ReachLocal Reports First Quarter 2013 Results

ReachLocal Reports First Quarter 2013 Results

         International Growth of 41%; Expanding to Austria and Russia

      ClubLocal San Francisco Launch; ReachCommerce Beta On Track for Q2

WOODLAND HILLS, Calif., May 7, 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 first
quarter ended March 31, 2013.

Q1 Highlights

  *Year-over-year revenue growth of 17%, highlighted by 41% growth in
    international markets and 19% growth in the Direct Local channel
  *International revenue expanded to 32% of revenue, up from 26% a year ago
  *Adjusted EBITDA grew 72% to $6.9 million, compared to $4.0 million a year
    ago
  *Year-over-year Active Advertisers grew 12% to 22,800 and Active Campaigns
    grew 13% to 34,000
  *Launched Direct Local operations in Austria
  *Repurchased 384,000 shares of stock for $5.4 million during the quarter
    under an expanded buy-back authorization, bringing the total repurchased
    to 2,507,000 shares for $24.9 million

Management Commentary

"ReachLocal posted solid first quarter results, highlighted by strong
international revenue which grew to 32% of our total revenue for the quarter,"
said Zorik Gordon, Chief Executive Officer. "The new initiatives we announced
at our analyst day on February 21, 2013 are all on track, with ClubLocal
scheduled to open in the San Francisco Bay Area in the current quarter, the
beta introduction of our ReachCommerce SaaS platform also set for this
quarter, and the launch of ReachEdge, our SaaS-based sites and marketing
automation solution, set to launch in the second half of 2013."

Quarterly Results at a Glance
(Table amounts in 000's except key metrics and per share amounts)
                                                                   
                                                   Q1 2013  Q1 2012  % Change
Revenue                                             $121,820 $104,003 17%
Net Loss                                            $(635)   $(1,006) 37%
Net Loss per Diluted Share                          $(0.02)  $(0.03)  33%
Non-GAAP Net Income                                 $2,859   $1,959   46%
Non-GAAP Net Income per Diluted Share               $0.10    $0.07    43%
Adjusted EBITDA                                     $6,918   $4,022   72%
Underclassmen Expense                               $11,494  $11,055  4%
Cash Flow from Continuing Operations                $4,704   $13,354  (65)%
Cash Flow from Operating Activities                 $4,698   $13,218  (64)%

Revenue by Channel and Geography:                                   
Direct Local Revenue                                $97,606  $81,740  19%
National Brands, Agencies and Resellers (NBAR)      $24,214  $22,263  9%
Revenue
International Revenue (included above)              $38,687  $27,527  41%
                                                                   
Key Metrics (at period end):
Active Advertisers                                  22,800   20,400   12%
Active Campaigns                                    34,000   30,100   13%
Total Upperclassmen                                 419      381      10%
Total Underclassmen                                 412      417      (1)%
Total IMCs                                          831      798      4%

Business Outlook

"We are maintaining our full-year guidance, and our second quarter outlook
reflects continued strong international performance, our planned change in
timing and mix of our Underclassmen hiring, and near-term macro-economic
challenges in the North American market," said Ross Landsbaum, Chief Financial
Officer. "We continue to invest in both the marketing services business and
our new commerce and SaaS initiatives, while also focusing on further
enhancing salesforce performance."

The Company's outlook is as follows:

Second Quarter 2013

  *Revenues in the range of $124 million to $126 million
  *Adjusted EBITDA in the range of $5 million to $6 million
  *Ending Upperclassmen headcount of 440 to 460
  *Ending Underclassmen headcount of 420 to 440
  *Ending total IMC headcount of 860 to 900

Fiscal 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 first quarter 2013 teleconference and webcast is scheduled to
begin at 2:00 p.m., Pacific Time on Tuesday, May 7, 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.

