Marchex Announces Second Quarter 2016 Results
"We are disappointed with our Q2 financial results and revised 2016 outlook, which were primarily driven by a small number of our large clients that reduced their marketing spend," said Pete Christothoulou, CEO. "It does not impact our long-term relationship with these clients or our belief in the Online-to-Offline opportunity. Our new client wins and strong customer feedback point to a growing pipeline. We are eager to see our strategic progress flow through to our financial performance and, ultimately, category leadership."
Q2 2016 Financial Highlights
-
GAAP revenue was $34.4 million for the second quarter of 2016,
compared to
$35.3 million for the second quarter of 2015. -
GAAP net loss from continuing operations was
$68.8 million for the second quarter of 2016 or$1.65 per diluted share, which includes the effect of an estimated pre-tax$63.3 million , or$1.52 per diluted share2,non-cash impairment charge based on the preliminary results of the company’s goodwill impairment tests. Excluding the impact of the impairment, net loss from continuing operations was$5.5 million 2 or$0.13 per diluted share2 for the second quarter of 2016. For the second quarter of 2015, GAAP net loss from continuing operations was$1.3 million or$0.03 per diluted share.
Q2 2015 | Q2 2016 | |||||||
GAAP Revenue | $35.3 million | $34.4 million | ||||||
Call-Driven Revenue1 | $34.5 million | $34.4 million | ||||||
Non-GAAP Results2: | ||||||||
Enterprise Revenue3 | $24.1 million | $26.3 million | ||||||
Call-Driven Adjusted OIBA | $1.4 million | ($1.6) million | ||||||
Call-Driven Adjusted EBITDA | $2.4 million | ($0.8) million | ||||||
Cash Balance | $104 million | $106 million | ||||||
-
Adjusted non-GAAP earnings (loss) per share2 from
continuing operations for the second quarter of 2016 was
($0.02) , compared to$0.02 for the second quarter of 2015. -
During the second quarter of 2016, YP contributed
$8.1 million in Call-Driven Revenue, compared to$10.4 million in the second quarter 2015.
____________________ |
1Call-Driven revenue includes revenue generated from our contracts with YP. |
2Reconciliations 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. |
3Enterprise Revenue, also referred to as “Call-Driven Revenue excluding YP”, represents Call-Driven revenue excluding revenue generated from our contracts with YP. |
Strategic Priorities Update
The following highlights our recent progress:
Grow New and Existing Enterprise Client Relationships
-
We are seeing positive progress in our sales metrics, including new
clients, estimated annualized new client bookings, and our pipeline.
We have added more than 15 enterprise scale clients in the second
quarter and are beginning to more deeply penetrate our core verticals,
such as
Travel and Communications . For example, we work with four of the largest Hotel brands of which three were signed in the first half of 2016. Our estimated annualized new client bookings through the first half of 2016 have grown more than 50% from the annualized run rate of the fourth quarter of 2015 despite many of our new sales reps not being fully ramped.
Accelerate Product Innovation
- We continue to execute our omni-channel analytics strategy. We are on track to deliver several new products including Display Analytics for general availability in the near term. These products enable clients to measure the effectiveness of display and other digital media in driving call conversions. Upon launching Display Analytics, we expect to also measure the consumer journey and interplay between Display and Search.
- We have integrated our Display Analytics technology with more than 40 of the world’s leading mobile publishers, including more than half of comScore’s top ten digital media properties.
Expand Global Strategic Partnerships
- We have a new integration with Adobe’s Marketing Cloud that delivers better return on advertising spend for enterprise search marketers that rely upon inbound phone calls to drive sales. The integration delivers automated insights on phone calls directly into the Adobe Media Optimizer for each keyword, including call outcomes and Interactive Voice Response (IVR) inputs. These insights allow marketers to properly automate paid search bidding by allocating budgets towards keywords that best drive over-the-phone purchases.
Business Outlook
The following forward-looking statements reflect
Total Call-Driven financial guidance for the Third Quarter ending September 30, 2016 |
|||
Call-Driven Revenue1 | $30 million or more | ||
Call-Driven Adjusted OIBA2 | a loss of ($2) million to a loss of ($4) million | ||
Call-Driven Adjusted EBITDA2 | a loss of ($1) million to a loss of ($3) million | ||
We are providing annual guidance on Call-Driven revenue which includes anticipated contributions by YP due to increased visibility in the remaining year outlook from this customer. We anticipate Enterprise Revenue for the full year will be lower than our previously stated annual guidance, primarily due to increasing variability in marketing budgets from a small number of our largest enterprise customers.
