Marchex, Inc. (NASDAQ:MCHX)(NASDAQ:MCHXP) today reported its
results for the third quarter ended September 30, 2006.
Consolidated Financial Results: -- Revenue was $32.3 million for
the third quarter of 2006, a 26% increase compared to $25.6 million
for the same period of 2005. -- GAAP net loss applicable to common
stockholders was $411,000 for the third quarter of 2006 or $0.01
per share, compared to GAAP net income applicable to common
stockholders of $27,000 or $0.00 per share for the same period of
2005. The third quarter 2006 results included non-cash stock-based
compensation expense recorded under the fair value method of $3.2
million, compared to non-cash stock-based compensation expense of
$558,000 for the same period in 2005. -- We provide a
reconciliation of GAAP EPS to Adjusted Non-GAAP EPS in the last
financial tables attached to this press release and encourage
investors to examine the reconciling adjustments between the GAAP
and non-GAAP measures. Adjusted non-GAAP EPS for the third quarter
of 2006 was $0.13, compared to $0.09 for the same period of 2005.
Some Wall Street analysts use non-GAAP measures to analyze our
operating results, which may include adjusted non-GAAP EPS,
adjusted operating income before amortization and adjusted EBITDA.
We present GAAP measures with equal or greater prominence than
non-GAAP measures and such non-GAAP measures should not be
considered a substitute for, or superior to, GAAP results. --
Adjusted operating income before amortization was $8.6 million for
the third quarter of 2006, which is an increase of 26% compared to
$6.8 million for the same period of 2005. A reconciliation of
non-GAAP adjusted operating income before amortization to GAAP
operating income (loss) and GAAP net income (loss) is attached to
the financial tables included in this release. -- Adjusted EBITDA
was $10.2 million in the third quarter of 2006, which is an
increase of 26% compared to $8.1 million for the same period of
2005. A reconciliation of operating income (loss) before taxes,
depreciation, amortization and gain/loss on sales and disposals of
intangible assets to GAAP net cash provided by operating activities
is attached to the financial tables included in this release. --
Third quarter results and outlook for the remainder of 2006,
reflect in part the following events and trends: -- An increase in
revenue attributable to proprietary traffic sources in the third
quarter; -- A sequential increase of more than 10% in the third
quarter of 2006 over the second quarter of 2006 in
revenue-per-click rates from Marchex's proprietary advertisers
accessing proprietary traffic sources; -- An increase in the third
quarter of 2006 in monetization per user from proprietary traffic
sources; -- Lower revenue in recent months from advertisers in
certain vertical categories such as finance and real estate, driven
by lower third party inventory and lower advertiser budgets; --
Lower than anticipated third party revenue-per-click rates in
certain areas including decreases versus prior year and prior
quarter levels; and -- In the near term, Marchex anticipates
increasingly higher professional service costs associated with
year-end public company reporting requirements. �Marchex made
significant product development and solid operational progress in
the third quarter,� said Russell C. Horowitz, Marchex Chairman and
CEO. �We believe that we are putting the product and technology
elements together that will drive utility, user retention and long
term growth in our proprietary network and we plan to continue our
significant investment in building these products and expanding our
online footprint.� Updated Statistics and Recent Highlights: --
Proprietary traffic: Marchex today announced that its proprietary
network of vertical and local Web sites attracted approximately 28
million unique visitors for the month of September 2006. Unique
visitor statistics are based on internal traffic logs, which
calculate unique IP (Internet protocol) addresses on an
unduplicated basis during a given month. For the third quarter in
2006, revenue attributable to proprietary traffic sources was $12.3
million. -- Updated data from initial local and vertical Web sites
with Open List integration: Marchex today announced the results
from the initial launch of its local and vertical Web sites on May
30, 2006, which featured integrations from Marchex's search
technology and content aggregation engine, Open List
(www.openlist.com). Selected results and trends from the 29 beta
Web sites are as follows and represent data for the full month of
September 2006 versus data for the average of the months of March,
April and May 2006, which were the three months prior to launch
(such selected results and trends are not indicative of future
results and trends). i. Pageviews -- Pageviews to these beta Web
sites increased more than 300% for the month of September 2006 over
the average pageviews for the months of March, April and May 2006.
ii. Revenue -- Revenue from these beta Web sites increased more
than 90% for the month of September 2006 over the average revenue
for the months of March, April and May 2006. iii. Traffic Referrals
-- For the month of September 2006, referring traffic to these beta
Web sites was generated from the following sources: 10% from
natural / algorithmic search engines with the remainder principally
from direct type-in traffic or bookmarks. iv. Search Keywords --
Data indicates that referring traffic to the Web sites from natural
/ algorithmic search engines was driven by more than exact match
search queries. For the month of September 2006, an average beta
Web site generated traffic from search engine referrals resulting
from 60 unique search keywords or keyword phrases. For example,
natural / algorithmic search traffic to www.sushibar.com was
generated by more than 125 unique search keywords or keyword
phrases. -- Launch of additional Web sites with expanded Open List
search and content platform: Marchex today announced that it has
expanded its Open List search technology and content aggregation
engine to include relevant searchable content and data covering
20,000 specific business categories and more than 15 million unique
business listings and associated pieces of content, up from
approximately one million listings and related content just a few
months ago. While this information is not yet accessible at the
Open List Web site, Marchex has made relevant parts of it available
on more than 50 vertical / local Web sites as part of its continued
effort to add relevant content and services across its network of
more than 200,000 Web sites. -- New portal for Marchex-owned Web
sites: In 2007, Marchex plans to relaunch the Open List search
platform and leverage it as a gateway for its network of 200,000
Web sites. This gateway site will offer a search product for
consumers and allow consumers to easily navigate back to a home
search page, from Marchex's network of Web sites. In addition, this
site will offer a variety of marketing opportunities for
advertisers and advertiser aggregator partners. -- Partner, or
third-party, distribution: During the quarter, Marchex announced
new premium publisher wins with TheStreet.com and Line56 Media.
This adds to Marchex's relationships with more than 100 vertically
focused and brand-name online publishers, such as BusinessWeek
Online, The Motley Fool, Forbes.com, and the Ziff Davis online
properties. -- Advertiser product introduction: Earlier this week,
Marchex announced the launch of the Marchex Network, an advertising
network featuring Marchex's more than 200,000 Web sites as the
foundation of its proprietary traffic available to advertisers.
