UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 1, 2012
REACHLOCAL, INC.
(Exact name of Registrant as specified in its charter)
Delaware |
001-34749 |
20-0498783 |
(State or other jurisdiction of incorporation) |
(Commission File No.) |
(I.R.S. Employer Identification No.) |
21700 Oxnard Street, Suite 1600, Woodland Hills, California |
91367 |
(Address of principal executive offices) |
(Zip Code) |
Registrant's telephone number, including area code: (818) 274-0260
Not Applicable
(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 registrant 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)) |
Item 2.02 |
Results of Operations and Financial Condition. |
On November 1, 2012, ReachLocal, Inc. (the Company) publicly disseminated a press release announcing financial results for the third quarter ended September 30, 2012.
The foregoing description is qualified in its entirety by reference to the Companys press release, dated November 1, 2012, a copy of which is attached hereto as Exhibit 99.01 and incorporated herein by reference. Such information shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
The Company recently completed a management realignment that also included additions to the Companys management organization previously announced during 2012. As part of this realignment, on October 31, 2012, the Board of Directors of the Company approved the expansion of the Board to seven members and appointed Nathan Hanks, the Companys President, to fill the vacancy created thereby. Because he is an employee of the Company, Mr. Hanks will not receive any compensation for his service as a director of the Company.
Additionally, on November 1, 2012, the Company entered into an agreement (the Transition Agreement) with Michael Kline, the Companys Chief Strategy Officer and President of Local Commerce, and one of the Companys founders, in connection with his resignation from his position effective as of June 30, 2013. Following the termination of his employment with the Company, Mr. Kline will serve as a consultant to the Company through December 31, 2013 to assist with the transition of his responsibilities.
Under the Transition Agreement, Mr. Kline will continue his employment with the Company in his current position through June 30, 2013, on the same terms and conditions as prior to entering into the Transition Agreement. He will be eligible to be paid a bonus targeted at $168,625 in respect of his employment during 2013, in accordance with the terms applicable to the bonuses for the Companys senior management for 2013. If Mr. Klines employment is terminated by the Company without cause prior to July 1, 2013 then, in addition to any amounts to which he may become entitled under the Companys Amended and Restated Change in Control Severance Policy for Senior Management, Mr. Kline will be eligible to receive his 2012 and 2013 bonuses.
In connection with his consulting services under the Transition Agreement, Mr. Kline will receive a monthly consulting fee from July 1, 2013 through December 31, 2013, Company-paid COBRA coverage for himself and his eligible dependents through December 31, 2013, and continued vesting of his currently outstanding stock options and shares of restricted stock through such date. The monthly consulting fee will equal $27,750, but if Mr. Klines employment is terminated without cause prior to December 31, 2013, the monthly consulting fee will be increased to compensate Mr. Kline for the loss of base pay during that period.
In the event that (1) the Company terminates Mr. Klines consulting services without cause prior to or on December 31, 2013, (2) Mr. Kline renders the consulting services through December 31, 2013, to the satisfaction of the Companys Compensation Committee, or (3) a change in control of the Company occurs during the consulting period, then Mr. Kline will receive immediate acceleration of his outstanding equity awards to the extent such awards would have vested had he remained in service with the Company through December 31, 2014. In addition, under the Transition Agreement, if Mr. Klines consulting services are terminated by the Company without cause prior to December 31, 2013, he will be entitled to receive a lump sum payment equal to his aggregate unpaid consulting fees and continued Company-paid COBRA coverage through December 31, 2013.
The foregoing is not a complete description of the terms and conditions of the Transition Agreement and is qualified in its entirety by reference to the Transition Agreement, a copy of which will be filed as an exhibit to the Companys next Quarterly Report on Form 10-Q.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
|
Description of Exhibit |
99.01 |
|
Press Release dated November 1, 2012 |
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.
Date: November 1, 2012 |
REACHLOCAL, INC. |
||
By: |
/s/ Zorik Gordon |
||
Name: |
Zorik Gordon |
||
Title: |
Chief Executive Officer |
INDEX TO EXHIBITS
Exhibit No. |
|
Description of Exhibit |
99.01 |
|
Press Release dated November 1, 2012 |
Exhibit 99.01
ReachLocal Reports Third Quarter 2012 Results
Raises 2012 Revenue and Adjusted EBITDA Guidance
Announces Launch in Brazil with First Office in Sao Paolo
(WOODLAND HILLS, CA) November 1, 2012 - ReachLocal, Inc. (NASDAQ:RLOC), a leader in local online marketing solutions for small- and medium-sized businesses (SMBs), today reported financial results for the third quarter ended September 30, 2012.
