Marchex, Inc. (NASDAQ:MCHX), a mobile advertising analytics
company, today announced its financial results for the first
quarter ended March 31, 2015.
“Massive mobile adoption is driving increased offline sales,
including phone calls from consumers to businesses. This is
creating an increasing gap for enterprise marketers whose top
priority is understanding mobile return on ad spend,” said Pete
Christothoulou, Chief Executive Officer. “The need for technology
solutions to bridge this gap validates our investment in
establishing Marchex as the world’s leading mobile advertising
analytics company.”
Q1 2015 Financial
Highlights
- GAAP revenue was $42.6
million for the first quarter of 2015, compared to $50.5
million for the first quarter of 2014.
- GAAP net income from continuing
operations was $4.6 million for the first quarter of 2015, compared
to GAAP net income from continuing operations of $846,000 for the
first quarter of 2014.
- GAAP net income from continuing
operations attributable to common stockholders per diluted share
was $0.11 for the first quarter of 2015. This compares to GAAP net
income from continuing operations attributable to common
stockholders per diluted share of $0.02 for the first quarter of
2014.
Q1 2015 Q1 2014 GAAP
Revenue $42.6 million $50.5 million
Call-Driven and related revenue $35.0 million
$45.5 million
Non-GAAP Results:
Call-Driven Adjusted OIBA1 $2.6 million
$2.4 million
Call-Driven Adjusted EBITDA1 $3.5
million $3.3 million
Adjusted OIBA1
$7.6 million $4.7 million
Adjusted EBITDA1
$8.5 million $5.7 million
Archeo Revenue2 $7.5 million
$5.0 million
Domain sales $6.4 million $1.9
million
- Adjusted non-GAAP EPS1 from continuing
operations for the first quarter of 2015 was $0.12, compared to
$0.08 for the first quarter of 2014.
_________________________
1 Reconciliations of non-GAAP measures are
included in the financial tables attached to this press release and
we encourage investors to examine the reconciling adjustments
between the GAAP and non-GAAP measures.
2 Includes domain sales recognized in GAAP
revenue.
Marchex Q1 2015 and Recent Call-Driven
Business Highlights:
- Revenue. Call-Driven and related
revenue was $35.0 million for the first quarter of 2015 compared to
$45.5 million for the first quarter of 2014.
Non-Operating Q1 2015
Highlights:
- Business Update. On April 22,
2015, the Company announced the sale of the bulk of its domain
portfolio for aggregate proceeds of $34.8 million, which includes a
sale to GoDaddy Inc. for $28.1 million paid in cash at closing plus
additional earn-out payments subject to certain sales targets, as
well as $6.7 million in direct domain sales by Marchex since
January 2015.
- Dividend Update. Following the
previously announced payment of the May 18, 2015 dividend, and with
the April sale of the domain assets, the Company is prospectively
discontinuing the dividend and intends to use any future cash
generated to support strategic flexibility.
- During the first quarter, Marchex
purchased 225,000 shares of its outstanding Class B common stock
for a total price of $931,000. This brings Marchex’s total shares
repurchased under its November 2014 share repurchase program to
893,000 shares or 2% of its outstanding Class B common stock.
Business Outlook
The following forward-looking statements reflect Marchex's
expectations as of May 6, 2015, and exclude any contribution from
Archeo operations, including domain sales, and discontinued
operations. Archeo operating results would be additive to our
Call-Driven revenue, profitability, and other measures
below:
Call-Driven
financial guidance for the Second Quarter ending June 30,
2015
Call-Driven Revenue $34.0 million or more Call-Driven
Adjusted OIBA 1 $1.0 million or more Call-Driven Adjusted
EBITDA 1 $2.0 million or more
1 These non-GAAP Call-Driven measures assign
all Marchex corporate overhead costs to the Call-Driven results.
Reconciliations of non-GAAP measures are included in the financial
tables attached to this press release and we encourage investors to
examine the reconciling adjustments between the GAAP and non-GAAP
measures.
Conference Call and Webcast
Information
Management will hold a conference call, starting at 5:00 p.m. ET
on Wednesday, May 6, 2015, to discuss its first quarter ended March
31, 2015, financial results, and other company updates. Access to
the live webcast of the conference call will be available online
from the Investors section of Marchex’s website at www.marchex.com. An archived version of the
webcast will also be available at the same location, beginning two
hours after completion of the call.
About Marchex
Marchex is a mobile advertising analytics company that connects
online behavior to real-world, offline actions. By linking critical
touchpoints in the customer journey, Marchex’s products enable a
360-degree view of marketing effectiveness. Brands and agencies
utilize Marchex’s products to transform business performance.
