ReachLocal Reports Third Quarter 2013 Results

ReachLocal Reports Third Quarter 2013 Results

  Revenue Grew 12%, Driven by International Revenue Growth of 29% (38% on a
                           Constant Currency Basis)

            Chief Revenue Officer Josh Claman Appointed President

WOODLAND HILLS, Calif., Nov. 5, 2013 (GLOBE NEWSWIRE) -- ReachLocal, Inc.
(Nasdaq:RLOC), a leader in powering local online marketing for small-to-medium
sized businesses (SMBs), today reported financial results for the third
quarter ended September 30, 2013.

Q3 Highlights

  *Year-over-year revenue grew 12% (15% on a constant currency basis)
    highlighted by 29% growth in international markets (38% on a constant
    currency basis) and 14% growth in the Direct Local channel (17% on a
    constant currency basis).
  *International revenue expanded to 34% of revenue (35% on a constant
    currency basis), up from 29% a year ago.
  *ReachEdge became available throughout the US on September 21, 2013 and has
    been sold to more than 500 customers.
  *Adjusted EBITDA was $7.3 million, which includes significant product and
    new market investment as well as the one-time costs associated with the
    departure of the company's former CEO.
  *Year-over-year Active Advertisers and Active Campaigns each grew 11% to
    24,600 and 36,400, respectively.
  *Launched Direct Local operations in Belgium, increasing ReachLocal's
    global footprint to a total of 16 countries.
  *Repurchased 475,000 shares of stock for $5.9 million during the quarter
    under the company's buy-back authorization.

Management Commentary

"We are pleased by our solid third-quarter results highlighted by 15% revenue
growth on a constant-currency basis," said David Carlick, interim CEO and
chairman of the board. "We are excited by the initial uptake of our new
ReachEdge marketing product and are particularly encouraged by the interest
level and engagement of our clients with this new addition to the ReachLocal
product set."

Carlick added, "we are also pleased to announce that Josh Claman will become
the President of ReachLocal. As Chief Revenue Officer, Josh has led our
continued global expansion and our efforts towards enhancing and improving our
go-to-market strategies. With his more than 25 years of experience building
and leading multi-billion dollar sales and service organizations across Asia,
Europe and the Americas, including with Dell, Josh is well suited to help lead
the company in the next phase of its global growth."

"On behalf of the board, I would like to thank Nathan Hanks, who has resigned
as an officer and director of the Company. Nathan helped found the business,
drove our rapid growth and positioned us for the future. His service,
dedication and contributions to ReachLocal are greatly appreciated," Carlick
concluded.

Quarterly Results at a Glance

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

                                                   Q3 2013  Q3 2012  % Change
Revenue                                             $133,148 $118,891 12%
Net Income (Loss)                                   $(1,122) $836     (234)%
Net Income (Loss) per Diluted Share                 $(0.04)  $0.03    (233)%
Non-GAAP Net Income                                 $2,630   $4,458   (41)%
Non-GAAP Net Income per Diluted Share               $0.09    $0.15    (40)%
Adjusted EBITDA                                     $7,302   $7,221   1%
Underclassmen Expense                               $12,900  $11,441  13%
Cash Flow from Continuing Operations                $13,924  $9,503   47%
Cash Flow from Operating Activities                 $13,924  $9,499   47%

Revenue by Channel and Geography:                                   
Direct Local Revenue                                $106,207 $93,537  14%
National Brands, Agencies and Resellers (NBAR)      $26,941  $25,354  6%
Revenue
International Revenue (included above)              $44,647  $34,679  29%
                                                                   
Key Metrics (at period end):
Active Advertisers                                  24,600   22,100   11%
Active Campaigns                                    36,400   32,900   11%
Total Upperclassmen                                 440      407      8%
Total Underclassmen                                 517      450      15%
Total IMCs                                          957      857      12%

Business Outlook

"In the fourth quarter we expect to see continuedgrowth in our international
markets, partially offset by continued Fx headwinds, and continued stability
in North America, subject to our typical seasonality. This should result in
annual growth for 2013 of approximately 13%, or 15% on a constant currency
basis, at the midpoint of our guidance range," said Ross Landsbaum, Chief
Financial Officer.

