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 third
quarter ended September 30, 2023.
Q3 2023 Financial
Highlights
- GAAP revenue was $12.8 million for the third quarter of 2023
compared to $13.2 million for the third quarter of 2022.
- Net loss was $1.5 million for the third quarter of 2023 or
$0.04 per diluted share compared to a net loss of $1.6 million or
$0.04 per diluted share for the third quarter of 2022.
Q3 2022
Q3 2023
GAAP Revenue
$13.2 million
$12.8 million
Non-GAAP Results:
Adjusted EBITDA:
Breakeven
$370,000*
*Adjusted EBITDA includes approximately
$300,000 of reorganization costs. Excluding these amounts would
result in Adjusted EBITDA totaling $670,000 dollars.
- Adjusted non-GAAP loss per share for the third quarter of 2023
was $0.01 compared to $0.01 for the third quarter of 2022.
Recent Progress 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,
and Healthcare.
- Conversation Volumes. Overall conversation volumes in
the third quarter of 2023 showed modest improvement when compared
to the second quarter of 2023. On a year-over-year basis volumes
were down slightly, due in part to some customers being impacted by
underlying churn and pressure from other overall macroeconomic
factors.
- Company Hires CFO. The company announced that Holly
Aglio has joined the company as Chief Financial Officer. Aglio is a
seasoned financial leader, having served in multiple influential
financial management roles during her career, and will lead
Marchex’s finance and accounting organizations.
- Accelerate Product Innovation.
- Marchex Launches Generative AI-powered Call Summary and
Sentiment Suite Capabilities. The company announced the first
of its Generative AI-powered technology capabilities in its rapidly
expanding award-winning conversational intelligence platform.
Powered by generative AI, these new features analyze and generate
summaries of consumer-to-business calls, enabling businesses to
immediately identify customers who have had exceptionally good
experiences, as well as dissatisfied ones. This valuable data
empowers companies to capitalize on positive interactions by
advancing sales processes or encouraging positive online behaviors,
as well as take action to rectify concerns from dissatisfied
customers.
“In the third quarter and today, Marchex is making significant
progress with a number of initiatives that will help ensure
long-term leadership in the conversational intelligence market,”
said Edwin Miller, CEO. “We are moving to optimize our technology
capabilities to accelerate our ability to innovate and harness the
power of our significant conversational data to deliver new
AI-driven products and features for customers and prospects. These
initiatives will be the foundation of our long-term growth and
profitability. We are highly focused on our most tangible
opportunities, which we believe have the potential to grow into a
nine-figure business in the future. At the same time, our focus has
enabled us to achieve profitability on an adjusted EBITDA basis
earlier than expected this year. This also sets the stage for more
operating leverage as we grow revenue. I am proud of the team and
the significant effort we are making to take advantage of our
robust market opportunity.”
Business Outlook
The following forward-looking statements reflect Marchex's
expectations as of November 8, 2023.
For the fourth quarter ending December 31, 2023:
- Revenue is anticipated to be at or near third quarter 2023
levels.
- The company anticipates the auto vertical to deliver
double-digit growth on an annualized run rate year-over-year basis
by the end of the fourth quarter.
- Adjusted EBITDA is anticipated to be above break-even.
For the fiscal year 2024:
- The company anticipates revenue growth on a year-over-year
basis along with sequential progress.
- Adjusted EBITDA is anticipated to be above break-even
throughout the year.
“Despite what is traditionally a seasonally slower quarter for
many customers, in the fourth quarter we anticipate the business
will continue to make progress, grow year-over-year and remain
profitable on an adjusted EBITDA basis as we exit 2023. We look
forward to seeing what our current efforts can achieve as we move
into next year and deliver on key initiatives including our robust
product roadmap and vertical sales opportunities,” said Miller.
