Marchex Reports First Quarter 2012 Financial Results
First Quarter Revenue Growth of 22% was Driven by Digital Call Advertising Products
First Quarter 2012 Consolidated Financial Results:
- Revenue was
$35.5 million for the first quarter of 2012, compared to$29.1 million for the same period of 2011. - GAAP net loss applicable to common stockholders was
$788,000 for the first quarter of 2012 or$0.02 per diluted share. This compares to GAAP net income applicable to common stockholders of$513,000 or$0.01 per diluted share for the same period of 2011. The first quarter 2012 results included non-cash stock-based compensation expense of$3.9 million , compared to non-cash stock-based compensation expense of$3.5 million for the same period in 2011. - We provide a reconciliation of GAAP diluted EPS to Adjusted Non-GAAP EPS 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. Adjusted non-GAAP EPS for first quarter 2012 was
$0.05 , compared to$0.06 for the same period in 2011. - Adjusted operating income before amortization was
$3.3 million for the first quarter of 2012, compared to$3.2 million for the same period of 2011. A reconciliation of non-GAAP adjusted operating income before amortization to GAAP operating income is included in the financial tables attached to this release. - Adjusted EBITDA was
$4.3 million in the first quarter of 2012, compared to$4.2 million for the same period of 2011. A reconciliation of adjusted EBITDA to GAAP net cash provided by operating activities is included in the financial tables attached to this release.
“We believe the growth of the mobile marketplace will change how advertisers buy and measure new customer phone calls as a lead source,” said
Recent Highlights:
1. Call-Driven Revenues: For the first quarter of 2012, revenue from call advertising products was
2. During the first quarter,
3.
4. Today,
Marchex Guidance:
The following forward-looking statements reflect
Financial guidance for the fiscal year ending December 31, 2012: | ||
Revenue: | $144 million to $152 million | |
Adjusted Operating Income Before Amortization: | More than $14.5 million | |
Adjusted EBITDA: | Estimated add-backs of approximately $4.5 million in additional depreciation and amortization to adjusted operating income before amortization, implying an adjusted EBITDA of more than $19 million | |
Long Term Adjusted EBITDA Margin Target: | 20% or more |
2012 GAAP income (loss) from operations is expected to be
Financial guidance for the Second Quarter ending June 30, 2012: | ||
Revenue: | $34.5 million to $36 million | |
Adjusted Operating Income Before Amortization: | $3.3 million | |
Adjusted EBITDA: | Estimated add-backs of approximately $1 million in additional depreciation and amortization to adjusted operating income before amortization, implying an adjusted EBITDA of $4.3 million | |
Long Term Adjusted EBITDA Margin Target: | 20% or more |
Second quarter GAAP income (loss) from operations is expected to be
“While we expect to see mobile performance and call advertising budgets ramp up in the latter half of the year based on our current pipeline and outlook, our decline in non-call driven revenue is impacting overall near term growth. Secondarily, we see budget variability in the second quarter with a small number of our larger call advertisers for a variety of reasons, including seasonality. Overall we are winning new customers for our mobile performance and call advertising products, so we feel good about what this means as an indicator of our long-term growth prospects. At the same time, we know that execution here will be key. We need to remain focused on replicating the successful advertiser and publisher relationships that we have more broadly, and continuing to add experienced people as we grow the business. As we move forward, we are managing our investments in the mobile performance and call advertising opportunity such that as we grow, a portion of the incremental contribution will be allocated to support our growth initiatives, including investments in our products, people and customers. The rest will flow through to contribute to expanding contribution margins,” said
Conference Call and Webcast Information
Management will hold a conference call, starting at
About
Marchex supports its customers through a unique technology platform that has three primary components: (1) Call Analytics, which powers all of Marchex's advertising solutions, and allows partners to leverage data and insights that accurately measure the performance of mobile, online and offline call advertising; (2) Digital Call Marketplace, which connects hundreds of millions of consumer calls to advertisers annually from a range of mobile and online sources on a Pay For Call basis; and (3) Local Leads, a white-labeled, full service digital advertising solution for small business resellers that drives quality phone calls and other leads to their small business advertisers.
