Company Exits 2015 with a $22.5 Million Annual Revenue Run Rate for its Subscription Products

WOODLAND HILLS, Calif., Feb. 25, 2016 (GLOBE NEWSWIRE) -- ReachLocal, Inc. (NASDAQ:RLOC), a leader in powering online marketing for local businesses, today reported financial results for the fourth quarter and 2015.

“Returning the company to Adjusted EBITDA profitability was a stated goal for ReachLocal as we entered 2015 and I’m pleased that we delivered on that goal, both for the fourth quarter and the full year.  We continued to demonstrate strong bottom-line performance and reductions in operating expenses, resulting in $4.3 million of Adjusted EBITDA for the fourth quarter,” said Sharon Rowlands, chief executive officer.  “While our return to revenue growth is taking longer than expected, we saw improved productivity metrics from our sales force, our subscription revenue is growing and we believe our web partner program will drive further adoption of our ReachEdge marketing automation software in the future.”

FY 15 Business Highlights

• Undertook a company-wide cost saving initiative that resulted in a reduction of operating expenses by 27% in 2015 over 2014 and run-rate operating expenses exiting 2015 were $65 million below the end of 2014.
   
• Exited 2015 with $22.5 million of annual revenue run-rate for subscription products, including the results from 53% year-over-year growth in ReachEdge units.
   
• Made progress in improving the economics of international operations, with several markets expected to be self-sustaining during 2016, and exited direct sales in the UK market.
   
• Entered into financing agreements with affiliates of VantagePoint Capital Partners and Hercules Technology Growth Capital to provide $30 million of additional liquidity to support stability and growth initiatives and ended 2015 with cash, cash equivalents and short term investments of $34.2 million, including $15 million of restricted cash under the Hercules loan agreement.
   
• Revised terms with key publishers to improve the ability to earn performance bonuses following up on winning top honors with Google’s Innovator Award for ReachEdge™ in Canada, Google's Quality Score Champion Award for North America, Australia/New Zealand and Latin America, and Highest Customer Service Satisfaction and Highest AdWords Account Performance Satisfaction in Australia/New Zealand.

Quarterly Results at a Glance

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

			Q4 2015			Q4 2014
Revenue			$	88,977		$	109,009
Net Loss from Continuing Operations			$	(2,504	)	$	(17,737	)
Net Loss from Continuing Operations per Diluted Share			$	(0.09	)	$	(0.62	)
Net Loss			$	(2,504	)	$	(17,458	)
Net Loss per Diluted Share			$	(0.09	)	$	(0.61	)
Non-GAAP Net Gain (Loss)			$	281		$	(15,000	)
Non-GAAP Net Gain (Loss) per Diluted Share			$	0.01		$	(0.52	)
Adjusted EBITDA			$	4,284		$	(5,924	)
Cash Flow from Operating Activities, Continuing Operations			$	(337	)	$	4,474
Cash Flow from Operating Activities			$	(312	)	$	4,961
The strengthening of the US Dollar had a significant impact on revenue.  Revenue for the fourth quarter of 2015 on a constant currency basis would have been $94.1 million.
	Q4 2015					Q4 2014
Revenue by Channel (North America):
Direct Local	$	43,903				$	47,408
National Brands, Agencies and Resellers (NBAR)	$	15,564				$	20,352
Revenue by Channel (International):
Direct Local	$	26,064				$	37,771
National Brands, Agencies and Resellers (NBAR)	$	3,446				$	3,478

