Marchex Announces Second Quarter 2018 Results

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, 2018.

Q2 2018 Financial Highlights


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 Enterprise Client Relationships. During the
second quarter, Marchex added more than 8 new clients in multiple
verticals including Auto, Health, and Home Services.

Growth in Call Volume. June 2018 was a record month for Marchex
with more than 20 million calls across its analytics platform. Continued
progress with our analytics products, including our speech analytics
product, is building momentum among new and existing customers. Based on
this progress, the company believes call volumes can continue to grow
into 2019.

Accelerate Product Innovation. The Marchex Institute
recently released two new studies focused on a couple of Marchex’s core
verticals: Auto and Hospitality. Using the Marchex script tracking tool,
which helps companies understand what transpires on a call between
agents and customers, the Marchex Institute analyzed over 1.8 million
calls placed by consumers to nearly 5,000 stores of auto service
providers across the country. The script tracking tool was able to
measure 50 phrases that implied a negative response. The
study revealed that saying “no” to a customer could result in lost
annual revenue of $110 million to the auto service industry.

Leveraging Marchex’s Call DNA®, which provides a visual of what happens
on calls using automated scoring technology, the Marchex Institute analyzed
over 5.8 million calls to 13 hotel brands and four cruise lines. The
Marchex Institute was able to identify key call handling challenges the
industries are facing, resulting in lost sales opportunities and
negative customer experiences.

“In the second quarter, we continued to add to our new customer pipeline
while seeing volume increases with several of our early analytics
customer relationships. We believe we will continue to make progress
with our analytics customers and grow volume levels across our analytics
platform into 2019,” said Mike Arends, Chief Financial Officer.
“Meanwhile, we continued to work through more limited media marketplace
budget allocations from a few of our customers. That said, we are
encouraged by the building pipeline of new customer relationships across
both product areas and are working to scale these relationships to
capitalize on our product momentum. We are excited by the interest and
uptake of new products that are powered by our Speech technology and
continue to believe we are building a foundation to return Marchex to
growth over time.”

Business Outlook

The following forward-looking statements reflect Marchex’s expectations
as of August 1, 2018.

Financial Guidance for the Third Quarter ending
September 30, 2018


Third quarter GAAP income (loss) from operations is expected to
be ($2) million or better, assuming stock-based compensation
between $0.9 and $1.1 million for the quarter. Third quarter
Adjusted EBITDA includes estimated addbacks of $1 million related
to depreciation and amortization.

Conference Call and Webcast Information

Management will hold a conference call, starting at 5:00 p.m. ET on
Wednesday, August 1, 2018, to discuss its second quarter ended June 30,
2018 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 August 1, 2018 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. Marchex also provides Enterprise
Revenue, which represents revenue excluding LLC (“YP”)
revenue generating contracts and, subsequent to Dex Media, Inc.’s
acquisition of YP (collectively “DexYP”), DexYP revenue generating

Adjusted 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. 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. Adjusted
EBITDA represents income (loss) before interest, income
taxes, depreciation, amortization, and stock-based compensation. 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 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; and (2)
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

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

Three Months EndedJune 30,

Six Months EndedJune 30,

Basic and diluted net loss per Class A and Class B share
applicable to common stockholders

Shares used to calculate basic net loss per share applicable to
common stockholders:

Shares used to calculate diluted net loss per share applicable to
common stockholders:

(1) Includes stock-based compensation allocated as follows:

Three Months EndedJune 30,

Six Months EndedJune 30,

Reconciliation from Net Cash provided by (used in) Operating
Activities to Adjusted EBITDA

Three Months EndedJune 30,

Six Months EndedJune 30,

Reconciliation from Revenue to Enterprise Revenue

Three Months EndedJune 30,

Six Months EndedJune 30,

Three Months EndedJune 30,

Six Months EndedJune 30,

Net loss per share applicable to common stockholders – diluted
(GAAP loss per share)

Shares used to calculate diluted net loss per share applicable to
common stockholders

Shares used to calculate diluted net loss per share applicable to
common stockholders (GAAP) and Adjusted Non-GAAP loss per share1

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