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Local.com Corporation (NASDAQ:LOCM)

Q3 2011 Earnings Conference Call

November 2, 2011 4:30 PM EST

Executives

David Katzoff – Associate VP

Heath Clarke – Chairman and CEO

Ken Cragun – CFO

Analysts

George Santana – Ascendiant

Jon Hickman – Ladenburg

Paul Resnik – RedChip Companies

David Kestenbaum – Morgan Joseph

Operator

Good day, ladies and gentlemen, and welcome to the third quarter 2011 Local.com earnings conference call.

My name is Chris and I will be your conference moderator for today.

Presently, all participants are in listen-only mode. Later, we will facilitate a question-and-answer session. (Operator Instructions).

At this time, I would now like to turn the conference over to your presenter for today, Mr. David Katzoff, Associate Vice President. Sir, you may proceed.

David Katzoff

Welcome to Local.com’s third quarter 2011 conference call. With me today are Local.com Chairman and CEO, Heath Clarke; and our Chief Financial Officer, Ken Cragun. Heath and Ken will discuss our results and outlook for the fourth quarter 2011, and we will then open the lines for questions.

Today's discussions include forward-looking statements that are subject to risks and uncertainties that can 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.com’s SEC filings.

Any forward-looking statements are only made as of the date of this call and we undertake no obligation to update such statements to reflect subsequent events or circumstances.

We use non-GAAP financial measures in evaluating our financial performance, specifically non-GAAP financial measures of the pro forma gross revenue and adjusted net income loss.

Please refer to the press release we issued today for how we define those non-GAAP measures and our reasons for using them, as well as a detailed review of our third quarter 2011 results, including the corresponding GAAP financial measures and a reconciliation of our non-GAAP financial measures to GAAP financial measures.

This conference call is publicly available via audio webcast through our 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 our CEO, Heath Clarke.

Heath Clarke

Thanks, David. Today we reported third quarter results and beat prior guidance and we’re projecting a record revenue of $24 million and break-even for the fourth quarter.

I’d like to begin the call by reminding our listeners of our mission to be a leader in connecting local merchants with online consumers. We’re committed to developing a competitive advantage in our space that provides merchants and consumers with the best possible products and services, while generating steady improvements in core earnings power that rewards our shareholders. In this regard, our results and guidance are a huge turnaround from the first half of this year which was beset with declining monetization caused by an ad partner. In the face of that challenge we invested internally and by acquisitions in revenue diversification, strengthened our management team and product development capabilities, and reorganized and expanded our sales force. I believe our results and guidance illustrates very clearly that these investments are paying off.

I’d like to discuss three key items on this call. Firstly, exclusive of our three most recent acquisitions, our operations have returned to profitability. Second, that we’re committed to extracting and growing the value of these acquisitions. And, third, we’re moving quickly towards monetizing more of our traffic with our own ad products sold by our own sales force.

Let’s review each of the items further starting with our core operations. When we connect local merchants with online consumers, we generate revenue from a variety of ad products we place in front of those consumers. Most of those ad products are provided by third parties like Google, Yahoo! or SuperMedia, and some are from our direct customers.

Our core operations consist of O&O, which is Owned & Operated, network and SAS or sales and ad services. Our O&O and network operations provide us with reach to consumers. And in the third quarter we reached over 90 million consumers, a new record for us and 10% growth over the second quarter, which was also a record. Almost all of these consumers were searching for a local product or service, which means they’re very valuable to advertisers and therefore highly monetizable with ad products, because they’re already shopping for something somewhere.

About 80% of our revenue comes from third-party ad feeds and the biggest third-party feed has historically been Yahoo! In the third quarter, we also implemented our new partnership with Google and this combination of partners has resulted in RKV, revenues per thousand visitors jumping 30% to $254 in Q3. Nearly all of this additional monetization drops to our bottom line and results in our business being profitable exclusive over our three months recent acquisitions. Better yet, we’re seeing additional monetization improvement in the fourth quarter which is driving our overall break-even guidance for Q4, which is about $1.5 million better than our prior Q4 guidance. We continue to focus on the optimization of our business in order to extract maximum yield from those assets.