2015 Annual Results and Key Metrics at a Glance

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

			FY 2015			FY 2014
Revenue			$	382,597		$	474,921
Net Loss from Continuing Operations			$	(61,515	)	$	(45,660	)
Net Loss from Continuing Operations per Diluted Share			$	(2.11	)	$	(1.60	)
Net Loss			$	(61,515	)	$	(45,010	)
Net Loss per Diluted Share			$	(2.11	)	$	(1.58	)
Non-GAAP Net Loss			$	(32,820	)	$	(32,558	)
Non-GAAP Net Loss per Diluted Share			$	(1.12	)	$	(1.14	)
Adjusted EBITDA			$	2,842		$	(9,410	)
Cash Flow from Operating Activities, Continuing Operations			$	(20,038	)	$	(1,403	)
Cash Flow from Operating Activities			$	(20,083	)	$	(2,318	)
Our Net Loss from Continuing Operations reflects a non-cash goodwill impairment charge of $27.8 million in the third quarter related to our Asia-Pacific reporting unit.
The strengthening of the US Dollar had a significant impact on revenue.  Revenue for fiscal 2015 on a constant currency basis relative to fiscal 2014 would have been $408.5 million.
	FY 2015					FY 2014
Revenue by Channel (North America):
Direct Local	$	181,022				$	208,459
National Brands, Agencies and Resellers (NBAR)	$	68,202				$	84,637
Revenue by Channel (International):
Direct Local	$	118,537				$	164,363
National Brands, Agencies and Resellers (NBAR)	$	14,836				$	17,462
Key Metrics (at Period End):
Active Clients		17,500					20,800
Active Product Units		27,900					31,400

Business Outlook

The Company’s outlook for the first quarter of 2016 is as follows:

• Revenue in the range of $77 to $79 million.
• Adjusted EBITDA in the range of $1.8 to $2.8 million.

Conference Call and Webcast Information

The ReachLocal fourth quarter and 2015 results teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time on Thursday, February 25, 2016. To participate on the live call, analysts and investors should dial 1-888-466-4462, or outside the U.S. 719-325-2472, at least 10 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 website 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 Active Clients and Active Product Units, as management believes that these metrics are important gauges of the progress of the Company’s performance.

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 goodwill), restructuring charges, and other non-operating income or expense. As a result, reported Adjusted EBITDA reflects that ClubLocal operations were determined to be discontinued operations during the fourth quarter of 2013, and that the Company had fully withdrawn during the first quarter 2014.

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

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

Active Product Units is a number we calculate to approximate the number of individual products, licenses or services we are providing to Active Clients. For example, if we were performing both ReachSearch and ReachDisplay campaigns for a client who also licenses ReachEdge, we consider that three Active Product Units. Similarly, if a client purchases ReachSearch campaigns for two different products or purposes, we consider that two Active Product Units. Numbers are rounded to the nearest hundred.

Caution Concerning Forward-Looking Statements

Statements in this press release regarding the Company’s outlook 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 increase productivity of its sales operations; (ii) the Company’s ability to obtain the cost savings contemplated by its cost reduction initiatives and maintain sufficient liquidity; (iii) the Company’s ability to purchase media and receive rebates from Google, Yahoo! and Microsoft under commercially reasonable terms; (iv) the Company’s ability to recruit, train and retain its salespeople; (v) the Company’s ability to attract and retain customers and compete with a wide range of competitors on both price and product offerings; (vi) the Company’s ability to satisfy the covenants under its term loan; (vii) the availability of banking and payment processing services from financial services providers; (viii) the Company’s ability to manage its international operations; (ix) the Company’s ability to successfully develop and offer new products and services in the highly competitive online advertising industry; (x) the impact of worldwide economic conditions, including the resulting effect on advertising budgets; and (xi) the Company’s 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) helps local businesses grow and operate their business better with leading technology and expert service for our clients’ lead generation and conversion. ReachLocal is headquartered in Woodland Hills, Calif. and operates in four regions: Asia-Pacific, Europe, Latin America and North America.

For more information please visit ReachLocal at www.reachlocal.com, follow us at www.reachlocal.com/social or email info@reachlocal.com. 