● |
Revenue growth of 21% over the third quarter of 2011, highlighted by 47% growth in international markets and 22% growth in the direct local channel |
● |
International revenue expanded to 29% of revenue from 24% for the prior year period |
● |
Adjusted EBITDA grew 59% to $7.2 million, compared to $4.5 million for the prior year period |
● |
Active Advertisers grew 18% to 22,100 and Active Campaigns grew 22% to 32,900 from the prior year period |
● |
Repurchased $1.4 million or 114,000 shares of stock ($13.1 million or 1,600,000 shares to date) under the company's $20 million buy-back authorization |
Management Commentary
We had another great quarter driven by strong demand for our online marketing solutions for SMBs highlighted by continued robust growth in our international markets, said Zorik Gordon, CEO. We are also excited to announce that we are launching in Brazil, one of the most dynamic internet markets and economies in the world. With the addition of Brazil, ReachLocal's global footprint will span eleven countries.
Quarterly Results at a Glance
(Table amounts in 000's except key metrics and per share amounts)
Q3 2012 |
Q3 2011 |
% Change |
||||||||||
Revenue |
$ | 118,891 | $ | 98,629 | 21 | % | ||||||
Net Income (Loss) from Continuing Operations |
$ | 836 | $ | (1,329 | ) | 163 | % | |||||
Net Income (Loss) from Continuing Operations per Diluted Share |
$ | 0.03 | $ | (0.05 | ) | 163 | % | |||||
Net Income (Loss) |
$ | 836 | $ | (4,601 | ) | 118 | % | |||||
Net Income (Loss) per Diluted Share |
$ | 0.03 | $ | (0.16 | ) | 118 | % | |||||
Non-GAAP Net Income |
$ | 4,458 | $ | 2,757 | 62 | % | ||||||
Non-GAAP Net Income per Diluted Share |
$ | 0.15 | $ | 0.09 | 70 | % | ||||||
Adjusted EBITDA |
$ | 7,221 | $ | 4,530 | 59 | % | ||||||
Underclassmen Expense |
$ | 11,441 | $ | 11,591 | (1 | )% | ||||||
Cash Flow from Continuing Operations |
$ | 9,027 | $ | 6,187 | 46 | % | ||||||
Cash Flow from Operating Activities |
$ | 9,023 | $ | 5,723 | 58 | % | ||||||
Revenue by Channel and Geography: |
||||||||||||
Direct Local Revenue |
$ | 93,537 | $ | 76,814 | 22 | % | ||||||
National Brands, Agencies and Resellers (NBAR) Revenue |
$ | 25,354 | $ | 21,815 | 16 | % | ||||||
International Revenue (included above) |
$ | 34,679 | $ | 23,561 | 47 | % | ||||||
Key Metrics (at period end): |
||||||||||||
Active Advertisers |
22,100 | 18,700 | 18 | % | ||||||||
Active Campaigns |
32,900 | 27,000 | 22 | % | ||||||||
Total Upperclassmen |
407 | 344 | 18 | % | ||||||||
Total Underclassmen |
450 | 464 | (3 | )% | ||||||||
Total IMCs |
857 | 808 | 6 | % |
Business Outlook
We are raising our fourth quarter and 2012 guidance based on strong results in the first nine months of the year. Our guidance reflects our typical fourth quarter seasonality, in particular spending reductions by our NBAR channel clients, the required new investment to launch our operations in Brazil and a continuing uncertain economic environment, said Ross Landsbaum, Chief Financial Officer.
