Company Sees Strong Demand for Mobile,
Call-Driven Products
Forecasts Record Call-Driven Revenue For
2014
Marchex, Inc. (NASDAQ:MCHX), a mobile advertising
technology company, today announced its financial results for the
fourth quarter and full year ended December 31, 2013.
“Marchex made significant strides in 2013 as we expanded our
Call Analytics technology, won new clients and retained and grew
important, existing relationships,” said Russell Horowitz, Chairman
and CEO of Marchex. “Specifically, our Call Analytics platform
connected and analyzed hundreds of millions of calls on behalf of
our clients; we added new advertisers to our Call Marketplace and
we grew our mobile distribution partner network. This progress
builds a strong foundation for 2014 as we enter the year with
product and business momentum.”
Q4 2013 Financial
Highlights1
- GAAP revenue was $39.7
million for the fourth quarter of 2013, compared to $32.4
million for the fourth quarter of 2012. Non-GAAP revenue2, which
excludes domain sales recorded in GAAP revenue, was $38.1 million
for the fourth quarter of 2013.
- GAAP net income from continuing
operations was $597,000 for the fourth quarter of 2013, compared to
a GAAP net loss from continuing operations of $33.5 million for the
fourth quarter of 2012.
- GAAP net income from continuing
operations attributable to common stockholders per diluted share
was $0.02 for the fourth quarter of 2013. This compares to GAAP net
loss from continuing operations attributable to common stockholders
per diluted share of $1.00 for the fourth quarter of 2012.
Q4 2013 Q4 2012 GAAP
Revenue $39.7 million $32.4 million
Non-GAAP
Results below exclude Domain Sales and Discontinued Operations:
Non-GAAP Revenue 2, 3 $38.1 million
$32.4 million
Call-Driven and Other Revenue $34.5
million $28.5 million
Archeo Revenue 2, 3
$3.7 million $4.0 million
Call-Driven Adjusted OIBA3 $1.7 million
$1.2 million
Call-Driven Adjusted EBITDA3
$2.6 million $2.0 million
Adjusted
OIBA2,3 $2.7 million $2.5 million
Adjusted EBITDA2,3 $3.7 million $3.4
million
- Adjusted non-GAAP EPS3 from continuing
operations for the fourth quarter of 2013 was $0.04, compared to
$0.05 for the fourth quarter of 2012.
Full Year 2013 Consolidated Financial
Results1
- GAAP revenue was $152.6
million for 2013, compared to $132.8 million for 2012.
Non-GAAP revenue2, which excludes domain sales recorded in GAAP
revenue, was $150.1 million for 2013.
- GAAP net income from continuing
operations applicable to common stockholders was $957,000 or $0.03
per diluted share for 2013. This compares to GAAP net loss from
continuing operations applicable to common stockholders of $34.3
million or $1.03 per diluted share in 2012.
FY 2013 FY 2012 GAAP
Revenue $152.6 million $132.8 million
Non-GAAP
Results below exclude Domain Sales and Discontinued Operations:
Non-GAAP Revenue 2, 3 $150.1 million
$132.8 million
Call-Driven and Other Revenue $135.1
million $111.9 million
Archeo Revenue 2, 3
$15.0 million $20.9 million
Call-Driven Adjusted OIBA3 $6.3
million $5.1 million
Call-Driven Adjusted
EBITDA3 $9.9 million $8.4 million
Adjusted OIBA2,3 $9.6 million $13.4
million
Adjusted EBITDA2,3 $13.4 million
$17.1 million
- Adjusted non-GAAP EPS3 from continuing
operations for 2013 was $0.17, compared to $0.25 in 2012.
1 In July 2013, certain pay-per-click assets were sold. As a
result, the financial results of these pay-per-click assets are
presented as income (loss) from discontinued operations, net of tax
in our consolidated statements of operations in accordance with
GAAP, and are excluded from all other results unless otherwise
noted.
2 Excludes domain sales recognized in GAAP revenue. In September
2013 upon the launch of its domain marketplace, the company
commenced recognizing domain sales as revenue.
3 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.
Marchex Q4 and Recent Call-Driven
Business Highlights:
- Revenue. Call-Driven and other
related revenue was $34.5 million for the fourth quarter of 2013 –
a 21 percent increase compared to $28.5 million for the fourth
quarter of 2012.
- Products. We recently released
data showing that Marchex blocked approximately 40 million phone
calls in 2013 to U.S. small businesses through its Clean Call™
technology. Marchex started aggressively going after spam calls in
2011, after noticing the detrimental effect these calls were having
on businesses. Clean Call™ technology is now used by hundreds of
thousands of advertisers to detect and block telemarketers,
robocallers and other spam dialers. Marchex found that these calls
cost small businesses about half a billion dollars a year in lost
productivity.
- Customers and Partners. We
recently announced a preferred partnership with MapQuest to connect
mobile and online consumers to businesses via pay-for-call ads.
