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Local Corporation (NASDAQ:LOCM)

Q1 2014 Results Earnings Conference Call

May 8, 2014, 5:00 p.m. ET

Executives

Fred Thiel – Chairman and CEO

Ken Cragun – CFO

Analysts

Andrew D’Silva - Merriman Capital

Ed Woo - Ascendiant Capital

Operator

Welcome to the Local Corporation’s first quarter 2014 conference call. On the call today are Local’s chairman and chief executive officer, Fred Thiel, and Local’s chief financial officer, Ken Cragun. Fred and Ken will discuss first quarter 2014 results and guidance for the 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 this conference 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 for how the company defines such non-GAAP measures and the reasons for using them, as well as a detailed review of our first quarter 2014 results, including the 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 and CEO, Fred Thiel.

Fred Thiel

Thanks, operator. Good afternoon, everyone, and thank you for joining us for our first quarter 2014 earnings call. Today we’re looking forward to discussing our Q1 performance, as well as updating you on our business progress.

I’m really excited about the opportunities ahead for the company, and in looking back to last year, I realized then, and believe even more so today, that the company has reached an important inflection point to drive shareholder value. We have an incredibly talented team, and are well-positioned for significant growth across our businesses. Also, I’d like to take the opportunity to thank Mike Sawtelle, who served as president and COO, for his many contributions to the company.

This was a very busy quarter and a strong start to 2014. In terms of revenue, I’m pleased to report that we delivered $26.2 million in revenue for Q1. Our first quarter revenue results were almost equal to our seasonally strong fourth quarter revenue for 2013.

Overall, year over year revenue for the first quarter increased 22%, supported by continued strong revenue growth of 78% across our network. Adjusted EBITDA was $712,000, reflecting an improvement on historical seasonal trends and our continued efforts to regain organic traffic and improve monetization.

We entered 2014 focused on three growth avenues to build long term shareholder value: our core business, our Krillion technology, and our intellectual property. We are executing on our vision by demonstrating our ability to invest in our business while fostering growth and generating a positive adjusted EBITDA.

First, we continue to see moderate growth from our core business, fueled by top line revenue expansion, driven by two factors: incremental revenue from new ad solutions launched across our extended ad network and better monetization of our traffic on our owned and operated properties.

We’re working to integrate mobile into everything we do. All of our new initiatives and products are built to deliver across all devices and channels. Similar to others across the industry, mobile continues to monetize at lower rates, but we are continuously optimizing and testing ad units and content to betwter understand consumer behavior and engagement.

As discussed in detail last quarter, Krillion, our patented local shopping platform, represents another avenue for accelerating our company’s growth and increasing shareholder value. Krillion enables retailers of all sizes to reach more connected consumers by providing the most accurate, current, and comprehensive local shopping data along the path to purchase.

According to Google’s new local shopping behavior study, over 80% of smartphone and tablet users conduct local searches on their devices, with most of those searches focusing on store hours, directions, addresses, and product availability.

We are in the early stages of implementing initiatives to capitalize on this growing trend and monetize this increasingly relevant technology. Our local shopping data is hard at work powering consumer discovery experiences, and I’ll share more on recent milestones shortly.

To further highlight Krillion’s importance to our business, we are consolidating all of Krillion’s assets, including its IP, into its own subsidiary, which enables us to better manage and measure its performance and contribution to the overall business. How we can best derive value from the technology is important to consider, given that $1.1 trillion of in-store sales are influenced by the web.

Our third avenue of growth involves implementing a phased approach to our patent strategy. As a first step in executing that strategy, we are in the process of transferring the other 11 of our 12 issued patents into a dedicated IP holding subsidiary. We believe this structure will provide us with the most flexibility solution to leverage the value of our intellectual property, allowing us to easily license our IP, form joint ventures, spin off assets individually or as a portfolio, or execute on other strategic alternatives.

