MCHX Marchex Inc

Marchex, Inc. (NASDAQ:MCHX), a mobile advertising analytics company, today announced its financial results for the second quarter ended June 30, 2015.

"We are seeing greater demand for Marchex’s mobile advertising analytics from enterprise marketers across the world. This is leading to increased adoption of our products with the channels and clients we view as most strategically important," said Pete Christothoulou, Chief Executive Officer. “Advertising leaders want products that provide an unparalleled level of visibility into the entire mobile consumer journey and increasingly, these leaders are choosing Marchex to improve their mobile performance and drive overall growth."

Q2 2015 Financial Highlights1

• GAAP revenue was $35.3 million for the second quarter of 2015, compared to $47.0 million for the second quarter of 2014. In the second quarter Marchex sold the bulk of its domain portfolio, which included a sale to GoDaddy Inc. for proceeds of $28.1 million.

• GAAP net income including discontinued operations was $20.9 million for the second quarter of 2015 compared to a GAAP net income including discontinued operations of $980,000 in second quarter of 2014. GAAP net loss from continuing operations was $1.3 million for the second quarter of 2015, compared to GAAP net loss from continuing operations of $102,000 for the second quarter of 2014.
• GAAP net income including discontinued operations attributable to common stockholders per diluted share for the second quarter of 2015 was $0.50, compared to $0.02 for the second quarter of 2014. GAAP net loss from continuing operations attributable to common stockholders per diluted share was $0.03 for the second quarter of 2015 compared to GAAP net loss from continuing operations of $0.00 for the second quarter of 2014.

    Q2 2015   Q2 2014 GAAP Revenue   $35.3 million   $47.0 million Call-Driven and related revenue   $34.5 million   $45.9 million Non-GAAP Results: Call-Driven Adjusted OIBA2   $1.4 million   $2.9 million Call-Driven Adjusted EBITDA2   $2.4 million   $3.8 million Adjusted OIBA2   $1.3 million   $3.1 million Adjusted EBITDA2   $2.3 million   $4.0 million           Archeo Revenue   $0.8 million   $1.1 million Domain transaction proceeds3   $28.1 million     Domain sales proceeds4   $0.4 million   $2.2 million

• Adjusted non-GAAP EPS2 including discontinued operations1 for the second quarter of 2015 was $0.37, compared to $0.07 for the second quarter of 2014. Adjusted non-GAAP EPS2 from continuing operations for the second quarter of 2015 was $0.02, compared to $0.05 for the second quarter of 2014.

1The Company sold certain Archeo domain name and related assets in April 2015 and certain pay-per-click assets in July 2013. As a result, the financial results of these dispositions are presented as discontinued operations net of tax in our condensed consolidated statements of operations in accordance with GAAP, and are excluded from all other results unless otherwise noted.

2Reconciliations 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.

3Represents proceeds from the sale of certain Archeo domain name and related assets recognized in discontinued operations.

4Represents proceeds from domain sales recognized in discontinued operations.

Marchex Q2 2015 and Recent Business Highlights:

• Strategic integrations. In July, Marchex announced a strategic, exclusive global partnership with Light Reaction, a mobile-first performance advertising business that is part of Xaxis, to launch M-Call, a new click-to-call mobile performance product that enables advertisers to generate high quality phone leads directly from mobile Web and in-app ads across hundreds of top publishers, social media sites and apps. Through the partnership, Light Reaction and Xaxis clients also gain access to Marchex Call Analytics, a real-time mobile advertising platform that measures sales, audiences and consumer intent from mobile, click-to-call campaigns. M-Call and Call Analytics are available to both Light Reaction and Xaxis clients, including GroupM agencies.
• Increased global scale. In June, Marchex announced its expansion into Europe, Canada, Australia and New Zealand to support enterprise marketers that need to tie mobile advertising spend to sales at scale - globally and seamlessly. Marchex now has clients utilizing its products within multiple geographies including CDK Global, Hearst, Yell and Intuit.
• YP contributed $10.4 million in call-driven revenues in the second quarter of 2015, compared to $10.2 million in the second quarter 2014.

Non-Operating Q2 2015 Highlights:

• During the second quarter, Marchex purchased 79,000 shares of its outstanding Class B common stock for a total price of $355,000. This brings Marchex’s total shares repurchased under its November 2014 share repurchase program to 973,000 shares or 3% of its outstanding Class B common stock.