Moving now to our acquisitions, we acquired four companies in the past 15 months and I’d like to report a progress of each of these. OCTANE was acquired in July 2010 due to its content marketplace and highly automated web hosting and SEO platform. OCTANE provides an SMB ad solution that we originally intended to offer to our channel partners for resell to their customers, because those partners, primarily Yellow Page publishers, had literally thousands of feet on the street that we felt we could leverage. We made great initial progress with this strategy until two things happened. One, algorithm changes by the major search engines affected our ability to deliver value to our customers. And, two, shifting priorities among the largest Yellow Page partners made this product a lower priority.

We fixed the algorithm issue back in May. And today up to 96% of customers are buying our exact match local SEO solution appear on page one of Google, Yahoo! or Bing. This fix has provided us with the value proposition we needed to reengage our channel partners and those discussions are again underway. This time, however, we plan to also sell these products direct to merchants.

In the second quarter, we acquired Krillion and Rovion, two small businesses with immaterial revenues, but both with significant potential inside our local ecosystem. Krillion provides us with real-time product inventory from big box retailers which enables us to serve consumers with great results for product-specific location searches like plasma TV and Irvine, California. We’ve been busy integrating and expanding Krillion’s data feeds throughout our business. For example, we now index over 77,000 products at over 70,000 retail locations, up from 50,000 locations a few months ago. And we intend to expand Krillion into other product categories such as clothing. The first implementation of Krillion data was within Rovion’s Ramp product and the next steps involve integrating Krillion data across our 1,600-site network business into our Spreebird daily deals business and into our flagship Local.com site.

Rovion was acquired to provide us with an entry into local rich media which is projected to grow 70% per year for the next five years. Rovion’s key product is Ramp, which is web-based ad management platform that enables publishers, ad agencies, and major advertisers to produce and manage rich media campaigns more rapidly and at lower cost. We integrated Krillion data into Rovion’s platform in what we believe to be an industry first of real-time local product data within a rich media ad unit. This combination of assets was launched from beta about a month ago and is potentially very disruptive to the rich media space. This became even more compelling to us with the recent issuance of Krillion’s patent for product, location, search and advertising.

We’ll grow our rich media revenues by increasing the number of ad impressions managed on the platform and that involves signing up and training customers. This signing and training process itself creates a barrier to entry. I’m pleased to report a positive response to our Ramp product from our publisher partners. We’ve signed 11 publishers to the Ramp platform, four in October, and serve 30 million impressions on the platform in the last two months which is twice the volume served in the fourth months before that. We anticipate Ramp will deliver great growth for us in 2012 at very high gross profit margins.

Our most recent acquisition was Screamin' Daily Deals which complemented our Spreebird daily deals business. We consider daily deals to be a performance ad product that works well for certain segments of advertisers such as restaurants and an important part of our mix of local online ad products. We feel that Screamin' Daily Deals community approach allows us to uniquely target the desirable stock them on [ph] demographic on a sustained basis, which is why we’ve adopted this model for Spreebird. We’ve been busy integrating Screamin' Daily Deals into Spreebird. And despite a soft September, we’re very focused on driving operational excellence within this business unit during the fourth quarter and expect daily deals to also be a growth engine for our business in 2012.

We acquired these businesses to diversify our revenues, expand our product range and expand our reach to even more consumers. We plan to invest in these businesses and expect to manage the overall business to about break-even for the next couple of quarters.

The third item I’d like to discuss is monetizing our own ecosystem with our own advertisers. This is a strategy we’ve not executed well in the past, but one which we’re executing well against today. The monetization challenges earlier this year gave us reason to reassess the various risks across our business. As a result of this process, the decision was made to diversify revenues between partners, diversify our reach outside of search and to sell our own ad products directly to our own customers.

I’ve discussed the great progress we’ve made on the first two items, but monetizing our own ecosystem with our own advertisers required us to first develop or acquire more products, and to second, build a sales force capable of selling those products. We have made excellent progress in expanding our product portfolio with five new SMB products since May of this year and more planned. To complement this, we transformed our sales organization over the past two quarters and are now selling more of our own ad products directly and more efficiently than ever before.

