NEW YORK--(BUSINESS WIRE)--Vertro, Inc. (NASDAQ: VTRO), today reported financial results for the third quarter ended September 30, 2009.

Summary of Third Quarter 2009 Results from Continuing Operations:

• Revenue of $7.4 million in Q3 2009, compared to revenue of $6.0 million in Q2 2009;
• Gross margins of 94% in Q3 2009, comparable to the 93% gross margins in Q2 2009;
• EBITDA loss of $1.6 million in Q3 2009, compared to an EBITDA loss of $3.4 million in Q2 2009. Both Q2 and Q3 2009 EBITDA included $0.2 million non-cash compensation expense;
• Adjusted EBITDA loss of $1.4 million in Q3 2009, compared to Adjusted EBITDA loss of $3.2 million in Q2 2009; and
• GAAP net loss from continuing operations of $1.8 million or $(0.05) per basic share in Q3 2009, compared to GAAP net loss from continuing operations of $3.9 million or $(0.11) per basic share in Q2 2009.

“Vertro delivered strong quarter over quarter results, with revenue from continuing operations up 23% and our EBITDA loss from continuing operations more than halved. We executed on our strategy of sustained and focused advertising spend and this enabled us to grow our user base and increase the number of revenue generating events being conducted across our product portfolio. We believe that our improved third quarter performance has laid the foundations required for us to achieve EBITDA profitability from continuing operations in the fourth quarter,” commented Peter Corrao, Vertro’s President and Chief Executive Officer.

Third Quarter Results from Continuing Operations

Revenue was $7.4 million in Q3 2009, compared to Q2 2009 revenue from continuing operations of $6.0 million.

Gross margins were 94% in Q3 2009, compared to 93% in Q2 2009. Gross margin excludes advertising spend of $6.0 million in Q3 2009 and $5.8 million in Q2 2009, which is included in consolidated operating expenses within the marketing, sales and service category.

Operating expenses were $8.6 million in Q3 2009, compared to $9.0 million in Q2 2009. The operating expenses in Q3 2009 included $0.2 million of non-cash compensation expense; Q2 2009 operating expenses included $0.2 million of non-cash compensation expense and accelerated recognition of $0.6 million of unamortized loan expense relating to our line of credit with Bridge Bank, N.A.

EBITDA was a loss of $1.6 million in Q3 2009, compared to an EBITDA loss of $3.4 million in Q2 2009. Both Q2 and Q3 2009 EBITDA included $0.2 million non-cash compensation expense.

Adjusted EBITDA was a loss of $1.4 million in Q3 2009, compared to Adjusted EBITDA loss of $3.2 million in Q2 2009. Both Q2 and Q3 2009 Adjusted EBITDA excluded $0.2 million non-cash compensation expense.

GAAP net loss from continuing operations of $1.8 million or $(0.05) per basic share in Q3 2009, compared to GAAP net loss from continuing operations of $3.9 million or $(0.11) per basic share in Q2 2009. The $1.8 million GAAP net loss from continuing operations in Q3 2009 was approximately $0.5 million less than the estimated $2.3 million GAAP net loss reported in a press release issued on November 3, 2009. This reduction resulted from a final adjustment to our exchange rate loss during the quarter close.

Adjusted net loss from continuing operations was $1.5 million or $(0.04) per diluted share in Q3 2009, compared to Adjusted net loss from continuing operations of $3.6 million or $(0.11) per diluted share in Q2 2009. Both Q2 and Q3 2009 Adjusted net loss excluded $0.2 million in non-cash compensation expense.

Cash and cash equivalents were $6.3 million at September 30, 2009, a decrease of $2.0 million from June 30, 2009 cash of $8.3 million. The decrease was primarily a result of the net loss in the quarter as well as certain anticipated one-time expenses.

As of September 30, 2009, the Company had an active base of approximately 50 full time employees, which was unchanged from the number reported on June 30, 2009.

