Local.com Reports Second Quarter 2009 Financial Results

Reaches Record Revenue and Adjusted Net Income
IRVINE, Calif.--(Business Wire)--
Local.com Corporation (NASDAQ: LOCM), a leading local search site and network,
today reported record financial results for the second quarter of 2009.

SUMMARY RESULTS

(in thousands, except per share amounts)

Q2 2009 Q1 2009 Q2 2008
Revenue $ 13,726 $ 11,064 $ 9,646

GAAP net loss (333 ) (2,856 ) (1,925 )
Less interest income and other, net (1 ) (3 ) (84 )
Plus provision for income taxes - 1 -
Plus non-cash depreciation, amortization and stock compensation 1,415 1,011 1,048
Plus non-recurring items (138 ) 658 -
Adjusted Net Income (Loss) * $ 943 $ (1,189 ) $ (961 )

GAAP net loss per share $ (0.02 ) $ (0.20 ) $ (0.14 )
Adjusted Net Income (Loss) per share * $ 0.06 $ (0.08 ) $ (0.07 )

Basic weighted average shares 14,332 14,433 14,242
Diluted weighted average shares 14,666 14,433 14,242

Cash $ 6,726 $ 11,076 $ 13,737

* See detailed reconciliation of GAAP to non-GAAP measures in the financial
tables attached to this release.

"We had a great second quarter. Record traffic, organic traffic, and
monetization yielded record revenue and a larger-than-anticipated adjusted net
income," said Heath Clarke, Local.com chairman and CEO. "We see many
opportunities in local search, and expect to continue our top and bottom line
growth through the remainder of the year."

Results Highlights:

• Revenue - Second quarter 2009 revenue of $13.7 million represents a sequential
increase of 24% over the first quarter 2009 and a year-over-year increase of 42%
from the second quarter 2008.

• Net Loss - Second quarter 2009 net loss was $333,000 or ($0.02) per share,
compared to the first quarter 2009 net loss of $2.9 million or ($0.20) per
share. The first quarter 2009 net loss included acquisition and non-recurring
charges of approximately $700,000 or ($0.05) per share. Net loss for the second
quarter 2008 was $1.9 million or ($0.14) per share.

• Adjusted Net Income (Loss) - Second quarter 2009 Adjusted Net Income was
$943,000 or $0.06 per share. This compares to an Adjusted Net Loss of $1.2
million or ($0.08) per share in the first quarter of 2009, and an Adjusted Net
Loss of $1.0 million or ($0.07) per share in the second quarter 2008.

Adjusted Net Income (Loss) is defined as net income (loss) excluding: provision
for income taxes; interest and other income (expense), net; depreciation;
amortization; stock based compensation charges and non-recurring items.

An explanation of the company`s use of non-GAAP financial measures, including
the limitations of such measures relative to GAAP measures is included below and
a reconciliation between GAAP and non-GAAP measures, where appropriate, is
included in the financial tables attached to this release.

• Cash -Net cash used in operating activities in the first half of 2009 was
$200,000. The company exited the quarter with $6.7 million in cash.

• Stock buyback - During the first half of 2009 the company repurchased 131,239
shares of common stock at an average price of $2.56, including 32,174 in the
second quarter, under the stock repurchase program approved by the board of
directors in October 2008.

Second Quarter Operating and Recent Highlights:

• Record Traffic - The company reached record traffic of 63 million monthly
unique visitors (MUVs) on the Local.com site and network during the second
quarter of 2009, up 5% from 60 million MUVs during the first quarter of 2009,
and up 31% from 48 million MUVs during the second quarter of 2008.

• Organic Traffic - Organic traffic also reached an all-time high, exceeding 29
million monthly unique visitors on the Local.com site and network during the
second quarter of 2009, up 7% from 27 million during the first quarter of 2009,
and up 61% from 18 million during the second quarter of 2008.

• RecordMonetization of Traffic - Revenue per thousand visitors (RKV) reached a
record $285 for the quarter, up 16% from $246 RKV in the first quarter of 2009
and up 12% from $254 RKV in the second quarter of 2008.

• Advertisers - We ended the second quarter of 2009 with over 27,000
subscription customers compared to nearly 30,000 at the end of the first quarter
of 2009 and 5,000 at the end of 2008.

