Marchex, Inc. (NASDAQ:MCHX), a leading provider of call
analytics that drive, measure, and convert callers into customers,
today announced its financial results for the second quarter ended
June 30, 2017.
Q2 2017 Financial
Highlights
- Revenue was $22.0 million for
the second quarter of 2017, compared to $34.4 million for the
second quarter of 2016.
- Net loss was $1.3 million for the
second quarter of 2017 or $0.03 per diluted share. For the second
quarter of 2016, net loss was $68.8 million or $1.65 per diluted
share.
Q2 2016 Q2 2017
Revenue $34.4 million $22.0 million
Non-GAAP
Results1: Enterprise Revenue2 $26.3
million $17.2 million
Adjusted OIBA ($1.6) million ($0.3)
million
Adjusted EBITDA ($0.8) million $0.4 million
Cash
Balance $106 million $102 million
- Adjusted non-GAAP earnings (loss) per
share1 for the second quarter of 2017 was ($0.01), compared to
($0.02) for the second quarter of 2016.
- During the second quarter of 2017, YP
contributed $4.8 million in revenue, compared to $8.1 million in
the second 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.
Strategic Priorities
Update
- Accelerate Product Innovation.
Marchex Audience Targeting launched in July 2017 is a new
solution that leverages real customer interactions to automatically
build high value audience segments for display and social media
platforms. By helping brands understand who is calling, and what
they’re calling about, Marchex Audience Targeting empowers
marketers with the ability to target high intent audiences with
their Facebook and display campaigns. Marketers can
fine-tune campaigns down to specific audience segments that are
most likely to convert to customers, or find new segments and
opportunities that haven’t been targeted before.Marchex Search
Essentials launched in June 2017 is a new version
of our leading Search Analytics previously targeted to
enterprise-level companies with large marketing budgets. Marchex
Search Essentials is available to all companies of all sizes to
maximize spend and increase ROI on paid search campaigns. Marchex
Search Essentials helps eliminate a major blind spot for marketers
by attributing inbound phone calls to paid search keywords and as a
result, marketers have the insights they need to make real time
adjustments to drive stronger, more efficient performance for their
paid search campaigns.Independent Research Study highlights the
value of customers that call. In July 2017, Marchex
announced the results of an industry survey that helps marketers
invest their marketing spend and increase their return on
investment. Based on a survey of marketing decision makers, the
study from Forrester Consulting showed that customers who call a
business are the most valuable prospects for a business. The report
found that phone customers convert faster, spend more, and have a
higher retention rate than customers who contact brands via other
channels such as in-store or on-line. The report can be downloaded
here.
- Expand Strategic Partnerships.
New integrations with Adobe Analytics Cloud, announced in June
2017, enable marketers to both increase sales and retain customers
by better understanding how customers and prospects interact with
their brands. Marchex was also promoted to Business partner in the
Adobe Exchange partner program for Adobe Experience Cloud.
“While we have continued to focus on stabilizing the business
and laying the foundation to return the company to growth, I am
pleased to report that the company returned to positive operating
cash generation in the second quarter,” said Michael Arends, Chief
Financial Officer. “We are expanding our product pipeline and
strategic partnership base while we continue to focus on adding to
and growing our base of customer relationships. These initiatives
are building blocks for putting Marchex back on a path to long term
growth.”
Business Outlook
The following forward-looking statements reflect Marchex's
expectations as of August 2, 2017.
Financial
Guidance for the Third Quarter ending September 30,
2017
Revenue $21 million or more Adjusted OIBA1 a loss of $1
million or better Adjusted EBITDA1 breakeven or better
Conference Call and Webcast
Information
Management will hold a conference call, starting at 5:00 p.m. ET
on Wednesday, August 2, 2017, to discuss its second quarter ended
June 30, 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 understands the best customers are those who call your
company - they convert faster, buy more, and churn less. Marchex
provides solutions that help companies drive more calls, understand
what happens on those calls, and convert more of those callers into
customers. Our actionable intelligence strengthens the connection
between companies and their customers, bridging the physical and
digital world, to help brands maximize their marketing investments
and operating efficiencies to acquire the best customers.
Please
visit http://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 including but not limited to product
demand, order cancellations and delays, competition and general
economic conditions. These factors are described in greater detail
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 2, 2017 and
Marchex undertakes no duty to update the information provided
herein.
This press release may contain links to third party websites or
materials. These links are provided solely as a convenience to you.
Marchex is not responsible for the content of linked third-party
sites or materials and does not make any representations regarding
the content or accuracy thereof.
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 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 (loss) 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.
