Marchex, Inc. (NASDAQ:MCHX), a leading mobile advertising
analytics company, today announced its financial results for the
third quarter ended September 30, 2016.
Q3 2016 Financial
Highlights
- GAAP revenue was $30.7
million for the third quarter of 2016, compared to $36.9
million for the third quarter of 2015.
- GAAP net loss from continuing
operations was $5.9 million for the third quarter of 2016 or $0.14
per diluted share. For the third quarter of 2015, GAAP net loss
from continuing operations was $191,000 or $0.00 per diluted
share.
Q3 2015
Q3 2016 GAAP Revenue $36.9 million
$30.7 million
Call-Driven Revenue1 $36.1
million $30.7 million
Non-GAAP Results2:
Enterprise Revenue3 $26.0
million $24.0 million
Call-Driven Adjusted OIBA
$2.2 million ($3.7) million
Call-Driven Adjusted
EBITDA $3.1 million ($2.9) million
Cash Balance
$109 million
$105 million
- Adjusted non-GAAP earnings (loss) per
share2 from continuing operations for the third quarter of 2016 was
($0.06), compared to $0.04 for the third quarter of 2015.
- During the third quarter of 2016, YP
contributed $6.7 million in Call-Driven Revenue, compared to $10.1
million in the third quarter 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
- Grow New and Existing Enterprise
Client Relationships. We are making progress with customer
initiatives, including new clients and our pipeline. We added 25
new clients year to date, including in the third quarter. These new
relationships add to our customer footprint, which includes 17 of
the top Fortune 500 global brands.
- Accelerate Product Innovation.
Marchex Display Analytics reached another milestone and is now
available through select strategic partnerships and we expect to
launch to general availability in the fourth quarter. Marchex
Display Analytics measures the effectiveness of display and other
digital media in driving call conversions and is expanding its
ability to measure the consumer journey and interplay between
search and display. With the availability of Marchex Display
Analytics, the Marchex Analytics platform gets closer to its
mission to measure offline sales, and audience and consumer intent
from digital advertisements across every channel and every device.
Through our expanding integration footprint, our Marchex Display
Analytics technology has access to more than 90% of impressions
available in the U.S.
- Expand Global Strategic
Partnerships. We have a new integration with DoubleClick
Campaign Manager’s newly released Conversions API. With this
integration, marketers can securely upload Marchex Display
Analytics data to DoubleClick and attribute inbound phone calls to
digital and mobile advertising programs, providing a more complete
view of media performance. DoubleClick customers can now take
advantage of the rich phone call data
that Marchex provides to better understand their
customers and campaigns.
“Marchex has a unique position in the mobile advertising
analytics market by virtue of our customer base, technology and
products and we expect to make progress toward improving our
financial performance and returning Marchex to profitability as
soon as possible,” said Michael Arends, Chief Financial
Officer.
Business Outlook
The following forward-looking statements reflect Marchex's
expectations as of November 2, 2016.
Total Call-Driven
financial guidance for the Fourth Quarter ending December 31,
2016
Call-Driven Revenue1
$26 million or more Call-Driven Adjusted OIBA2
a loss of ($3) million to a loss of ($4) million
Call-Driven Adjusted EBITDA2 a loss of ($2)
million to a loss of ($3) million
Total Call-Driven
financial guidance for the Fiscal Year ending December 31,
2016
Call-Driven Revenue1
$127 million or more Call-Driven Adjusted OIBA2
a loss of ($10) million to a loss of ($11)
million Call-Driven Adjusted EBITDA2 a loss of