• Secured $10 Million Credit Facility - In June 2009, the company secured a $10
million revolving credit facility from Square 1 Bank, which we intend to use
primarily for expansion of the company via potential acquisitions, and to fund
expected strategic growth initiatives.

• Private Label Partnerships- In June 2009, the company announced partnerships
with The Dallas Morning News and The Press Enterprise to power local search on
the companies` web properties. The company currently partners with over 700
regional media sites.

• Technology Licensees - The number of licensees for the company`s local search
technologies grew to 63 during the second quarter of 2009, up from 48 in the
first quarter of 2009.

• Appointments to Management Team - In May 2009, the company announced the
appointment of two new members to the company's management team. Scott Reinke
and Ken Cragun joined the company as general counsel and vice president of
finance, respectively. As announced earlier this week, Michael Plonski has
joined the management team as chief technology officer.

"We are pleased with our second quarter results and have entered the third
quarter with strong momentum based on solid execution," said Brenda Agius,
Local.com CFO. "This success would not be possible without the efforts of our
entire team. While we would hope to continue this upward trend, we are also
mindful of the importance of making significant reinvestments in the company to
provide future financial growth which in turn we believe will sustain long-term
shareholder value."

Third Quarter Financial Guidance:

The company expects third quarter 2009 revenue to be between $14.1 and $14.6
million, which at the midpoint represents a 5% sequential increase over the
second quarter of 2009. The company expects net loss for the third quarter of
2009 to be between $400,000 and $100,000 or between ($0.03) and ($0.01) per
share, and to include the following items:

* depreciation and amortization of $900,000;
* and stock based compensation charges of $500,000

Excluding the above items from net loss, Adjusted Net Income is expected to be
between $1.0 million and $1.3 million or between $0.07 and $0.09 per diluted
share for the third quarter of 2009.

The net loss per share forecast assumes a weighted average share count of 14.3
million. The Adjusted Net Income per share assumes a diluted weighted average
share count of 14.8 million, taking into account the dilutive effect of stock
options and warrants.

Conference Call Information:

Investors and analysts can participate in the call by dialing 1-800-435-1261 or
1-617-614-4076, passcode #73461443. To listen to the webcast, or to view the
press release, please visit the Investor Relations section of the Local.com
website at: http://ir.local.com. Institutional investors can access the call via
Thomson/CCBN's password-protected event management site, StreetEvents at
www.streetevents.com.

The replay can be accessed for approximately one week starting at 7:00 p.m. ET
the day of the call by dialing 1-888-286-8010 or 1-617-801-6888, passcode #
17405668. A replay of the webcast will be available for approximately 90 days at
the company's website, starting approximately one hour after the completion of
the call.

About Local.com®

Local.com (NASDAQ: LOCM) owns and operates a leading local search site and the
largest private label, local search network in the United States. The company
uses patented technologies to provide over 20 million consumers each month with
the most relevant search results for local businesses, products and services on
Local.com and over 700 regional media sites. Businesses can target
ready-to-purchase consumers using a variety of advertising products. To
advertise, or for more information visit: www.local.com.

Forward Looking Statements

All statements other than statements of historical fact included in this
document regarding our anticipated financial position, business strategy and
plans and objectives of our management for future operations, are
forward-looking statements. When used in this report, words such as
`anticipate,` `believe,` `estimate,` `plans,` `expect,` `intend,` `projects` and
similar expressions and phrases, as they relate to Local.com or our management,
identify forward-looking statements. Any forward-looking statements are based on
the beliefs of our management as well as assumptions made by and information
currently available to our management. Actual results could differ materially
from those contemplated by the forward-looking statements as a result of certain
factors, including, but not limited to, our ability to monetize the Local.com
domain, incorporate our local-search technologies, market the Local.com domain
as a destination for consumers seeking local-search results, grow our business
by enhancing our local-search services, successfully expand and implement our
outsourced, direct subscription advertising sales efforts, increase the number
of businesses that purchase our subscription advertising products, expand our
advertiser and distribution networks, integrate and effectively utilize our
acquisitions` technologies, develop our products and sales, marketing, finance
and administrative functions and successfully integrate our expanded
infrastructure, as well as our dependence on major advertisers, competitive
factors and pricing pressures, changes in legal and regulatory requirements, and
general economic conditions. Any forward-looking statements reflect our current
views with respect to future events and are subject to these and other risks,
uncertainties and assumptions relating to our operations, results of operations,
growth strategy and liquidity. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by this paragraph. Unless otherwise stated, all site
traffic and usage statistics are from third-party service providers engaged by
the company.

