ReachLocal Reports Fourth Quarter and Fiscal Year 2012 Results

ReachLocal Reports Fourth Quarter and Fiscal Year 2012 Results

       Posts $455.4 Million in 2012 Revenue, 21% Year-over-Year Growth

    Delivered $23.6 Million in Adjusted EBITDA, 49% Year-over-Year Growth

Will Announce New Products and Initiatives at Analyst Day on February 21, 2013

WOODLAND HILLS, Calif., Feb. 12, 2013 (GLOBE NEWSWIRE) -- ReachLocal, Inc.
(Nasdaq:RLOC), a leader in local online marketing solutions for small- and
medium-sized businesses (SMBs), today reported financial results for the
fourth quarter and fiscal year ended December 31, 2012.

Q4 Year-Over-Year Highlights

  *Revenue growth of 20%, highlighted by 47% growth in international markets
    and 23% growth in the direct local channel
  *International revenue expanded to 30% of revenue, up from 25% in Q4 2011
  *Adjusted EBITDA grew 23% to $6.4 million, compared to $5.2 million in Q4
    2011
  *Active Advertisers grew 15% to 22,000 and Active Campaigns grew 18% to
    32,500
  *Launched operations directly in Brazil and with a franchise partner in the
    Czech Republic
  *Repurchased 480,000 shares of stock for $5.6 million

FY 2012 Highlights

  *Revenue growth of 21%, with 49% growth in international markets and 23%
    growth in the direct local channel
  *Loss from continuing operations of $232,000, compared to a loss of $4.1
    million in 2011 and a Net Loss of $232,000, compared to a Net Loss of
    $10.3 million in 2011
  *Adjusted EBITDA of $23.6 million, compared to $15.9 million in 2011
  *Launched operations directly in Asia and Latin America, as well as in
    Eastern Europe with a Franchise Partner
  *Non-GAAP net income of $13.0 million, compared to Non-GAAP net income of
    $9.6 million in 2011
  *Repurchased 1,116,000 shares of stock for $10.8 million during 2012 and
    expanded buy-back authorization under which ReachLocal has repurchased
    1,985,000 shares for $17.4 million to date
  *Launched new products including ReachRetargeting and the new ReachLocal
    Mobile App

Management Commentary

"2012 was another excellent year for ReachLocal. We made progress across all
of our key initiatives enabling us to deliver both strong revenue and Adjusted
EBITDA growth," said Zorik Gordon, CEO. "We accelerated international
expansion into two new continents, launched important new lead generation and
mobile products, and continued to lay the foundation for our local commerce
and software product initiatives that we plan to showcase at our upcoming
analyst day this month."

Q4 Quarterly Results at a Glance

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

                                                   Q4 2012  Q4 2011  % Change
Revenue                                             $120,248 $ 99,802 20%
Net Income (Loss) from Continuing Operations        $(394)   $151     (361)%
Net Income (Loss) from Continuing Operations per    $(0.01)  $0.01    (200)%
Diluted Share
Net Loss                                            $(394)   $(1,344) 71%
Net Loss per Diluted Share                          $(0.01)  $(0.05)  80%
Non-GAAP Net Income                                 $3,198   $ 3,508  (9)%
Non-GAAP Net Income per Diluted Share               $0.11    $0.12    (8)%
Adjusted EBITDA                                     $6,445   $ 5,241  23%
Underclassmen Expense                               $11,426  $ 11,774 (3)%
Cash Flow from Continuing Operations                $11,004  $967     1,038%
Cash Flow from Operating Activities                 $10,957  $402     2,626%

Revenue by Channel and Geography:                                   
Direct Local Revenue                                $95,982  $78,275  23%
National Brands, Agencies and Resellers (NBAR)      $24,266  $21,527  13%
Revenue
International Revenue (included above)              $36,091  $24,555  47%
                                                                   

2012 Annual Results and Key Metrics at a Glance

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

                                                  FY 2012  FY 2011   % Change
Revenue                                            $455,354 $ 375,241 21%
Net Loss from Continuing Operations                $(232)   $(4,126)  94%
Net Loss from Continuing Operations per Diluted    $(0.01)  $(0.14)   93%
Share
Net Loss                                           $(232)   $(10,341) 98%
Net Loss per Diluted Share                         $(0.01)  $(0.36)   97%
Non-GAAP Net Income                                $ 13,017 $ 9,620   35%
Non-GAAP Net Income per Diluted Share              $0.45    $0.31     45%
Adjusted EBITDA                                    $ 23,635 $ 15,915  49%
Underclassmen Expense                              $ 45,250 $ 44,488  2%
Cash Flow from Continuing Operations               $ 42,588 $ 20,861  104%
Cash Flow from Operating Activities                $42,359  $18,989   123%
                                                                   