Advertisers can directly bid for placement on a Cost-Per-Click
basis across Marchex's network of Web sites, based on designated
keywords and categories. The advertiser sign-up process is
accessible on most of Marchex's 200,000 Web sites via a link
stating: 'Advertise on this Network.' Marchex Financial Guidance:
Marchex is updating its previous guidance provided on August 8,
2006, as follows: 2006 consolidated revenue range estimate: $128
million to $131 million� 2006 adjusted operating income before
amortization target range: $33 million to $35 million� Long-term
adjusted operating income before amortization margins: 30% or more�
Conference Call and Webcast Information: Management will hold a
conference call, starting at 5:00 p.m. EST on Wednesday, November
8, 2006 to discuss its third quarter 2006 results and other company
updates. To access the call by live Webcast, please log onto the
Investor Relations section of the Marchex Web site
(www.marchex.com/ir.html). An archived version of the Webcast will
also be available, beginning two hours after completion of the
call, at the same location. About Marchex, Inc. Marchex
(www.marchex.com) is a technology driven search and media company
focused on vertical and local online traffic. Specifically, the
company is focused on search marketing, local search, and direct
navigation. Marchex's platform of integrated performance-based
advertising and search marketing services enables merchants to
efficiently market and sell their products and services across
multiple online distribution channels, including search engines,
product shopping engines, directories and selected Web sites.
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,
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 August 8, 2006 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 and Adjusted
non-GAAP EPS. Marchex also provides Pro Forma Revenue information
for the three and nine months ended September 30, 2005 and 2006 as
if the Name Development and Pike Street asset acquisitions and the
IndustryBrains acquisition in 2005, and the AreaConnect and Open
List asset acquisitions in 2006 occurred as of January 1, 2005, and
the AreaConnect and Open List asset acquisitions in 2006 occurred
as of January 1, 2006, respectively. OIBA represents income (loss)
from operations plus (1) stock-based compensation expense and (2)
amortization of acquired intangible assets. 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 as this is viewed as
non-recurring in nature. 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 non-cash and non-recurring expenses. Adjusted EBITDA
represents income before interest, income taxes, depreciation,
amortization, stock compensation expense, 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. Adjusted non-GAAP EPS represents
Adjusted Net Income divided by weighted average fully diluted
shares outstanding for Adjusted non-GAAP EPS purposes. Adjusted Net
Income generally captures those items on the statement of
operations that have been, or ultimately will be, settled in cash
exclusive of certain non-recurring items and represents net income
(loss) available to common shareholders plus: (1) stock based
compensation expense, (2) amortization of acquired intangible
assets, (3) gain/loss on sales and disposals of intangible assets,
(4) other income (expense) and (5) the cumulative effect of changes
in accounting principles. Adjusted non-GAAP EPS includes dilution
from options and warrants per the treasury stock method and
includes the weighted average number of all potential common shares
relating to convertible preferred stock and restricted stock.
Shares outstanding for Adjusted non-GAAP EPS purposes are therefore
higher than shares outstanding for GAAP EPS purposes. 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. These non-GAAP
terms, as defined by Marchex, may not be comparable to similarly
titled measures used by other companies. 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
(unaudited) � � Three Months Ended September 30, � 2005� � 2006� �
Revenue $ 25,627,677� $ 32,326,116� � Expenses: Service costs (1)
13,280,344� 15,184,125� Sales and marketing (1) 3,197,809�
5,962,465� Product development (1) 1,038,257� 2,689,912� General
and administrative (1) 1,870,984� 3,109,209� Amortization of
acquired intangible assets � 5,191,699� � 5,309,102� Total
operating expenses � 24,579,093� � 32,254,813� � Gain (loss) on
sales and disposals of intangible assets, net � -� � (68,513) �
Income from operations 1,048,584� 2,790� � Interest income and
other, net � 532,043� � 821,263� � Income before provision for
income taxes 1,580,627� 824,053� � Income tax expense � 871,277� �
812,795� � Net income 709,350� 11,258� � Convertible preferred
stock dividends � 682,813� � 422,147� � Net income (loss)
applicable to common stockholders $ 26,537� $ (410,889) � Basic and
diluted net income (loss) applicable to common stockholders $ 0.00�
$ (0.01) Shares used to calculate basic net income (loss) per share
applicable to common stockholders 36,043,092� 38,720,191� Shares
used to calculate diluted net income (loss) per share applicable to
common stockholders 38,144,506� 38,720,191� � (1) Includes stock
compensation allocated as follows: Service costs $ (131,034) $
268,654� Sales and marketing 437,983� 845,594� Product development
(125,895) 884,156� General and administrative � 376,904� �
1,210,301� Total stock compensation expense $ 557,958� $ 3,208,705�
� Prior to January 1, 2006, Marchex accounted for stock
compensation under Accounting Principles Board, Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25). In accordance
with APB 25, Marchex historically used the intrinsic value method
to account for stock compensation. As of January 1, 2006, Marchex
accounts for stock compensation under the fair value method as
prescribed by Statement of Financial Accounting Standards No. 123-R
(SFAS 123R). As Marchex adopted the modified prospective method,
results for the prior year have not been restated under the fair
value method for GAAP purposes. � In accordance with SEC Staff
Accounting Bulletin No. 107, stock-based compensation is no longer
presented as a separate line item on the Consolidated Statement of
Operations. The stock-based compensation is now presented in the
same lines as cash compensation paid to the same individuals.