REACHLOCAL, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
	December 31,				December 31,
		2015				2014
Assets
Current Assets:
Cash and cash equivalents	$	18,833			$	43,720
Short-term investments		359				904
Accounts receivable, net		6,278				7,844
Prepaid expenses and other current assets		8,296				7,855
Total current assets		33,766				60,323
Property and equipment, net		13,550				19,639
Capitalized software development costs, net		20,691				21,555
Restricted cash- term loan		15,000				-
Restricted cash		3,502				3,589
Intangible assets, net		4,011				5,492
Non-marketable investments		9,000				9,000
Other  assets		2,547				3,601
Goodwill		20,129				48,189
Total assets	$	122,196			$	171,388
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	33,581			$	44,874
Accrued compensation and benefits		14,478				15,972
Deferred revenue		22,985				29,016
Accrued restructuring		3,329				3,196
Term loan		8,352				-
Capital lease		698				624
Other current liabilities		10,166				12,316
Liabilities of discontinued operations		804				850
Total current liabilities		94,393				106,848
Term loan		16,194				-
Convertible notes – related party		5,000				-
Capital lease		484				1,103
Deferred rent and other liabilities		8,111				10,513
Total liabilities		124,182				118,464
Stockholders’ Equity:
Common stock		-				-
Receivable from stockholder		(55	)			(65	)
Additional paid-in capital		140,398				132,080
Accumulated deficit		(136,084	)			(74,569	)
Accumulated other comprehensive loss		(6,245	)			(4,522	)
Total stockholders’ equity		(1,986	)			52,924
Total liabilities and stockholders’ equity	$	122,196			$	171,388

 

REACHLOCAL, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
	Three Months  Ended								Twelve Months  Ended
	December 31,								December 31,
		2015				2014				2015				2014
Revenue	$	88,977			$	109,009			$	382,597			$	474,921
Cost of revenue		48,131				61,708				213,409				252,721
Operating expenses:
Selling and marketing		27,002				42,334				126,966				182,720
Product and technology		6,964				6,989				28,414				27,510
General and administrative		9,399				11,278				39,332				52,155
Restructuring charges		1,975				1,360				7,546				5,927
Impairment of goodwill		-				-				27,800				-
Total operating expenses		45,340				61,961				230,058				268,312
Operating loss		(4,494	)			(14,660	)			(60,870	)			(46,112	)
Gain on deconsolidation of subsidiaries, net		2,853				-				2,853				-
Interest expense		(1,027	)			(36	)			(2,790	)			(67	)
Other income (expense), net		79				381				(339	)			1,003
Loss from continuing operations before income taxes		(2,589	)			(14,315	)			(61,146	)			(45,176	)
Income tax provision (benefit)		(85	)			3,422				369				484
Loss from continuing operations		(2,504	)			(17,737	)			(61,515	)			(45,660	)
Income from discontinued operations, net of income taxes		-				279				-				650
Net loss	$	(2,504	)		$	(17,458	)		$	(61,515	)		$	(45,010	)
Net loss per share:
Basic:
Loss from continuing operations	$	(0.09	)		$	(0.62	)		$	(2.11	)		$	(1.60	)
Income from discontinued operations, net of income taxes		-				0.01				-				0.02
Net loss per share	$	(0.09	)		$	(0.61	)		$	(2.11	)		$	(1.58	)
Diluted:
Loss from continuing operations	$	(0.09	)		$	(0.62	)		$	(2.11	)		$	(1.60	)
Income from discontinued operations, net of income taxes		-				0.01				-				0.02
Net loss per share	$	(0.09	)		$	(0.61	)		$	(2.11	)		$	(1.58	)
Weighted average common shares used in the computation of income (loss) per share:
Basic		29,336				28,765				29,174				28,461
Diluted		29,336				28,765				29,174				28,461
Stock-based compensation, net of capitalization, and depreciation and amortization included in above line items:
Stock-based compensation:
Cost of revenue	$	82			$	197			$	487			$	932
Selling and marketing		204				607				1,510				2,959
Product and technology		234				217				725				825
General and administrative		1,595				1,521				5,949				8,544
	$	2,115			$	2,542			$	8,671			$	13,260
Depreciation and amortization:
Cost of revenue	$	186			$	167			$	735			$	674
Selling and marketing		691				986				3,039				3,041
Product and technology		3,305				3,184				13,910				11,730
General and administrative		504				462				1,997				1,949
	$	4,686			$	4,799			$	19,681			$	17,394

 

