Local Corporation Management Discusses Q4 2013 Results - Earnings Call Transcript

| About: Local Corporation (LOCM)

Local Corporation (NASDAQ:LOCM)

Q4 2013 Earnings Conference Call

February 13, 2014 5:00 PM ET

Executives

Fred Thiel – Chairman

Michael Sawtell – President and Chief Operations Officer

Ken Cragun – CFO

Analysts

Andrew D’Silva – Merriman Capital

Ed Woo – Ascendiant Capital

Operator

Good day, ladies and gentlemen, and thank you for standing by. And welcome to the Local Corporation’s Fourth Quarter and Full Year 2013 Conference Call. On the call today are Local’s Chairman of the Board, Fred Thiel; President and COO, Michael Sawtell; and CFO Ken Cragun. Fred, Mike and Ken will discuss fourth quarter and full year 2013 results and guidance for full year 2014. We will then open the lines for questions.

Today’s discussion includes forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. These risks and uncertainties will be outlined at the end of the call and are detailed in Local Corporation’s SEC filings. Any forward-looking statements are only made of this date of this conference call, and the company undertakes no obligation to update such statements to reflect subsequent events or circumstances.

The company uses non-GAAP financial measures in evaluating financial performance. Please refer to the press release issued today, how the company defines such non-GAAP measures and the reasons for using them, as well as a detailed review of our fourth quarter and fiscal 2013 results, including corresponding GAAP financial measures and a reconciliation of non-GAAP to GAAP financial measures. This conference call is publicly available via audio webcast through the company’s website and a replay of the call will be available for the next 90 days.

I’d now like to turn the call over to the Local Corporation’s Chairman of the Board, Fred Thiel.

Fred Thiel

Thank you, operator. Good afternoon and thanks everyone for joining us on today’s call. Before we start, I just wanted to give a brief update on our recent leadership transition. I’d like to take this opportunity to thank Founder and Former Chairman and CEO Heath Clarke for his for his 15 years of service, dedication and innovation. Over the last few weeks I’ve had the opportunity to work closely with Mike, ken and rest of the management team. I feel confident that we have a talented team in place that’s leading the company.

On the call today, we’re going to share an overview of our 2013 financial performance and our 2014 outlook. I believe this is an exciting time for the company. We look forward to continuing to build the foundation to address the rapid customer shift – sorry consumer shift to mobile and the demand for richer Local content. In addition to our core search this create the opportunities to serve new growth market leveraging our Krillion assets. We’re looking forward to what’s ahead.

Now, I’m going to hand over the call to President and COO, Mike Sawtell to give out more detail on our immediate action plans and growth opportunities related to each of the company’s key focus areas. Mike?

Michael Sawtell

Thanks Fred. We appreciate your guidance as we move forward into what we all agree as the year filled with new opportunities. Before, I talk more about our plans, I want to mention that next month, we will celebrate our 15th Anniversary of the company. We’re all very proud of reaching this milestone, we feel it’s a testament of a hard work and dedication of all our employees over the years.

On today’s call, I’d like to share our 2013 accomplishments along with the challenges we faced during the year. Then I like to discuss opportunities ahead including our progress towards becoming a mobile-first company. Overall, we believe 2013 was all about execution. This is evident as we finished the year with revenue of $94.4 million and adjusted EBITDA of $4.5 million with positive cash flow from operating activities. As a result, our teams focus and hard work, we had one of the best financial results in the company’s history. That being said, we also saw our [indiscernible] challenges last year.

First, we had to adjust our approach to accommodate ad policy changes from our largest partners across desktop and mobile. As a result, we saw a decline in our overall revenue per thousand visitors. We have since worked diligently and optimizing both desktop and mobile are now seeing positive monetization trends as we enter 2014. We also absorb outdoor rhythmic changes from our major search engine that affected organic traffic levels across our network business causing a negative financial impact to both our top and bottom-line.

Though we remain challenged by this trend, we’re working hard to improve content while the attempt to restore organic traffic to previous levels. As we grew our network business, we took a firm stands on traffic quality and user engagements. And as a result, we reduced the overall number of network sites. We also simultaneously focused on growing our business with our higher quality publishers. But in spite of all these challenges, we still ended the year strong achieving our largest year-over-year network revenue growth in the company’s history up 141% over 2012. And even though we have fewer partner sites, we’re able to achieve quarter-over-quarter sequential revenue growth which we believe, positions us very well for 2014.