Stock-based compensation recognized in the prior period has been
reclassified to conform with the presentation in the current
period. MARCHEX, INC. AND SUBSIDIARIES Condensed Consolidated
Statements of Operations (unaudited) � � Nine Months Ended
September 30, � 2005� � 2006� � Revenue $ 65,191,682� $ 95,153,161�
� Expenses: Service costs (1) 34,822,513� 45,056,393� Sales and
marketing (1) 6,382,121� 17,236,349� Product development (1)
3,252,001� 7,470,331� General and administrative (1) 4,841,571�
10,364,929� Amortization of acquired intangible assets �
13,224,507� � 15,343,966� Total operating expenses � 62,522,713� �
95,471,968� � Gain (loss) on sales and disposals of intangible
assets, net � -� � 284,766� � Income (loss) from operations
2,668,969� (34,041) � Interest income and other, net � 1,388,939� �
2,307,371� � Income before provision for income taxes 4,057,908�
2,273,330� � Income tax expense � 1,820,866� � 2,305,247� � Income
(loss) before cumulative effect of a change in accounting principle
2,237,042� (31,917) � Cumulative effect of a change in accounting
principle, net of tax (2) � -� � 151,341� � Net income 2,237,042�
119,424� � Convertible preferred stock dividends and conversion
payment � 1,714,619� � 2,338,229� � Net income (loss) applicable to
common stockholders $ 522,423� $ (2,218,805) � � Basic net income
(loss) applicable to common stockholders $ 0.02� $ (0.06) Diluted
net income (loss) applicable to common stockholders $ 0.01� $
(0.06) Shares used to calculate basic net income (loss) per share
applicable to common stockholders 33,886,928� 38,065,347� Shares
used to calculate diluted net income (loss) per share applicable to
common stockholders 36,188,819� 38,065,347� � (1) Includes stock
compensation allocated as follows: Service costs $ 3,600� $
760,607� Sales and marketing 753,414� 2,836,843� Product
development 22,755� 2,446,530� General and administrative �
421,896� � 4,113,376� Total stock compensation expense $ 1,201,665�
$ 10,157,356� � Prior to January 1, 2006, Marchex accounted for
stock compensation under Accounting Principles Board, Opinion No.
25, Accounting for Stock Issued to Employees (APB 25). In
accordance with APB 25, Marchex historically used the intrinsic
value method to account for stock compensation. As of January 1,
2006, Marchex accounts for stock compensation under the fair value
method as prescribed by Statement of Financial Accounting Standards
No. 123-R (SFAS 123R). As Marchex adopted the modified prospective
method, results for the prior year have not been restated under the
fair value method for GAAP purposes. � In accordance with SEC Staff
Accounting Bulletin No. 107, stock-based compensation is no longer
presented as a separate line item on the Consolidated Statement of
Operations. The stock-based compensation is now presented in the
same lines as cash compensation paid to the same individuals.
Stock-based compensation recognized in the prior period has been
reclassifed to conform with the presentation in the current period.
� (2) As a result of the adoption of SFAS 123R, Marchex recorded an
amount from the cumulative impact of the accounting change.
MARCHEX, INC. AND SUBSIDIARIES Condensed Consolidated Balance
Sheets (unaudited) � � December 31, September 30, Assets � 2005� �
2006� � Current assets: Cash and cash equivalents $ 63,090,941� $
69,334,818� Trade accounts receivable, net 14,401,814� 14,539,441�
Prepaid expenses and other current assets 1,818,211� 2,400,316�
Refundable taxes 3,835,542� 3,146,204� Deferred income tax assets �
428,855� � 358,081� Total current assets 83,575,363� 89,778,860� �
Property and equipment, net 3,402,262� 7,331,859� Deferred income
tax assets -� 2,121,944� Intangibles and other assets, net
15,447,504� 12,984,003� Goodwill 180,637,076� 200,742,308�
Intangible assets from acquisitions, net � 51,346,944� �
42,127,241� � Total assets $ 334,409,149� $ 355,086,215� � �
Liabilities and Stockholders' Equity � Current liabilities:
Accounts payable $ 9,258,423� $ 9,052,542� Accrued expenses and
other current liabilities 1,755,970� 2,149,649� Deferred revenue �
2,291,374� � 2,491,013� Total current liabilities 13,305,767�
13,693,204� � Deferred income tax liabilities 397,481� -� Other
non-current liabilities � 92,309� � 98,076� Total liabilities
13,795,557� 13,791,280� � Stockholders' equity: Convertible
preferred stock 54,121,678� 34,116,491� Class A common stock
119,282� 119,217� Class B common stock 254,839� 274,651� Additional
paid-in capital 271,949,963� 311,932,041� Deferred stock-based
compensation (3,042,016) -� Accumulated deficit � (2,790,154) �
(5,147,465) Total stockholders' equity � 320,613,592� �
341,294,935� � Total liabilities and stockholders' equity $
334,409,149� $ 355,086,215� MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of Revenue to Pro Forma Revenue (unaudited) � �
Three months Three months Nine months Nine months ended ended ended
ended September 30, September 30, September 30, September 30, �
2005� � 2006� � 2005� � 2006� � Revenue, as reported $ 25,627,677�
$ 32,326,116� $ 65,191,682� $ 95,153,161� � Name Development pro
forma revenue -� -� 2,544,459� -� � Pike Street pro forma revenue
-� -� 1,230,494� -� � Industry Brains pro forma revenue 686,823� -�
6,188,897� -� � AreaConnect pro forma revenue 400,973� -� 892,606�
649,675� � Open List pro forma revenue 54,104� -� 59,353� 156,511�
� Pro forma eliminations � (3,387) � -� � (36,086) � (22,259) � Pro
forma Revenue $ 26,766,190� $ 32,326,116� $ 76,071,405� $
95,937,088� MARCHEX, INC. AND SUBSIDIARIES Reconciliation of GAAP
Net Income (Loss) to Operating Income Before Amortization (OIBA)
and Adjusted Operating Income Before Amortization (Adjusted OIBA)
(unaudited) � � � � Three Months Ended September 30, � 2005� �
2006� � Net income (loss) applicable to common stockholders $
26,537� $ (410,889) � Convertible preferred stock dividends �
682,813� � 422,147� � Net income 709,350� 11,258� � Income tax
expense � 871,277� � 812,795� � Income before provision for income
taxes 1,580,627� 824,053� � Interest income and other, net �
(532,043) � (821,263) � Income from operations 1,048,584� 2,790� �
Stock-based compensation 557,958� 3,208,705� Amortization of
acquired intangible assets � 5,191,699� � 5,309,102� � Operating
income before amortization (OIBA) 6,798,241� 8,520,597� � Gain/loss
on sales and disposals of intangible assets, net � -� � 68,513� �
Adjusted operating income before amortization (Adjusted OIBA) $
6,798,241� $ 8,589,110� MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Income (Loss) to Operating Income Before
Amortization (OIBA) and Adjusted Operating Income Before
Amortization (Adjusted OIBA) (unaudited) � � � � Nine Months Ended
September 30, � 2005� � 2006� � Net income (loss) applicable to
