ReachLocal Reports Fourth Quarter and 2015 Results

Company Exits 2015 with a $22.5 Million Annual Revenue Run Rate for its Subscription Products

Plano, Texas, UNITED STATES


WOODLAND HILLS, Calif., Feb. 25, 2016 (GLOBE NEWSWIRE) -- ReachLocal, Inc. (NASDAQ:RLOC), a leader in powering online marketing for local businesses, today reported financial results for the fourth quarter and 2015.

“Returning the company to Adjusted EBITDA profitability was a stated goal for ReachLocal as we entered 2015 and I’m pleased that we delivered on that goal, both for the fourth quarter and the full year.  We continued to demonstrate strong bottom-line performance and reductions in operating expenses, resulting in $4.3 million of Adjusted EBITDA for the fourth quarter,” said Sharon Rowlands, chief executive officer.  “While our return to revenue growth is taking longer than expected, we saw improved productivity metrics from our sales force, our subscription revenue is growing and we believe our web partner program will drive further adoption of our ReachEdge marketing automation software in the future.”

FY 15 Business Highlights

  • Undertook a company-wide cost saving initiative that resulted in a reduction of operating expenses by 27% in 2015 over 2014 and run-rate operating expenses exiting 2015 were $65 million below the end of 2014.
     
  • Exited 2015 with $22.5 million of annual revenue run-rate for subscription products, including the results from 53% year-over-year growth in ReachEdge units.
     
  • Made progress in improving the economics of international operations, with several markets expected to be self-sustaining during 2016, and exited direct sales in the UK market.
     
  • Entered into financing agreements with affiliates of VantagePoint Capital Partners and Hercules Technology Growth Capital to provide $30 million of additional liquidity to support stability and growth initiatives and ended 2015 with cash, cash equivalents and short term investments of $34.2 million, including $15 million of restricted cash under the Hercules loan agreement.
     
  • Revised terms with key publishers to improve the ability to earn performance bonuses following up on winning top honors with Google’s Innovator Award for ReachEdge™ in Canada, Google's Quality Score Champion Award for North America, Australia/New Zealand and Latin America, and Highest Customer Service Satisfaction and Highest AdWords Account Performance Satisfaction in Australia/New Zealand.

Quarterly Results at a Glance

(Table amounts in 000’s except key metrics and per share amounts)

 Q4 2015Q4 2014
Revenue$88,977 $109,009 
Net Loss from Continuing Operations$(2,504)$(17,737)
Net Loss from Continuing Operations per Diluted Share$(0.09)$(0.62)
Net Loss$(2,504)$(17,458)
Net Loss per Diluted Share$(0.09)$(0.61)
Non-GAAP Net Gain (Loss)$281 $(15,000)
Non-GAAP Net Gain (Loss) per Diluted Share$0.01 $(0.52)
Adjusted EBITDA$4,284 $(5,924)
Cash Flow from Operating Activities, Continuing Operations$(337)$4,474 
Cash Flow from Operating Activities$(312)$4,961 
 
The strengthening of the US Dollar had a significant impact on revenue.  Revenue for the fourth quarter of 2015 on a constant currency basis would have been $94.1 million.
 
 Q4 2015Q4 2014
Revenue by Channel (North America):  
Direct Local$43,903 $47,408 
National Brands, Agencies and Resellers (NBAR)$15,564 $20,352 
   
Revenue by Channel (International):  
Direct Local$26,064 $37,771 
National Brands, Agencies and Resellers (NBAR)$3,446 $3,478 
       

2015 Annual Results and Key Metrics at a Glance

(Table amounts in 000’s except key metrics and per share amounts)

  FY 2015FY 2014 
Revenue$382,597 $474,921  
Net Loss from Continuing Operations$(61,515)$(45,660) 
Net Loss from Continuing Operations per Diluted Share$(2.11)$(1.60) 
Net Loss$(61,515)$(45,010) 
Net Loss per Diluted Share$(2.11)$(1.58) 
Non-GAAP Net Loss$(32,820)$(32,558) 
Non-GAAP Net Loss per Diluted Share$(1.12)$(1.14) 
Adjusted EBITDA$2,842 $(9,410) 
Cash Flow from Operating Activities, Continuing Operations$(20,038)$(1,403) 
Cash Flow from Operating Activities$(20,083)$(2,318) 
 
Our Net Loss from Continuing Operations reflects a non-cash goodwill impairment charge of $27.8 million in the third quarter related to our Asia-Pacific reporting unit.
 
The strengthening of the US Dollar had a significant impact on revenue.  Revenue for fiscal 2015 on a constant currency basis relative to fiscal 2014 would have been $408.5 million.
 