Business Outlook

The following forward-looking statements reflect Marchex's expectations as of August 5, 2015, and exclude any impact from Archeo operating results and discontinued operations. Archeo operating results are not included in our Call-Driven revenue, profitability, and other measures below:

Call-Driven financial guidance for the Third Quarter ending September 30, 2015

Call-Driven Revenue   $34.5 million or more Call-Driven Adjusted OIBA 5   $1.0 million or more Call-Driven Adjusted EBITDA 5   $2.0 million or more

5 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, August 5, 2015 to discuss its second quarter ended June 30, 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 August 5, 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. Additionally, Marchex also provides Call-Driven and Archeo Revenue excluding revenue generated from our contracts with Yellowpages.com LLC (“YP”). In conjunction with the sale of the bulk of Marchex’s domain portfolio and certain related assets in April 2015, Marchex has also presented Adjusted OIBA and EBITDA from discontinued operations and Adjusted non-GAAP EPS including discontinued operations.

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. Adjusted OIBA and EBITDA from discontinued operations include revenue and adjusted OIBA and EBITDA contributed by discontinued operations. Call-Driven and Archeo Revenue excluding YP excludes revenue generated through our contracts with YP. Financial analysts and investors may use Adjusted OIBA and EBITDA and Revenue excluding YP to help with comparative financial evaluation to make informed investment decisions. 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. Adjusted non-GAAP EPS including discontinued operations includes the above description of Adjusted non-GAAP EPS but includes the results of discontinued operations. 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 SUBSIDIARIES Condensed Consolidated Statements of Operations (in thousands, except per share data) (unaudited)     Three months ended June 30, 2014   2015 Revenue $ 47,042 $ 35,346   Expenses: Service costs (1) 31,455 19,797 Sales and marketing (1) 2,711 4,245 Product development (1) 7,458 8,147 General and administrative (1) 5,386 4,505 Amortization of intangible assets from acquisitions 31 - Acquisition and disposition related costs   (68 )     118   Total operating expenses   46,973       36,812   Income (loss) from operations 69 (1,466 ) Interest expense and other, net   (22 )     (16 ) Income (loss) from continuing operations before provision for income taxes 47 (1,482 ) Income tax expense (benefit)   149       (185 ) Net loss from continuing operations (102 ) (1,297 ) Discontinued operations: Income (loss) from discontinued operations, net of tax 1,082 (92 ) Gain on sale from discontinued operations, net of tax   -       22,257   Discontinued operations, net of tax   1,082       22,165   Net income 980 20,868 Dividends paid to participating securities   (33 )     (19 ) Net income applicable to common stockholders $ 947     $ 20,849     Basic and diluted net income (loss) per Class A and Class B share applicable to common stockholders: Continuing operations $ 0.00 $ (0.03 ) Discontinued operations, net of tax $ 0.02       0.53   Basic and diluted net income per Class A and Class B share applicable to common stockholders $ 0.02 $ 0.50 Dividends paid per share $ 0.02 $ 0.02 Shares used to calculate basic net income (loss) per share applicable to common stockholders Class A 5,243 5,233 Class B 35,441 36,072 Shares used to calculate diluted net income (loss) per share applicable to common stockholders Class A 5,243 5,233 Class B 40,684 41,305

(1) Includes stock-based compensation allocated as follows:

Service costs $ 360 $ 552 Sales and marketing 231 309 Product development 691 644 General and administrative   1,831       1,162   Total $ 3,113     $ 2,667     MARCHEX, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (in thousands, except per share data) (unaudited)     Six Months Ended June 30, 2014   2015 Revenue $ 95,137 $ 71,261   Expenses: Service costs (1) 62,957 39,163 Sales and marketing (1) 5,946 7,703 Product development (1) 15,018 15,839 General and administrative (1) 10,747 10,204 Amortization of intangible assets from acquisitions 434 - Acquisition and disposition related costs   (68 )     118   Total operating expenses 95,034 73,027 Income (loss) from operations 103 (1,766 ) Interest expense and other, net   (24 )     (41 ) Income (loss) from continuing operations before provision for income taxes 79 (1,807 ) Income tax expense (benefit)   260       (180 ) Net loss from continuing operations (181 ) (1,627 ) Discontinued operations: Income from discontinued operations, net of tax 2,016 5,047 Gain on sale from discontinued operations, net of tax   -       22,032   Discontinued operations, net of tax   2,016       27,079   Net income 1,835 25,452 Dividends paid to participating securities   (69 )     (37 ) Net income applicable to common stockholders $ 1,766     $ 25,415     Basic and diluted net income (loss) per Class A and Class B share applicable to common stockholders Continuing operations $ 0.00 $ (0.04 ) Discontinued operations, net of tax $ 0.05       0.66   Basic and diluted net income per Class A and Class B share applicable to common stockholders: $ 0.05 $ 0.62 Dividends paid per share $ 0.04 $ 0.04 Shares used to calculate basic net income (loss) per share applicable to common stockholders Class A 6,483 5,233 Class B 32,277 35,919 Shares used to calculate diluted net income (loss) per share applicable to common stockholders Class A 6,483 5,233 Class B 38,760 41,152