common stockholders $ 522,423� $ (2,218,805) � Convertible
preferred stock dividends and conversion payment � 1,714,619� �
2,338,229� � Net income 2,237,042� 119,424� � Cumulative effect of
a change in accounting principle, net of tax (1) � -� � 151,341� �
Income (loss) before cumulative effect of a change in accounting
principle 2,237,042� (31,917) � Income tax expense � 1,820,866� �
2,305,247� � Income before provision for income taxes 4,057,908�
2,273,330� � Interest income and other, net � (1,388,939) �
(2,307,371) � Income (loss) from operations 2,668,969� (34,041) �
Stock-based compensation 1,201,665� 10,157,356� Amortization of
acquired intangible assets � 13,224,507� � 15,343,966� � Operating
income before amortization (OIBA) 17,095,141� 25,467,281� �
Gain/loss on sales and disposals of intangible assets, net � -� �
(284,766) � Adjusted operating income before amortization (Adjusted
OIBA) $ 17,095,141� $ 25,182,515� � � � (1) As a result of the
adoption of SFAS 123R, Marchex recorded an amount from the
cumulative impact of the accounting change. MARCHEX, INC. AND
SUBSIDIARIES Reconciliation from Net Cash provided by Operating
Activities to Adjusted EBITDA (unaudited) � � � � � Three Months
Ended September 30, � 2005� � 2006� � Net cash provided by
operating activities $ 3,667,596� $ 11,152,291� � Changes in asset
and liabilities, net of effects of acquisitions 4,540,461�
(1,105,044) Provision for income taxes 871,277� 812,795� Other item
- facility relocation 17,980� -� Interest income and other, net
(532,043) (829,164) Income and excess tax benefits related to stock
options � (470,069) � 192,651� Adjusted EBITDA $ 8,095,202� $
10,223,529� � � � � Nine Months Ended September 30, � 2005� � 2006�
� Net cash provided by operating activities $ 10,068,630� $
26,833,818� � Changes in asset and liabilities, net of effects of
acquisitions 10,294,873� 625,347� Provision for income taxes
1,820,866� 2,305,247� Other item - facility relocation 36,690�
43,431� Interest income and other, net (1,384,939) (2,317,135)
Income and excess tax benefits related to stock options � (798,162)
� 2,025,351� Adjusted EBITDA $ 20,037,958� $ 29,516,059� MARCHEX,
INC. AND SUBSIDIARIES Reconciliation of GAAP EPS to Adjusted
Non-GAAP EPS (unaudited) � � � � Three Months Ended September 30, �
2005� � 2006� � � Adjusted Non-GAAP EPS $ 0.09� $ 0.13� � � Net
income (loss) per share applicable to common stockholders - diluted
(GAAP EPS) $ 0.00� $ (0.01) Shares used to calculate diluted net
income (loss) per share applicable to common stockholders
38,144,506� 38,720,191� � Net income (loss) applicable to common
stockholders $ 26,537� $ (410,889) � Stock-based compensation
557,958� 3,208,705� Amortization of acquired intangible assets
5,191,699� 5,309,102� Gain/loss on sales and disposals of
intangible assets, net -� 68,513� Interest income and other, net
(532,043) (821,263) Estimated impact of income taxes � (1,668,546)
� (2,241,493) � Adjusted Non-GAAP net income applicable to common
stockholders $ 3,575,605� $ 5,112,675� � � Adjusted Non-GAAP EPS $
0.09� $ 0.13� � Shares used to calculate diluted net income (loss)
per share applicable to common stockholders 38,144,506� 38,720,191�
Weighted average stock options and warrants and common shares
subject to repurchase or cancellation (if applicable) � 210,750� �
1,757,902� Shares used to calculate Adjusted Non-GAAP EPS �
38,355,256� � 40,478,093� � � For Adjusted Non-GAAP EPS, the impact
of restricted stock (common shares subject to repurchase or
cancellation) is based on the weighted average of restricted stock
outstanding as compared with diluted shares for GAAP purposes,
which included restricted stock on a treasury stock method basis.
MARCHEX, INC. AND SUBSIDIARIES Reconciliation of GAAP EPS to
Adjusted Non-GAAP EPS (unaudited) � � � � Nine Months Ended
September 30, � 2005� � 2006� � � Adjusted Non-GAAP EPS $ 0.25� $
0.34� � � Net income (loss) per share applicable to common
stockholders - diluted (GAAP EPS) $ 0.01� $ (0.06) Shares used to
calculate diluted net income (loss) per share applicable to common
stockholders 36,188,819� 38,065,347� � Net income (loss) applicable
to common stockholders $ 522,423� $ (2,218,805) � Stock-based
compensation 1,201,665� 10,157,356� Amortization of acquired
intangible assets 13,224,507� 15,343,966� Gain/loss on sales and
disposals of intangible assets, net -� (284,766) Cumulative effect
of a change in accounting principle, net of tax (1) -� (151,341)
Interest income and other, net (1,388,939) (2,307,371) Estimated
impact of income taxes � (4,574,426) � (6,755,422) � Adjusted
Non-GAAP net income applicable to common stockholders $ 8,985,230�
$ 13,783,617� � � Adjusted Non-GAAP EPS $ 0.25� $ 0.34� � Shares
used to calculate diluted net income (loss) per share applicable to
common stockholders 36,188,819� 38,065,347� Weighted average stock
options and warrants and common shares subject to repurchase or
cancellation (if applicable) � 89,372� � 2,237,408� Shares used to
calculate Adjusted Non-GAAP EPS � 36,278,191� � 40,302,755� � � For
Adjusted Non-GAAP EPS, the impact of restricted stock (common
shares subject to repurchase or cancellation) is based on the
weighted average of restricted stock outstanding as compared with
diluted shares for GAAP purposes, which included restricted stock
on a treasury stock method basis. � (1) As a result of the adoption
of SFAS 123R, Marchex recorded an amount from the cumulative impact
of the accounting change. Marchex, Inc. (NASDAQ:MCHX)(NASDAQ:MCHXP)
today reported its results for the third quarter ended September
30, 2006. Consolidated Financial Results: -0- *T -- Revenue was
$32.3 million for the third quarter of 2006, a 26% increase
compared to $25.6 million for the same period of 2005. -- GAAP net
loss applicable to common stockholders was $411,000 for the third
quarter of 2006 or $0.01 per share, compared to GAAP net income
applicable to common stockholders of $27,000 or $0.00 per share for
the same period of 2005. The third quarter 2006 results included
non-cash stock-based compensation expense recorded under the fair
value method of $3.2 million, compared to non-cash stock-based
compensation expense of $558,000 for the same period in 2005. -- We
provide a reconciliation of GAAP EPS to Adjusted Non-GAAP EPS in
the last financial tables attached to this press release and
encourage investors to examine the reconciling adjustments between
the GAAP and non-GAAP measures. Adjusted non-GAAP EPS for the third
quarter of 2006 was $0.13, compared to $0.09 for the same period of
2005. Some Wall Street analysts use non-GAAP measures to analyze
our operating results, which may include adjusted non-GAAP EPS,
adjusted operating income before amortization and adjusted EBITDA.