We have high-end sales staff and offices on both coasts and have filled our telesales facility here in Irvine. Last month, we launched a new call center facility and we plan to steadily ramp our sales capabilities throughout 2012 in order to fulfill our long-term goal of replacing many of our third-party ad feeds with our own direct advertiser inventory. We believe this process should result in continued RKV improvements which we’ll report each quarter.

I’d like to finish the call reminding our listeners that we have a very simple mission, to be a leader at connecting local merchants with online consumers. We have more products and more reach than ever before, but all the activities I’ve discussed today are aligned with this simple mission. We are laser focused on extracting value out of our platform. Ken will now discuss our financial results.

Ken Cragun

Thank you, Heath, and thanks to everyone who has joined us for our Q3 2011 financial results conference call.

As Heath mentioned in his remarks, our third quarter results show a return to strong revenue growth and a significantly improved bottom-line results. We achieved record traffic and greatly improved monetization of that traffic.

Comparing our operating expenses to the prior quarter, Q3 cost of revenue as a percent of revenue decreased to 60% from 69% last quarter, primarily due to the improvement in traffic monetization on Local.com. Beginning on August 1st, we’ve launched the Google ad feed on our Owned & Operated sites which resulted in two favorable outcomes. First, we diversified revenue among our ad partners. And, second, we saw a significant increase in the revenue per visit on our flagship site, which resulted in improved margins.

Q3 sales and marketing expense increased from the prior quarter related to marketing costs from our new Spreebird daily deals business and increased sales resources for our rich media products and our exact match small business product suite.

Q3 G&A expense decreased from Q2 as the prior quarter included certain change in officer and other severance costs.

Q3 R&D costs were up slightly from Q2.

Q3 amortization expense was $1.4 million, up from $1.2 million in Q2. The increase in amortization expense is related to our recent acquisitions.

During Q3, we recorded a 513,000 or $0.02 per diluted share warrant evaluation gain based on the Black Scholes calculation that takes into account among other things the trading price of our common stock.

During Q3, we had a GAAP net loss of $4 million or $0.18 per diluted share, with 21.9 million shares outstanding. This compares to Q2 GAAP net loss of $5.4 million or $0.25 per diluted share with 21.3 million diluted shares outstanding.

During Q3, we had an adjusted net loss of $1.1 million, improved from the Q2 adjusted net loss of $1.9 million.

I would like to provide some insight as to how different parts of our business contributed to the Q3 bottom-line results.

During the third quarter, we invested in our new acquisitions, while our core business exclusive of these acquisitions returned to profitability. The investments increased our direct sales capability and supported the rollout of new products. The newly acquired companies lost about $3 million in the third quarter, which losses were contemplated when we issued the guidance for the quarter. Our core operations excluding the acquisitions returned to profitability during the quarter with adjusted net income of over $2 million.

We anticipate improvements in bottom-line results for both our core operations and our recent acquisitions from Q3 to Q4. As previously disclosed, the company’s third and fourth quarter results include a top and bottom-line net financial benefit of approximately $500,000 per quarter, resulting from the modification of a partner contract.

Extra cash and liquidity, we ended third quarter with cash of $10.1 million, down from $13.5 million at the end of the second quarter. During the quarter, we used $10 million of cash related to acquisitions, largely offset by $8 million drawn from our line of credit. We also used about $1 million of cash for capital expenditures. Although we expected positive cash flow from operations during the third quarter due to timing of payments from one of our larger advertising partners, cash used by operating activities was $775,000. Our accounts receivable balance increased to $2 million from the end of the second quarter to the end of the third quarter.

Looking to Q4 2011, we expect revenue to be a record $24 million, an increase of 15% over the third quarter. This record revenue is expected despite our recent announcement that revenue from our Spreebird daily deals business will exclude the portion of gross billings paid to the merchant going forward. Merchant rev shares are expected to be approximately $2 million in Q4. Therefore, in a pro forma gross billing basis, our Q4 revenue projections would have been $26 million, $2 million above our initial guidance and in line with consensus estimates. We expect adjusted net income for the fourth quarter of 2011 to be approximately break-even, a significant improvement from the prior guidance for Q4 which guided to an adjusted net loss below $1.5 million.

We will continue to make appropriate investments to build our business and intend to manage our bottom line to approximately break even over the next couple of quarters, and therefore, do not anticipate the need to raise capital to support operations.