Selected quarterly metrics from continuing operations are available on Vertro’s investor relations website at: http://ir.vertro.com/results.cfm

Management Conference Call

Management will participate in a conference call to discuss the full results for the Company on November 11, 2009, at approximately 5:00 p.m. ET. Details of the call for interested parties are as follows:

Date: Wednesday, November 11, 2009

Time: 5:00 p.m. ET

Dial-in number: 888-364-3111 / 719-325-2455 (Intl.)

Live webcast: http://ir.vertro.com/events.cfm

Conference call replay: http://ir.vertro.com/events.cfm

Vertro believes that “EBITDA”, “Adjusted EBITDA”, “Adjusted net income/loss” and “Adjusted net income/loss per share” provide meaningful measures for comparison of the Company’s current and projected operating performance with its historical results due to the significant changes in non-cash amortization that began in 2004 primarily due to certain intangible assets resulting from mergers and acquisitions that have since been written off. Vertro defines Adjusted EBITDA as EBITDA (earnings before interest, income taxes, depreciation and amortization) plus non-cash compensation expense and plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business. Vertro uses EBITDA and Adjusted EBITDA as internal measures of its business and believes they are utilized as important measures of performance by the investment community. Vertro sets goals and awards bonuses in part based on performance relative to Adjusted EBITDA. Vertro defines Adjusted net income/loss as net income/loss plus amortization and non-cash compensation expense, plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business, in each case including the tax effects (if any) of the adjustment. Vertro believes the use of these measures does not lessen the importance of GAAP measures.

About Vertro, Inc.

Vertro, Inc. (NASDAQ: VTRO) is a software and technology company that owns and operates the ALOT product portfolio. ALOT's products are designed to 'Make the Internet Easy' by enhancing the way consumers engage with content online. Through ALOT, Internet users can discover best-of-the-web content and display that content through customizable toolbar, homepage and desktop products. ALOT has millions of live users across its product portfolio. Together these users conduct high-volumes of type-in search queries, which are monetized through third-party search and content agreements.

VTRO-E

Forward-looking Statements

This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions such as "anticipate", "plan," "will," "intend," "believe" or "expect'" or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including (1) our ability to successfully execute upon our corporate strategies, (2) our ability to distribute and monetize our international products at rates sufficient to meet our expectations, (3) our ability to develop and successfully market new products and services, and (4) the potential acceptance of new products in the market. Additional key risks are described in Vertro's reports filed with the U.S. Securities and Exchange Commission, including the Form 10-Q for Q3 2009.

Non-GAAP Financial Measures

This press release includes discussion of additional financial measures “EBITDA”, “Adjusted EBITDA,” “Adjusted Net Loss,” “Adjusted Net Income,” “Adjusted Net Loss Per Share” and “Adjusted Net Income Per Share,” which are not considered generally accepted accounting principle (GAAP) measures by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Vertro provides reconciliations of these two financial measures to GAAP measures in its press releases regarding actual financial results. Reconciliations of net income/loss from continuing operations and net income/loss per share to these financial measures for the three month periods ended September 30, 2009 and 2008, and June 30, 2009, and for the nine month periods ended September 30, 2009 and 2008 are included in this press release as set forth below.

