Local.com Reports Preliminary Q3 2009 Financial Results

Reaches record revenue and adjusted net income

IRVINE, CA, October 27, 2009 — Local.com Corporation (NASDAQ: LOCM), a leading local search site and network, today reported record financial results for the third quarter of 2009.

“The company achieved record traffic, revenue and adjusted income in the third quarter. We added to our cash balance and were also granted a new patent, our second in the directory assistance segment,” said Heath Clarke, chairman and CEO.

“We feel we are well positioned to capture an increasing portion of the online advertising dollars spent by small businesses as they transition from old to new media during 2010 and beyond. The fourth quarter is seasonally our weakest quarter, yet our outlook is for continued growth through the end of the year, positioning us for approximately 45% year over year revenue growth. We believe this is a remarkable outcome given the challenging economic environment during 2009.”

Results Highlights:

• Revenue – Third quarter 2009 revenue of $15.1 million represents a sequential increase of 10% over the second quarter 2009 and a year-over-year increase of 48% from the third quarter 2008.

• Net Loss – Third quarter 2009 net loss was $212,000 or ($0.01) per share, compared to the second quarter 2009 net loss of $333,000 or ($0.02) per share. The second quarter 2009 net loss included a non-recurring benefit of approximately $138,000 or $0.01 per share. Net loss for the third quarter 2008 was $1.7 million or ($0.12) per share.

• Adjusted Net Income (Loss) – Third quarter 2009 Adjusted Net Income was $1.3 million or $0.09 per share. This compares to an Adjusted Net Income of $943,000 or $0.06 per share in the second quarter of 2009, and an Adjusted Net Loss of $766,000 or ($0.05) per share in the third quarter 2008.

Adjusted Net Income (Loss) is defined as net income (loss) excluding: provision for income taxes; interest and other income (expense), net; depreciation; amortization; stock based compensation charges and non-recurring items.

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 a reconciliation between GAAP and non-GAAP measures, where appropriate, is included in the financial tables attached to this release.

• Cash – Net cash generated from operations for the nine months ended September 30, 2009 was $669,000. The company ended the third quarter 2009 with $7.2 million in cash.

Third Quarter Operating and Recent Highlights:

• Record Traffic – The company reached record traffic for the third quarter 2009 with 66 million monthly unique visitors (MUVs) on the Local.com site and network, up 5% from 63 million MUVs for the second quarter of 2009, and up 22% from 54 million MUVs for the third quarter of 2008.

• Organic Traffic – Organic traffic exceeded 28 million MUVs on the Local.com site and network for the third quarter of 2009, up 4% from 27 million for the third quarter of 2008.

• Monetization of Traffic – Revenue per thousand visitors (RKV) was $270 for the quarter, down 5.3% from $285 RKV in the second quarter of 2009 and down 2.9% from $278 RKV in the third quarter of 2008.

• Business Subscriber Base – The company ended the third quarter of 2009 with over 25,000 business subscribers compared to over 27,000 at the end of the second quarter of 2009. The company has significantly decreased its outsourced telesales efforts in favor of more profitable business subscriber acquisition strategies, and expects to increase the number of subscribers over time.

• Granted Patent for Enhanced Directory Assistance Services – In October 2009, the company announced that the company was granted patent number 7,596,218 by the U.S. Patent and Trademark Office, which covers a system and method for Enhanced Directory Assistance Services.

• Ranked 10th Largest Search Engine in the U.S. – In September 2009, the company announced that its flagship search site, www.local.com, was ranked as the 10th largest search engine in the U.S. by the Nielsen Company for the month of August 2009.

• Expanded Local Syndication Network – The company had 743 sites in its private label Local Syndication Network, up 6% from 702 sites in the second quarter 2009.

• Held Analyst Day – The company hosted its first analyst day in New York City in early October, following the company’s ceremonial opening of the NASDAQ stock market.

• Launched 2009 Best of Local Awards Program– In September 2009, the company launched its second annual "Best of Local" awards program and weekly drawing. The Best of Local program features the top businesses as rated by consumers in 15 cities and 20 categories across the U.S.

"Of the $1.4 million sequential increase in quarterly revenue from the second quarter to the third quarter, 27% or $400,000, went directly to our bottom line. Although we cannot give an assurance that this rate of bottom line contribution will continue, we are pleased with these results," said Brenda Agius, chief financial officer. “We are investing in our platform in order to continue our momentum, and for the rest of the year, the company is focused on growing traffic, increasing the number of business subscribers and expanding our technology infrastructure and capabilities."

Fourth Quarter Financial Guidance:

The company expects fourth quarter 2009 revenue to be between $15.3 and $15.6 million, which at the midpoint would represent a 2% sequential increase over the third quarter of 2009. The company expects net loss for the fourth quarter of 2009 to be between $100,000 and $0 or between ($0.01) and $0.00 per share, and to include the following items:

* depreciation and amortization of approximately $900,000; and
* stock based compensation charges of approximately $600,000

Excluding the above items from net income, Adjusted Net Income is expected to be between $1.4 million and $1.5 million or between $0.09 and $0.10 per diluted share for the fourth quarter of 2009.

The net loss per share forecast assumes a weighted average share count of 14.4 million. The Adjusted Net Income per share assumes a diluted weighted average share count of 14.9 million, taking into account the dilutive effect of stock options and warrants.

Full Year Financial Guidance:

The company expects fiscal year 2009 revenue to be between $55.2 and $55.5 million, which at the midpoint represents a 45% sequential increase over fiscal year 2008. The company expects net loss for fiscal year 2009 to be between $3.5 and $3.4 million or ($0.24) per share, and to include the following items:

* depreciation and amortization of approximately $3.2 million;
* stock based compensation charges of approximately $2.3 million; and
* non-recurring items of $521,000

Excluding the above items from net income, Adjusted Net Income is expected to be between $2.5 million and $2.6 million or between $0.17 and $0.18 per diluted share for fiscal year 2009.

The net loss per share forecast assumes a weighted average share count of 14.4 million. The Adjusted Net Income per share assumes a diluted weighted average share count of 14.7 million, taking into account the dilutive effect of stock options and warrants.

Source: Local.com