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 fourth quarter and
full year ended December 31, 2017.
Q4 and Full Year 2017 Financial
Highlights
- Revenue was $21.8 million for
the fourth quarter of 2017, compared to $28.4 million for the
fourth quarter of 2016. Revenue was $90.3 million for
2017, compared to $129.5 million for 2016.
- Net loss applicable to common
stockholders was $841,000 for the fourth quarter of 2017 or $0.02
per diluted share, compared to a net loss of $5.7 million or $0.14
per diluted share for the fourth quarter of 2016. Net loss
applicable to common stockholders was $6.4 million for 2017 or
$0.15 per diluted share, compared to a net loss of $84.1 million or
$2.01 per diluted share for 2016.
Q4 2016 Q4 2017 FY
2016 FY 2017 Revenue $ 28.4 million $ 21.8
million $ 129.5 million $ 90.3 million
Non-GAAP
Results1: Enterprise Revenue2 $
22.4 million $ 17.7 million $ 100.1 million $ 71.3 million
Adjusted OIBA $ (2.8 ) million $ 0.4 million $ (9.7 )
million $ (1.8 ) million
Adjusted EBITDA $ (2.0 ) million $
1.0 million $ (6.6 ) million $ 1.0 million
Cash
Balance $ 104 million $ 104 million
- Adjusted non-GAAP income (loss) per
share1 for the fourth quarter of 2017 was $0.01, compared to
($0.04) for the fourth quarter of 2016. Adjusted non-GAAP income
(loss) per share1 for 2017 was ($0.03), compared to ($0.16) for
2016.
- During the fourth quarter of 2017, YP
contributed $4.2 million in revenue, compared to $6.0 million in
the fourth quarter of 2016. During 2017, YP contributed $19.0
million in revenue compared to $29.4 million in 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.
During 2017, Marchex added more than 40 new clients, including
several in two of its core focus verticals, Auto and Home
Services.
Accelerate Product Innovation. Marchex launched five
new products, including:
- Marchex Speech Analytics was
launched in April 2017 to enable actionable insights for
enterprise and mid-sized companies, helping them understand what is
happening on inbound phone calls from consumers to their business.
In October 2017, new enhancements were added to this solution,
which included updates to its Call DNA user interface. The
interface accepts user input on Artificial Intelligence predicted
outcomes, which will allow Marchex to improve the overall accuracy
of its speech recognition. Uncovering the intelligence and insights
of calls can empower companies to optimize media spend and sales
operations, and can enable them to drive more high-quality calls to
their business and create the opportunity to convert more of those
callers into customers.
- Marchex Audience
Targeting was launched in July 2017 to
automatically build high-value audience segments for display and
social media platforms by leveraging real customer interactions.
Marketers can fine-tune their Facebook and display campaigns down
to specific audience segments that are most likely to convert to
customers, or find new segments and opportunities that have not
been targeted before.
- Marchex Omnichannel Analytics
Cloud was launched in February 2017 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.
- Marchex Search Essentials was
launched in June 2017 and is a new version of our leading Search
Analytics available to companies of all sizes. 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 to help to make real-time
adjustments to drive stronger, more efficient performance for their
paid search campaigns.
- Video and Display Analytics was
launched in December 2016 to measure 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.
Strategic Partnerships and Integrations. During 2017,
Marchex announced a strategic partnership with Facebook and
integrations with Adobe. By partnering with Facebook, Marchex
enables marketers to optimize their marketing spend across all paid
media channels based on actionable insight into which channel drove
offline interaction by consumers to a brand. The integrations
with Adobe Marketing Cloud enables marketers to both increase sales
and retain customers by better understanding how customers and
prospects interact with their brands.
“In 2017, we made considerable progress in building a leading
conversation analytics platform through continued product
innovation and through strategic partnerships,” said Mike Arends,
Chief Financial Officer. “Through our teams’ dedicated focus and
revamped sales efforts, we are laying the foundation to stabilize
Marchex while creating new opportunities that can drive long-term
growth.”
Business Outlook
The following forward-looking statements reflect Marchex's
expectations as of February 15, 2018.
