Marchex Announces Fourth Quarter and Full Year 2019 Results
Q4 and Full Year 2019 Financial Highlights
- Revenue was
$28.6 million for the fourth quarter of 2019, compared to$23.1 million for the fourth quarter of 2018. Revenue was$106.1 million for 2019, compared to$85.3 million for 2018. - Core analytics and solutions revenue was
$12.7 million for the fourth quarter of 2019, compared to$10.9 million for the fourth quarter of 2018. Core analytics and solutions revenue was$52.3 million for 2019, compared to$35.4 million for 2018. - Net loss was
$0.4 million for the fourth quarter of 2019 or$0.01 per diluted share, compared to a net loss of$0.6 million or$0.01 per diluted share for the fourth quarter of 2018. Net loss was$4.0 million for 2019 or$0.09 per diluted share, compared to a net loss of$2.7 million or$0.06 per diluted share for 2018.
|
|
Q4 2018 |
|
Q4 2019 |
|
|
FY 2018 |
|
FY 2019 |
|||||||||||||||||
Revenue |
|
$ |
|
23.1 |
|
million |
|
$ |
|
28.6 |
|
|
million |
|
|
$ |
|
85.3 |
|
million |
|
$ |
|
106.1 |
|
million |
Net cash provided by (used in) operating activities |
|
$ |
|
1.0 |
|
million |
|
$ |
|
(1.7 |
) |
|
million |
|
|
$ |
|
5.1 |
|
million |
|
$ |
|
5.1 |
|
million |
Cash Balance |
|
$ |
|
45.2 |
|
million |
|
$ |
|
42.5 |
|
|
million |
|
|
|
|
|
|
|
|
|
|
|
||
Non-GAAP Results1: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA |
|
$ |
|
1.2 |
|
million |
|
$ |
|
1.0 |
|
|
million |
|
|
$ |
|
2.2 |
|
million |
|
$ |
|
4.4 |
|
million |
- Adjusted non-GAAP income per share1 for the fourth quarter of 2019 was
$0.01 , compared to$0.02 for the fourth quarter of 2018. Adjusted non-GAAP income per share1 for 2019 was$0.04 , compared to$0.00 for 2018.
1 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
Expanded conversational analytics and solutions leadership with the acquisition of Sonar Technologies. In
Grow New and Existing Client Relationships. In the fourth quarter,
Accelerate Product Innovation.
“In 2019, we made considerable progress in expanding our market opportunity through innovating with products, leveraging strategic initiatives and evolving our infrastructure to solve mission critical problems for our customers across the fastest growing mobile communication channels,” said
Business Outlook
The following forward-looking statements reflect
- For the first quarter of 2020, the Company anticipates core analytics and solutions revenue to be in the range of
$12.8 million , representing growth from the prior year comparative quarter and from the fourth quarter of 2019. - In the first quarter of 2020, the Company anticipates seeing stabilization or potentially a modest increase in revenue related to Marchex’s marketplace products on a year-over-year basis, excluding the decline of the legacy Local Leads product.
“For 2020, as our sales, product and OEM partner initiatives ramp, we anticipate that growth in our auto vertical may accelerate later in the year. We are making a series of strategic investments that we believe will drive Marchex’s growth and long-term operating profile in 2021 and beyond”, said Arends.
- Additional sales and marketing investments, particularly in the first part of the year, as the Company accelerates its initiatives and personnel additions to capture the increasing opportunity it is seeing for its conversational analytics products and sales acceleration solutions.
$2 million in addressing various infrastructure initiatives, including consolidating infrastructure and data centers during 2020. Through these initiatives, the Company anticipates that it can achieve more than$1 million in annualized cost savings beginning in 2021 and beyond.- Up to
$2.5 million investment in a private auto services company. The Company expects to include the activity and expenses from this investment in its results of operations.
“Our majority investment in a private auto services company is independent from our existing auto analytics product focus, but represents an opportunity that can benefit from our technology investments and relationships within the auto vertical over time. We believe this investment can help broaden our overall strategy, deepen our industry coverage, and leverage our technology investments,” said Arends. “We also anticipate we will maintain our profitability profile in 2020 and make profitability progress excluding the investment in the auto services company.”
