Shares of local advertising pioneer ReachLocal (RLOC) are up $1.26, or 15%, at $9.60 in late trading after the company met Q4 revenue estimates, reported a stronger-than-expected profit, and projected this quarter’s revenue ahead of expectations.
Revenue in the three months ended in December rose 24%, year over year, to $99.8 million, yielding EPS of 12 cents a share, excluding some costs, compared to a net loss of 2 cents a year earlier. Analysts had been modeling $99.9 million and a projected loss of 5 cents per share.
Note that the 5 cents is a GAAP estimate. There is a non-GAAP estimate available from FactSet that was for 4 cents per share, which some investors may have been using as the basis for comparison. On that basis, the company still beat, albeit by a smaller margin.
For the current quarter, the company projects revenue in a range of $102 million to $104 million, ahead of the average $102 million estimate.
For the year, the company projects revenue in a range of $435 million to $450 millon, below the average $452 million estimate.
CEO Zorik Gordon remarked that the company was poised to benefit from more small and medium businesses looking to advertise online. He said 2012 would be a year of increased investment. The company projects adjusted Ebitda this year of $17 million to $21 million, which would be up from the $15.9 million recorded last year. CFO Ross Landsbaum said that “Our 2011 revenue and Adjusted EBITDA performance demonstrates the continued scaling of our business.”
Update: In the late session, the shares are actually back to an unchanged level at $8.34. It appears the surge of 15% was an errant trade or two around quarter of 4 pm, Eastern.
Update 2: The shares continued to move around quite a bit in late trading, and the latest quote has the stock back up again by $1, or 12%, at $9.34.
Update 3: CEO Gordon was kind enough to talk with me following the company’s conference call. Gordon said that the focus of investment this year will be on hiring sales staff, especially in overseas market where the company saw a 72% rise in revenue and where there’s less competition so far for local advertising dollars. Putting more people in place in markets such as the U.K., Australia, and elsewhere overseas can have a meaningful impact on productivity, he said.
Another big focus this year will be R&D on products. Among them will be mobile versions of the user interface for the company’s service. That would allow, say, a local HVAC vendor to control their use of ReachLocal’s advertising platform from a smartphone or tablet computer. The time frame for that big push into mobile is early this year, he said.
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