I’d now like to open up the call to Q&A. Moderator?

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from the line of George Santana of Ascendiant. You may proceed.

George Santana – Ascendiant

Yes, thanks guys. Hi, thanks for taking my call.

Heath Clarke

Hi George.

Ken Cragun

Hi George.

George Santana – Ascendiant

A couple of questions. One, could you just provide a little bit of color on the macro environment that you’re seeing? And, second, could you speak a little bit more to the issue to whatever extend you fee comfortable of customer acquisition costs in your core business and also in these new businesses you’ve acquired? Thanks.

Heath Clarke

Sure. So macro – let me just jot these down, customer acquisition and cost. Yes, the macro environment, it’s choppy. We’re hearing other companies talk about a challenging macro environment, we consider ourselves to be canary in the coal mine of consumer spending, because we shift between primarily local merchants and consumers who want to buy things from them, and that drives a vast majority of our economy.

And it’s tough out there I’d say you that. It’s tough for SMBs. And we’re guiding on the basis of that. We have a fairly limited set of SMBs that we can compare against; for example, for a year-ago or a two year-ago period. But we think generally it’s tough going out there for them. And we haven’t seen the kind of drop-off that we saw in October 2008, which was very, very material. But we are seeing just a tougher environment. I think that’s going to impact our ability to drive sales, but we’re giving obviously guidance in light of all of that.

On the customer acquisition costs, you may want to speak to – attack a little bit Ken, but directionally we try to maintain customer acquisition costs. Our biggest expense is the cost of driving traffic to our – primarily to Local.com, it’s the major traffic – major search engine marketing campaigns that we have. Overall, we’ve always said they generally, these costs are going to rise and our job is to manage the cost as best as we can.

I think there is a lot of efficiency. I talked about in my prepared script that we are looking to extract as many efficiencies as possible from our system. And I think there is a lot of efficiencies that we – as we look internally look at our metrics and oriented [ph] around those really tightly, I think there is more efficiencies that we can extract to you the drive down cost or increased margin, now that we’ve obviously got Google in the ecosystem that we developed.

Ken Cragun

Yes, what we’re seeing is we have a record traffic, so we’ve been able to – even though maybe it’s a tough macro environment, we’ve been able to drive record business to the site. And our margin is improving in that area as well. We do – we are seeing good metrics for us on some of our sales metrics, but it is from – it’s early days for us in ramping our sales efforts, so we don’t have a large base or a significant history in that area. But our early efforts, we’re hitting the – exceeding the operating model that we put in place to expand our sales capability.

Heath Clarke

And in that regard, in particular, a much of the reengineering of the management team and leadership team we did in Q2 was oriented around getting better at sales. So despite that potentially tougher environment out there, we are performing better than we have in the past today. And that’s really going to drive our growth notwithstanding perhaps a tougher environment generally.

George Santana – Ascendiant

Thank you so much.

Heath Clarke

Thanks George.

Operator

And next question comes from the line of Jon Hickman of Ladenburg. Sir, you may proceed.

Jon Hickman – Ladenburg

Hi, good afternoon.

Heath Clarke

Hi John.

Jon Hickman – Ladenburg

I was wondering if you could comment on – you’re guiding for $24 million on the revenues for the fourth quarter and break-even results. Could you comment a little bit maybe going forward about what you expect for the break-even number to be on a quarterly basis as you maybe get more efficient with Google, you get more time and efficiency under with all the acquisitions?

Heath Clarke

Sure. So recall that we started the partnership or the feed with Google on August 1st. So we’ve got two-thirds of the last quarter in Q3, two-thirds of the benefit of that. We’ve got the full – excuse me the full benefit of that in Q4, and some seasonality frankly for us in Q4. Recall that Q4 is actually traditionally the weakest quarter for Owned & Operated business, which has historically been half of our business. But we’ve been diversifying our revenues and that’s not necessarily the same seasonality in other areas of our business, which is where we’re projecting growth in some part.