($6.5) million to a loss of ($7.5) million
Conference Call and Webcast
Information
Management will hold a conference call, starting at 5:00 p.m. ET
on Wednesday, November 2, 2016 to discuss its third quarter ended
September 30, 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 November 2, 2016 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 plus 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 amounts) (unaudited) Three
months ended Nine Months Ended September
30, September 30, 2015 2016 2015
2016 Revenue $ 36,852 $ 30,749 $ 108,113 $ 101,146
Expenses: Service costs (1) 20,003 18,505 59,166 60,964 Sales and
marketing (1) 4,266 5,562 11,969 16,733 Product development (1)
7,769 6,832 23,608 21,859 General and administrative (1) 4,721
5,320 14,925 15,815 Acquisition and disposition related costs
81 354 199 662 Total operating expenses
36,840 36,573 109,867 116,033 Impairment of goodwill —
— — (63,305 ) Income (loss) from operations 12
(5,824 ) (1,754 ) (78,192 ) Interest expense and other, net
(12 ) (15 ) (52 ) (90 ) Loss from continuing
operations before provision for income taxes 0 (5,839 ) (1,806 )
(78,282 ) Income tax expense 191 15 11
40 Net loss from continuing operations (191 ) (5,854 ) (1,817 )
(78,322 ) Discontinued operations: Income from discontinued
operations, net of tax 37 — 5,084 — Gain on sale from discontinued
operations, net of tax 163 — 22,195 —
Discontinued operations, net of tax 200 —
27,279 — Net income (loss) 9 (5,854 ) 25,462 (78,322 )
Dividends paid to participating securities — —
(37 ) — Net income (loss) applicable to common stockholders
$ 9 $ (5,854 ) $ 25,425 $ (78,322 ) Basic and diluted net
income (loss) per Class A and Class
B share applicable to common
stockholders:
Continuing operations $ (0.00 ) $ (0.14 ) $ (0.04 ) $ (1.88 )
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
$ 0.00 $ (0.14 ) $ 0.62 $ (1.88 ) Dividends paid per share $ — $ —
$ 0.04 $ — Shares used to calculate basic net income (loss) per
share applicable to common
stockholders
Class A 5,233 5,233 5,233 5,233 Class B 36,120 36,639 35,980 36,372
Shares used to calculate diluted net income (loss) per
share applicable to common
stockholders
Class A 5,233 5,233 5,233 5,233 Class B 41,353 41,872 41,213 41,605
(1) Includes stock-based compensation allocated as follows: Service
costs $ 273 $ 160 $ 1,046 $ 565 Sales and marketing 339 353 893
1,321 Product development 620 206 1,843 1,367 General and
administrative 1,119 1,060 4,027 3,993
Total $ 2,351 $ 1,779 $ 7,809 $ 7,246
MARCHEX, INC. AND
SUBSIDIARIES Condensed Consolidated Balance Sheets
(in thousands) (unaudited) December
31, September 30, Assets 2015 2016
Current assets: Cash and cash equivalents $ 109,155 $ 105,275
Accounts receivable, net 24,621 21,579 Prepaid expenses and other
current assets 1,784 1,995 Refundable taxes 127 117
Total current assets 135,687 128,966 Property and equipment, net
5,778 3,913 Intangibles and other assets, net 222 220 Goodwill
63,305 — Total Assets $ 204,992 $ 133,099
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable $ 9,460 $ 7,960 Accrued expenses and other current
liabilities 6,712 8,300 Deferred revenue 692 362
Total current liabilities 16,864 16,622 Other non-current
liabilities 662 266 Total Liabilities 17,526 16,888
Class A common stock 55 55 Class B common stock 368 381 Treasury
stock (238 ) (2 ) Additional paid-in capital 350,799 357,617
Accumulated deficit (163,518 ) (241,840 ) Total
Stockholders' Equity 187,466 116,211 Total
Liabilities and Stockholders' Equity $ 204,992 $ 133,099
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
Nine Months Ended September 30, September 30,
2015 2016 2015 2016 Income
(loss) from operations $ 12 $
(5,824 ) $ (1,754 ) $
(78,192 ) Stock-based compensation 2,351
1,779 7,809 7,246 Operating income (loss)
