Shares of ReachLocal Inc. dropped nearly 15 percent Wednesday following the announcement of widening losses in the fourth quarter.
The Woodland Hills company, which helps small and mid-sized businesses market online, reported a net loss $585, 000 (-2 cents a share) for the quarter, compared to a loss of $394,000 (-1 cent) in the same quarter a year earlier. Revenue grew 11 percent to $133 million.
Analysts on average expected earnings of 3 cents a share on revenue of $135 million, according to Thomson Financial Network.
The company said the surprise losses are driven by costs to reorganize its domestic staff as sales grow rapidly in international markets.
“In December 2013, we executed a complete realignment of our direct local sales force in North America,” said interim Chief Executive David Carlick. “While these changes negatively impacted our fourth-quarter revenue results and will require increased investment in 2014, we believe these initiatives mark the transition of ReachLocal to a product-focused technology company with a significantly expanded market opportunity.”
For the full year, the company reported a net loss of $2.5 million (-9 cents) compared to a loss of $232,000 (-1 cent) in 2012. Annual revenue increased 13 percent to $514 million.
Analysts on average expected earnings of 8 cents on revenue of $592 million, according to Thomson Financial Network.
Shares fell $1.88 to $10.80 on the Nasdaq.