REACHLOCAL, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except per share data)
	Twelve Months Ended December 31,
		2015				2014
Cash flows from operating activities:
Loss from continuing operations	$	(61,515	)		$	(45,660	)
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:
Depreciation and amortization		19,681				17,394
Goodwill impairment		27,800				-
Stock-based compensation		8,671				13,260
Restructuring charges		7,546				5,927
Gain on deconsolidation of subsidiary		(2,853	)			-
Loss on disposal of fixed assets		168				-
Provision for doubtful accounts		260				1,649
Contingent consideration fair value adjustment		-				(416	)
Non-cash interest expense, net		641				17
Deferred taxes, net		93				873
Changes in operating assets and liabilities:
Accounts receivable		703				(460	)
Prepaid expenses and other current assets		(1,077	)			701
Other assets		222				(669	)
Accounts payable		(9,185	)			9,081
Accrued compensation and benefits		(151	)			(557	)
Deferred revenue		(4,541	)			(3,400	)
Accrued restructuring		(6,510	)			(2,564	)
Deferred rent and other liabilities		9				3,421
Net cash used in operating activities, continuing operations		(20,038	)			(1,403	)
Net cash used in operating activities, discontinued operations		(45	)			(915	)
Net cash used in operating activities		(20,083	)			(2,318	)
Cash flows from investing activities:
Additions to property, equipment and software		(13,894	)			(25,735	)
Acquisitions, net of acquired cash		-				(7,089	)
Investments in non-marketable investments		-				(2,000	)
Maturities of  certificates of deposits and short-term investments		124				-
Purchases of  certificates of deposits and short-term investments		-				(474	)
Net cash used in investing activities		(13,770	)			(35,298	)
Cash flows from financing activities:
Proceeds from term loan, net		24,700				-
Restricted cash- term loan		(15,000	)			-
Issuance of convertible notes to related party		5,000				-
Payment of deferred and contingent consideration		(529	)			-
Proceeds from exercise of stock options		7				6,438
Principal payments on capital lease obligations		(752	)			(259	)
Term loan costs		(542	)			-
Common stock repurchases		(7	)			(69	)
Net cash provided by financing activities		12,877				6,110
Effect of exchange rate changes on cash and cash equivalents		(3,911	)			(2,288	)
Net change in cash and cash equivalents		(24,887	)			(33,794	)
Cash and cash equivalents—beginning of period		43,720				77,514
Cash and cash equivalents—end of period	$	18,833			$	43,720

 

REACHLOCAL, INC.
Reconciliation of Adjusted EBITDA to Operating Loss
(in thousands)
	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
		2015				2014				2015				2014
Operating loss	$	(4,494	)		$	(14,660	)		$	(60,870	)		$	(46,112	)
Add:
Depreciation and amortization		4,686				4,799				19,681				17,394
Stock-based compensation		2,115				2,542				8,671				13,260
Acquisition and integration costs		2				35				14				121
Restructuring charges		1,975				1,360				7,546				5,927
Impairment of goodwill		-				-				27,800				-
Adjusted EBITDA (1)	$	4,284			$	(5,924	)		$	2,842			$	(9,410	)

 

