Marchex Announces Second Quarter 2017 Results
Marchex, Inc. (NASDAQ:MCHX), a leading provider of call analytics that drive, measure, and convert callers
into customers, today announced its financial results for the second quarter ended June 30, 2017.
Q2 2017 Financial Highlights
- Revenue was $22.0 million for the second quarter of 2017, compared to $34.4 million for the
second quarter of 2016.
- Net loss was $1.3 million for the second quarter of 2017 or $0.03 per diluted share. For the second
quarter of 2016, net loss was $68.8 million or $1.65 per diluted share.
|
|
|
Q2 2016 |
|
|
Q2 2017 |
| Revenue |
|
|
$34.4 million |
|
|
$22.0 million |
| Non-GAAP Results 1 : |
|
|
|
|
|
|
| Enterprise Revenue 2 |
|
|
$26.3 million |
|
|
$17.2 million |
| Adjusted OIBA |
|
|
($1.6) million |
|
|
($0.3) million |
| Adjusted EBITDA |
|
|
($0.8) million |
|
|
$0.4 million |
| Cash Balance |
|
|
$106 million |
|
|
$102 million |
- Adjusted non-GAAP earnings (loss) per share1 for the second quarter of 2017 was
($0.01), compared to ($0.02) for the second quarter of 2016.
- During the second quarter of 2017, YP contributed $4.8 million in revenue, compared to $8.1 million
in the second quarter of 2016.
|
|
|
|
|
1
|
|
|
Reconciliations of non-GAAP measures are included in the financial tables attached to this press
release and we encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures.
|
|
2
|
|
|
Enterprise Revenue represents total revenue less revenue generated from our contracts with
YP.
|
|
|
|
|
Strategic Priorities Update
-
Accelerate Product Innovation. Marchex Audience Targeting launched in July 2017 is a new solution that
leverages real customer interactions to automatically build high value audience segments for display and social media
platforms. By helping brands understand who is calling, and what they’re calling about, Marchex Audience Targeting empowers
marketers with the ability to target high intent audiences with their Facebook and display campaigns. Marketers can
fine-tune campaigns down to specific audience segments that are most likely to convert to customers, or find new segments and
opportunities that haven’t been targeted before.
Marchex Search Essentials launched in June 2017 is a new version of our leading Search Analytics
previously targeted to enterprise-level companies with large marketing budgets. Marchex Search Essentials is available to all
companies of all sizes to maximize spend and increase ROI on paid search campaigns. Marchex Search Essentials helps eliminate a
major blind spot for marketers by attributing inbound phone calls to paid search keywords and as a result, marketers have the
insights they need to make real time adjustments to drive stronger, more efficient performance for their paid search campaigns.
Independent Research Study highlights the value of customers that call. In July 2017, Marchex announced the
results of an industry survey that helps marketers invest their marketing spend and increase their return on investment. Based
on a survey of marketing decision makers, the study from Forrester Consulting showed that customers who call a business are the
most valuable prospects for a business. The report found that phone customers convert faster, spend more, and have a higher
retention rate than customers who contact brands via other channels such as in-store or on-line. The report can be downloaded here.
- Expand Strategic Partnerships. New integrations with Adobe Analytics Cloud, announced in June
2017, enable marketers to both increase sales and retain customers by better understanding how customers and prospects interact
with their brands. Marchex was also promoted to Business partner in the Adobe Exchange partner program for Adobe Experience
Cloud.
“While we have continued to focus on stabilizing the business and laying the foundation to return the company to growth, I am
pleased to report that the company returned to positive operating cash generation in the second quarter,” said Michael Arends,
Chief Financial Officer. “We are expanding our product pipeline and strategic partnership base while we continue to focus on adding
to and growing our base of customer relationships. These initiatives are building blocks for putting Marchex back on a path to long
term growth.”