Vertro, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
				Three Months				Three Months				Nine Months				Nine Months
				Ended				Ended				Ended				Ended
				September 30, 2009				September 30, 2008				September 30, 2009				September 30, 2008
				(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenues				$	7,389			$	10,367			$	19,625			$	32,741
Cost of services					479				660				1,380				1,926
Gross profit					6,910				9,707				18,245				30,815
Operating expenses
	Marketing, sales, and service				6,350				6,882				17,246				22,653
	General and administrative				1,595				3,420				6,880				11,725
	Product development				596				861				1,927				2,703
	Amortization				106				411				146				1,364
	Restructuring Charges				-				110				(15	)			661
Total operating expenses					8,647				11,684				26,184				39,106
Loss from operations					(1,737	)			(1,977	)			(7,939	)			(8,291	)
Interest (expense), net					(2	)			29				(75	)			182
Exchange rate gain (loss)					(89	)			-				(487	)			-
Loss before provision for income taxes					(1,828	)			(1,948	)			(8,501	)			(8,109	)
Income tax expense (benefit)					-				(18	)			27				67
Loss from continuing operations				$	(1,828	)		$	(1,930	)		$	(8,528	)		$	(8,176	)
Income/(loss) from discontinued operations				$	1,184			$	(8,596	)		$	(3,483	)		$	(13,942	)
Gain on sale of discontinued operations					0				-				7,139				-
Net loss				$	(644	)		$	(10,526	)		$	(4,872	)		$	(22,118	)
Basic earnings (loss) per share
		Continuing operations		$	(0.05	)		$	(0.06	)		$	(0.25	)		$	(0.25	)
		Discontinued operations		$	0.04			$	(0.26	)		$	0.11			$	(0.43	)
Diluted earnings (loss) per share
		Continuing operations		$	(0.05	)		$	(0.06	)		$	(0.25	)		$	(0.25	)
		Discontinued operations		$	0.04			$	(0.26	)		$	0.11			$	(0.43	)
Weighted-average number of common
	shares outstanding
		Basic			33,784				32,641				33,564				32,596
		Diluted			33,784				32,641				33,564				32,596

Vertro, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
				Three Months				Three Months
				Ended				Ended
				September 30, 2009				June 30, 2009
				(unaudited)				(unaudited)
Revenues				$	7,389			$	6,002
Cost of services					479				445
Gross profit					6,910				5,557
Operating expenses
	Marketing, sales, and service				6,350				6,143
	General and administrative				1,595				2,193
	Product development				596				633
	Amortization				106				40
	Restructuring Charges				-				-
Total operating expenses					8,647				9,009
Loss from operations					(1,737	)			(3,452	)
Interest income, net					(2	)			9
Exchange rate gain (loss)					(89	)			(398	)
Loss before provision for income taxes					(1,828	)			(3,841	)
Income tax expense					-				14
Loss from continuing operations				$	(1,828	)		$	(3,855	)
Income/(loss) from discontinued operations				$	1,184				491
Gain on sale of discontinued operations					0				213
Net loss				$	(644	)		$	(3,151	)
Basic earnings (loss) per share
		Continuing operations		$	(0.05	)		$	(0.11	)
		Discontinued operations		$	0.04			$	0.02
Diluted earnings (loss) per share
		Continuing operations		$	(0.05	)		$	(0.11	)
		Discontinued operations		$	0.04			$	0.02
Weighted-average number of common
	shares outstanding
		Basic			33,784				33,707
		Diluted			33,784				33,707