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) our success indevelopingand offering new products and services in the
highly competitive online advertising industry, (ii) our ability to expand our
product suite into software-related products, (iii) our ability to expand into
consumer-facing products; (iv) our ability to purchase media and receive
rebates from Google, Yahoo! and Microsoft under commercially reasonable terms;
(v) our ability to recruit, train and retain our Internet Marketing
Consultants; (vi) our ability to attract and retain customers; (vii) our
ability to successfully enter new markets and manage its international
expansion; (viii) the impact of worldwide economic conditions, including the
resulting effect on advertising budgets; and (ix) 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. (Nasdaq:RLOC) develops online marketing and transaction
solutions that power local commerce for SMBs, from lead generation and lead
conversion to booking and buying. Our global distribution network includes
local Internet marketing consultants and service professionals, along with
select third-party agencies and resellers throughout the United States,
Australia, Austria, Brazil, Canada, Czech Republic, Germany, Japan,
Netherlands, New Zealand, Slovakia, Poland, Russia and the United Kingdom.
ReachLocal is headquartered in Woodland Hills, Calif. Subscribe to
ReachLocal's free newsletter to receive news, tips, and other online marketing
insights.

                                                        
REACHLOCAL, INC.
UNAUDITED BALANCE SHEETS
(in thousands, except per share data)
                                                        
                                              March 31,  December 31,
                                              2013       2012
Assets                                                   
Current assets:                                          
Cash and cash equivalents                      $87,649  $92,336
Short-term investments                         574       3,149
Accounts receivable, net                       5,563     5,689
Other receivables and prepaid expenses         9,951     8,957
Total current assets                           103,737   110,131
                                                        
Property and equipment, net                    11,686    11,066
Capitalized software development costs, net    15,569    14,704
Restricted certificates of deposit             1,257     1,226
Intangible assets, net                         2,047     2,442
Otherassets                                   6,862     4,044
Goodwill                                       42,083    42,083
Total assets                                   $183,241 $185,696
                                                        
Liabilities and Stockholders' Equity                     
                                                        
Current Liabilities:                                     
Accounts payable                               $36,462  $35,297
Accrued expenses                               25,115    27,422
Deferred revenue and other current liabilities 36,472    36,304
Liabilities of discontinued operations, net    762       767
Total current liabilities                      98,811    99,790
                                                        
                                                        
Deferred rent and other liabilities            3,629     4,020
Total liabilities                              102,440   103,810
                                                        
Stockholders' Equity:                                    
Common stock                                   --       --
Receivable from stockholder                    (90)      (89)
Additional paid-in capital                     110,112   110,573
Accumulated deficit                            (27,711)  (27,076)
Accumulated other comprehensive loss           (1,510)   (1,522)
Total stockholders' equity                     80,801    81,886
Total liabilities and stockholders' equity     $183,241 $185,696
                                                        


REACHLOCAL, INC.
UNAUDITED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                                                                  
                                                        ThreeMonths Ended
                                                        March 31,
                                                        2013       2012
                                                                  
Revenue                                                  $121,820 $104,003
Cost of revenue                                          61,553    52,390
Operating expenses:                                                
Selling and marketing                                    44,699    38,543
Product and technology                                   6,176     4,333
General and administrative                               9,225     9,807
                                                                  
Total operating expenses                                 60,100    52,683
                                                                  
Income (loss) from operations                            167       (1,070)
Other income, net                                        227       203
                                                                  
Income (loss) before provision for (benefit from) income 394       (867)
taxes
Provision for income taxes                               1,029     139
                                                                  
Net loss                                                 $(635)   $(1,006)
                                                                  
                                                                  
Net loss per share, basic and diluted                    $(0.02)  $(0.03)
                                                                  
Weighted average common shares used in computation of    28,112    29,111
net loss per share, basic and diluted

Stock-based compensation, net of capitalization, and depreciation and
amortization included in above line items:
                                                                  
Stock-based compensation:                                          
Cost of revenue                                          $136     $54
Selling and marketing                                    830       300
Product and technology                                   229       249
Generaland administrative                               1,525     1,493
                                                        $2,720   $2,096
                                                                  
Depreciation and amortization:                                     
Cost of revenue                                          $219     $122
Selling and marketing                                    979       518
Product and technology                                   2,725     1,969
General and administrative                               108       355
                                                        $4,031   $2,964
                                                                  