 FY 2015FY 2014 
Revenue by Channel (North America):   
Direct Local$181,022 $208,459  
National Brands, Agencies and Resellers (NBAR)$68,202 $84,637  
    
Revenue by Channel (International):   
Direct Local$118,537 $164,363  
National Brands, Agencies and Resellers (NBAR)$14,836 $17,462  
        
Key Metrics (at Period End):       
Active Clients 17,500  20,800  
Active Product Units 27,900  31,400  
        

Business Outlook

The Company’s outlook for the first quarter of 2016 is as follows:

  • Revenue in the range of $77 to $79 million.
  • Adjusted EBITDA in the range of $1.8 to $2.8 million.

Conference Call and Webcast Information

The ReachLocal fourth quarter and 2015 results teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time on Thursday, February 25, 2016. To participate on the live call, analysts and investors should dial 1-888-466-4462, or outside the U.S. 719-325-2472, at least 10 minutes prior to the call. ReachLocal will also offer a live and archived webcast of the conference call, accessible from the “Investors” section of the Company’s website at www.reachlocal.com

Use of Non-GAAP Measures

ReachLocal management evaluates and makes operating decisions using various financial and operational metrics.  In addition to the Company’s GAAP results, management also considers non-GAAP measures of non-GAAP net income (loss), non-GAAP net income (loss) per share, and Adjusted EBITDA.  Management believes that these non-GAAP measures provide useful information about the Company’s core operating results and thus are appropriate to enhance the overall understanding of the Company’s past financial performance and its prospects for the future. The attached tables provide a reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures.  Management also tracks and reports Active Clients and Active Product Units, as management believes that these metrics are important gauges of the progress of the Company’s performance.

Non-GAAP net income is defined as net income (loss) from continuing operations before (a) stock-based compensation related expense (including the related adjustment to amortization of capitalized software development costs) and (b) acquisition related costs.  Adjusted EBITDA is defined as net income (loss) from continuing operations before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, the effects of accounting for business combinations (including any impairment of acquired intangibles and goodwill), restructuring charges, and other non-operating income or expense. As a result, reported Adjusted EBITDA reflects that ClubLocal operations were determined to be discontinued operations during the fourth quarter of 2013, and that the Company had fully withdrawn during the first quarter 2014.

Acquisition Related Costs:  Acquisition related costs, including the amortization and any impairment of acquired intangibles and goodwill and the deferred cash consideration for the SMB:LIVE acquisition, are excluded from the non-GAAP operating results as these are non-recurring charges which the Company would not have incurred as part of continuing operations.

Each of these non-GAAP measures, while having utility, also has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Some of these limitations are:

  • Adjusted EBITDA does not reflect the Company’s cash expenditures for capital equipment or other contractual commitments;
  • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements;
  • Adjusted EBITDA does not reflect changes in, or cash requirements for, the Company’s working capital needs;
  • Adjusted EBITDA and non-GAAP net income (loss) do not consider the potentially dilutive impact of issuing equity-based compensation to the Company’s management and other employees;
  • Adjusted EBITDA does not reflect the potentially significant interest expense or the cash requirements necessary to service interest or principal payments on indebtedness that the Company may incur in the future;
  • Adjusted EBITDA does not reflect income and expense items that relate to the Company’s financing and investing activities, any of which could significantly affect the Company’s results of operations or be a significant use of cash;
  • Adjusted EBITDA and non-GAAP net income (loss) do not reflect costs or expenses associated with accounting for business combinations;
  • Adjusted EBITDA does not reflect certain tax payments that may represent a reduction in cash available to the Company; and
  • Other companies, including companies in the same industry, calculate Adjusted EBITDA and non-GAAP net income (loss) measures differently, which reduces their usefulness as a comparative measure.

Adjusted EBITDA is not intended to replace operating income (loss), net income (loss) and other measures of financial performance reported in accordance with GAAP. Rather, Adjusted EBITDA is a measure of operating performance that may be considered in addition to those measures. Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to the Company to invest in the growth of the business.

Active Clients is a number the Company calculates to approximate the number of clients directly served through our Direct Local channel as well as clients served through our National Brands, Agencies and Resellers channel. We calculate Active Clients by adjusting the number of Active Product Units to combine clients with more than one Active Product Unit as a single Active Client. Clients with more than one location are generally reflected as multiple Active Clients. Because this number includes clients served through the National Brands, Agencies and Resellers channel, Active Clients includes entities with which we do not have a direct client relationship. Numbers are rounded to the nearest hundred.