Now, I’d like to share with you some of our notable accomplishments from last year, many of which are critical to our transformation into a mobile-first company. In 2013, we released new mobile-optimized sites across our properties and network. We also released a new version of our Local.com app for Android and iOS. Next, we tested and released several new advertising initiatives, intended to drive additional revenue including mobile pay-per-call and pre-roll video. We also delivered our next generation, enterprise-ready Krillion Local Shopping platform which we believe is one of the largest and most comprehensive in the industry with approximately 120,000 retail store locations and 3 million localized products. This is no small accomplishment because in the aggregate, Krillion represents over 90% coverage of the top 100 U.S. retailers.

Finally, we successfully launched our Innovative Shopping App Havvit which is powered by our Krillion platform. Havvit enables consumers to find products near them, track savings, compare prices and ultimately to make a purchase. The Havvit App showcases just one of the many ways our shopping data can be utilized by consumers. And as one of the first Shopping Apps of its kind designed for iOS 7 the Havvit App was named one of the top five Shopping Apps by the Los Angeles Times in this past holiday season.

Now let’s discuss the consumer shift to mobile devices and how that presents a tremendous opportunity for us. Today, consumers are using their mobile devices more than ever before to research for local products and services. In fact, our research says that over 76% of consumers access local retail store information from the smartphone. Through Forrester Research the online to offline market opportunity is 5 times greater than everything sold online today. The market for web-influenced sales to the retail store is almost $690 billion. We believe the retailers we are in discussions, well they’re excited about this opportunity as they continue to look for new advertising strategies to drive more consumers into their retail stores and overcome growing competitive pressures from online-only retailers.

Let me give you a brief examples of how Krillion works and why it’s relevant. More and more consumers are searching for product directly rather than searching for a business that may sell the product. For example, you can search directly for the Samsung LED TV on your smartphone while you’re in local Starbucks. Krillion would power that results that for all the retailers who sell that particular TV near your location showing the current price by retailer and if it’s an stock at a particular store location. Krillion also provides detailed store information including contact information, hours of operation, driving directions and dynamic map for the retailers who carry that product.

We believe the ability to provide relevant product results is highly valuable to retailers seeking to attract the on-the-go consumer for further along the path approaches. So, let me share with you our plan for the Krillion platform and how it fits into the emerging local shopping environment. Our plan for the Krillion platform centers on retailer coverage, product listing distribution and monetization. We continue to work directly with national, regional retailers to broaden their data coverage. We’ve also laid the plans to define and secure additional distribution partners including opening up our API to developers and publishers for use within their own apps and sites.

We’re hard at work testing various app formats utilizing our product data with some of our largest partners including CPC and CPM ad units. We will anticipate the next version of the Havvit App which is powered by Krillion will be released sometime in the first half of 2014 and will include an in-stock availability feature. And we will release an HTML5 mobile responsive companion desktop shop site which will enable Havvit to work across other devices and operating system including Android.

Other key strategies for 2014 includes continually grow the network to the new search initiative focused on user engagement, mobile ads distribution and monetization. Also, we want to build our new vertical markets for our mobile pay-per-call offering. We also intend to further integrate Krillion Local Shopping content into Local.com and across our network.

Now, let me quickly touch upon the status of our IT strategy. We are continuing our efforts to enforce our patent rights related to our cascading menu patent. We recently received what we believe is a positive claim construction relief from the court in the Fry’s Electronics litigation. We are looking forward to go into trial this case in May of this year and we’ll provide further updates as appropriate.

On the pay-per-call side, we have taken steps to preserve our rights with respect to our pay-per-call patents and we’ll consider our options for maximizing their value over the coming months. Before I hand over the call over to Ken, I want to mention that we believe we are ready to take on the challenges and opportunities ahead in this emerging Local Mobile marketplace. We believe the organization is built to scale, it’s very nimble and add significant technology and IT that is at the forefront of this space.

I’ll now turn it over to Ken for an overview of our financial performance and outlook.