Please visit www.marchex.com, blog.marchex.com or @marchex on
Twitter (Twitter.com/Marchex), where Marchex discloses material
information from time to time about the Company, its financial
information, and its business.
Forward-Looking
Statements:
This press release contains forward-looking statements that
involve substantial risks and uncertainties. All statements, other
than statements of historical facts, included in this press release
regarding our strategy, future operations, future financial
position, future revenues, other financial guidance, acquisitions,
dispositions, projected costs, prospects, plans and objectives of
management are forward-looking statements. We may not actually
achieve the plans, intentions, or expectations disclosed in our
forward-looking statements and you should not place undue reliance
on our forward-looking statements. Actual results or events could
differ materially from the plans, intentions and expectations
disclosed in the forward-looking statements we make. There are a
number of important factors that could cause Marchex's actual
results to differ materially from those indicated by such
forward-looking statements which are described in the "Risk
Factors" section of our most recent periodic report and
registration statement filed with the SEC. All of the information
provided in this release is as of May 6, 2015 and Marchex
undertakes no duty to update the information provided herein.
Non-GAAP Financial
Information:
To supplement Marchex's consolidated financial statements
presented in accordance with GAAP and to provide clarity internally
and externally, Marchex uses certain non-GAAP measures of financial
performance and liquidity, including OIBA, Adjusted OIBA, Adjusted
EBITDA, Adjusted non-GAAP EPS and Call-Driven and Archeo Adjusted
OIBA and EBITDA. In conjunction with the sale of the bulk of
Marchex’s domain portfolio and certain related assets in April 2015
(”Divested Assets”), Marchex has also presented Revenue from
Divested Assets, Adjusted OIBA and EBITDA from Divested Assets and
Archeo Revenue, Adjusted OIBA and EBITDA excluding Divested
Assets.
OIBA represents income (loss) from
operations plus (1) stock-based compensation expense and (2)
amortization of intangible assets from acquisitions. This measure,
among other things, is one of the primary metrics by which Marchex
evaluates the performance of its business. Additionally, Marchex's
management uses Adjusted OIBA, which
excludes acquisition and disposition related costs, as this item is
not indicative of Marchex’s recurring core operating results.
Adjusted OIBA is the basis on which Marchex's internal budgets are
based and by which Marchex's management is currently evaluated.
Marchex believes these measures are useful to investors because
they represent Marchex's consolidated operating results, taking
into account depreciation and other intangible amortization, which
Marchex believes is an ongoing cost of doing business, but
excluding the effects of certain other expenses such as stock-based
compensation, amortization of intangible assets from acquisitions
and acquisition and disposition related costs. Adjusted EBITDA represents income before interest,
income taxes, depreciation, amortization, stock compensation
expense, and acquisition and disposition related cost. Marchex
believes that Adjusted EBITDA is another alternative measure of
liquidity to GAAP net cash provided by operating activities that
provides meaningful supplemental information regarding liquidity
and is used by Marchex's management to measure its ability to fund
operations and its financing obligations.
Call-Driven Adjusted OIBA and
EBITDA include the above descriptions of Adjusted OIBA and
EBITDA for the Call-Driven segment. The Call-Driven Adjusted OIBA
and EBITDA assign all Marchex general corporate overhead costs to
the Call-Driven results. Archeo Adjusted OIBA
and EBITDA include the above descriptions of Adjusted OIBA
and EBITDA for the Archeo segment. Financial analysts and investors
may use Adjusted OIBA and EBITDA to help with comparative financial
evaluation to make informed investment decisions. Revenue from Divested Assets and Adjusted OIBA and EBITDA from Divested Assets
include preliminary estimates of revenue and adjusted OIBA and
EBITDA contributed by the Divested Assets. Archeo Revenue, Adjusted OIBA and EBITDA excluding
Divested Assets exclude preliminary estimates of revenue and
adjusted OIBA and EBITDA contributed by the Divested Assets.
Adjusted non-GAAP EPS represents
Adjusted non-GAAP net income applicable to common stockholders
divided by GAAP diluted shares outstanding. Adjusted non-GAAP net
income applicable to common stockholders generally captures those
items on the statement of operations that have been, or ultimately
will be, settled in cash exclusive of certain items that are not
indicative of Marchex’s recurring core operating results and
represents net income applicable to common stockholders plus the
net of tax effects of: (1) stock-based compensation expense, (2)
amortization of intangible assets from acquisitions, (3)
acquisition and disposition related costs, (4) interest and other
income (expense), (5) discontinued operations, net of tax and (6)
dividends paid to participating securities. Financial analysts and
investors may use Adjusted non-GAAP EPS to analyze Marchex's
financial performance since these groups have historically used EPS
related measures, along with other measures, to estimate the value
of a company, to make informed investment decisions, and to
evaluate a company's operating performance compared to that of
other companies in its industry.