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, 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 (1) stock-based compensation expense and (2) amortization of intangible assets from acquisitions. This measure, among other things, is one of the primary metrics by which
Adjusted non-GAAP EPS represents Adjusted non-GAAP Net Income applicable to common stockholders divided by GAAP diluted shares outstanding. Adjusted non-GAAP Net Income applicable to common stockholders 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) amortization of intangible assets from acquisitions, (3) gain/loss on sales and disposals of intangible assets, (4) acquisition related costs, (5) interest and other income (expense), and (6) dividends paid to participating securities. Financial analysts and investors may use Adjusted non-GAAP EPS to analyze
MARCHEX, INC. AND SUBSIDIARIES | ||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||
(in thousands, except per share data) | ||||||||||||
(unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
March 31, | ||||||||||||
2011 | 2012 | |||||||||||
Revenue | $ | 29,080 | $ | 35,481 | ||||||||
Expenses: | ||||||||||||
Service costs (1) | 16,672 | 19,937 | ||||||||||
Sales and marketing (1) | 2,695 | 3,913 | ||||||||||
Product development (1) | 4,889 | 5,992 | ||||||||||
General and administrative (1) | 5,155 | 6,295 | ||||||||||
Amortization of intangible assets from acquisitions | 464 | 1,537 | ||||||||||
Acquisition related costs | 402 | (132 | ) | |||||||||
Total operating expenses | 30,277 | 37,542 | ||||||||||
Gain on sales and disposals of intangible assets, net | 1,913 | 1,463 | ||||||||||
Income (loss) from operations | 716 | (598 | ) | |||||||||
Interest expense and other, net | 102 | (197 | ) | |||||||||
Income (loss) before provision for income taxes | 818 | (795 | ) | |||||||||
Income tax expense (benefit) | 242 | (80 | ) | |||||||||
Net income (loss) | 576 | (715 | ) | |||||||||
Dividends paid to participating securities | (63 | ) | (73 | ) | ||||||||
Net income (loss) applicable to common stockholders | $ | 513 | $ | (788 | ) | |||||||
Basic net income (loss) per share applicable to Class A and Class B common stockholders | $ | 0.02 | $ | (0.02 | ) | |||||||
Diluted net income (loss) per share applicable to Class A and Class B common stockholders | $ | 0.01 | $ | (0.02 | ) | |||||||
Dividends paid per share | $ | 0.02 | $ | 0.02 | ||||||||
Shares used to calculate basic net income (loss) per share applicable to common stockholders | ||||||||||||
Class A | 10,236 | 9,587 | ||||||||||
Class B | 22,170 | 24,015 | ||||||||||
Shares used to calculate diluted net income (loss) per share applicable to common stockholders | ||||||||||||
Class A | 10,236 | 9,587 | ||||||||||
Class B | 34,255 | 33,602 | ||||||||||
(1 | ) | Includes stock-based compensation allocated as follows: | ||||||||||
Service costs | $ | 285 | $ | 383 | ||||||||
Sales and marketing | 219 | 378 | ||||||||||
Product development | 314 | 301 | ||||||||||
General and administrative | 2,693 | 2,846 | ||||||||||
Total | $ | 3,511 | $ | 3,908 | ||||||||
MARCHEX, INC. AND SUBSIDIARIES | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(in thousands) | |||||||||
(unaudited) | |||||||||
December 31, | March 31, | ||||||||
Assets | 2011 | 2012 | |||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 37,443 | $ | 41,295 | |||||
Accounts receivable, net | 30,635 | 30,682 | |||||||
Prepaid expenses and other current assets | 3,614 | 3,860 | |||||||
Refundable taxes | 193 | 321 | |||||||
Deferred tax assets | 2,753 | 3,184 | |||||||
Total current assets | 74,638 | 79,342 | |||||||
Property and equipment, net | 6,187 | 6,320 | |||||||
Deferred tax assets | 46,310 | 45,896 | |||||||
Intangibles and other assets, net | 2,191 | 1,698 | |||||||
Goodwill | 82,644 | 82,582 | |||||||
Intangible assets from acquisitions, net | 8,088 | 6,550 | |||||||
Total assets | $ | 220,058 | $ | 222,388 | |||||
Liabilities and Stockholders' Equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 12,896 | $ | 13,084 | |||||
Accrued expenses and other current liabilities | 8,430 | 9,145 | |||||||
Deferred acquisition payments | 35,214 | 34,943 | |||||||
Deferred revenue | 1,930 | 1,931 | |||||||
Total current liabilities | 58,470 | 59,103 | |||||||
