Marchex, Inc. (NASDAQ: MCHX), the award-winning AI-powered
conversation intelligence company that helps businesses turn
strategic insights into the actions that drive their most valued
sales outcomes, today announced its financial results for the first
quarter ended March 31, 2023.
Q1 2023 Financial Highlights
- GAAP revenue was $12.2 million for the first quarter of 2023
compared to $13.2 million for the first quarter of 2022.
- Net loss was $4.5 million for the first quarter of 2023 or
$0.11 per diluted share compared to a net loss of $1.6 million or
$0.04 per diluted share for the first quarter of 2022.
Q1 2022
Q1 2023
GAAP Revenue
$13.2 million
$12.2 million
Non-GAAP Results:
Adjusted EBITDA*
$151,000
($2.8) million
*
Adjusted EBITDA includes approximately
$800,000 of reorganization costs. Excluding these amounts would
result in Adjusted EBITDA totaling ($2.0) million dollars
- Adjusted non-GAAP income (loss) per share for the first quarter
of 2023 was ($0.08) compared to ($0.01) for the first quarter of
2022.
First Quarter Summary:
- New Customer Traction and Existing Customer Expansion.
During the first quarter of 2023, Marchex signed a long-term,
multi-year extension with an existing auto brand customer and won
an additional long-term, multi-year agreement with a new auto
brand. Under the parameters of both agreements, there is
significant growth potential over time. The company also signed a
multi-year extension with a small business listing and solutions
provider that primarily sells marketing services to local
businesses.
- Conversation Volumes. Overall conversation volumes in
the first quarter of 2023 were down on a year-over-year basis, due
in part to some customers being impacted by inflationary pressures,
customer churn and pressure from other overall macroeconomic
factors.
- Accelerate Product Innovation. Marchex recently launched
Spotlight for Automotive, a key addition to the company’s
conversation intelligence platform. Spotlight identifies failed
calls and enables users to easily measure call handling, campaign,
and seller performance results against company benchmarks, to
determine how individual locations and teams perform nationally,
regionally, and locally. Spotlight can measure across a brand or
network of business locations, all the way down to localized dealer
and department levels, providing guided observations directing
users where to take needed actions to improve performance and
increase sales.
“In the first quarter, Marchex continued to make progress
signing new customers and extending relationships with existing
large enterprise customers,” said Edwin Miller, CEO. “I have spent
my first months getting to know the team and meeting with as many
customers as possible. The company is at an inflection point with
the confluence of several factors: A number of industries that are
core to Marchex are dealing with disruption from transformational
industry trends and innovative disruptors that are redesigning the
purchase funnel. Based on those customer conversations and our
progress in the first quarter, I see many of our large enterprise
customers looking to and leaning on Marchex to help them meet these
challenges. With these factors in mind, I believe there is a
significant opportunity to build a much larger business at Marchex.
Over the coming quarters, we will continue to optimize Marchex’s
organization to extend our leadership in core verticals to
accelerate growth and profitability.”
Business Outlook
The following forward-looking statements reflect Marchex's
expectations as of May 4, 2023.
“Consistent with the fourth quarter of 2022, certain customer
segments continued to face conversation volume pressure in the
first quarter of 2023 and that continues today,” said Mike Arends,
Vice Chairman. “Despite this, we anticipate that sales traction
will lead revenue to increase modestly relative to the first
quarter of 2023. Additionally, excluding the impact of
restructuring expenditures for operating activity modifications, we
anticipate that Adjusted EBITDA should improve meaningfully in the
second quarter compared to the first quarter of 2023.
In 2023, looking at the recent customer wins and expected
ramping of existing customer relationships, we anticipate that
revenue should increase throughout 2023. We also believe, as
revenue ramps, that we should make meaningful progress on
profitability measures in the remainder of the year, potentially
reaching break-even on an Adjusted EBITDA basis in the second half
of the year. In addition, as we see sales traction and make further
progress on technology infrastructure initiatives, we continue to
believe that we can see growth accelerate and potentially increase
significantly our operating leverage over time,” said Arends.
Management will hold a conference call, starting at 5:00 p.m. ET
on Thursday, May 4, 2023, to discuss its first quarter March
31, 2023, 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 two hours after completion of the call.
About Marchex
Marchex’s award-winning conversation intelligence platform,
featuring AI-powered sales engagement and marketing solutions,
helps businesses turn strategic insights into the actions that
drive their most valued sales outcomes. Our multichannel voice and
text capabilities enable sales and marketing teams to deliver the
buying experiences that today’s customers expect. Marchex is the
trusted conversation intelligence partner for market-leading
companies in critical industries, including many of the world’s
most innovative and successful brands.
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 May 4, 2023, 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 EBITDA, Adjusted
OIBA, and Adjusted non-GAAP income (loss) per share.