Active Product Units is a number we calculate to approximate the number of individual products, licenses or services we are providing to Active Clients. For example, if we were performing both ReachSearch and ReachDisplay campaigns for a client who also licenses ReachEdge, we consider that three Active Product Units. Similarly, if a client purchases ReachSearch campaigns for two different products or purposes, we consider that two Active Product Units. Numbers are rounded to the nearest hundred.

Caution Concerning Forward-Looking Statements

Statements in this press release regarding the Company’s outlook for future periods and the quotes from management constitute “forward-looking” statements within the meaning of the Securities Exchange Act of 1934.  These statements reflect the Company’s current views about future events and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievement to materially differ from those expressed or implied by the forward-looking statements.  Actual events or results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including:  (i) the Company’s ability to increase productivity of its sales operations; (ii) the Company’s ability to obtain the cost savings contemplated by its cost reduction initiatives and maintain sufficient liquidity; (iii) the Company’s ability to purchase media and receive rebates from Google, Yahoo! and Microsoft under commercially reasonable terms; (iv) the Company’s ability to recruit, train and retain its salespeople; (v) the Company’s ability to attract and retain customers and compete with a wide range of competitors on both price and product offerings; (vi) the Company’s ability to satisfy the covenants under its term loan; (vii) the availability of banking and payment processing services from financial services providers; (viii) the Company’s ability to manage its international operations; (ix) the Company’s ability to successfully develop and offer new products and services in the highly competitive online advertising industry; (x) the impact of worldwide economic conditions, including the resulting effect on advertising budgets; and (xi) the Company’s ability to comply with government regulation affecting our business, including regulations or policies governing consumer privacy.  More information about these factors and other potential factors that could affect the Company's business and financial results is contained in its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. The Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.

About ReachLocal, Inc.

ReachLocal, Inc. (NASDAQ:RLOC) helps local businesses grow and operate their business better with leading technology and expert service for our clients’ lead generation and conversion. ReachLocal is headquartered in Woodland Hills, Calif. and operates in four regions: Asia-Pacific, Europe, Latin America and North America.

For more information please visit ReachLocal at www.reachlocal.com, follow us at www.reachlocal.com/social or email info@reachlocal.com

REACHLOCAL, INC.       
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS     
(in thousands, except per share data)       
        
 December 31,  December 31,    
  2015   2014     
Assets       
Current Assets:       
Cash and cash equivalents $  18,833  $  43,720     
Short-term investments    359     904     
Accounts receivable, net    6,278     7,844     
Prepaid expenses and other current assets   8,296     7,855     
Total current assets    33,766     60,323     
        
Property and equipment, net    13,550     19,639     
Capitalized software development costs, net    20,691     21,555     
Restricted cash- term loan   15,000     -     
Restricted cash   3,502     3,589     
Intangible assets, net    4,011     5,492     
Non-marketable investments   9,000     9,000     
Other  assets   2,547     3,601     
Goodwill    20,129     48,189     
Total assets $  122,196  $  171,388     
        
Liabilities and Stockholders’ Equity       
Current Liabilities:       
Accounts payable $  33,581  $  44,874     
Accrued compensation and benefits   14,478     15,972     
Deferred revenue    22,985     29,016     
Accrued restructuring   3,329     3,196     
Term loan   8,352     -     
Capital lease   698     624     
Other current liabilities   10,166     12,316     
Liabilities of discontinued operations   804     850     
Total current liabilities    94,393     106,848     
        
Term loan   16,194     -     
Convertible notes – related party   5,000     -     
Capital lease   484     1,103     
Deferred rent and other liabilities   8,111     10,513     
Total liabilities    124,182     118,464     
        
Stockholders’ Equity:       
Common stock   -     -     
Receivable from stockholder   (55)    (65)    
Additional paid-in capital   140,398     132,080     
Accumulated deficit   (136,084)    (74,569)    
Accumulated other comprehensive loss   (6,245)    (4,522)    
Total stockholders’ equity   (1,986)    52,924     
Total liabilities and stockholders’ equity$  122,196  $  171,388     

 

REACHLOCAL, INC.        
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per share data)        
         
 Three Months  Ended Twelve Months  Ended 
 December 31,  December 31,  
  2015   2014   2015   2014  
Revenue $  88,977  $  109,009  $  382,597  $  474,921  
Cost of revenue   48,131   61,708   213,409   252,721  
Operating expenses:                
Selling and marketing 27,002     42,334     126,966     182,720  
Product and technology 6,964     6,989     28,414     27,510  
General and administrative 9,399     11,278     39,332     52,155  
Restructuring charges 1,975     1,360     7,546     5,927  
Impairment of goodwill   -      -    27,800     -   
Total operating expenses  45,340     61,961     230,058     268,312  
         