We present GAAP measures with equal or greater prominence than
non-GAAP measures and such non-GAAP measures should not be
considered a substitute for, or superior to, GAAP results. --
Adjusted operating income before amortization was $8.6 million for
the third quarter of 2006, which is an increase of 26% compared to
$6.8 million for the same period of 2005. A reconciliation of
non-GAAP adjusted operating income before amortization to GAAP
operating income (loss) and GAAP net income (loss) is attached to
the financial tables included in this release. -- Adjusted EBITDA
was $10.2 million in the third quarter of 2006, which is an
increase of 26% compared to $8.1 million for the same period of
2005. A reconciliation of operating income (loss) before taxes,
depreciation, amortization and gain/loss on sales and disposals of
intangible assets to GAAP net cash provided by operating activities
is attached to the financial tables included in this release. --
Third quarter results and outlook for the remainder of 2006,
reflect in part the following events and trends: -- An increase in
revenue attributable to proprietary traffic sources in the third
quarter; -- A sequential increase of more than 10% in the third
quarter of 2006 over the second quarter of 2006 in
revenue-per-click rates from Marchex's proprietary advertisers
accessing proprietary traffic sources; -- An increase in the third
quarter of 2006 in monetization per user from proprietary traffic
sources; -- Lower revenue in recent months from advertisers in
certain vertical categories such as finance and real estate, driven
by lower third party inventory and lower advertiser budgets; --
Lower than anticipated third party revenue-per-click rates in
certain areas including decreases versus prior year and prior
quarter levels; and -- In the near term, Marchex anticipates
increasingly higher professional service costs associated with
year-end public company reporting requirements. *T "Marchex made
significant product development and solid operational progress in
the third quarter," said Russell C. Horowitz, Marchex Chairman and
CEO. "We believe that we are putting the product and technology
elements together that will drive utility, user retention and long
term growth in our proprietary network and we plan to continue our
significant investment in building these products and expanding our
online footprint." Updated Statistics and Recent Highlights: -0- *T
-- Proprietary traffic: Marchex today announced that its
proprietary network of vertical and local Web sites attracted
approximately 28 million unique visitors for the month of September
2006. Unique visitor statistics are based on internal traffic logs,
which calculate unique IP (Internet protocol) addresses on an
unduplicated basis during a given month. For the third quarter in
2006, revenue attributable to proprietary traffic sources was $12.3
million. -- Updated data from initial local and vertical Web sites
with Open List integration: Marchex today announced the results
from the initial launch of its local and vertical Web sites on May
30, 2006, which featured integrations from Marchex's search
technology and content aggregation engine, Open List
(www.openlist.com). Selected results and trends from the 29 beta
Web sites are as follows and represent data for the full month of
September 2006 versus data for the average of the months of March,
April and May 2006, which were the three months prior to launch
(such selected results and trends are not indicative of future
results and trends). i. Pageviews -- Pageviews to these beta Web
sites increased more than 300% for the month of September 2006 over
the average pageviews for the months of March, April and May 2006.
ii. Revenue -- Revenue from these beta Web sites increased more
than 90% for the month of September 2006 over the average revenue
for the months of March, April and May 2006. iii. Traffic Referrals
-- For the month of September 2006, referring traffic to these beta
Web sites was generated from the following sources: 10% from
natural / algorithmic search engines with the remainder principally
from direct type-in traffic or bookmarks. iv. Search Keywords --
Data indicates that referring traffic to the Web sites from natural
/ algorithmic search engines was driven by more than exact match
search queries. For the month of September 2006, an average beta
Web site generated traffic from search engine referrals resulting
from 60 unique search keywords or keyword phrases. For example,
natural / algorithmic search traffic to www.sushibar.com was
generated by more than 125 unique search keywords or keyword
phrases. -- Launch of additional Web sites with expanded Open List
search and content platform: Marchex today announced that it has
expanded its Open List search technology and content aggregation
engine to include relevant searchable content and data covering
20,000 specific business categories and more than 15 million unique
business listings and associated pieces of content, up from
approximately one million listings and related content just a few
months ago. While this information is not yet accessible at the
Open List Web site, Marchex has made relevant parts of it available
on more than 50 vertical / local Web sites as part of its continued
effort to add relevant content and services across its network of
more than 200,000 Web sites. -- New portal for Marchex-owned Web
sites: In 2007, Marchex plans to relaunch the Open List search
platform and leverage it as a gateway for its network of 200,000
Web sites. This gateway site will offer a search product for
consumers and allow consumers to easily navigate back to a home
search page, from Marchex's network of Web sites. In addition, this
site will offer a variety of marketing opportunities for
advertisers and advertiser aggregator partners. -- Partner, or
third-party, distribution: During the quarter, Marchex announced
new premium publisher wins with TheStreet.com and Line56 Media.
This adds to Marchex's relationships with more than 100 vertically
focused and brand-name online publishers, such as BusinessWeek
Online, The Motley Fool, Forbes.com, and the Ziff Davis online
properties. -- Advertiser product introduction: Earlier this week,
Marchex announced the launch of the Marchex Network, an advertising
network featuring Marchex's more than 200,000 Web sites as the
foundation of its proprietary traffic available to advertisers.