Financial Guidance for the First Quarter ending March 31, 2020 |
||
Total Revenue |
|
Approximately $25 million |
Income (loss) from operations |
|
($4.5) million or better |
Adjusted OIBA1,2 |
|
A loss of ($1.5) million or better |
Adjusted EBITDA1,2 |
|
A loss of ($1.0) million or better |
Adjusted EBITDA excluding auto services investment 1,2 |
|
Near break-even |
2 First quarter GAAP income (loss) from operations is expected to be ($4.5) million or better, assuming stock-based compensation and amortization of intangibles between $2.8 and $3 million for the quarter. |
Conference Call and Webcast Information
Management will hold a conference call, starting at
About
Please visit http://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
In the event the press release contains links to third party websites or materials, the links are provided solely as a convenience to you.
Non-GAAP Financial Information:
To supplement
Adjusted OIBA represents income (loss) from operations excluding stock-based compensation expense, amortization of intangible assets from acquisitions, and acquisition related costs (benefit). This measure, among other things, is one of the primary metrics by which
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, |
|
||||||||||||||||||
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
||||||||
Revenue |
|
$ |
|
|
23,131 |
|
|
$ |
|
|
28,591 |
|
|
$ |
|
|
85,251 |
|
|
$ |
|
|
106,132 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Service costs (1) |
|
|
12,720 |
|
|
|
15,586 |
|
|
|
47,804 |
|
|
|
56,537 |
|
||||||||
Sales and marketing (1) |
|
|
3,513 |
|
|
|
4,479 |
|
|
|
13,788 |
|
|
|
16,651 |
|
||||||||
Product development (1) |
|
|
4,041 |
|
|
|
5,419 |
|
|
|
15,423 |
|
|
|
20,127 |
|
||||||||
General and administrative (1) |
|
|
2,798 |
|
|
|
3,577 |
|
|
|
10,881 |
|
|
|
13,516 |
|
||||||||
Amortization of intangible assets from acquisitions |
|
|
781 |
|
|
|
1,559 |
|
|
|
781 |
|
|
|
6,263 |
|
||||||||
Acquisition related costs (benefit) |
|
|
352 |
|
|
|
263 |
|
|
|
462 |
|
|
|
(447 |
) |
||||||||
Total operating expenses |
|
|
24,205 |
|
|
|
30,883 |
|
|
|
89,139 |
|
|
|
112,647 |
|
||||||||
Loss from operations |
|
|
(1,074 |
) |
|
|
(2,292 |
) |
|
|
(3,888 |
) |
|
|
(6,515 |
) |
||||||||
Interest income and other, net |
|
|
249 |
|
|
|
160 |
|
|
|
1,054 |
|
|
|
752 |
|
||||||||
Loss before provision for income taxes |
|
|
(825 |
) |
|
|
(2,132 |
) |
|
|
(2,834 |
) |
|
|
(5,763 |
) |
||||||||
Income tax expense (benefit) |
|
|
(188 |
) |
|
|
(1,718 |
) |
|
|
(156 |
) |
|
|
(1,721 |
) |
||||||||
Net loss applicable to common stockholders |
|
$ |
|
|
(637 |
) |
|
$ |
|
|
(414 |
) |
|
$ |
|
|
(2,678 |
) |
|
$ |
|
|
(4,042 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net loss per Class A and Class B share applicable to common stockholders |
|
$ |
|
|
(0.01 |
) |
|
$ |
|
|
(0.01 |
) |
|
$ |
|
|
(0.06 |
) |
|
$ |
|
|
(0.09 |
) |
Shares used to calculate basic net loss per share applicable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Class A |
|
|
5,056 |
|
|
|
4,661 |
|
|
|
5,056 |
|
|
|
4,793 |
|
||||||||
Class B |
|
|
37,823 |
|
|
|
41,286 |
|
|
|
37,390 |
|
|
|
40,667 |
|
||||||||
Shares used to calculate diluted net loss per share applicable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Class A |
