The Acquisition Creates one of the largest
Conversation Analytics Companies across both voice and text
solutions
Marchex will have more than $50 million in
Annualized Core Analytics Revenue Run Rate*
Marchex, Inc. (NASDAQ: MCHX), a leading provider of call
analytics that drive, measure, and convert callers into customers,
today announced the acquisition of Callcap, a leading call
monitoring and analytics company, for total consideration of $35
million in a combination of cash and stock.
Callcap specializes in call monitoring and analytics solutions
for more than twelve industry verticals, including home services,
healthcare, automotive, and telecommunications. The Company’s
innovative technology powers complex, custom evaluations of
millions of calls each month, providing deep insights into consumer
and business conversations with numerous integrations into the call
center environments of many franchise businesses. Callcap has
processed tens of millions of calls year to date, which further
expands the footprint of Marchex’s leading conversational data set.
Additionally, the company offers a separate self-service offering
to Small and Medium Sized Businesses (SMBs), which is one of the
fastest growing segments in the call analytics market and one where
Marchex sees meaningful prospective opportunity.
“Following today’s announcement, Marchex is on pace to have more
than $50 million in annualized, growing analytics revenue,” said
Russell Horowitz, Executive Director and Member of the Office of
the CEO. “With the addition of Callcap, we are expanding our
conversational data footprint and customer base, as well as
enhancing our growth opportunities in valuable verticals and new
customer channels, such as the small business segment. Our
investments in AI and machine learning will accelerate Callcap’s
ability to surface insights on an automated basis and their ability
to develop new solutions for their growing customer base in key
verticals. Together we are operating at a unique scale in our
industry, further enhancing Marchex’s position as the leading
conversational analytics company covering both voice and text.”
“We are excited to combine our existing suite of call monitoring
and analytics solutions with Marchex innovations,” said Will
Steinhoff, Callcap President and CEO. "Marchex has made significant
advancements in AI, speech analytics and sales acceleration
products. We believe the solutions built off these advancements
will return even greater value to more of our customers. This
alliance creates a formidable team, delivering first ever
technology-based and revenue-focused solutions for businesses of
all sizes, across many of the most valuable verticals. I am very
proud of our team and the brands we serve each day.”
Strategic Rationale:
Broaden Market Reach. The combination of Marchex and
Callcap will more effectively serve the entire market, ranging from
Fortune 500 brands to small and medium-sized businesses.
Additionally, Callcap has a broad range of home services customers,
from franchisors with call centers to small business service
providers. Recognizing the distinct needs and operating
requirements for each segment, this transaction will better equip
the combined Company to profitably serve the fast-growing SMB
segment.
Significant Cost Savings. Leveraging Marchex AI and
machine learning investments will unlock significant long-term
savings by streamlining Callcap’s call monitoring solutions. In
addition, the Company will benefit from joint sales efforts as well
as meaningful operational efficiencies.
Faster Innovation. By combining resources, the companies
expect to leverage machine learning and AI driven capabilities
across one of the largest conversational data sets in the industry
to deliver unique solutions for businesses of all sizes.
Transaction Details and Financial
Considerations
- Total consideration of $35 million,
with $25 million paid in cash in connection with the closing and
$10 million (or 3.4 million aggregate shares of Marchex Class B
common stock based on a 10-day trailing average from the closing
date) in stock to be issued in four equal installments on each
annual anniversary of the closing date.
- For 2018, on a standalone basis,
Callcap is projecting $9 million or more in total revenue,
including more than $8.5 million in core1 analytics revenue, up
from $7.6 million over the prior year (based on preliminary
unaudited estimates), and more than $2.8 million in operating
income.
- Marchex expects the amortization of
intangible assets from the acquisition will impact GAAP results.
For the remainder of 2018 and for 2019, we expect the acquisition
to be accretive to Adjusted OIBA2.
- For the partial fourth quarter of 2018,
Callcap is anticipated to contribute more than $0.6 million in core
analytics revenue and more than $0.2 million in operating income
excluding amortization. This amount is anticipated to be
incremental to Marchex’s fourth quarter outlook outlined on
November 5, 2018.
- For 2019, the Company anticipates the
continuation of double-digit percentage year-over-year growth in
Callcap’s core analytics revenue and Callcap to contribute
operating income of more than $3 million excluding amortization. In
2020, the Company anticipates the realization of potential
annualized cost synergies of an incremental $500,000 or more.
1 Non-core and other analytics revenue includes revenue from
tests, consulting services, or other non-core analytics revenue
that may continue for a limited time but is not anticipated to
continue in future periods.
2 Adjusted OIBA represents income (loss) from operations
excluding stock-based compensation expense, amortization of
intangible assets from acquisitions, and acquisition related
costs.
* Based on preliminary proforma unaudited annualized run rate
data for the quarterly period ended September 30, 2018.
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.
About Callcap
Founded in 2001, Callcap was the first call measurement company
to provide real-time complete caller data and a recording of the
call. Today, we are still a leader in providing innovative call
monitoring and call tracking solutions that help businesses to
deliver excellent customer experiences. We serve companies in a
variety of industries from home services to education, HVAC to
healthcare. We’re experts in helping companies who do business over
the phone understand and improve their customer conversations in
order to grow their 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 26, 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, including Adjusted OIBA.
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. Financial analysts and investors may
use Adjusted OIBA to help with comparative financial evaluation to
make informed investment decisions.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20181126005657/en/
Trevor CaldwellMarchex Investor RelationsTelephone:
206.331.3600Email: ir@marchex.comOrMEDIA INQUIRIESMarchex
Corporate CommunicationsTelephone: 206.331.3434Email:
marchex@edelman.com
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