(1) Includes stock-based compensation allocated as follows:

Service costs $ 640 $ 772 Sales and marketing 434 554 Product development 1,350 1,223 General and administrative   3,569       2,909   Total $ 5,993     $ 5,458     MARCHEX, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in thousands) (unaudited)     December 31, June 30, Assets 2014   2015 Current assets: Cash and cash equivalents $ 80,032 $ 104,431 Accounts receivable, net 25,941 30,513 Prepaid expenses and other current assets 3,143 2,615 Refundable taxes   131       120   Total current assets 109,247 137,679   Property and equipment, net 5,430 6,471 Intangibles and other assets, net 313 245 Goodwill   65,679       63,305   Total Assets $ 180,669     $ 207,700     Liabilities and Stockholders' Equity   Current liabilities: Accounts payable $ 13,766 $ 13,369 Accrued expenses and other current liabilities 7,515 7,942 Deferred revenue   2,117       1,305   Total current liabilities 23,398 22,616   Other non-current liabilities   1,118       898   Total Liabilities 24,516 23,514     Class A common stock 55 55 Class B common stock 373 372 Treasury stock (2,503 ) (144 ) Additional paid-in capital 348,467 348,690 Accumulated deficit   (190,239 )     (164,787 ) Total Stockholders' Equity   156,153       184,186   Total Liabilities and Stockholders' Equity $ 180,669     $ 207,700     MARCHEX, INC. AND SUBSIDIARIES Reconciliation of GAAP Income (Loss) from Operations to Operating Income Before Amortization (OIBA) and Adjusted Operating Income Before Amortization (Adjusted OIBA) (in thousands) (unaudited)     Three Months Ended June 30, 2014   2015 Income (loss) from operations $ 69 $ (1,466 ) Stock-based compensation 3,113 2,667 Amortization of intangible assets from acquisitions   31       -   Operating income before amortization (OIBA) 3,213 1,201 Acquisition and disposition related costs   (68 )     118   Adjusted operating income before amortization (Adjusted OIBA) $ 3,145     $ 1,319     Six Months Ended June 30, 2014   2015   Income (loss) from operations $ 103 $ (1,766 ) Stock-based compensation 5,993 5,458 Amortization of intangible assets from acquisitions   434       -   Operating income before amortization (OIBA) 6,530 3,692 Acquisition and disposition related costs   (68 )     118   Adjusted operating income before amortization (Adjusted OIBA) $ 6,462     $ 3,810     MARCHEX, INC. AND SUBSIDIARIES Reconciliation from Net Cash provided by (used in) Operating Activities to Adjusted EBITDA (in thousands) (unaudited)     Three Months Ended June 30, 2014   2015   Net cash provided by (used in) operating activities $ 3,289 $ (1,814 ) Changes in assets and liabilities 1,672 3,883 Income tax expense (benefit) 149 (185 ) Acquisition and disposition related costs - 118 Interest expense and other, net 22 16 Loss (income) from discontinued operations, net of tax (1,120 ) 91 Tax effect on gain on sale of discontinued operations   -       163   Adjusted EBITDA $ 4,012     $ 2,272     Net cash provided by (used in) investing activities $ (545 )   $ 23,767     Net cash provided by (used in) financing activities $ 33,680     $ (1,181 )   Six Months Ended June 30, 2014   2015   Net cash provided by operating activities $ 11,367 $ 4,437 Changes in asset and liabilities (1,312 ) 6,111 Income tax expense (benefit) 260 (180 ) Acquisition and disposition related costs - 118 Interest expense and other, net 24 41 Income on discontinued operations, net of tax (2,109 ) (5,065 ) Tax effect on gain on sale of discontinued operations   -       163   Adjusted EBITDA $ 8,230     $ 5,625     Net cash provided by (used in) investing activities $ (1,352 )   $ 22,840     Net cash provided by (used in) financing activities $ 34,023     $ (2,878 )   MARCHEX, INC. AND SUBSIDIARIES Reconciliation of GAAP EPS to Adjusted Non-GAAP EPS (in thousands, except per share data) (unaudited)     Three Months Ended June 30, 2014   2015 Adjusted Non-GAAP EPS from continuing operations $ 0.05     $ 0.02     Net income (loss) from continuing operations applicable to common stockholders - diluted (GAAP EPS) $ 0.00 $ (0.03 ) Shares used to calculate diluted net income (loss) per share applicable to common stockholders 40,684 41,305   Net income applicable to common stockholders $ 947 $ 20,849 Stock-based compensation 3,113 2,667 Acquisition and disposition related costs (68 ) 118 Amortization of intangible assets from acquisitions 31 - Interest expense and other, net 22 16 Dividends paid to participating securities 33 19 Discontinued operations, net of tax (1,082 ) (22,165 ) Estimated impact of income taxes   (973 )     (646 ) Adjusted Non-GAAP net income from continuing operations $ 2,023 $ 858 Discontinued operations, net of tax 1,086 22,164 Estimated impact of income taxes   -       (7,706 ) Adjusted Non-GAAP net income including discontinued operations $ 3,109     $ 15,316     Adjusted Non-GAAP EPS from continuing operations $ 0.05     $ 0.02   Adjusted Non-GAAP EPS including discontinued operations $ 0.07     $ 0.37    