Total Call-Driven financial guidance for the year ending December 31, 2016 |
|||
Call-Driven Revenue1 | $128 million or more | ||
Conference Call and Webcast Information
Management will hold a conference call, starting at
About
Please visit www.marchex.com,
www.marchex.com/blog/
or @marchex
on Twitter (Twitter.com/
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
Non-GAAP Financial Information:
To supplement
OIBA represents income (loss) from
operations plus stock-based compensation expense. This measure, among
other things, is one of the primary metrics by which
Call-Driven Adjusted OIBA and EBITDA
include the above descriptions of Adjusted OIBA and EBITDA for the
Call-Driven segment. The Call-Driven Adjusted OIBA and EBITDAincludes
all
MARCHEX, INC. AND SUBSIDIARIES | |||||||||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three months ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2015 | 2016 | 2015 | 2016 | ||||||||||||||||||
Revenue | $ | 35,346 | $ | 34,412 | $ | 71,261 | $ | 70,397 | |||||||||||||
Expenses: | |||||||||||||||||||||
Service costs (1) | 19,797 | 20,477 | 39,163 | 42,459 | |||||||||||||||||
Sales and marketing (1) | 4,245 | 5,649 | 7,703 | 11,171 | |||||||||||||||||
Product development (1) | 8,147 | 7,555 | 15,839 | 15,027 | |||||||||||||||||
General and administrative (1) | 4,505 | 5,833 | 10,204 | 10,495 | |||||||||||||||||
Acquisition and disposition related costs | 118 | 304 | 118 | 308 | |||||||||||||||||
Total operating expenses | 36,812 | 39,818 | 73,027 | 79,460 | |||||||||||||||||
Impairment of goodwill | - | (63,305 | ) | - | (63,305 | ) | |||||||||||||||
Loss from operations | (1,466 | ) | (68,711 | ) | (1,766 | ) | (72,368 | ) | |||||||||||||
Interest expense and other, net | (16 | ) | (68 | ) | (41 | ) | (75 | ) | |||||||||||||
Loss from continuing operations before provision for income taxes | (1,482 | ) | (68,779 | ) | (1,807 | ) | (72,443 | ) | |||||||||||||
Income tax expense (benefit) | (185 | ) | 12 | (180 | ) | 25 | |||||||||||||||
Net loss from continuing operations | (1,297 | ) | (68,791 | ) | (1,627 | ) | (72,468 | ) | |||||||||||||
Discontinued operations: | |||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | (92 | ) | - | 5,047 | - | ||||||||||||||||
Gain on sale from discontinued operations, net of tax | 22,257 | - | 22,032 | - | |||||||||||||||||
Discontinued operations, net of tax | 22,165 | - | 27,079 | - | |||||||||||||||||
Net income (loss) | 20,868 | (68,791 | ) | 25,452 | (72,468 | ) | |||||||||||||||
Dividends paid to participating securities | (19 | ) | - | (37 | ) | - | |||||||||||||||
Net income (loss) applicable to common stockholders | $ | 20,849 | $ | (68,791 | ) | $ | 25,415 | $ | (72,468 | ) | |||||||||||
Basic and diluted net income (loss) per Class A and Class B share applicable to common stockholders: | |||||||||||||||||||||
Continuing operations | $ | (0.03 | ) | $ | (1.65 | ) | $ | (0.04 | ) | $ | (1.75 | ) | |||||||||
Discontinued operations, net of tax | $ | 0.53 | $ | - | $ | 0.66 | $ | - | |||||||||||||
Basic and diluted net income (loss) per Class A and Class B share applicable to common stockholders | $ | 0.50 | $ | (1.65 | ) | $ | 0.62 | $ | (1.75 | ) | |||||||||||
Dividends paid per share | $ | 0.02 | $ | - | $ | 0.04 | $ | - | |||||||||||||
Shares used to calculate basic net income (loss) per share applicable to common stockholders | |||||||||||||||||||||
Class A | 5,233 | 5,233 | 5,233 | 5,233 | |||||||||||||||||
Class B | 36,072 | 36,499 | 35,919 | 36,238 | |||||||||||||||||
Shares used to calculate diluted net income (loss) per share applicable to common stockholders | |||||||||||||||||||||
Class A | 5,233 | 5,233 | 5,233 | 5,233 | |||||||||||||||||
Class B |