The Company's outlook is as follows:

Fourth Quarter 2013

  *Revenue in the range of $133 million to $136 million
  *Adjusted EBITDA in the range of $8.8 million to $9.8 million

Fiscal Year 2013

  *Revenue in the range of $515 million to $518 million
  *Adjusted EBITDA in the range of $30 million to $31 million
  *Ending Upperclassmen headcount of 460 to 480
  *Ending Underclassmen headcount of 460 to 480
  *Ending total IMC headcount of 920 to 960

Conference Call and Webcast Information

The ReachLocal third quarter 2013 teleconference and webcast is scheduled to
begin at 2:00 p.m., Pacific Time on Tuesday, November 5, 2013. To participate
on the live call, analysts and investors should dial 1-877-941-1427 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, Adjusted EBITDA and constant currency
revenues.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. Constant currency revenues are determined by
recalculating net revenues denominated in currencies other than U.S. Dollars
in the current fiscal period using average exchange rates for that particular
currency during the corresponding financial period of the prior year. Where
constant currency revenue is presented for a period longer than one fiscal
quarter, it is computed as the sum of the amount separately calculated for
each quarter during that period.

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,
Canada, Australia, Austria, Belgium, Brazil, Czech Republic, Germany, Japan,
the Netherlands, New Zealand, Poland, Russia, Slovakia, 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)                                      
                                                           
                                              September 30, December 31,
                                               2013          2012
Assets                                                      
Current Assets:                                             
Cash and cash equivalents                     $84,989     $92,336
Short-term investments                        553          3,149
Accounts receivable, net                      10,099       5,689
Other receivables and prepaid expenses        14,404       8,957
Total current assets                          110,045      110,131
                                                           
Property and equipment, net                   12,136       11,066
Capitalized software development costs, net   18,795       14,704
Restricted certificates of deposit            1,697        1,226
Intangible assets, net                        1,525        2,442
Otherassets                                   9,254        4,044
Goodwill                                      42,083       42,083
Total assets                                  $195,535    $185,696
                                                           
Liabilities and Stockholders' Equity                        
Current Liabilities:                                        
Accounts payable                              $47,145     $35,297
Accrued expenses                              30,647       27,422
Deferred revenue and other current liabilities 37,444       36,304
Liabilities of discontinued operations, net    794          767
Total current liabilities                     116,030      99,790
                                                           
                                                           
Deferred rent and other liabilities            4,626        4,020
Total liabilities                             120,656      103,810
                                                           
Stockholders' Equity:                                       
Common stock                                   --          --
Receivable from stockholder                   (78)         (89)
Additional paid-in capital                     107,078      110,573
Accumulated deficit                            (28,974)     (27,076)
Accumulated other comprehensive loss          (3,147)      (1,522)
Total stockholders' equity                    74,879       81,886
Total liabilities and stockholders' equity    $195,535    $185,696

                                                        
REACHLOCAL, INC.                                                          
UNAUDITED STATEMENTS OF OPERATIONS                                        
(in thousands, except per share data)                                     
                                               
                        ThreeMonthsEnded      NineMonthsEnded
                         September 30,           September 30,
                        2013        2012        2013       2012
                                                        
Revenue                 $133,148  $118,891  $382,023 $335,106
Cost of revenue          66,764     59,500     192,564   167,546
Operating expenses:                                      
Selling and marketing    48,980     42,860     140,470   122,579
Product and technology   5,901      5,448      17,574    14,180
General and              11,376     9,966      30,588    30,241
administrative
                                                        
Total operating          66,257     58,274     188,632   167,000
expenses
                                                        
Income from operations   127        1,117      827       560
Other income, net       181        33         522       338
                                                        
Income before provision  308        1,150      1,349     898
for income taxes
Provision for income     1,430      314        3,247     736
taxes
                                                        
Net income (loss)        $(1,122)  $836      $(1,898) $162
                                                        
                                                        
Net income (loss) per                                    
share
Basic                    $(0.04)   $0.03     $(0.07)  $0.01
Diluted                  $(0.04)   $0.03     $(0.07)  $0.01
                                                        
Weighted average common
shares used in                                           
computation of net
income (loss) per share
Basic                    27,507     28,403     27,843    28,379
Diluted                  27,507     29,342     27,843    28,902
                                                                         
Stock-based compensation, net of capitalization,
and depreciation and amortization included in              
above line items:
                                                        
Stock-based                                              
compensation:
Cost of revenue         $176      $73       $471     $198
Sellingand marketing   765        437        2,396     1,122
Productand technology  163        488        425       868
Generaland              2,084      1,597      5,118     4,741
administrative
                        $3,188    $2,595    $8,410   $6,929
                                                        
Depreciation and                                         
amortization:
Cost of revenue         $182      $131      $589     $401
Sellingand marketing   662        457        2,330     1,576
Productand technology  2,790      2,385      8,277     6,435
Generaland              353        536        810       1,257
administrative
                        $3,987    $3,509    $12,006  $9,669