Shares used to calculate diluted net income (loss) per share applicable to common stockholders (GAAP)

40,684 41,305 Weighted average stock options and common shares subject to purchase or cancellation (if applicable)   2,769       415   Diluted shares used to calculate Adjusted Non-GAAP EPS (1)   43,453       41,720  

 

(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.

Certain reclassifications have been made to prior periods to conform to current presentation.

  MARCHEX, INC. AND SUBSIDIARIES Reconciliation of GAAP EPS to Adjusted Non-GAAP EPS (in thousands, except per share data) (unaudited)     Six Months Ended June 30, 2014   2015 Adjusted Non-GAAP EPS from continuing operations $ 0.10     $ 0.06  

 

Net income (loss) from continuing operations applicable to common stockholders - diluted (GAAP EPS) $ 0.00 $ (0.04 ) Shares used to calculate diluted net income (loss) per share applicable to common stockholders 38,760 41,152   Net income (loss) applicable to common stockholders $ 1,766 $ 25,415 Stock-based compensation 5,993 5,458 Acquisition and disposition related costs (68 ) 118 Amortization of intangible assets from acquisitions 434 - Interest expense and other, net 24 41 Dividends paid to participating securities 69 37 Discontinued operations, net of tax (2,016 ) (27,079 ) Estimated impact of income taxes   (2,041 )     (1,516 ) Adjusted Non-GAAP net income from continuing operations $ 4,161 $ 2,474 Discontinued operations, net of tax 2,023 27,081 Estimated impact of income taxes   -       (9,521 ) Adjusted Non-GAAP net income including discontinued operations $ 6,184     $ 20,034     Adjusted Non-GAAP EPS from continuing operations $ 0.10     $ 0.06   Adjusted Non-GAAP EPS including discontinued operations $ 0.15     $ 0.48    

Shares used to calculate diluted net income (loss) per share applicable to common stockholders (GAAP)

38,760 41,152 Weighted average stock options and common shares subject to purchase or cancellation (if applicable)   2,898       366   Diluted shares used to calculate Adjusted Non-GAAP EPS (1)   41,658       41,518  

 

(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.

Certain reclassifications have been made to prior periods to conform to current presentation.

