCM Company Overview

MARCH 2015

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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.

Adjusted EBITDA 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 derivatives’ revaluation; net income (loss) from discontinued operations; LEC receivables reserve; finance-related charges; accrued lease liability/asset; severance charges; and an expense related to a settlement accrual.

Adjusted EBITDA, as defined above, is not a measurement under GAAP. Adjusted EBITDA 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 EBITDA 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 EBITDA in evaluating the overall performance of the company’s business operations.

A limitation of non-GAAP Adjusted EBITDA 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 EBITDA in conjunction with GAAP net loss and loss per share measures. The company believes that Adjusted EBITDA 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.

LOCM—Roth Presentation– March 2015

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Who we are

A search and mobile ad technology company that reaches millions of high intent consumers across devices, and that provides leading monetization solutions for publishers

Audience

200M consumers annually

Reach

30B impressions annually

Intent

Mobile + local consumer search

Technology

Audience tracking & traffic quality platform

LOCM—Roth Presentation– March 2015

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Transforming our business and entering growing digital ad markets

LOCM—Roth Presentation– March 2015

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Four drivers for growth

1 Focused on driving profitable growth and asset value

2 Building large captive mobile phone user base

3 Owner of large scale premium commercial intent audience

4 Moving into rapidly growing programmatic market

FOCUS ON PROFITABILITY

MOBILE INNOVATION

HIGH INTENT AUDIENCE

PROGRAMMATIC GROWTH MARKETS

LOCM—Roth Presentation– March 2015

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Base business provides foundation for programmatic and mobile growth accelerators

LOCM—Roth Presentation– March 2015

Note: See reconciliation of Adjusted EBITDA to GAAP net income at presentation end

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Mobile Innovation

More search is being done on mobile devices than desktop – GLOBALLY

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Positioned to control a global mobile ad marketplace

Mobile internet ad spending

>$158B worldwide

by 2018

eMarketer Dec 2014

Mobile phone users

> 4B worldwide

eMarketer Mar 2015

LOCM—Roth Presentation– March 2015

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White labeled hosted search

Drive subscriber and search volume in portal & default search

Growing mobile search demand

20M unique visitors per month

Market expansion

18 countries (LATAM + US)

EMEA & APAC expected by

2H 2015

Platform expansion

Enhancing paid content

Enter into default search via browser – expected 2H2015

LOCM—Roth Presentation– March 2015

Innovation Milestone:

Concept to global launch in < 9 months

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High-Intent Audience

The most valuable consumer for an advertiser is one actively searching for goods and services

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We own a high-intent search audience

Publisher Partner Network

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Destination search site

New category pages accelerate top- and bottom-line growth

SERP + Feed + Premium Listings

Category Page

$42M annual revenue Over 23M queries per month

Select partners:

LOCM—Roth Presentation– March 2015

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Proprietary technology ensures only real humans interact with our ads

Allows Network revenue to scale predictably

An advanced traffic quality platform that leverages a multitude of signals and data to detect, analyze and decide the most successful delivery of content and ads

Results:

100% of Network syndication feed is screened for quality

Increase in traffic quality scores from ad partners

Quality traffic based on:

LOCM—Roth Presentation– March 2015

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We monetize our audience on site and via programmatic exchanges

LOCM—Roth Presentation– March 2015

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Programmatic Growth Markets

Programmatic and REAL-TIME BIDDING rapidly expanding and projected to become the digital media supply and demand equation

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The advent of exchanges for online ad-buying has been fast and furious

96%+ adults in the

U.S. are active online

“Prices for programmatic ads are increasing for almost all ad types as demand outpaces supply”

-Business Insider

In the next year programmatic digital display spending will

Increase 37%

eMarketer

LOCM—Roth Presentation– March 2015

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Programmatic + advertisers’ demand for audience provides us with advantages

Increasing CPMs due to more competition for search intent audiences*

More media spend via audience extension and retargeting campaigns

Expected new revenue stream to sell data via DMPs

Opportunity to launch private exchanges

LOCM—Roth Presentation– March 2015

*Turn Advertising Intelligence Index 17

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Infrastructure in place to begin executing programmatic campaigns

Built a proprietary cross-platform data tracking tool and added third party media buying platforms to leverage and monetize first party search intent data

Publishers

First party search data

Quality controls

Smart segmentation

Media buying expertise

DMP platform

Optimization platform

Advertisers

LOCM—Roth Presentation– March 2015

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Why us

1 Focused on driving profitable growth and asset value

2 Building large captive mobile phone user base

3 Owner of large scale premium commercial intent audience

4 Moving into rapidly growing programmatic market

FOCUS ON PROFITABILITY

MOBILE INNOVATION

HIGH INTENT AUDIENCE

PROGRAMMATIC GROWTH MARKETS

LOCM—Roth Presentation– March 2015

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Thank you

Fred Thiel

Chairman & CEO fred@local.com

Ken Cragun CFO kcragun@local.com

Local Corporation | 7555 Irvine Center Drive | Irvine CA 92618 | 949.784.0800 | www.localcorporation.com

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Use of non-GAP measures

This document includes the non-GAAP financial measure of “Adjusted EBITDA” 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 derivatives’ revaluation, net income (loss) from discontinued operations; gain on sale of Rovion; impairment charges; LEC receivables reserve; finance related charges; accrued lease liability/asset; and severance charges. Adjusted EBITDA, as defined above, is not a measurement under GAAP. Adjusted EBITDA is reconciled to net income (loss) which we believe is the most comparable GAAP measure. A reconciliation of net income (loss) to Adjusted EBITDA is set forth within this presentation.

