Marchex, Inc. (NASDAQ:MCHX), a mobile advertising analytics
company, today announced its financial results for the fourth
quarter and full year ended December 31, 2016.
Q4 and Full Year 2016 Financial
Highlights
- GAAP revenue was $28.4
million for the fourth quarter of 2016, compared to $34.9
million for the fourth quarter of 2015. GAAP revenue
was $129.5 million for 2016, compared to $143.0 million
for 2015.
- GAAP net loss from continuing
operations was $5.7 million for the fourth quarter of 2016 or $0.14
per diluted share. For the fourth quarter of 2015, GAAP net income
from continuing operations was $1.2 million or $0.03 per diluted
share. GAAP net loss from continuing operations was $84.1 million
for 2016 or $2.01 per diluted share. For 2015, GAAP net loss from
continuing operations was $597,000 or $0.01 per diluted share.
Q4 2015 Q4 2016 FY 2015 FY 2016 GAAP
Revenue $ 34.9 million $ 28.4 million $ 143.0 million $ 129.5
million
Call-Driven Revenue1 $ 34.3 million $ 28.4
million $ 139.9 million $ 129.5 million
Non-GAAP
Results2:
Enterprise Revenue3 $ 25.3 million $ 22.4 million $
99.7 million $ 100.1 million
Call-Driven Adjusted OIBA $ 1.6
million $
(2.9) million
$ 7.8 million $
(9.9) million
Call-Driven Adjusted EBITDA $ 2.5 million $
(2.1) million
$ 11.5 million $
(6.7) million
Cash Balance $ 109 million $ 104 million
- Adjusted non-GAAP earnings (loss) per
share2 from continuing operations for the fourth quarter of 2016
was ($0.04). For the fourth quarter of 2015, adjusted non-GAAP
earnings (loss) per share2 was $0.03. Adjusted non-GAAP earnings
(loss) per share2 from continuing operations for 2016 was ($0.16).
For 2015, adjusted non-GAAP earnings (loss) per share2 was
$0.13.
- During the fourth quarter of 2016, YP
contributed $6.0 million in Call-Driven Revenue, compared to $9.0
million in the fourth quarter of 2015. During 2016, YP contributed
$29.4 million in Call-Driven Revenue compared to $40.2 million in
2015.
_______________________
1
Call-Driven revenue includes revenue
generated from our contracts with YP.
2
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.
3
Enterprise Revenue represents Call-Driven
revenue excluding revenue generated from our contracts with YP.
Strategic Priorities
Update
- Secure New Enterprise Clients and
Grow Existing Relationships. Continued progress with our
customer initiatives, including adding 30 new clients in 2016.
- Accelerate Product Innovation.
Marchex Omnichannel Analytics Cloud launched this month to help
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. The results are smarter media
spend and lower new customer acquisition costs, higher phone call
conversion rates based on optimized media, and increased customer
conversion and revenue to businesses. This integrated solution
gives marketers a full and accurate understanding of which
marketing activity is most successful to optimize overall marketing
spend and ROI for industries that rely heavily on phone calls to
schedule appointments and close sales, such as insurance,
automotive, travel, and cable.Video and Display Analytics launched
to general availability, which measures the impact of display and
video advertising campaigns on inbound phone calls to call centers
and stores. Marketers can expand their visibility into these
campaigns by measuring video advertising units in both premium and
programmatic video publishers.
- Expand Strategic Partnerships.
Our partnership with Facebook announced this month gives marketers
a deeper understanding of what happens on a phone call that stems
from a Facebook ad. This partnership will integrate across
Facebook’s social analytics solution into the Marchex Omnichannel
Analytics Cloud. Marketers can now quickly optimize their marketing
spend across all paid media channels based on actionable insights
into which channel drove offline consumer interactions, thereby
boosting the efficiency of Facebook ads.
“Marchex continues to expand the unique insights we can deliver
to enterprise advertisers as we build out a broad mobile
advertising analytics solution,” said Michael Arends, Chief
Financial Officer. “The Office of the CEO is conducting a strategic
review of each of Marchex’s product areas to determine how best to
leverage the strengths of the business where there is customer
momentum and to determine the best path forward in areas that
present challenges. As part of this process, we are determined to
make progress toward the goal of achieving profitability in the
business and anticipate Marchex to be at or near breakeven for
Adjusted EBITDA at some point in the second half of this year.”
Business Outlook
The following forward-looking statements reflect Marchex’s
expectations as of February 16, 2017. The revenue outlook for the
first quarter is impacted primarily by three factors:
- Reduced budget from an ongoing
relationship with a large financial services customer.