Ken Cragun

Thanks, Mike. Good afternoon everyone. Thanks for joining us on our earnings call today. Looking back at 2013, we saw steady sequential improvements in both revenue and bottom-line results. We’re focused on strengthening our core-search business while investing in growth initiatives.

We achieved four straight quarters of revenue growth. Quarterly revenue improved from $21 million at the end of 2012 to $27 million at the end of 2013. The growth came primarily from our higher margin network business which more than doubled year-over-year. Our Owned & Operated business is also back in growth mode up 20% sequentially from Q3 to Q4. We’re pleased with our bottom-line improvements as well reporting Q4 adjusted EBITDA of $1.4 million and full year adjusted EBITDA of $4.5 million, nearly tripled the bottom-line from 2012. We also cut our GAAP net loss year-over-year by 57% from $24 million to $10 million.

I’d now like to discuss trends we’re seeing in two of our key business drivers, traffic and monetization. Mobile traffic in Q4 was up 24% from the prior year reaching 31 million monthly unique visitors which represents 39% of our total traffic. Overall traffic on the site and network in Q4 was 80 million monthly unique visitors, this is down 20% from the prior year quarter due to low organic traffic. During Q4, organic traffic was 26 million visitors down 42% from the prior year quarter. Several of our network sites saw lower traffic referred by top search engines due to changes in search hour [derivance]. We expect that traffic on our network will fluctuate from time to time and we’re working to improve the content and relevance of these sites to improve the organic traffic that goes to those sites.

Our key monetization metric is revenue per thousand visitors. Monetization dropped 23% from $230 to $178 per thousand visitors from Q4 of 2012 to Q4 of 2013. The decrease was primarily due to ad policy changes and declining revenue per click trends from one of our major ad partners. In addition, our growing mobile traffic generally monetizes at a lower level than desktop traffic. Although we have initiatives in mobile pay-per-call and mobile shopping that we believe can improve mobile monetization. We have a team that is experienced in responding to these type of market changes. The team is leveraging our improved testing platform and making adjustments to optimize both revenue and margins. I’m happy to report that we’re already seeing improved monetization trends in the first quarter of 2014 based on these efforts. We’re excited about the opportunities we have before and so we look forward to share in progress throughout the year.

And looking at our operating expenses for the fourth quarter. Cost of revenue increased as a percent of revenue from last quarter lowering our gross margin percentage to about 24%. As we mentioned on our last call, third quarter gross margin included a one-time benefit and a 24% gross margin in the fourth quarter was in line with our expectations. Please note that fourth quarter G&A expense included a $1.7 million non-cash charge establishing a full reserve against our long-term LEC receivable. Our LEC receivable related to legacy subscribers that were built on the phone bills from Local Exchange Carriers also known as LECs. The LECs stopped billing our subscribers in this manner at the end of 2012 in evaluating the collectibility of this receivable, we felt it was prudent to increase the reserve based on recent developments. The investment we made in these legacy subscribers provided an excellent return between 2009 and 2012 when we exited the business.

Let me now turn to cash and liquidity. We had another quarter of positive cash flow. The company’s cash balance was $5.1 million as of the end of the fourth quarter up from $4.8 million at the end of the third quarter. Our core business is generating positive cash flow. We’re investing the returns from our core business into new initiatives. We have several new opportunities ahead in 2014 including the expansion of our Local’s Krillion shopping platform and new mobile advertising solutions.

On the liability side of our balance sheet the company ended the year with $9 million outstanding under its Square 1 Bank credit facilities with availability under the line of credit of about $3 million. The company also had $5 million outstanding related to convertible notes.

Now on to our 2014 guidance. We expect revenue between $103 million and $107 million, which implies 11% in growth at the midpoint. We expect adjusted EBITDA of between $3 million and $4 million or between $0.13 and $0.17 per diluted share and $23.5 million diluted shares. While we’re not providing a quarterly breakdown of adjusted EBITDA guidance please note that similar to last year we expect that adjusted EBITDA generation will be more heavily weighted to the second half of the year in 2014.

Before I wrap up I’d like to say that we believe we have an incredibly resilient organization. We expect to navigate near term challenges as they occur and we have a strong core business that allows us to invest in strategic growth initiatives. For your information you can find additional slides related to our results on the Investors Section of our corporate site at ir.local.com.