The Companys outlook is as follows:
Fourth Quarter 2012
● |
Revenues in the range of $118 million to $120 million | |
● |
Adjusted EBITDA in the range of $5.5 million to $6.5 million | |
● |
Ending Upperclassmen headcount of 420 to 440 | |
● |
Ending Underclassmen headcount of 390 to 410 | |
● |
Ending total IMC headcount of 810 to 850 |
Fiscal Year 2012
|
● |
Revenues in the range of $453.1 million to $455.1 million |
|
● |
Adjusted EBITDA in the range of $22.7 million to $23.7 million |
Conference Call and Webcast Information
The ReachLocal third quarter 2012 teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Thursday, November 1, 2012. To participate on the live call, analysts and investors should dial 888-846-5003 at least ten minutes prior to the call. ReachLocal will also offer a live and archived webcast of the conference call, accessible from the Investors section of the Company's Web site at www.reachlocal.com.
Use of Non-GAAP Measures
ReachLocal management evaluates and makes operating decisions using various financial and operational metrics. In addition to the Companys GAAP results, management also considers non-GAAP measures of non-GAAP net income (loss), non-GAAP net income (loss) per share, and Adjusted EBITDA. Management believes that these non-GAAP measures provide useful information about the Company's core operating results and thus are appropriate to enhance the overall understanding of the Company's past financial performance and its prospects for the future. The attached tables provide a reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures. Management also tracks and reports on Underclassmen Expense, Active Advertisers, Active Campaigns and the total number of Internet Marketing Consultants (IMCs), as management believes that these metrics are important gauges of the progress of the Company's performance.
The non-GAAP net income is defined as net income (loss) from continuing operations before (a) stock-based compensation related expense (including the related adjustment to amortization of capitalized software development costs) and (b) acquisition related costs. Adjusted EBITDA is defined as net income (loss) from continuing operations before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, the effects of accounting for business combinations (including any impairment of acquired intangibles and, in the case of the acquisition of SMB:LIVE, the deferred cash consideration) and amounts included in other non-operating income or expense.
Acquisition Related Costs: Acquisition related costs, including the amortization and any impairment of acquired intangibles and the deferred cash consideration for the SMB:LIVE acquisition, are excluded from the non-GAAP operating results as these are non-recurring charges which the Company would not have incurred as part of continuing operations.
Each of these non-GAAP measures, while having utility, also have limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of these limitations are:
● |
Adjusted EBITDA does not reflect the Companys cash expenditures for capital equipment or other contractual commitments; | |
● |
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements; | |
● |
Adjusted EBITDA does not reflect changes in, or cash requirements for, the Companys working capital needs; | |
● |
Adjusted EBITDA and non-GAAP net income (loss) do not consider the potentially dilutive impact of issuing equity-based compensation to the Companys management and other employees; | |
● |
Adjusted EBITDA does not reflect the potentially significant interest expense or the cash requirements necessary to service interest or principal payments on indebtedness that the Company may incur in the future; | |
● |
Adjusted EBITDA does not reflect income and expense items that relate to the Companys financing and investing activities, any of which could significantly affect the Companys results of operations or be a significant use of cash; | |
● |
Adjusted EBITDA and non-GAAP net income (loss) do not reflect costs or expenses associated with accounting for business combinations; | |
● |
Adjusted EBITDA does not reflect certain tax payments that may represent a reduction in cash available to the Company; and | |
● |
Other companies, including companies in the same industry, calculate Adjusted EBITDA and non-GAAP net income (loss) measures differently, which reduces their usefulness as a comparative measure. |
Adjusted EBITDA is not intended to replace operating income (loss), net income (loss) and other measures of financial performance reported in accordance with GAAP. Rather, Adjusted EBITDA is a measure of operating performance that may be considered in addition to those measures. Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to the Company to invest in the growth of the business.
Underclassmen Expense is a number the Company calculates to approximate its investment in Underclassmen and is comprised of the selling and marketing expenses allocated to Underclassmen during a reporting period. The amount includes the direct salaries and allocated benefits of the Underclassmen (excluding commissions), training and sales organization expenses including depreciation allocated based on relative headcount and marketing expenses allocated based on relative revenue. While management believes that Underclassmen Expense provides useful information regarding the Company's approximated investment in Underclassmen, the methodology used to arrive at the estimated Underclassmen Expense was developed internally by the Company, is not a concept or method recognized by GAAP and other companies may use different methodologies to calculate or approximate measures similar to Underclassmen Expense. Accordingly, the calculation of Underclassmen Expense may not be comparable to similar measures used by other companies. Management refers to sales through its sales force of Internet Marketing Consultants as its Direct Local channel. As the sale to agencies, resellers and national brands involves negotiations with businesses that generally represent an aggregated group of SMB advertisers, management groups them together as the National Brands, Agencies and Resellers (NBAR) channel.