MapQuest is one of the leading mapping brands online, reaching 28.4
million web users and 13.7 million mobile and tablet users, with
4.0 million users across devices in November 2013, according to
comScore Media Metrix. The partnership allows Marchex to leverage
MapQuest’s broad reach of consumers across every digital channel
for Pay-for-Call advertising.
Archeo Q4 Business
Highlights:
- Revenue. Archeo non-GAAP revenue
was $3.7 million for the fourth quarter of 2013, which excludes
domain sales recognized in GAAP revenue.
- Domains sales. During the fourth
quarter of 2013, Archeo sold a total of 262 domains that yielded
$1.6 million.
Business Outlook
“Our business is being driven by our advertiser demand for
mobile performance. Our Call-Driven products and investments are
centered on unlocking this opportunity,” said Mike Arends, Chief
Financial Officer of Marchex. “Given the relative size and
importance of our Call-Driven products, we believe that focusing on
these revenue and profitability measures is the most appropriate
way to communicate our business progress and guidance going
forward. While advertiser budgets can change and we can experience
period-to-period variability based on a variety of factors, we are
excited about the ongoing progress we are making in our business.
Today we are forecasting accelerated Call-Driven revenue
year-over-year growth of approximately 30% in the first
quarter.”
The following forward-looking statements reflect Marchex's
expectations as of February 19, 2014 and exclude any contribution
from Archeo operations, domain sales and discontinued operations.
Archeo operating results would be incremental and additive to
our Call-Driven revenue, profitability, and other measures
below:
Call-Driven
financial guidance for the fiscal year ending December 31,
2014
Call-Driven Revenue $162 million or more Call-Driven
Adjusted OIBA 1 $7.5 million or more Call Driven Adjusted EBITDA 1
$11.5 million or more
Call-Driven
financial guidance for the First Quarter ending March 31,
2014
Call-Driven Revenue $40 million or more Call-Driven Adjusted
OIBA 1 $1-$2 million Call-Driven Adjusted EBITDA 1 $2-$3 million
1 These non-GAAP Call-Driven measures assign all Marchex
indirect overhead costs to the Call-Driven results. 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.
Conference Call and Webcast
Information
Management will hold a conference call, starting at 5:00 p.m. ET
on Wednesday, February 19, 2014 to discuss its fourth quarter and
year ended December 31, 2013 financial results, and other company
updates. Access to the live webcast of the conference call will be
available online from the Investors section of the 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 technology company. The company
provides a suite of products and services for businesses that
depend on consumer phone calls to drive sales. Marchex’s mobile
advertising platform delivers new customer phone calls to
businesses, while its technology analyzes the data in these calls
to help maximize ad campaign results. Marchex disrupts traditional
advertising models by giving businesses full transparency into
their ad campaign performance and charging them based on new
customer acquisition.
Please visit www.marchex.com, blog.marchex.com 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,
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
February 19, 2014 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, Revenue excluding and including Domain Sales, and Adjusted
OIBA and EBITDA excluding and including Domain Sales. Marchex also
provides Call-Driven and Archeo Adjusted OIBA and EBITDA, and
Adjusted non-GAAP EPS.
OIBA represents income (loss) from
operations plus (1) stock-based compensation expense and (2)
amortization of intangible assets from acquisitions. 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 any gain/loss on sales and disposals of intangible assets
for each asset and acquisition and separation related costs as
these items are not indicative of Marchex’s recurring core
operating results and any domain sales contribution. 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 or gain/loss such as stock-based
compensation, amortization of intangible assets from acquisitions,
acquisition and separation related costs, domain sales contribution
and gain/loss on sales and disposals of intangible assets.
Adjusted EBITDA represents income
(loss) before interest, income taxes, depreciation, amortization,
stock compensation expense, acquisition and separation related
cost, domain sales contribution and gain/loss on sales and
disposals of intangible assets. Marchex believes that Adjusted
EBITDA is another alternative measure of liquidity to GAAP net cash
provided by 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.
Revenue excluding Domain Sales
represents GAAP revenue excluding domain sales sold through
Marchex’s Domain Marketplace which are recognized in GAAP revenue.
Revenue with Domain Sales represents
GAAP revenue plus sales proceeds from the sale of intangible
assets. Adjusted OIBA and EBITDA with Domain
Sales includes the above descriptions of Adjusted OIBA and
EBITDA plus any domain sales contribution and gain/loss on sales
and disposals of intangible assets. Call-Driven Adjusted OIBA and EBITDA includes the
above descriptions of Adjusted OIBA and EBITDA for the Call-Driven
segment. The Call-Driven Adjusted OIBA and EBITDA assigns all
Marchex indirect overhead costs to the Call-Driven results.
Archeo non-GAAP Measures include the
measures above for the Archeo segment. Financial analysts and
investors may use the non-GAAP historical Revenue with Domain
Sales, Adjusted OIBA and EBITDA with Domain Sales to help with
comparative financial evaluation to make informed investment
decisions.