With that I’ll hand it back over to Mike.

Michael Sawtell

Thank you, Ken. Before I hand the call over to Fred I want to give a special thanks to all our partners and employees for delivering such a great quarter and 2013. In order to have this success that we’ve had several things have come together and as you know timing is everything. In this case the completion of our Krillion Local shopping platform combined with the massive consumer adoption of mobile devices creates a tremendous opportunity for our company.

We believe that Krillion can become the engine which powers third-party apps and sites that can provide on the globe mobile consumers with the Local product information they want at precisely the time they needed along the path to purchase. We believe that our role in this emerging marketplace enables us to be at the forefront of the [highpoint] transformation of consumers’ shopping behavior with what we believe could be a potentially disruptive solution.

What’s truly exciting about this path forward is that we believe as a company we will be in a better position to control our financial future by having direct relationships with retailers and brands. And as a result we expect to be able to reduce our reliance on third-party advertisers. In addition with the wide adoption of the Krillion platform comes accessed to immense amount of data about retailers, manufacturers and consumers alike which further evolve Krillion’s platform into a big data play complete with highly valuable consumer behavior trends, price history by category and other value information.

We’re in the early stages of this evolution and consumer search and we believe we’re well positioned to take advantage of it and provide Local Corporation with a long-term and fully defensible business model. We’re optimistic about what’s ahead for us in 2014 and look forward to executing throughout the year.

With that said I’ll turn the call over to Fred for closing comments.

Fred Thiel

Thank you, Mike. We’d like to acknowledge and thank our value shareholders. We plan to strengthen communications with our shareholder and provide updates on our progress towards new initiatives and accomplishments as we move forward throughout the year.

Now I’d like to turn the call over to the moderator to start Q&A.

Question-And-Answer Session

Operator

Thank you sir. (Operator Instructions) And our first question from the phone will come from Andrew D’Silva with Merriman Capital. Please go ahead. Your line is open.

Andrew D’Silva – Merriman Capital

Hey guys. Thanks for taking my call. I apologize I’m having you repeat a couple of things I got added on a little late. First off I just wanted to kind of a update on how things were kind of proceeding with the pay-per-call patent infringement. Have you done a shortlist of companies that fit your target criteria and what would be a good timeline for us to think about potential announcements? Also regarding the pay-per-call, can you still expect $2 million to $3 million in pay-per-call revenues for 2014?

Michael Sawtell

Well.

Ken Cragun

Go ahead, Mike.

Michael Sawtell

Well I would say on the pay-per-call side, we’ve just taken like I said steps to preserve our right. And we’re going to consider our options and we’re going to consider them a little next couple of months and we’ll advise appropriately.

Andrew D’Silva – Merriman Capital

Got it. Okay. And then look the $2 million to $3 million is that still something we can expect in revenues this year and I remember Heath mentioned that on the last call?

Ken Cragun

Yes, we do have pay-per-call initiatives that are going right now and that is one of our top focuses is for 2014 is to expand revenue from new initiatives. And so we’ll definitely keep the pay-per-call revenue going and do expect growth in that. And I think your ballpark of $2 million to $3 million is probably a reasonable estimate at this time.

Andrew D’Silva – Merriman Capital

And you’re figuring that into your guidance as well or is that additive?

Ken Cragun

We do have pay-per-call approximately that level baked into our guidance.

Andrew D’Silva – Merriman Capital

Got it. Okay. And then to your network publishers, are you seeing any slowdown in the rate you’re able to use in the ad publishers network and have you seen an uptake in publisher interest over Krillion postings and second part of the Krillion question would be our continued adopting to have it chopping up, do you have any metrics you can share with us?

Ken Cragun

Your first question was about the number of publishers. We did see a decline in our number of publishers in the fourth quarter. We do monitor quality of all our network publishers. We want to be a – have top quality experiences for the advertisers. And so from time-to-time if a publisher is not meeting our quality standards they will get turned off, but we did see even though the number of sites went down the absolute revenue from network increase significantly. And so we more than doubled that business and we’ve increased business with our high quality partners. We do see a demand and we’re adding but we’re adding carefully our network partners. We do think maybe Mike you could talk about some of the initiatives that we’ll have in mobile search that could go to network partners in 2014.