  MARCHEX, INC. AND SUBSIDIARIES Quarterly Financial Summary Information (in thousands) (unaudited)           NON-GAAP MEASURES                       CONSOLIDATED1   Q214   Q314   Q414   Q115   Q215 GAAP Revenue $ 47,042 $ 47,238 $ 31,226 $ 35,915 $ 35,346 Adjusted OIBA $ 3,145 $ 3,214 $ 2,355 $ 2,491 $ 1,319 Adjusted EBITDA   $ 4,012   $ 4,105     $ 3,253     $ 3,353     $ 2,272                         CALL-DRIVEN AND RELATED   Q214   Q314   Q414   Q115   Q215 GAAP Revenue $ 45,856 $ 46,379 $ 30,324 $ 35,028 $ 34,458 Adjusted OIBA $ 2,896 $ 3,280 $ 2,511 $ 2,632 $ 1,400 Adjusted EBITDA   $ 3,763   $ 4,171     $ 3,409     $ 3,494     $ 2,353                         ARCHEO EXCLUDING DISCONTINUED OPERATIONS1   Q214   Q314   Q414   Q115   Q215 GAAP Revenue $ 1,186 $ 859 $ 902 $ 887 $ 888 Adjusted OIBA $ 249 $ (66 ) $ (156 ) $ (141 ) $ (81 ) Adjusted EBITDA   $ 249   $ (66 )   $ (156 )   $ (141 )   $ (81 )                       CALL-DRIVEN REVENUE EXCLUDING YP   Q214   Q314   Q414   Q115   Q215 GAAP Revenue $ 45,856 $ 46,379 $ 30,324 $ 35,028 $ 34,458 Revenue excluding YP $ 35,634 $ 35,162 $ 19,261 $ 24,271 $ 24,096 YP Revenue   $ 10,222   $ 11,217     $ 11,063     $ 10,757     $ 10,362                         ARCHEO REVENUE EXCLUDING YP AND DISCONTINUED OPERATIONS1   Q214   Q314   Q414   Q115   Q215 GAAP Revenue $ 1,186 $ 859 $ 902 $ 887 $ 888 Revenue excluding YP $ 716 $ 608 $ 524 $ 525 $ 515 YP Revenue   $ 470   $ 251     $ 378     $ 362     $ 373                         DISCONTINUED OPERATIONS1   Q214   Q314   Q414   Q115   Q215 Revenue from Discontinued Operations $ 2,634 $ 1,943 $ 2,065 $ 6,659 $ 422 Adjusted OIBA from Discontinued Operations $ 1,646 $ 1,035 $ 1,113 $ 5,142 $ (56 ) Adjusted EBITDA from Discontinued Operations   $ 1,680   $ 1,050     $ 1,127     $ 5,156     $ (53 )

 

1 In April 2015, Marchex divested certain Archeo domain name and related assets. The operating results of the divested assets are included in discontinued operations net of tax in the unaudited consolidated financial statements. The financial results for the discontinued operations 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

  6/30/2014       9/30/2014       12/31/2014       3/31/2015       6/30/2015     Income (loss) from operations $ 69 $ 193 $ (521 ) $ (300 ) $ (1,466 ) Stock-based compensation 3,113 3,021 2,876 2,791 2,667 Amortization of intangible assets from acquisitions   31       -       -       -       -   Operating income before amortization (OIBA) 3,213 3,214 2,355 2,491 1,201 Acquisition and disposition related costs   (68 )     -       -       -       118   Adjusted OIBA - Consolidated $ 3,145 $ 3,214 $ 2,355 $ 2,491 $ 1,319 Less: Archeo Adjusted OIBA1   249       (66 )     (156 )     (141 )     (81 ) Call-Driven1 and related Adjusted OIBA $ 2,896     $ 3,280     $ 2,511     $ 2,632     $ 1,400       Reconciliation from Net Cash provided by Operating Activities to Adjusted EBITDA  

Three Months Ended

  6/30/2014       9/30/2014       12/31/2014       3/31/2015       6/30/2015     Net cash provided by (used in) operating activities $ 3,289 $ 6,750 $ 4,302 $ 6,251 $ (1,814 ) Changes in assets and liabilities 1,672 (24,736 ) 58 2,228 3,883 Income tax expense (benefit) 149 22,980 - 5 (185 ) Disposition related costs - - - - 118 Discontinued operations (1,120 ) (1,050 ) (1,127 ) (5,156 ) 91 Tax effect of gain on sale of discontinued operations - 143 - - 163 Interest expense and other, net   22       18       20       25       16   Adjusted EBITDA - Consolidated $ 4,012     $ 4,105     $ 3,253     $ 3,353     $ 2,272   Less: Archeo Adjusted EBITDA1   249       (66 )     (156 )     (141 )     (81 ) Call-Driven1 and related Adjusted EBITDA $ 3,763     $ 4,171     $ 3,409     $ 3,494     $ 2,353       Summary of Revenue by Segment  

