Marchex, Inc. (NASDAQ:MCHX), a mobile advertising analytics
company, today announced its financial results for the first
quarter ended March 31, 2017.
Q1 2017 Financial
Highlights
- Revenue was $24.4 million for
the first quarter of 2017, compared to $36.0 million for the first
quarter of 2016.
- Net loss was $3.5 million for the first
quarter of 2017 or $0.08 per diluted share. For the first quarter
of 2016, net loss was $3.7 million or $0.09 per diluted share.
Q1 2016 Q1 2017 Revenue
$36.0 million $24.4 million
Non-GAAP Results1:
Enterprise Revenue2 $27.4 million $19.0 million
Adjusted OIBA3 ($1.7) million ($2.2) million
Adjusted EBITDA3 ($0.8) million ($1.4) million
Cash Balance $107 million $103 million
- Adjusted non-GAAP earnings (loss) per
share1 was ($0.03) for both the first quarter of 2016 and
2017.
- During the first quarter of 2017, YP
contributed $5.4 million in revenue, compared to $8.5 million in
the first quarter of 2016.
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
Enterprise Revenue represents total
revenue less revenue generated from our contracts with YP and other
Archeo related transition activities.
3
Includes reorganization costs of
approximately $700,000 in Q1 2017.
Strategic Priorities
Update
- Accelerate Product Innovation.
Marchex Speech Analytics, a new solution launched in April 2017,
enables actionable insights for enterprise and mid-sized companies,
helping them understand what is happening on inbound phone calls
from consumers to their business. Uncovering the intelligence and
insights of these consumer calls can empower companies to optimize
media spend and sales operations, and enable them to drive more
high quality calls to their business and create the opportunity to
convert more of those callers into customers.Marchex Omnichannel
Analytics Cloud, launched in February 2017, helps marketers connect
customer conversions driven from all paid media channels –
including search, display and video, social and sites – to phone
calls made to a business. Marketers now have a complete view
of which marketing activities are most successful to optimize
overall marketing spend and return on investment (ROI) for
industries that rely heavily on phone calls.
- Expand Strategic
Partnerships. Marchex’s February 2017 partnership
with Facebook provides marketers a deeper understanding
of what happens on a phone call that stems from
a Facebook ad. This partnership integrates across
Facebook’s social analytics solution into the Marchex Omnichannel
Analytics Cloud.
“Over the last few months, the Office of the CEO has been
focused on accelerating Marchex’s product progress and expanding
key partnerships to capitalize on the opportunities in our existing
business and also open new markets,” said Michael Arends, Chief
Financial Officer. “We are continuing to execute on a series of
initiatives to place Marchex back on the path to positive cash
generation and to return our company to growth over time.”
Business Outlook
The following forward-looking statements reflect Marchex's
expectations as of May 4, 2017.
Financial
Guidance for the Second Quarter ending June 30, 2017
Revenue $22 million or more Adjusted OIBA1 a loss of $1
million to $2 million Adjusted EBITDA1 breakeven to a loss of $1
million
Conference Call and Webcast
Information
Management will hold a conference call, starting at 5:00 p.m. ET
on Thursday, May 4, 2017, to discuss its first quarter ended March
31, 2017 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, www.marchex.com/blog/ 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 4, 2017 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, and Adjusted non-GAAP earnings (loss) per share. Marchex
also provides Enterprise Revenue, which represents revenue
excluding Yellowpages.com LLC (“YP”) revenue generating contracts
and other Archeo related transition activities which were
insignificant.
OIBA represents income (loss)
from operations excluding stock-based compensation expense. 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 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 and disposition related costs. Adjusted EBITDA represents income (loss)
before interest, income taxes, depreciation, amortization, stock
compensation expense, and disposition related costs. Marchex
believes that Adjusted EBITDA is another alternative measure of
liquidity to GAAP net cash provided by (used in) 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.