41,305 | 41,732 | 41,152 | 41,471 | |||||||||||||||||
(1) Includes stock-based compensation allocated as follows: |
|||||||||||||||||||||
Service costs | $ | 552 | $ | 207 | $ | 772 | $ | 405 | |||||||||||||
Sales and marketing | 309 | 529 | 554 | 968 | |||||||||||||||||
Product development | 644 | 629 | 1,223 | 1,161 | |||||||||||||||||
General and administrative | 1,162 | 2,136 | 2,909 | 2,933 | |||||||||||||||||
Total | $ | 2,667 | $ | 3,501 | $ | 5,458 | $ | 5,467 | |||||||||||||
MARCHEX, INC. AND SUBSIDIARIES | |||||||||||
Condensed Consolidated Balance Sheets | |||||||||||
(in thousands) | |||||||||||
(unaudited) | |||||||||||
December 31, | June 30, | ||||||||||
Assets | 2015 | 2016 | |||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 109,155 | $ | 105,777 | |||||||
Accounts receivable, net | 24,621 | 25,301 | |||||||||
Prepaid expenses and other current assets | 1,784 | 2,393 | |||||||||
Refundable taxes | 127 | 124 | |||||||||
Total current assets | 135,687 | 133,595 | |||||||||
Property and equipment, net | 5,778 | 4,454 | |||||||||
Intangibles and other assets, net | 222 | 222 | |||||||||
Goodwill | 63,305 | - | |||||||||
Total Assets | $ | 204,992 | $ | 138,271 | |||||||
Liabilities and Stockholders' Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 9,460 | $ | 9,614 | |||||||
Accrued expenses and other current liabilities | 6,712 | 7,583 | |||||||||
Deferred revenue | 692 | 333 | |||||||||
Total current liabilities | 16,864 | 17,530 | |||||||||
Other non-current liabilities | 662 | 407 | |||||||||
Total Liabilities | 17,526 | 17,937 | |||||||||
Class A common stock | 55 | 55 | |||||||||
Class B common stock | 368 | 381 | |||||||||
Treasury stock | (238 | ) | (95 | ) | |||||||
Additional paid-in capital | 350,799 | 355,979 | |||||||||
Accumulated deficit | (163,518 | ) | (235,986 | ) | |||||||
Total Stockholders' Equity | 187,466 | 120,334 | |||||||||
Total Liabilities and Stockholders' Equity | $ | 204,992 | $ | 138,271 | |||||||
MARCHEX, INC. AND SUBSIDIARIES | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Reconciliation of GAAP Loss from Operations to Operating Income Before Amortization (OIBA) and Adjusted Operating Income Before Amortization (Adjusted OIBA) |
|||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2015 | 2016 | 2015 | 2016 | ||||||||||||||||||
Loss from operations | $ | (1,466 | ) | $ | (68,711 | ) | $ | (1,766 | ) | $ | (72,368 | ) | |||||||||
Stock-based compensation | 2,667 | 3,501 | 5,458 | 5,467 | |||||||||||||||||
Operating income before amortization (OIBA) | 1,201 | (65,210 | ) | 3,692 | (66,901 | ) | |||||||||||||||
Acquisition and disposition related costs | 118 | 304 | 118 | 308 | |||||||||||||||||
Impairment of goodwill | - | 63,305 | - | 63,305 | |||||||||||||||||
Adjusted operating income before amortization (Adjusted OIBA) - Consolidated | $ | 1,319 | $ | (1,601 | ) | $ | 3,810 | $ | (3,288 | ) | |||||||||||
Less: Archeo and Other Adjusted OIBA1 | (81 | ) | 11 | (222 | ) | 27 | |||||||||||||||
Call-Driven Adjusted OIBA1 | $ | 1,400 | $ | (1,612 | ) | $ | 4,032 | $ | (3,315 | ) | |||||||||||
Reconciliation from Net Cash provided by (used in) Operating Activities to Adjusted EBITDA | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2015 | 2016 | 2015 | 2016 | ||||||||||||||||||
Net cash provided by (used in) operating activities | $ | (1,814 | ) | $ | (386 | ) | $ | 4,437 | $ | (2,653 | ) | ||||||||||
Changes in asset and liabilities | 3,883 | (785 | ) | 6,111 | 647 | ||||||||||||||||
Income tax expense (benefit) | (185 | ) | 12 | (180 | ) | 25 | |||||||||||||||
Acquisition and disposition related costs | 118 | 304 | 118 | 308 | |||||||||||||||||
Interest expense and other, net | 16 | 68 | 41 | 75 | |||||||||||||||||