                                                          
REACHLOCAL, INC.                                                            
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS                            
(in thousands, except per share data)                                       
                                          Nine Months Ended September 30,
                                          2013             2012
Cash flow from operating activities:                       
Net income (loss)                          $(1,898)       $162
Adjustments to reconcile net income (loss)
to net cash provided by operating                          
activities:
Depreciation and amortization             12,006          9,669
Stock-based compensation                   8,410           6,929
Excess tax benefits from stock-based       (1,127)         --
awards
Provision for doubtful accounts           513             18
Changes in operating assets and                            
liabilities:
Accounts receivable                       (4,908)         (679)
Other receivables and prepaid expenses     (5,448)         (1,291)
Other assets                              (1,509)         (216)
Accounts payable and accrued expenses      16,777          10,510
Deferred revenue, rent and other           2,919           6,958
liabilities
Net cash provided by operating activities, 25,735          32,060
continuing operations
Net cash used for operating activities,    --             (182)
discontinued operations
Net cash provided by operating activities 25,735          31,878
                                                          
Cash flow from investing activities:                       
Additions to property, equipment and       (16,148)        (12,067)
software
Acquisitions, net of acquired cash         (363)           (4,120)
Loan to franchisee                         (1,221)         (1,863)
Investment in partnership                  (2,500)         --
Purchases of certificates of deposit and   (563)           (8,447)
short-term investments
Maturities ofcertificates of deposits and 2,566           466
short-term investments
Net cash used in investing activities      (18,229)        (26,031)
                                                          
Cash flow from financing activities:                       
Proceeds from exercise of stock options   5,333           1,639
Excess tax benefits from stock-based       1,127           --
awards
Common stock repurchases                   (18,904)        (5,395)
Net cash used in financing activities     (12,444)        (3,756)
                                                          
Effect of exchange rate changes on cash    (2,409)         94
and cash equivalents
                                                          
Net change in cash and cash equivalents   (7,347)         2,185
Cash and cash equivalents—beginning of     92,336          84,525
period
                                                          
Cash and cash equivalents—end of period   $84,989        $86,710

                                                         
REACHLOCAL, INC.                                                          
Reconciliation of Adjusted EBITDA to Income from Operations               
(in thousands)                                                            
                                                         
                              Three Months Ended  Nine Months Ended
                               September 30,       September 30,
                              2013      2012      2013      2012
Income from operations         $127    $1,117  $827    $560
Add:                                                      
Depreciation and amortization 3,987    3,509    12,006   9,669
Stock-based compensation       3,188    2,595    8,410    6,929
Acquisition and integration    --       --       --       32
costs
Adjusted EBITDA (1)            $7,302  $7,221  $21,243 $17,190
                                                         
                                                         
Underclassmen Expense (2)      $12,900 $11,441 $35,731 $33,824

                                                                                          
REACHLOCAL, Inc.                                                                                                    
Reconciliation of GAAP to Non-GAAP Operating Results for Three Months Ended September 30, 2013 and 2012          
(in thousands, except per share amounts)                                                                            
                                                                                          
              Three Months Ended September 30, 2013          Three Months Ended September 30, 2012
                        Adjustments:                                 Adjustments:             
               GAAP       Stock-based                         GAAP       Stock-based
               Continuing Compensation                        Continuing Compensation
              Operations Related      Acquisition Non-GAAP   Operations Related      Acquisition Non-GAAP
               "As        Expense (3)  Related     Operating  "As        Expense (3)  Related     Operating
               Reported"               Costs (4)   Results    Reported"               Costs (4)   Results
Revenue        $133,148 --         --        $133,148 $118,891 --         --        $118,891
                                                                                          
Cost of        66,764    (177)       --        66,587    59,500    (72)        (15)       59,413
revenue
                                                                                          
Operating                                                                                  
expenses:
Sales and      48,980    (765)       --        48,215    42,860    (438)       --        42,422
marketing
Product and    5,901     (402)       (259)      5,240     5,448     (824)       (456)      4,168
technology
General and    11,376    (2,084)     --        9,292     9,966     (1,597)     (152)      8,217
administrative
Total
Operating      66,257    (3,251)     (259)      62,747    58,274    (2,859)     (608)      54,807
expenses
Income from    127       3,428       259        3,814     1,117     2,931       623        4,671
operations
Other income,  181       --         --        181       33        --         --        33
net
Income before
provision for  308       3,428       259        3,995     1,150     2,931       623        4,704
(benefit from)
income taxes
Provision for
(benefit from) 1,430     --         (65)       1,365     314       --         (68)       246
income taxes
Net income     $(1,122) 3,428       324        $2,630   $836     2,931       691        $4,458
(loss)
                                                                                          
Net income
(loss) per                                                                                 
share
Basic income
(loss) per     $(0.04)                         $0.10    $0.03                           $0.16
share
                                                                                          
Diluted income
(loss) per     $(0.04)                         $0.09    $0.03                           $0.15
share
                                                                                          
Weighted
average shares                                                                             
outstanding
Basic         27,507                           27,507    28,403                           28,403
Diluted       27,507                           28,652    29,342                           29,342