REACHLOCAL, Inc.
Reconciliation of GAAP to Non-GAAP Operating Results for Three Months Ended December 31, 2015 and 2014
(in thousands, except per share amounts)
	Three Months Ended December 31, 2015																Three Months Ended December 31, 2014
				Adjustments:																Adjustments:
				Stock-based																Stock-based
	GAAP			Compensation			Acquisition			Restructuring			Non-GAAP				GAAP			Compensation			Acquisition			Restructuring			Non-GAAP
	Operating Results			Related			Related			Related			Operating				Operating Results			Related			Related			Related			Operating
	"As Reported"			Expense (2)			Costs (3)			Costs (4)			Results				"As Reported"			Expense (2)			Costs (3)			Costs (4)			Results
Revenue	$	88,977			-			-			-		$	88,977			$	109,009			-			-			-		$	109,009
Cost of revenue		48,131			(82	)		-			-			48,049				61,708			(197	)		-			-			61,511
Operating expenses:
Sales and marketing		27,002			(204	)		-			-			26,798				42,334			(607	)		-			-			41,727
Product and technology		6,964			(357	)		(157	)		-			6,450				6,989			(312	)		(283	)		-			6,394
General and administrative		9,399			(1,600	)		(84	)		-			7,715				11,278			(1,521	)		(99	)		-			9,658
Restructuring charges		1,975			-			-			(1,975	)		-				1,360			-			-			(1,360	)		-
Impairment of goodwill		-			-			-			-			-				-			-			-			-			-
Total operating expenses		45,340			(2,161	)		(241	)		(1,975	)		40,963				61,961			(2,440	)		(382	)		(1,360	)		57,779
Operating income (loss)		(4,494	)		2,243			241			1,975			(35	)			(14,660	)		2,637			382			1,360			(10,281	)
Gain on deconsolidation of subsidiaries, net		2,853			-			-			-			2,853				-			-			-			-			-
Interest expense		(1,027	)		-			-			-			(1,027	)			(36	)		-			-			-			(36	)
Other income (expense), net		79			-			-			-			79				381			-			-			-			381
Income (loss) from continuing operations before income taxes		(2,589	)		2,243			241			1,975			1,870				(14,315	)		2,637			382			1,360			(9,936	)
Income tax provision (benefit) (5)		(85	)		842			91			741			1,589				3,422			989			143			510			5,064
Income (loss) from continuing operations	$	(2,504	)	$	1,401		$	150		$	1,234		$	281			$	(17,737	)		1,648			239			850		$	(15,000	)
Net loss per share
Basic loss per share	$	(0.09	)										$	0.01			$	(0.62	)										$	(0.52	)
Diluted loss per share	$	(0.09	)										$	0.01			$	(0.62	)										$	(0.52	)
Weighted average shares outstanding
Basic		29,336												29,336				28,765												28,765
Diluted		29,336												29,336				28,765												28,765

 

REACHLOCAL, Inc.
Reconciliation of GAAP to Non-GAAP Operating Results for Twelve Months Ended December 31, 2015 and 2014
(in thousands, except per share amounts)
	Twelve Months Ended December 31, 2015																Twelve Months Ended December 31, 2014
				Adjustments:																Adjustments:
				Stock-based																Stock-based
	GAAP			Compensation			Acquisition			Restructuring			Non-GAAP				GAAP			Compensation			Acquisition			Restructuring			Non-GAAP
	Operating Results			Related			Related			Related			Operating				Operating Results			Related			Related			Related			Operating
	"As Reported"			Expense (2)			Costs (3)			Costs (4)			Results				"As Reported"			Expense (2)			Costs (3)			Costs (4)			Results
Revenue	$	382,597			-			-			-		$	382,597			$	474,921			-			-			-		$	474,921
Cost of revenue		213,409			(487	)		-			-			212,922				252,721			(932	)		-			-			251,789
Operating expenses:
Sales and marketing		126,966			(1,510	)		-			-			125,456				182,720			(2,959	)		-			-			179,761
Product and technology		28,414			(1,191	)		(1,053	)		-			26,170				27,510			(1,235	)		(939	)		-			25,336
General and administrative		39,332			(5,966	)		(360	)		-			33,006				52,155			(8,544	)		(428	)		-			43,183
Restructuring charges		7,546			-			-			(7,546	)		-				5,927			-			-			(5,927	)		-
Impairment of goodwill		27,800						(27,800	)					-				-			-			-			-			-
Total operating expenses		230,058			(8,667	)		(29,213	)		(7,546	)		184,632				268,312			(12,738	)		(1,367	)		(5,927	)		248,280
Operating income (loss)		(60,870	)		9,154			29,213			7,546			(14,957	)			(46,112	)		13,670			1,367			5,927			(25,148	)
Gain on deconsolidation of subsidiaries, net		2,853			-			-			-			2,853				-			-			-			-			-
Interest expense		(2,790	)		-			-			-			(2,790	)			(67	)											(67	)
Other income (expense), net		(339	)		-			-			-			(339	)			1,003			-			-			-			1,003
Income (loss) from continuing operations before income taxes		(61,146	)		9,154			29,213			7,546			(15,233	)			(45,176	)		13,670			1,367			5,927			(24,212	)
Income tax provision (benefit) (5)		369			3,433			10,955			2,830			17,587				484			5,126			513			2,223			8,346
Income (loss) from continuing operations	$	(61,515	)	$	5,721		$	18,258		$	4,716		$	(32,820	)		$	(45,660	)		8,544			854			3,704		$	(32,558	)
Net loss per share
Basic loss per share	$	(2.11	)										$	(1.12	)		$	(1.60	)										$	(1.14	)
Diluted loss per share	$	(2.11	)										$	(1.12	)		$	(1.60	)										$	(1.14	)
Weighted average shares outstanding
Basic		29,174												29,174				28,461												28,461
Diluted		29,174												29,174				28,461												28,461