I also wanted to provide a quick update in regard to the ongoing Fry’s Electronics litigation. In early 2014, we received a positive claim construction ruling from the court and we remain very confident in our position. Our trial date has been moved to July, and we will keep you posted on this as well.

Now, I’m going to provide more detail on the company’s operating milestones. 2013 was a year of transition. We exited direct advertising sales efforts to SMBs, reduced headcount, and focused all our efforts back to the core business, which includes our owned and operated sites and network, all while shifting our focus to mobile-first initiatives. Likewise, we started to invest in our Krillion technology and the growth potential in this business. Now I’d like to discuss key milestones and the opportunities ahead.

First, within our core business, our owned and operated properties performed, and the first quarter was our second consecutive quarter of owned and operated revenue growth. We believe we have turned the corner. As part of our ongoing efforts, we also plan to implement new category pages with relevant content to further increase consumer engagement and add new monetization vehicles to drive incremental revenue.

Moving on to our extended ad network, we are pleased with the performance we’ve seen so far this year. The network delivered 78% year over year first quarter revenue growth and, as expected, it was down sequentially due to seasonality continue to the strong fourth quarter.

A recent milestone includes the launch of display ads across mobile sites and apps and nList, our Javascript search solution, a collaborative effort with advertisers and publishing partners. nList utilizes our proprietary technology and enables publishers to build an engaging webpage featuring both paid and organic content. The solution also provides traffic quality reporting functionality, which is both critical for our publishers and for our own internal quality assessments.

In the fourth quarter last year, we announced the launch of our new pay per call network, an area where we have significant intellectual property. We’re getting good traction and receiving very positive feedback from our direct advertisers, many of which are well known national advertisers who we are working with to generate leads from consumers directly from their mobile devices.

Second, some of our recent Krillion milestones include the launch of nFuse, a dynamic, data-driven rich media mobile ad unit, and nStore, a flexible where to buy solution for manufacturers. Our first use case for nFuse was with a top-five national retailer in two markets, and initial results surpassed industry benchmarks for localized interactions.

As a matter of fact, the results were a factor of magnitude greater than industry benchmarks. The ad geosenses the consumer to locate nearby stores, provide ambient store data, and enable the consumer to browse products and then verify if the product is in stock, all in real time, all through the Krillion platform, all while within the ad. We’re now engaged in a broader campaign with the same retailer across additional markets that incorporates new localized data elements for their campaigns.

Our second Krillion related product launch was nStore, a flexible where to buy solution. This product rollout was in conjunction with a national household appliance brand. This solution is resonating well with manufacturers who want to provide consumers with dynamic pricing and real-time availability to help speed up their prepurchase research and support retail channel sales. We’re currently talking with other major brands about powering their where to buy solutions.

Also this quarter, we released the next version of our award-winning Habit app, powered by Krillion. One of the new features that leverages our enhanced stock check technology is real time stock availability and another is our new best/better smart price comparison feature, which allows consumers to compare and find the best price for a product. Furthermore, we have recently received recognition from prominent industry organizations such as the Appie Awards.

As we have said before, Habit is a showcase for the platform, and as we learn more about how consumers interact with our data, we will begin to roll out more consumer experiences across our properties like Local.com and in other places where consumers spend time researching online. We will also launch Habit for desktop, Android, and tablets.

Our vision is to create a new standard for retail shopping data that allows retailers and brand manufacturers to create new value added applications that drive consumers to purchase both online and in store, as well as gain further insight from consumer interactions within our data.

Our vision for Krillion is centered on providing the most accurate, current, and comprehensive local shopping data in the industry, making Krillion the de facto shopping data standard. We are in the early stages of a multiphase plan which focuses on three main areas: distribution, data acquisition and quality, and coverage.

Before turning over the call to Ken, I’d like to say that I couldn’t be more excited about the opportunities for Local, the quality of the team, and my outlook on the future. That said, I’ll now hand over the call to our CFO, Ken Cragun.

Ken Cragun

Thanks, Fred. Good afternoon everyone. Thanks for joining us today.