Advertisers can directly bid for placement on a Cost-Per-Click
basis across Marchex's network of Web sites, based on designated
keywords and categories. The advertiser sign-up process is
accessible on most of Marchex's 200,000 Web sites via a link
stating: 'Advertise on this Network.' *T Marchex Financial
Guidance: Marchex is updating its previous guidance provided on
August 8, 2006, as follows: -0- *T 2006 consolidated revenue range
estimate: $128 million to $131 million
----------------------------------------
---------------------------- 2006 adjusted operating income before
amortization target range: $33 million to $35 million
----------------------------------------
---------------------------- Long-term adjusted operating income
before amortization margins: 30% or more
----------------------------------------
---------------------------- *T Conference Call and Webcast
Information: Management will hold a conference call, starting at
5:00 p.m. EST on Wednesday, November 8, 2006 to discuss its third
quarter 2006 results and other company updates. To access the call
by live Webcast, please log onto the Investor Relations section of
the Marchex Web site (www.marchex.com/ir.html). An archived version
of the Webcast will also be available, beginning two hours after
completion of the call, at the same location. About Marchex, Inc.
Marchex (www.marchex.com) is a technology driven search and media
company focused on vertical and local online traffic. Specifically,
the company is focused on search marketing, local search, and
direct navigation. Marchex's platform of integrated
performance-based advertising and search marketing services enables
merchants to efficiently market and sell their products and
services across multiple online distribution channels, including
search engines, product shopping engines, directories and selected
Web sites. 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,
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 August 8, 2006 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 and Adjusted
non-GAAP EPS. Marchex also provides Pro Forma Revenue information
for the three and nine months ended September 30, 2005 and 2006 as
if the Name Development and Pike Street asset acquisitions and the
IndustryBrains acquisition in 2005, and the AreaConnect and Open
List asset acquisitions in 2006 occurred as of January 1, 2005, and
the AreaConnect and Open List asset acquisitions in 2006 occurred
as of January 1, 2006, respectively. OIBA represents income (loss)
from operations plus (1) stock-based compensation expense and (2)
amortization of acquired intangible assets. 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 as this is viewed as
non-recurring in nature. 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 non-cash and non-recurring expenses. Adjusted EBITDA
represents income before interest, income taxes, depreciation,
amortization, stock compensation expense, 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. Adjusted non-GAAP EPS represents
Adjusted Net Income divided by weighted average fully diluted
shares outstanding for Adjusted non-GAAP EPS purposes. Adjusted Net
Income generally captures those items on the statement of
operations that have been, or ultimately will be, settled in cash
exclusive of certain non-recurring items and represents net income
(loss) available to common shareholders plus: (1) stock based
compensation expense, (2) amortization of acquired intangible
assets, (3) gain/loss on sales and disposals of intangible assets,
(4) other income (expense) and (5) the cumulative effect of changes
in accounting principles. Adjusted non-GAAP EPS includes dilution
from options and warrants per the treasury stock method and
includes the weighted average number of all potential common shares
relating to convertible preferred stock and restricted stock.
Shares outstanding for Adjusted non-GAAP EPS purposes are therefore
higher than shares outstanding for GAAP EPS purposes. 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. These non-GAAP
terms, as defined by Marchex, may not be comparable to similarly
titled measures used by other companies. 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. -0- *T MARCHEX, INC. AND
SUBSIDIARIES Condensed Consolidated Statements of Operations
(unaudited) Three Months Ended September 30, 2005 2006 ------------
------------ Revenue $25,627,677 $32,326,116 ------------
------------ Expenses: Service costs (1) 13,280,344 15,184,125
Sales and marketing (1) 3,197,809 5,962,465 Product development (1)
1,038,257 2,689,912 General and administrative (1) 1,870,984
3,109,209 Amortization of acquired intangible assets 5,191,699
5,309,102 ------------ ------------ Total operating expenses
24,579,093 32,254,813 ------------ ------------ Gain (loss) on
sales and disposals of intangible assets, net - (68,513)
------------ ------------ Income from operations 1,048,584 2,790
Interest income and other, net 532,043 821,263 ------------
------------ Income before provision for income taxes 1,580,627
824,053 Income tax expense 871,277 812,795 ------------
------------ Net income 709,350 11,258 Convertible preferred stock
dividends 682,813 422,147 ------------ ------------ Net income
(loss) applicable to common stockholders $ 26,537 $ (410,889)
============ ============ Basic and diluted net income (loss)
applicable to common stockholders $ 0.00 $ (0.01) Shares used to
calculate basic net income (loss) per share applicable to common
stockholders 36,043,092 38,720,191 Shares used to calculate diluted
net income (loss) per share applicable to common stockholders
38,144,506 38,720,191 (1) Includes stock compensation allocated as
follows: Service costs $ (131,034) $ 268,654 Sales and marketing
437,983 845,594 Product development (125,895) 884,156 General and
administrative 376,904 1,210,301 ------------ ------------ Total
stock compensation expense $ 557,958 $ 3,208,705 ============
============ Prior to January 1, 2006, Marchex accounted for stock
compensation under Accounting Principles Board, Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25). In accordance
with APB 25, Marchex historically used the intrinsic value method
to account for stock compensation. As of January 1, 2006, Marchex
accounts for stock compensation under the fair value method as
prescribed by Statement of Financial Accounting Standards No. 123-R
(SFAS 123R). As Marchex adopted the modified prospective method,
results for the prior year have not been restated under the fair
value method for GAAP purposes. In accordance with SEC Staff
Accounting Bulletin No. 107, stock- based compensation is no longer
presented as a separate line item on the Consolidated Statement of
Operations. The stock-based compensation is now presented in the
same lines as cash compensation paid to the same individuals.