Our Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q,
recent Current Reports on Form 8-K, and other Securities and Exchange Commission
filings discuss the foregoing risks as well as other important risk factors that
could contribute to such differences or otherwise affect our business, results
of operations and financial condition. The forward-looking statements in this
release speak only as of the date they are made. We undertake no obligation to
revise or update publicly any forward-looking statement for any reason.

Non-GAAP Financial Measures

This press release includes the non-GAAP financial measure of "Adjusted Net
Income (Loss)" which we define as net income/loss excluding: provision for
income taxes; interest and other income (expense), net; depreciation;
amortization; stock based compensation charges and non-recurring items. Adjusted
Net Income (Loss), as defined above, is not a measurement under GAAP. Adjusted
Net Income (Loss) is reconciled to net loss and loss per share which we believe
are the most comparable GAAP measures. A reconciliation of Net Loss to Adjusted
Net Income (Loss) is set forth at the end of this press release.

Management believes that Adjusted Net Income (Loss) provides useful information
to investors about the company`s performance because it eliminates the effects
of period-to-period changes in income from interest on the company`s cash and
marketable securities, expense from the company`s financing transactions and the
costs associated with income tax expense, capital investments, stock-based
compensation expense and non-recurring items which are not directly attributable
to the underlying performance of the company`s business operations. Management
uses Adjusted Net Income (Loss) in evaluating the overall performance of the
company`s business operations.

A limitation of non-GAAP Adjusted Net Income (Loss) is that it excludes items
that often have a material effect on the company`s net income and earnings per
common share calculated in accordance with GAAP. Therefore, management
compensates for this limitation by using Adjusted Net Income (Loss) in
conjunction with GAAP net loss and loss per share measures. The company believes
that Adjusted Net Income (Loss) provides investors with an additional tool for
evaluating the company`s core performance, which management uses in its own
evaluation of overall performance, and as a base-line for assessing the future
earnings potential of the company. While the GAAP results are more complete, the
company prefers to allow investors to have this supplemental metric since, with
reconciliation to GAAP, it may provide greater insight into the company`s
financial results. The non-GAAP measures should be viewed as a supplement to,
and not as a substitute for, or superior to, GAAP net income or earnings per
share.

LOCAL.COM CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

June 30, December 31,
2009 2008
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 6,726 $ 12,142
Restricted cash 81 31
Accounts receivable, net of allowances of $213 and $60, respectively 7,619 5,270
Prepaid expenses and other current assets 238 374

Total current assets 14,664 17,817

Property and equipment, net 1,377 1,073
Intangible assets, net 5,269 2,158
Goodwill 13,231 13,231
Long-term restricted cash 35 35
Deposits 12 12

Total assets $ 34,588 $ 34,326

LIABILITIES AND STOCKHOLDERS` EQUITY
Current liabilities:
Accounts payable $ 7,160 $ 5,608
Accrued compensation 1,163 545
Deferred rent 137 199
Other accrued liabilities 1,015 564
Deferred revenue 217 64

Total liabilities, all current 9,692 6,980

Commitments and contingencies

Stockholders` equity:
Convertible preferred stock, $0.00001 par value; 10,000 shares authorized; none issued and outstanding for all periods presented - -
Common stock, $0.00001 par value; 30,000 shares authorized; 14,329 and 14,446 issued and outstanding, respectively - -
Additional paid-in capital 85,880 85,141
Accumulated deficit (60,984 ) (57,795 )