Financial Guidance for
the First Quarter ending March 31, 2018
Revenue $21 million or more Adjusted OIBA1 loss of $1.0
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 Thursday, February 15, 2018, to discuss its fourth quarter and
year ended December 31, 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
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 February 15, 2018 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 Twelve Months Ended December 31,
December 31, 2016 2017 2016
2017 Revenue $ 28,401 $ 21,847 $ 129,547 $ 90,291
Expenses:
Service costs (1)
16,006 11,649 76,970 49,339
Sales and marketing (1)
5,574 3,577 22,307 15,652 Product development (1) 6,587 4,285
28,446 18,094 General and administrative (1) 5,939 2,999 21,754
13,567 Acquisition and disposition related costs — —
662 — Total operating expenses 34,106 22,510 150,139
96,652 Impairment of goodwill — — (63,305 )
— Loss from operations (5,705 ) (663 ) (83,897 ) (6,361 )
Interest income (expense) and other, net (25 ) 182
(115 ) 316 Loss before provision for income taxes
(5,730 ) (481 ) (84,012 ) (6,045 ) Income tax expense 14
5 54 42 Net loss (5,744 ) (486 ) (84,066 )
(6,087 ) Dividends applicable to participating securities —
(355 ) — (355 ) Net loss applicable to common
stockholders $ (5,744 ) $ (841 ) $ (84,066 ) $ (6,442 )
Basic and diluted net loss per Class A share applicable to common
stockholders $ (0.14 ) $ (0.02 ) $ (2.01 ) $ (0.16 ) Basic and
diluted net loss per Class B share applicable to common
stockholders $ (0.14 ) $ (0.02 ) $ (2.01 ) $ (0.15 ) Dividends
applicable to participating securities $ — $ 0.50 $ — $ 0.50 Shares
used to calculate basic net loss per share applicable to common
stockholders: Class A 5,062 5,056 5,190 5,056 Class B 37,076 37,930
36,550 37,657 Shares used to calculate diluted net loss per share
applicable to common stockholders: Class A 5,062 5,056 5,190 5,056
Class B 42,138 42,987 41,740 42,713 (1) Includes stock-based
compensation allocated as follows: Service costs $ 128 $ 130 $ 693
$ 515 Sales and marketing 417 246 1,738 1,014 Product development
202 182 1,569 679 General and administrative 2,190
539 6,183 2,389 Total $ 2,937 $ 1,097 $ 10,183 $
4,597
MARCHEX, INC. AND SUBSIDIARIES Condensed
Consolidated Balance Sheets (in thousands)
(unaudited) December 31,
December 31, 2016 2017 Assets Current
assets: Cash and cash equivalents $ 103,950 $ 104,190 Accounts
receivable, net 18,922 14,860 Prepaid expenses and other current
assets 1,531 2,001 Refundable taxes 98 40 Total
current assets 124,501 121,091 Property and equipment, net 3,557
2,405 Other assets, net 214 326 Total assets $
128,272 $ 123,822
Liabilities and Stockholders’ Equity
Current liabilities: Accounts payable $ 6,811 $ 4,928 Accrued
expenses and other current liabilities 7,707 5,585 Deferred revenue
349 313 Dividends payable — 21,907 Total current
liabilities 14,867 32,733 Other non-current liabilities 134
1,090 Total liabilities 15,001 33,823 Stockholders’ equity:
Class A common stock 53 53 Class B common stock 380 387 Additional
paid-in capital 360,422 343,268 Accumulated deficit (247,584
) (253,709 ) Total stockholders’ equity 113,271
89,999 Total liabilities and stockholders’ equity $ 128,272
$ 123,822
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 EndedDecember
31,
Twelve Months EndedDecember
31,
2016 2017 2016 2017
Loss from operations $ (5,705 )
$ (663 ) $ (83,897 )
$ (6,361 ) Stock-based compensation
2,937 1,097 10,183 4,597 Operating income
(loss) before amortization (OIBA) (2,768 ) 434 (73,714 ) (1,764 )
Acquisition and disposition related costs — — 662 — Impairment of
goodwill — — 63,305 —
Adjusted
operating income (loss) before amortization (Adjusted
OIBA)1 $ (2,768 ) $
434 $ (9,747 ) $ (1,764
)
Reconciliation from Net Cash provided
by (used in) Operating Activities to Adjusted EBITDA
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2016 2017 2016 2017
Net cash provided by (used in) operating activities $
(796 ) $ 0 $ (3,669
) $ 1,692 Changes in assets and liabilities
(1,273 ) 1,136 (3,711 ) (392 ) Income tax expense 14 5 54 42
Acquisition and disposition related costs — — 662 — Interest
(income) expense and other, net 25 (182 ) 112
(316 )
Adjusted EBITDA1 $ (2,030
) $ 959 $ (6,552 )
$ 1,026 Net cash provided by (used in)
investing activities $ 395 $ (288
) $ (1,224 ) $ (1,577
) Net cash provided by (used in) financing
activities $ (134 ) $ 101
$ (312 ) $ 125 1
Includes reorganization costs of approximately $700,000 in Q1 2017.
Reconciliation from Revenue to
Enterprise Revenue
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2016 2017 2016 2017
Revenue $ 28,401 $ 21,847 $ 129,547 $ 90,291 Less: YP Revenue 6,031
4,197 29,388 19,013 Less: Other — — 21
— Enterprise Revenue2 $ 22,370 $ 17,650 $ 100,138 $ 71,278 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 EndedDecember
31,
Twelve Months EndedDecember
31,
2016 2017 2016 2017
Adjusted Non-GAAP income (loss) per share $ (0.04 ) $ 0.01 $ (0.16
) $ (0.03 )
Net loss per Class B share applicable
to common stockholders - diluted (GAAP loss per share)
$ (0.14 ) $ (0.02 )
$ (2.01 ) $ (0.15 )
Shares used to calculate diluted net loss
per share applicable to common stockholders
42,138 42,987 41,740 42,713
Net loss applicable to common
stockholders $ (5,744 ) $
(841 ) $ (84,066 ) $
(6,442 ) Stock-based compensation 2,937 1,097 10,183
4,597 Acquisition and disposition related costs — — 662 —
Impairment of goodwill — — 63,305 — Interest (income) expense and
other, net 25 (182 ) 115 (316 ) Dividends applicable to
participating securities — 355 — 355 Estimated impact of income
taxes 931 (151 ) 3,273 575
Adjusted
Non-GAAP net income (loss) $ (1,851 )
$ 278 $ (6,528 ) $
(1,231 ) Adjusted Non-GAAP income (loss) per
share $ (0.04 ) $ 0.01
$ (0.16 ) $ (0.03 )
Shares used to calculate diluted net loss per Class B share
applicable to common stockholders (GAAP) 42,138 42,987 41,740
42,713 Weighted average stock options and common shares subject to
purchase or cancellation (if applicable) — 339
— — Diluted shares used to calculate Adjusted Non-GAAP
income (loss) per share 1 42,138 43,326 41,740
42,713 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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version on businesswire.com: http://www.businesswire.com/news/home/20180215006223/en/
Marchex Investor RelationsTrevor Caldwell,
206-331-3600ir(at)marchex.comorMEDIA INQUIRIESMarchex
Corporate Communications206-331-3434marchex(at)edelman.com
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