Key Metrics (at period end):
Active Advertisers                                 22,000   19,100    15%
Active Campaigns                                   32,500   27,500    18%
Total Upperclassmen                                419      372       13%
Total Underclassmen                                405      424       (4)%
Total IMCs                                         824      796       4%

Business Outlook

"We are pleased to have delivered strong revenue and profitability growth
during 2012.As we look ahead, we intend to continue to invest in the
long-term expansion and optimization of our distribution organization as well
as in product expansion.We believe that we are well-positioned to deliver
solid revenue growth and, even with our planned investments, modestly expand
Adjusted EBITDA margins in 2013.Moreover, for the near-term, we currently
expect to maintain revenue growth and annual margin expansion at levels equal
to or better than our current expectation for 2013," said Ross Landsbaum,
Chief Financial Officer.

The Company's outlook is as follows:

First Quarter 2013

  *Revenues in the range of $121.5 million to $123.5 million
  *Adjusted EBITDA in the range of $5.4 million to $6.4 million
  *Ending Upperclassmen headcount of 410 to 430
  *Ending Underclassmen headcount of 395 to 415
  *Ending total IMC headcount of 805 to 845

Calendar Year 2013

  *Revenues in the range of $530 million to $540 million
  *Adjusted EBITDA in the range of $29.5 million to $31.5 million
  *Ending Upperclassmen headcount of 470 to 510
  *Ending Underclassmen headcount of 300 to 340
  *Ending total IMC headcount of 770 to 850

Conference Call and Webcast Information

The ReachLocal fourth quarter and fiscal year 2012 teleconference and webcast
is scheduled to begin at 2:00 p.m., Pacific Time, on Tuesday, February 12,
2013. To participate on the live call, analysts and investors should dial
877-941-2068 at least ten 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 Web site at www.reachlocal.com.

Analyst & Investor Day Information

ReachLocal will host an Analyst and Investor Day on Thursday, February 21,
2013 at NASDAQ in Times Square.Key members of the senior management team will
host a series of presentations beginning at 8:00 a.m. Eastern Time, providing
insight into the global business and a preview of new product and technology
initiatives for 2013 and beyond. Financial analysts and investors may register
to attend by contacting Stephanie Boyar by email at
stephanie@blueshirtgroup.com.Space is limited and pre-registration is
required for admittance to the event.

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 on Underclassmen Expense, Active
Advertisers, Active Campaigns and the total number of Internet Marketing
Consultants (IMCs), as management believes that these metrics are important
gauges of the progress of the Company's performance.

The 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, in the case of the acquisition of
SMB:LIVE, the deferred cash consideration) and amounts included in other
non-operating income or expense.

Acquisition Related Costs: Acquisition related costs, including the
amortization and any impairment of acquired intangibles 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 have 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.

Underclassmen Expense is a number the Company calculates to approximate its
investment in Underclassmen and is comprised of the selling and marketing
expenses allocated to Underclassmen during a reporting period. The amount
includes the direct salaries and allocated benefits of the Underclassmen
(excluding commissions), training and sales organization expenses including
depreciation allocated based on relative headcount and marketing expenses
allocated based on relative revenue. While management believes that
Underclassmen Expense provides useful information regarding the Company's
approximated investment in Underclassmen, the methodology used to arrive at
the estimated Underclassmen Expense was developed internally by the Company,
is not a concept or method recognized by GAAP and other companies may use
different methodologies to calculate or approximate measures similar to
Underclassmen Expense. Accordingly, the calculation of Underclassmen Expense
may not be comparable to similar measures used by other companies. Management
refers to sales through its sales force of Internet Marketing Consultants as
its Direct Local channel.As the sale to agencies, resellers and national
brands involves negotiations with businesses that generally represent an
aggregated group of SMB advertisers, management groups them together as the
National Brands, Agencies and Resellers (NBAR) channel.