Looking at our financial results, we’re pleased to report a solid quarter for Q1 2014. Revenue grew 22% year over year to $26.2 million. The primary growth came from our network business, which was up 78% year over year. Revenue from our owned and operated business is also headed in the right direction as it was up 7% from the prior quarter, the second straight quarter of sequential owned and operated revenue growth.

Adjusted EBITDA was $712,000 in the first quarter, continue to $685,000 in the first quarter of last year. Notably, we reduced our GAAP net loss year over year by 16%, from $3.4 million to $2.8 million.

While we are seeing year over year improvement to the bottom line, we continue to build for the future, and 2014 will be a year of focus on strengthening our core business while investing in growth initiatives.

I’d now like to discuss two of our key business drivers for the core business, traffic and monetization. Generally speaking, our traffic metrics have been down from prior periods due to seasonality and also due to lower organic traffic from top search engines due to search algorithm changes.

We’re currently implementing changes to the structure and content of our managed network sites, and we’re seeing slow but steady progress with upwards trends in organic traffic. For Q1, overall traffic on local.com and across our managed network was 72 million visitors, down 33% from the prior year quarter and organic traffic was 17 million visitors, down 65% in the same timeframe.

Mobile traffic was 23 million monthly unique visitors, which represents about one-third of our total traffic, and was down 27%. Our key monetization metric is revenue per thousand visitors. While first quarter monetization decreased 12% from the prior year period, primarily due to ad policy changes, we’re encouraged to see that it increased sequentially, up 6% from $178 in Q4 to $189 per thousand visitors in Q1.

We’re pleased to see the sequential improvement in this monetization metric. We’re a data-driven company and we’ll continue to leverage our testing and analytics tools to optimize monetization of all our traffic. I’m also happy to report the approved monetization continues in the early part of the second quarter of 2014.

Looking at our operating expenses for the first quarter, cost of revenue increased as a percentage of revenue from last quarter, resulting in a 22% gross margin for Q1. The decline in our gross margin percentage was anticipated and reflects a decline in our high-margin organic traffic.

Our outlook is that gross margin should improve throughout the year to about 24% to 26% during the year. First quarter G&A expense included a $1 million severance charge. Let me now turn to cash and liquidity.

The company’s cash balance was $3.7 million at the end of the first quarter, compared to $5.1 million at the end of the fourth quarter. The decline in cash in Q1 reflects the payment of severance and other accrued compensation. Given our current outlook for adjusted net income, we expect to have positive cash from operations and build our cash balances during the remainder of 2014.

On the liability side of our balance sheet, the company ended the quarter with $9.6 million outstanding under its Square One Bank credit facility, up from $9.2 million at the end of Q4, with availability under the line of credit of about $2 million.

During the first quarter, we amended the Square One Bank credit facility. The amendment extended the maturity date to April 2015. It removed the liquidity ratio covenant and transferred the nonformula term loan to the formula line of credit. The company also has $5 million outstanding related to convertible notes.

I’d now like to discuss our financial guidance for the year. We’re pleased with the solid first quarter results and we are reiterating our 2014 guidance, noting that we now expect to be at the high end of the guidance range.

We continue to expect revenue between $103 million and $107 million, and adjusted EBITDA of between $3 million and $4 million, or between $0.13 and $0.17 per diluted share on 23.5 million diluted shares. You can find additional slides related to our results on the investor section of our corporate site at ir.local,com.

With that, I’ll hand it back to Fred.

Fred Thiel

Thank you, Ken. We continue to be focused on maximizing shareholder value and are pleased with the traction we’re making in each of our three growth areas: our solidly profitable core business, our innovative Krillion technology, and the substantial untapped value of our intellectual property portfolio. This will set the stage to establish long term accelerated growth and position us as a leading local advertising technology company.

As promised, we’re committed to increasing investor communications and have plans to do so in earnest. We will present at four investor conferences in May and June: SunTrust Robinson’s Internet and Digital Media Conference, B. Riley’s 15th Annual Investor Conference, Markham’s Third Annual Microcap Conference, and LD Micro’s Invitational.

