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 third quarter ended
September 30, 2017.
This press release features multimedia. View
the full release here:
http://www.businesswire.com/news/home/20171102006587/en/
Q3 2017 Financial
Highlights
- Revenue was $22.1 million for
the third quarter of 2017, compared to $30.7 million for the third
quarter of 2016.
- Net loss was $811,000 for the third
quarter of 2017 or $0.02 per diluted share. For the third quarter
of 2016, net loss was $5.9 million or $0.14 per diluted share.
Q3 2016 Q3 2017 Revenue
$30.7 million $22.1 million
Non-GAAP Results1:
Enterprise Revenue2 $24.0 million $17.5 million
Adjusted OIBA ($3.7) million $0.3 million
Adjusted
EBITDA ($2.9) million $1.1 million
Cash Balance $105
million $104 million
- Adjusted non-GAAP income (loss) per
share1 for the third quarter of 2017 was $0.00, compared to
($0.06) for the third quarter of 2016.
- During the third quarter of 2017, YP
contributed $4.6 million in revenue, compared to $6.7 million in
the third 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 contracts with YP.
Strategic Priorities
Update
Grow New and Existing Enterprise Client Relationships.
Positive progress in the development of its sales pipeline. Marchex
has added more than 30 new clients year to date and launched more
than 5 new trials over that same timeframe across many of its new
products. Marchex is beginning to more deeply penetrate its core
verticals, such as Auto and Travel.
Accelerate Product Innovation. In October 2017,
Marchex announced new enhancements to its industry leading Marchex
Speech Analytics solution, including updates to its Call DNA user
interface, which now accepts user input on Artificial Intelligence
predicted outcomes. The direct in-app feedback from customers will
allow Marchex to continually improve the overall accuracy of its
speech recognition technology. These enhancements improved the
accuracy of word transcription by reducing the Word Error Rate by
15%. This increased accuracy of conversational speech recognition
enables marketers and sales teams to gain deeper insights from
inbound calls, which can be used to optimize media spend and sales
operations.
- Marchex Institute Study. In October
2017, Marchex released an industry index report that benchmarks the
call-handling performance of 16 major car brands. The study
leveraged Marchex’s proprietary Speech Analytics solution to
analyze millions of anonymized calls in the United States and found
that more than 19% of calls go unanswered by the dealer or are
abandoned by the customer. Poor handling of any phone call can
result in lost or delayed opportunities that could otherwise have
been appointments, sales, or positive customer experiences which
could cost auto dealers potential sales opportunities.
“We continue to focus relentlessly on our customers, which is
enabling us to develop new opportunities and open the door for
long-term growth,” said Michael Arends, Chief Financial Officer.
“Our early focus on expanding our product pipeline is translating
to new pilots and customers. In addition, we posted our second
consecutive quarter of positive operating cash generation.”
Business Outlook
The following forward-looking statements reflect Marchex's
expectations as of November 2, 2017.
Financial Guidance for
the Fourth Quarter ending December 31, 2017
Revenue $21 million or more Adjusted OIBA1 loss of $0.5
million or better Adjusted EBITDA1 $0.5 million or better
Conference Call and Webcast
Information
Management will hold a conference call, starting at 5:00 p.m. ET
on Thursday, November 2, 2017, to discuss its third quarter ended
September 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 November 2, 2017 and
Marchex undertakes no duty to update the information provided
herein.
In the event the press release contains links to third party
websites or materials, the 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 income (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 income
(loss) per share represents Adjusted non-GAAP income
(loss) divided by GAAP diluted shares outstanding. Adjusted
non-GAAP income (loss) 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 income (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
September 30,
Nine Months Ended
September 30,
2016 2017 2016 2017
Revenue $ 30,749 $ 22,053 $ 101,146 $ 68,444 Expenses: Service
costs (1) 18,505 11,917 60,964 37,690 Sales and marketing (1) 5,562
3,612 16,733 12,075 Product development (1) 6,832 4,256 21,859
13,809 General and administrative (1) 5,320 3,144 15,815 10,568
Acquisition and disposition related costs 354 —
662 — Total operating expenses 36,573
22,929 116,033 74,142 Impairment of goodwill —
— (63,305 ) — Loss from operations (5,824 )
(876 ) (78,192 ) (5,698 ) Interest income (expense) and other, net
(15 ) 77 (90 ) 134 Loss before
provision for income taxes (5,839 ) (799 ) (78,282 ) (5,564 )
Income tax expense 15 12 40 37 Net loss
applicable to common stockholders $ (5,854 ) $ (811 ) $ (78,322 ) $
(5,601 ) Basic and diluted net loss per Class A and Class B
share applicable
to common stockholders
$ (0.14 ) $ (0.02 ) $ (1.88 ) $ (0.13 ) 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 36,639 37,820 36,372 37,565
