Local.com Corp., which runs a search engine for finding local businesses, has had an eventful year.
The company made a slew of changes to its business that better capture new revenue.
“We’ve been growing fairly aggressively for five years now,” Chief Executive Heath Clarke said. “Those revenue streams we had cultivated a couple of years back are simply bigger now.”
The company’s search engine directs users to local businesses via Internet searches such as “dry cleaners in Costa Mesa.”
Users also get reviews, links to local websites, maps, directions and other features.
The company makes money from advertising and from embedding its search functions into other websites.
Local.com came in at No. 3 on the Business Journal’s 2010 list of the fastest-growing public companies in Orange County. It rose up two spots from last year, when it debuted at No. 5.
Local.com posted 144% revenue growth for the three years through June 30. The company went from about $30 million in revenue for the 12 months through June 2008 to $73 million for the same period through this June.
In the past year, the company reorganized into three business units, dubbed “owned and operated,” “network” and “sales and advertiser services.”
Local.com’s owned and operated unit, which includes its flagship website, has seen growth as the company has boosted traffic.
The network division probably saw the biggest boost, growing from nearly $2 million in yearly sales to $7 million in a span of months.
That part of the business feeds local search results and related advertising to others, mostly smaller websites with some local search traffic. Customers include Yellowpages.com and Reply.com.
The company significantly pared down its sales and advertiser services unit, which included a fleet of telemarketers. It slashed nearly 300 jobs down to 40.
“We decided that we would wind down those operations in favor of acquisitions,” Clarke said.
In July, Local.com acquired Los Angeles-based Octane 360, an online advertising startup, for up to $11 million.
Octane360 offers services that allow small businesses and advertising agencies to target locally focused websites and to place ads on them.
The company also did some financial reshuffling this summer, buying back $2 million in shares and securing a $30 million line of credit.
There have been distractions.
In recent months, the company has seen its shares plunge after a website published a critical story about Local.com and its executives in August.
Shares are off more than 50% in the past six months. They rebounded somewhat in September, rising 17% on a recent market value of $75 million.
TheStreetSweeper.org published a story that raised questions about the credibility of the company’s current and past executives and its way of doing business.
Local.com refuted the assertions, calling them “loose implications” designed to benefit investors who short the company’s shares and profit when they fall.
An investigation into Street Sweeper and the reporter who penned the stories is in progress, according to Clark.
“The stock hasn’t recovered from the activity that occurred,” he said. “We continue to work with the authorities.”
In perhaps what can be seen as a vote of confidence, no shareholder lawsuits have been filed against the company.
Local.com got started nearly a dozen years ago as Interchange Corp. The company went public in 2004 and initially surged on the coattails of Google Inc.
Its shares fell off a cliff in the following years—plummeting nearly 90% by 2006.
In 2005, the company acquired the Local.com domain name and later adopted the name for the company itself.
THE NUMBERS
Three-year revenue growth: 144%
12-month revenue through June: $73.1 million
Yearly loss through June: $480,000
Market value: $75 million
Employees: 110, all in OC
Company: runs online search engine