Following these events, we’ll commence a series of non-deal roadshows to share our vision for local with current and future investors. Please contact our IR firm, LHA, if you’d like to schedule a meeting.

I want to thank the board of directors for the vote of confidence, our employees for their patience during this time and continued hard work, and our valued partners and shareholders for their continued support. We look forward to a great year.

Thanks again for joining us today. Moderator, I’ll turn it to you to open the lines for Q&A.

Question-and-Answer Session

Operator

[Operator instructions.] Our first question comes from the line of Andrew D’Silva with Merriman Capital.

Andrew D’Silva - Merriman Capital

First off, what’s causing the lower organic traffic, and thus lower gross margins?

Fred Thiel

In the fourth quarter of last year, we saw fewer referrals from a top search engine to our network partner sites on our managed network. So they were getting less organic traffic, primarily due to algorithmic changes from those large search partners.

Andrew D’Silva - Merriman Capital

And then did you list how many network partners you have, or at least ended the quarter with? I know in the fourth quarter you had 1,600, and that was down from 2,100 in the third quarter. Did you have a number for the first quarter?

Fred Thiel

On the network metric, we’re looking at coming up with a new metric on that that will be impressions, that we’ll probably start disclosing next quarter. We found that the number of network partner sites is not clearly tied to the network growth. It can sometimes be skewed kind of an 80-20 rule where maybe the top sites are contributing more to the revenue and the tail of those network sites, if that’s growing or shrinking, is not really indicative of the health and strength of our network.

Andrew D’Silva - Merriman Capital

Right. You don’t want to have a lot of non-quality partners coming in. Wouldn’t that affect the relationship you have with larger search engines? Or is that a wrong way of thinking about it too?

Fred Thiel

No, it’s a good way of thinking about it. At the end of the day, there are certain partners whose sites don’t really contribute to the overall numbers, and as Ken said, it comes down to let’s measure something that really does related directly to revenue, which is impressions and traffic that’s going to and from those sites. That’s a much better metric, and so that’s why we’re shifting to that focus.

Andrew D’Silva - Merriman Capital

Should we still figure the network business, though, to be the primary growth driver in 2014 or is it switching back to the owned and operated, or maybe even pay per call?

Fred Thiel

The network has grown at a much greater clip. We like the balance we have between owned and operated and network. We would anticipate that network will contribute the bulk of the growth, or will grow at a greater clip, than owned and operated, which is positive, because it’s generally a higher-margin business, and that’s why we’re giving the outlook for improved margins during the year.

Andrew D’Silva - Merriman Capital

And then pay per call, do you still think you can do $2 million to $3 million in sales for this year?

Fred Thiel

Yeah, pay per call, we’re signing up new top national advertisers, we’re bullish on our outlook for pay per call, and we do anticipate at that level approximately for the year.

Andrew D’Silva - Merriman Capital

And then was there any particular reason for letting Mike Sawtelle go? I know he spearheaded a lot of the Krillion campaigns. It seems like that’s a big driver for maybe the second half of this year and 2015. And then also, who’s going to be spearheading that going forward?

Fred Thiel

That’s a great question. We’re really focused on having a very flat, agile, fast-moving organization which is focused on execution and empowering managers really as close to the line of interface with the customer as possible, with the ability to drive their businesses. And at the end of the day, it comes down to how many people do you have to have between strategy and execution.

And so the board decided that it was in the best interest of the company to really focus on a flattened hierarchy. We’re actually a bit of a small company to have as many chiefs as we’ve had, and at the end of the day, it comes down to very rapid execution, being agile, being able to push down decisioning. And just that was the luck of the draw, so to say.

Andrew D’Silva - Merriman Capital

That makes sense. Mike was a great guy. I was just curious about the rationale. I understand you want to be nimble in these situations, particularly as you’re growing. Do you have Habit download metrics as far as how many phones or subscribers, users, you have to date?

