Local: Current Financial Momentum


The following excerpt is from the company's SEC filing.

5 5 Structured for growth Note: See reconciliation of Adjusted EBITDA to GAAP net income at presentation end. Core Search Local Shopping & Discovery Intellectual Property Reasons to invest: Growing base of consumers and partners • 27 million consumers/month • 1,600 network sites Positioned to be leader in mobile • Mobile traffic up 24% Y/Y • Expanding mobile search landscape Multiple avenues to value • Display/pay-per-click/pay-per-call ads • Leverage Krillion data technology • IP monetization Improving financial performance • 4 consecutive quarters of revenue and Adjusted EBIDTA growth • Positive cash f low from operating activities in 2013 5

10 10 Extended Network monetization Earns income from clicks and impressions on search, pay-per-call and various display ads Ad types: • • • • • = Revenue source Display Business Search Product Search Pay-Per-Call Video

12 12 Large market opportunity Total Online Advertising Spend in US Billions In online advertising spend expected over the next 5 years Source: Borrell Associates, Inc. 2014 12

13 Source: Deloitte 2012 Mobile-influenced in-store sales greater than online Over the next three years: Mobile-influenced store sales are projected to reach $689 billion. 5x greater Addressable market is than everything sold online today. Source: Forrester Research – Web-influenced retail sales forecast 13

14 14 Our customer value proposition answers 3 key questions: Krillion drives local shopping • Is it carried near me? • Is it available in-store? • How much does it cost? Krillion’s dynamic platform provides retailers & brands multiple channels to engage consumers wherever they research online. Retailers Manufacturers Web & Mobile Publishers & Search Engines Developers Innovative solutions for: 14

15 15 Top priorities: Location of Retail Stores in the Krillion Database Broaden coverage with retailers & manufacturers Enable and expand monetization Secure additional distribution with publishers Krillion – the leading local shopping authority 3 Million Localized Products Over 120,000 National and Regional Retailer Stores 90% Coverage of the Top 100 U.S. Retailers

16 16 Monetize IP portfolio The patent descriptions herein do not constitute the legal opinion or advice of the patent owner or their counsel. The reader is encouraged to seek the advice of their own counsel regarding the scope of any domestic or foreign patents. Positive claim construction ruling Cascading Menu patent Trial scheduled for May 2014 Preserving rights and reviewing options to maximize value Pay-Per-Call patent portfolio 16

17 17 Strong financial fundamentals Investing for growth Notable Accomplishments: • • • • Note: See Appendix for reconciliation of Adjusted EBITDA to GAAP net income 17 Positive cash flow from operating activities in 2013 Four consecutive quarters of Revenue and Adjusted EBITDA growth Reduced GAAP net loss year-over- year by more than 50% Largest year-over-year network revenue growth, up 141% in 2012

19 19 Plus exponential growth in mobile Serving more consumers 209% CAGR Mobile Traffic over the past five years Mobile traffic represents 39% of total overall traffic

Improving financials Stabilize Execute GROW Investing for Growth (Adjusted EBITDA) Note: See reconciliation of Adjusted EBITDA to GAAP net income at presentation end. *Estimate Evolving model remains strong Multiple growth drivers 21

22 22 4Q13 Balance Sheet & Cap. Table Key Balance Sheet Items (In Thousands) 12/31/2013 Cash $5,069 Accounts Receivable 17,298 Total Assets 51,579 Total Debt 12,684 Total Liabilities 31,294 Stockholders Equity 20,285 Capitalization (In Thousands) 12/31/2013 Common Stock 23,038 Convertible Debentures 2,488 Options (Weighted avg. strike 4.17) 3,375 Warrants (Weighted avg. strike 2.01) 766 RSUs 248 Fully Diluted 29,915 Additional Data:                                                 I. $12 million credit facility with $9 million outstanding and $3 million available under the line of credit.  Interest rate approximately 5% II. Total authorized shares 65,000,000 common and 10,000,000 preferred III. In April 2013, the company closed $5 million in convertible notes. Interest rate of 7%. Conversion price of $2.01. Included 746,000 of warrants with $2.01 exercise price.

24 24 Structured for growth Note: See reconciliation of Adjusted EBITDA to GAAP net income at presentation end. Reasons to invest: Growing base of consumers and partners • 27 million consumers/month • 1,600 network sites Positioned to be leader in mobile • Mobile traffic up 24% Y/Y • Expanding mobile search landscape Multiple avenues to value • Display/pay-per-click/pay-per-call ads • Leverage Krillion data technology • IP monetization Improving financial performance • 4 consecutive quarters of revenue and Adjusted EBIDTA growth • Positive cash flow from operating activities in 2013 24 Core Search Local Shopping & Discovery Intellectual Property

27 27 Market Cap/Sales Valuation Company Symbol Price Market Cap (MM) 2014E Sales (MM) 2014E Market Cap/Sales Blucora, Inc. BCOR $  20.04 $     843.3 $    223.0 3.8 ReachLocal, Inc. RLOC $  10.69 $     294.3 $    590.0 0.5 Angie’s List, Inc. ANGI $  13.84 $     808.7 $    325.0 2.5 Marchex, Inc. MCHX $  12.27 $     443.4 $    177.0 2.5 Autobytel, Inc. ABTL $  14.90 $     132.7 $      86.0 1.5 Yelp, Inc. YELP $  97.77 $  6,730.0 $    355.0 19.0 Travelzoo Inc. TZOO $  24.09 $     361.1 $    163.0 2.2 XOXO Group Inc. XOXO $  12.45 $     307.9 $    145.0 2.1 Demand Media DMD $    4.76 $     429.9 $      96.0 4.5 Web.com Group WWWW $  37.04 $  1,840.0 $    590.0 3.1 Average 4.2 Local Corp LOCM $    1.59 $       36.5 $    105.0 0.3

28 28 Reconciliation: Adjusted EBITDA to GAAP Net Income Description FY-09 FY-10 FY-11 FY-12 FY-13 FY-14* Adjusted EBITDA $3,041 $13,775 $3,247 $777 $4,533 $3,500 Less interest and other income (expense), net (27) (275) (413) (425) (2,321) (1,700) Less provision for income taxes (158) (102) (178) (111) (139) (200) Less amortization of intangibles (2,524) (5,734) (4,864) (3,611) (912) (900) Less depreciation (734) (1,418) (3,182) (3,658) (3,896) (4,000) Less stock-based compensation (2,364) (2,911) (3,442) (2,533) (1,619) (800) Less LEC receivable reserve - (1,407) (1,721) Less net loss from discontinued operations - (6,899) (14,250) (3,729) Plus gain on sale of Rovion - 1,458 Plus revaluation of warrants - 887 2,633 202 1,100 Less Geo-Tag settlement (2,981) (550) Less non-recurring charges (520) (1,461) (684) (1,108) (1,200) GAAP Net income (loss) $(6,267) $4,222 $(14,559) $(24,242) $(10,362) $(5,300) 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 30 *Estimate

29 29 Use of non-GAAP 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.

The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here.

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Other recent filings from the company include the following:

Local: Strategies, Llc, Gunnallen Financial Inc - Sept. 9, 2014
Local: Entry Into A Material Definitive Agreement - Sept. 5, 2014

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