Adjusted non-GAAP EPS 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) amortization of intangible assets from
acquisitions, (3) domain sales contribution and gain/loss on sales
and disposals of intangible assets and domain sales contribution,
(4) acquisition and separation related costs, (5) interest and
other income (expense), (6) discontinued operations and gain on
sale of discontinued operations, net of tax and (7) dividends paid
to participating securities, and also excludes the effect of the
tax valuation allowance. Financial analysts and investors may use
Adjusted non-GAAP EPS 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
data) (unaudited) Three Months Ended
December 31, 2012
2013 Revenue $ 32,436 $ 39,680
Expenses: Service costs (1) 19,099 23,833 Sales and marketing (1)
2,563 2,832 Product development (1) 5,963 6,760 General and
administrative (1) 5,557 4,382 Amortization of intangible assets
from acquisitions 1,054 426 Acquisition and separation related
costs 589 (62 ) Total operating
expenses 34,825 38,171 Impairment of goodwill (15,837 ) - Gain on
sales and disposals of intangible assets, net 862
35 Income (loss) from operations (17,364 )
1,544 Interest expense and other, net (20 ) 11
Income (loss) from continuing operations before provision
for income taxes (17,384 ) 1,555 Income tax expense 16,108
958 Net income (loss) from continuing
operations (33,492 ) 597 Discontinued operations: Income (loss)
from discontinued operations, net of tax (843 ) 7 Gain on sale from
discontinued operations, net of tax - 1
Discontinued operations, net of tax (843 ) 8 Net income
(loss) (34,335 ) 605 Dividends paid to participating securities
(394 ) - Net income (loss) applicable
to common stockholders $ (34,729 ) $ 605 Basic
and diluted net income (loss) per Class A share applicable to
common stockholders: Continuing operations $ (1.00 ) $ 0.02
Discontinued operations, net of tax (0.02 )
0.00 Basic and diluted net income (loss) per Class A share
applicable to common stockholders $ (1.02 ) $ 0.02 Basic net income
(loss) per Class B share applicable to common stockholders:
Continuing operations $ (0.99 ) $ 0.02 Discontinued operations, net
of tax (0.02 ) 0.00 Basic net income
(loss) per Class B share applicable to common stockholders: $ (1.01
) $ 0.02 Diluted net income (loss) per Class B share applicable to
common stockholders: Continuing operations $ (1.00 ) $ 0.02
Discontinued operations, net of tax (0.02 )
0.00 Diluted net income (loss) per Class B share applicable
to common stockholders: $ (1.02 ) $ 0.02 Dividends paid per share $
0.18 $ - Shares used to calculate basic net income (loss) per share
applicable to common stockholders Class A 9,570 7,770 Class B
24,642 28,371 Shares used to calculate diluted net income (loss)
per share applicable to common stockholders Class A 9,570 7,770
Class B 34,212 38,713 (1) Includes stock-based compensation
allocated as follows: Service costs $ 325 $ 362 Sales and marketing
20 171 Product development 178 508 General and administrative
2,720 1,321 Total $ 3,243
$ 2,362
MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (in
thousands, except per share data) (unaudited)
Twelve Months Ended December 31,
2012 2013 Revenue $
132,794 $ 152,550 Expenses: Service costs (1) 75,920 91,858
Sales and marketing (1) 13,057 11,182 Product development (1)
23,200 27,346 General and administrative (1) 22,838 19,385
Amortization of intangible assets from acquisitions 4,728 2,926
Acquisition and separation related costs 753
878 Total operating expenses 140,496 153,575
Impairment of goodwill (15,837 ) - Gain on sales and disposals of
intangible assets, net 6,296 3,774
Income (loss) from operations (17,243 ) 2,749 Interest
expense and other, net (449 ) (37 ) Income
(loss) from continuing operations before provision for income taxes
(17,692 ) 2,712 Income tax expense 16,566
1,755 Net income (loss) from continuing operations
(34,258 ) 957 Discontinued operations: Loss from discontinued
operations, net of tax (938 ) (70 ) Gain on sale from discontinued
operations, net of tax - 930
Discontinued operations, net of tax (938 ) 860 Net income (loss)
(35,196 ) 1,817 Dividends paid to participating securities
(657 ) - Net income (loss) applicable to
common stockholders $ (35,853 ) $ 1,817 Basic
and diluted net income (loss) per Class A share applicable to
common stockholders: Continuing operations $ (1.03 ) $ 0.03
Discontinued operations, net of tax (0.03 )
0.02 Basic and diluted net income (loss) per Class A share
applicable to common stockholders $ (1.06 ) $ 0.05 Basic and
diluted net income (loss) per Class B share applicable to common
stockholders: Continuing operations $ (1.02 ) $ 0.03 Discontinued
operations, net of tax (0.03 ) 0.02
Basic and diluted net income (loss) per Class A share applicable to
common stockholders $ (1.05 ) $ 0.05 Dividends paid per share $
0.25 $ - Shares used to calculate basic net income (loss) per share
applicable to common stockholders Class A 9,574 8,816 Class B
24,412 26,798 Shares used to calculate diluted net income (loss)
per share applicable to common stockholders Class A 9,574 8,816
Class B 33,986 36,999 (1) Includes stock-based compensation
allocated as follows: Service costs $ 1,869 $ 1,180 Sales and
marketing 2,029 645 Product development 1,038 1,635 General and
administrative 10,702 5,777
Total $ 15,638 $ 9,237
MARCHEX, INC.