Michael Sawtell

Yes, we’ve several initiatives of mobile search. And we’re working actually with a couple of our very large partners to do so. So there is – we think there is a Greenfield of different [equal fare] of mobile to go ahead and distribute and we think that’s a big opportunity for us in 2014 and we plan on executing on that.

Andrew D’Silva – Merriman Capital

So with the network partners the revenue increased, it also increased as a percentage of revenue sequentially. Is that correct and if so why did your gross margin have a compression I thought the network business was higher margin and operated at Local’s dotcom site?

Ken Cragun

Yes, the network business is higher margin than our owned and operated business and we did see a favorable mix in Q4. On our last call we mentioned that Q3 was a little bit of an aberration, had a one-time benefit and that we thought that margin in Q4 would come back to 24% and that is what we did see was the 24%. So the 31% we saw last quarter, on the last quarter’s call we mentioned that wouldn’t continue at that level. And within the network business there was a bit of a shift from – we saw lower network that came from organic traffic. So that’s our very highest margin, but so little bit of a mix within that work, but the compression was more a product of Q3 being a little bit high on trend.

Andrew D’Silva – Merriman Capital

Got it. Okay. And then are you seeing any computing shopping to aggregation apps or platform is hitting the market. And I think you – how do you feel you just kind of [indiscernible] in that marketplace right now within Krillion?

Michael Sawtell

Andrew, this is Mike. So, as far as the Havvit goes, we’re seeing some good adoption and we’re learning, we’re learning a lot from the data and the users and how they’re actually using the app and the type of data where it’s also – they’re accessing. So, we’re getting a lot of good data that way. What we think of the Havvit App is a showcase for the Krillion database okay the Krillion platform. So, we want that the business model for that is that we actually want to power 2000 Shopping Apps like Havvit and not just try and have our own Shopping App go vital and be successful.

So, we feel what we believe is a world-class Shopping App on the iOS7 platform and it’s a great display case for everything the clean database can do. In fact, the next version of Havvit is going to add that in-stock, out-stock availability feature. So, we think that’s something that not many people out there have at all. So, we’re trying to differentiate ourselves with the use of the data and Havvit displays that.

Andrew D’Silva – Merriman Capital

And you’ll publish your network, I think as we said they are adopting that quickly or are we seeing some interest in that as far as and adding to – they’re adding it on to their suite of products that they purchase really at?

Ken Cragun

Yes. We did have a couple of press releases in the last quarter or two about some newspaper websites having a shopping channel. And so, some of the – so they make public a few that launch the shopping channel. We are publishing shopping data across the network. And then as we look at what would work well for partners that have network traffic on a mobile device. So, the mobile consumer – we think that the Local Shopping data will be highly relevant to a mobile consumer. And so, that will be new for us. So, we are making shopping data available to existing partners, there is interest but there is also as Mike mentioned, the Greenfield on mobile search.

Andrew D’Silva – Merriman Capital

Right.

Ken Cragun

That we think this will play very well as we expand into that area.

Andrew D’Silva – Merriman Capital

I absolutely view at that, I think that’s going to happen. So it seems like you have a pretty good, see real candidate. And Mike, is there a reason or anything particular, you’re looking forward to your external search than your internal candidates start fulfilling. And I mean do you have a list selected at this time?

Fred Thiel

No, right now what we’re doing is we’re finalizing our choice of recruiter that is going to do the search process for us. I think we need to do our due diligence relative to looking and evaluating as a candidates, we’re obviously looking for people with great experience in this space, people who are experience in running complaints in the public environment, who understand the strategic relationships working fast and have prudent capability working with those partners and other partners that we think are going to be important here in taking the complaint to the next level.

But we need to important as a Board that we go through a process to evaluate candidates and if it settles out that Mike who is doing great job, he’s the final candidate and we feel confident that we did our job as a Board in serving the needs of our shareholders and evaluating and fill the best possible candidate, he’s flexed and very big choose to fill and we want to make sure that we show them with the best possible candidate.