Business Outlook
The following forward-looking statements reflect Marchex's expectations as of August 2, 2017.
|
Financial Guidance for the Third Quarter ending September 30,
2017
|
|
|
|
| Revenue |
|
$21 million or more |
| Adjusted OIBA1 |
|
a loss of $1 million or better |
| Adjusted EBITDA1 |
|
breakeven or better |
Conference Call and Webcast Information
Management will hold a conference call, starting at 5:00 p.m. ET on Wednesday, August 2, 2017, to discuss its second quarter
ended June 30, 2017 financial results and other company updates. Access to the live webcast of the conference call will be
available online from the Investors section of Marchex’s website at www.marchex.com. An archived version of the webcast will also be available at the same location, beginning two
hours after completion of the call.
About Marchex
Marchex understands the best customers are those who call your company - they convert faster, buy more, and
churn less. Marchex provides solutions that help companies drive more calls, understand what happens on those calls, and convert
more of those callers into customers. Our actionable intelligence strengthens the connection between companies and their customers,
bridging the physical and digital world, to help brands maximize their marketing investments and operating efficiencies to acquire
the best customers.
Please visit http://www.marchex.com, www.marchex.com/blog or @marchex on Twitter (Twitter.com/Marchex), where Marchex discloses material information from time to time about the company, its
financial information, and its business.
Forward-Looking Statements:
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other
than statements of historical facts, included in this press release regarding our strategy, future operations, future financial
position, future revenues, other financial guidance, acquisitions, dispositions, projected costs, prospects, plans and objectives
of management are forward-looking statements. We may not actually achieve the plans, intentions, or expectations disclosed in our
forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events
could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. There are
a number of important factors that could cause Marchex's actual results to differ materially from those indicated by such
forward-looking statements including but not limited to product demand, order cancellations and delays, competition and general
economic conditions. These factors are described in greater detail in the "Risk Factors" section of our most recent periodic report
and registration statement filed with the SEC. All of the information provided in this release is as of August 2, 2017 and Marchex
undertakes no duty to update the information provided herein.
This press release may contain links to third party websites or materials. These 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 OIBA, Adjusted OIBA,
Adjusted EBITDA, and Adjusted non-GAAP earnings (loss) per share. Marchex also provides Enterprise Revenue, which represents
revenue excluding Yellowpages.com LLC (“YP”) revenue generating contracts and other Archeo related transition activities which were
insignificant.
OIBA represents income (loss) from operations excluding stock-based compensation expense.
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 acquisition and
disposition related costs and impairment of goodwill, as these items are not indicative of Marchex’s recurring core operating
results. 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, acquisition and disposition related costs,
and impairment of goodwill. Adjusted EBITDA represents income (loss) before interest,
income taxes, depreciation, amortization, stock compensation expense, acquisition and disposition related costs, and impairment of
goodwill. 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 EBITDA and Enterprise Revenue to help with comparative financial
evaluation to make informed investment decisions. Adjusted non-GAAP earnings (loss) per
share 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) acquisition and disposition related costs, (3) interest and other income
(expense), and (4) impairment of goodwill. Financial analysts and investors may use Adjusted non-GAAP earnings (loss) per
share to analyze Marchex's financial performance since these groups have historically used EPS related measures, along with other
measures, to estimate the value of a company, to make informed investment decisions, and to evaluate a company's operating
performance compared to that of other companies in its industry.
Marchex's management believes that investors should have access to, and Marchex is obligated to provide, the same set of tools
that management uses in analyzing the company's results. These non-GAAP measures should be considered in addition to results
prepared in accordance with GAAP, and should not be considered in isolation, as a substitute for, or superior to, GAAP results.