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), and (4) 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 amounts) (unaudited) Three
Months Ended
June 30,
Six Months Ended
June 30,
2016 2017 2016 2017
Revenue $ 34,412 $ 22,016 $ 70,397 $ 46,391 Expenses: Service costs
(1) 20,477 12,175 42,459 25,773 Sales and marketing (1) 5,649 3,471
11,171 8,463 Product development (1) 7,555 4,283 15,027 9,553
General and administrative (1) 5,833 3,394 10,495 7,424 Acquisition
and disposition related costs 304 — 308
— Total operating expenses 39,818 23,323
79,460 51,213 Impairment of goodwill (63,305 )
— (63,305 ) — Loss from operations (68,711 ) (1,307 )
(72,368 ) (4,822 ) Interest income (expense) and other, net
(68 ) 40 (75 ) 57 Loss before provision for
income taxes (68,779 ) (1,267 ) (72,443 ) (4,765 ) Income tax
expense 12 13 25 25 Net loss applicable
to common stockholders $ (68,791 ) $ (1,280 ) $ (72,468 ) $ (4,790
) Basic and diluted net loss per Class A and Class B share
applicable
to common stockholders
$ (1.65 ) $ (0.03 ) $ (1.75 ) $ (0.11 ) Shares used to calculate
basic net loss per share applicable to
common stockholders:
Class A 5,233 5,056 5,233 5,056 Class B 36,499 37,698 36,238 37,435
Shares used to calculate diluted net loss per share applicable
to common stockholders:
Class A 5,233 5,056 5,233 5,056 Class B 41,732 42,754 41,471 42,491
(1) Includes stock-based compensation allocated as follows:
Service costs $ 207 $ 130 $ 405 $ 255 Sales and marketing 529 63
968 469 Product development 629 207 1,161 298 General and
administrative 2,136 581 2,933 1,316
Total $ 3,501 $ 981 $ 5,467 $ 2,338
MARCHEX, INC. AND SUBSIDIARIES Condensed Consolidated
Balance Sheets (in thousands) (unaudited)
December 31, June 30, 2016 2017
Assets Current assets: Cash and cash equivalents $ 103,950 $
102,429 Accounts receivable, net 18,922 15,461 Prepaid expenses and
other current assets 1,531 2,004 Refundable taxes 98
94 Total current assets 124,501 119,988 Property and equipment, net
3,557 2,962 Other assets, net 214 329 Total assets $
128,272 $ 123,279
Liabilities and Stockholders’ Equity
Current liabilities: Accounts payable $ 6,811 $ 5,098 Accrued
expenses and other current liabilities 7,707 6,469 Deferred revenue
349 337 Total current liabilities 14,867 11,904 Other
non-current liabilities 134 540 Total liabilities
15,001 12,444 Stockholders’ equity: Class A common stock 53 53
Class B common stock 380 385 Treasury stock - (2 ) Additional
paid-in capital 360,422 362,810 Accumulated deficit (247,584
) (252,411 ) Total stockholders’ equity 113,271
110,835 Total liabilities and stockholders’ equity $ 128,272
$ 123,279
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
June 30,
Six Months Ended
June 30,
2016 2017 2016 2017
Loss from operations $ (68,711 )
$ (1,307 ) $ (72,368 )
$ (4,822 ) Stock-based compensation
3,501 981 5,467 2,338 Operating loss before
amortization (OIBA) (65,210 ) (326 ) (66,901 ) (2,484 ) Acquisition
and disposition related costs 304 — 308 — Impairment of goodwill
63,305 — 63,305 —
Adjusted operating
loss before amortization (Adjusted OIBA)1 $
(1,601 ) $ (326 ) $
(3,288 ) $ (2,484 )
Reconciliation from Net Cash used in
Operating Activities to Adjusted EBITDA
Three Months Ended
June 30,
Six Months Ended
June 30,
2016 2017 2016 2017
Net cash provided by (used in) operating activities $
(386 ) $ 254 $ (2,653
) $ (624 ) Changes in assets and
liabilities (785 ) 174 647 (350 ) Income tax expense 12 13 25 25
Acquisition and disposition related costs 304 — 308 — Interest
(income) expense and other, net 68 (40 ) 75
(57 )
Adjusted EBITDA1 $ (787
) $ 401 $ (1,598 )
$ (1,006 ) Net cash used in
investing activities $ (119 ) $
(906 ) $ (594 ) $
(912 ) Net cash provided by (used in)
financing activities $ (321 ) $
9 $ (131 ) $ 15
1
Includes reorganization costs of approximately
$700,000 in Q1 2017.
Reconciliation from Revenue to
Enterprise Revenue
Three Months Ended
June 30,
Six Months Ended
June 30,
2016 2017 2016
2017 Revenue $ 34,412 $ 22,016 $ 70,397 $ 46,391 Less: YP
Revenue 8,091 4,829 16,610 10,232 Less: Other — —
21 — Enterprise Revenue2 $ 26,321 $ 17,187 $ 53,766 $
36,159 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
June 30,
Six Months Ended
June 30,
2016 2017 2016 2017
Adjusted Non-GAAP loss per share $ (0.02 ) $ (0.01 ) $ (0.05 ) $
(0.04 )
Net loss per share applicable to common
stockholders - diluted
(GAAP loss per share)
$ (1.65 ) $ (0.03 )
$ (1.75 ) $ (0.11 )
Shares used to calculate diluted net loss per share applicable to
common stockholders
41,732 42,754 41,471 42,491
Net loss applicable to common
stockholders $ (68,791 ) $
(1,280 ) $ (72,468 ) $
(4,790 ) Stock-based compensation 3,501 981 5,467
2,338 Acquisition and disposition related costs 304 — 308 —
Impairment of goodwill 63,305 — 63,305 — Interest (income) expense
and other, net 68 (40 ) 75 (57 ) Estimated impact of income taxes
746 115 1,093 829
Adjusted Non-GAAP
loss $ (867 ) $ (224
) $ (2,220 ) $ (1,680
) Adjusted Non-GAAP loss per share $
(0.02 ) $ (0.01 ) $
(0.05 ) $ (0.04 ) Shares
used to calculate diluted net loss per share applicable to
common stockholders (GAAP) and Adjusted
Non-GAAP loss per share
41,732 42,754 41,471 42,491
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version on businesswire.com: http://www.businesswire.com/news/home/20170802006297/en/
Marchex Investor RelationsTrevor Caldwell,
206-331-3600ir(at)marchex.comorMEDIA INQUIRIESMarchex
Corporate Communications206-331-3434, pr(at)marchex.com
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