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
second quarter ended June 30, 2023.
Q2 2023 Financial
Highlights
- GAAP revenue was $12.5 million for the second quarter of 2023
compared to $13.5 million for the second quarter of 2022.
- Net loss was $2.7 million for the second quarter of 2023 or
$0.06 per diluted share compared to a net loss of $1.5 million or
$0.03 per diluted share for the second quarter of 2022.
Q2 2022
Q2 2023
GAAP Revenue
$13.5
million
$12.5
million
Non-GAAP Results:
Adjusted EBITDA*
$167,000
$(1.0)
million
*Adjusted EBITDA includes approximately
$500,000 of reorganization costs. Excluding these amounts would
result in Adjusted EBITDA totaling ($550,000) dollars.
- Adjusted non-GAAP income (loss) per share for the second
quarter of 2023 was $(0.03) compared to $(0.01) for the second
quarter of 2022.
Second Quarter Summary:
- New Customer Traction and Existing Customer Expansion.
Marchex saw traction with new enterprise customers across multiple
product lines in several verticals, including Home Services, Auto,
Auto Services and others.
- Conversation Volumes. Overall conversation volumes in
the second quarter of 2023 were down on a year-over-year basis, due
in part to some customers being impacted by customer churn and
pressure from other overall macroeconomic factors. However, volumes
within certain verticals, like auto, showed progress when compared
to the first quarter of 2023.
- Accelerate Product Innovation.
- Marchex Wins 2023 Artificial Intelligence Breakthrough Award
for “Best AI-Based Solution for Sales.” AI Breakthrough is a
leading market intelligence organization that recognizes the top
companies, technologies and products in the global Artificial
Intelligence (AI) market today. This year’s program attracted more
than 3,200 nominations from over 20 different countries throughout
the world. The mission of the AI Breakthrough Awards is to honor
excellence and recognize innovation, hard work and success in a
range of AI and machine learning related categories, including
Generative AI, Computer Vision, AIOps, Deep Learning, Robotics,
Natural Language Processing, industry specific AI applications and
many more. Marchex Engage for Automotive is a powerful sales
enablement solution that leverages AI, specifically natural
language processing and machine learning, to empower dealership
sales teams and enhance the buying experience for consumers. By
unlocking the content of conversations with car buyers who are
highly likely to make a purchase, this solution provides dealership
sales teams and vehicle manufacturing customers with the insights
and tools they need to close more deals and drive revenue
growth.
- Marchex Wins 2023 APPEALIE SaaS Customer Success Award.
For the second consecutive year, Marchex won the customer success
award from APPEALIE. APPEALIE SaaS Awards honor customer-obsessed
SaaS platforms and success stories that deliver extraordinary
experiences and results. The SaaS Customer Success Award category
winners are selected from entrants who are able to demonstrate the
best customer success stories and outcomes. Marchex received the
award for the use of its conversation intelligence capabilities to
help a digital marketing agency that runs call-based campaigns on
behalf of thousands of local businesses and multi-location
organizations across the country who rely on channel attribution
with automation and to improve data quality with integration.
Through Marchex's products, this digital marketing agency is able
to reap significant cost and time savings every month that they are
able to redeploy for more strategic work.
- During the second quarter, Marchex 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 second quarter Marchex continued to make significant
progress,” said Edwin Miller, CEO. “We have aligned several facets
of the company in the last few months to take advantage of the most
meaningful opportunities we see in what is a multibillion-dollar
market with Conversational AI. From the executive team to other
functions within the company, we are reorganizing to accelerate
Marchex’s progress. I am proud of the team and have seen amazing
effort and alignment in a very short period of time. These
initiatives will help us achieve profitability earlier than we
previously anticipated. In addition, these efforts are focused on
enabling us to move even faster as a company, faster to innovate,
faster to deliver new products and faster to serve our customers. I
am excited about building a much larger company and believe Marchex
has an opportunity to emerge as an important leader in this dynamic
market.”
Business Outlook
The following forward-looking statements reflect Marchex's
expectations as of August 3, 2023.
“Consistent with the first quarter of 2023, we continued to face
conversation volume pressure in the second quarter of 2023 in
certain customer segments,” said Mike Arends, Vice Chairman. “With
that said, in the third quarter we anticipate that sales traction
will lead to modest growth in revenue relative to the second
quarter of 2023. With our current expected progress so far this
year, we anticipate to be at or near breakeven on an Adjusted
EBITDA basis for the third quarter, including break-even or above
levels in September.”
In addition, based on current customer momentum, we continue to
believe that we will see revenue growth in our back half of the
year versus the first half of 2023 and we continue to believe that
our traction within the automotive vertical can lead to
double-digit growth on an annualized run rate year-over-year basis
by the end of 2023 within that vertical. As we believe we will see
sales traction and make further progress on technology
infrastructure initiatives for the remainder of this year and into
next year, we continue to believe that we can see revenue growth
and potentially increase our operating leverage over time,” said
Arends.