|
|
5,056 |
|
|
|
4,661 |
|
|
|
5,056 |
|
|
|
4,793 |
|
||||||||
Class B |
|
|
42,880 |
|
|
|
45,947 |
|
|
|
42,446 |
|
|
|
45,460 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
(1) Includes stock-based compensation allocated as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Service costs |
|
$ |
|
|
97 |
|
|
$ |
|
|
10 |
|
|
$ |
|
|
435 |
|
|
$ |
|
|
141 |
|
Sales and marketing |
|
|
152 |
|
|
|
187 |
|
|
|
563 |
|
|
|
716 |
|
||||||||
Product development |
|
|
80 |
|
|
|
75 |
|
|
|
356 |
|
|
|
290 |
|
||||||||
General and administrative |
|
|
376 |
|
|
|
725 |
|
|
|
1,686 |
|
|
|
2,000 |
|
||||||||
Total |
|
$ |
|
|
705 |
|
|
$ |
|
|
997 |
|
|
$ |
|
|
3,040 |
|
|
$ |
|
|
3,147 |
|
The consideration and purchase accounting for the Sonar acquisition are preliminary estimates at this time and are pending finalization of various items including potential working capital adjustments. |
MARCHEX, INC. AND SUBSIDIARIES |
||||||||||||
Condensed Consolidated Balance Sheets |
||||||||||||
(in thousands) |
||||||||||||
(unaudited) |
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
December 31, |
|
|
December 31, |
|
||||||
|
|
|
2018 |
|
|
|
2019 |
|
||||
Assets |
|
|
|
|
|
|
|
|
||||
Current assets: |
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
45,230 |
|
|
$ |
|
|
42,526 |
|
Accounts receivable, net |
|
|
16,198 |
|
|
|
17,809 |
|
||||
Prepaid expenses and other current assets |
|
|
2,657 |
|
|
|
2,084 |
|
||||
Total current assets |
|
|
64,085 |
|
|
|
62,419 |
|
||||
Property and equipment, net |
|
|
2,921 |
|
|
|
3,028 |
|
||||
Right-of-use lease asset |
|
|
— |
|
|
|
5,801 |
|
||||
Other assets, net |
|
|
917 |
|
|
|
335 |
|
||||
Goodwill |
|
|
24,442 |
|
|
|
33,433 |
|
||||
Intangible assets from acquisitions, net |
|
|
20,697 |
|
|
|
19,485 |
|
||||
Total assets |
|
$ |
|
|
113,062 |
|
|
$ |
|
|
124,501 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
||||
Current liabilities: |
|
|
|
|
|
|
|
|
||||
Accounts payable |
|
$ |
|
|
5,968 |
|
|
$ |
|
|
7,082 |
|
Accrued expenses and other current liabilities |
|
|
5,807 |
|
|
|
6,668 |
|
||||
Current portion of acquisition-related liabilities |
|
|
1,215 |
|
|
|
579 |
|
||||
Deferred revenue and deposits |
|
|
1,782 |
|
|
|
1,173 |
|
||||
Lease liability current |
|
|
— |
|
|
|
1,500 |
|
||||
Total current liabilities |
|
|
14,772 |
|
|
|
17,002 |
|
||||
Other non-current liabilities |
|
|
1,287 |
|
|
|
— |
|
||||
Deferred tax liabilities |
|
|
1,531 |
|
|
|
981 |
|
||||
Lease liability non-current |
|
|
— |
|
|
|
5,664 |
|
||||
Non-current portion of acquisition-related liabilities |
|
|
446 |
|
|
|
— |
|
||||
Total liabilities |
|
|
18,036 |
|
|
|
23,647 |
|
||||
Stockholders’ equity: |
|
|
|
|
|
|
|
|
||||
Class A common stock |
|
|
53 |
|
|
|
49 |
|
||||
Class B common stock |
|
|
370 |
|
|
|
396 |
|
||||
Additional paid-in capital |
|
|
350,801 |
|
|
|
360,649 |
|
||||
Accumulated deficit |
|
|
(256,198 |
) |
|
|
(260,240 |
) |
||||
Total stockholders’ equity |
|
|
95,026 |
|
|
|
100,854 |
|
||||
Total liabilities and stockholders’ equity |
|
$ |
|
|
113,062 |
|
|
$ |
|
|
124,501 |
|
The consideration and purchase accounting for the Sonar acquisition are preliminary estimates at this time and are pending finalization of various items including potential working capital adjustments. |