Operating loss   (4,494)    (14,660)    (60,870)    (46,112) 
Gain on deconsolidation of subsidiaries, net   2,853     -      2,853     -   
Interest expense   (1,027)    (36)    (2,790)    (67) 
Other income (expense), net  79     381     (339)    1,003  
Loss from continuing operations before income taxes  (2,589)    (14,315)    (61,146)    (45,176) 
Income tax provision (benefit) (85)    3,422     369     484  
Loss from continuing operations (2,504)    (17,737)    (61,515)    (45,660) 
Income from discontinued operations, net of income taxes   -      279     -      650  
Net loss$  (2,504) $  (17,458) $  (61,515) $  (45,010) 
         
Net loss per share:        
Basic:        
Loss from continuing operations$  (0.09) $  (0.62) $  (2.11) $  (1.60) 
Income from discontinued operations, net of income taxes   -      0.01     -      0.02  
Net loss per share$  (0.09) $  (0.61) $  (2.11) $  (1.58) 
         
Diluted:        
Loss from continuing operations$  (0.09) $  (0.62) $  (2.11) $  (1.60) 
Income from discontinued operations, net of income taxes   -      0.01     -      0.02  
Net loss per share$  (0.09) $  (0.61) $  (2.11) $  (1.58) 
         
Weighted average common shares used in the computation of income (loss) per share:        
Basic   29,336     28,765     29,174     28,461  
Diluted   29,336     28,765     29,174     28,461  
         
         
Stock-based compensation, net of capitalization, and depreciation and amortization included in above line items:    
         
Stock-based compensation:         
Cost of revenue $  82  $  197  $  487  $  932  
Selling and marketing    204     607     1,510     2,959  
Product and technology    234     217     725     825  
General and administrative   1,595     1,521     5,949     8,544  
 $  2,115  $  2,542  $  8,671  $  13,260  
         
Depreciation and amortization:        
Cost of revenue $  186  $  167  $  735  $  674  
Selling and marketing    691     986     3,039     3,041  
Product and technology    3,305     3,184     13,910     11,730  
General and administrative    504     462     1,997     1,949  
 $  4,686  $  4,799  $  19,681  $  17,394  

 

REACHLOCAL, INC.   
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(in thousands, except per share data)   
 Twelve Months Ended
December 31, 
 
  2015   2014 
Cash flows from operating activities:   
Loss from continuing operations$  (61,515) $  (45,660)
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:   
Depreciation and amortization    19,681     17,394 
Goodwill impairment   27,800     -  
Stock-based compensation   8,671     13,260 
Restructuring charges   7,546     5,927 
Gain on deconsolidation of subsidiary   (2,853)    -  
Loss on disposal of fixed assets   168     -  
Provision for doubtful accounts    260     1,649 
Contingent consideration fair value adjustment   -      (416)
Non-cash interest expense, net   641     17 
Deferred taxes, net   93     873 
Changes in operating assets and liabilities:   
Accounts receivable    703     (460)
Prepaid expenses and other current assets   (1,077)    701 
Other assets    222     (669)
Accounts payable   (9,185)    9,081 
Accrued compensation and benefits   (151)    (557)
Deferred revenue   (4,541)    (3,400)
Accrued restructuring   (6,510)    (2,564)
Deferred rent and other liabilities   9     3,421 
Net cash used in operating activities, continuing operations    (20,038)    (1,403)
Net cash used in operating activities, discontinued operations   (45)    (915)
Net cash used in operating activities    (20,083)    (2,318)
    
Cash flows from investing activities:   
Additions to property, equipment and software    (13,894)    (25,735)
Acquisitions, net of acquired cash   -      (7,089)
Investments in non-marketable investments   -      (2,000)
Maturities of  certificates of deposits and short-term investments   124     -  
Purchases of  certificates of deposits and short-term investments   -      (474)
Net cash used in investing activities   (13,770)    (35,298)
    
Cash flows from financing activities:   
Proceeds from term loan, net   24,700     -  
Restricted cash- term loan   (15,000)    -  
Issuance of convertible notes to related party   5,000     -  
Payment of deferred and contingent consideration   (529)    -  
Proceeds from exercise of stock options    7     6,438 
Principal payments on capital lease obligations   (752)    (259)
Term loan costs   (542)    -  
Common stock repurchases   (7)    (69)
Net cash provided by financing activities    12,877     6,110 
    
Effect of exchange rate changes on cash and cash equivalents   (3,911)    (2,288)
    
Net change in cash and cash equivalents    (24,887)    (33,794)
Cash and cash equivalents—beginning of period    43,720     77,514 
Cash and cash equivalents—end of period $  18,833  $  43,720 

 

REACHLOCAL, INC.       
Reconciliation of Adjusted EBITDA to Operating Loss       
(in thousands)       
        