AND SUBSIDIARIES Condensed Consolidated Balance Sheets
(in thousands) (unaudited)
December 31, December 31, Assets
2012 2013 Current
assets: Cash and cash equivalents $ 15,930 $ 30,912 Accounts
receivable, net 25,988 30,005 Prepaid expenses and other current
assets 2,667 2,943 Refundable taxes 264 97 Deferred tax assets
830 1,016 Total current assets
45,679 64,973 Property and equipment, net 6,005 5,440
Deferred tax assets 27,677 25,446 Intangibles and other assets, net
611 484 Goodwill 65,815 65,679 Intangible assets from acquisitions,
net 3,360 434 Total Assets $
149,147 $ 162,456
Liabilities and
Stockholders' Equity Current liabilities: Accounts
payable $ 12,378 $ 15,922 Accrued expenses and other current
liabilities 9,609 7,988 Deferred revenue 2,009
1,388 Total current liabilities 23,996 25,298
Other non-current liabilities 2,216
2,095 Total Liabilities 26,212 27,393 Class A
common stock 98 80 Class B common stock 284 309 Treasury stock (13
) (2 ) Additional paid-in capital 295,532 305,825 Accumulated
deficit (172,966 ) (171,149 ) Total
Stockholders' Equity 122,935 135,063
Total Liabilities and Stockholders' Equity $ 149,147
$ 162,456
MARCHEX, INC. AND
SUBSIDIARIES Reconciliation of GAAP Income (Loss) from
Operations to Operating Income Before Amortization (OIBA)
and Adjusted Operating Income Before Amortization (Adjusted
OIBA) (in thousands) (unaudited)
Three Months Ended December 31,
2012 2013 Income (loss)
from operations $ (17,364 ) $ 1,544 Stock-based compensation
3,243 2,362 Amortization of intangible assets from acquisitions
1,054 426 Operating income
before amortization (OIBA) (13,067 ) 4,332 Acquisition and
separation related costs 589 (62 ) Impairment of goodwill 15,837 -
Domain sales contribution - (1,549 ) Gain on sales and disposals of
intangible assets, net (862 ) (35 ) Adjusted
operating income before amortization (Adjusted OIBA) $ 2,497
$ 2,686
Twelve Months Ended December
31, 2012 2013
Income (loss) from operations $ (17,243 ) $ 2,749
Stock-based compensation 15,638 9,237 Amortization of intangible
assets from acquisitions 4,728 2,926
Operating income before amortization (OIBA) 3,123 14,912
Acquisition and separation related costs 753 878 Impairment of
goodwill 15,837 - Domain sales contribution - (2,388 ) Gain on
sales and disposals of intangible assets, net (6,296 )
(3,774 ) Adjusted operating income before
amortization (Adjusted OIBA) $ 13,417 $ 9,628
MARCHEX, INC. AND SUBSIDIARIES Reconciliation from
Net Cash provided by Operating Activities to Adjusted EBITDA
(in thousands) (unaudited)
Three Months Ended December 31, 2012
2013 Net cash provided by
operating activities $ 4,311 $ 6,109 Changes in asset and
liabilities (17,696 ) (1,636 ) Income tax expense 16,108 958
Separation related costs 589 - Interest expense and other, net 19
(14 ) Less: Domain sales contribution - (1,549 ) Discontinued
operations, net of tax (73 ) (7 ) Excess tax benefits related to
stock compensation 146 (209 ) Adjusted
EBITDA $ 3,404 $ 3,652
Net cash provided by (used in) investing activities $ 197
$ (549 ) Net cash provided by (used in)
financing activities $ (24,112 ) $ 202
Twelve Months Ended December 31, 2012
2013 Net cash provided by
operating activities $ 19,901 $ 13,596 Changes in asset and
liabilities (20,580 ) (1,154 ) Income tax expense 16,566 1,755
Separation related costs 885 940 Interest expense and other, net 88
30 Less: Domain sales contribution - (2,388 ) Discontinued
operations, net of tax (24 ) 42 Tax effect on gain on sale of
discontinued operations - 563 Excess tax benefits related to stock
compensation 308 - Adjusted
EBITDA $ 17,144 $ 13,384
Net cash provided by investing activities $ 3,320 $
1,647 Net cash used in financing
activities $ (44,734 ) $ (261 ) Certain
reclassifications have been made to prior periods to conform to
current period presentation.
