A continuing international expansion and improved quarterly earnings have made Woodland Hills Internet ad company ReachLocal Inc. an investor favorite.
Shares increased 16 percent for the week ended May 2 to close at $8.86, making it one of the biggest gainers on the LABJ Stock Index. (See page 38.)
The company last week said that for the quarter ended March 31 revenue rose 24 percent but went up 60 percent internationally from the same quarter the year before. The company also raised its revenue forecast for the rest of 2012. ReachLocal’s loss for the quarter was $1 million, down from a loss of $3.44 million the previous year.
Michael Kline, ReachLocal’s chief strategy officer, attributes the improved performance to several factors.
“One is certainly our international presence and how much that has grown,” Kline said. “The second is the deepening of our relationship with advertisers.”
Kline said advertisers have put more faith in Reach Local since the company inked a partnership deal with Google Inc. last year. Also, instead of limiting its focus on small businesses, ReachLocal has begun looking for larger clients.
The company started out in 2003 with a staff of four in a small office in Encino. Today, it has more than 1,600 employees internationally, with operations in the Netherlands, United Kingdom, New Zealand, Germany, Australia, Canada and Japan. This year, the company plans to expand to two or three more countries, Kline said, but wouldn’t disclose which ones.
“We firmly believe that opportunity we saw nine years ago is a global opportunity,” he said.
ReachLocal has focused on promoting small and medium-size businesses on the Internet through search engine advertising and social media campaigns.
Marketing packages average about $1,500 per client, and can go as high as $5,000 and as low as $100 a month. The company reported 20,400 active advertisers purchasing 30,100 products, compared with 17,400 advertisers and 24,300 products in the first quarter of last year.
The relationship with Google is key to that growth, Kline said. ReachLocal joined the Mountain View giant’s AdWords services in 2004, but last year’s deal made ReachLocal a premier AdWords partner, which essentially gives Google’s seal of approval to the company.
Chief Executive Zorik Gordon predicted more growth for ReachLocal.
Chief Financial Officer Ross Landsbaum raised the revenue forecast for this year, expecting $439 million to $454 million.