 Three Months Ended Twelve Months Ended
 December 31,  December 31, 
  2015   2014   2015   2014 
        
Operating loss$  (4,494) $  (14,660) $  (60,870) $  (46,112)
Add:       
Depreciation and amortization    4,686     4,799     19,681     17,394 
Stock-based compensation   2,115     2,542     8,671     13,260 
Acquisition and integration costs    2     35     14     121 
Restructuring charges   1,975     1,360     7,546     5,927 
Impairment of goodwill   -      -     27,800     - 
Adjusted EBITDA (1)$  4,284  $  (5,924) $  2,842  $  (9,410)

 

REACHLOCAL, Inc.           
Reconciliation of GAAP to Non-GAAP Operating Results for Three Months Ended December 31, 2015 and 2014
(in thousands, except per share amounts)           
            
 Three Months Ended December 31, 2015 Three Months Ended December 31, 2014
  Adjustments:   Adjustments: 
  Stock-based     Stock-based   
 GAAPCompensationAcquisitionRestructuring Non-GAAP GAAPCompensationAcquisitionRestructuring Non-GAAP
 Operating ResultsRelatedRelatedRelatedOperating Operating ResultsRelatedRelatedRelatedOperating
 "As Reported"Expense (2)Costs (3)Costs (4)Results "As Reported"Expense (2)Costs (3)Costs (4)Results
Revenue$  88,977    -      -      -   $88,977  $  109,009    -      -      -   $  109,009 
Cost of revenue 48,131  (82) -      -    48,049     61,708    (197)   -      -      61,511 
Operating expenses:           
Sales and marketing   27,002    (204)   -      -    26,798     42,334    (607)   -      -      41,727 
Product and technology   6,964    (357)   (157)   -      6,450     6,989    (312)   (283)   -      6,394 
General and administrative   9,399    (1,600)   (84)   -      7,715     11,278    (1,521)   (99)   -      9,658 
Restructuring charges   1,975    -      -      (1,975)   -      1,360    -      -      (1,360)   -  
Impairment of goodwill   -     -      -     -      -      -     -      -      -      -  
Total operating expenses   45,340    (2,161)   (241)   (1,975) 40,963     61,961    (2,440)   (382)   (1,360)   57,779 
Operating income (loss)   (4,494)   2,243    241    1,975    (35)    (14,660)   2,637    382    1,360    (10,281)
Gain on deconsolidation of subsidiaries, net   2,853    -     -     -     2,853     -     -     -     -     -  
Interest expense   (1,027)   -     -     -   (1,027)    (36)   -     -     -     (36)
Other income (expense), net   79    -      -      -      79     381    -      -      -      381 
Income (loss) from continuing operations before income taxes   (2,589)   2,243    241    1,975    1,870     (14,315)   2,637    382    1,360    (9,936)
Income tax provision (benefit) (5)   (85)   842     91     741     1,589     3,422    989     143     510     5,064 
Income (loss) from continuing operations$  (2,504)$  1,401 $  150 $  1,234 $  281  $  (17,737)   1,648     239     850  $  (15,000)
            
Net loss per share           
Basic loss per share$  (0.09)   $  0.01  $  (0.62)   $  (0.52)
Diluted loss per share$  (0.09)   $  0.01  $  (0.62)   $  (0.52)
            
Weighted average shares outstanding           
Basic   29,336     29,336     28,765       28,765 
Diluted   29,336     29,336     28,765       28,765 

 

REACHLOCAL, Inc.           
Reconciliation of GAAP to Non-GAAP Operating Results for Twelve Months Ended December 31, 2015 and 2014
(in thousands, except per share amounts)           
            