MARCHEX, INC. AND
SUBSIDIARIES Reconciliation of GAAP EPS to Adjusted Non-GAAP
EPS (in thousands, except per share data)
(unaudited) Three Months Ended
December 31, 2012
2013 Adjusted Non-GAAP EPS from continuing operations
$ 0.05 $ 0.04 Net income (loss) from
continuing operations applicable to common stockholders - diluted
(GAAP EPS) $ (1.00 ) $ 0.02 Shares used to calculate diluted net
income (loss) per share applicable to common stockholders 34,212
38,713 Net income (loss) applicable to common stockholders $
(34,729 ) $ 605 Stock-based compensation 3,243 2,362 Acquisition
and separation related costs 589 (62 ) Impairment of goodwill
15,837 - Amortization of intangible assets from acquisitions 1,054
426 Gain on sales and disposals of intangible assets, net (862 )
(35 ) Domain sales contribution - (1,549 ) Interest expense and
other, net 20 (11 ) Dividends paid to participating securities 394
- Tax valuation allowance 16,400 - Discontinued operations, net of
tax 843 (8 ) Estimated impact of income taxes (1,170 )
(69 ) Adjusted Non-GAAP net income from
continuing operations $ 1,619 $ 1,659
Adjusted Non-GAAP EPS from continuing operations $
0.05 $ 0.04 Shares used to calculate
diluted net income (loss) per share applicable to common
stockholders 34,212 38,713 Weighted average stock options and
common shares subject to purchase or cancellation (if applicable)
1,523 - Diluted shares used to
calculate Adjusted Non-GAAP EPS (1) 35,735
38,713
(1)
For the purpose of computing the number of
diluted shares for Adjusted Non-GAAP EPS, Marchex uses the
accounting guidance that would be applicable for computing the
number of diluted shares for GAAP EPS.
MARCHEX, INC. AND SUBSIDIARIES Reconciliation of GAAP EPS
to Adjusted Non-GAAP EPS (in thousands, except per share
data) (unaudited) Twelve Months
Ended December 31, 2012
2013 Adjusted Non-GAAP
EPS $ 0.25 $ 0.17 Net income (loss)
from continuing operations per share applicable to common
stockholders - diluted (GAAP EPS) $ (1.03 ) $ 0.03 Shares used to
calculate diluted net income (loss) per share applicable to common
stockholders 33,986 36,999 Net income (loss) applicable to
common stockholders $ (35,853 ) $ 1,817 Stock-based compensation
15,638 9,237 Acquisition and separation related costs 753 878
Impairment of goodwill 15,837 - Amortization of intangible assets
from acquisitions 4,728 2,926 Gain on sales and disposals of
intangible assets, net (6,296 ) (3,774 ) Domain sales contribution
- (2,388 ) Interest expense and other, net 449 37 Dividends paid to
participating securities 657 - Tax valuation allowance 16,400 651
Discontinued operations, net of tax 938 (860 ) Estimated impact of
income taxes (4,544 ) (2,268 ) Adjusted
Non-GAAP net income from continuing operations $ 8,707
$ 6,256 Adjusted Non-GAAP EPS
from continuing operations $ 0.25 $ 0.17
Shares used to calculate diluted net income (loss) per share
applicable to common stockholders 33,986 36,999 Weighted average
stock options and common shares subject to purchase or cancellation
(if applicable) 1,377 - Diluted
shares used to calculate Adjusted Non-GAAP EPS (1) 35,363
36,999 (1) For the purpose of
computing the number of diluted shares for non-GAAP EPS, Marchex
uses the accounting guidance that would be applicable for computing
the number of diluted shares for GAAP EPS.
MARCHEX, INC. AND SUBSIDIARIES
(in thousands) (unaudited) Reconciliation
of GAAP Income (Loss) from Operations to Operating Income before
Amortization (OIBA) and Adjusted Operating Income Before
Amortization (Adjusted OIBA) 3 months
ended 12 months ended
3/31/2012 6/30/2012
9/30/2012 12/31/2012
3/31/2013 6/30/2013
9/30/2013 12/31/2013
12/31/2012
12/31/2013
Income (loss) from operations $ (616 ) $ 1,158 $ (421