Management believes that Adjusted EBITDA 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, LEC receivables reserve, warrant revaluation charges; finance related charges; accrued lease liability; and severance charges which are not directly attributable to the underlying performance of the company’s business operations. Management uses Adjusted EBITDA in evaluating the overall performance of the company’s business operations.

A limitation of non-GAAP Adjusted EBITDA 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 EBITDA in conjunction with net income (loss) and net income (loss) per share measures. The company believes that Adjusted EBITDA 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 (loss) or earnings (loss) per share.

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Appendix

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Market Cap/Sales Valuation

Company

Blucora, Inc.

The Rubicon Project, Inc.

Angie’s List, Inc.

Marchex, Inc. Autobytel Inc. Yelp, Inc. Travelzoo Inc. XOXO Group Inc. Demand Media Rocket Fuel Inc.

Average

Local Corporation

Symbol

BCOR RUBI ANGI MCHX ABTL YELP TZOO XOXO DMD FUEL

LOCM

Price

$ 14.64 $ 19.12 $ 6.72 $ 4.44 $ 14.77 $ 47.94 $ 10.04 $ 15.50 $ 5.25 $ 10.32

$ 0.65

Market Cap

(in millions) $ 595.1

$ 680.0 $ 398.5 $ 171.8 $ 129.7 $ 3,540.0 $ 144.4 $ 386.3 $ 114.6 $ 429.5

$ 15.3

2014A Sales

(in millions) $ 580.7

$ 125.3 $ 315.0 $ 182.6 $ 106.3 $ 377.5 $ 142.1 $ 141.0 $ 172.4 $ 408.6

$ 83.1

Market Cap/Sales

1.0

5.4

1.3

0.9

1.2

9.4

1.0

2.7

0.7

1.1

2.5

0.2

*Estimate

LOCM—Roth Presentation– March 2015

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Reconciliation of adjusted EBITDA to GAAP net income (loss)

Description

Adjusted EBITDA

Less interest and other income (expense), net Less provision for income taxes Less amortization of intangibles Less depreciation Less stock-based compensation Less LEC receivable reserve Less net loss from discontinued operations Plus gain on sale of Rovion Plus revaluation of warrants Less Geo-Tag settlement Less non-recurring charges GAAP Net income (loss)

FY-09

$3,041 (27) (158) (2,524) (734) (2,364) —-(2,981) -(520) $(6,267)

FY-10

$13,775 (275) (102) (5,734) (1,418) (2,911) —-887 —$4,222

FY-11

$3,247 (413) (178) (4,864) (3,182) (3,442) -(6,899) -2,633 -(1,461) $(14,559)

FY-12

$777 (425) (111) (3,611) (3,658) (2,533) (1,407) (14,250) 1,458 202 -(684) $(24,242)

FY-13

$4,533 (2,321) (139) (912) (3,896) (1,619) -(3,729) -1,100 (550) (2,829) $(10,362)

FY-14

$2,363 (2,183) (129) (687) (3,885) (767) -710 -918 -(1,841) $(5,501)

FY-15*

$3,500 (1,100) (100) (150) (4,500) (600)

$(2,950)

*As of February 2015

Note: Since we cannot predict the valuation of the warrant liability and the conversion option liability, we cannot reasonably project our GAAP net income (loss).

We, therefore, cannot provide GAAP guidance, but we do report GAAP results. An explanation of the Company’s use of Non-GAAP measures is set forth on Slide 22

LOCM—Roth Presentation– March 2015

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Consolidated quarterly revenues

Quarterly Revenues by Business Unit

$26.8

$26.2

$23.5

$22.7

$22.5

$5.0

$21.5

$20.6

$16.1

$14.8

$18.1

$9.9

$11.6

$8.3

$14.5

$16.3

$7.6

$6.4

$7.8

$12.9

$13.2

$12.6

$11.1

$11.4

$11.7

$8.9$10.7

$8.5

$ in Millions

Network O&O

Consolidated Revenue

Q4-12 $ 7.6 $ 12.9 $ 20.6

Q1-13 $ 8.3 $ 13.2 $ 21.5

Q2-13 $ 11.6 $ 11.1 $ 22.7

Q3-13 $ 14.5 $ 8.9 $ 23.5

Q4-13 $ 16.1 $ 10.7 $ 26.8

Q1-14 $ 14.8 $ 11.4 $ 26.2

Q2-14 $ 9.9 $ 12.6 $ 22.5

Q3-14 $ 6.4 $ 11.7 $ 18.1

Q4-14 $ 7.8 $ 8.5 $ 16.3

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