Management will hold a conference call, starting at 5:00 p.m. ET
on Wednesday, November 8, 2023, to discuss its third quarter
September 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 November 8, 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 September
30,
Nine Months Ended September
30,
2022
2023
2022
2023
Revenue
$
13,197
$
12,778
$
39,878
$
37,516
Expenses:
Service costs (1)
4,992
5,057
14,791
15,899
Sales and marketing (1)
3,388
2,319
10,172
8,920
Product development (1)
3,524
3,942
10,515
12,202
General and administrative (1)
2,351
2,249
7,397
7,412
Amortization of intangible assets from
acquisitions
531
531
1,593
1,593
Acquisition and disposition-related
costs
10
—
37
12
Total operating expenses
14,796
14,098
44,505
46,038
Loss from operations
(1,599
)
(1,320
)
(4,627
)
(8,522
)
Interest income (expense) and other,
net
37
(218
)
33
(192
)
Loss before provision for income taxes
(1,562
)
(1,538
)
(4,594
)
(8,714
)
Income tax expense (benefit)
(4
)
9
77
53
Net loss
(1,558
)
(1,547
)
(4,671
)
(8,767
)
Net loss applicable to common
stockholders
$
(1,558
)
$
(1,547
)
$
(4,671
)
$
(8,767
)
Basic and diluted net loss per Class A and
Class B share applicable to common stockholders
$
(0.04
)
$
(0.04
)
$
(0.11
)
$
(0.21
)
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
38,861
38,103
38,735
37,927
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
43,522
42,764
43,396
42,588
(1) Includes stock-based compensation
allocated as follows:
Service costs
$
46
$
—
$
125
$
—
Sales and marketing
205
89
596
580
Product development
58
(39
)
216
94
General and administrative
316
357
1,097
1,233
Total
$
625
$
407
$
2,034
$
1,907
MARCHEX, INC. AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(in thousands)
(unaudited)
December 31,
September 30,
2022
2023
Assets
Current assets:
Cash and cash equivalents
$
20,474
$
13,717
Accounts receivable, net
8,396
8,132
Prepaid expenses and other current
assets
2,015
2,107
Total current assets
30,885
23,956
Property and equipment, net
4,050
3,313
Right-of-use lease asset
738
1,745
Other assets, net
973
1,112
Assets held for sale
-
400
Goodwill
17,558
17,558
Intangible assets from acquisitions,
net
2,590
997
Total assets
$
56,794
$
49,081
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
2,037
$
1,177
Accrued benefits and payroll
3,566
2,990
Other accrued expenses and current
liabilities
3,825
3,762
Deferred revenue and deposits
1,384
1,212
Right of use liability, current
1,252
452
Finance lease, current
—
221
Total current liabilities
12,064
9,814
Deferred tax liabilities
233
233
Finance lease, non-current
-
424
Right of use liability non-current
385
1,336
Total liabilities
12,682
11,807
Stockholders’ equity:
Class A common stock
49
49
Class B common stock
385
387
Additional paid-in capital
354,999
356,926
Accumulated deficit
(311,321
)
(320,088
)
Total stockholders’ equity
44,112
37,274
Total liabilities and stockholders’
equity
$
56,794
$
49,081
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 September
30,
Nine Months Ended September
30,
2022
2023
2022
2023
Net loss applicable to common
stockholders
$
(1,558
)
$
(1,547
)
$
(4,671
)
$
(8,767
)
Interest expense (income) and other,
net
(37
)
218
(33
)
192
Income tax expense
(4
)
9
77
53
Amortization of intangible assets from
acquisitions
531
531
1,593
1,593
Depreciation and amortization
443
752
1,301
1,533
Stock-based compensation
625
407
2,034
1,907
Acquisition and disposition-related
costs
10
—
37
12
Foreign government paycheck assistance and
rent subsidies1
—
—
(10
)
—
Adjusted EBITDA
$
10
$
370
$
328
$
(3,477
)
Depreciation and amortization
443
752
1,301
1,533
Adjusted OIBA
$
(433
)
$
(382
)
$
(973
)
$
(5,010
)
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 Loss1
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2023
2022
2023
Net loss applicable to common
stockholders, diluted
$
(0.04
)
$
(0.04
)
$
(0.11
)
$
(0.21
)
Stock-based compensation
0.02
0.02
0.05
0.05
Acquisition and disposition-related
costs
-
-
-
-
Amortization of intangible assets from
acquisitions
0.01
0.01
0.04
0.04
Interest income (expense) and other,
net
-
-
-
-
Foreign government paycheck assistance and
rent subsidies
-
-
-
-
Adjusted non-GAAP loss per
share
$
(0.01
)
$
(0.01
)
$
(0.02
)
$
(0.12
)
Shares used to calculate diluted net loss
per share applicable to common stockholders (GAAP) and Adjusted
Non-GAAP loss per share
43,522
42,764
43,396
42,588
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/20231108521255/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
Marchex (NASDAQ:MCHX)
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