) $ (17,364 ) $ 297 $ (98 ) $ 1,006 $ 1,544 $ (17,243 ) $ 2,749
Stock-based compensation 3,891 4,802 3,702 3,243 1,907 2,603 2,365
2,362 15,638 9,237 Amortization of intangible assets from
acquisitions 1,537 1,082 1,055
1,054 1,055 736
709 426 4,728
2,926 Operating income before amortization
(OIBA) 4,812 7,042 4,336 (13,067 ) 3,259 3,241 4,080 4,332 3,123
14,912 Acquisition and separation related costs (132 ) - 296 589
345 309 286 (62 ) 753 878 Impairment of goodwill - - - 15,837 - - -
- 15,837 - Domain sales contribution - - - - - - (839 ) (1,549 ) -
(2,388 ) Gain on sales and disposals of intangible assets, net
(1,463 ) (3,258 ) (713 ) (862 ) (1,362
) (1,330 ) (1,047 ) (35 )
(6,296 ) (3,774 ) Adjusted operating income before
amortization (Adjusted OIBA) $ 3,217 $ 3,784
$ 3,919 $ 2,497 $ 2,242
$ 2,220 $ 2,480 $ 2,686 $
13,417 $ 9,628
Reconciliation from
Net Cash provided by Operating Activities to Adjusted EBITDA
3 months ended 12 months ended
3/31/2012 6/30/2012
9/30/2012 12/31/2012
3/31/2013 6/30/2013
9/30/2013
12/31/2013 12/31/2012
12/31/2013
Net cash provided by operating activities $ 3,954 $ 7,980 $ 3,656 $
4,311 $ 2,141 $ 1,014 $ 4,332 $ 6,109 $ 19,901 $ 13,596 Changes in
asset and liabilities 302 (3,997 ) 811 (17,696 ) 463 1,393 (1,374 )
(1,636 ) (20,580 ) (1,154 ) Income tax expense (benefit) (88 ) 595
(49 ) 16,108 165 243 389 958 16,566 1,755 Separation related costs
- - 296 589 345 309 286 - 885 940 Less: Domain sales contribution -
- - - - - (839 ) (1,549 ) - (2,388 ) Discontinued operations, net
of tax (27 ) 38 38 (73 ) 17 (11 ) 43 (7 ) (24 ) 42 Tax effect of
gain on sale of discontinued operations - - - - - - 563 - - 563
Interest expense and other, net 19 22 28 19 17 12 15 (14 ) 88 30
Excess tax benefits related to stock compensation 97
23 42 146 7
189 13 (209 )
308 - Adjusted EBITDA $ 4,257
$ 4,661 $ 4,822 $ 3,404
$ 3,155 $ 3,149 $ 3,428
$ 3,652 $ 17,144 $ 13,384
Net cash provided by (used in) investing activities $ 1,194
$ 2,032 $ (103 ) $ 197 $
512 $ 449 $ 1,235 $ (549
) $ 3,320 $ 1,647 Net cash provided by (used
in) financing activities $ (1,296 ) $ (17,734 ) $
(1,592 ) $ (24,112 ) $ (1,484 ) $ 179
$ 842 $ 202 $ (44,734 ) $ (261 )
Certain reclassifications have been made to prior
periods to conform to current period presentation and to exclude
the results from discontinued operations. Due to rounding, the sum
of quarterly amounts may not equal amounts reported for
year-to-date periods.
MARCHEX, INC. AND SUBSIDIARIES
Quarterly Financial Summary Information (in
thousands) NON-GAAP MEASURES Amounts below
exclude Domain Sales and Discontinued Operations
CONSOLIDATED Q112 Q212
Q312 Q412 Q113
Q213 Q313 Q413 Non-GAAP
Revenue $ 33,835 $
32,832 $ 33,691 $
32,436 $ 34,732 $
37,578 $ 39,661 $
38,124 Adjusted OIBA $ 3,217 $
3,784 $ 3,919 $ 2,497 $
2,242 $ 2,220 $ 2,480 $
2,686 Adjusted EBITDA $ 4,257
$ 4,661 $ 4,822
$ 3,404 $ 3,155 $
3,149 $ 3,428 $
3,652 CALL-DRIVEN AND OTHER Q112
Q212 Q312 Q412
Q113 Q213 Q313
Q413 GAAP Revenue $ 26,651 $
27,497 $ 29,269 $ 28,469
$ 31,108 $ 33,893 $
35,668 $ 34,457 Adjusted OIBA $
188 $ 1,530 $ 2,215 $
1,158 $ 1,371 $ 1,508 $
1,693 $ 1,725 Adjusted EBITDA
$ 980 $ 2,319 $
3,064 $ 2,016 $
2,247 $ 2,400 $
2,598 $ 2,618 ARCHEO
Q112 Q212 Q312
Q412 Q113 Q213
Q313 Q413 Non-GAAP Revenue $
7,184 $ 5,335 $ 4,422 $
3,967 $ 3,624 $ 3,685 $
3,993 $ 3,667 Adjusted OIBA $
3,029 $ 2,254 $ 1,704 $
1,339 $ 871 $ 712 $
787 $ 961 Adjusted EBITDA
$ 3,277 $ 2,342 $
1,758 $ 1,388 $
908 $ 749 $ 830
$ 1,034 Certain
reclassifications have been made to prior periods to conform to
current period presentation and to exclude the results from
discontinued operations. Due to rounding, the sum of quarterly
amounts may not equal amounts reported for year-to-date periods.