Active Advertisers is a number the Company calculates to approximate the number of clients directly served through our Direct Local channel as well as clients served through our National Brands, Agencies and Resellers channel. We calculate Active Advertisers by adjusting the number of Active Campaigns to combine clients with more than one Active Campaign as a single Active Advertiser. Clients with more than one location are generally reflected as multiple Active Advertisers. Because this number includes clients served through the National Brands, Agencies and Resellers channel, Active Advertisers includes entities with which we do not have a direct client relationship. Numbers are rounded to the nearest hundred.
Active Campaigns is a number we calculate to approximate the number of individual products or services we are managing under contract for Active Advertisers. For example, if we were performing both ReachSearch and ReachDisplay campaigns for a client, we consider that two Active Campaigns. Similarly, if a client purchased ReachSearch campaigns for two different products or purposes, we consider that two Active Campaigns. Numbers are rounded to the nearest hundred.
Caution Concerning Forward-Looking Statements
Statements in this press release regarding the Companys guidance for future periods and the quotes from management constitute forward-looking statements within the meaning of the Securities Exchange Act of 1934. These statements reflect the Company's current views about future events and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievement to materially differ from those expressed or implied by the forward-looking statements. Actual events or results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including: (i) the Companys ability to purchase media and receive rebates from Google, Yahoo! and Microsoft under commercially reasonable terms; (ii) the Companys ability to recruit, train and retain its Internet Marketing Consultants; (iii) the Companys ability to attract and retain customers; (iv) the Company's ability to successfully enter new markets and manage its international expansion; (v) the Companys ability to successfully develop and offer new products and services in the highly competitive online advertising industry; (vi) the impact of worldwide economic conditions, including the resulting effect on advertising budgets; and (vii) our ability to comply with government regulation affecting our business, including regulations or policies governing consumer privacy. More information about these factors and other potential factors that could affect the Companys business and financial results is contained in its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. The Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
About ReachLocal, Inc.
ReachLocal, Inc.s (Nasdaq:RLOC) mission is to help small- and medium-sized businesses (SMBs) acquire, maintain and retain customers via the Internet. ReachLocal offers a comprehensive suite of online marketing solutionsincluding search engine marketing (ReachSearch), Web presence (ReachCast), display retargeting (ReachRetargeting), display advertising (ReachDisplay), online marketing analytics (TotalTrack®) and assisted chat service (TotalLiveChat), each targeted to the SMB market. ReachLocal delivers this suite of services to SMBs through a combination of its proprietary technology platform and its direct, feet-on-the-street sales force of Internet Marketing Consultants and select third-party agencies and resellers. ReachLocal is headquartered in Woodland Hills, CA, with offices throughout North America and in Australia, the United Kingdom, Germany, the Netherlands and Japan. Subscribe to ReachLocal's free newsletter to receive news, tips, and other online marketing insights.
Investor Relations: Alex Wellins The Blueshirt Group (415) 217-5861 alex@blueshirtgroup.com |
Media Contact: |
REACHLOCAL, INC.