- Renegotiated economic terms of our
extended relationship with YP.
- Acquired customers referenced on our
2016 second quarter conference call.
Total Call-Driven
financial guidance for the First Quarter ending March 31,
2017
Call-Driven Revenue1 $22.5 million or more
Call-Driven Adjusted OIBA2 a loss of ($4) million to ($4.5) million
Call-Driven Adjusted EBITDA2 a loss of ($3) million to ($3.5)
million
The guidance includes estimated reorganizational costs of
approximately $800,000 to $1.5 million for the first quarter. In
addition, the company believes that its cost reduction initiatives
will yield more than $10 million in annualized savings. The benefit
of these savings are expected to ramp throughout the year.
“While we remain vulnerable to shifting media tactics from some
of our large customers, particularly on our Call Marketplace media
product, we believe our analytics product area is a unique
strategic asset with a strong customer base and favorable operating
characteristics. As we progress through our strategic review, we
expect that our overall corporate strategy may evolve, and that we
can unlock value in our assets,” said Michael Arends.
Conference Call and Webcast
Information
Management will hold a conference call, starting at 5:00 p.m. ET
on Thursday, February 16, 2017, to discuss its fourth quarter and
year ended December 31, 2016 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 February 16, 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, Adjusted non-GAAP earnings (loss) per share and Call-Driven
and Archeo and Other Adjusted OIBA and EBITDA. Marchex also
provides Enterprise Revenue, which represents Call-Driven revenue
excluding revenue generated from our contracts with Yellowpages.com
LLC (“YP”).
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 acquisition and disposition related
costs and impairment of goodwill, as these items are 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,
acquisition and disposition related costs, and impairment of
goodwill. Adjusted EBITDA represents
income before interest, income taxes, depreciation, amortization,
stock compensation expense, acquisition and disposition related
costs, and impairment of goodwill. 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.
Call-Driven Adjusted OIBA and
EBITDA and Archeo and Other Adjusted
OIBA and EBITDA include the above descriptions of Adjusted
OIBA and EBITDA for the Call-Driven and Archeo segments. The
Call-Driven Adjusted OIBA and EBITDA includes all Marchex general
corporate overhead costs. The Archeo and Other Adjusted OIBA and
EBITDA in 2016 primarily includes transition activities provided to
the buyer of the Archeo assets which are not material. 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) acquisition and disposition related costs, (3)
interest and other income (expense), (4) discontinued operations,
net of tax, (5) dividends paid to participating securities and (6)
impairment of goodwill. 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 data) (unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31, 2015
2016 2015 2016 Revenue $ 34,900 $
28,401 $ 143,013 $ 129,547 Expenses: Service costs (1) 19,601
16,006 78,767 76,970 Sales and marketing (1) 4,493 5,574 16,462
22,307 Product development (1) 7,450 6,587 31,058 28,446 General
and administrative (1) 3,585 5,939 18,510 21,754 Acquisition and
disposition related costs 20 — 219
662 Total operating expenses 35,149 34,106 145,016
150,139 Impairment of goodwill — — — (63,305 ) Gain on sale of
Archeo assets 1,496 — 1,496 —
Income (loss) from operations 1,247 (5,705 ) (507 ) (83,897
) Interest expense and other, net (11 ) (25 )
(63 ) (115 ) Income (loss) from continuing operations before
provision for income taxes 1,236 (5,730 ) (570 ) (84,012 ) Income
tax expense 16 14 27 54
Net income (loss) from continuing operations 1,220 (5,744 ) (597 )
(84,066 ) Discontinued operations: Income from discontinued
operations, net of tax 38 — 5,123 — Gain on sale of discontinued
operations, net of tax — — 22,195
— Discontinued operations, net of tax 38
— 27,318 — Net income (loss)
1,258 (5,744 ) 26,721 (84,066 ) Dividends paid to participating
securities — — (37 ) —
Net income (loss) applicable to common stockholders $ 1,258 $
(5,744 ) $ 26,684 $ (84,066 ) Basic and diluted net income
(loss) per Class A and Class B share applicable to common
stockholders: Continuing operations $ 0.03 $ (0.14 ) $ (0.01 ) $
