Local.com: We Now Have 30K Customers

Local.com put out a release last night that said the firm was acquiring 14,000 of LiveDeal’s customers. Here are the main bits from the release:

[Local.com] announced the acquisition of approximately 14,000 local business advertisers, bringing the company’s total number of small business customers to approximately 30,000.

This acquisition moves the company closer to its stated goal of 50,000 small business customers by the end of 2009, and also increases monetization of the Local.com site and network. The acquired customers will pay approximately $33 per month for a Local Promote listing on Local.com and select sites.

The company will acquire approximately 14,000 local business customers from LiveDeal, Inc. for up to $3.1 million in cash. Excluding one-time acquisition related charges, the transaction is expected to be immediately accretive. The company expects to complete the transfer of the advertiser listings during March.

When I saw this I was a bit confused; were LiveDeal’s assets being acquired? No, apparently just 14K customers (which is probably most of them). Recently LiveDeal sold the YP.com domain for $3.8 million to AT&T. Now it has sold many/most of its customers to Local.com for just over $3M.

I’m still confused. LiveDeal’s latest earnings release doesn’t suggest that it’s going out of business but that it will focus on “premium services.” Are these then the low value accounts? They represent about $5.5M in annual revenue. Local.com will have to retain them and will probably seek to upsell many of them.

It appears that as a classifieds/YP destination LiveDeal is all but done.

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6 Responses to “Local.com: We Now Have 30K Customers”

  1. Zach Says:

    I just found your blog today, there is a great wealth of information here, keep up the awesome work!

  2. Steve Espinosa Says:

    Seriously? 3.1 Million for 5.5 Million in gross yearly revenue? Am I missing something? It says there are ‘other’ one time fees but even if that were be lets say 2 Million that would only bring it up to 5.1 Million, 1x multiplier.

    To me this doesn’t make any sense for Live Deal and makes perfect sense for Local.com.

  3. Greg Sterling Says:

    The churn rate might be pretty high and/or LiveDeal might be desperate for cash.

  4. Peter Scotts Says:

    How do you “acquire” customers who pay for advertising on one product for another product? I am a bit confused on what they actually bought?

  5. Greg Sterling Says:

    That’s apparently what they’ve done, however. I was initially confused as well. They’re taking over the contracts I would assume. And then they’ll pitch their products whenever the accounts are up for renewal (speculation).

  6. Gary Remy Says:

    I would guess these are old LEC billed accounts. In my opinion Local.com will not be able to upsell them and will just let them churn away over time. Cash flow will look good for a while and so will customer count. This will allow Local.com to focus on real customer growth and keep investors satisfied with “supposed” customer numbers.

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