MARCHEX, INC. AND SUBSIDIARIES |
||||||||||||||||||||
(in thousands) |
||||||||||||||||||||
(unaudited) |
||||||||||||||||||||
Reconciliation of GAAP Loss from Operations to Adjusted Operating Income Before Amortization (OIBA) |
||||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||
|
|
Three Months Ended December 31, |
|
|
Twelve Months Ended December 31, |
|
||||||||||||||
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
||||
Loss from operations |
|
$ |
|
(1,074 |
) |
|
$ |
|
(2,292 |
) |
|
$ |
|
(3,888 |
) |
|
$ |
|
(6,515 |
) |
Stock-based compensation |
|
|
705 |
|
|
|
997 |
|
|
|
3,040 |
|
|
|
3,147 |
|
||||
Amortization of intangible assets from acquisitions |
|
|
781 |
|
|
|
1,559 |
|
|
|
781 |
|
|
|
6,263 |
|
||||
Acquisition related costs (benefit) |
|
|
352 |
|
|
|
263 |
|
|
|
462 |
|
|
|
(447 |
) |
||||
Adjusted operating income before amortization (Adjusted OIBA) |
|
$ |
|
764 |
|
|
$ |
|
527 |
|
|
$ |
|
395 |
|
|
$ |
|
2,448 |
|
Reconciliation from Net Cash provided by (used in) Operating Activities to Adjusted EBITDA |
||||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||
|
|
Three Months Ended December 31, |
|
|
Twelve Months Ended December 31, |
|
||||||||||||||
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
||||
Net cash provided by (used in) operating activities |
|
$ |
|
989 |
|
|
$ |
|
(1,749 |
) |
|
$ |
|
5,051 |
|
|
$ |
|
5,094 |
|
Changes in assets and liabilities |
|
|
317 |
|
|
|
4,374 |
|
|
|
(2,092 |
) |
|
|
2,179 |
|
||||
Income tax expense (benefit) |
|
|
(188 |
) |
|
|
(1,718 |
) |
|
|
(156 |
) |
|
|
(1,721 |
) |
||||
Acquisition related costs (benefit) |
|
|
352 |
|
|
|
263 |
|
|
|
462 |
|
|
|
(447 |
) |
||||
Interest income and other, net |
|
|
(249 |
) |
|
|
(160 |
) |
|
|
(1,054 |
) |
|
|
(752 |
) |
||||
Adjusted EBITDA |
|
$ |
|
1,221 |
|
|
$ |
|
1,010 |
|
|
$ |
|
2,211 |
|
|
$ |
|
4,353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net cash used in investing activities |
|
$ |
|
(34,407 |
) |
|
$ |
|
(8,236 |
) |
|
$ |
|
(36,563 |
) |
|
$ |
|
(9,683 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net cash provided by (used in) financing activities |
|
$ |
|
43 |
|
|
$ |
|
44 |
|
|
$ |
|
(27,448 |
) |
|
$ |
|
1,885 |
|
Revenue Reconciliations |
||||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||
|
|
Three Months Ended December 31, |
|
|
Twelve Months Ended December 31, |
|
||||||||||||||
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
||||
Core analytics and solutions revenue1 |
|
$ |
|
10,860 |
|
|
$ |
|
12,669 |
|
|
$ |
|
35,390 |
|
|
$ |
|
52,318 |
|
Marketplace, Local Leads, and other analytics2 |
|
|
12,271 |
|
|
|
15,922 |
|
|
|
49,861 |
|
|
|
53,814 |
|
||||
Total Revenue |
|
$ |
|
23,131 |
|
|
$ |
|
28,591 |
|
|
$ |
|
85,251 |
|
|
$ |
|
106,132 |
|
1 Core analytics and solutions revenue includes revenue from analytics customers, including those that are purchasing or buying products derived from the company’s speech technology platform. 2 Includes revenue from marketplace, local leads and from tests, consulting services or other analytics revenues that may continue for a limited time but are not anticipated to continue in future periods.
