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 first quarter ended
March 31, 2019.
Q1 2019 Financial
Highlights
- Revenue was $26.4 million for
the first quarter of 2019, compared to $21.9 million for the first
quarter of 2018.
- Core analytics revenue was $12.8
million for the first quarter of 2019, compared to $7.4
million for the first quarter of 2018.
- Net loss was $1.3 million for the first
quarter of 2019 or $0.03 per diluted share. For the first quarter
of 2018, net loss was $0.9 million or $0.02 per diluted share.
Q1 2018 Q1 2019 Revenue $21.9
million $26.4 million
Net cash provided by operating
activities $3.0 million $5.6 million
Cash Balance $84.6
million $50.9 million
Non-GAAP
Results1: Adjusted EBITDA $0.3 million
$1.2 million
- Adjusted non-GAAP income (loss) per
share1 for the first quarter of 2019 was $0.01, compared to
($0.00) for the first quarter of 2018.
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.
Strategic Priorities
Update
Grow New and Existing Client Relationships. In the first
quarter, Marchex added more than 8 new clients, including
enterprise brands in verticals such as Auto, Senior Living, and
Home Services.
Accelerate Product Innovation. Marchex Recently Launched
Marchex Stream, its new platform that analyzes consumer-to-business
conversational data, gains insights in real time and at meaningful
scale, extracts signals of consumer intent and supports predictive
analytics and the development of artificial intelligence-driven,
use-case specific applications. With Marchex Stream, a customer’s
journey can now be captured across its many touchpoints, including
inbound and outbound phone calls, SMS, messaging and chat, in a
single, unified platform and processed within seconds. Marchex
Stream enables businesses to realize the full potential and value
of conversational artificial intelligence and is introducing a new
set of industry-leading capabilities, including: massive
cloud-based conversational data storage and analytics scalability,
new streaming capabilities enable processing events and extracting
signals from conversations as they occur, a new rich API for
developers and a multi-layered, cloud-based advanced security
processes and techniques to provide the protection required to
support enterprise level needs.
Marchex recently launched Marchex Sales Rescue, a new AI-infused
call monitoring, scoring and engagement solution. Marchex Sales
Rescue combines Marchex artificial intelligence and machine
learning with call monitoring and scoring services to alert
businesses when potential buyers hang up without making a purchase,
or when certain calls did not meet the business’ customer service
standards. This solution identifies in real-time when potential
high-value customer prospects engaged in conversations with sales
representatives are mishandled in any number of ways, and then
gives businesses the opportunity to re-engage immediately to
capture these potentially lost opportunities, as well as avoid
undesired customer experiences. Marchex’s ability to deliver the
Sales Rescue solution has been accelerated by its Callcap
subsidiary, which it acquired in November 2018.
“Marchex is making important progress setting the foundation for
leadership in conversational analytics and sales acceleration
solutions,” said Mike Arends, Chief Financial Officer. “From
launching innovative new products that solve critical pain points
for our customers, to supporting our many world-class customers as
they roll out strategic initiatives with Marchex solutions at the
center, 2019 will be a significant step in setting the stage for
Marchex to capture meaningful opportunities in this emerging
market.”
Business Outlook
The following forward-looking statements reflect Marchex's
expectations as of May 2, 2019.
- For the second quarter, the Company
anticipates $12.8 million or more in Marchex’s core analytics
revenue, representing a more than 50% increase year-over-year.
Financial Guidance for
the Second Quarter ending June 30, 2019
Total Revenue $25 million or more Income (loss) from
operations ($3) million or better Adjusted OIBA1, 2 breakeven or
better Adjusted EBITDA1, 2 $1 million or better
2
Second quarter GAAP income (loss) from
operations is expected to be ($3) million or better, assuming
stock-based compensation and amortization of intangibles between
$2.8 million and $3 million for the quarter.
Conference Call and Webcast
Information
Management will hold a conference call, starting at 5:00 p.m. ET
on Wednesday May 2, 2019 to discuss its first quarter ended March
31, 2019 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 May 2, 2019 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 Adjusted OIBA, Adjusted
EBITDA, and Adjusted non-GAAP income (loss) per share.