Management will hold a conference call, starting at 5:00 p.m. ET
on Thursday, August 3, 2023, to discuss its second quarter June
30, 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 August 3, 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, (6) acquisition and disposition-related costs (benefit),
and (7) foreign government assistance subsidies. 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,
(4) interest income and other, net, and (5) foreign government
assistance subsidies. 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 June
30,
Six Months Ended June
30,
2022
2023
2022
2023
Revenue
$
13,510
$
12,522
$
26,681
$
24,738
Expenses:
Service costs (1)
4,864
5,418
9,799
10,842
Sales and marketing (1)
3,619
2,631
6,784
6,601
Product development (1)
3,531
4,096
6,991
8,260
General and administrative (1)
2,440
2,546
5,046
5,163
Amortization of intangible assets from
acquisitions
531
531
1,062
1,062
Acquisition and disposition-related
costs
22
(1
)
27
12
Total operating expenses
15,007
15,221
29,709
31,940
Loss from operations
(1,497
)
(2,699
)
(3,028
)
(7,202
)
Interest income (expense) and other,
net
17
(31
)
(4
)
26
Loss before provision for income taxes
(1,480
)
(2,730
)
(3,032
)
(7,176
)
Income tax expense
51
14
81
44
Net loss
(1,531
)
(2,744
)
(3,113
)
(7,220
)
Net loss applicable to common
stockholders
$
(1,531
)
$
(2,744
)
$
(3,113
)
$
(7,220
)
Basic and diluted net loss per Class A and
Class B share applicable to common stockholders
$
(0.03
)
$
(0.06
)
$
(0.07
)
$
(0.17
)
Shares used to calculate basic net loss
per share applicable to common stockholders
Class A
4,661
4,661
4,661
4,661
Class B
38,696
37,840
38,670
37,837
Shares used to calculate diluted net loss
per share applicable to common stockholders:
Class A
4,661
4,661
4,661
4,661
Class B
43,357
42,501
43,331
42,498
(1) Includes stock-based compensation
allocated as follows:
Service costs
$
45
$
(45
)
$
79
$
—
Sales and marketing
200
228
391
491
Product development
76
47
158
133
General and administrative
393
471
781
876
Total
$
714
$
701
$
1,409
$
1,500
MARCHEX, INC. AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(in thousands)
(unaudited)
December 31,
June 30,
2022
2023
Assets
Current assets:
Cash and cash equivalents
$
20,474
$
14,122
Accounts receivable, net
8,396
7,724
Prepaid expenses and other current
assets
2,015
2,200
Total current assets
30,885
24,046
Property and equipment, net
4,050
4,669
Right-of-use lease asset
738
1,858
Other assets, net
973
1,064
Goodwill
17,558
17,558
Intangible assets from acquisitions,
net
2,590
1,528
Total assets
$
56,794
$
50,723
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
2,037
$
915
Accrued benefits and payroll
3,566
2,903
Other accrued expenses and current
liabilities
3,825
4,194
Deferred revenue and deposits
1,384
1,441
Right of use liability, current
1,252
443
Finance lease, current
—
264
Total current liabilities
12,064
10,160
Deferred tax liabilities
233
257
Finance lease, non-current
-
443
Right of use liability non-current
385
1,453
Total liabilities
12,682
12,313
Stockholders’ equity:
Class A common stock
49
49
Class B common stock
385
387
Additional paid-in capital
354,999
356,515
Accumulated deficit
(311,321
)
(318,541
)
Total stockholders’ equity
44,112
38,410
Total liabilities and stockholders’
equity
$
56,794
$
50,723
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 June
30,
Six Months Ended June
30,
2022
2023
2022
2023
Net loss applicable to common
stockholders
$
(1,531
)
$
(2,744
)
$
(3,113
)
$
(7,220
)
Interest expense (income) and other,
net
(17
)
31
4
(26
)
Income tax expense
51
14
81
44
Amortization of intangible assets from
acquisitions
531
531
1,062
1,062
Depreciation and amortization
407
422
858
780
Stock-based compensation
714
701
1,409
1,500
Acquisition and disposition-related
costs
22
(1
)
27
12
Foreign government paycheck assistance and
rent subsidies1
(10
)
—
(10
)
—
Adjusted EBITDA
$
167
$
(1,046
)
$
318
$
(3,848
)
Depreciation and amortization
407
422
858
780
Adjusted OIBA
$
(240
)
$
(1,468
)
$
(540
)
$
(4,628
)
1 Includes pandemic related wage and rent relief subsidies,
recognized as a reduction of wages or rent during the period
received
MARCHEX, INC. AND SUBSIDIARIES
(in thousands)
(unaudited)
Reconciliation of GAAP Net
Loss per Share to Adjusted Non-GAAP Loss
Three Months Ended June
30,
Six Months Ended June
30,
2022
2023
2022
2023
Net loss applicable to common
stockholders, diluted
$
(0.03
)
$
(0.06
)
$
(0.07
)
$
(0.17
)
Stock-based compensation
0.01
0.02
0.04
0.03
Acquisition and disposition-related
costs
-
-
-
-
Amortization of intangible assets from
acquisitions
0.01
0.01
0.02
0.03
Interest income (expense) and other,
net
-
-
-
-
Foreign government paycheck assistance and
rent subsidies
-
-
-
-
Adjusted non-GAAP loss per
share
$
(0.01
)
$
(0.03
)
$
(0.01
)
$
(0.11
)
Shares used to calculate diluted net loss
per share applicable to common stockholders (GAAP) and Adjusted
Non-GAAP loss per share
43,357
42,501
43,331
42,498
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803370525/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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