 

REACHLOCAL, INC.
Reconciliation of GAAP to Constant Currency Revenue
(in thousands)
	Three Months  Ended								Twelve Months  Ended
	December 31,								December 31,
		2015				2014				2015				2014
North American GAAP Revenue	$	59,467			$	67,760			$	249,224			$	293,096
Constant Currency Adjustment		460				-				1,872				-
North American Revenue at Constant Currency (6)	$	59,927			$	67,760			$	251,096			$	293,096
As Reported Growth Rates		(12.2	%)			(19.9	%)			(15.0	%)			(14.2	%)
Constant Currency Growth Rates		(11.6	%)			(19.7	%)			(14.3	%)			(14.0	%)
International GAAP Revenue	$	29,510			$	41,249			$	133,373			$	181,825
Constant Currency Adjustment		4,687				-				24,071				-
International Revenue at Constant Currency (6)	$	34,197			$	41,249			$	157,444			$	181,825
As Reported Growth Rates		(28.5	%)			(14.5	%)			(26.6	%)			5.5	%
Constant Currency Growth Rates		(17.1	%)			(8.4	%)			(13.4	%)			7.6	%
Consolidated GAAP Revenue	$	88,977			$	109,009			$	382,597			$	474,921
Constant Currency Adjustment		5,147				-				25,943				-
Consolidated Revenue at Constant Currency (6)	$	94,124			$	109,009			$	408,540			$	474,921
As Reported Growth Rates		(18.4	%)			(18.0	%)			(19.4	%)			(7.6	%)
Constant Currency Growth Rates		(13.7	%)			(15.7	%)			(14.0	%)			(6.8	%)

 

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 goodwill), restructuring charges, and other non-operating income or expense.

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

(3) Acquisition Related Costs, including the amortization and any impairment of acquired intangibles and goodwill, 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.

(4) Restructuring Related Costs are excluded from the non-GAAP operating results as these are non-recurring charges with the Company would not have incurred as part of continuing operations.

(5)  The income tax provision (benefit) for the Non-GAAP adjustments is estimated using the effective statutory rate for those jurisdictions.

(6) 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.

 