Andrew D’Silva – Merriman Capital

Yeah, good absolutely. I guess this is my last question. Is he – I mean he’s recurring some salary right now after he reported. Is it just at a base salary and are there any like non-equity payments or bonus structure and then just trying to model out the savings we can anticipate from, I’m just hypocrite why you’re looking for a new CEO?

Ken Cragun

Right. Yes, this is Ken. The – we did have a severance in connection with the comps to the employment agreement that we had which basically was a year is his compensation that gets paid in the first quarter. And we put out an 8-K on what that would be. And so, the base compensation of a CEO, that – usually we’ll have like one-time charge in the first quarter, I believe it was just over $700,000 if the ballpark set for you.

Andrew D’Silva – Merriman Capital

Okay, perfect. All right. That’s all I got. Guys, I’ll hop back in queue. Thanks for taking my call.

Ken Cragun

Okay, Andrew. Thank you.

Operator

Thank you, sir. (Operator Instructions) Our next phone question will come from the line of Ed Woo with Ascendiant Capital. Please go ahead. Your line is open.

Ed Woo – Ascendiant Capital

Yes, thanks for a solid Q4. I had a question, do you see any changes in any of your ad partners are at an algorithm or policy changes over the near term?

Michael Sawtell

Ed – hi, Ed, this Mike. Just – the search engines are always changing their algorithm. So, that’s a constant. And we have a team dedicated to observe and go ahead and try to optimize our listings, get better content and optimize. So, that’s always going on.

Ken Cragun

Right now, I don’t think there is anything that we did see an adjustment to organic traffic in Q4, we’re not seeing anything as we’re into Q1 or don’t anticipate any significant changes.

Michael Sawtell

Yes, that’s [true].

Ed Woo – Ascendiant Capital

Great. What about – you mentioned on your press release that your EBITDA guidance for 2014 declining little bit because of investments. Could you just provide a little bit more color on that?

Michael Sawtell

The guidance going down, we end up…

Ken Cragun

I think that’s a…

Michael Sawtell

We’ll just have a little settle in here Ed, but I think Ken has got it.

Ken Cragun

Yes, we are investing in mobile and in shopping and we think that’s prudent at this time. At the high end of the range of $4 million it’s kind of flat from 2013 to 2014, mid-point down a little bit. We did think it’s prudent to invest, we have the significant portion of our team focused on these new initiatives. And then we do face a little bit of a headwinds from the drop in organic traffic that impacts the bottom-line.

Ed Woo – Ascendiant Capital

Great. Well, thank you and good luck for 2014.

Ken Cragun

Thank you, Ed.

Michael Sawtell

Thanks Ed.

Operator

Thank you, sir. And presenters, at this time I’m showing no additional questioners in the phone queue. I like to turn the program back to Mr. Fred Thiel for any additional or closing remarks.

Fred Thiel

Okay. I like to thank everyone again for joining us on today’s call. Now, I’d like to turn the call back over to moderator for final disclosures.

Operator

Thank you, sir. This conference call contains forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933 and Section 21-E of the Securities Exchange Act of 1934. Words or expressions such as ‘anticipate,’ ‘believe,’ ‘think,’ ‘estimate,’ ‘plans,’ ‘expect,’ ‘intend,’ ‘projects,’ ‘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, including at a profit, 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 monetize partner for Local.com.

Local and other web properties under our management that allows us to operate profitably, our ability to develop, markets and operate our local-search technologies, our ability to maintain and grow the number of network partners, sites and the aggregate levels of user traffics from such network partner sites, our ability market the Local.com domain as a destination to consumers seeking local-search results, our ability to adapt to policy and technology changes promulgated by our advertising partners and the traffic acquisition partners, and our ability to grow our business by enhancing our local-search, including those the businesses we acquire.

The integration and future performance of our Krillion business, the possibility that the information and estimates used to predict anticipate revenues and expenses associated with the businesses we acquire are not accurate, difficulties executing integration strategies or achieving planned synergies, the possibility to integrate the costs and go-forward costs associated with the businesses we acquire will be higher than anticipated, possibility of impairment of assets associated with the businesses we have acquired, 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, our ability to successfully assert our intellectual property rights, 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 the future events 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.

This concludes today’s call. Thank you for your interest in Local Corporation. Ladies and gentlemen, thank you for your participation. And you may now all disconnect.

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