                                                              
REACHLOCAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except per share data)
                                                 Three Months Ended March 31,
                                                 2013          2012
Cash flow from operating activities:                           
Net loss                                          $(635)      $(1,006)
Adjustments to reconcile net loss to net cash                  
provided by operating activities:
Depreciation and amortization                     4,031        2,964
Stock-based compensation                          2,720        2,096
Excess tax benefits from stock-based awards       (576)        --
Provision for doubtful accounts                   215          78
Changes in operating assets and liabilities:                   
Accounts receivable                               (122)        (222)
Other receivables and prepaid expenses            (1,024)      836
Other assets                                      (373)        (30)
Accounts payable and accrued expenses             (48)         3,530
Deferred revenue, rent and other liabilities      516          5,108
Net cash provided by operating activities,        4,704        13,354
continuing operations
Net cash used for operating activities ,          (6)          (136)
discontinued operations
Net cash provided by operating activities         4,698        13,218
                                                              
Cash flow from investing activities:                           
Additions to property, equipment and software     (5,153)      (4,490)
Acquisitions, net of acquired cash                (363)        (1,035)
Investment in partnership                         (2,500)      --
Purchases of certificates of deposit and short    (29)         --
term investments
Maturities ofcertificates of deposits and        2,578        383
short-term investments
Net cash used in investing activities             (5,467)      (5,142)
                                                              
Cash flow from financing activities:                           
Proceeds from exercise of stock options           1,441        11
Excess tax benefits from stock-based awards       576          --
Common stock repurchases                          (5,397)      (2,786)
Net cash used in financing activities             (3,380)      (2,775)
                                                              
Effect of exchange rate changes on cash and cash  (538)        510
equivalents
                                                              
Net change in cash and cash equivalents           (4,687)      5,811
Cash and cash equivalents—beginning of period     92,336       84,525
                                                              
Cash and cash equivalents—end of period           $87,649     $90,336
                                                              

                                                                  
                                                         Three Months Ended
                                                         March 31,
                                                         2013      2012
Reconciliation of Adjusted EBITDA to income (loss) from            
operations
(in thousands)                                                     
Income (loss) from operations                             $167    $(1,070)
Add:                                                               
Depreciation and amortization                             4,031    2,964
Stock-based compensation                                  2,720    2,096
Acquisition and integration costs                         --       32
Adjusted EBITDA (1)                                       $6,918  $4,022
                                                                  
Underclassmen Expense (2)                                 $11,494 $11,055
                                                                  

                                                                                          
REACHLOCAL, Inc.                                                                            
Reconciliation of GAAP to Non-GAAP Operating Results for Three Months Ended March 31,
2013 and 2012
(in thousands, except per share                                                   
amounts)
                                                                                          
                                                                                          
              Three Months Ended March 31, 2013              Three Months Ended March 31, 2012
                        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        $121,820                        $121,820 $104,003 --         --        $104,003
                                                                                          
Cost of        61,553    (136)       (8)        61,409    52,390    (54)        (11)       52,325
revenue
                                                                                          
Operating                                                                                  
expenses:
Sales and      44,699    (830)       --        43,869    38,543    (300)       --        38,243
marketing
Product and    6,176     (555)       (391)      5,230     4,333     (584)       (315)      3,434
technology
General and
administrative 9,225     (1,525)                7,700     9,807     (1,493)     (192)      8,122
(5)
Total
Operating      60,100    (2,910)     (391)      56,799    52,683    (2,377)     (507)      49,799
expenses
Income (loss)
from           167       3,046       399        3,612     (1,070)   2,431       518        1,879
operations
Other income,  227                              227       203       --         --        203
net
Income (loss)
before
provision for  394       3,046       399        3,839     (867)     2,431       518        2,082
(benefit from)
income taxes
Provision for
(benefit from) 1,029                 (49)       980       139       --         (16)       123
income taxes
Net income     $(635)   3,046       448        $2,859   $(1,006) 2,431       534        $1,959
(loss)
                                                                                          
Net income
(loss) per                                                                                 
share
Basic income
(loss) per     $(0.02)                         $0.10    $(0.03)                         $0.07
share
                                                                                          
Diluted income
(loss) per     $(0.02)                         $0.10    $(0.03)                         $0.07
share
                                                                                          
Weighted
average shares                                                                             
outstanding
Basic          28,112                           28,112    29,111                           29,111
Diluted        28,112                           29,534    29,111                           29,612
                                                                                          

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, 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.

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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