Stock-based compensation recognized in the prior period has been
reclassified to conform with the presentation in the current
period. *T -0- *T MARCHEX, INC. AND SUBSIDIARIES Condensed
Consolidated Statements of Operations (unaudited) Nine Months Ended
September 30, 2005 2006 ------------ ------------ Revenue
$65,191,682 $95,153,161 ------------ ------------ Expenses: Service
costs (1) 34,822,513 45,056,393 Sales and marketing (1) 6,382,121
17,236,349 Product development (1) 3,252,001 7,470,331 General and
administrative (1) 4,841,571 10,364,929 Amortization of acquired
intangible assets 13,224,507 15,343,966 ------------ ------------
Total operating expenses 62,522,713 95,471,968 ------------
------------ Gain (loss) on sales and disposals of intangible
assets, net - 284,766 ------------ ------------ Income (loss) from
operations 2,668,969 (34,041) Interest income and other, net
1,388,939 2,307,371 ------------ ------------ Income before
provision for income taxes 4,057,908 2,273,330 Income tax expense
1,820,866 2,305,247 ------------ ------------ Income (loss) before
cumulative effect of a change in accounting principle 2,237,042
(31,917) Cumulative effect of a change in accounting principle, net
of tax (2) - 151,341 ------------ ------------ Net income 2,237,042
119,424 Convertible preferred stock dividends and conversion
payment 1,714,619 2,338,229 ------------ ------------ Net income
(loss) applicable to common stockholders $ 522,423 $(2,218,805)
============ ============ Basic net income (loss) applicable to
common stockholders $ 0.02 $ (0.06) Diluted net income (loss)
applicable to common stockholders $ 0.01 $ (0.06) Shares used to
calculate basic net income (loss) per share applicable to common
stockholders 33,886,928 38,065,347 Shares used to calculate diluted
net income (loss) per share applicable to common stockholders
36,188,819 38,065,347 (1) Includes stock compensation allocated as
follows: Service costs $ 3,600 $ 760,607 Sales and marketing
753,414 2,836,843 Product development 22,755 2,446,530 General and
administrative 421,896 4,113,376 ------------ ------------ Total
stock compensation expense $ 1,201,665 $10,157,356 ============
============ Prior to January 1, 2006, Marchex accounted for stock
compensation under Accounting Principles Board, Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25). In accordance
with APB 25, Marchex historically used the intrinsic value method
to account for stock compensation. As of January 1, 2006, Marchex
accounts for stock compensation under the fair value method as
prescribed by Statement of Financial Accounting Standards No. 123-R
(SFAS 123R). As Marchex adopted the modified prospective method,
results for the prior year have not been restated under the fair
value method for GAAP purposes. In accordance with SEC Staff
Accounting Bulletin No. 107, stock- based compensation is no longer
presented as a separate line item on the Consolidated Statement of
Operations. The stock-based compensation is now presented in the
same lines as cash compensation paid to the same individuals.
Stock-based compensation recognized in the prior period has been
reclassifed to conform with the presentation in the current period.
(2) As a result of the adoption of SFAS 123R, Marchex recorded an
amount from the cumulative impact of the accounting change. *T -0-
*T MARCHEX, INC. AND SUBSIDIARIES Condensed Consolidated Balance
Sheets (unaudited) December 31, September 30, Assets 2005 2006
------------- ------------- Current assets: Cash and cash
equivalents $ 63,090,941 $ 69,334,818 Trade accounts receivable,
net 14,401,814 14,539,441 Prepaid expenses and other current assets
1,818,211 2,400,316 Refundable taxes 3,835,542 3,146,204 Deferred
income tax assets 428,855 358,081 ------------- ------------- Total
current assets 83,575,363 89,778,860 Property and equipment, net
3,402,262 7,331,859 Deferred income tax assets - 2,121,944
Intangibles and other assets, net 15,447,504 12,984,003 Goodwill
180,637,076 200,742,308 Intangible assets from acquisitions, net
51,346,944 42,127,241 ------------- ------------- Total assets
$334,409,149 $355,086,215 ============= ============= Liabilities
and Stockholders' Equity Current liabilities: Accounts payable $
9,258,423 $ 9,052,542 Accrued expenses and other current
liabilities 1,755,970 2,149,649 Deferred revenue 2,291,374
2,491,013 ------------- ------------- Total current liabilities
13,305,767 13,693,204 Deferred income tax liabilities 397,481 -
Other non-current liabilities 92,309 98,076 -------------
------------- Total liabilities 13,795,557 13,791,280 Stockholders'
equity: Convertible preferred stock 54,121,678 34,116,491 Class A
common stock 119,282 119,217 Class B common stock 254,839 274,651
Additional paid-in capital 271,949,963 311,932,041 Deferred
stock-based compensation (3,042,016) - Accumulated deficit
(2,790,154) (5,147,465) ------------- ------------- Total
stockholders' equity 320,613,592 341,294,935 -------------
------------- Total liabilities and stockholders' equity
$334,409,149 $355,086,215 ============= ============= *T -0- *T
MARCHEX, INC. AND SUBSIDIARIES Reconciliation of Revenue to Pro
Forma Revenue (unaudited) Three months Three months Nine months
Nine months ended ended ended ended September 30, September 30,
September 30, September 30, 2005 2006 2005 2006 -------------
------------- -------------- ------------- Revenue, as reported $
25,627,677 $ 32,326,116 $ 65,191,682 $ 95,153,161 Name Development
pro forma revenue - - 2,544,459 - Pike Street pro forma revenue - -
1,230,494 - Industry Brains pro forma revenue 686,823 - 6,188,897 -
AreaConnect pro forma revenue 400,973 - 892,606 649,675 Open List
pro forma revenue 54,104 - 59,353 156,511 Pro forma eliminations
(3,387) - (36,086) (22,259) ------------- -------------
-------------- ------------- Pro forma Revenue $ 26,766,190 $
32,326,116 $ 76,071,405 $ 95,937,088 ============= =============
============== ============= *T -0- *T MARCHEX, INC. AND
SUBSIDIARIES Reconciliation of GAAP Net Income (Loss) to Operating
Income Before Amortization (OIBA) and Adjusted Operating Income
Before Amortization (Adjusted OIBA) (unaudited) Three Months Ended
September 30, 2005 2006 ----------- ----------- Net income (loss)
applicable to common stockholders $ 26,537 $ (410,889) Convertible
preferred stock dividends 682,813 422,147 ----------- -----------
Net income 709,350 11,258 Income tax expense 871,277 812,795
----------- ----------- Income before provision for income taxes
1,580,627 824,053 Interest income and other, net (532,043)
(821,263) ----------- ----------- Income from operations 1,048,584
2,790 Stock-based compensation 557,958 3,208,705 Amortization of
acquired intangible assets 5,191,699 5,309,102 -----------