Stockholders` equity 24,896 27,346

Total liabilities and stockholders` equity $ 34,588 $ 34,326

LOCAL.COM CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2009 2008 2009 2008
Revenue $ 13,726 $ 9,646 $ 24,790 $ 18,488
Operating Expenses:
Search serving 1,011 1,320 2,120 2,773
Sales and marketing 9,153 7,900 18,403 15,543
General and administrative 2,437 1,400 4,789 2,842
Research and development 735 755 1,591 1,632
Amortization of intangibles 724 280 1,079 598

Total operating expenses 14,060 11,655 27,982 23,388

Operating loss (334 ) (2,009 ) (3,192 ) (4,900 )

Interest and other income (expense), net 1 84 4 218

Loss before income taxes (333 ) (1,925 ) (3,188 ) (4,682 )

Provision for income taxes - - 1 1

Net loss $ (333 ) $ (1,925 ) $ (3,189 ) $ (4,683 )

Per share data:

Basic net loss per share $ (0.02 ) $ (0.14 ) $ (0.22 ) $ (0.33 )
Diluted net loss per share $ (0.02 ) $ (0.14 ) $ (0.22 ) $ (0.33 )

Basic weighted average shares outstanding 14,332 14,242 14,382 14,223
Diluted weighted average shares outstanding 14,332 14,242 14,382 14,223

Supplemental Consolidated Statements of Operations Information

Stock-based Compensation Expense

(in thousands, except per share data)

Three Months Ended June 30, Six Months Ended June 30,
2009 2008 2009 2008
Sales and marketing $ 185 $ 234 $ 368 $ 474
General and administrative 296 286 532 626
Research and development 68 52 135 123

Total stock-based compensation expense $ 549 $ 572 $ 1,035 $ 1,223

Basic and diluted net stock-based compensation expense per share $ 0.04 $ 0.04 $ 0.07 $ 0.09

LOCAL.COM CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Six Months Ended June 30,
2009 2008
Cash flows from operating activities:
Net loss $ (3,189 ) $ (4,683 )
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization 1,391 1,036
Provision for doubtful accounts 175 10
Stock-based compensation expense 1,035 1,223
Changes in operating assets and liabilities:
Accounts receivable (2,462 ) (1,553 )
Prepaid expenses and other 136 164
Accounts payable and accrued liabilities 2,559 1,214
Deferred revenue 153 (89 )
Net cash used in operating activities (202 ) (2,678 )

Cash flows from investing activities:
Capital expenditures (616 ) (98 )
Proceeds from sales of marketable securities - 2,000
Increase in restricted cash (50 ) -
Purchases of intangible assets (4,252 ) 2
Net cash (used in) provided by investing activities: (4,918 ) 1,904

Cash flows from financing activities:
Proceeds from issuance of common stock:
Exercise of warrants - 112
Exercise of options 40 158
Repurchases of common stock (336 ) -
Swing sale profit contribution - 3
Payment of financing related costs - (20 )
Net cash (used in) provided by financing activities (296 ) 253
Net decrease in cash and cash equivalents (5,416 ) (521 )
Cash and cash equivalents, beginning of period 12,142 14,258
Cash and cash equivalents, end of period $ 6,726 $ 13,737

Supplemental Cash Flow Information:
Interest paid $ 2 $ -
Income taxes paid $ 1 $ 1

LOCAL.COM CORPORATION

RECONCILIATION OF NET LOSS TO ADJUSTED NET INCOME (LOSS)

(in thousands, except per share amounts)

(Unaudited)

Three Months Ended June 30, Three Months Ended
March 31,
2009 2008 2009
Net loss $ (333 ) $ (1,925 ) $ (2,856 )

Less interest income and other, net (1 ) (84 ) (3 )
Plus provision for income taxes - - 1
Plus amortization of intangibles 724 280 355
Plus depreciation 142 195 170
Plus stock-based compensation 549 572 486
Plus non-recurring items:
Gain on contract settlement (138 ) - -
Acquisition-related charges and change in officer - - 658

Adjusted Net Income (Loss) $ 943 $ (962 ) $ (1,189 )

Diluted Adjusted Net Income (Loss) per share $ 0.06 $ (0.07 ) $ (0.08 )

Diluted weighted average shares outstanding 14,666 14,242 14,433

Local.com
Cameron Triebwasser, 949-789-5223
ctriebwasser@local.com

Copyright Business Wire 2009

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