REACHLOCAL, INC.
UNAUDITED RECONCILIATION OF PRO-FORMA FINANCIAL INFORMATION EXCLUDING THE UNITED KINGDOM
(in thousands)
	Three Months Ended										Three Months Ended
	March 31, 2015										March 31, 2014
	As Reported			United Kingdom			Pro-Forma				As Reported			United Kingdom			Pro-Forma
Revenue by Channel (North America) (1):
Direct Local	$	45,926			-		$	45,926			$	56,264			-		$	56,264
National Brands, Agencies and Resellers (NBAR)		17,573			-			17,573				20,824			-			20,824
Revenue by Channel (International):
Direct Local		32,809			6,496			26,313				42,303			10,432			31,871
National Brands, Agencies and Resellers (NBAR)		3,255			294			2,961				5,345			818			4,527
Consolidated Revenue	$	99,563			6,790		$	92,773			$	124,736			11,250		$	113,486
Consolidated Adjusted EBITDA (2)	$	(3,785	)		(1,913	)	$	(1,872	)		$	2,261			905		$	1,356
	Three Months Ended										Three Months Ended
	June 30, 2015										June 30, 2014
	As Reported			United Kingdom			Pro-Forma				As Reported			United Kingdom			Pro-Forma
Revenue by Channel (North America) (1):
Direct Local	$	46,189			-		$	46,189			$	54,944			-		$	54,944
National Brands, Agencies and Resellers (NBAR)		17,787			-			17,787				22,024			-			22,024
Revenue by Channel (International):
Direct Local		31,085			6,380			24,705				42,218			8,215			34,003
National Brands, Agencies and Resellers (NBAR)		3,715			187			3,528				4,367			683			3,684
Consolidated Revenue	$	98,776			6,567		$	92,209			$	123,553			8,898		$	114,655
Consolidated Adjusted EBITDA (2)	$	715			(22	)	$	737			$	(1,904	)		(1,753	)	$	(151	)
	Three Months Ended										Three Months Ended
	September 30, 2015										September 30, 2014
	As Reported			United Kingdom			Pro-Forma				As Reported			United Kingdom			Pro-Forma
Revenue by Channel (North America) (1):
Direct Local	$	45,007			-		$	45,007			$	49,842			-		$	49,842
National Brands, Agencies and Resellers (NBAR)		17,276			-			17,276				21,438			-			21,438
Revenue by Channel (International):
Direct Local		28,580			6,703			21,877				42,072			8,177			33,895
National Brands, Agencies and Resellers (NBAR)		4,419			161			4,258				4,271			530			3,741
Consolidated Revenue	$	95,282			6,864		$	88,418			$	117,623			8,707		$	108,916
Consolidated Adjusted EBITDA (2)	$	1,629			32		$	1,597			$	(3,843	)		(559	)	$	(3,284	)
	Three Months Ended										Three Months Ended
	December 31, 2015										December 31, 2014
	As Reported			United Kingdom			Pro-Forma				As Reported			United Kingdom			Pro-Forma
Revenue by Channel (North America) (1):
Direct Local	$	43,903			-		$	43,903			$	47,408			-		$	47,408
National Brands, Agencies and Resellers (NBAR)		15,564			-			15,564				20,351			-			20,351
Revenue by Channel (International):
Direct Local		26,064			4,859			21,205				37,771			7,226			30,545
National Brands, Agencies and Resellers (NBAR)		3,446			135			3,311				3,479			360			3,119
Consolidated Revenue	$	88,977			4,994		$	83,983			$	109,009			7,586		$	101,423
Consolidated Adjusted EBITDA (2)	$	4,284			311		$	3,973			$	(5,924	)		(1,521	)	$	(4,403	)
	Twelve Months Ended										Twelve Months Ended
	December 31, 2015										December 31, 2014
	As Reported			United Kingdom			Pro-Forma				As Reported			United Kingdom			Pro-Forma
Revenue by Channel (North America) (1):
Direct Local	$	181,022			-		$	181,022			$	208,459			-		$	208,459
National Brands, Agencies and Resellers (NBAR)		68,202			-			68,202				84,637			-			84,637
Revenue by Channel (International):
Direct Local		118,537			24,438			94,099				164,363			34,051			130,312
National Brands, Agencies and Resellers (NBAR)		14,836			777			14,059				17,462			2,391			15,071
Consolidated Revenue	$	382,597			25,215		$	357,382			$	474,921			36,442		$	438,479
Consolidated Adjusted EBITDA (2)	$	2,842			(1,592	)	$	4,434			$	(9,410	)		(2,928	)	$	(6,482	)
(1) North America includes the United States and Canada. International includes all other countries.
(2) 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 goodwill), restructuring charges, and other non-operating income or expense.