Adjusted OIBA represents
income (loss) from operations excluding stock-based compensation
expense, amortization of intangible assets from acquisitions, and
acquisition related costs. This measure, among other things, is one
of the primary metrics by which Marchex evaluates the performance
of its business. 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 related costs. Adjusted EBITDA represents income (loss)
before interest, income taxes, depreciation, amortization, stock
compensation expense and acquisition related costs. 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 Adjusted
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 related
costs, (3) interest and other income (expense), and (4)
amortization of intangible assets from acquisitions. 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
March 31,
2018 2019 Revenue $ 21,896 $ 26,406 Expenses:
Service costs (1) 12,823 14,258 Sales and marketing (1) 3,610 4,113
Product development (1) 3,648 4,568 General and administrative (1)
2,970 3,320 Amortization of intangible assets from acquisitions —
1,568 Acquisition related costs — 182 Total operating
expenses 23,051 28,009 Loss from operations (1,155 )
(1,603 ) Interest income and other, net 240 185 Loss
before provision for income taxes (915 ) (1,418 ) Income tax
expense (benefit) 11 (119 ) Net loss applicable to
common stockholders $ (926 ) $ (1,299 ) Basic and diluted
net loss per Class A and Class B share applicable
to common stockholders
$ (0.02 ) $ (0.03 ) Shares used to calculate basic net loss per
share applicable to
common stockholders:
Class A 5,056 5,056 Class B 38,039 39,827 Shares used to calculate
diluted net loss per share applicable
to common stockholders:
Class A 5,056 5,056 Class B 43,095 44,883 (1) Includes
stock-based compensation allocated as follows: Service costs $ 128
$ 59 Sales and marketing 214 177 Product development 91 76 General
and administrative 518 233 Total $ 951 $ 545
MARCHEX, INC. AND SUBSIDIARIES Condensed
Consolidated Balance Sheets (in thousands)
(unaudited) December 31, March
31, 2018 2019 Assets Current assets: Cash
and cash equivalents $ 45,230 $ 50,906 Accounts receivable, net
16,198 14,716 Prepaid expenses and other current assets
2,657 2,919 Total current assets 64,085 68,541 Property and
equipment, net 2,921 2,774 Right-of-use lease asset — 7,065 Other
assets, net 917 848 Goodwill 24,442 24,442 Intangible assets from
acquisitions, net 20,697 19,129 Total assets $
113,062 $ 122,799
Liabilities and Stockholders’ Equity
Current liabilities: Accounts payable $ 5,968 $ 6,687 Accrued
expenses and other current liabilities 5,807 6,128 Current portion
of acquisition-related liabilities 1,215 1,276 Deferred revenue and
deposits 1,782 3,955 Lease liability current — 1,517
Total current liabilities 14,772 19,563 Other non-current
liabilities 1,287 91 Deferred tax liabilities 1,531 1,390 Lease
liability non-current — 6,787 Non-current portion of
acquisition-related liabilities 446 502 Total
liabilities 18,036 28,333 Stockholders’ equity: Class A common
stock 53 53 Class B common stock 370 371 Treasury stock — (1 )
Additional paid-in capital 350,801 351,540 Accumulated deficit
(256,198 ) (257,497 ) Total stockholders’ equity
95,026 94,466 Total liabilities and stockholders’
equity $ 113,062 $ 122,799
MARCHEX, INC. AND
SUBSIDIARIES (in thousands) (unaudited)
Reconciliation of GAAP Loss from Operations to Adjusted
Operating Income (Loss) Before Amortization (Adjusted OIBA)
Three Months Ended
March 31,
2018 2019 Loss from operations $ (1,155 ) $
(1,603 ) Stock-based compensation 951 545 Amortization of
intangible assets from acquisitions — 1,568 Acquisition related
costs — 182 Adjusted OIBA $ (204 ) $ 692
Reconciliation from Net Cash provided
by Operating Activities to Adjusted EBITDA
Three Months Ended
March 31,
2018 2019 Net cash provided by operating
activities $ 3,021 $ 5,624 Changes in assets and liabilities (2,471
) (4,345 ) Income tax expense (benefit) 11 (119 ) Acquisition
related costs — 182 Interest income and other, net (240 )
(185 ) Adjusted EBITDA $ 321 $ 1,157 Net cash used in
investing activities $ (769 ) $ (143 ) Net cash provided by
(used in) financing activities $ (21,880 ) $ 195
Revenue Reconciliation
Three Months Ended
March 31,
2018 2019 Core Analytics revenue1 $
7,401 $ 12,784 Marketplace, Local Leads, and other analytics2
14,495 13,622 Total Revenue $ 21,896 $ 26,406 1
Core analytics revenue includes revenue from analytics
customers, including those that are purchasing or buying products
derived from the company’s speech technology platform. 2
Includes revenue from marketplace, local leads and from tests,
consulting services or other analytics revenues that may continue
for a limited time but are not anticipated to continue in future
periods.
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
March 31,
2018 2019 Adjusted Non-GAAP income (loss) per
share $ (0.00 ) $ 0.01 Net loss per share applicable to
common stockholders - diluted
(GAAP loss per share)
$ (0.02 ) $ (0.03 ) Shares used to calculate diluted net loss per
share applicable to
common stockholders
43,095 44,883 Net loss applicable to common stockholders $
(926 ) $ (1,299 ) Stock-based compensation 951 545 Acquisition
related costs — 182 Amortization of intangible assets from
acquisitions — 1,568 Interest income and other, net (240 ) (185 )
Estimated impact of income taxes 23 (309 ) Adjusted
Non-GAAP income (loss) $ (192 ) $ 502 Adjusted Non-GAAP income
(loss) per share $ (0.00 ) $ 0.01 Shares used to calculate
diluted net loss per share applicable to
common stockholders (GAAP)
43,095 44,883 Weighted average stock options and common shares
subject to
purchase or cancellation (if
applicable)
— 756 Diluted shares used to calculate Adjusted
Non-GAAP income (loss) per share1 43,095 45,639 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: https://www.businesswire.com/news/home/20190502005780/en/
Trevor CaldwellMarchex Investor RelationsTelephone:
206.331.3600Email: ir@marchex.comOrMEDIA INQUIRIESMarchex
Corporate CommunicationsTelephone: 206.331.3434Email:
marchex@edelman.com
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