Q1 should be traditionally our strongest quarter in O&O specifically, but we’re not going to get that additional lift that we’re getting – we’re seeing between Q3 and Q4, again in Q1 from the – at least from the Google implementation. What we will be working on of course is extracting maximum value and working on optimizing the yield off the traffic not just on Local.com, but right throughout our ecosystem. So – and one of the other things that as I mentioned we’re going to be ramping our sales force. And so that really – it doesn’t throw off cash while you’re ramping it, that’s why we’re going to ramp is steadily not crazily. We’re not going to be too aggressive there.

We don’t think – as we ramp that, it does not – we’re not anticipating that that piece of our business throw off cash or be profitable not for a few more quarters. So we mentioned that we’re going to continue to invest in the businesses. I mentioned a few other things that we want to do with Krillion, so that’s really going to the extent that we do achieve margin improvements, we’re going to redeploy that capital. We want to maintain break even or approximately break even simply because we think that’s prudent in light of that kind of the – there is lot of issues that are going on a macro basis. We want to preserve our capital.

Jon Hickman – Ladenburg

So like a couple of quarters down the road, does the break even go from $24 million down to $23 million, or are the sales expenses are going to drive that higher?

Heath Clarke

The break even, you mean the revenue for break even. No, we are not anticipating the revenue from break even. What we’re saying is, we do anticipate – directionally we’re going to anticipate revenue growth quarter-over-quarter. But we’ll redeploy to the extent that there is additional profit we may choose to redeploy that such that the bottom line is approximately break even. I think as we approach the middle of the year, whether that’s Q2 or Q3, we’re going to be driving above break even would be our goal.

Jon Hickman – Ladenburg

Okay, thanks.

Heath Clarke

Thanks John.

Operator

Our next question comes from the line of Paul Resnik of RedChip Companies. Sir, you may proceed.

Paul Resnik – RedChip Companies

Good afternoon.

Heath Clarke

Hi Paul.

Paul Resnik – RedChip Companies

When you say break even, are we talking adjusted or GAAP numbers?

Ken Cragun

That would be on an adjusted net income basis.

Paul Resnik – RedChip Companies

Adjusted net income basis.

Ken Cragun

Right.

Paul Resnik – RedChip Companies

And I know the Rovion is going to be exhibiting at ad:tech in New York next week, and I was wondering what sort of, I hate to reuse it, ramp up do you see following an exposure like that? I mean is that a significant stimulus to getting this product out there or how quickly do you see revenues beginning to grow from this product?

Heath Clarke

This is Heath. So we’re actually already seeing revenues begin to grow. ad:tech is a great place to show our advertising wares to our potential customer base. And, yes, we are exhibiting there next week and we’re looking forward to presenting to those potential partners. And we think that will certainly spur growth of inquiries and help to build our product of our customer pipeline, that’s exactly why we’re there. And it’s certainly a premier time for us to do that.

We have a big pipe already and we have deals flowing through that pipe, we have orders flowing through that pipe and orders flowing on to that platform. So we’re kind of well underway. Certainly, we’ll use ad:tech to continue to either demonstrate to customers who are already in that pipe and perhaps move them further along and any alternative to present to potentially new customers. So we’re very excited about ad:tech and we’re looking forward to showing the Ramp with Krillion implementation.

Paul Resnik – RedChip Companies

Thank you.

Heath Clarke

Thanks Paul.

Operator

Our next question comes from the line of David Kestenbaum of Morgan Joseph. You may proceed.

David Kestenbaum – Morgan Joseph

Okay, thanks. Can you talk about the consolidation opportunities in the daily deal business? Are they still out there? And do you see competitors consolidating in the industry currently?

Heath Clarke

Yes, there is definitely consolidation opportunities. If we look at industry reports, certain – to remain nameless, players in the space have had a softer Q3 and certain players are having tougher time of it, and I’m not sure whether that’s macro economy. I get a sense of some of that certainly is, but also it’s competition. Obviously BuyWithMe was acquired by Gilt Groupe recently, and so that’s an example of rollup opportunities and consolidation opportunities within that space. We’re going to see a lot more of that. We see a lot of deals from week to week of much, much smaller companies, but we have a bias towards internal focus right now. We’ve got some work to do with Spreebird, we’re very optimistic about the platform and what we’ve got there. We want to get some things lockdown during this quarter before we kind of turn our focus outward again.

