Press release

Marchex Announces First Quarter 2019 Results

Sponsored by Businesswire

. (NASDAQ:MCHX), a leading provider of call analytics that drive,
measure, and convert callers into customers, today announced its
financial results for the first quarter ended March 31, 2019.

Q1 2019 Financial Highlights

  • Revenue was $26.4 million for the first quarter of 2019, compared to
    $21.9 million for the first quarter of 2018.
  • Core analytics revenue was $12.8 million for the first quarter of
    2019, compared to $7.4 million for the first quarter of 2018.
  • Net loss was $1.3 million for the first quarter of 2019 or $0.03 per
    diluted share. For the first quarter of 2018, net loss was $0.9
    million or $0.02 per diluted share.
  Q1 2018   Q1 2019
Revenue $21.9 million $26.4 million
Net cash provided by operating activities $3.0 million $5.6 million
Cash Balance $84.6 million $50.9 million
Non-GAAP Results1:
Adjusted EBITDA $0.3 million $1.2 million
  • Adjusted non-GAAP income (loss) per share1 for the first
    quarter of 2019 was $0.01, compared to ($0.00) for the first quarter
    of 2018.



Reconciliations of non-GAAP measures are included in the
financial tables attached to this press release and we encourage
investors to examine the reconciling adjustments between the GAAP
and non-GAAP measures.


Strategic Priorities Update

Grow New and Existing Client Relationships. In the first quarter,
Marchex added more than 8 new clients, including enterprise brands in
verticals such as Auto, Senior Living, and Home Services.

Accelerate Product Innovation. Marchex Recently Launched Marchex
Stream, its new platform that analyzes consumer-to-business
conversational data, gains insights in real time and at meaningful
scale, extracts signals of consumer intent and supports predictive
analytics and the development of artificial intelligence-driven,
use-case specific applications. With Marchex Stream, a customer’s
journey can now be captured across its many touchpoints, including
inbound and outbound phone calls, SMS, messaging and chat, in a single,
unified platform and processed within seconds. Marchex Stream enables
businesses to realize the full potential and value of conversational
artificial intelligence and is introducing a new set of industry-leading
capabilities, including: massive cloud-based conversational data storage
and analytics scalability, new streaming capabilities enable processing
events and extracting signals from conversations as they occur, a new
rich API for developers and a multi-layered, cloud-based advanced
security processes and techniques to provide the protection required to
support enterprise level needs.

Marchex recently launched Marchex
Sales Rescue
, a new AI-infused call monitoring, scoring and
engagement solution. Marchex Sales Rescue combines Marchex artificial
intelligence and machine learning with call monitoring and scoring
services to alert businesses when potential buyers hang up without
making a purchase, or when certain calls did not meet the business’
customer service standards. This solution identifies in real-time when
potential high-value customer prospects engaged in conversations with
sales representatives are mishandled in any number of ways, and then
gives businesses the opportunity to re-engage immediately to capture
these potentially lost opportunities, as well as avoid undesired
customer experiences. Marchex’s ability to deliver the Sales Rescue
solution has been accelerated by its Callcap subsidiary, which it
acquired in November 2018.

“Marchex is making important progress setting the foundation for
leadership in conversational analytics and sales acceleration
solutions,” said Mike Arends, Chief Financial Officer. “From launching
innovative new products that solve critical pain points for our
customers, to supporting our many world-class customers as they roll out
strategic initiatives with Marchex solutions at the center, 2019 will be
a significant step in setting the stage for Marchex to capture
meaningful opportunities in this emerging market.”

Business Outlook

The following forward-looking statements reflect Marchex’s expectations
as of May 2, 2019.

  • For the second quarter, the Company anticipates $12.8 million or more
    in Marchex’s core analytics revenue, representing a more than 50%
    increase year-over-year.

Financial Guidance for the Second Quarter
ending June 30, 2019

Total Revenue   $25 million or more
Income (loss) from operations ($3) million or better
Adjusted OIBA1, 2 breakeven or better
Adjusted EBITDA1, 2 $1 million or better



Second quarter GAAP income (loss) from operations is expected
to be ($3) million or better, assuming stock-based compensation
and amortization of intangibles between $2.8 million and $3
million for the quarter.


Conference Call and Webcast Information

Management will hold a conference call, starting at 5:00 p.m. ET on
Wednesday May 2, 2019 to discuss its first quarter ended March 31, 2019
financial results and other company updates. Access to the live webcast
of the conference call will be available online from the Investors
section of Marchex’s website at An
archived version of the webcast will also be available at the same
location two hours after completion of the call.