Marchex's management believes that investors should have access
to, and Marchex is obligated to provide, the same set of tools that
management uses in analyzing the company's results. These non-GAAP
measures should be considered in addition to results prepared in
accordance with GAAP, and should not be considered in isolation, as
a substitute for, or superior to, GAAP results. Marchex’s non-GAAP
financial measures may be defined differently from time to time and
may be defined differently than similar titled terms used by other
companies, and accordingly, care should be exercised in
understanding how Marchex defines its non-GAAP financial measures
in this release. Marchex endeavors to compensate for the
limitations of the non-GAAP measures presented by providing the
comparable GAAP measure with equal or greater prominence, GAAP
financial statements, and detailed descriptions of the reconciling
items and adjustments, including quantifying such items, to derive
the non-GAAP measure.
MARCHEX, INC. AND SUBSIDIARIESCondensed
Consolidated Statements of Operations(in thousands, except
per share data)(unaudited) Three Months
EndedMarch 31, 2014 2015 Revenue $
50,496 $ 42,575 Expenses: Service costs (1) 32,354
20,688 Sales and marketing (1) 3,382 3,657 Product development (1)
7,560 7,693 General and administrative (1) 5,361 5,699 Amortization
of intangible assets from acquisitions 403 - Disposition related
costs - 225 Total operating
expenses 49,060 37,962 Income
from operations 1,436 4,613 Interest expense and other, net
(2 ) (25 ) Income from continuing operations before
provision for income taxes 1,434 4,588 Income tax expense
588 5 Net income from continuing
operations 846 4,583 Discontinued operations, net of tax 9
- Net income 855 4,583 Dividends paid
to participating securities (36 ) (19 ) Net
income applicable to common stockholders $ 819 $
4,564 Basic and diluted net income per Class A and
Class B share applicable to common stockholders $ 0.02 $ 0.11
Dividends paid per share $ 0.02 $ 0.02 Shares used to calculate
basic net income per share applicable to common stockholders Class
A 7,741 5,233 Class B 29,035 35,766 Shares used to calculate
diluted net income per share applicable to common stockholders
Class A 7,741 5,233 Class B 39,761 41,310
(1) Includes stock-based compensation
allocated as follows:
Service costs $ 282 $ 223 Sales and marketing 204 246 Product
development 659 579 General and administrative 1,738
1,746 Total $ 2,883 $ 2,794
MARCHEX, INC. AND
SUBSIDIARIESCondensed Consolidated Balance Sheets(in
thousands)(unaudited)
December 31,2014 March
31,2015
Assets
Current assets: Cash and cash equivalents $ 80,032 $ 83,658
Accounts receivable, net 25,941 27,943 Prepaid expenses and other
current assets 3,143 3,153 Refundable taxes 131
133 Total current assets 109,247 114,887
Property and equipment, net 5,430 5,505 Intangibles and
other assets, net 313 367 Goodwill 65,679
65,679 Total Assets $ 180,669 $ 186,438
Liabilities and Stockholders' Equity
Current liabilities: Accounts payable $ 13,766 $ 13,839 Accrued
expenses and other current liabilities 7,515 8,297 Deferred revenue
2,117 1,454 Total current
liabilities 23,398 23,590 Other non-current liabilities
1,118 1,016 Total Liabilities
24,516 24,606 Class A common stock 55 55 Class B
common stock 373 370 Treasury stock (2,503 ) (3,430 ) Additional
paid-in capital 348,467 350,493 Accumulated deficit (190,239
) (185,656 ) Total Stockholders' Equity
156,153 161,832 Total Liabilities and
Stockholders' Equity $ 180,669 $ 186,438
MARCHEX, INC. AND
SUBSIDIARIESReconciliation of GAAP Income from Operations to
Operating Income Before Amortization (OIBA)and Adjusted