Three Months Ended

  6/30/2014       9/30/2014       12/31/2014       3/31/2015       6/30/2015   Call-Driven1 and related Revenue $ 45,856 $ 46,379 $ 30,324 $ 35,028 $ 34,458 Archeo Revenue1   1,186       859       902       887       888   Revenue - Consolidated $ 47,042     $ 47,238     $ 31,226     $ 35,915     $ 35,346  

 

1 The financial results for Call-Driven and Archeo have been derived from the unaudited condensed consolidated financial statements. The Call-Driven financial results include certain direct operating expenses and general corporate overhead expenses. The Archeo financial results include direct operating expenses.

Due to rounding, the sum of quarterly amounts may not equal amounts reported for year-to-date periods.

MARCHEX, INC. AND SUBSIDIARIES Consolidated Continuing and Discontinued Operations (in thousands) (unaudited)              

Three months ended

Six months ended   6/30/2014     9/30/2014       12/31/2014       3/31/2015       6/30/2015     6/30/2014     6/30/2015   Consolidated Continuing Operations Revenue $ 47,042 $ 47,238 $ 31,226 $ 35,915 $ 35,346 $ 95,137 $ 71,261 Adjusted OIBA $ 3,145 $ 3,214 $ 2,355 $ 2,491 $ 1,319 $ 6,462 $ 3,810 Adjusted EBITDA $ 4,012 $ 4,105 $ 3,253 $ 3,353 $ 2,272 $ 8,230 $ 5,625   Archeo Continuing Operations1 Revenue $ 1,186 $ 859 $ 902 $ 887 $ 888 $ 3,788 $ 1,775 Adjusted OIBA $ 249 $ (66 ) $ (156 ) $ (141 ) $ (81 ) $ 1,155 $ (222 ) Adjusted EBITDA $ 249 $ (66 ) $ (156 ) $ (141 ) $ (81 ) $ 1,206 $ (222 )   Discontinued Operations2 Revenue $ 2,634 $ 1,943 $ 2,065 $ 6,659 $ 422 $ 5,035 $ 7,081 Adjusted OIBA $ 1,646 $ 1,035 $ 1,113 $ 5,142 $ (56 ) $ 3,038 $ 5,086 Adjusted EBITDA $ 1,680 $ 1,050 $ 1,127 $ 5,156 $ (53 ) $ 3,124 $ 5,103     Reconciliation of GAAP Income (Loss) from Discontinued Operations, Net of Tax to Adjusted Operating Income Before Amortization (Adjusted OIBA) and Adjusted EBITDA  

Three months ended

Six months ended

  6/30/2014     9/30/2014       12/31/2014       3/31/2015       6/30/2015     6/30/2014     6/30/2015   Discontinued Operations2 Income (loss) from discontinued operations, net of tax $ 1,082 $ 1,031 $ 1,109 $ 5,139 $ (92 ) $ 2,016 $ 5,047 Income tax expense   560     -       -       -       37     1,014     37   Income (loss) from discontinued operations before provision for income taxes 1,642 1,031 1,109 5,139 (55 ) 3,030 5,084 Stock-based compensation   4     4       4       3       (1 )   8     2   Adjusted Operating income before amortization (OIBA) 1,646 1,035 1,113 5,142 (56 ) 3,038 5,086 Domain Amortization   34     15       14       14       3     86     17   Adjusted EBITDA   1,680     1,050       1,127       5,156       (53 )   3,124     5,103  

 

1 The financial results of Archeo are preliminary and have been derived from the unaudited consolidated financial statements of Marchex, Inc. for all periods presented. The unaudited Archeo financial results include direct operating expenses for all periods presented.

2 Operating results of discontinued operations relate to certain pay-per-click assets sold in July 2013 and certain Archeo domain names and related assets sold in April 2015 are included in discontinued operations net of tax in the unaudited consolidated financial statements.

Due to rounding, the sum of quarterly amounts may not equal amounts reported for year-to-date periods.

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Marchex Investor RelationsTrevor Caldwell, 206-331-3600ir(at)marchex.comOrMEDIA INQUIRIESMarchex Corporate Communications206-331-3434pr(at)marchex.com