            
 Twelve Months Ended December 31, 2015 Twelve Months Ended December 31, 2014
  Adjustments:   Adjustments: 
  Stock-based     Stock-based   
 GAAPCompensationAcquisitionRestructuring Non-GAAP GAAPCompensationAcquisitionRestructuring Non-GAAP
 Operating ResultsRelatedRelatedRelatedOperating Operating ResultsRelatedRelatedRelatedOperating
 "As Reported"Expense (2)Costs (3)Costs (4)Results "As Reported"Expense (2)Costs (3)Costs (4)Results
Revenue$  382,597    -      -      -   $  382,597  $  474,921    -      -      -   $  474,921 
Cost of revenue 213,409  (487)   -      -    212,922   252,721  (932)   -      -    251,789 
Operating expenses:           
Sales and marketing 126,966  (1,510) -    -    125,456   182,720  (2,959) -      -    179,761 
Product and technology   28,414    (1,191)   (1,053)   -      26,170   27,510    (1,235)   (939)   -      25,336 
General and administrative   39,332    (5,966)   (360)   -      33,006   52,155    (8,544)   (428)   -      43,183 
Restructuring charges   7,546    -      -      (7,546)   -    5,927    -      -      (5,927)   -  
Impairment of goodwill   27,800   (27,800)    -      -      -      -      -     
Total operating expenses   230,058    (8,667) (29,213) (7,546) 184,632   268,312  (12,738) (1,367) (5,927) 248,280 
Operating income (loss)   (60,870)   9,154  29,213  7,546  (14,957)  (46,112) 13,670  1,367  5,927  (25,148)
Gain on deconsolidation of subsidiaries, net   2,853    -     -     -     2,853     -     -     -     -     -  
Interest expense   (2,790)   -     -     -     (2,790)    (67)      (67)
Other income (expense), net   (339)   -      -      -      (339)  1,003    -      -      -      1,003 
Income (loss) from continuing operations before income taxes   (61,146)   9,154    29,213    7,546    (15,233)    (45,176)   13,670    1,367    5,927    (24,212)
Income tax provision (benefit) (5)   369    3,433  10,955    2,830    17,587     484    5,126     513     2,223     8,346 
Income (loss) from continuing operations$(61,515)$5,721 $18,258 $  4,716 $  (32,820) $  (45,660)   8,544     854     3,704  $  (32,558)
            
Net loss per share           
Basic loss per share$  (2.11)   $  (1.12) $  (1.60)   $  (1.14)
Diluted loss per share$  (2.11)   $  (1.12) $  (1.60)   $  (1.14)
            
Weighted average shares outstanding           
Basic   29,174       29,174     28,461       28,461 
Diluted   29,174       29,174     28,461       28,461 

 

REACHLOCAL, INC.        
Reconciliation of GAAP to Constant Currency Revenue        
(in thousands)        
         
 Three Months  Ended Twelve Months  Ended 
 December 31, December 31, 
  2015   2014   2015   2014  
North American GAAP Revenue$  59,467  $  67,760  $  249,224  $  293,096  
Constant Currency Adjustment   460     -     1,872     -  
North American Revenue at Constant Currency (6)$  59,927  $  67,760  $  251,096  $  293,096  
         
As Reported Growth Rates (12.2%)  (19.9%)  (15.0%)  (14.2%) 
Constant Currency Growth Rates (11.6%)  (19.7%)  (14.3%)  (14.0%) 
         
International GAAP Revenue$  29,510  $  41,249  $  133,373  $  181,825  
Constant Currency Adjustment   4,687     -     24,071     -  
International Revenue at Constant Currency (6)$  34,197  $  41,249  $  157,444  $  181,825  
         
As Reported Growth Rates (28.5%)  (14.5%)  (26.6%)  5.5% 
Constant Currency Growth Rates (17.1%)  (8.4%)  (13.4%)  7.6% 
         
Consolidated GAAP Revenue$  88,977  $  109,009  $  382,597  $  474,921  
Constant Currency Adjustment   5,147     -     25,943     -  
Consolidated Revenue at Constant Currency (6)$  94,124  $  109,009  $  408,540  $  474,921  
         
As Reported Growth Rates (18.4%)  (18.0%)  (19.4%)  (7.6%) 
Constant Currency Growth Rates (13.7%)  (15.7%)  (14.0%)  (6.8%) 

 

Footnotes
 
(1) Adjusted EBITDA is defined as net income (loss) from continuing operations before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, the effects of accounting for business combinations (including any impairment of acquired intangibles and goodwill), restructuring charges, and other non-operating income or expense.
 
(2) Stock-based Compensation Related Expense:  Includes stock-based compensation expense and the related adjustment to amortization of capitalized software development costs. 
 
(3) Acquisition Related Costs, including the amortization and any impairment of acquired intangibles and goodwill, are excluded from the non-GAAP operating results as these are non-recurring charges which the Company would not have incurred as part of continuing operations.
 
(4) Restructuring Related Costs are excluded from the non-GAAP operating results as these are non-recurring charges with the Company would not have incurred as part of continuing operations. 
 
(5)  The income tax provision (benefit) for the Non-GAAP adjustments is estimated using the effective statutory rate for those jurisdictions.
 
(6) Constant currency revenues are determined by recalculating net revenues denominated in currencies other than U.S. Dollars in the current fiscal period using average exchange rates for that particular currency during the corresponding financial period of the prior year. The company uses this non-GAAP measure to evaluate performance on a comparable basis excluding the impact of foreign currency fluctuations. Where constant currency revenue is presented for a period longer than one fiscal quarter, it is computed as the sum of the amount separately calculated for each quarter during that period.