Active Advertisers 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 Advertisers by adjusting the number of Active Campaigns to
combine clients with more than one Active Campaign as a single Active
Advertiser. Clients with more than one location are generally reflected as
multiple Active Advertisers. Because this number includes clients served
through the National Brands, Agencies and Resellers channel, Active
Advertisers includes entities with which we do not have a direct client
relationship. Numbers are rounded to the nearest hundred.

Active Campaigns is a number we calculate to approximate the number of
individual products or services we are managing under contract for Active
Advertisers. For example, if we were performing both ReachSearch and
ReachDisplay campaigns for a client, we consider that two Active Campaigns.
Similarly, if a client purchased ReachSearch campaigns for two different
products or purposes, we consider that two Active Campaigns. Numbers are
rounded to the nearest hundred.

Caution Concerning Forward-Looking Statements

Statements in this press release regarding the Company's guidance 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 purchase media and receive rebates
from Google, Yahoo! and Microsoft under commercially reasonable terms; (ii)
the Company's ability to recruit, train and retain its Internet Marketing
Consultants; (iii) the Company's ability to attract and retain customers; (iv)
the Company's ability to successfully enter new markets and manage its
international expansion; (v) the Company's ability to successfully develop and
offer new products and services in the highly competitive online advertising
industry; (vi) the impact of worldwide economic conditions, including the
resulting effect on advertising budgets; and (vii) our 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.'s (Nasdaq:RLOC) mission is to help small- and medium-sized
businesses (SMBs) acquire, maintain and retain customers via the Internet.
ReachLocal offers a comprehensive suite of online marketing solutions
including search engine marketing (ReachSearch™), Web presence (ReachCast™),
display retargeting (ReachRetargeting™), display advertising (ReachDisplay™),
online marketing analytics (TotalTrack®) and assisted chat service
(TotalLiveChat™), each targeted to the SMB market. ReachLocal delivers this
suite of services to SMBs through a combination of its proprietary technology
platform and its direct, "feet-on-the-street" sales force of Internet
Marketing Consultants and select third-party agencies and resellers.
ReachLocal is headquartered in Woodland Hills, CA, with offices throughout
North America and in Australia, the United Kingdom, Germany, the Netherlands
and Japan. Subscribe to ReachLocal's free newsletter to receive news, tips,
and other online marketing insights.

The ReachLocal, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=7488

REACHLOCAL, INC.                                             
UNAUDITED BALANCE SHEETS                                     
(in thousands, except per share data)                        
                                                            
                                            December 31,     December 31,
                                            2012             2011
Assets                                                       
Current assets:                                              
Cash and cash equivalents                   $92,336        $84,525
Short-term investments                      3,149           644
Accounts receivable, net                    5,689           4,240
Other receivables and prepaid expenses      8,957           9,226
Total current assets                        110,131         98,635
                                                            
Property and equipment, net                 11,066          9,885
Capitalized software development costs, net 14,704          10,942
Restricted certificates of deposit          1,226           1,286
Intangible assets, net                      2,442           1,957
Otherassets                                 4,044           1,966
Goodwill                                    42,083          41,766
Total assets                                $185,696       $166,437
                                                            
Liabilities and Stockholders' Equity                         
                                                            
Current Liabilities:                                         
Accounts payable                            $35,297        $29,831
Accrued expenses                            27,422          19,537
Deferred revenue and other current           36,304          30,747
liabilities
Liabilities of discontinued operations, net  767             996
Total current liabilities                   99,790          81,111
                                                            
Deferred rent and other liabilities          4,020           3,039
Total liabilities                           103,810         84,150
                                                            
Stockholders' Equity:                                        
Common stock                                 --             --
Receivable from stockholder                 (89)            (87)
Additional paid-in capital (5)               110,573         109,493
Accumulated deficit (5)                      (27,076)        (26,844)
Accumulated other comprehensive loss        (1,522)         (275)
Total stockholders' equity                  81,886          82,287
Total liabilities and stockholders' equity  $185,696       $166,437
                                                            
Note: During the year ended December 31, 2011, the Company recorded the
results of operations and financial position of its Bizzy subsidiary as
discontinued operations.