                                                                                          
REACHLOCAL, Inc.                                                                                                    
Reconciliation of GAAP to Non-GAAP Operating Results for Nine Months Ended September 30, 2013 and 2012           
(in thousands, except per share amounts)                                                                            
                                                                                          
              Nine Months Ended September 30, 2013           Nine Months Ended September 30, 2012
                        Adjustments:                                 Adjustments:             
               GAAP       Stock-based                         GAAP       Stock-based
               Continuing Compensation                        Continuing Compensation
              Operations Related      Acquisition Non-GAAP   Operations Related      Acquisition Non-GAAP
               "As        Expense (3)  Related     Operating  "As        Expense (3)  Related     Operating
               Reported"               Costs (4)   Results    Reported"               Costs (4)   Results
Revenue        $382,023 --         --        $382,023 $335,106 --         --        $335,106
                                                                                          
Cost of        192,564   (472)       (21)       192,071   167,546   (197)       (37)       167,312
revenue
                                                                                          
Operating                                                                                  
expenses:
Sales and      140,470   (2,396)     --        138,074   122,579   (1,123)     --        121,456
marketing
Product and    17,574    (1,332)     (908)      15,334    14,180    (1,873)     (1,009)    11,298
technology
General and    30,588    (5,118)     --        25,470    30,241    (4,741)     (536)      24,964
administrative
Total
Operating      188,632   (8,846)     (908)      178,878   167,000   (7,737)     (1,545)    157,718
expenses
Income from    827       9,318       929        11,074    560       7,934       1,582      10,076
operations
Other income,  522       --         --        522       338       --         --        338
net
Income before
provision for  1,349     9,318       929        11,596    898       7,934       1,582      10,414
(benefit from)
income taxes
Provision for
(benefit from) 3,247     --         (152)      3,095     736       --         (141)      595
income taxes
Net income     $(1,898) 9,318       1,081      $8,501   $162     7,934       1,723      $9,819
(loss)
                                                                                          
Net income
(loss) per                                                                                 
share
Basic income
(loss) per     $(0.07)                         $0.31    $0.01                           $0.35
share
                                                                                          
Diluted income
(loss) per     $(0.07)                         $0.29    $0.01                           $0.34
share
                                                                                          
Weighted
average shares                                                                             
outstanding
Basic          27,843                           27,843    28,379                           28,379
Diluted        27,843                           29,303    28,902                           28,902

                                                        
REACHLOCAL, INC.                                                          
Reconciliation of GAAP to Constant Currency Revenue                       
(in thousands)                                                            
                                               
                          ThreeMonthsEnded    NineMonthsEnded
                           September 30,         September 30,
                          2013       2012       2013       2012
                                                        
North American GAAP        $88,501  $84,212  $257,941 $243,364
Revenue
Constant Currency          177       --       251       --
Adjustment
North American Revenue at  $88,678  $84,212  $258,192 $243,364
Constant Currency (5)
                                                        
As Reported Growth Rates   5.1%       12.2%      6.0%       13.7%
Constant Currency Growth   5.3%       12.2%      6.1%       13.7%
Rates
                                                        
International GAAP Revenue $44,647  $34,679  $124,081 $91,742
Constant Currency          3,148     --       4,640     --
Adjustment
International Revenue at   $47,795  $34,679  $128,721 $91,742
Constant Currency (5)
                                                        
As Reported Growth Rates   28.7%      47.2%      35.2%      49.3%
Constant Currency Growth   37.8%      47.2%      40.3%      49.3%
Rates
                                                        
Consolidated GAAP Revenue  $133,148 $118,891 $382,023 $335,106
Constant Currency          3,325     --       4,891     --
Adjustment
Consolidated Revenue at    $136,473 $118,891 $386,914 $335,106
Constant Currency (5)
                                                        
As Reported Growth Rates   12.0%      20.5%      14.0%      21.7%
Constant Currency Growth  14.8%      20.5%      15.5%      21.7%
Rates

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.

(5) Constant currency revenues are determined by recalculating net revenues
denominated in currencies other than U.S. Dollars in the current fiscal period
using average exchange rates for that particular currency during the
corresponding financial period of the prior year. The company uses this
non-GAAP measure to evaluate performance on a comparable basis excluding the
impact of foreign currency fluctuations. Where constant currency revenue is
presented for a period longer than one fiscal quarter, it is computed as the
sum of the amount separately calculated for each quarter during that period.

CONTACT: Investor Relations:
         Alex Wellins
         The Blueshirt Group
         (415) 217-5861
         alex@blueshirtgroup.com
        
         Media Contact:
         Dana Harris
         Vice President, Corporate Communications
         ReachLocal, Inc.
         (818) 936-9904
         dana.harris@reachlocal.com
 
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