UNAUDITED BALANCE SHEETS
(in thousands, except per share data)
September 30, 2012 |
December 31, 2011 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 86,710 | $ | 84,525 | ||||
Short-term investments |
9,001 | 644 | ||||||
Accounts receivable, net |
4,982 | 4,240 | ||||||
Other receivables and prepaid expenses |
10,557 | 9,226 | ||||||
Total current assets |
111,250 | 98,635 | ||||||
Property and equipment, net |
10,923 | 9,885 | ||||||
Capitalized software development costs, net |
13,637 | 10,942 | ||||||
Restricted certificates of deposit |
931 | 1,286 | ||||||
Intangible assets, net |
2,968 | 1,957 | ||||||
Other assets |
4,058 | 1,966 | ||||||
Goodwill |
42,083 | 41,766 | ||||||
Total assets |
$ | 185,850 | $ | 166,437 | ||||
Liabilities and Stockholders Equity |
||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | 34,463 | $ | 29,831 | ||||
Accrued expenses |
25,357 | 19,537 | ||||||
Deferred revenue and other current liabilities |
36,490 | 30,747 | ||||||
Liabilities of discontinued operations, net |
814 | 996 | ||||||
Total current liabilities |
97,124 | 81,111 | ||||||
Deferred rent and other liabilities |
3,208 | 3,039 | ||||||
Total liabilities |
100,332 | 84,150 | ||||||
Stockholders Equity: |
||||||||
Common stock |
- | - | ||||||
Receivable from stockholder |
(89 | ) | (87 | ) | ||||
Additional paid-in capital |
113,009 | 109,493 | ||||||
Accumulated deficit |
(26,682 | ) | (26,844 | ) | ||||
Accumulated other comprehensive loss |
(720 | ) | (275 | ) | ||||
Total stockholders equity |
85,518 | 82,287 | ||||||
Total liabilities and stockholders equity |
$ | 185,850 | $ | 166,437 |
Note: During the year ended December 31, 2011, the Company recorded the results of operations and financial position of its Bizzy subsidiary as discontinued operations.
REACHLOCAL, INC.
UNAUDITED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2012 |
2011 |
2012 |
2011 |
|||||||||||||
Revenue |
$ | 118,891 | $ | 98,629 | $ | 335,106 | $ | 275,439 | ||||||||
Cost of revenue |
59,500 | 50,265 | 167,546 | 141,363 | ||||||||||||
Operating expenses: |
||||||||||||||||
Selling and marketing |
42,860 | 36,769 | 122,579 | 103,457 | ||||||||||||
Product and technology |
5,448 | 4,257 | 14,180 | 10,800 | ||||||||||||
General and administrative |
9,966 | 8,821 | 30,241 | 24,470 | ||||||||||||
Total operating expenses |
58,274 | 49,847 | 167,000 | 138,727 | ||||||||||||
Income (loss) from continuing operations |
1,117 | (1,483 | ) | 560 | (4,651 | ) | ||||||||||
Other income, net |
33 | 280 | 338 | 697 | ||||||||||||
Income (loss) from continuing operations before provision for income taxes |
1,150 | (1,203 | ) | 898 | (3,954 | ) | ||||||||||
Provision for income taxes |
314 | 126 | 736 | 323 | ||||||||||||
- | ||||||||||||||||
Income (loss) from continuing operations, net of income taxes |
836 | (1,329 | ) | 162 | (4,277 | ) | ||||||||||
Loss from discontinued operations, net of income taxes |
- | (3,272 | ) | - | (4,720 | ) | ||||||||||
Net income (loss) |
$ | 836 | $ | (4,601 | ) | $ | 162 | $ | (8,997 | ) | ||||||
Net income (loss) per share available to common stockholders |
||||||||||||||||
Basic income (loss) per share from continuing operations |
$ | 0.03 | $ | (0.05 | ) | $ | 0.01 | $ | (0.15 | ) | ||||||
Basic loss per share from discontinued operations |
- | (0.11 | ) | - | (0.16 | ) | ||||||||||
Basic net income (loss) per share |
$ | 0.03 | $ | (0.16 | ) | $ | 0.01 | $ | (0.31 | ) | ||||||
Diluted income (loss) per share from continuing operations |
$ | 0.03 | $ | (0.05 | ) | $ | 0.01 | $ | (0.15 | ) | ||||||
Diluted loss per share from discontinued operations |
- | (0.11 | ) | - | (0.16 | ) | ||||||||||
Diluted net income (loss) per share |
$ | 0.03 | $ | (0.16 | ) | $ | 0.01 | $ | (0.31 | ) | ||||||
Weighted average common shares used in computation of net income (loss) per share |
||||||||||||||||
Basic |
28,403 | 29,302 | 28,379 | 28,936 | ||||||||||||
Diluted |
29,342 | 29,302 | 28,902 | 28,936 | ||||||||||||
Stock-based compensation, net of capitalization, and depreciation and amortization included in above line items: |
||||||||||||||||
Stock-based compensation: |
||||||||||||||||
Cost of revenue |
$ | 73 | $ | 60 | $ | 198 | $ | 176 | ||||||||
Selling and marketing |
437 | 325 | 1,122 | 1,068 | ||||||||||||
Product and technology |
488 | 421 | 868 | 976 | ||||||||||||
General and administrative |
1,597 | 1,525 | 4,741 | 4,096 | ||||||||||||
$ | 2,595 | $ | 2,331 | $ | 6,929 | $ | 6,316 | |||||||||
Depreciation and amortization: |
||||||||||||||||
Cost of revenue |
$ | 131 | $ | 194 | $ | 401 | $ | 551 | ||||||||
Selling and marketing |
457 | 413 | 1,576 | 1,080 | ||||||||||||
Product and technology |
2,385 | 1,862 | 6,435 | 5,033 | ||||||||||||
General and administrative |
536 | 359 | 1,257 | 971 | ||||||||||||
$ | 3,509 | $ | 2,828 | $ | 9,669 | $ | 7,635 |
Note: During the year ended December 31, 2011, the Company recorded the results of operations and financial position of its Bizzy subsidiary as discontinued operations.
REACHLOCAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except per share data)
Nine Months Ended September 30, |
||||||||
2012 |
2011 |
|||||||
Cash flow from operating activities: |
||||||||
Net loss from continuing operations, net of income taxes |
$ | 162 | $ | (4,277 | ) | |||
Adjustments to reconcile net loss from continuing operations, net of income taxes to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
9,669 | 7,635 | ||||||
Stock-based compensation, net |
6,929 | 6,316 | ||||||
Provision for doubtful accounts |
18 | 180 | ||||||
Impairment of intangible assets |
- | 764 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(679 | ) | (903 | ) | ||||
Other receivables and prepaid expenses |
(1,291 | ) | 273 | |||||
Other assets |
(216 | ) | 163 | |||||
Accounts payable and accrued expenses |
10,034 | 4,734 | ||||||
Deferred revenue, rent and other liabilities |
6,958 | 5,009 | ||||||
Net cash provided by operating activities, continuing operations |
31,584 | 19,894 | ||||||
Net cash used for operating activities , discontinued operations |
(182 | ) | (1,307 | ) | ||||
Net cash provided by operating activities |
31,402 | 18,587 | ||||||
Cash flow from investing activities: |
||||||||
Additions to property, equipment and software |
(11,591 | ) | (9,547 | ) | ||||
Acquisitions, net of acquired cash |
(4,120 | ) | (6,210 | ) | ||||
Loan to franchisee |
(1,863 | ) | - | |||||
Maturities of certificates of deposits and short-term investments |
466 | 7,666 | ||||||
Purchases of certificates of deposit and short term investments |
(8,447 | ) | (280 | ) | ||||
Net cash used in investing activities, continuing operations |
(25,555 | ) | (8,371 | ) | ||||
Net cash used in investing activities, discontinued operations |
- | (1,244 | ) | |||||
Net cash used in investing activities |
(25,555 | ) | (9,615 | ) | ||||
Cash flow from financing activities: |
||||||||
Proceeds from exercise of stock options |
1,639 | 5,515 | ||||||
Common stock repurchases |
(5,395 | ) | - | |||||
Net cash provided by (used in) financing activities |
(3,756 | ) | 5,515 | |||||
Effect of exchange rates on cash |
94 | (800 | ) | |||||
Net change in cash and cash equivalents |
2,185 | 13,687 | ||||||
Cash and cash equivalentsbeginning of period |
84,525 | 79,906 | ||||||
Cash and cash equivalentsend of period |
$ | 86,710 | $ | 93,593 |
Note: During the year ended December 31, 2011, the Company recorded discontinued operations related to its Bizzy subsidiary.
REACHLOCAL, INC.
Reconciliation of Adjusted EBITDA to income (loss) from continuing operations
(in thousands)
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2012 |
2011 |
2012 |
2011 |
|||||||||||||
|
||||||||||||||||
Income (loss) from continuing operations |
$ | 1,117 | $ | (1,483 | ) | $ | 560 | $ | (4,651 | ) | ||||||
Add: |
||||||||||||||||
Depreciation and amortization |
3,509 | 2,828 | 9,669 | 7,635 | ||||||||||||
Stock-based compensation, net |
2,595 | 2,331 | 6,929 | 6,316 | ||||||||||||
Acquisition and integration costs |
- | 854 | 32 | 1,374 | ||||||||||||
Adjusted EBITDA (1) |
$ | 7,221 | $ | 4,530 | $ | 17,190 | $ | 10,674 | ||||||||
Underclassmen Expense (2) |
$ | 11,441 | $ | 11,591 | $ | 33,824 | $ | 32,714 |
Note: During the year ended December 31, 2011, the Company recorded the results of operations and financial position of its Bizzy subsidiary as discontinued operations.