 










REACHLOCAL, INC.        
UNAUDITED RECONCILIATION OF PRO-FORMA FINANCIAL INFORMATION EXCLUDING THE UNITED KINGDOM
 
(in thousands)        
         
 Three Months Ended Three Months Ended 
 March 31, 2015 March 31, 2014 
         
 As ReportedUnited KingdomPro-Forma As ReportedUnited KingdomPro-Forma 
Revenue by Channel (North America) (1):         
Direct Local $  45,926    -  $  45,926  $  56,264    -  $  56,264  
National Brands, Agencies and Resellers (NBAR)    17,573    -     17,573     20,824    -     20,824  
         
Revenue by Channel (International):        
Direct Local   32,809  6,496    26,313     42,303  10,432    31,871  
National Brands, Agencies and Resellers (NBAR)    3,255  294    2,961     5,345  818    4,527  
         
Consolidated Revenue$  99,563  6,790 $  92,773  $  124,736  11,250 $  113,486  
         
Consolidated Adjusted EBITDA (2)$  (3,785)   (1,913)$  (1,872) $  2,261    905 $  1,356  
         
 Three Months Ended Three Months Ended 
 June 30, 2015 June 30, 2014 
         
 As ReportedUnited KingdomPro-Forma As ReportedUnited KingdomPro-Forma 
Revenue by Channel (North America) (1):         
Direct Local $  46,189    -  $  46,189  $  54,944    -  $  54,944  
National Brands, Agencies and Resellers (NBAR)    17,787    -     17,787     22,024    -     22,024  
         
Revenue by Channel (International):        
Direct Local   31,085  6,380    24,705     42,218  8,215    34,003  
National Brands, Agencies and Resellers (NBAR)    3,715  187    3,528     4,367  683    3,684  
         
Consolidated Revenue$  98,776  6,567 $  92,209  $  123,553  8,898 $  114,655  
         
Consolidated Adjusted EBITDA (2)$  715    (22)$  737  $  (1,904)   (1,753)$  (151) 
         
 Three Months Ended Three Months Ended 
 September 30, 2015 September 30, 2014 
         
 As ReportedUnited KingdomPro-Forma As ReportedUnited KingdomPro-Forma 
Revenue by Channel (North America) (1):         
Direct Local $  45,007    -  $  45,007  $  49,842    -  $  49,842  
National Brands, Agencies and Resellers (NBAR)    17,276    -     17,276     21,438    -     21,438  
         
Revenue by Channel (International):        
Direct Local   28,580  6,703    21,877     42,072  8,177    33,895  
National Brands, Agencies and Resellers (NBAR)    4,419  161    4,258     4,271  530    3,741  
         
Consolidated Revenue$  95,282  6,864 $  88,418  $  117,623  8,707 $  108,916  
         
Consolidated Adjusted EBITDA (2)$  1,629    32 $  1,597  $  (3,843)   (559)$  (3,284) 
         
 Three Months Ended Three Months Ended 
 December 31, 2015 December 31, 2014 
         
 As ReportedUnited KingdomPro-Forma As ReportedUnited KingdomPro-Forma 
Revenue by Channel (North America) (1):         
Direct Local $  43,903    -  $  43,903  $  47,408    -  $  47,408  
National Brands, Agencies and Resellers (NBAR)    15,564    -     15,564     20,351    -     20,351  
         
Revenue by Channel (International):        
Direct Local   26,064  4,859    21,205     37,771  7,226    30,545  
National Brands, Agencies and Resellers (NBAR)    3,446  135    3,311     3,479  360    3,119  
         
Consolidated Revenue$  88,977  4,994 $  83,983  $  109,009  7,586 $  101,423  
         
Consolidated Adjusted EBITDA (2)$  4,284    311 $  3,973  $  (5,924)   (1,521)$  (4,403) 
         
 Twelve Months Ended Twelve Months Ended 
 December 31, 2015 December 31, 2014 
         
 As ReportedUnited KingdomPro-Forma As ReportedUnited KingdomPro-Forma 
Revenue by Channel (North America) (1):         
Direct Local $  181,022    -  $  181,022  $  208,459    -  $  208,459  
National Brands, Agencies and Resellers (NBAR)    68,202    -     68,202     84,637    -     84,637  
         
Revenue by Channel (International):        
Direct Local   118,537  24,438    94,099     164,363  34,051    130,312  
National Brands, Agencies and Resellers (NBAR)    14,836  777    14,059     17,462  2,391    15,071  
         
Consolidated Revenue$  382,597  25,215 $  357,382  $  474,921  36,442 $  438,479  
         
Consolidated Adjusted EBITDA (2)$  2,842    (1,592)$  4,434  $  (9,410)   (2,928)$  (6,482) 
         
         
(1) North America includes the United States and Canada. International includes all other countries.   
         
