Marchex, Inc. (NASDAQ: MCHX), which harnesses the power of AI
and conversational intelligence to provide actionable insights
aligned with prescriptive vertical market data analytics, driving
operational excellence and revenue acceleration, today announced
its financial results for the fourth quarter and full year ended
December 31, 2023.
Q4 2023 and Full Year 2023 Financial
Highlights
- GAAP revenue was $12.4 million for the fourth quarter of 2023,
compared to $12.3 million for the fourth quarter of 2022.
- Net loss was $1.1 million for the fourth quarter of 2023 or
$(0.02) per diluted share, compared to a net loss of $3.6 million
or $(0.08) per diluted share for the fourth quarter of 2022. Net
loss was $9.9 million for 2023 or $(0.23) per diluted share,
compared to a net loss of $8.2 million or $(0.19) per diluted share
for 2022.
Q4 2022
Q4 2023
FY 2022
FY 2023
GAAP Revenue
$ 12.3 million
$ 12.4 million
$ 52.2 million
$ 49.9 million
Non-GAAP Results:
Adjusted EBITDA
$ (1.7) million
$ 0.1 million
$ (1.4) million
$ (3.4) million *
*
Adjusted EBITDA for full year 2023
includes approximately $1,620,000 of reorganization costs.
Excluding these amounts would result in Adjusted EBITDA for full
year 2023 totaling $(1,780,000).
- Adjusted non-GAAP loss per share for the fourth quarter of 2023
was $0.00 compared to ($0.05) for the fourth quarter of 2022.
Adjusted non-GAAP loss per share for 2023 was $(0.12) compared to
$(0.08) for 2022.
Fourth Quarter Summary:
- New Customer Traction and Existing Customer Expansion.
During the fourth quarter, Marchex signed new customers across
multiple verticals including automotive, home services and health
care. In addition, the company saw continued traction by signing up
more than a hundred auto dealers through direct or channel partners
sales initiatives over the last twelve months.
- Conversation Volumes. Overall conversation volumes were
down in the fourth quarter compared to the third quarter of 2023
due to typical seasonality and as some customers faced pressure due
to certain inflationary and overall consumer-related macroeconomic
factors.
Strategic Priorities and Growth
Initiatives For 2024:
- Existing Customer Expansion and New Customer Traction to
Drive Growth in 2024. In 2024, the company expects to add
meaningfully to its base of customer relationships across multiple
verticals, including home services, healthcare, auto services and
auto, as well as expand some of its most significant existing large
enterprise relationships. The company expects to continue to build
its pipeline of customers utilizing AI features and products.
- Accelerate Product Innovation. The company expects to
expand its success with recent product launches such as AI call
summaries and sentiment analysis with more AI features and
capabilities launched throughout the year. The company
believes its continued product innovation will accelerate revenue
growth and deepen vertical penetration across all of its core
verticals from new and existing customers.
- Complete Technology Initiatives to Enable Faster Innovation
and New Initiatives. The company expects it will complete its
primary cloud-based infrastructure initiatives as well as complete
its single sign on and unified user interface by the third quarter,
which will advance the rate of overall product innovation and
customer facing sales initiatives.
“2023 was a year of great foundational progress for Marchex. We
moved aggressively to position the company to take advantage of our
robust conversational data and position ourselves to emerge as a
leader in conversational intelligence across our core vertical
markets," said Edwin Miller, CEO. "After meeting with many of our
customers through 2023 and already in 2024, I firmly believe there
is a significant opportunity to build a nine-figure business. This
year, we are continuing to complete our key initiatives to enable
Marchex to take advantage of our robust generative AI product
opportunities. We are putting the pieces in place to achieve our
growth ambitions and accelerate the business. Marchex is ideally
positioned to help Fortune 500 businesses understand and act on
their data. We are focused on driving the future of conversational
AI in our verticals and opening up new avenues for growth, some of
which will launch in the course of this year.
Business Outlook
The following forward-looking statements reflect Marchex's
expectations as of March 14, 2024.
For the first quarter ending March 31, 2024:
- Revenue is anticipated to be somewhat lower than fourth quarter
2023 levels.
- Adjusted EBITDA is anticipated to be somewhat lower than the
fourth quarter 2023 levels, with improvements sequentially
throughout the year.
For the fiscal year 2024:
- The company anticipates revenue growth for the full year with
sequential revenue progress throughout the year.
- The company anticipates that gross margins can increase by 5
percent or more by the end of 2024.
- Adjusted EBITDA is anticipated to be at or above break-even for
the full year.
- The company anticipates 2024 year end cash balances to be at or
near year end 2023 levels.
“In January we saw continued pressure on conversational volumes
consistent with the fourth quarter in certain verticals such as our
small business resellers, which we expect to flow through in the
first part of the year. However, based on the current pipeline of
customers and ongoing pilots, we believe we will grow the business
sequentially from the first quarter revenue levels. In addition,
the completion of our infrastructure initiatives should enable us
to scale our gross margins and accelerate our go-to-market
initiatives in the latter half of the year, positioning Marchex for
accelerating growth,” said Miller.
Management will hold a conference call, starting at 5:00 p.m. ET
on Thursday, March 14, 2024, to discuss its fourth quarter and
Full Year 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 harnesses the power of AI and conversational
intelligence to provide actionable insights aligned with
prescriptive vertical market data analytics, driving operational
excellence and revenue acceleration. Marchex enables executive,
sales and marketing teams to optimize customer journey experiences
across all communication channels. Through our prescriptive
analytics solutions, we enable the alignment of enterprise
strategy, empowering businesses to increase revenue through
informed decision-making and strategic execution. Marchex provides
conversational intelligence AI powered solutions for market-leading
companies in many leading B2B2C vertical markets, including several
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 March 14, 2024, 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. Financial
analysts and investors may use Adjusted EBITDA and Adjusted OIBA to
help with comparative financial evaluation to make informed
investment decisions. 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.
