Local.com Corp. (LOCM, Financial) filed Quarterly Report for the period ended 2012-03-31.
Local.com Corp has a market cap of $56.3 million; its shares were traded at around $2.42 with and P/S ratio of 0.7.
Owned and operated revenue for the three months ended March 31, 2012, increased 75.5% compared to the same periods in 2011. The increase in revenue for the three months ended March 31, 2012, compared to the same period in 2011 is a combination of increased traffic to our Local.com website, together with an increase in monetization as our revenue per thousand visitors (RKV) increased to $285 for the three months ended March 31, 2012, from $211 for the three months ended March 31, 2011. The increase in RKV was primarily a result of changes made to our advertising partner relationships. The increase in RKV due to a new advertising partner relationship was partially offset by a significant decrease in revenue from one of our large advertising partners. The lower RKV for the three months ended March 31, 2011, was primarily due to the Yahoo!/Bing alliance, which resulted in changes to the Yahoo! search and advertising platform. Starting in August 2011
Network revenue for the three months ended March 31, 2012, increased 13.2%, compared to the same period in 2011. The increase is primarily due to increased traffic to our network partner websites and the increase in revenue per click (RPC) from our advertising partner feed. The increase in traffic is a combination of increased cost of revenues to attract users to the network partner sites together with an increase in organic traffic over the same period.
We currently maintain a billing relationship with certain third parties that bill a portion of our legacy subscribers for us via Local Exchange Carriers (LECs). In the first quarter 2012, our legacy subscribers represented revenue of approximately $1.5 million, a decline of 36% from the first quarter of fiscal 2011 revenue derived for our legacy subscribers of $2.3 million and 11% from the fourth quarter of fiscal 2011 revenue of approximately $1.7 million. Since our decision to suspend the acquisition of new LEC-billed customers in the fourth quarter of fiscal 2010, subject to existing contractual obligations, we have experienced a natural and expected churn in these legacy subscribers resulting in a fairly predictable reduction in our total legacy subscription customers on a quarter to quarter basis. In April 2012, we were advised that certain of our third party billing partners had received notification that certain LECs would no longer provide billing services for our products and services with respect to these legacy subscribers as of August and December 2012, respectively. We anticipate that the inability to bill our legacy subscribers via LECs will reduce revenue for the second half of 2012 by approximately $666,000 and net income for the second half of 2012 by approximately $634,000. The impact to our revenues after fiscal 2012 would continue to decline as a result of the natural churn which would have occurred in the absence of these actions by the LECs. While we understand that efforts are being undertaken to forestall or delay the effectiveness of this decision by certain LECs, we cannot be sure that such efforts will be successful. We remain focused on selling our new products from our Exact Match product suite, which are billed via credit card and are entirely unaffected by LEC billing. As of March 31, 2012, we had 864 Exact Match customers which are billed monthly at an average charge that is approximately 10 times as much as one legacy subscription customer. There can be no assurance that our efforts to secure new Exact Match customers will be capable of offsetting the revenue and net income losses we anticipate from the loss of our revenue and net income by our legacy subscribers.
Sales and marketing expenses for the three months ended March 31, 2012, increased 93.3% compared to the same period in 2011. The increase was primarily due to higher personnel-related costs due to increased costs related to the three acquisitions completed during the second and third quarter of 2011 together with our continued efforts in expanding our sales force. Included in sales and marketing expense for the three months ended March 31, 2012 is $1.7 million relating to the Daily Deals segment, which commenced operations in May 2011.
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Local.com Corp has a market cap of $56.3 million; its shares were traded at around $2.42 with and P/S ratio of 0.7.
Highlight of Business Operations:
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 Local Exchange Carrier (LEC) billings). We advertise on large search engine websites such as Google, Yahoo!, MSN/Bing and Ask.com, as well as other search engine websites, by bidding on certain keywords we believe will drive traffic to our Local.com website. During the three months ended March 31, 2012 and 2011, approximately 63% and 64% respectively, of our overall traffic was purchased from other search engine websites. During the three months ended March 31, 2012, advertising costs to drive consumers to our Local.com website were $14.5 million, of which $10.0 million and $4.1 million were attributable to Google, Inc. and Yahoo!, respectively. During the three months ended March 31, 2011, advertising costs to drive consumers to our Local.com website were $8.1 million of which $6.1 million and $1.4 million were attributable to Google, Inc. and Yahoo!, respectively. 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 months ended March 31, 2012, increased 75.5% compared to the same periods in 2011. The increase in revenue for the three months ended March 31, 2012, compared to the same period in 2011 is a combination of increased traffic to our Local.com website, together with an increase in monetization as our revenue per thousand visitors (RKV) increased to $285 for the three months ended March 31, 2012, from $211 for the three months ended March 31, 2011. The increase in RKV was primarily a result of changes made to our advertising partner relationships. The increase in RKV due to a new advertising partner relationship was partially offset by a significant decrease in revenue from one of our large advertising partners. The lower RKV for the three months ended March 31, 2011, was primarily due to the Yahoo!/Bing alliance, which resulted in changes to the Yahoo! search and advertising platform. Starting in August 2011
Network revenue for the three months ended March 31, 2012, increased 13.2%, compared to the same period in 2011. The increase is primarily due to increased traffic to our network partner websites and the increase in revenue per click (RPC) from our advertising partner feed. The increase in traffic is a combination of increased cost of revenues to attract users to the network partner sites together with an increase in organic traffic over the same period.
We currently maintain a billing relationship with certain third parties that bill a portion of our legacy subscribers for us via Local Exchange Carriers (LECs). In the first quarter 2012, our legacy subscribers represented revenue of approximately $1.5 million, a decline of 36% from the first quarter of fiscal 2011 revenue derived for our legacy subscribers of $2.3 million and 11% from the fourth quarter of fiscal 2011 revenue of approximately $1.7 million. Since our decision to suspend the acquisition of new LEC-billed customers in the fourth quarter of fiscal 2010, subject to existing contractual obligations, we have experienced a natural and expected churn in these legacy subscribers resulting in a fairly predictable reduction in our total legacy subscription customers on a quarter to quarter basis. In April 2012, we were advised that certain of our third party billing partners had received notification that certain LECs would no longer provide billing services for our products and services with respect to these legacy subscribers as of August and December 2012, respectively. We anticipate that the inability to bill our legacy subscribers via LECs will reduce revenue for the second half of 2012 by approximately $666,000 and net income for the second half of 2012 by approximately $634,000. The impact to our revenues after fiscal 2012 would continue to decline as a result of the natural churn which would have occurred in the absence of these actions by the LECs. While we understand that efforts are being undertaken to forestall or delay the effectiveness of this decision by certain LECs, we cannot be sure that such efforts will be successful. We remain focused on selling our new products from our Exact Match product suite, which are billed via credit card and are entirely unaffected by LEC billing. As of March 31, 2012, we had 864 Exact Match customers which are billed monthly at an average charge that is approximately 10 times as much as one legacy subscription customer. There can be no assurance that our efforts to secure new Exact Match customers will be capable of offsetting the revenue and net income losses we anticipate from the loss of our revenue and net income by our legacy subscribers.
Sales and marketing expenses for the three months ended March 31, 2012, increased 93.3% compared to the same period in 2011. The increase was primarily due to higher personnel-related costs due to increased costs related to the three acquisitions completed during the second and third quarter of 2011 together with our continued efforts in expanding our sales force. Included in sales and marketing expense for the three months ended March 31, 2012 is $1.7 million relating to the Daily Deals segment, which commenced operations in May 2011.
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