Slide 1: LookSmart Investor Presentation, May 2010
Exhibit 99.1 Jean-Yves Dexmier Executive Chairman & CEO Steve Markowski, CFO May 2010
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements, such as references to our business prospects. These statements, including their underlying assumptions, are subject to risks and uncertainties and are not guarantees of future performance. Results may differ due to various factors su
Slide 3: Non-GAAP Information
Non-GAAP Information This presentation includes non-GAAP financial information. LookSmart provides “non-GAAP net loss,” and “Operating Expense excluding impairment charges,” which are non-GAAP financial measures. Non-GAAP net loss consists of net loss before (a) income (loss) from discontinued opera
Slide 4: Company Overview
Company Overview • LookSmart is an online search advertising network solutions company – Operates in the Tier 2 segment of the online paid search advertising market – Aggregates traffic from large number of publishers – Delivers traffic to a large number of advertisers • LookSmart at a glance – Foun
Slide 5: Focus on Fundamentals
Focus on Fundamentals • Strong Market Opportunity • Diversified customer base – Needs further expansion • Significant competitive advantage: AdCenter Platform • Must improve “throughput” – Traffic Acquisition Cost – Traffic Delivery & Optimization • Must expand distribution network
Slide 6: US Online Advertising Spend, 2008-2014
US Online Advertising Spend, 2008-2014 . Source: eMarketer, December 2009 We believe search advertising will grow as the largest segment in online advertising. $23.6B $22.4B $25.2B $28.3B $31.0B $34.0B $23.4B
Slide 7: A Diversified Customer Base
A Diversified Customer Base • Intermediaries – Our Largest Category – Search Arbitrage reselling to large search engines – Backfill Customers with direct and arbitrage accounts • Direct Advertisers and Agencies – Transaction-based: CPA (cost-per-acquisition) – Page view-based: CPV (cost-per-view) •
Slide 8: The Ad Center Platform – A competitive advantage
The Ad Center Platform – A competitive advantage • Long-standing technology investment – Operating platform since 2002 – Developed with MSN and Ask.com until in-sourcing – Currently available for licensing on an opportunistic basis • A very strong feature set – Granular campaign setting similar to l
Slide 9: Optimizing Traffic Acquisition Costs (TAC)
Optimizing Traffic Acquisition Costs (TAC) • Quest for quality drives focus on high quality traffic – High quality traffic can be acquired at higher TAC – Effort undertaken over the past year resulted in significant increase of TAC and resulting lower Gross Margin • Continuing focus on traffic quali
Slide 10: Increasing “Throughput” will drive Revenues
Increasing “Throughput” will drive Revenues • Traffic Optimization – Deliver the “right” traffic at the “right” price to Search Arbitrage clients, CPA advertisers and Impression advertisers – As traffic delivery meets client performance, increase volume until reaching traffic limits – Stability and
Slide 11: Planning Distribution Network Expansion
Planning Distribution Network Expansion • Focus on quality and customer requirements – Continuing quest for quality drives search for premium traffic – Optimize traffic for both page view and CPA customers • Traffic optimization will test distribution Network limits • Developing leading Distribution
Slide 12: Targeting Sustainable Profitability
Targeting Sustainable Profitability • Sustainable profitability will result from: – Continuing tight control of operating expenses – Short term focus on Traffic Acquisition Costs (TAC) optimization in order to materially improve Gross Margin – Controlled Revenue Growth through implementation of data
Slide 13: GAAP Operating Expenses
GAAP Operating Expenses * *Includes impairment charges of $9.8M in Q408, $0.2M in Q209, and $0.1M in Q409
Slide 14: Non-GAAP Operating Expenses
Non-GAAP Operating Expenses * *Excludes impairment charges of $9.8M in Q408, $0.2M in Q209, and $0.1M in Q409 Tight Control of Operating Expenses
Slide 15: Gross Margin and TAC
Gross Margin and TAC Optimizing TAC to materially improve Gross Margin
Slide 16: Revenue
Revenue Controlled Revenue Growth
Slide 17: GAAP Net Loss
GAAP Net Loss * Dec-08 not drawn to scale ($12.45M loss) *
Slide 18: Non-GAAP Net Income (loss)
Non-GAAP Net Income (loss) * * Without FAS 123R, impairment and discontinued operations Targeting Sustainable Non-GAAP Net Income
Slide 19: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Operating Expenses Mar-08 Jun-08 Sep-08 Dec-08 FY2008 Mar-09 Jun-09 Sep-09 Dec-09 FY2009 Mar-10 GAAP Operating expenses 7,993 7,054 8,146 16,892 40,085 7,347 6,671 5,972 5,330 25,320 4,866 Less: Impairment charges - - - 9,810 9,810 - - - Non-GAAP operating expenses 7
Slide 20: Tangible Net Worth
Tangible Net Worth TANGIBLE NET WORTH PER SHARE $1.38 March 31, Tangible Net Worth ASSETS Current assets: Cash and cash equivalents $ 20,192 Short-term investments 4,473 Total cash, cash equivalents and short-term investments 24,665 Trade accounts receivable, net 5,111 Prepaid expenses and other cur
Slide 21: Summary
Summary • PPC Search Advertising is a growing market • We are improving the business fundamentals to fully leverage our market opportunity • We are first targeting sustainable profitability through a combination of tight expense control, material margin improvement and controlled revenue growth
Slide 22: Questions
Questions