Marchex’s non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar
titled terms used by other companies, and accordingly, care should be exercised in understanding how Marchex defines its non-GAAP
financial measures in this release. Marchex endeavors to compensate for the limitations of the non-GAAP measures presented by
providing the comparable GAAP measure with equal or greater prominence, GAAP financial statements, and detailed descriptions of the
reconciling items and adjustments, including quantifying such items, to derive the non-GAAP measure.
|
|
| MARCHEX, INC. AND SUBSIDIARIES |
|
| Condensed Consolidated Statements of Operations |
|
| (in thousands, except per share amounts) |
|
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
| Revenue |
|
$ |
34,412 |
|
|
$ |
22,016 |
|
|
$ |
70,397 |
|
|
$ |
46,391 |
|
| Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Service costs (1) |
|
|
20,477 |
|
|
|
12,175 |
|
|
|
42,459 |
|
|
|
25,773 |
|
| Sales and marketing (1) |
|
|
5,649 |
|
|
|
3,471 |
|
|
|
11,171 |
|
|
|
8,463 |
|
| Product development (1) |
|
|
7,555 |
|
|
|
4,283 |
|
|
|
15,027 |
|
|
|
9,553 |
|
| General and administrative (1) |
|
|
5,833 |
|
|
|
3,394 |
|
|
|
10,495 |
|
|
|
7,424 |
|
| Acquisition and disposition related costs |
|
|
304 |
|
|
|
— |
|
|
|
308 |
|
|
|
— |
|
| Total operating expenses |
|
|
39,818 |
|
|
|
23,323 |
|
|
|
79,460 |
|
|
|
51,213 |
|
| Impairment of goodwill |
|
|
(63,305 |
) |
|
|
— |
|
|
|
(63,305 |
) |
|
|
— |
|
| Loss from operations |
|
|
(68,711 |
) |
|
|
(1,307 |
) |
|
|
(72,368 |
) |
|
|
(4,822 |
) |
| Interest income (expense) and other, net |
|
|
(68 |
) |
|
|
40 |
|
|
|
(75 |
) |
|
|
57 |
|
| Loss before provision for income taxes |
|
|
(68,779 |
) |
|
|
(1,267 |
) |
|
|
(72,443 |
) |
|
|
(4,765 |
) |
| Income tax expense |
|
|
12 |
|
|
|
13 |
|
|
|
25 |
|
|
|
25 |
|
| Net loss applicable to common stockholders |
|
$ |
(68,791 |
) |
|
$ |
(1,280 |
) |
|
$ |
(72,468 |
) |
|
$ |
(4,790 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per Class A and Class B share applicable
to common stockholders
|
|
$ |
(1.65 |
) |
|
$ |
(0.03 |
) |
|
$ |
(1.75 |
) |
|
$ |
(0.11 |
) |
|
Shares used to calculate basic net loss per share applicable to
common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Class A |
|
|
5,233 |
|
|
|
5,056 |
|
|
|
5,233 |
|
|
|
5,056 |
|
| Class B |
|
|
36,499 |
|
|
|
37,698 |
|
|
|
36,238 |
|
|
|
37,435 |
|
|
Shares used to calculate diluted net loss per share applicable
to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Class A |
|
|
5,233 |
|
|
|
5,056 |
|
|
|
5,233 |
|
|
|
5,056 |
|
| Class B |
|
|
41,732 |
|
|
|
42,754 |
|
|
|
41,471 |
|
|
|
42,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) Includes stock-based compensation allocated as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Service costs |
|
$ |
207 |
|
|
$ |
130 |
|
|
$ |
405 |
|
|
$ |
255 |
|
| Sales and marketing |
|
|
529 |
|
|
|
63 |
|
|
|
968 |
|
|
|
469 |
|
| Product development |
|
|
629 |
|
|
|
207 |
|
|
|
1,161 |
|
|
|
298 |
|
| General and administrative |
|
|
2,136 |
|
|
|
581 |
|
|
|