Other non-current liabilities | 2,580 | 2,487 | |||||||
Total liabilities | 61,050 | 61,590 | |||||||
Stockholders' equity: | |||||||||
Class A common stock | 99 | 98 | |||||||
Class B common stock | 281 | 280 | |||||||
Treasury stock | (1,067 | ) | (239 | ) | |||||
Additional paid-in capital | 297,465 | 299,144 | |||||||
Accumulated deficit | (137,770 | ) | (138,485 | ) | |||||
Total stockholders' equity | 159,008 | 160,798 | |||||||
Total liabilities and stockholders' equity | $ | 220,058 | $ | 222,388 | |||||
MARCHEX, INC. AND SUBSIDIARIES | ||||||||||
Reconciliation of GAAP Income (Loss) from Operations to Operating Income Before Amortization (OIBA) and | ||||||||||
Adjusted Operating Income Before Amortization (Adjusted OIBA) | ||||||||||
(in thousands) | ||||||||||
(unaudited) | ||||||||||
Three Months Ended | ||||||||||
March 31, | ||||||||||
2011 | 2012 | |||||||||
Income (loss) from operations | $ | 716 | $ | (598 | ) | |||||
Stock-based compensation | 3,511 | 3,908 | ||||||||
Amortization of intangible assets from acquisitions | 464 | 1,537 | ||||||||
Operating income before amortization (OIBA) | 4,691 | 4,847 | ||||||||
Acquisition related costs | 402 | (132 | ) | |||||||
Gain on sales and disposals of intangible assets, net | (1,913 | ) | (1,463 | ) | ||||||
Adjusted operating income before amortization (Adjusted OIBA) | $ | 3,180 | $ | 3,252 | ||||||
MARCHEX, INC. AND SUBSIDIARIES | ||||||||
Reconciliation from Net Cash provided by Operating Activities to Adjusted EBITDA | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2012 | |||||||
Net cash provided by operating activities | $ | 2,519 | $ | 3,954 | ||||
Changes in asset and liabilities, net of acquisitions | 1,161 | 302 | ||||||
Income tax expense (benefit) | 242 | (80 | ) | |||||
Acquisition related costs | 402 | - | ||||||
Interest (income) expense and other, net | (104 | ) | 19 | |||||
Excess tax benefits related to stock compensation | - | 97 | ||||||
Adjusted EBITDA | $ | 4,220 | $ | 4,292 | ||||
Net cash provided by investing activities | $ | 931 | $ | 1,194 | ||||
Net cash used in financing activities | $ | (729 | ) | $ | (1,296 | ) | ||
MARCHEX, INC. AND SUBSIDIARIES | |||||||||||||
Reconciliation of GAAP EPS to Adjusted Non-GAAP EPS | |||||||||||||
(in thousands, except per share data) | |||||||||||||
(unaudited) | |||||||||||||
Three Months Ended | |||||||||||||
March 31, | |||||||||||||
2011 | 2012 | ||||||||||||
Adjusted Non-GAAP EPS | $ | 0.06 | $ | 0.05 | |||||||||
Net income (loss) per Class B share applicable to common stockholders - diluted (GAAP EPS) | $ | 0.01 | $ | (0.02 | ) | ||||||||
Shares used to calculate diluted net income (loss) per Class B | |||||||||||||
share applicable to common stockholders | 34,255 | 33,602 | |||||||||||
Net income (loss) applicable to common stockholders | $ | 513 | $ | (788 | ) | ||||||||
Stock-based compensation | 3,511 | 3,908 | |||||||||||
Acquisition related costs | 402 | (132 | ) | ||||||||||
Amortization of intangible assets from acquisitions | 464 | 1,537 | |||||||||||
Gain on sales and disposals of intangible assets, net | (1,913 | ) | (1,463 | ) | |||||||||
Interest (income) expense and other, net | (102 | ) | 197 | ||||||||||
Dividends paid to participating securities | 63 | 73 | |||||||||||
Estimated impact of income taxes | (879 | ) | (1,242 | ) | |||||||||
Adjusted Non-GAAP net income applicable to common stockholders | $ | 2,059 | $ | 2,090 | |||||||||
Adjusted Non-GAAP EPS | $ | 0.06 | $ | 0.05 | |||||||||
Shares used to calculate diluted net income (loss) per Class B share applicable | |||||||||||||
to common stockholders | 34,255 | 33,602 | |||||||||||
Weighted average stock options and common shares subject to repurchase or cancellation (if applicable) | - | 2,046 | |||||||||||
Weighted average common shares related to deferred acquisition payments | - | 8,270 | |||||||||||
Diluted shares used to calculate Adjusted Non-GAAP EPS (1) | 34,255 | 43,918 | |||||||||||
(1 | ) | For the purpose of computing the number of diluted shares for non-GAAP EPS, Marchex uses the accounting guidance that would be applicable for computing the number of diluted shares for GAAP EPS. |
Source:
Marchex Investor Relations
Trevor Caldwell,
206-331-3600
ir@marchex.com
or
MEDIA INQUIRIES
Weber ShandwickKatie Riese,
206-576-5507
kriese@webershandwick.com