Local.com Corp. (LOCM, Financial) filed Quarterly Report for the period ended 2010-09-30.
Local.com Corp. has a market cap of $70.8 million; its shares were traded at around $4.22 with a P/E ratio of 8.7 and P/S ratio of 1.3. LOCM is in the portfolios of Jim Simons of Renaissance Technologies LLC, Kenneth Fisher of Fisher Asset Management, LLC.
On July 1, 2010, we acquired all of the assets of Simply Static, LLC (doing business as Octane360), a Delaware limited liability company (Octane). The assets acquired include a technology platform, which can be used to offer targeting and registration of geo-category based local website domains; small business and geo-category website creation, hosting and management; an ad exchange to manage the selection and deployment of ad inventory across all Octane-controlled domains and websites; and a content marketplace to allow for the management of geo-category content written for advertising customers or our directly owned portfolio properties. Under the terms of the Asset Purchase Agreement, dated July 1, 2010 between us and Octane, we acquired the assets of Octane for $3.5 million in cash, 200,482 shares of our common stock and possible future contingent consideration based on the achievement of certain earnout milestones. On July 28, 2010 Octane achieved one of the milestones and received an additional $325,000 in cash and 48,077 shares of our common stock. On September 28, 2010 three additional earnout milestones were achieved totaling $1,950,000 and this amount was included in acquisition consideration payable on the balance sheet as of September 30, 2010. Octane may receive up to an additional $3.3 million in a combination of cash and stock based on Octane achieving certain milestones and its operating performance during the two year period ending June 30, 2012, as more particularly described in the Octane Asset Purchase Agreement.
On September 30, 2010, we entered into an Asset Purchase Agreement with Best Click Advertising.com, LLC (BestClick) whereby we acquired up to 10,000 web hosting subscribers for a cash purchase price of up to $1,100,000. The Purchase Price is subject to adjustment in our favor if BestClick actually transfers fewer than 10,000 web hosting subscribers, or in the event some or all of the Purchased Subscribers are no longer billable once transferred under certain limited circumstances, as more completely described in the Purchase Agreement. As of September 30, 2010, we recorded $830,500 as the estimated purchase price. The purchase price will be amortized on an accelerated basis over four years based on how we expect the customer relationships to contribute to future cash flows.
According to a February 2010 study, The Kelsey Group estimates that the local search market in the United States will grow from $4.2 billion in 2010 to $8 billion by 2014. Local businesses, those that principally serve consumers within a fifty mile radius of their location, are increasingly shifting their newspaper and print yellow pages ad spend to online advertising, some of which is directed towards local search advertising.
Cost of revenues consists of traffic acquisition costs, revenue sharing payments that we make to our Network partners, and other cost of revenues. Traffic acquisition costs consist primarily of campaign costs associated with driving consumers to our Local.com website, including personnel costs associated with managing traffic acquisition programs. Other cost of revenues consists of Internet connectivity costs, data center costs, amortization of certain software license fees and maintenance, depreciation of computer equipment used in providing our paid-search services, and payment processing fees (credit cards and fees for LEC billings). We advertise on large search engine sites such as Google, Yahoo!, MSN/Bing and Ask.com, as well as other search engine sites, by bidding on certain keywords we believe will drive traffic to our Local.com website. During the nine month period ended September 30, 2010, approximately 71% of our overall traffic was purchased from other search engine websites. During the nine month period ended September 30, 2010, advertising costs to drive consumers to our Local.com website were $22.9 million of which $17.0 million was attributable to Google, Inc. If we are unable to advertise on these websites, or the cost to advertise on these websites increases, our financial results will likely suffer materially.
Owned and operated revenue for the three and nine months ended September 30, 2010 increased 16.3% and 25.9%, respectively, compared to the same periods in 2009. The increase in revenue is primarily due to increased traffic on our Local.com website partially offset by lower monetization as our revenue per thousand visitors (RKV) decreased to $266 and $253 for the three and nine months ended September 30, 2010 from $270 and $267 for the three and nine months ended September 30, 2009, respectively. Although the increased traffic monetized at a lower level, the average cost per visit to acquire the traffic was also lower than the prior year periods, and we saw an increase in both revenue and gross margin for the Owned and Operated business unit.
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Local.com Corp. has a market cap of $70.8 million; its shares were traded at around $4.22 with a P/E ratio of 8.7 and P/S ratio of 1.3. LOCM is in the portfolios of Jim Simons of Renaissance Technologies LLC, Kenneth Fisher of Fisher Asset Management, LLC.