Fred Thiel

Again, let me preface it by saying Habit is a demonstration platform for the technology. It’s a way for us to show people what you can do with it. I believe the downloads have crossed the 10,000 mark. The reviews in the app store, I think, are 4.5 stars out of 5. And I think we’re seeing good engagement somewhere in the 3 to 4 minute range typically, on average, with the app. So all good metrics.

Habit’s not meant to be the millions of downloads type of product for us. We’re not spending lots of money to drive downloads. We’re really using it, again, as a demonstration of hey, here’s what you can do with the technology. As you look at the Krillion business model and if you sort of go back to what I said earlier during the call, our vision is to be the de facto data provider.

Habit will play a role out there, but we believe the much bigger play is providing Krillion data to all of the large search engines, to all of the large discovery apps, and to the retailers and to the brands, as a way of getting not just real-time product availability in a very hyperlocalized sense, but more importantly, being able to drive significant business insights regarding retail sales.

Andrew D’Silva - Merriman Capital

As far as the way you’re monetizing all your different iterations of your Krillion application, are you really just doing it on a per-view basis as far as a consumer leverages the technology, views the item they want to purchase, or does some research on it, and at that point you’re monetizing it? Or do you get more granular to the sense if you can prove that they actually made a purchase due to that view? Because a lot of people look at something then go to the store and buy it, instead of obviously doing it online or over a mobile device.

Fred Thiel

Great question. When you think about the retail world, we’re trying to drive the path to purchase. We don’t typically consummate the transaction, so our goal is to get the person to the store and then it’s up to the merchandisers and the store and the sales people in the store to do the final conversion.

So our sort of internal focus is how can we prove to an advertiser that we’re driving traffic to the store? So we’re not monetizing based on conversions, we’re monetizing based on impressions and traffic. Realize also that as we license the data feed to people like Bing, for example, there it’s a license based on volume and usage. In the case of the nFuse product, there it’s an impression-based monetization model.

So there are going to be a number of different monetization models, and again, back to my prior comments. One of the reasons for putting the Krillion assets into a sub and really being able to highlight Krillion is in future quarters, we look forward to being able to highlight more granular metrics on Krillion as the business evolves. And that will give better insight to you and your colleagues and our investors, obviously, as to the progress we’re making with Krillion.

But right now, I think as I said, in the prior quarter call, the initial focus was the land grab on the data. Now that we have, we believe, a really good position by having 90% of the retailers, 3 million SKUs, over 120,000 retail locations, that we’re processing data for, we’re going to begin to really execute on the series of products, much more than what we’ve talked about currently to date.

And you’ll begin to see really the traction that Krillion gets across a variety of different areas. And that’s really what makes us so bullish about it as kind of local is kind of the next generation of technology.

Andrew D’Silva - Merriman Capital

And then when you’re leveraging Krillion as a form of revenue, that’s a much higher margin business, since you’re deriving everything internally, essentially. As that grows, as a percentage of your revenue, should we expect gross margins to increase substantially due to that? I mean, do you have a margin profile we can kind of think about with this?

Fred Thiel

It might be a little early to give you a broad metric on that. The licensing revenue will be obviously high margin and that’s the bulk of the Krillion revenue to date. The CPM revenue broadly is going to be a good margin for us, but it may be more similar to the network revenue for the bulk of the CPM. So that’s 35%, 37% margin, and then layer on top of that the licensing revenue, which is basically 100% margin. So it will be definitely higher margin, but it will blend based on the level of licensing versus the CPM revenue out of the gate.

Andrew D’Silva - Merriman Capital

Have you noticed anything with Yahoo as far as strengthening your relationship? They had a partnership with Yelp to drive local search. Has that affected your relationship with them at all?

Fred Thiel

I’m not going to comment directly on Yelp. I will say we have a very close relationship with Yahoo and we’re very happy with the relationship. We think we work very well together with them. And we look forward to broadening the nature of our relationship beyond the areas where we’re currently partnering. Sorry for being a little obtuse, but kind of have to be.