 

REACHLOCAL, INC.
UNAUDITED RECONCILIATION OF PRO-FORMA FINANCIAL INFORMATION EXCLUDING THE UNITED KINGDOM
(in thousands)
	Three Months Ended										Three Months Ended
	March 31, 2015										March 31, 2014
	As Reported			United Kingdom			Pro-Forma				As Reported			United Kingdom			Pro-Forma
Operating loss	$	(12,527	)		(1,973	)	$	(10,554	)		$	(8,369	)		828		$	(9,197	)
Add:								-										-
Depreciation and amortization		5,134			60			5,074				4,222			77			4,145
Stock-based compensation		2,146			-			2,146				4,571			-			4,571
Acquisition and integration costs		7			-			7				14			-			14
Restructuring charges		1,455			-			1,455				1,823			-			1,823
Adjusted EBITDA (1)	$	(3,785	)		(1,913	)	$	(1,872	)		$	2,261			905		$	1,356
	Three Months Ended										Three Months Ended
	June 30, 2015										June 30, 2014
	As Reported			United Kingdom			Pro-Forma				As Reported			United Kingdom			Pro-Forma
Operating loss	$	(9,785	)		(174	)	$	(9,611	)		$	(11,626	)		(1,828	)	$	(9,798	)
Add:								-										-
Depreciation and amortization		5,149			58			5,091				4,018			75			3,943
Stock-based compensation		2,214			-			2,214				3,476			-			3,476
Acquisition and integration costs		4			-			4				2			-			2
Restructuring charges		3,133			94			3,039				2,226			-			2,226
Adjusted EBITDA (1)	$	715			(22	)	$	737			$	(1,904	)		(1,753	)	$	(151	)
	Three Months Ended										Three Months Ended
	September 30, 2015										September 30, 2014
	As Reported			United Kingdom			Pro-Forma				As Reported			United Kingdom			Pro-Forma
Operating loss	$	(34,063	)		(39	)	$	(34,024	)		$	(11,457	)		(628	)	$	(10,829	)
Add:																		-
Depreciation and amortization		4,712			57			4,655				4,355			69			4,286
Stock-based compensation		2,195			-			2,195				2,671			-			2,671
Acquisition and integration costs		2			-			2				70			-			70
Restructuring charges		983			14			969				518			-			518
Impairment of goodwill		27,800			-			27,800				-			-			-
Adjusted EBITDA (1)	$	1,629			32		$	1,597			$	(3,843	)		(559	)	$	(3,284	)
	Three Months Ended										Three Months Ended
	December 31, 2015										December 31, 2014
	As Reported			United Kingdom			Pro-Forma				As Reported			United Kingdom			Pro-Forma
Operating loss	$	(4,494	)		(216	)	$	(4,278	)		$	(14,660	)		(1,620	)	$	(13,040	)
Add:								-										-
Depreciation and amortization		4,686			56			4,630				4,799			61			4,738
Stock-based compensation		2,115			-			2,115				2,542			-			2,542
Acquisition and integration costs		2			-			2				35			-			35
Restructuring charges		1,975			471			1,504				1,360			38			1,322
Impairment of goodwill		-			-			-				-			-			-
Adjusted EBITDA (1)	$	4,284			311		$	3,973			$	(5,924	)		(1,521	)	$	(4,403	)
	Twelve Months Ended										Twelve Months Ended
	December 31, 2015										December 31, 2014
	As Reported			United Kingdom			Pro-Forma				As Reported			United Kingdom			Pro-Forma
Operating loss	$	(60,870	)		(2,402	)	$	(58,468	)		$	(46,112	)		(3,249	)	$	(42,863	)
Add:								-										-
Depreciation and amortization		19,681			230			19,451				17,394			283			17,111
Stock-based compensation		8,671			-			8,671				13,260			-			13,260
Acquisition and integration costs		14			-			14				121			-			121
Restructuring charges		7,546			580			6,966				5,927			38			5,889
Impairment of goodwill		27,800			-			27,800				-			-			-
Adjusted EBITDA (1)	$	2,842			(1,592	)	$	4,434			$	(9,410	)		(2,928	)	$	(6,482	)
(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 goodwill), restructuring charges, and other non-operating income or expense.

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

Media Contact:
Amber Seikaly 
Vice President, Marketing and Communications
(214) 294-0242
amber.seikaly@reachlocal.com

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