Loss (income) from discontinued operations, net of tax | 91 | - | (5,065 | ) | - | ||||||||||||||||
Tax effect on gain on sale of discontinued operations | 163 | - | 163 | - | |||||||||||||||||
Adjusted EBITDA - Consolidated | $ | 2,272 | $ | (787 | ) | $ | 5,625 | $ | (1,598 | ) | |||||||||||
Less: Archeo and Other Adjusted EBITDA1 | (81 | ) | 11 | (222 | ) | 27 | |||||||||||||||
Call-DrivenAdjusted EBITDA1 | $ | 2,353 | $ | (798 | ) | $ | 5,847 | $ | (1,625 | ) | |||||||||||
Net cash provided by (used in) investing activities | $ | 23,767 | $ | (119 | ) | $ | 22,840 | $ | (594 | ) | |||||||||||
Net cash used in financing activities | $ | (1,181 | ) | $ | (321 | ) | $ | (2,878 | ) | $ | (131 | ) | |||||||||
1 |
The financial results have been derived from the condensed consolidated financial statements. In April 2015, Marchex divested certain Archeo domain name and related assets and the operating results of these divested assets are included in discontinued operations, net of tax, in the condensed consolidated financial statements. In December 2015, Marchex sold the remaining Archeo assets and its operating results are included in continuing operations for 2015. Unless otherwise indicated, information presented in these financial tables relates only to Marchex's continuing operations. In 2016, Other operating results related primarily to transition activities provided to the buyer of the Archeo assets and were not significant. |
||
MARCHEX, INC. AND SUBSIDIARIES | |||||||||||||||||||||
Reconciliation of GAAP earnings (loss) per share to Adjusted Non-GAAP earnings (loss) per share | |||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2015 | 2016 | 2015 | 2016 | ||||||||||||||||||
Adjusted Non-GAAP earnings (loss) per share from continuing operations | $ | 0.02 | $ | (0.02 | ) | $ | 0.06 | $ | (0.05 | ) | |||||||||||
Net loss from continuing operations applicable to common stockholders - diluted (GAAP loss per share) | $ | (0.03 | ) | $ | (1.65 | ) | $ | (0.04 | ) | $ | (1.75 | ) | |||||||||
Shares used to calculate diluted net loss from continuing operations per share applicable to common stockholders | 41,305 | 41,732 | 41,152 | 41,471 | |||||||||||||||||
Net income (loss) applicable to common stockholders | $ | 20,849 | $ | (68,791 | ) | $ | 25,415 | $ | (72,468 | ) | |||||||||||
Stock-based compensation | 2,667 | 3,501 | 5,458 | 5,467 | |||||||||||||||||
Acquisition and disposition related costs | 118 | 304 | 118 | 308 | |||||||||||||||||
Impairment of goodwill | - | 63,305 | - | 63,305 | |||||||||||||||||
Interest expense and other, net | 16 | 68 | 41 | 75 | |||||||||||||||||
Dividends paid to participating securities | 19 | - | 37 | - | |||||||||||||||||
Discontinued operations, net of tax | (22,165 | ) | - | (27,079 | ) | - | |||||||||||||||
Estimated impact of income taxes | (646 | ) | 746 | (1,516 | ) | 1,093 | |||||||||||||||
Adjusted Non-GAAP net income (loss) from continuing operations | $ | 858 | $ | (867 | ) | $ | 2,474 | $ | (2,220 | ) | |||||||||||
Adjusted Non-GAAP earnings (loss) per share from continuing operations | $ | 0.02 | $ | (0.02 | ) | $ | 0.06 | $ | (0.05 | ) | |||||||||||
Shares used to calculate diluted net income (loss) from continuing operations per share applicable to common stockholders (GAAP) |
41,305 | 41,732 | 41,152 | 41,471 | |||||||||||||||||
Weighted average stock options and common shares subject to purchase or cancellation (if applicable) | 415 | - | 366 | - | |||||||||||||||||
Diluted shares used to calculate Adjusted Non-GAAP earnings (loss) per share 1 | 41,720 | 41,732 | 41,518 | 41,471 | |||||||||||||||||
