Big Progress on the Way to 50/50 in 2013: Organic Traffic and Direct Revenues produce no cost of revenues
= 50% Organic Traffic
= 50% Organic Revenue
Development of Organic Traffic/Monthly Unique Visitors (MUVs):
2010: 88 million = 31% of total traffic
2011: 117 million = 33% of total traffic
2012: 155 million = 37% of total traffic
Goal: 50% of total traffic
Development of Organic Revenues
2010: 17 million = 20% of total revenues
2011: 22 million = 28% of total revenues
2012: 29 million = 30% of total revenues
Goal: 50% of total revenues
The change in policy in 2013 is an important step to build a more defensible and sustanainable business to growing organic traffic and organic revenues. Organic traffic will reach after my estimates 45% and organic revenues will be near 40%.
We have taken decisive cost-cutting measures to return the company to cash flow positive, and expect steady revenue growth and margin improvement throughout 2013. While there are periodic challenges when working in a competitive, dynamic and high growth sector, these challenges often create new opportunities for future growth. We are confident that we are well positioned to capitalize on those opportunities with a powerful platform and an experienced team.”
•An important reason that Local Corp in 2011 and 2012 didn't reached the break-even was the 150 employees in sales and marketing. In 10K from 2011 we could read: "Employees - As of December 31, 2011, we had 227 employees, all of whom were full-time employees. 29 were engaged in research and development, 150 in sales and marketing, 6 in cost of revenues and 42 in general and administration."
This strong íncrease of employees in sales and markeing (alone 50 throught the buy of Spreebird) had could be the right decision, if former estimates about the development of the Daily Deal-Business had taken place. The reaction of the management at the new situation was excellent. One result of the strong cut by the 150 employees in sales and marketing was, that Rovion (which needed direct sales) were better placed by another company - and therefore Rovion was sold with a small gain against book-value. And since 2013 Launch by Local were only sold about channels. Only by Spreebird, which had reached break-even in Q4/2012 and will have a first very small net-income exist a very small direct sales today. Maybe Local Corp could sell Spreebird for a sale-price between 3.5 and 5 million (Spreebird were written down in steps to about 2 million, when companies like Groupon dipped - but since there Groupon has doubled the share-price again).
Turnaround of Local Corp [Adjusted Net income (loss) ]had take place:
From last Conference Call (Source: Transcript on Seeking Alopha): "And so we do anticipate that’s going to drive more organic traffic and we have long-term goal of 50% of organic traffic. We were expecting to hit that in 2014. We may hit that a little sooner. And by the way that was the end of 2014 so we may hit that a little sooner. And that’s very high margin for us. That’s traffic. And so we have got about six things that roll in to our O&O and network initiatives for the year and that’s what's driving this incremental expectation around revenue."
Five material challenges in 24 months withstood with significant cost to the company in revenue and earnings are a sign, that the company are agile and able to adapt quickly changes in the digital and mobile landscape