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 41,872 42,876 41,605 42,621
(1) Includes stock-based compensation allocated as follows:
Service costs $ 160 $ 130 $ 565 $ 385 Sales and marketing 353 299
1,321 768 Product development 206 199 1,367 497 General and
administrative 1,060 534 3,993 1,850
Total $ 1,779 $ 1,162 $ 7,246 $ 3,500
MARCHEX, INC. AND SUBSIDIARIES Condensed Consolidated
Balance Sheets (in thousands) (unaudited)
December 31, September 30, 2016 2017
Assets Current assets: Cash and cash equivalents $ 103,950 $
104,377 Accounts receivable, net 18,922 14,893 Prepaid expenses and
other current assets 1,531 1,905 Refundable taxes 98
86 Total current assets 124,501 121,261 Property and equipment, net
3,557 2,538 Other assets, net 214 328 Total assets $
128,272 $ 124,127
Liabilities and Stockholders’ Equity
Current liabilities: Accounts payable $ 6,811 $ 5,265 Accrued
expenses and other current liabilities 7,707 6,345 Deferred revenue
349 335 Total current liabilities 14,867 11,945 Other
non-current liabilities 134 988 Total liabilities
15,001 12,933 Stockholders’ equity: Class A common stock 53 53
Class B common stock 380 386 Additional paid-in capital 360,422
363,977 Accumulated deficit (247,584 ) (253,222 )
Total stockholders’ equity 113,271 111,194 Total
liabilities and stockholders’ equity $ 128,272 $ 124,127
MARCHEX, INC. AND SUBSIDIARIES (in
thousands) (unaudited) Reconciliation of GAAP Loss
from Operations to Operating Income (Loss) Before Amortization
(OIBA) and Adjusted Operating Income (Loss) Before
Amortization (Adjusted OIBA) Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2017 2016 2017
Loss from operations $ (5,824 )
$ (876 ) $ (78,192 )
$ (5,698 ) Stock-based compensation
1,779 1,162 7,246 3,500 Operating income
(loss) before amortization (OIBA) (4,045 ) 286 (70,946 ) (2,198 )
Acquisition and disposition related costs 354 — 662 — Impairment of
goodwill — — 63,305 —
Adjusted
operating income (loss) before amortization (Adjusted
OIBA)1 $ (3,691 ) $
286 $ (6,979 ) $ (2,198
)
Reconciliation from Net Cash provided
by (used in) Operating Activities to Adjusted EBITDA
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2017 2016 2017
Net cash provided by (used in) operating activities $
(220 ) $ 2,316 $ (2,873
) $ 1,692 Changes in assets and liabilities
(3,085 ) (1,178 ) (2,438 ) (1,528 ) Income tax expense 15 12 40 37
Acquisition and disposition related costs 354 — 662 — Interest
(income) expense and other, net 12 (77 ) 87
(134 )
Adjusted EBITDA1 $ (2,924
) $ 1,073 $ (4,522 )
$ 67 Net cash used in investing
activities $ (235 ) $ (377
) $ (829 ) $ (1,289
) Net cash provided by (used in) financing
activities $ (47 ) $ 9
$ (178 ) $ 24
1 Includes reorganization costs of
approximately $700,000 in Q1 2017.
Reconciliation from Revenue to
Enterprise Revenue
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2017 2016
2017 Revenue $ 30,749 $ 22,053 $ 101,146 $ 68,444 Less: YP
Revenue 6,747 4,584 23,357 14,816 Less: Other — —
21 — Enterprise Revenue2 $ 24,002 $ 17,469 $ 77,768 $
53,628 2 Enterprise Revenue represents total revenue less revenue
generated from contracts with YP and other Archeo related
transition activities.
MARCHEX, INC. AND
SUBSIDIARIES Reconciliation of GAAP Net Loss per Share to
Adjusted Non-GAAP Income (Loss) per Share (in thousands,
except per share amounts) (unaudited) Three
Months Ended
September 30,
Nine Months Ended
September 30,
2016 2017 2016 2017
Adjusted Non-GAAP income (loss) per share $ (0.06 ) $ 0.00 $ (0.11
) $ (0.04 )
Net loss per share applicable to common
stockholders - diluted
(GAAP loss per share)
$ (0.14 ) $ (0.02 )
$ (1.88 ) $ (0.13 )
Shares used to calculate diluted net loss per share applicable to
common stockholders
41,872 42,876 41,605 42,621
Net loss applicable to common
stockholders $ (5,854 ) $
(811 ) $ (78,322 ) $
(5,601 ) Stock-based compensation 1,779 1,162 7,246
3,500 Acquisition and disposition related costs 354 — 662 —
Impairment of goodwill — — 63,305 — Interest (income) expense and
other, net 15 (77 ) 90 (134 ) Estimated impact of income taxes
1,248 (104 ) 2,342 725
Adjusted
Non-GAAP income (loss) $ (2,458 ) $
170 $ (4,677 ) $ (1,510
) Adjusted Non-GAAP income (loss) per share $
(0.06 ) $ 0.00 $ (0.11
) $ (0.04 ) Shares used to
calculate diluted net loss per share applicable to
common stockholders (GAAP)
41,872 42,876 41,605 42,621 Weighted average stock options and
common shares subject to
purchase or cancellation (if
applicable)
— 186 — — Diluted shares used to
calculate Adjusted Non-GAAP income (loss) per share 1 41,872
43,062 41,605 42,621 1 For the purpose of
computing the number of diluted shares for Adjusted Non-GAAP income
(loss) per share, Marchex uses the accounting guidance that would
be applicable for computing the number of diluted shares for GAAP
net income (loss) per share.
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Marchex Investor RelationsTrevor CaldwellTelephone:
206-331-3600Email: ir(at)marchex.comOrMEDIA INQUIRIESMarchex
Corporate CommunicationsTelephone: 206-331-3434Email:
pr(at)marchex.com
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