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ReachLocal IPO: Never earned an operating profit. Rev run rate is $240

|Includes: ReachLocal Inc. (RLOC)

ReachLocal (NASDAQ:RLOC) $75mm IPO scheduled for May 20
$488mm market cap at $18 price range mid-point

. RLOC is not worth 9.2 times tangible book value
. Revenue keeps increasing and the losses continue.  Not one quarterly or yearly operating profit in the SEC filing
. Is the IPO window this open that a profitless, non-technology service company can IPO?
. This isn’t operating profit: $16mm gain on 2009 acquisition of ReachLocal Australia

. Internet ad agency offering a comprehensive suite of online marketing and reporting solutions, including search engine marketing, display advertising, remarketing and online marketing analytics, each targeted to the SMB (small, meidium-sized businesses) market
. Delivers these solutions to SMBs through a combination of a proprietary RL Platform and direct, “feet-on-the-street” sales force of Internet Marketing Consultants, or IMCs, and select third-party agencies and resellers.

At March 31, 2010, managed 19,700 Active Campaigns across 15,700 Active Advertisers, a substantial majority of which spend from $500 to $3,000 per month
. Clients include SMBs in a number of industry verticals, such as home repair and improvement, automobile sales and repair, medical and health services, legal services and retail and personal services.
. Employs 569 IMCs (Internet Marketing Consultants) in North America, Australia and the United Kingdom and works with over 350 third-party agencies and resellers that use the RL Platform to serve their SMB clients.
. Intends to expand the IMC sales force both in existing and new markets.

see the financial analysis in RLOC IPOreport

Disclosure: none