1 | For the purpose of computing the number of diluted shares for Adjusted Non-GAAP earnings (loss) per share, Marchex uses the accounting guidance that would be applicable for computing the number of diluted shares for GAAP earnings (loss) per share. | ||
Reconciliation of GAAP net loss from continuing operations to Non-GAAP net loss from continuing operations | |||||||||||||||||||||
excluding impairment of goodwill | |||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2015 | 2016 | 2015 | 2016 | ||||||||||||||||||
Net loss from continuing operations (GAAP) | $ | (1,297 | ) | $ | (68,791 | ) | $ | (1,627 | ) | $ | (72,468 | ) | |||||||||
Impairment of goodwill | - | 63,305 | - | 63,305 | |||||||||||||||||
Net loss from continuing operations excluding goodwill impairment (NON-GAAP) | $ | (1,297 | ) | $ | (5,486 | ) | $ | (1,627 | ) | $ | (9,163 | ) | |||||||||
Net loss from continuing operations applicable to common stockholders - diluted (GAAP loss per share) | $ | (0.03 | ) | $ | (1.65 | ) | $ | (0.04 | ) | $ | (1.75 | ) | |||||||||
Impairment of goodwill per diluted share | - | 1.52 | - | 1.53 | |||||||||||||||||
Net loss from continuing operations excluding goodwill impairment per diluted share (NON-GAAP) | $ | (0.03 | ) | $ | (0.13 | ) | $ | (0.04 | ) | $ | (0.22 | ) | |||||||||
Shares used to calculate diluted net loss from continuing operations per share applicable to common stockholders (GAAP) and diluted net loss from continuing operations excluding goodwill impairment (NON-GAAP) |
41,305 | 41,732 | 41,152 | 41,471 | |||||||||||||||||
MARCHEX, INC. AND SUBSIDIARIES | ||||||||||||||||||||
Financial Summary Information | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
NON-GAAP MEASURES | ||||||||||||||||||||
CONSOLIDATED1 | Q215 | Q216 | YTD Q215 | YTD Q216 | ||||||||||||||||
GAAP Revenue | $ | 35,346 | $ | 34,412 | $ | 71,261 | $ | 70,397 | ||||||||||||
Adjusted OIBA | $ | 1,319 | $ | (1,601 | ) | $ | 3,810 | $ | (3,288 | ) | ||||||||||
Adjusted EBITDA | $ | 2,272 | $ | (787 | ) | $ | 5,625 | $ | (1,598 | ) | ||||||||||
CALL-DRIVEN | Q215 | Q216 | YTD Q215 | YTD Q216 | ||||||||||||||||
GAAP Revenue | $ | 34,458 | $ | 34,412 | $ | 69,486 | $ | 70,376 | ||||||||||||
Adjusted OIBA | $ | 1,400 | $ | (1,612 | ) | $ | 4,032 | $ | (3,315 | ) | ||||||||||
Adjusted EBITDA | $ | 2,353 | $ | (798 | ) | $ | 5,847 | $ | (1,625 | ) | ||||||||||
ENTERPRISE REVENUE2 | Q215 | Q216 | YTD Q215 | YTD Q216 | ||||||||||||||||
Call-Driven GAAP Revenue | $ | 34,458 | $ | 34,412 | $ | 69,486 | $ | 70,376 | ||||||||||||
Less: YP Revenue | $ | 10,362 | $ | 8,091 | $ | 21,119 | $ | 16,610 | ||||||||||||
Enterprise Revenue | $ | 24,096 | $ | 26,321 | $ | 48,367 | $ | 53,766 | ||||||||||||
1 | In April 2015, Marchex divested certain Archeo domain name and related assets and the operating results of these divested assets are included in discontinued operations, net of tax, in the condensed consolidated financial statements. In December 2015, Marchex sold the remaining Archeo assets and its operating results are included in continuing operations for 2015. In 2016, there were Other operating activities that related primarily to transition activities provided to the buyer of the Archeo assets and were not significant. Unless otherwise indicated, information presented in these financial tables relates only to Marchex's continuing operations. | ||
2 | Enterprise Revenue, also referred to as “Call-Driven Revenue excluding YP”, represents Call-Driven revenue excluding revenue generated from our contracts with YP. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160809006400/en/
Source:
Marchex Investor Relations
Trevor Caldwell, 206-331-3600
Email:
ir(at)marchex.com
or
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Marchex
Corporate Communications
206-331-3434
Email: pr(at)marchex.com