(2.01 ) Discontinued operations, net of tax $ 0.00 $ — $
0.66 $ — Basic and diluted net income (loss) per Class A and
Class B share applicable to common stockholders $ 0.03 $ (0.14 ) $
0.65 $ (2.01 ) Dividends paid per share $ — $ — $ 0.04 $ — Shares
used to calculate basic net income (loss) per share applicable to
common stockholders: Class A 5,233 5,062 5,233 5,190 Class B 35,804
37,076 35,935 36,550 Shares used to calculate diluted net income
(loss) per share applicable to common stockholders: Class A 5,233
5,062 5,233 5,190 Class B 41,599 42,138 41,168 41,740 (1)
Includes stock-based compensation allocated as follows: Service
costs $ 143 $ 128 $ 1,189 $ 693 Sales and marketing 414 417 1,307
1,738 Product development 567 202 2,410 1,569 General and
administrative 1,091 2,190 5,118
6,183 Total $ 2,215 $ 2,937 $ 10,024 $ 10,183
MARCHEX, INC. AND SUBSIDIARIES Condensed Consolidated
Balance Sheets (in thousands) (unaudited)
December 31, December 31,
2015 2016 Assets Current assets: Cash and cash
equivalents $ 109,155 $ 103,950 Accounts receivable, net 24,621
18,922 Prepaid expenses and other current assets 1,784 1,531
Refundable taxes 127 98 Total current assets
135,687 124,501 Property and equipment, net 5,778 3,557 Other
assets, net 222 214 Goodwill 63,305 — Total
assets $ 204,992 $ 128,272
Liabilities and Stockholders’
Equity Current liabilities: Accounts payable $ 9,460 $ 6,811
Accrued expenses and other current liabilities 6,712 7,707 Deferred
revenue 692 349 Total current liabilities
16,864 14,867 Other non-current liabilities 662 134
Total liabilities 17,526 15,001 Class A common stock
55 53 Class B common stock 368 380 Treasury Stock (238 ) —
Additional paid-in capital 350,799 360,422 Accumulated deficit
(163,518 ) (247,584 ) Total stockholders’ equity
187,466 113,271 Total liabilities and
stockholders’ equity $ 204,992 $ 128,272
MARCHEX, INC. AND SUBSIDIARIES (in thousands)
(unaudited) Reconciliation of GAAP Income (Loss) from
Operations to Operating Income (Loss) Before Amortization
(OIBA) and Adjusted Operating Income (Loss) Before
Amortization (Adjusted OIBA)
Three Months Ended
Twelve Months Ended
December 31, December 31, 2015
2016
2015 2016 Income (loss) from
operations
$
1,247
$
(5,705
)
$
(507
)
$
(83,897
)
Stock-based compensation 2,215 2,937
10,024 10,183 Operating income (loss)
before amortization (OIBA) 3,462 (2,768 ) 9,517 (73,714 )
Acquisition and disposition related costs 20 — 219 662 Impairment
of goodwill — — — 63,305 Gain on sale of Archeo assets
(1,496 ) — (1,496 ) —
Adjusted operating income (loss) before amortization (Adjusted
OIBA) - Consolidated
$
1,986
$
(2,768
)
$
8,240
$
(9,747
)
Less: Archeo and Other Adjusted OIBA1 386 82
431 127 Call-Driven Adjusted
OIBA1 $ 1,600 $ (2,850 ) $ 7,809 $ (9,874 )
Reconciliation from Net Cash provided
by (used in) Operating Activities to Adjusted EBITDA
Three Months Ended Twelve Months Ended
December 31, December 31, 2015 2016
2015 2016 Net cash provided by (used in) operating
activities
$
753
$
(796
)
$
12,753
$
(3,669
)
Changes in assets and liabilities 2,150 (1,273 ) 3,963 (3,711 )
Income tax expense 16 14 27 54 Acquisition and disposition related
costs 20 — 219 662 Interest expense and other, net 11 25 63 112
Income from discontinued operations, net of tax (38 )
— (5,140 ) —
Adjusted EBITDA -
Consolidated $ 2,912 $ (2,030
) $ 11,885 $ (6,552 )
Less: Archeo and Other Adjusted EBITDA1 386 82
431 127
Call-Driven Adjusted EBITDA1
$ 2,526 $ (2,112 ) $ 11,454 $ (6,679 )
Net
cash provided by (used in) investing activities $
242 $ 395 $ 21,822
$ (1,224 ) Net cash used in
financing activities $ (776 ) $
(134 ) $ (5,452 ) $
(312 ) 1 The financial
results have been derived from the condensed consolidated financial
statements. In April 2015, Marchex divested certain Archeo domain
name and related assets and the operating results of these divested
assets are included in discontinued operations, net of tax, in the
condensed consolidated financial statements. In December 2015,
Marchex sold the remaining Archeo assets and its operating results
are included in continuing operations for 2015. Unless otherwise
indicated, information presented in these financial tables relates
only to Marchex's continuing operations. In 2016, Other operating
results related primarily to transition activities provided to the
buyer of the Archeo assets and were not significant.