About Marchex

understands the best customers are those who call your company – they
convert faster, buy more, and churn less. Marchex provides solutions
that help companies drive more calls, understand what happens on those
calls, and convert more of those callers into customers. Our actionable
intelligence strengthens the connection between companies and their
customers, bridging the physical and digital world, to help brands
maximize their marketing investments and operating efficiencies to
acquire the best customers.

Please visit or @marchex on
Twitter (, where Marchex discloses material
information from time to time about the company, its financial
information, and its business.

Forward-Looking Statements:

This press release contains forward-looking statements that involve
substantial risks and uncertainties. All statements, other than
statements of historical facts, included in this press release regarding
our strategy, future operations, future financial position, future
revenues, other financial guidance, acquisitions, dispositions,
projected costs, prospects, plans and objectives of management are
forward-looking statements. We may not actually achieve the plans,
intentions, or expectations disclosed in our forward-looking statements
and you should not place undue reliance on our forward-looking
statements. Actual results or events could differ materially from the
plans, intentions and expectations disclosed in the forward-looking
statements we make. There are a number of important factors that could
cause Marchex’s actual results to differ materially from those indicated
by such forward-looking statements including but not limited to product
demand, order cancellations and delays, competition and general economic
conditions. These factors are described in greater detail in the “Risk
Factors” section of our most recent periodic report and registration
statement filed with the SEC. All of the information provided in this
release is as of May 2, 2019 and Marchex undertakes no duty to update
the information provided herein.

In the event the press release contains links to third party websites or
materials, the links are provided solely as a convenience to you.
Marchex is not responsible for the content of linked third-party sites
or materials and does not make any representations regarding the content
or accuracy thereof.

Non-GAAP Financial Information:

To supplement Marchex’s consolidated financial statements presented in
accordance with GAAP and to provide clarity internally and externally,
Marchex uses certain non-GAAP measures of financial performance and
liquidity, including Adjusted OIBA, Adjusted EBITDA, and Adjusted
non-GAAP income (loss) per share.

Adjusted OIBA represents income
(loss) from operations excluding stock-based compensation expense,
amortization of intangible assets from acquisitions, and acquisition
related costs. This measure, among other things, is one of the primary
metrics by which Marchex evaluates the performance of its business.
Adjusted OIBA is the basis on which Marchex’s internal budgets are based
and by which Marchex’s management is currently evaluated. Marchex
believes these measures are useful to investors because they represent
Marchex’s consolidated operating results, taking into account
depreciation and other intangible amortization, which Marchex believes
is an ongoing cost of doing business, but excluding the effects of
certain other expenses such as stock-based compensation, amortization of
intangible assets from acquisitions, and acquisition related costs. Adjusted
 represents income (loss) before interest, income
taxes, depreciation, amortization, stock compensation expense and
acquisition related costs. Marchex believes that Adjusted EBITDA is
another alternative measure of liquidity to GAAP net cash provided by
(used in) operating activities that provides meaningful supplemental
information regarding liquidity and is used by Marchex’s management to
measure its ability to fund operations and its financing obligations.
Financial analysts and investors may use Adjusted OIBA and Adjusted
EBITDA and Enterprise Revenue to help with comparative financial
evaluation to make informed investment decisions. Adjusted
non-GAAP income (loss) per share
 represents Adjusted non-GAAP
income (loss) divided by GAAP diluted shares outstanding. Adjusted
non-GAAP income (loss) generally captures those items on the statement
of operations that have been, or ultimately will be, settled in cash
exclusive of certain items that are not indicative of Marchex’s
recurring core operating results and represents net income (loss)
applicable to common stockholders plus the net of tax effects of: (1)
stock-based compensation expense, (2) acquisition related costs, (3)
interest and other income (expense), and (4) amortization of intangible
assets from acquisitions. Financial analysts and investors may use
Adjusted non-GAAP income (loss) per share to analyze Marchex’s financial
performance since these groups have historically used EPS related
measures, along with other measures, to estimate the value of a company,
to make informed investment decisions, and to evaluate a company’s
operating performance compared to that of other companies in its

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

Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended

March 31,

2018   2019
Revenue $ 21,896 $ 26,406
Service costs (1) 12,823 14,258
Sales and marketing (1) 3,610 4,113
Product development (1) 3,648 4,568
General and administrative (1) 2,970 3,320
Amortization of intangible assets from acquisitions 1,568
Acquisition related costs     182
Total operating expenses   23,051   28,009
Loss from operations (1,155 ) (1,603 )
Interest income and other, net   240   185
Loss before provision for income taxes (915 ) (1,418 )
Income tax expense (benefit)   11   (119 )
Net loss applicable to common stockholders $ (926 ) $ (1,299 )
Basic and diluted net loss per Class A and Class B share applicable

to common stockholders

$ (0.02 ) $ (0.03 )
Shares used to calculate basic net loss per share applicable to

common stockholders:

Class A 5,056 5,056
Class B 38,039 39,827
Shares used to calculate diluted net loss per share applicable

to common stockholders:

Class A 5,056 5,056
Class B 43,095 44,883
(1) Includes stock-based compensation allocated as follows:
Service costs $ 128 $ 59
Sales and marketing 214 177
Product development 91 76
General and administrative   518   233
Total $ 951 $ 545
Condensed Consolidated Balance Sheets
(in thousands)
December 31, March 31,
2018 2019
Current assets:
Cash and cash equivalents $ 45,230 $ 50,906
Accounts receivable, net 16,198 14,716
Prepaid expenses and other current assets   2,657   2,919
Total current assets 64,085 68,541
Property and equipment, net 2,921 2,774
Right-of-use lease asset 7,065
Other assets, net 917 848
Goodwill 24,442 24,442
Intangible assets from acquisitions, net   20,697   19,129
Total assets $ 113,062 $ 122,799
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 5,968 $ 6,687
Accrued expenses and other current liabilities 5,807 6,128
Current portion of acquisition-related liabilities 1,215 1,276
Deferred revenue and deposits 1,782 3,955
Lease liability current     1,517
Total current liabilities 14,772 19,563
Other non-current liabilities 1,287 91
Deferred tax liabilities 1,531 1,390
Lease liability non-current 6,787
Non-current portion of acquisition-related liabilities   446   502
Total liabilities 18,036 28,333
Stockholders’ equity:
Class A common stock 53 53
Class B common stock 370 371
Treasury stock (1 )
Additional paid-in capital 350,801 351,540
Accumulated deficit   (256,198 )   (257,497 )
Total stockholders’ equity   95,026   94,466
Total liabilities and stockholders’ equity $ 113,062 $ 122,799
(in thousands)
Reconciliation of GAAP Loss from Operations to Adjusted Operating
Income (Loss) Before Amortization (Adjusted OIBA)
Three Months Ended

March 31,

2018   2019
Loss from operations $ (1,155 ) $ (1,603 )
Stock-based compensation 951 545
Amortization of intangible assets from acquisitions 1,568
Acquisition related costs     182
Adjusted OIBA $ (204 ) $ 692

Reconciliation from Net Cash provided by Operating Activities
to Adjusted EBITDA

Three Months Ended

March 31,

2018   2019
Net cash provided by operating activities $ 3,021 $ 5,624
Changes in assets and liabilities (2,471 ) (4,345 )
Income tax expense (benefit) 11 (119 )
Acquisition related costs 182
Interest income and other, net   (240 )   (185 )
Adjusted EBITDA $ 321 $ 1,157
Net cash used in investing activities $ (769 ) $ (143 )
Net cash provided by (used in) financing activities $ (21,880 ) $ 195

Revenue Reconciliation

Three Months Ended

March 31,

2018     2019
Core Analytics revenue1 $ 7,401 $ 12,784
Marketplace, Local Leads, and other analytics2   14,495   13,622
Total Revenue $ 21,896 $ 26,406
1   Core analytics revenue includes revenue from analytics customers,
including those that are purchasing or buying products derived from
the company’s speech technology platform.
2 Includes revenue from marketplace, local leads and from tests,
consulting services or other analytics revenues that may continue
for a limited time but are not anticipated to continue in future
Reconciliation of GAAP Net Loss per Share to Adjusted Non-GAAP
Loss per Share
(in thousands, except per share amounts)
Three Months Ended

March 31,

2018   2019
Adjusted Non-GAAP income (loss) per share $ (0.00 ) $ 0.01
Net loss per share applicable to common stockholders – diluted

(GAAP loss per share)

$ (0.02 ) $ (0.03 )
Shares used to calculate diluted net loss per share applicable to

common stockholders

43,095 44,883
Net loss applicable to common stockholders $ (926 ) $ (1,299 )
Stock-based compensation 951 545
Acquisition related costs 182
Amortization of intangible assets from acquisitions 1,568
Interest income and other, net (240 ) (185 )
Estimated impact of income taxes   23   (309 )
Adjusted Non-GAAP income (loss) $ (192 ) $ 502
Adjusted Non-GAAP income (loss) per share $ (0.00 ) $ 0.01
Shares used to calculate diluted net loss per share applicable to

common stockholders (GAAP)

43,095 44,883
Weighted average stock options and common shares subject to

purchase or cancellation (if applicable)

Diluted shares used to calculate Adjusted Non-GAAP income (loss) per
  43,095   45,639
1   For the purpose of computing the number of diluted shares for
Adjusted Non-GAAP income (loss) per share, Marchex uses the
accounting guidance that would be applicable for computing the
number of diluted shares for GAAP net income (loss) per share.