Vertro, Inc.
Reconciliations to Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
		Three Months				Three Months				Nine Months				Nine Months
Additional information:		Ended				Ended				Ended				Ended
		September 30, 2009				September 30, 2008				September 30, 2009				September 30, 2008
Adjusted EBITDA		$	(1,365	)		$	(304	)		$	(6,811	)		$	(3,716	)
Adjusted net loss		$	(1,486	)		$	(394	)		$	(7,480	)		$	(4,052	)
Adjusted net loss per share		$	(0.04	)		$	(0.01	)		$	(0.22	)		$	(0.12	)
		Three Months				Three Months
Additional information:		Ended				Ended
		September 30, 2009				June 30, 2009
Adjusted EBITDA		$	(1,365	)		$	(3,166	)
Adjusted net loss		$	(1,486	)		$	(3,593	)
Adjusted net loss per share		$	(0.04	)		$	(0.11	)
		Three Months				Three Months				Nine Months				Nine Months
		Ended				Ended				Ended				Ended
Reconciliation of Net Loss to Adjusted EBITDA		September 30, 2009				September 30, 2008				September 30, 2009				September 30, 2008
Loss from continuing operations		$	(1,828	)		$	(1,930	)		$	(8,528	)		$	(8,176	)
Interest income (expense), net and exchange rate loss			91				(29	)			562				(182	)
Income tax expense (benefit)			-				(18	)			27				67
Depreciation			30				137				80				451
Amortization			106				411				146				1,364
EBITDA			(1,601	)			(1,429	)			(7,713	)			(6,476	)
Restructuring Charges			-				110				(15	)			661
Non cash compensation charge			236				1,015				917				2,099
Adjusted EBITDA		$	(1,365	)		$	(304	)		$	(6,811	)		$	(3,716	)
		Three Months				Three Months
		Ended				Ended
Reconciliation of Net Loss to Adjusted EBITDA		September 30, 2009				June 30, 2009
Loss from continuing operations		$	(1,828	)		$	(3,855	)
Interest income (expense), net and exchange rate loss			91				389
Income tax expense			-				14
Depreciation			30				24
Amortization			106				40
EBITDA			(1,601	)			(3,388	)
Non cash compensation charge			236				222
Restructuring charges			-				-
Adjusted EBITDA		$	(1,365	)		$	(3,166	)
		Three Months				Three Months				Nine Months				Nine Months
		Ended				Ended				Ended				Ended
Reconciliation of Net Loss to Adjusted Net Loss		September 30, 2009				September 30, 2008				September 30, 2009				September 30, 2008
Loss from continuing operations		$	(1,828	)		$	(1,930	)		$	(8,528	)		$	(8,176	)
Amortization			106				411				146				1,364
Restructuring Charges			-				110				(15	)			661
Non cash compensation charges			236				1,015				917				2,099
Adjusted net loss		$	(1,486	)		$	(394	)		$	(7,480	)		$	(4,052	)
Adjusted net loss per share			(0.04	)			(0.01	)			(0.22	)			(0.12	)
Shares used in per share calculation - basic / diluted			33,784				32,641				33,564				32,596
		Three Months				Three Months
		Ended				Ended
		September 30, 2009				June 30, 2009
Reconciliation of Net Loss to Adjusted Net Loss
Loss from continuing operations		$	(1,828	)		$	(3,855	)
Amortization			106				40
Non cash compensation charges			236				222
Adjusted net loss		$	(1,486	)		$	(3,593	)
Adjusted net loss per share		$	(0.04	)		$	(0.11	)
Shares used in per share calculation - basic			33,784				33,707

Vertro, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
			September 30,				December 31,
ASSETS			2009				2008
			(Unaudited)
CURRENT ASSETS
	Cash and Cash Equivalents		$	6,330			$	6,699
	Accounts receivable, less allowances of $891 and $1,242
	at September 30, 2009 and December 31, 2008.			2,741				11,204
	Deferred tax assets			167				167
	Income tax receivable			114				247
	Prepaid expenses and other current assets			265				1,584
	TOTAL CURRENT ASSETS			9,617				19,901
Property and equipment, net				53				4,975
Restricted cash				550				2,000
Other assets				500				703
	TOTAL ASSETS		$	10,720			$	27,579
LIABILITIES AND (CAPITAL DEFICIT) STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
	Accounts payable		$	5,152			$	6,609
	Accrued expenses			4,129				11,534
	Other Current Liabilities			41				783
	TOTAL CURRENT LIABILITIES			9,322				18,926
	Deferred tax liabilities long-term			167				167
	Long-term debt			-				4,595
	Other long-term liabilities			1,382				1,305
	TOTAL LIABILITIES			10,871				24,993
(CAPITAL DEFICIT) STOCKHOLDERS' EQUITY
	Preferred stock, $.001 par value; authorized,
	500 shares; none issued and outstanding			-				-
	Common stock, $.001 par value; authorized, 200,000
	shares; issued 35,552 and 34,480, respectively;
	outstanding 33,786 and 32,731, respectively			35				34
	Additional paid-in capital			270,457				268,841
	Treasury stock; 1,766 and 1,749 shares at cost, respectively			(6,722	)			(6,719	)
	Accumulated other comprehensive income			12,914				12,393
	Accumulated Deficit			(276,835	)			(271,963	)
	TOTAL (CAPITAL DEFICIT) STOCKHOLDERS' EQUITY			(151	)			2,586
	TOTAL LIABILITIES AND (CAPITAL DEFICIT) STOCKHOLDERS' EQUITY		$	10,720			$	27,579

Vertro, Inc.
Peter Corrao, 212-231-2000
President & CEO
Peter.Corrao@vertro.com