Certain immaterial reclassifications were made to the current presentation. |
MARCHEX, INC. AND SUBSIDIARIES |
||||||||||||||||||||
Reconciliation of GAAP Net Loss per Share to Adjusted Non-GAAP Income per Share |
||||||||||||||||||||
(in thousands, except per share amounts) |
||||||||||||||||||||
(unaudited) |
||||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||
|
|
Three Months Ended December 31, |
|
|
Twelve Months Ended December 31, |
|
||||||||||||||
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
||||
Adjusted Non-GAAP income per share |
|
$ |
|
0.02 |
|
|
$ |
|
0.01 |
|
|
$ |
|
0.00 |
|
|
$ |
|
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss per share applicable to common stockholders - diluted (GAAP loss per share) |
|
$ |
|
(0.01 |
) |
|
$ |
|
(0.01 |
) |
|
$ |
|
(0.06 |
) |
|
$ |
|
(0.09 |
) |
Shares used to calculate diluted net loss per share applicable to common stockholders |
|
|
42,880 |
|
|
|
45,947 |
|
|
|
42,446 |
|
|
|
45,460 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss applicable to common stockholders |
|
$ |
|
(637 |
) |
|
$ |
|
(414 |
) |
|
$ |
|
(2,678 |
) |
|
$ |
|
(4,042 |
) |
Stock-based compensation |
|
|
705 |
|
|
|
997 |
|
|
|
3,040 |
|
|
|
3,147 |
|
||||
Acquisition related costs (benefit) |
|
|
352 |
|
|
|
263 |
|
|
|
462 |
|
|
|
(447 |
) |
||||
Amortization of intangible assets from acquisitions |
|
|
781 |
|
|
|
1,559 |
|
|
|
781 |
|
|
|
6,263 |
|
||||
Interest income and other, net |
|
|
(249 |
) |
|
|
(160 |
) |
|
|
(1,054 |
) |
|
|
(752 |
) |
||||
Estimated impact of income taxes |
|
|
(231 |
) |
|
|
(1,846 |
) |
|
|
(350 |
) |
|
|
(2,348 |
) |
||||
Adjusted Non-GAAP net income |
|
$ |
|
721 |
|
|
$ |
|
399 |
|
|
$ |
|
201 |
|
|
$ |
|
1,821 |
|
Adjusted Non-GAAP income per share |
|
$ |
|
0.02 |
|
|
$ |
|
0.01 |
|
|
$ |
|
0.00 |
|
|
$ |
|
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares used to calculate diluted net loss per share applicable to common stockholders (GAAP) |
|
|
42,880 |
|
|
|
45,947 |
|
|
|
42,446 |
|
|
|
45,460 |
|
||||
Weighted average stock options and common shares subject to purchase or cancellation |
|
|
274 |
|
|
|
476 |
|
|
|
301 |
|
|
|
714 |
|
||||
Diluted shares used to calculate Adjusted Non-GAAP income per share 1 |
|
|
43,154 |
|
|
|
46,423 |
|
|
|
42,747 |
|
|
|
46,174 |
|
1 For the purpose of computing the number of diluted shares for Adjusted Non-GAAP income 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. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200212005850/en/
Source:
Trevor Caldwell
Marchex Investor Relations
Telephone: 206.331.3600
Email: ir@marchex.com
Or
MEDIA INQUIRIES
Marchex Corporate Communications
Telephone: 206.331.3434
Email: marchex@edelman.com