Marchex Acquires Callcap, A Leading Call Monitoring Company
The Acquisition Creates one of the largest Conversation Analytics Companies across both voice and text solutions
Callcap specializes in call monitoring and analytics solutions for more
than twelve industry verticals, including home services, healthcare,
automotive, and telecommunications. The Company’s innovative technology
powers complex, custom evaluations of millions of calls each month,
providing deep insights into consumer and business conversations with
numerous integrations into the call center environments of many
franchise businesses. Callcap has processed tens of millions of calls
year to date, which further expands the footprint of Marchex’s leading
conversational data set. Additionally, the company offers a separate
self-service offering to Small and Medium Sized Businesses (SMBs), which
is one of the fastest growing segments in the call analytics market and
“Following today’s announcement,
“We are excited to combine our existing suite of call monitoring and
analytics solutions with
Broaden Market Reach. The combination of
Significant Cost Savings. Leveraging Marchex AI and machine learning investments will unlock significant long-term savings by streamlining Callcap’s call monitoring solutions. In addition, the Company will benefit from joint sales efforts as well as meaningful operational efficiencies.
Faster Innovation. By combining resources, the companies expect to leverage machine learning and AI driven capabilities across one of the largest conversational data sets in the industry to deliver unique solutions for businesses of all sizes.
Transaction Details and Financial Considerations
Total consideration of
$35 million, with $25 millionpaid in cash in connection with the closing and $10 million(or 3.4 million aggregate shares of Marchex Class B common stock based on a 10-day trailing average from the closing date) in stock to be issued in four equal installments on each annual anniversary of the closing date.
For 2018, on a standalone basis, Callcap is projecting
$9 millionor more in total revenue, including more than $8.5 millionin core1 analytics revenue, up from $7.6 millionover the prior year (based on preliminary unaudited estimates), and more than $2.8 millionin operating income.
Marchexexpects the amortization of intangible assets from the acquisition will impact GAAP results. For the remainder of 2018 and for 2019, we expect the acquisition to be accretive to Adjusted OIBA2.
For the partial fourth quarter of 2018, Callcap is anticipated to
contribute more than
$0.6 millionin core analytics revenue and more than $0.2 millionin operating income excluding amortization. This amount is anticipated to be incremental to Marchex’s fourth quarter outlook outlined on November 5,2018.
For 2019, the Company anticipates the continuation of double-digit
percentage year-over-year growth in Callcap’s core analytics revenue
and Callcap to contribute operating income of more than
$3 millionexcluding amortization. In 2020, the Company anticipates the realization of potential annualized cost synergies of an incremental $500,000or more.
1 Non-core and other analytics revenue includes revenue from tests, consulting services, or other non-core analytics revenue that may continue for a limited time but is not anticipated to continue in future periods.
2 Adjusted OIBA represents income (loss) from operations excluding stock-based compensation expense, amortization of intangible assets from acquisitions, and acquisition related costs.
* Based on preliminary proforma unaudited annualized run rate data for
the quarterly period ended
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Founded in 2001, Callcap was the first call measurement company to provide real-time complete caller data and a recording of the call. Today, we are still a leader in providing innovative call monitoring and call tracking solutions that help businesses to deliver excellent customer experiences. We serve companies in a variety of industries from home services to education, HVAC to healthcare. We’re experts in helping companies who do business over the phone understand and improve their customer conversations in order to grow their business.
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Non-GAAP Financial Information
Adjusted OIBA represents income
(loss) from operations excluding stock-based compensation expense,
amortization of intangible assets from acquisitions, and acquisition
related costs. This measure, among other things, is one of the primary
metrics by which