MARCHEX, INC. AND SUBSIDIARIES Reconciliation of GAAP
Earnings (Loss) Per Share to Adjusted Non-GAAP Earnings (Loss) Per
Share (in thousands, except per share data)
(unaudited) Three Months
Ended Twelve Months Ended December
31, December 31, 2015 2016
2015 2016 Adjusted Non-GAAP earnings
(loss) per share from continuing operations
$
0.03
$
(0.04
)
$
0.13
$
(0.16
)
Net Income (loss) from continuing operations applicable
to common stockholders - diluted (GAAP earnings (loss) per
share)
$
0.03
$
(0.14
)
$
(0.01
)
$
(2.01
)
Shares used to calculate diluted net
income (loss) from continuing operations per share applicable to
common stockholders
41,599 42,138 41,168 41,740
Net income (loss) applicable
to common stockholders
$
1,258
$
(5,744
)
$
26,684
$
(84,066
)
Stock-based compensation 2,215 2,937 10,024 10,183 Acquisition and
disposition related costs 20 — 219 662 Impairment of goodwill — — —
63,305 Gain on sale of Archeo assets (1,496 ) — (1,496 ) — Interest
expense and other, net 11 25 63 115 Dividends paid to participating
securities — — 37 — Discontinued operations, net of tax (38 ) —
(27,318 ) — Estimated impact of income taxes (682 )
931 (2,863 ) 3,273
Adjusted Non-GAAP net income (loss)
from continuing operations
$ 1,288 $ (1,851 )
$ 5,350 $ (6,528 )
Adjusted Non-GAAP earnings (loss) per
share from continuing operations
$ 0.03 $ (0.04 ) $
0.13 $ (0.16 ) Shares
used to calculate diluted net income (loss) from continuing
operations per share applicable to common stockholders (GAAP)
41,599 42,138 41,168 41,740 Weighted average stock options and
common shares subject to purchase or cancellation (if applicable)
— — 421 —
Diluted shares used to calculate Adjusted Non-GAAP earnings (loss)
per share 1 41,599 42,138 41,589
41,740 1 For the
purpose of computing the number of diluted shares for Adjusted
Non-GAAP earnings (loss) per share, Marchex uses the accounting
guidance that would be applicable for computing the number of
diluted shares for GAAP earnings (loss) per share.
MARCHEX, INC. AND SUBSIDIARIES Financial Summary
Information (in thousands) (unaudited)
NON-GAAP MEASURES CONSOLIDATED1
Q415 Q416
FY 2015 FY 2016 GAAP Revenue $ 34,900 $
28,401 $ 143,013 $ 129,547 Adjusted OIBA $ 1,986 $ (2,768 ) $ 8,240
$ (9,747 ) Adjusted EBITDA $ 2,912 $ (2,030 ) $ 11,885 $ (6,552 )
CALL-DRIVEN Q415 Q416
FY 2015 FY 2016 GAAP Revenue $ 34,265 $ 28,401 $
139,886 $ 129,526 Adjusted OIBA $ 1,600 $ (2,850 ) $ 7,809 $ (9,874
) Adjusted EBITDA $ 2,526 $ (2,112 ) $ 11,454 $ (6,679 )
ENTERPRISE REVENUE2 Q415 Q416 FY
2015 FY 2016 Call-Driven GAAP Revenue $ 34,265 $ 28,401
$ 139,886 $ 129,526 Less: YP Revenue $ 8,963 $ 6,031 $
40,210 $ 29,388 Enterprise Revenue $ 25,302 $ 22,370 $
99,676 $ 100,138 1 In April 2015,
Marchex divested certain Archeo domain name and related assets and
the operating results of these divested assets are included in
discontinued operations, net of tax, in the condensed consolidated
financial statements. In December 2015, Marchex sold the remaining
Archeo assets and its operating results are included in continuing
operations for 2015. In 2016, there were Other operating activities
that related primarily to transition activities provided to the
buyer of the Archeo assets and were not significant. Unless
otherwise indicated, information presented in these financial
tables relates only to Marchex's continuing operations. 2
Enterprise Revenue, also referred to as “Call-Driven Revenue
excluding YP”, represents Call-Driven revenue excluding revenue
generated from our contracts with YP.
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version on businesswire.com: http://www.businesswire.com/news/home/20170216006264/en/
Marchex Investor RelationsTrevor Caldwell, 206-331-3600Email:
ir(at)marchex.comorMEDIA INQUIRIESMarchex Corporate
Communications206-331-3434Email: pr(at)marchex.com
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