REACHLOCAL, INC.
Reconciliation of GAAP to Non-GAAP Operating Results for Three Months Ended September 30, 2012 and 2011
(in thousands, except per share amounts)
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2011 |
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Adjustments: |
Adjustments: |
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GAAP Continuing Operations "As Reported" |
Stock-based Compensation Related Expense (3) |
Acquisition Related Costs (4) |
Non-GAAP Operating Results |
GAAP Continuing Operations "As Reported" |
Stock-based Compensation Related Expense (3) |
Acquisition Related Costs (4) |
Non-GAAP Operating Results |
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Revenue |
$ | 118,891 | - | - | $ | 118,891 | $ | 98,629 | - | - | $ | 98,629 | ||||||||||||||||||||
Cost of revenue |
59,500 | (72 | ) | (15 | ) | 59,413 | 50,265 | (55 | ) | (856 | ) | 49,354 | ||||||||||||||||||||
Operating expenses: |
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Sales and marketing |
42,860 | (438 | ) | - | 42,422 | 36,769 | (331 | ) | - | 36,438 | ||||||||||||||||||||||
Product and technology |
5,448 | (824 | ) | (456 | ) | 4,168 | 4,257 | (694 | ) | (386 | ) | 3,177 | ||||||||||||||||||||
General and administrative |
9,966 | (1,597 | ) | (152 | ) | 8,217 | 8,821 | (1,525 | ) | (239 | ) | 7,057 | ||||||||||||||||||||
Total Operating expenses |
58,274 | (2,859 | ) | (608 | ) | 54,807 | 49,847 | (2,550 | ) | (625 | ) | 46,672 | ||||||||||||||||||||
Income (Loss) from continuing operations |
1,117 | 2,931 | 623 | 4,671 | (1,483 | ) | 2,605 | 1,481 | 2,603 | |||||||||||||||||||||||
Other income, net |
33 | - | - | 33 | 280 | - | - | 280 | ||||||||||||||||||||||||
Income (Loss) from continuing operations before provision for income taxes |
1,150 | 2,931 | 623 | 4,704 | (1,203 | ) | 2,605 | 1,481 | 2,883 | |||||||||||||||||||||||
Provision (benefit) for income taxes |
314 | - | (68 | ) | 246 | 126 | - | - | 126 | |||||||||||||||||||||||
Net income (loss) from continuing operations |
$ | 836 | 2,931 | 691 | $ | 4,458 | $ | (1,329 | ) | 2,605 | 1,481 | $ | 2,757 | |||||||||||||||||||
Net income (loss) per share from continuing operations available to common stockholders |
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Basic income (loss) per share from continuing operations |
$ | 0.03 | $ | 0.16 | $ | (0.05 | ) | $ | 0.09 | |||||||||||||||||||||||
Diluted income (loss) per share from continuing operations |
$ | 0.03 | $ | 0.15 | $ | (0.05 | ) | $ | 0.09 | |||||||||||||||||||||||
Weighted average shares outstanding |
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Basic |
28,403 | 28,403 | 29,302 | 29,302 | ||||||||||||||||||||||||||||
Diluted |
29,342 | 29,342 | 29,302 | 30,767 |
Note: During the year ended December 31, 2011, the Company recorded the results of operations and financial position of its Bizzy subsidiary as discontinued operations. Accordingly, related prior-period amounts have been reclassified to conform to the current period presentation.
REACHLOCAL, INC.
