ReachLocal Sets IPO Terms

ReachLocal Inc., a Woodland Hills, Calif.-based provider of online advertising solutions for local businesses, has set its IPO terms to 4.17 million common shares being offered at between $17 and $19 per share. It would have an initial market cap of approximately $515 million, were it to price at the high end of its range.

The company plans to trade on the Nasdaq under ticker symbol RLOC, with J.P. Morgan and BoA Merrill Lynch serving as co-lead underwriters.

ReachLocal reported over $203 million in revenue for 2009, compared to around $146 million in 2008. Its net income for the 2009 period is $11.66 million, compared to a $4.47 million loss in 2008. Net income was around $1.4 million, compared to a $7 million net loss in 2008.

ReachLocal raised around $68 million in VC funding, from VantagePoint Venture Partners (53.22% pre-IPO stake), Rho Ventures (12.94%) and Galleon Group (6.76%).


  • If this deal happens it trades down.

  • Don’t really get this one. Can someone please explain how do these guys compete with Yellow pages, who already have the customers and can bundle? Or Google’s Local platform?

  • Reachlocal will fail. The problem with this company is like a lot of the long distance aggregators and resellers that popped up out of the woodworks back in the 80’s when they divested AT&T, Reachlocal is preying on the uneducated consumer. Yes their plan will work for awhile in the niche industries that typically purchased yellow pages, but come how long can reachlocal pull the wool over their eyes. As the consumers become more educated and Google continues to make it easier to track and manage Pay Per Click yourself on their site Reachlocal will start to slip, just the the majority of CLECs did in the 90s.

    This deal most definetly Trades down and once they are public and the public figures out how they generate the clicks to there website a lot of there customer will have egg on there face.

    Ask anyone that knows the reachlocal model and they will tell you that every campaign they run they bid on the companies name who puts a google adwords campaign together that focuses on the companies name, what a joke. Bring your customers real traffic, new traffic, qualified traffic and stop telling your clients for long term success you dont need SEM/SEO.

    I could go on and on but I wont you get the picture for more information on what I am ranting about do a google search and type in Reachlocal Complaints or Scams.
    Some companies have already figured out how Reachlocal gets results

    This company is trying to force a round peg into a square hole

  • Selling Google ads door to door is a throwback. Google already has a self-service model, and the first company that can simplify the process even further and create mass awareness for local businesses will show that Reachlocal’s top-heavy sales model is entrely wrong.

  • I would have to disagree with the posts above. My bet is that once this hits the public market it makes a big run up. They’ve got huge revenue potential in a $20bb US yellow page market (not to mention international expansion). Google is not a sales organization and most small businesses don’t have the time or know-how to manage an integrated marketing campaign. There is a huge need for that and with the potential revenue growth over the next 5+ years I could easily see the market cap of this company going north of $1bb+.

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