We’re really not looking at any daily deal providers that are not profitable. It’s kind of an entry level thing for us right now. We just brought our company back to break even, so we’re very protective of the capital that we have, and we’re going to have a bias towards companies that are going to be accretive.

David Kestenbaum – Morgan Joseph

Okay. And can you talk about your mobile product? I saw you introduced in mid-October. You said you were doing better with Spreebird, is that helping drive better results?

Heath Clarke

So the mobile product, if you’re referring to the Spreebird App, yes that was recently launched. And really what we’re finding is upwards of 40% of consumers hit the Spreebird website from their mobile device. And so this is the natural fit for what our consumers are already doing and we’ll have them mobile-enabled device. So the app helps to bridge that gap. We’ll have a mobile-enabled website launching fairly quickly with that knowledge in hand.

And we have new products planned particularly that relates to the Krillion data feed. We’ve got – we still have got a little bit of work to do, but we’ve got some work to do, and then as the Krillion app should be one of the next ones out of the pipe. And that will give you product information around you with in-stock – in-store ability, so we’re excited about that too.

David Kestenbaum – Morgan Joseph

Okay, thank you very much.

Heath Clarke

Thanks David.

Ken Cragun

Thanks David.

Operator

(Operator Instructions). Next question comes from the line of Daniel Rudd [ph] of Fortitude Investments. Sir you may proceed.

Daniel Rudd – Fortitude Investments

Hi Heath, thanks for taking the call.

Heath Clarke

Hi Dan.

Daniel Rudd – Fortitude Investments

Congratulations on a very strong quarter.

Heath Clarke

Thanks. Just one major question I have is, the patents that you most recently had received, one of which I believe you guys were hoping to get for a long time now, is there any evaluation that you could put on that yet? Is there any possibility to monetize that patent yet?

Heath Clarke

Yes, we go through a patent analysis each time we receive a patent and that involves engaging patent council. We create a matrix where we’re looking at potential violations of the patent, any patents or prior art they may have in the fields and what the potential is for licensing those patents. We do typically arrive at a value of each patent and then we make a decision whether we want to proceed with efforts to license the patent, extract royalties out of it. And we’ve never disclosed what those specific patents might be worth. There are some that are worth a lot more in our opinion than others based on the feedbacks that we’ve gotten. We haven’t been through that process with the Krillion patent. Krillion and what that patent relates to are using that same methodology today, so we’re encouraged by that. But there is a multi-months process we have to go through.

We wouldn’t be disclosing what we ultimately think it’s worth and potentially who may be infringing upon that. That’s just something that we keep in halves and move forward on. We did put our patent prosecution efforts on hold while we were dealing with Yahoo! issue, because it is expensive to prosecute and protect your IP, but we are – we’ve moved some of that off hold and inactive again this quarter. So we are looking to ultimately protect our IP.

Daniel Rudd – Fortitude Investments

Okay, thank you.

Heath Clarke

Thanks Dan. If there is no more questions, I’d like to wrap it up.

Ken Cragun

I’d like to thank everybody for being joining us on the call today. And we’ll turn the call over to David for final disclosures.

David Katzoff

This conference call contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Words or expressions such as anticipate, believe, 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 RPC and revenues to us for our search results; 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 monetization 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 market the Local.com domain as a destination for consumers seeking local search results; our ability to grow our business by enhancing our local search services, including through businesses we acquire; the future performance of our OCTANE360 business; the integration and future performance of our social buying business, our Krillion business and our Rovion business, as well as any other businesses we may acquire including our newly acquired Screamin’ Daily Deals business; our ability to successfully expand our Spreebird business into new markets, including through acquisition such as the Screamin’ Daily Deals acquisition; the possibility that information and estimates we use to predict anticipated revenues and expenses associated with the business we acquire are not accurate; difficulties executing integration strategies or achieving planned synergies; the possibilities that integration costs and go-forward costs associated with the businesses we acquire will be higher than anticipated; 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 expand our advertising 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, competitive forces and pricing pressures; changes in legal and regulatory requirements, and general economic conditions.

Any forward-looking statements reflect our current view with respect to future events and are subject to these and other risk, 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 our call for today. Thank you for your interest in Local.com.

Operator

Ladies and gentlemen, that concludes today’s conference. Thank you so much for your participation. You may now disconnect. Have a great day.

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