Andrew D’Silva - Merriman Capital

That’s fine. I just thought it was interesting that they did that partner. Kind of shows that the larger search engines are focusing more on local. That’s obviously your forte.

Fred Thiel

Just a comment to your point there, which I think might be important. One of the things that we know Krillion does better than any of the large search engines is hyperlocalization of the data. And that really is Krillion’s unique secret sauce, if you will, in that we can provide that granularity that you can’t using traditional methods.

Andrew D’Silva - Merriman Capital

So it wouldn’t be wrong to think a couple of years down the road, a deal like that would be what you’re aiming for?

Fred Thiel

Exactly.

Andrew D’Silva - Merriman Capital

And then are severance packages, to [Heath] completely paid out? And then also should we expect severance packages for Mike in the second quarter?

Fred Thiel

We paid out two-thirds of Heath’s severance in the first quarter. And Mike did have a contract, and we would expect to see that in the second quarter. Not paid out, but accrued in the second quarter and then paid over a year.

Andrew D’Silva - Merriman Capital

But you’d recognize it as an expense all in the second quarter?

Fred Thiel

That’s correct.

Andrew D’Silva - Merriman Capital

Do you have a range for that?

Fred Thiel

That would be about $500,000.

Operator

Our next question comes from the line of Ed Woo with Ascendiant Capital.

Edward Woo - Ascendiant Capital

The question I had is, have you seen any changes in the online search engine algorithms? Should we expect there to be any changes coming up shortly?

Fred Thiel

We don’t have anything as far as expecting big changes, although the changes that we made responding to the current environment, we think could really bear fruit in the next couple of months. So I think as we meet next quarter, we hope to be able to say we’ve seen an increase in our organic visits. We’ve seen modest increases to date. We’re making some changes, as I mentioned on the script, to both the layout and content of these sites. And then kind of in the late May, June, July timeframe, we expect to see an uptick. Hard to say at what levels it will return to, but we do expect to see some improvements.

Edward Woo - Ascendiant Capital

And has there been any big change in your IP strategy? I remember May was a big date for your current case with Fry’s. Is there any update on that?

Fred Thiel

I think I mentioned in my comments that the trial date has been moved to July. So we don’t foresee a different outlook or outcome from our perspective. But obviously, the courts take their time with their process. So we remain optimistic about the outcome, and we continue to execute our strategy on the overall IP portfolio.

Edward Woo - Ascendiant Capital

Will we probably wait until July before we see any other meetings on the IP front?

Ken Cragun

We are right now pushing the patents into an IP holding company. And then the Krillion patent, the Krillion assets, we’re pushing to the Krillion entity. So we’re kind of positioning our IP portfolio into wholly owned subsidiaries at this point, and then we’re looking at strategic alternatives, whether that’s joint ventures, or it’s spun out, or it’s sold individually or as a portfolio. So there are several alternatives that we’ll be exploring. First step is what we’re doing now, is pushing those into a subsidiary.

Fred Thiel

And I think as we’ve said in the past, part of the challenge, obviously, is when you have patents that touch on areas where not only we’re operating but also some of our partners are operating, we just need to be very careful as to how we decide to move forward with monetizing those patents.

Operator

I’m not showing any further questions at this time. I’d like to turn the call back over to Fred Thiel for closing remarks.

Fred Thiel

Thank you for being on today’s call. And now I’d like to turn the call back over to the moderator for final disclosures.

Operator

This conference call contains certain 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 beliefs of our management, as well as assumptions made by, and information currently available by, 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 result; 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 the Local.com domain and other web properties under our management that allows us to operate profitably; our ability to develop, market and operate our local search technologies; our ability to maintain and grow the number of network partners, sites and the aggregate levels of user traffic 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 traffic acquisition partners; our ability to grow our business by enhancing our local-search services, including through 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; the 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 distributor 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 the call for today. Thank you for your interest in Local Corporation.

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