MARCHEX, INC. AND SUBSIDIARIES Financial Summary by
Segment (in thousands) (unaudited)
Three months ended Twelve months
ended 3/31/2012 6/30/2012
9/30/2012 12/31/2012
3/31/2013 6/30/2013
9/30/2013 12/31/2013
12/30/2012 12/31/2013 Marchex
- consolidated4
Revenue - GAAP $ 33,835 $ 32,832
$ 33,691 $ 32,436 $ 34,732 $ 37,578
$ 40,560 $ 39,680 $ 132,794
$ 152,550
Revenue excluding Domain Sales2
$ 33,835 $ 32,832
$ 33,691 $ 32,436
$ 34,732 $ 37,578
$ 39,661 $ 38,124
$ 132,794 $ 150,095
Revenue with Domain Sales3 $ 35,309 $ 36,101 $
34,404 $ 33,298 $ 36,094 $ 38,908 $
41,607 $ 39,715 $ 139,112 $
156,324
Adjusted OIBA excluding Domain Sales2
$ 3,217 $ 3,784 $
3,919 $ 2,497 $
2,242 $ 2,220 $
2,480 $ 2,686
$ 13,417 $ 9,628 Adjusted OIBA
with Domain Sales3 $ 4,680 $ 7,042 $ 4,632
$ 3,359 $ 3,604 $ 3,550 $ 4,366
$ 4,270 $ 19,713 $ 15,790
Adjusted
EBITDA excluding Domain Sales2 $
4,257 $ 4,661 $
4,822 $ 3,404 $
3,155 $ 3,149 $
3,428 $ 3,652
$ 17,144 $ 13,384 Adjusted
EBITDA with Domain Sales3 $ 5,720 $ 7,919 $ 5,535 $ 4,266 $ 4,517 $
4,479 $ 5,314 $ 5,236 $ 23,440 $ 19,546
Call-Driven and
Other1 Revenue $ 26,651 $ 27,497 $ 29,269 $ 28,469 $
31,108 $ 33,893 $ 35,668 $ 34,457 $ 111,886 $ 135,126 Adjusted OIBA
$ 188 $ 1,530 $ 2,215 $ 1,158 $ 1,371 $ 1,508 $ 1,693 $ 1,725 $
5,091 $ 6,297 Adjusted EBITDA $ 980 $ 2,319 $
3,064 $ 2,016 $ 2,247 $ 2,400 $ 2,598
$ 2,618 $ 8,379 $ 9,863
Archeo1,4 Revenue $ 7,184 $ 5,335 $ 4,422 $ 3,967 $
3,624 $ 3,685 $ 4,892 $ 5,223 $ 20,908 $ 17,424 Revenue excluding
Domain Sales2 $ 7,184 $ 5,335 $ 4,422 $ 3,967 $ 3,624 $ 3,685 $
3,993 $ 3,667 $ 20,908 $ 14,969 Revenue with Domain Sales3 $
8,658 $ 8,604 $ 5,135 $ 4,829 $ 4,986
$ 5,015 $ 5,939 $ 5,258 $
27,226 $ 21,198 Adjusted OIBA excluding Domain Sales2 $
3,029 $ 2,254 $ 1,704 $ 1,339 $ 871 $ 712 $ 787 $ 961 $ 8,326 $
3,331 Adjusted OIBA with Domain Sales3 $ 4,492 $
5,512 $ 2,417 $ 2,201 $ 2,233 $ 2,042
$ 2,673 $ 2,545 $ 14,622
$ 9,493 Adjusted EBITDA excluding Domain Sales2 $ 3,277 $ 2,342 $
1,758 $ 1,388 $ 908 $ 749 $ 830 $ 1,034 $ 8,765 $ 3,521 Adjusted
EBITDA with Domain Sales3 $ 4,740 $ 5,600 $ 2,471 $ 2,250 $ 2,270 $
2,079 $ 2,716 $ 2,618 $ 15,061 $ 9,683
1
The financial results for Call-Driven and
Archeo are preliminary and have been derived from the unaudited
condensed consolidated financial statements of Marchex, Inc. for
all periods presented. Corporate overhead expenses have been
reallocated in prior periods to conform to current period
presentation. The unaudited Call-Driven financial results include
certain direct operating expenses and general corporate overhead
expenses in all periods presented. The unaudited Archeo financial
results include direct operating expenses for all periods
presented.
2
In September 2013, Marchex announced and
launched its Domains Marketplace and through it, commenced buying
and selling of domains. Domain sales occurring after this date are
included in revenue and related cost in service cost. Prior to this
date, domain sales were recognized in gain on sales and disposals
of intangible assets in the unaudited condensed consolidated
financial statements.
3
Includes all domain sales recognized in
gain on sales and disposals of intangible assets and in revenue and
service costs.
4
Amounts presented exclude results of
discontinued operations. Operating results of discontinued
operations relate to certain pay-per-click assets sold in July 2013
and are included in discontinued operations, net of tax in the
unaudited condensed consolidated financial statements.
Certain reclassifications have been made
to prior periods to conform to current period presentation and to
exclude the results from discontinued operations.
Due to rounding, the sum of quarterly
amounts may not equal amounts reported for year-to-date
periods.