Operating Income Before Amortization (Adjusted OIBA)(in
thousands)(unaudited) Three Months
EndedMarch 31, 2014 2015 Income
from operations $ 1,436 $ 4,613 Stock-based compensation
2,883 2,794 Amortization of intangible assets from acquisitions
403 - Operating income before amortization
(OIBA) 4,722 7,407 Disposition related costs -
225
Adjusted operating income before amortization (Adjusted
OIBA) $ 4,722 $ 7,632
MARCHEX, INC. AND SUBSIDIARIESReconciliation from
Net Cash provided by Operating Activities to Adjusted
EBITDA(in thousands)(unaudited)
Three Months EndedMarch 31, 2014
2015 Net cash provided by operating activities $
8,078 $ 6,200 Changes in assets and liabilities (2,984 ) 2,054
Income tax expense 588 5 Disposition related costs - 225 Interest
expense and other, net 2 24 Loss on discontinued operations, net of
tax (9 ) -
Adjusted EBITDA
$ 5,675 $ 8,508
Net cash used in investing activities $ (807 ) $ (877
) Net cash provided by (used in) financing activities $ 343
$ (1,697 )
MARCHEX, INC. AND
SUBSIDIARIESReconciliation of GAAP EPS to Adjusted Non-GAAP
EPS(in thousands, except per share
data)(unaudited) Three Months
EndedMarch 31, 2014 2015 Adjusted
Non-GAAP EPS from continuing operations $ 0.08 $ 0.12
Net income applicable to common stockholders -
diluted (GAAP EPS) $ 0.02 $ 0.11 Shares used to calculate diluted
net income per share applicable to common stockholders 39,761
41,310 Net income applicable to common stockholders $ 819 $
4,564 Stock-based compensation 2,883 2,794 Disposition related
costs - 225 Amortization of intangible assets from acquisitions 403
- Interest expense and other, net 2 25 Dividends paid to
participating securities 36 19 Discontinued operations, net of tax
(9 ) - Estimated impact of income taxes (1,068 )
(2,680 )
Adjusted Non-GAAP net income from continuing
operations $ 3,066 $
4,947 Adjusted Non-GAAP EPS from continuing
operations $ 0.08 $
0.12 Diluted shares used
to calculate Adjusted Non-GAAP EPS (1) 39,761
41,310
(1) For the purpose of computing the
number of diluted shares for Adjusted Non-GAAP EPS, Marchex uses
the accounting guidance that would be applicable for computing the
number of diluted shares for GAAP EPS.
MARCHEX, INC. AND SUBSIDIARIESQuarterly
Financial Summary Information(in
thousands)(unaudited) NON-GAAP
MEASURESAmounts below exclude Discontinued Operations
CONSOLIDATED Q114 Q214
Q314 Q414 Q115 GAAP
Revenue $ 50,496 $
49,676 $ 49,181 $
33,291 $ 42,575 Adjusted OIBA
$ 4,722 $ 4,791 $ 4,249
$ 3,469 $ 7,632 Adjusted EBITDA
$ 5,675 $ 5,692
$ 5,155 $ 4,380
$ 8,508
CALL-DRIVEN AND
RELATED Q114 Q214
Q314 Q414 Q115 GAAP
Revenue $ 45,492 $ 45,857 $
46,379 $ 30,323 $ 35,029
Adjusted OIBA $ 2,411 $ 2,897
$ 3,279 $ 2,512 $ 2,631
Adjusted EBITDA $ 3,312 $
3,764 $ 4,170 $
3,409 $ 3,493
ARCHEO Q114 Q214
Q314 Q414 Q115 GAAP
Revenue $ 5,004 $ 3,819 $
2,802 $ 2,968 $ 7,546
Adjusted OIBA $ 2,311 $ 1,894
$ 970 $ 957 $ 5,001
Adjusted EBITDA $ 2,363 $
1,928 $ 985 $
971 $ 5,015
ARCHEO excluding Divested Assets1 Q114
Q214 Q314 Q414
Q115 Revenue excluding Divested Assets1
$ 2,602 $ 1,185 $ 859
$ 903 $ 887 Adjusted OIBA excluding
Divested Assets1 $ 847 $ 239
$ (49 ) $ (154 ) $
(170 ) Adjusted EBITDA excluding Divested
Assets1 $ 847 $
239 $ (49 ) $
(154 ) $ (169 )
1 In April 2015, Marchex divested certain
Archeo domain name and related assets ("Divested Assets"). The
financial results for the Divested Assets are preliminary, subject
to updates, and have been derived from the unaudited consolidated
financial statements of Marchex, Inc. for all periods
presented.
Due to rounding, the sum of quarterly amounts may not equal
amounts reported for year-to-date periods.