2,933 |
|
|
|
1,316 |
|
| Total |
|
$ |
3,501 |
|
|
$ |
981 |
|
|
$ |
5,467 |
|
|
$ |
2,338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| MARCHEX, INC. AND SUBSIDIARIES |
|
| Condensed Consolidated Balance Sheets |
|
| (in thousands) |
|
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
June 30, |
|
|
|
2016 |
|
|
2017 |
|
| Assets |
|
|
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
103,950 |
|
|
$ |
102,429 |
|
| Accounts receivable, net |
|
|
18,922 |
|
|
|
15,461 |
|
| Prepaid expenses and other current assets |
|
|
1,531 |
|
|
|
2,004 |
|
| Refundable taxes |
|
|
98 |
|
|
|
94 |
|
| Total current assets |
|
|
124,501 |
|
|
|
119,988 |
|
| Property and equipment, net |
|
|
3,557 |
|
|
|
2,962 |
|
| Other assets, net |
|
|
214 |
|
|
|
329 |
|
| Total assets |
|
$ |
128,272 |
|
|
$ |
123,279 |
|
| Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
6,811 |
|
|
$ |
5,098 |
|
| Accrued expenses and other current liabilities |
|
|
7,707 |
|
|
|
6,469 |
|
| Deferred revenue |
|
|
349 |
|
|
|
337 |
|
| Total current liabilities |
|
|
14,867 |
|
|
|
11,904 |
|
| Other non-current liabilities |
|
|
134 |
|
|
|
540 |
|
| Total liabilities |
|
|
15,001 |
|
|
|
12,444 |
|
| Stockholders’ equity: |
|
|
|
|
|
|
|
|
| Class A common stock |
|
|
53 |
|
|
|
53 |
|
| Class B common stock |
|
|
380 |
|
|
|
385 |
|
| Treasury stock |
|
|
- |
|
|
|
(2 |
) |
| Additional paid-in capital |
|
|
360,422 |
|
|
|
362,810 |
|
| Accumulated deficit |
|
|
(247,584 |
) |
|
|
(252,411 |
) |
| Total stockholders’ equity |
|
|
113,271 |
|
|
|
110,835 |
|
| Total liabilities and stockholders’ equity |
|
$ |
128,272 |
|
|
$ |
123,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| MARCHEX, INC. AND SUBSIDIARIES |
|
| (in thousands) |
|
| (unaudited) |
|
|
|
| Reconciliation of GAAP Loss from Operations to Operating Loss Before
Amortization (OIBA) |
|
| and Adjusted Operating Loss Before Amortization (Adjusted OIBA) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
| Loss from operations |
|
$ |
(68,711 |
) |
|
$ |
(1,307 |
) |
|
$ |
(72,368 |
) |
|
$ |
(4,822 |
) |
| Stock-based compensation |
|
|
3,501 |
|
|
|
981 |
|
|
|
5,467 |
|
|
|
2,338 |
|
| Operating loss before amortization (OIBA) |
|
|
(65,210 |
) |
|
|
(326 |
) |
|
|
(66,901 |
) |
|
|
(2,484 |
) |
| Acquisition and disposition related costs |
|
|
304 |
|
|
|
— |
|
|
|
308 |
|
|
|
— |
|
| Impairment of goodwill |
|
|
63,305 |
|
|
|
— |
|
|
|
63,305 |
|
|
|
— |
|
| Adjusted operating loss before amortization (Adjusted OIBA)
1 |
|
$ |
(1,601 |
) |
|
$ |
(326 |
) |
|
$ |
(3,288 |
) |
|
$ |
(2,484 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation from Net Cash used in Operating Activities to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
| Net cash provided by (used in) operating activities |
|
$ |
(386 |
) |
|
$ |
254 |
|
|
$ |
(2,653 |
) |
|
$ |
(624 |
) |
| Changes in assets and liabilities |
|
|
(785 |
) |
|
|
174 |
|
|
|
647 |
|
|
|
(350 |
) |
| Income tax expense |
|
|
12 |
|
|
|
13 |
|
|
|
25 |
|
|
|
25 |
|
| Acquisition and disposition related costs |
|
|
304 |
|
|
|
— |
|
|
|
308 |
|
|
|
— |