MARCHEX, INC. AND SUBSIDIARIES Reconciliation to
Reported Financial and Non-GAAP Information (in
thousands) (unaudited) Three
months ended Twelve months ended
3/31/2012 6/30/2012
9/30/2012 12/31/2012
3/31/2013 6/30/2013
9/30/2013 12/31/2013
12/31/2012 12/31/2013 Revenue5
Consolidated -
GAAP $ 33,835 $ 32,832 $
33,691 $ 32,436 $ 34,732 $
37,578 $ 40,560 $ 39,680
$ 132,794 $ 152,550 Less: Domain sales
recognized in revenue2 - - -
- - - 899
1,556 - 2,455 Consolidated excluding
Domain Sales1 $ 33,835 $ 32,832 $ 33,691 $ 32,436 $ 34,732 $ 37,578
$ 39,661 $ 38,124 $ 132,794 $ 150,095 Add: Domain sales recognized
in revenue4 - - - - - - 899 1,556 - 2,455 Add: Domain Sales1
1,474 3,269 713 862
1,362 1,330 1,047
35 6,318 3,774 Consolidated with Domain Sales1
35,309 36,101 34,404 33,298 36,094 38,908 41,607 39,715 139,112
156,324 Less: Archeo including Domain Sales3 8,658 8,604 5,135
4,829 4,986 5,015 5,939 5,258 27,226 21,198 Other 181
175 174 180 171
162 131 99 710
563 Call-Driven3 $ 26,470 $ 27,322 $ 29,095
$ 28,289 $ 30,937 $ 33,731 $ 35,537
$ 34,358 $ 111,176 $ 134,563 Adjusted
operating income3,5 Consolidated $ 3,217 $ 3,784 $ 3,919 $ 2,497 $
2,242 $ 2,220 $ 2,480 $ 2,686 $ 13,417 $ 9,628 Add: Gain on Domain
Sales and Domain Sales Contribution6 1,463
3,258 713 862 1,362
1,330 1,886 1,584 6,296
6,162 Consolidated with Domain Sales 4,680 7,042
4,632 3,359 3,604 3,550 4,366 4,270 19,713 15,790 Less:
Archeo including Domain Sales3 4,492 5,512 2,417 2,201 2,233 2,042
2,673 2,545 14,622 9,493 Other 71 116
104 105 106 86
75 59 396 326
Call-Driven3 $ 117 $ 1,414 $ 2,111 $ 1,053
$ 1,265 $ 1,422 $ 1,618 $ 1,666 $ 4,695
$ 5,971 Adjusted EBITDA4,5 Consolidated $ 4,257 $
4,661 $ 4,822 $ 3,404 $ 3,155 $ 3,149 $ 3,428 $ 3,652 $ 17,144 $
13,384 Add: Gain on Domain Sales and Domain Sales Contribution6
1,463 3,258 713 862
1,362 1,330 1,886
1,584 6,296 6,162 Consolidated with
Domain Sales 5,720 7,919 5,535 4,266 4,517 4,479 5,314 5,236 23,440
19,546 Less: Archeo including Domain Sales3 4,740 5,600 2,471 2,250
2,270 2,079 2,716 2,618 15,061 9,683 Other 71
116 104 105 106 86
75 59 396 326
Call-Driven3 $ 909 $ 2,203 $ 2,960 $ 1,911
$ 2,141 $ 2,314 $ 2,523 $ 2,559 $ 7,982
$ 9,537 1 These are non-GAAP measures of financial
results which are adjusted for sales proceeds from sales of
intangible assets and/or domain sales recognized as revenue. 2 In
September 2013, Marchex announced and launched its Domains
Marketplace and through it, commenced buying and selling of
domains. Domain sales occurring after this date are included in
revenue and related cost in service cost. Prior to this date,
domain sales were recognized in gain on sales and disposals of
intangible assets in the unaudited condensed consolidated financial
statements. 3 The financial results for Call-Driven and Archeo are
preliminary and have been derived from the unaudited condensed
consolidated financial statements of Marchex, Inc. for all periods
presented. Corporate overhead expenses have been reallocated in
prior periods to conform to current period presentation. The
unaudited Call-Driven financial results include certain direct
operating expenses and general corporate overhead expenses in all
periods presented. The unaudited Archeo financial results include
direct operating expenses for all periods presented. 4 These are
non-GAAP measures of operating results and liquidity. These
non-GAAP measures are adjusted for net gains from sales of
intangible assets, direct contribution of domain sales sold through
Marchex's Domains Marketplace. 5 Amounts presented exclude results
of discontinued operations. Financial results of discontinued
operations related to certain pay-per-click assets sold in July
2013 and are included in discontinued operations, net of tax in the
unaudited condensed consolidated financial statements. 6 Includes
net gains from sales of intangible assets and direct contribution
of domain sales sold through Marchex's Domains Marketplace.
Certain reclassifications have been made to prior periods to
conform to current period presentation and to exclude the results
from discontinued operations. Due to rounding, the sum of quarterly
amounts may not equal amounts reported for year-to-date periods.
Marchex Investor RelationsTrevor Caldwell, 206-331-3600Email:
ir(at)marchex.comOrMEDIA INQUIRIESMarchex Corporate
CommunicationsSonia Krishnan, 206-331-3434Email:
skrishnan(at)marchex.com
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