before amortization (OIBA) 2,363 (4,045 ) 6,055 (70,946 )
Acquisition and disposition related costs 81 354 199 662 Impairment
of goodwill — — — 63,305
Adjusted
operating income (loss) before amortization
(Adjusted OIBA) - Consolidated
$ 2,444 $ (3,691 ) $
6,254 $ (6,979 ) Less: Archeo and Other
Adjusted OIBA1 267 18 45 45 Call-Driven
Adjusted OIBA1 $ 2,177 $ (3,709 ) $ 6,209 $ (7,024 )
Reconciliation from Net Cash provided
by (used in) Operating Activities to Adjusted EBITDA
Three Months Ended Nine Months Ended
September 30, September 30, 2015 2016
2015 2016 Net cash provided by (used in) operating
activities $ 7,563 $ (220 )
$ 12,000 $ (2,873 ) Changes in
asset and liabilities (4,299 ) (3,085 ) 1,813 (2,438 ) Income tax
expense 191 15 11 40 Acquisition and disposition related costs 81
354 199 662 Interest expense and other, net 12 12 52 87 Income from
discontinued operations, net of tax (37 ) — (5,102 ) — Tax effect
on gain on sale of discontinued operations (163 ) —
— —
Adjusted EBITDA - Consolidated $
3,348 $ (2,924 ) $ 8,973
$ (4,522 ) Less: Archeo and Other Adjusted
EBITDA1 267 18 45 45 Call-Driven
Adjusted EBITDA1 $ 3,081 $ (2,942 ) $ 8,928 $ (4,567 )
Net cash provided by (used in) investing activities $
(1,260 ) $ (235 ) $
21,580 $ (829 ) Net cash used
in financing activities $ (1,798 )
$ (47 ) $ (4,676 )
$ (178 )
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 loss per share to Adjusted Non-GAAP
earnings (loss) per share (in thousands, except per share
amounts) (unaudited) Three Months
Ended Nine Months Ended September 30,
September 30, 2015 2016 2015
2016 Adjusted Non-GAAP earnings (loss) per share from
continuing operations
$ 0.04 $ (0.06 ) $ 0.10 $ (0.11 )
Net loss from continuing
operations applicable to
common stockholders - diluted (GAAP
loss per share)
$ (0.00 ) $ (0.14 )
$ (0.04 ) $ (1.88 )
Shares used to calculate diluted net loss from continuing
operations per share applicable to common
stockholders
41,353 41,872 41,213 41,605
Net income (loss) applicable to
common stockholders $ 9 $ (5,854
) $ 25,425 $ (78,322 )
Stock-based compensation 2,351 1,779 7,809 7,246 Acquisition and
disposition related costs 81 354 199 662 Impairment of goodwill — —
— 63,305 Interest expense and other, net 12 15 52 90 Dividends paid
to participating securities — — 37 — Discontinued operations, net
of tax (200 ) — (27,279 ) — Estimated impact of income taxes
(662 ) 1,248 (2,182 ) 2,342
Adjusted
Non-GAAP net income (loss) from
continuing operations
$ 1,591 $ (2,458 ) $
4,061 $ (4,677 ) Adjusted Non-GAAP
earnings (loss) per share from
continuing operations
$ 0.04 $ (0.06 ) $
0.10 $ (0.11 ) Shares used to
calculate diluted net income (loss) from
continuing operations per share applicable
to common
stockholders (GAAP)
41,353 41,872 41,213 41,605 Weighted average stock options and
common shares
subject to purchase or cancellation (if
applicable)
394 — 373 — Diluted shares used to
calculate Adjusted Non-GAAP earnings
(loss) per share 1
41,747 41,872 41,586 41,605
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
Q315 Q316 YTD Q315 YTD
Q316 GAAP Revenue $ 36,852 $
30,749 $ 108,113 $ 101,146
Adjusted OIBA $ 2,444 $ (3,691
) $ 6,254 $ (6,979 )
Adjusted EBITDA $ 3,348 $ (2,924
) $ 8,973 $ (4,522 )
CALL-DRIVEN Q315 Q316 YTD Q315
YTD Q316 GAAP Revenue $ 36,135 $
30,749 $ 105,621 $ 101,125
Adjusted OIBA $ 2,177 $ (3,709
) $ 6,209 $ (7,024 )
Adjusted EBITDA $ 3,081 $ (2,942
) $ 8,928 $ (4,567 )
ENTERPRISE REVENUE2 Q315 Q316
YTD Q315 YTD Q316 Call-Driven GAAP Revenue
$ 36,135 $ 30,749 $
105,621 $ 101,125 Less: YP Revenue
$ 10,128 $ 6,747 $ 31,247
$ 23,357 Enterprise Revenue $
26,007 $ 24,002 $ 74,374
$ 77,768
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/20161102006637/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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