|
| Interest (income) expense and other, net |
|
|
68 |
|
|
|
(40 |
) |
|
|
75 |
|
|
|
(57 |
) |
| Adjusted EBITDA 1 |
|
$ |
(787 |
) |
|
$ |
401 |
|
|
$ |
(1,598 |
) |
|
$ |
(1,006 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash used in investing activities |
|
$ |
(119 |
) |
|
$ |
(906 |
) |
|
$ |
(594 |
) |
|
$ |
(912 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash provided by (used in) financing activities |
|
$ |
(321 |
) |
|
$ |
9 |
|
|
$ |
(131 |
) |
|
$ |
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
Includes reorganization costs of approximately $700,000 in Q1 2017. |
|
|
|
|
|
|
|
Reconciliation from Revenue to Enterprise Revenue
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
2017 |
| Revenue |
|
$ |
34,412 |
|
|
$ |
22,016 |
|
|
$ |
70,397 |
|
|
$ |
46,391 |
| Less: YP Revenue |
|
|
8,091 |
|
|
|
4,829 |
|
|
|
16,610 |
|
|
|
10,232 |
| Less: Other |
|
|
— |
|
|
|
— |
|
|
|
21 |
|
|
|
— |
| Enterprise Revenue2 |
|
$ |
26,321 |
|
|
$ |
17,187 |
|
|
$ |
53,766 |
|
|
$ |
36,159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2 |
|
|
Enterprise Revenue represents total revenue less revenue generated from our contracts
with YP and other Archeo related transition activities. |
|
|
|
|
|
|
|
| MARCHEX, INC. AND SUBSIDIARIES |
|
| Reconciliation of GAAP Net Loss per Share to Adjusted Non-GAAP Loss
per Share |
|
| (in thousands, except per share amounts) |
|
| (unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
| Adjusted Non-GAAP loss per share |
|
$ |
(0.02 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share applicable to common stockholders - diluted
(GAAP loss per share)
|
|
$ |
(1.65 |
) |
|
$ |
(0.03 |
) |
|
$ |
(1.75 |
) |
|
$ |
(0.11 |
) |
|
Shares used to calculate diluted net loss per share applicable to
common stockholders
|
|
|
41,732 |
|
|
|
42,754 |
|
|
|
41,471 |
|
|
|
42,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss applicable to common stockholders |
|
$ |
(68,791 |
) |
|
$ |
(1,280 |
) |
|
$ |
(72,468 |
) |
|
$ |
(4,790 |
) |
| Stock-based compensation |
|
|
3,501 |
|
|
|
981 |
|
|
|
5,467 |
|
|
|
2,338 |
|
| Acquisition and disposition related costs |
|
|
304 |
|
|
|
— |
|
|
|
308 |
|
|
|
— |
|
| Impairment of goodwill |
|
|
63,305 |
|
|
|
— |
|
|
|
63,305 |
|
|
|
— |
|
| Interest (income) expense and other, net |
|
|
68 |
|
|
|
(40 |
) |
|
|
75 |
|
|
|
(57 |
) |
| Estimated impact of income taxes |
|
|
746 |
|
|
|
115 |
|
|
|
1,093 |
|
|
|
829 |
|
| Adjusted Non-GAAP loss |
|
$ |
(867 |
) |
|
$ |
(224 |
) |
|
$ |
(2,220 |
) |
|
$ |
(1,680 |
) |
| Adjusted Non-GAAP loss per share |
|
$ |
(0.02 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to calculate diluted net loss per share applicable to
common stockholders (GAAP) and Adjusted Non-GAAP loss per share
|
|
|
41,732 |
|
|
|
42,754 |
|
|
|
41,471 |
|
|
|
42,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marchex Investor Relations
Trevor Caldwell, 206-331-3600
ir(at)marchex.com
or
MEDIA INQUIRIES
Marchex Corporate Communications
206-331-3434, pr(at)marchex.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170802006297/en/