Financial analysts and investors may use Adjusted OIBA and
EBITDA and Enterprise Revenue to help with comparative financial
evaluation to make informed investment decisions. Adjusted non-GAAP earnings (loss) per
share represents Adjusted non-GAAP net income (loss)
applicable to common stockholders divided by GAAP diluted shares
outstanding. Adjusted non-GAAP net income (loss) 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 (loss) applicable to common stockholders plus the net of tax
effects of: (1) stock-based compensation expense, (2) disposition
related costs, and (3) interest and other income
(expense). Financial analysts and investors may use Adjusted
non-GAAP earnings (loss) per share 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 SUBSIDIARIES Condensed
Consolidated Statements of Operations (in thousands, except
per share amounts) (unaudited)
Three Months Ended
March 31,
2016 2017 Revenue $ 35,985 $ 24,375 Expenses:
Service costs (1) 21,982 13,598 Sales and marketing (1) 5,522 4,992
Product development (1) 7,472 5,270 General and administrative (1)
4,662 4,030 Disposition related costs 4 — Total
operating expenses 39,642 27,890 Loss from operations
(3,657 ) (3,515 ) Interest income (expense) and other, net
(7 ) 17 Loss before provision for income taxes (3,664 )
(3,498 ) Income tax expense 13 12 Net loss applicable
to common stockholders $ (3,677 ) $ (3,510 ) Basic and
diluted net loss per Class A and Class B share applicable to
common stockholders
$ (0.09 ) $ (0.08 ) Shares used to calculate basic net loss per
share applicable to
common stockholders:
Class A 5,233 5,056 Class B 35,977 37,169 Shares used to calculate
diluted net loss per share
applicable to common stockholders:
Class A 5,233 5,056 Class B 41,210 42,225 (1) Includes
stock-based compensation allocated as follows: Service costs $ 198
$ 125 Sales and marketing 439 406 Product development 532 91
General and administrative 797 735 Total $ 1,966 $
1,357
MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (in thousands)
(unaudited) December 31, March 31,
2016 2017 Assets Current assets: Cash and cash
equivalents $ 103,950 $ 103,072 Accounts receivable, net 18,922
16,740 Prepaid expenses and other current assets 1,531 1,853
Refundable taxes 98 87 Total current assets 124,501
121,752 Property and equipment, net 3,557 2,791 Other assets, net
214 213 Total assets $ 128,272 $ 124,756
Liabilities and Stockholders’ Equity Current liabilities:
Accounts payable $ 6,811 $ 5,951 Accrued expenses and other current
liabilities 7,707 7,325 Deferred revenue 349 355
Total current liabilities 14,867 13,631 Other non-current
liabilities 134 — Total liabilities 15,001 13,631
Stockholders’ equity: Class A common stock 53 53 Class B common
stock 380 380 Additional paid-in capital 360,422 361,824
Accumulated deficit (247,584 ) (251,132 ) Total
stockholders’ equity 113,271 111,125 Total
liabilities and stockholders’ equity $ 128,272 $ 124,756
MARCHEX, INC. AND SUBSIDIARIES (in thousands)
(unaudited) Reconciliation of GAAP Loss from
Operations to Operating Loss Before Amortization (OIBA) and
Adjusted Operating Loss Before Amortization (Adjusted OIBA)
Three Months Ended
March 31,
2016 2017 Loss from operations $
(3,657 ) $ (3,515 ) Stock-based
compensation 1,966 1,357 Operating loss before
amortization (OIBA) (1,691 ) (2,158 ) Disposition related costs
4 —
Adjusted operating loss before amortization
(Adjusted OIBA)1 $ (1,687 )
$ (2,158 )
Reconciliation from Net Cash used in
Operating Activities to Adjusted EBITDA
Three Months Ended
March 31,
2016 2017 Net cash used in operating
activities $ (2,267 ) $ (878
) Changes in assets and liabilities 1,432 (524 ) Income tax
expense 13 12 Disposition related costs 4 — Interest expense and
other, net 7 (17 )
Adjusted EBITDA1
$ (811 ) $ (1,407 )
Net cash used in investing activities $
(475 ) $ (6 ) Net cash
provided by financing activities $ 190 $
6
1 Includes reorganization costs of
approximately $700,000 in Q1 2017.
Reconciliation from Revenue to
Enterprise Revenue
Three Months Ended
March 31,
2016 2017 Revenue $ 35,985 $ 24,375
Less: YP Revenue 8,519 5,402 Less: Other 21 —
Enterprise Revenue2 $ 27,445 $ 18,973 2 Enterprise
Revenue represents total revenue less revenue generated from our
contracts with YP and other Archeo related transition activities.
MARCHEX, INC. AND SUBSIDIARIES Reconciliation of
GAAP Net Loss per Share to Adjusted Non-GAAP Loss per Share
(in thousands, except per share amounts) (unaudited)
Three Months Ended
March 31,
2016 2017 Adjusted Non-GAAP loss per share $
(0.03 ) $ (0.03 )
Net loss per share applicable to common
stockholders - diluted
(GAAP loss per share)
$ (0.09 ) $ (0.08 )
Shares used to calculate diluted net loss per share applicable to
common stockholders
41,210 42,225
Net loss applicable to common
stockholders $ (3,677 ) $
(3,510 ) Stock-based compensation 1,966 1,357
Disposition related costs 4 — Interest (income) expense and other,
net 7 (17 ) Estimated impact of income taxes 348 714
Adjusted Non-GAAP loss $ (1,352 )
$ (1,456 ) Adjusted Non-GAAP loss per
share $ (0.03 ) $ (0.03
) Shares used to calculate diluted net loss per share
applicable to
common stockholders (GAAP) and Adjusted
Non-GAAP loss per share
41,210 42,225
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version on businesswire.com: http://www.businesswire.com/news/home/20170504006549/en/
Marchex Investor RelationsTrevor Caldwell,
206-331-3600ir(at)marchex.comorMEDIA INQUIRIESMarchex
Corporate Communications206-331-3434, pr(at)marchex.com
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