----------- Operating income before amortization (OIBA) 6,798,241
8,520,597 Gain/loss on sales and disposals of intangible assets,
net - 68,513 ----------- ----------- Adjusted operating income
before amortization (Adjusted OIBA) $6,798,241 $8,589,110
=========== =========== *T -0- *T MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Income (Loss) to Operating Income Before
Amortization (OIBA) and Adjusted Operating Income Before
Amortization (Adjusted OIBA) (unaudited) Nine Months Ended
September 30, 2005 2006 ------------ ------------ Net income (loss)
applicable to common stockholders $ 522,423 $(2,218,805)
Convertible preferred stock dividends and conversion payment
1,714,619 2,338,229 ------------ ------------ Net income 2,237,042
119,424 Cumulative effect of a change in accounting principle, net
of tax (1) - 151,341 ------------ ------------ Income (loss) before
cumulative effect of a change in accounting principle 2,237,042
(31,917) Income tax expense 1,820,866 2,305,247 ------------
------------ Income before provision for income taxes 4,057,908
2,273,330 Interest income and other, net (1,388,939) (2,307,371)
------------ ------------ Income (loss) from operations 2,668,969
(34,041) Stock-based compensation 1,201,665 10,157,356 Amortization
of acquired intangible assets 13,224,507 15,343,966 ------------
------------ Operating income before amortization (OIBA) 17,095,141
25,467,281 Gain/loss on sales and disposals of intangible assets,
net - (284,766) ------------ ------------ Adjusted operating income
before amortization (Adjusted OIBA) $17,095,141 $25,182,515
============ ============ (1) As a result of the adoption of SFAS
123R, Marchex recorded an amount from the cumulative impact of the
accounting change. *T -0- *T MARCHEX, INC. AND SUBSIDIARIES
Reconciliation from Net Cash provided by Operating Activities to
Adjusted EBITDA (unaudited) Three Months Ended September 30, 2005
2006 ------------ ------------ Net cash provided by operating
activities $ 3,667,596 $11,152,291 Changes in asset and
liabilities, net of effects of acquisitions 4,540,461 (1,105,044)
Provision for income taxes 871,277 812,795 Other item - facility
relocation 17,980 - Interest income and other, net (532,043)
(829,164) Income and excess tax benefits related to stock options
(470,069) 192,651 ------------ ------------ Adjusted EBITDA $
8,095,202 $10,223,529 ============ ============ Nine Months Ended
September 30, 2005 2006 ------------ ------------ Net cash provided
by operating activities $10,068,630 $26,833,818 Changes in asset
and liabilities, net of effects of acquisitions 10,294,873 625,347
Provision for income taxes 1,820,866 2,305,247 Other item -
facility relocation 36,690 43,431 Interest income and other, net
(1,384,939) (2,317,135) Income and excess tax benefits related to
stock options (798,162) 2,025,351 ------------ ------------
Adjusted EBITDA $20,037,958 $29,516,059 ============ ============
*T -0- *T MARCHEX, INC. AND SUBSIDIARIES Reconciliation of GAAP EPS
to Adjusted Non-GAAP EPS (unaudited) Three Months Ended September
30, 2005 2006 ------------ ------------ ------------ ------------
Adjusted Non-GAAP EPS $ 0.09 $ 0.13 ============ ============ Net
income (loss) per share applicable to common stockholders - diluted
(GAAP EPS) $ 0.00 $ (0.01) Shares used to calculate diluted net
income (loss) per share applicable to common stockholders
38,144,506 38,720,191 Net income (loss) applicable to common
stockholders $ 26,537 $ (410,889) Stock-based compensation 557,958
3,208,705 Amortization of acquired intangible assets 5,191,699
5,309,102 Gain/loss on sales and disposals of intangible assets,
net - 68,513 Interest income and other, net (532,043) (821,263)
Estimated impact of income taxes (1,668,546) (2,241,493)
------------ ------------ Adjusted Non-GAAP net income applicable
to common stockholders $ 3,575,605 $ 5,112,675 ============
============ ------------ ------------ Adjusted Non-GAAP EPS $ 0.09
$ 0.13 ============ ============ Shares used to calculate diluted
net income (loss) per share applicable to common stockholders
38,144,506 38,720,191 Weighted average stock options and warrants
and common shares subject to repurchase or cancellation (if
applicable) 210,750 1,757,902 ------------ ------------ Shares used
to calculate Adjusted Non-GAAP EPS 38,355,256 40,478,093
============ ============ For Adjusted Non-GAAP EPS, the impact of
restricted stock (common shares subject to repurchase or
cancellation) is based on the weighted average of restricted stock
outstanding as compared with diluted shares for GAAP purposes,
which included restricted stock on a treasury stock method basis.
*T -0- *T MARCHEX, INC. AND SUBSIDIARIES Reconciliation of GAAP EPS
to Adjusted Non-GAAP EPS (unaudited) Nine Months Ended September
30, 2005 2006 ------------ ------------ ------------ ------------
Adjusted Non-GAAP EPS $ 0.25 $ 0.34 ============ ============ Net
income (loss) per share applicable to common stockholders - diluted
(GAAP EPS) $ 0.01 $ (0.06) Shares used to calculate diluted net
income (loss) per share applicable to common stockholders
36,188,819 38,065,347 Net income (loss) applicable to common
stockholders $ 522,423 $(2,218,805) Stock-based compensation
1,201,665 10,157,356 Amortization of acquired intangible assets
13,224,507 15,343,966 Gain/loss on sales and disposals of
intangible assets, net - (284,766) Cumulative effect of a change in
accounting principle, net of tax (1) - (151,341) Interest income
and other, net (1,388,939) (2,307,371) Estimated impact of income
taxes (4,574,426) (6,755,422) ------------ ------------ Adjusted
Non-GAAP net income applicable to common stockholders $ 8,985,230
$13,783,617 ============ ============ ------------ ------------
Adjusted Non-GAAP EPS $ 0.25 $ 0.34 ============ ============
Shares used to calculate diluted net income (loss) per share
applicable to common stockholders 36,188,819 38,065,347 Weighted
average stock options and warrants and common shares subject to
repurchase or cancellation (if applicable) 89,372 2,237,408
------------ ------------ Shares used to calculate Adjusted
Non-GAAP EPS 36,278,191 40,302,755 ============ ============ For
Adjusted Non-GAAP EPS, the impact of restricted stock (common
shares subject to repurchase or cancellation) is based on the
weighted average of restricted stock outstanding as compared with
diluted shares for GAAP purposes, which included restricted stock
on a treasury stock method basis. (1) As a result of the adoption
of SFAS 123R, Marchex recorded an amount from the cumulative impact
of the accounting change. *T
Marchex (MM) (NASDAQ:MCHXP)
Historical Stock Chart
From Jun 2024 to Jul 2024
Marchex (MM) (NASDAQ:MCHXP)
Historical Stock Chart
From Jul 2023 to Jul 2024