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, and (7)
foreign government assistance subsidies. Adjusted EBITDA is an
alternative measure used by our management to understand and
evaluate our core operating performance and trends, and management
believes it provides meaningful supplemental information regarding
the company's liquidity and ability to fund its operations and
financing obligations.
Adjusted OIBA represents Adjusted
EBITDA adjusted for depreciation and amortization. This measure,
among other things, is another metric by which Marchex has
evaluated the performance of its business, to include being the
basis on which Marchex's internal budgets were based and by which
Marchex's management was evaluated in 2023. This measure represents
Marchex's consolidated operating results, taking into account
depreciation and other intangible amortization, but excluding the
effects of certain other expenses removed in arriving at Adjusted
EBITDA, as detailed above.
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.
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
Twelve Months Ended
December 31,
December 31,
(In Thousands)
2022
2023
2022
2023
Revenue
$
12,292
$
12,395
$
52,170
$
49,910
Expenses:
Service costs (1)
5,671
4,683
20,462
20,582
Sales and marketing (1)
3,345
2,492
13,517
11,412
Product development (1)
3,840
3,154
14,355
15,355
General and administrative (1)
2,390
2,792
9,787
10,205
Amortization of intangible assets from
acquisitions
531
394
2,124
1,987
Acquisition and disposition related
costs
37
—
74
12
Total operating expenses
15,814
13,515
60,319
59,553
Loss from operations
(3,522
)
(1,120
)
(8,149
)
(9,643
)
Interest income (expense) and other,
net
55
19
88
(173
)
Loss before provision for income taxes
(3,467
)
(1,101
)
(8,061
)
(9,816
)
Income tax expense
107
42
184
94
Net loss applicable to common
stockholders
$
(3,574
)
$
(1,143
)
$
(8,245
)
$
(9,910
)
Basic and diluted net loss per Class A and
Class B share applicable to common stockholders
Basic and diluted net loss per Class A and
Class B share applicable to common stockholders
$
(0.08
)
$
(0.02
)
$
(0.19
)
$
(0.23
)
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
38,042
38,059
38,560
37,960
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
42,703
42,720
43,221
42,621
(1) Includes stock-based compensation
allocated as follows:
Service costs
$
46
$
3
$
171
$
2
Sales and marketing
200
83
796
663
Product development
77
20
293
114
General and administrative
289
380
1,386
1,613
Total
$
612
$
486
$
2,646
$
2,392
MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (in thousands)
(unaudited)
December 31,
December 31,
(In Thousands)
2022
2023
Assets
Current assets:
Cash and cash equivalents
$
20,474
$
14,607
Accounts receivable, net
8,396
7,394
Prepaid expenses and other current
assets
2,015
1,805
Total current assets
30,885
23,806
Property and equipment, net
4,050
2,398
Other assets, net
973
1,482
Right-of-use lease asset
738
1,631
Goodwill
17,558
17,558
Intangible assets from acquisitions,
net
2,590
602
Total assets
$
56,794
$
47,477
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
2,037
$
1,533
Accrued benefits and payroll
3,566
3,294
Other accrued expenses and current
liabilities
3,825
3,217
Deferred revenue and deposits
1,384
1,214
Lease liability current
1,252
462
Total current liabilities
12,064
9,720
Deferred tax liabilities
233
249
Finance lease, non-current
—
421
Lease liability non-current
385
1,217
Total liabilities
12,682
11,607
Stockholders’ equity:
Class A common stock
49
49
Class B common stock
385
386
Additional paid-in capital
354,999
356,666
Accumulated deficit
(311,321
)
(321,231
)
Total stockholders’ equity
44,112
35,870
Total liabilities and stockholders’
equity
$
56,794
$
47,477
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
Twelve Months Ended
December 31,
December 31,
(In Thousands)
2022
2023
2022
2023
Net loss applicable to common
stockholders
$
(3,574
)
$
(1,143
)
$
(8,245
)
$
(9,910
)
Interest income (expense) and other,
net
(55
)
(19
)
(88
)
173
Income tax expense
107
42
184
94
Amortization of intangible assets from
acquisitions
531
394
2,124
1,987
Depreciation and amortization
608
352
1,910
1,886
Stock-based compensation
612
486
2,646
2,392
Acquisition and disposition-related
costs
37
—
74
12
Foreign government paycheck assistance and
rent subsidies1
—
—
(10
)
—
Adjusted EBITDA
$
(1,734
)
$
112
$
(1,405
)
$
(3,366
)
Depreciation and amortization
608
352
1,910
1,886
Adjusted OIBA
$
(2,342
)
$
(240
)
$
(3,315
)
$
(5,252
)
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
Twelve Months Ended
December 31,
December 31,
2022
2023
2022
2023
Net loss applicable to common
stockholders, diluted
$
(0.08
)
$
(0.02
)
$
(0.19
)
$
(0.23
)
Stock-based compensation
0.02
0.01
0.06
0.06
Acquisition and disposition-related costs
(benefit)
—
—
—
—
Amortization of intangible assets from
acquisitions
0.01
0.01
0.05
0.05
Interest income and other, net
—
—
—
—
Adjusted non-GAAP loss per
share
$
(0.05
)
$
—
$
(0.08
)
$
(0.12
)
Shares used to calculate diluted net loss
per share applicable to common stockholders (GAAP) and Adjusted
Non-GAAP loss per share
42,703
42,720
43,221
42,621
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/20240314259337/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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