                                                               
REACHLOCAL, INC.                                                
UNAUDITED STATEMENTS OF                                         
OPERATIONS
(in thousands, except per share                                 
data)
                                                               
                               ThreeMonths Ended     Twelve Months Ended
                               December 31,            December 31,
                               2012         2011       2012       2011
                                                               
Revenue                        $120,248   $99,802  $455,354 $375,241
Cost of revenue                 59,790      49,196    227,336   190,559
Operating expenses:                                             
Selling and marketing           44,845      36,472    167,424   139,929
Product and technology          5,596       4,802     19,776    15,602
General and administrative (5)  10,230      9,000     40,471    33,470
Total operating expenses       60,671      50,274    227,671   189,001
                                                               
Income (loss) from continuing   (213)       332       347       (4,319)
operations
Other income, net              237         231       575       928
Income (loss) from continuing
operations before provision for 24          563       922       (3,391)
income taxes
                                                               
Provision for income taxes     418         412       1,154     735
                                                               
Income (loss) from continuing   (394)       151       (232)     (4,126)
operations, net of income taxes
Loss from discontinued          --         (1,495)   --       (6,215)
operations, net of income taxes
Net loss                        $(394)     $(1,344) $(232)   $(10,341)
                                                               
Net income (loss) per share                                     
Basic income (loss) per share   $(0.01)    $0.01    $(0.01)  $(0.14)
from continuing operations
Basic loss per share from       --         (0.05)    --       (0.21)
discontinued operations
Basic net loss per share        $(0.01)    $(0.05)  $(0.01)  $(0.36)
                                                               
Diluted income (loss) per share $(0.01)    $0.01    $(0.01)  $(0.14)
from continuing operations
Diluted loss per share from     --         (0.05)    --       (0.21)
discontinued operations
Diluted net loss per share      $(0.01)    $(0.05)  $(0.01)  $(0.36)
                                                               
                                                               
Weighted average common shares
used in computation of net                                      
income (loss) per share
Basic                           28,254      29,089    28,348    28,974
Diluted                         28,254      29,595    28,348    28,974
                                                               

Stock-based compensation, net of capitalization, and depreciation and
amortization included in above line items:
                                                               
Stock-based compensation:                                       
Cost of revenue                $99        $24      $297     $200
Sellingand marketing          620         334       1,742     1,402
Productand technology         336         411       1,204     1,387
Generaland administrative (5)  1,520       1,453     6,261     5,549
                               $2,575     $2,222   $9,504   $8,538
                                                               
Depreciation and amortization:                                  
Cost of revenue                $305       $94      $706     $645
Sellingand marketing          860         363       2,436     1,443
Productand technology         2,621       1,731     9,056     6,764
Generaland administrative     297         451       1,554     1,422
                               $4,083     $2,639   $13,752  $10,274
                                                               
Note: During the year ended December 31, 2011, the Company recorded the
results of operations and financial position of its Bizzy subsidiary as
discontinued operations.

REACHLOCAL, INC.                                                  
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS                  
(in thousands, except per share data)                             
                                                      Year Ended December 31,
                                                      2012        2011
Cash flow from operating activities:                              
Net loss from continuing operations, net of income     $(232)    $(4,126)
taxes (5)
Adjustments to reconcile net loss from continuing
operations, net of income taxes to net cash provided              
by operating activities:
Depreciation and amortization                         13,752     10,274
Stock-based compensation (5)                           9,504      8,538
Provision for doubtful accounts                       13         172
Impairment of intangible assets                        --        764
Provision for deferred income taxes                    211        185
Changes in operating assets and liabilities:                      
Accounts receivable                                   (1,396)    (1,077)
Other receivables and prepaid expenses                 291        (5,740)
Other assets                                          (118)      (673)
Accounts payable and accrued expenses                  12,869     7,076
Deferred revenue, rent and other liabilities           7,694      5,468
Net cash provided by operating activities, continuing  42,588     20,861
operations
Net cash used for operating activities , discontinued  (229)      (1,872)
operations
Net cash provided by operating activities             42,359     18,989
                                                                 
Cash flow from investing activities:                              
Additions to property, equipment and software         (16,336)   (12,441)
Acquisitions, net of acquired cash                     (3,976)    (6,342)
Loan to franchisee                                     (1,863)    --
Maturities ofcertificates of deposits and short-term  6,646      7,649
investments
Purchases of certificates of deposit and short term    (9,069)    (574)
investments
Net cash used in investing activities, continuing      (24,598)   (11,708)
operations
Net cash used in investing activities, discontinued    --        (1,140)
operations
Net cash used in investing activities                  (24,598)   (12,848)
                                                                 