Highlight of Business Operations:
On February 12, 2010, we entered into an Asset Purchase Agreement with LaRoss Partners, LLC (LaRoss) whereby we purchased approximately 10,000 website hosting accounts for up to $1,586,000 in cash, subject to reduction in the event any of the subscribers were not successfully transferred to us or the subscriber base fails to achieve a certain performance requirement. All performance criteria per the Asset Purchase Agreement were met, resulting in the maximum purchase price of $158.60 per account or an aggregate $1,586,000, based on 10,000 accounts. LaRoss will provide ongoing billing services and hosting of the sites. The purchase price will be amortized on an accelerated basis over four years based on how we expect the customer relationships to contribute to future cash flows.On July 1, 2010, we acquired all of the assets of Simply Static, LLC (doing business as Octane360), a Delaware limited liability company (Octane). The assets acquired include a technology platform, which can be used to offer targeting and registration of geo-category based local website domains; small business and geo-category website creation, hosting and management; an ad exchange to manage the selection and deployment of ad inventory across all Octane-controlled domains and websites; and a content marketplace to allow for the management of geo-category content written for advertising customers or our directly owned portfolio properties. Under the terms of the Asset Purchase Agreement, dated July 1, 2010 between us and Octane, we acquired the assets of Octane for $3.5 million in cash, 200,482 shares of our common stock and possible future contingent consideration based on the achievement of certain earnout milestones. On July 28, 2010 Octane achieved one of the milestones and received an additional $325,000 in cash and 48,077 shares of our common stock. On September 28, 2010 three additional earnout milestones were achieved totaling $1,950,000 and this amount was included in acquisition consideration payable on the balance sheet as of September 30, 2010. Octane may receive up to an additional $3.3 million in a combination of cash and stock based on Octane achieving certain milestones and its operating performance during the two year period ending June 30, 2012, as more particularly described in the Octane Asset Purchase Agreement.
On September 30, 2010, we entered into an Asset Purchase Agreement with Best Click Advertising.com, LLC (BestClick) whereby we acquired up to 10,000 web hosting subscribers for a cash purchase price of up to $1,100,000. The Purchase Price is subject to adjustment in our favor if BestClick actually transfers fewer than 10,000 web hosting subscribers, or in the event some or all of the Purchased Subscribers are no longer billable once transferred under certain limited circumstances, as more completely described in the Purchase Agreement. As of September 30, 2010, we recorded $830,500 as the estimated purchase price. The purchase price will be amortized on an accelerated basis over four years based on how we expect the customer relationships to contribute to future cash flows.
According to a February 2010 study, The Kelsey Group estimates that the local search market in the United States will grow from $4.2 billion in 2010 to $8 billion by 2014. Local businesses, those that principally serve consumers within a fifty mile radius of their location, are increasingly shifting their newspaper and print yellow pages ad spend to online advertising, some of which is directed towards local search advertising.
Cost of revenues consists of traffic acquisition costs, revenue sharing payments that we make to our Network partners, and other cost of revenues. Traffic acquisition costs consist primarily of campaign costs associated with driving consumers to our Local.com website, including personnel costs associated with managing traffic acquisition programs. Other cost of revenues consists of Internet connectivity costs, data center costs, amortization of certain software license fees and maintenance, depreciation of computer equipment used in providing our paid-search services, and payment processing fees (credit cards and fees for LEC billings). We advertise on large search engine sites such as Google, Yahoo!, MSN/Bing and Ask.com, as well as other search engine sites, by bidding on certain keywords we believe will drive traffic to our Local.com website. During the nine month period ended September 30, 2010, approximately 71% of our overall traffic was purchased from other search engine websites. During the nine month period ended September 30, 2010, advertising costs to drive consumers to our Local.com website were $22.9 million of which $17.0 million was attributable to Google, Inc. If we are unable to advertise on these websites, or the cost to advertise on these websites increases, our financial results will likely suffer materially.
Owned and operated revenue for the three and nine months ended September 30, 2010 increased 16.3% and 25.9%, respectively, compared to the same periods in 2009. The increase in revenue is primarily due to increased traffic on our Local.com website partially offset by lower monetization as our revenue per thousand visitors (RKV) decreased to $266 and $253 for the three and nine months ended September 30, 2010 from $270 and $267 for the three and nine months ended September 30, 2009, respectively. Although the increased traffic monetized at a lower level, the average cost per visit to acquire the traffic was also lower than the prior year periods, and we saw an increase in both revenue and gross margin for the Owned and Operated business unit.
Read the The complete Report