Adjusted EBITDA represents net
income (loss) before (1) interest, (2) income taxes, (3)
amortization of intangible assets from acquisitions, (4)
depreciation and amortization, (5) stock-based compensation
expense, and (6) acquisition and disposition-related costs
(benefit). Marchex believes that Adjusted EBITDA is an alternative
measure used by our management to understand and evaluate our core
operating performance and trends, and that provides meaningful
supplemental information regarding performance and evaluating
performance and liquidity to measure its ability to fund operations
and its financing obligations.
Adjusted OIBA represents Adjusted
EBITDA adjusted for depreciation and amortization. This measure,
among other things, is another metric 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 as detailed above. Financial analysts and
investors may use Adjusted EBITDA and Adjusted OIBA 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 and disposition related costs
(benefit), (3) amortization of intangible assets from acquisitions,
and (4) interest income and other, net. 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 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 March
31,
2022
2023
Revenue
$
13,171
$
12,216
Expenses:
Service costs (1)
4,935
5,424
Sales and marketing (1)
3,165
3,970
Product development (1)
3,460
4,164
General and administrative (1)
2,606
2,617
Amortization of intangible assets from
acquisitions
531
531
Acquisition and disposition-related
costs
5
13
Total operating expenses
14,702
16,719
Loss from operations
(1,531
)
(4,503
)
Interest income (expense) and other,
net
(21
)
57
Loss before provision for income taxes
(1,552
)
(4,446
)
Income tax expense
30
30
Net loss
(1,582
)
(4,476
)
Net loss applicable to common
stockholders
$
(1,582
)
$
(4,476
)
Basic and diluted net loss per Class A and
Class B share applicable to common stockholders
$
(0.04
)
$
(0.11
)
Shares used to calculate basic net loss
per share applicable to common stockholders
Class A
4,661
4,661
Class B
38,666
37,835
Shares used to calculate diluted net loss
per share applicable to common stockholders:
Class A
4,661
4,661
Class B
43,327
42,496
(1) Includes stock-based compensation
allocated as follows:
Service costs
$
34
$
45
Sales and marketing
191
263
Product development
82
86
General and administrative
388
405
Total
$
695
$
799
MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (in thousands)
(unaudited)
December 31,
March 31,
2022
2023
Assets
Current assets:
Cash and cash equivalents
$
20,474
$
15,710
Accounts receivable, net
8,396
8,047
Prepaid expenses and other current
assets
2,015
2,397
Total current assets
30,885
26,154
Property and equipment, net
4,050
4,530
Right-of-use lease asset
738
495
Other assets, net
973
1,118
Goodwill
17,558
17,558
Intangible assets from acquisitions,
net
2,590
2,059
Total assets
$
56,794
$
51,914
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
2,037
$
1,342
Accrued benefits and payroll
3,566
2,981
Other accrued expenses and current
liabilities
3,825
4,261
Deferred revenue and deposits
1,384
1,676
Right of use liability, current
1,252
189
Finance lease, current
—
161
Total current liabilities
12,064
10,610
Deferred tax liabilities
233
232
Finance lease, non-current
-
290
Right of use liability non-current
385
336
Total liabilities
12,682
11,468
Stockholders’ equity:
Class A common stock
49
49
Class B common stock
385
387
Additional paid-in capital
354,999
355,807
Accumulated deficit
(311,321
)
(315,797
)
Total stockholders’ equity
44,112
40,446
Total liabilities and stockholders’
equity
$
56,794
$
51,914
MARCHEX, INC. AND SUBSIDIARIES
(in thousands) (unaudited) Reconciliation of GAAP Net Loss to
Adjusted EBITDA and Adjusted Operating Income (Loss) Before
Amortization (OIBA)
Three Months Ended March
31,
2022
2023
Net loss applicable to common
stockholders
$
(1,582
)
$
(4,476
)
Interest income (expense) and other,
net
21
(57
)
Income tax expense
30
30
Amortization of intangible assets from
acquisitions
531
531
Depreciation and amortization
451
359
Stock-based compensation
695
799
Acquisition and disposition-related
costs
5
13
Adjusted EBITDA
$
151
$
(2,801
)
Depreciation and amortization
451
359
Adjusted OIBA
$
(300
)
$
(3,160
)
MARCHEX, INC. AND SUBSIDIARIES
(in thousands) (unaudited) Reconciliation of GAAP Net Loss per
Share to Adjusted Non-GAAP Loss
Three Months Ended March
31,
2022
2023
Net loss applicable to common
stockholders, diluted
$
(0.04
)
$
(0.11
)
Stock-based compensation
0.02
0.02
Acquisition and disposition-related
costs
-
-
Amortization of intangible assets from
acquisitions
0.01
0.01
Interest income and other, net
-
-
Adjusted non-GAAP loss per
share
$
(0.01
)
$
(0.08
)
Shares used to calculate diluted net loss
per share applicable to common stockholders (GAAP) and Adjusted
Non-GAAP loss per share
43,327
42,496
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20230504005818/en/
Trevor Caldwell Marchex Investor Relations Telephone:
206.331.3600 Email: ir@marchex.com
Or
MEDIA INQUIRIES Marchex Corporate Communications
Telephone: 206.331.3434 Email: pr(at)marchex.com
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