Cash flow from financing activities:                              
Proceeds from exercise of stock options               1,783      5,495
Common stock repurchases                               (10,963)   (6,468)
Net cash used in financing activities                 (9,180)    (973)
                                                                 
Effect of exchange rates on cash                      (770)      (549)
                                                                 
Net change in cash and cash equivalents               7,811      4,619
Cash and cash equivalents—beginning of period         84,525     79,906
                                                                 
Cash and cash equivalents—end of period               $92,336   $84,525
                                                                 
Note: During the year ended December 31, 2011, the Company recorded
discontinued operations related to its Bizzy subsidiary.
                                                                 

                           Three Months Ended       Twelve Months Ended
                           December 31,             December 31,
                           2012         2011        2012        2011
Reconciliation of Adjusted EBITDA to Income (loss) from                     
continuing operations
(in thousands)                                                
Income (loss) from          $(213)     $332      $347      $(4,319)
continuing operations (5)
Add:                                                          
Depreciation and            4,083       2,639      13,752     10,274
amortization
Stock-based compensation    2,575       2,222      9,504      8,538
(5)
Acquisition and integration --          48         32         1,422
costs
Adjusted EBITDA (1) (5)     $6,445     $5,241    $23,635   $15,915
                                                             
Underclassmen Expense (2)   $11,426    $11,774   $45,250   $44,488
                                                             
Note: During the year ended December 31, 2011, the Company recorded the
results of operations and financial position of its Bizzy subsidiary as
discontinued operations.

REACHLOCAL,                                                                                
Inc.
Reconciliation of GAAP to Non-GAAP Operating Results for Three Months Ended December 31, 2012 and 2011
(in thousands,
except per                                                                                 
share amounts)
                                                                                          
                                                                                          
              Three Months Ended December 31, 2012           Three Months Ended December 31, 2011
                        Adjustments:                                 Adjustments:             
                        Stock-based                                 Stock-based             
              GAAP       Compensation Acquisition Non-GAAP   GAAP       Compensation Acquisition Non-GAAP
              Continuing Related      Related     Operating  Continuing Related      Related     Operating
               Operations                                     Operations
              "As        Expense (3)  Costs (4)   Results    "As        Expense (3)  Costs (4)   Results
               Reported"                                      Reported"
Revenue        $120,248 --         --        $120,248 $99,802  --         --        $99,802
                                                                                          
Cost of        59,790    (99)        (79)       59,612    49,196    (24)        (11)       49,161
revenue
                                                                                          
Operating                                                                                  
expenses:
Sales and      44,845    (620)       --        44,225    36,472    (334)       --        36,138
marketing
Product and    5,596     (668)       (535)      4,393     4,802     (742)       (416)      3,644
technology
General and
administrative 10,230    (1,520)     --        8,710     9,000     (1,453)     (192)      7,355
(5)
Total
Operating      60,671    (2,808)     (535)      57,328    50,274    (2,529)     (608)      47,137
expenses
Income (Loss)
from           (213)     2,907       614        3,308     332       2,553       619        3,504
continuing
operations
Other income,  237       --         --        237       231       --         --        231
net
Income (Loss)
from
continuing
operations     24        2,907       614        3,545     563       2,553       619        3,735
before
provision for
income taxes
Provision
(benefit) for  418       --         (71)       347       412       --         (185)      227
income taxes
Net income
(loss) from    $(394)   2,907       685        $3,198   $151     2,553       804        $3,508
continuing
operations
                                                                                          
Net income
(loss) per
share from
continuing                                                                                 
operations
available to
common
stockholders
Basic income
(loss) per
share from     $(0.01)                         $0.11    $0.01                           $0.12
continuing
operations
                                                                                          
Diluted income
(loss) per
share from     $(0.01)                         $0.11    $0.01                           $0.12
continuing
operations
                                                                                          
Weighted
average shares                                                                             
outstanding
Basic         28,254                           28,254    29,089                           29,089
Diluted       28,254                           29,131    29,595                           29,595
                                                                                          
Note: During the year ended December 31, 2011, the Company recorded the results of operations and financial
position of its Bizzy subsidiary as discontinued operations. Accordingly, related prior-period amounts have
been reclassified to conform to the current period presentation.