MARCHEX, INC. AND SUBSIDIARIES(in
thousands)(unaudited) Reconciliation of GAAP
Income (Loss) from Operations to Operating Income before
Amortization (OIBA)and Adjusted Operating Income Before
Amortization (Adjusted OIBA) Three
Months Ended 3/31/2014 6/30/2014
9/30/2014 12/31/2014 3/31/2015
Income from operations $ 1,436 $ 1,711
$ 1,225 $ 590 $ 4,613 Stock-based compensation 2,883 3,117 3,024
2,879 2,794 Amortization of intangible assets from acquisitions
403 31 -
- - Operating income before
amortization (OIBA) 4,722 4,859 4,249 3,469 7,407 Acquisition and
disposition related costs - (68 )
- - 225
Adjusted OIBA - Consolidated $ 4,722 $
4,791 $ 4,249 $ 3,469 $
7,632 Less: Archeo Adjusted OIBA 1 2,311
1,894 970
957 5,001 Call-Driven and related Adjusted OIBA1 $
2,411 $ 2,897 $ 3,279 $
2,512 $ 2,631
Reconciliation from Net Cash
provided by Operating Activities to Adjusted EBITDA
Three Months Ended 3/31/2014 6/30/2014
9/30/2014 12/31/2014
3/31/2015 Net cash provided by operating activities $
8,078 $ 3,289 $ 6,750 $ 4,302 $ 6,200 Changes in assets and
liabilities (2,984 ) 1,672 (24,736 ) 58 2,054 Income tax expense
588 709 22,980 - 5 Disposition related costs - - - - 225
Discontinued operations, net of tax (9 ) - - - - Tax effect of gain
on sale of discontinued operations - - 143 - - Interest expense and
other, net 2 22 18
20 24
Adjusted EBITDA -
Consolidated $ 5,675 $ 5,692
$ 5,155 $ 4,380 $ 8,508
Less: Archeo Adjusted EBITDA1 2,363
1,928 985 971
5,015 Call-Driven and related Adjusted EBITDA1 $ 3,312
$ 3,764 $ 4,170 $ 3,409
$ 3,493
Summary of Revenue by Segment
Three Months Ended 3/31/2014 6/30/2014
9/30/2014 12/31/2014 3/31/2015 Call-Driven and
related Revenue1 $ 45,492 $ 45,857 $ 46,379 $ 30,323 $ 35,029
Archeo Revenue1 5,004 3,819
2,802 2,968 7,546
Revenue - Consolidated $ 50,496
$ 49,676 $ 49,181
$ 33,291 $ 42,575
1 The financial results for Call-Driven
and Archeo have been derived from the unaudited condensed
consolidated financial statements.
MARCHEX, INC. AND SUBSIDIARIESArcheo
Financial Summary(in thousands)(Unaudited)
NON-GAAP MEASURES
ARCHEO Q114 Q214
Q314 Q414 Q115 Archeo GAAP
Revenue
$ 5,004 $ 3,819 $
2,802 $ 2,968 $ 7,546 Less:
Revenue from Divested Assets $ 2,402 $ 2,634 $ 1,943
$ 2,065 $ 6,659
Archeo
Revenue excluding Divested Assets1 $ 2,602
$ 1,185 $ 859
$ 903 $ 887
Archeo Adjusted OIBA
$ 2,311 $
1,894 $ 970 $ 957 $
5,001 Less: Adjusted OIBA from Divested Assets $ 1,464
$ 1,655 $ 1,019 $ 1,111 $
5,171
Archeo Adjusted OIBA excluding Divested
Assets1 $ 847 $ 239
$ (49 ) $ (154
) $ (170 ) Archeo
Adjusted EBITDA
$ 2,363 $ 1,928
$ 985 $ 971 $ 5,015
Less: Adjusted EBITDA from Divested
Assets
$ 1,516 $ 1,689 $ 1,034 $ 1,125
$ 5,184
Archeo Adjusted EBITDA excluding Divested
Assets1 $ 847 $ 239
$ (49 ) $ (154
) $ (169 )
1 In April 2015, Marchex divested certain
Archeo domain name and related assets ("Divested Assets"). The
financial results for the Divested Assets are preliminary, subject
to updates, and have been derived from the unaudited consolidated
financial statements of Marchex, Inc. for all periods
presented.
Due to rounding, the sum of quarterly amounts may not equal
amounts reported for year-to-date periods.
Marchex, Inc.Investor RelationsTrevor Caldwell,
206-331-3600ir(at)marchex.comorMedia Inquiries:Corporate
Communications206-331-3434pr(at)marchex.com
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