(2) Adjusted EBITDA is defined as net income (loss) from continuing operations before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, the effects of accounting for business combinations (including any impairment of acquired intangibles and goodwill), restructuring charges, and other non-operating income or expense. 

 

REACHLOCAL, INC.        
UNAUDITED RECONCILIATION OF PRO-FORMA FINANCIAL INFORMATION EXCLUDING THE UNITED KINGDOM
 
(in thousands)        
         
 Three Months Ended Three Months Ended 
 March 31, 2015 March 31, 2014 
         
 As ReportedUnited KingdomPro-Forma As ReportedUnited KingdomPro-Forma 
         
Operating loss$  (12,527)   (1,973)$  (10,554) $  (8,369)   828 $  (9,197) 
Add:     -        -   
Depreciation and amortization    5,134    60    5,074     4,222    77    4,145  
Stock-based compensation   2,146    -     2,146     4,571    -     4,571  
Acquisition and integration costs    7    -     7     14    -     14  
Restructuring charges   1,455    -     1,455     1,823    -     1,823  
Adjusted EBITDA (1)$  (3,785)   (1,913)$  (1,872) $  2,261    905 $  1,356  
         
 Three Months Ended Three Months Ended 
 June 30, 2015 June 30, 2014 
         
 As ReportedUnited KingdomPro-Forma As ReportedUnited KingdomPro-Forma 
         
Operating loss$  (9,785)   (174)$  (9,611) $  (11,626)   (1,828)$  (9,798) 
Add:     -        -   
Depreciation and amortization    5,149    58    5,091     4,018    75    3,943  
Stock-based compensation   2,214    -     2,214     3,476    -     3,476  
Acquisition and integration costs    4    -     4     2    -     2  
Restructuring charges   3,133    94    3,039     2,226    -     2,226  
Adjusted EBITDA (1)$  715    (22)$  737  $  (1,904)   (1,753)$  (151) 
         
 Three Months Ended Three Months Ended 
 September 30, 2015 September 30, 2014 
         
 As ReportedUnited KingdomPro-Forma As ReportedUnited KingdomPro-Forma 
         
Operating loss$  (34,063)   (39)$  (34,024) $  (11,457)   (628)$  (10,829) 
Add:         -   
Depreciation and amortization    4,712    57    4,655     4,355    69    4,286  
Stock-based compensation   2,195    -     2,195     2,671    -     2,671  
Acquisition and integration costs    2    -     2     70    -     70  
Restructuring charges   983    14    969     518    -     518  
Impairment of goodwill   27,800    -     27,800     -    -     -  
Adjusted EBITDA (1)$  1,629  32 $  1,597  $  (3,843)   (559)$  (3,284) 
         
 Three Months Ended Three Months Ended 
 December 31, 2015 December 31, 2014 
         
 As ReportedUnited KingdomPro-Forma As ReportedUnited KingdomPro-Forma 
         
Operating loss$  (4,494)   (216)$  (4,278) $  (14,660)   (1,620)$  (13,040) 
Add:     -        -   
Depreciation and amortization    4,686    56    4,630     4,799    61    4,738  
Stock-based compensation   2,115    -     2,115     2,542    -     2,542  
Acquisition and integration costs    2    -     2     35    -     35  
Restructuring charges   1,975    471    1,504     1,360    38    1,322  
Impairment of goodwill   -    -     -     -    -     -  
Adjusted EBITDA (1)$  4,284    311 $  3,973  $  (5,924)   (1,521)$  (4,403) 
         
 Twelve Months Ended Twelve Months Ended 
 December 31, 2015 December 31, 2014 
         
 As ReportedUnited KingdomPro-Forma As ReportedUnited KingdomPro-Forma 
         
Operating loss$  (60,870)   (2,402)$  (58,468) $  (46,112)   (3,249)$  (42,863) 
Add:     -        -   
Depreciation and amortization    19,681    230    19,451     17,394    283    17,111  
Stock-based compensation   8,671    -     8,671     13,260    -     13,260  
Acquisition and integration costs    14    -     14     121    -     121  
Restructuring charges   7,546    580    6,966     5,927    38    5,889  
Impairment of goodwill   27,800    -     27,800     -    -     -  
Adjusted EBITDA (1)$  2,842    (1,592)$  4,434  $  (9,410)   (2,928)$  (6,482) 
         
         
         
(1) Adjusted EBITDA is defined as net income (loss) from continuing operations before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, the effects of accounting for business combinations (including any impairment of acquired intangibles and goodwill), restructuring charges, and other non-operating income or expense. 


                    

        

Contact Data