REACHLOCAL, Inc.
Reconciliation of GAAP to Non-GAAP Operating Results for Twelve Months Ended December 31, 2012 and 2011
(in thousands, except per share amounts)
                                                                                          
                                                                                          
              Twelve Months Ended December 31, 2012          Twelve Months Ended December 31, 2011
                        Adjustments:                                 Adjustments:             
                        Stock-based                                 Stock-based             
              GAAP       Compensation Acquisition Non-GAAP   GAAP       Compensation Acquisition Non-GAAP
              Continuing Related      Related     Operating  Continuing Related      Related     Operating
               Operations                                     Operations
              "As        Expense (3)  Costs (4)   Results    "As        Expense (3)  Costs (4)   Results
               Reported"                                      Reported"
Revenue        $455,354 --         --        $455,354 $375,241 --         --        $375,241
                                                                                          
Cost of        227,336   (297)       (116)      226,923   190,559   (200)       (1,011)    189,348
revenue
                                                                                          
Operating                                                                                  
expenses:
Sales and      167,424   (1,742)     --        165,682   139,929   (1,402)     --        138,527
marketing
Product and    19,776    (2,541)     (1,544)    15,691    15,602    (2,627)     (1,532)    11,443
technology
General and
administrative 40,471    (6,261)     (536)      33,674    33,470    (5,549)     (1,226)    26,695
(5)
Total
Operating      227,671   (10,544)    (2,080)    215,047   189,001   (9,578)     (2,758)    176,665
expenses
Income (Loss)
from           347       10,841      2,196      13,384    (4,319)   9,778       3,769      9,228
continuing
operations
Other income,  575       --         --        575       928       --         14         942
net
Income (Loss)
from
continuing
operations     922       10,841      2,196      13,959    (3,391)   9,778       3,783      10,170
before
provision for
income taxes
Provision
(benefit) for  1,154     --         (212)      942       735       --         (185)      550
income taxes
Net income
(loss) from    $(232)   10,841      2,408      $13,017  $(4,126) $9,778     $3,968    $9,620
continuing
operations
                                                                                          
Net income
(loss) per
share from
continuing                                                                                 
operations
available to
common
stockholders
Basic income
(loss) per
share from     $(0.01)                         $0.46    $(0.14)                         $0.33
continuing
operations
                                                                                          
Diluted income
(loss) per
share from     $(0.01)                         $0.45    $(0.14)                         $0.31
continuing
operations
                                                                                          
                                                                                          
Weighted
average shares                                                                             
outstanding
Basic         28,348                           28,348    28,974                           28,974
Diluted       28,348                           28,896    28,974                           30,916
                                                                                          
                                                                                          
Note: During the year ended December 31, 2011, the Company recorded the results of operations and financial
position of its Bizzy subsidiary as discontinued operations. Accordingly, related prior-period amounts have
been reclassified to conform to the current period presentation.

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, in the case of the acquisition of SMB:LIVE, the deferred cash
consideration) and amounts included in other non-operating income or expense.

(2) Underclassmen Expense is a number the Company calculates to approximate
its investment in Underclassmen and is comprised of the selling and marketing
expenses allocated to Underclassmen during a reporting period. The amount
includes the direct salaries and allocated benefits of the Underclassmen
(excluding commissions), training and sales organization expenses including
depreciation allocated based on relative headcount and marketing expenses
allocated based on relative revenue.

(3) Stock-based Compensation Related Expense:Includes stock-based
compensation expense and the related adjustment to amortization of capitalized
software development costs.

(4) Acquisition related costs, including the amortization and any impairment
of acquired intangibles 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.

(5) The financial statements as of and for the periods ending December 31,
2011 have been revised to reflect the correction of immaterial errors related
to the application of stock option forfeiture rates in prior periods (as
described in Footnote 9 in the Notes to Condensed Consolidated Financial
Statements in our Form 10-Q as of September 30, 2012). This resulted in an
increase in stock-based compensation expense of $157,000within General and
Administrative expense on the Unaudited Statement of Operations, with a
corresponding increase in Net loss. The cumulative impact of $610,000 has been
adjusted to Additional paid-in-capital and Accumulated deficit on the Balance
Sheet.


CONTACT: Investor Relations:
         Alex Wellins
         The Blueshirt Group
         (415) 217-5861
         alex@blueshirtgroup.com

         Media Contact:
         Jason Treu
         Vice President of Public Relations
         ReachLocal, Inc.
         (214) 294-0307
         jason.treu@reachlocal.com

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