Reconciliation of GAAP to Non-GAAP Operating Results for Nine Months Ended September 30, 2012 and 2011
(in thousands, except per share amounts)
Nine Months Ended September 30, 2012 |
Nine Months Ended September 30, 2011 |
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Adjustments: |
Adjustments: |
|||||||||||||||||||||||||||||||
GAAP Continuing Operations "As Reported" |
Stock-based Compensation Related |
Acquisition Related Costs (4) |
Non-GAAP Operating Results |
GAAP Continuing Operations "As Reported" |
Stock-based Compensation Related Expense (3) |
Acquisition Related Costs (4) |
Non-GAAP Operating Results |
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Revenue |
$ | 335,106 | - | - | $ | 335,106 | $ | 275,439 | - | - | $ | 275,439 | ||||||||||||||||||||
Cost of revenue |
167,546 | (197 | ) | (37 | ) | 167,312 | 141,363 | (169 | ) | (1,000 | ) | 140,194 | ||||||||||||||||||||
Operating expenses: |
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Sales and marketing |
122,579 | (1,123 | ) | - | 121,456 | 103,457 | (1,075 | ) | - | 102,382 | ||||||||||||||||||||||
Product and technology |
14,180 | (1,873 | ) | (1,009 | ) | 11,298 | 10,800 | (1,885 | ) | (1,116 | ) | 7,799 | ||||||||||||||||||||
General and administrative |
30,241 | (4,741 | ) | (536 | ) | 24,964 | 24,470 | (4,096 | ) | (1,034 | ) | 19,340 | ||||||||||||||||||||
Total Operating expenses |
167,000 | (7,737 | ) | (1,545 | ) | 157,718 | 138,727 | (7,056 | ) | (2,150 | ) | 129,521 | ||||||||||||||||||||
Income (Loss) from continuing operations |
560 | 7,934 | 1,582 | 10,076 | (4,651 | ) | 7,225 | 3,150 | 5,724 | |||||||||||||||||||||||
Other income, net |
338 | - | - | 338 | 697 | - | 14 | 711 | ||||||||||||||||||||||||
Income (Loss) from continuing operations before provision for income taxes |
898 | 7,934 | 1,582 | 10,414 | (3,954 | ) | 7,225 | 3,164 | 6,435 | |||||||||||||||||||||||
Provision (benefit) for income taxes |
736 | - | (141 | ) | 595 | 323 | - | - | 323 | |||||||||||||||||||||||
Net income (loss) from continuing operations |
$ | 162 | 7,934 | 1,723 | $ | 9,819 | $ | (4,277 | ) | $ | 7,225 | $ | 3,164 | $ | 6,112 | |||||||||||||||||
Net income (loss) per share from continuing operations available to common stockholders |
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Basic income (loss) per share from continuing operations |
$ | 0.01 | $ | 0.35 | $ | (0.15 | ) | $ | 0.21 | |||||||||||||||||||||||
Diluted income (loss) per share from continuing operations |
$ | 0.01 | $ | 0.34 | $ | (0.15 | ) | $ | 0.19 | |||||||||||||||||||||||
Weighted average shares outstanding |
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Basic |
28,379 | 28,379 | 28,936 | 28,936 | ||||||||||||||||||||||||||||
Diluted |
28,902 | 28,902 | 28,936 | 31,374 |
Note: During the year ended December 31, 2011, the Company recorded the results of operations and financial position of its Bizzy subsidiary as discontinued operations. Accordingly, related prior-period amounts have been reclassified to conform to the current period presentation.
Footnotes |
(1) Adjusted EBITDA is defined as net income (loss) from continuing operations before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, the effects of accounting for business combinations (including any impairment of acquired intangibles and, in the case of the acquisition of SMB:LIVE, the deferred cash consideration) and amounts included in other non-operating income or expense. |
(2) Underclassmen Expense is a number the Company calculates to approximate its investment in Underclassmen and is comprised of the selling and marketing expenses allocated to Underclassmen during a reporting period. The amount includes the direct salaries and allocated benefits of the Underclassmen (excluding commissions), training and sales organization expenses including depreciation allocated based on relative headcount and marketing expenses allocated based on relative revenue. |
(3) Stock-based Compensation Related Expense: Includes stock-based compensation expense and the related adjustment to amortization of capitalized software development costs. |
(4) Acquisition related costs, including the amortization and any impairment of acquired intangibles and the deferred cash consideration for the SMB:LIVE acquisition, are excluded from the non-GAAP operating results as these are non-recurring charges which the Company would not have incurred as part of continuing operations. |
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