Marchex Announces Third Quarter 2016 Results
Q3 2016 Financial Highlights
-
GAAP revenue was $30.7 million for the third quarter of 2016, compared
to
$36.9 million for the third quarter of 2015. -
GAAP net loss from continuing operations was
$5.9 million for the third quarter of 2016 or$0.14 per diluted share. For the third quarter of 2015, GAAP net loss from continuing operations was$191,000 or$0.00 per diluted share.
Q3 2015 | Q3 2016 | |||
GAAP Revenue | $36.9 million | $30.7 million | ||
Call-Driven Revenue1 | $36.1 million | $30.7 million | ||
Non-GAAP Results2: |
||||
Enterprise Revenue3 | $26.0 million | $24.0 million | ||
Call-Driven Adjusted OIBA | $2.2 million | ($3.7) million | ||
Call-Driven Adjusted EBITDA | $3.1 million | ($2.9) million | ||
Cash Balance |
$109 million |
$105 million | ||
-
Adjusted non-GAAP earnings (loss) per share2 from
continuing operations for the third quarter of 2016 was
($0.06) , compared to$0.04 for the third quarter of 2015. -
During the third quarter of 2016, YP contributed
$6.7 million in Call-Driven Revenue, compared to$10.1 million in the third 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 represents Call-Driven revenue excluding revenue generated from our contracts with YP.
Strategic Priorities Update
- Grow New and Existing Enterprise Client Relationships. We are making progress with customer initiatives, including new clients and our pipeline. We added 25 new clients year to date, including in the third quarter. These new relationships add to our customer footprint, which includes 17 of the top Fortune 500 global brands.
- Accelerate Product Innovation. Marchex Display Analytics reached another milestone and is now available through select strategic partnerships and we expect to launch to general availability in the fourth quarter. Marchex Display Analytics measures the effectiveness of display and other digital media in driving call conversions and is expanding its ability to measure the consumer journey and interplay between search and display. With the availability of Marchex Display Analytics, the Marchex Analytics platform gets closer to its mission to measure offline sales, and audience and consumer intent from digital advertisements across every channel and every device. Through our expanding integration footprint, our Marchex Display Analytics technology has access to more than 90% of impressions available in the U.S.
- Expand Global Strategic Partnerships. We have a new integration with DoubleClick Campaign Manager’s newly released Conversions API. With this integration, marketers can securely upload Marchex Display Analytics data to DoubleClick and attribute inbound phone calls to digital and mobile advertising programs, providing a more complete view of media performance. DoubleClick customers can now take advantage of the rich phone call data that Marchex provides to better understand their customers and campaigns.
“Marchex has a unique position in the mobile advertising analytics
market by virtue of our customer base, technology and products and we
expect to make progress toward improving our financial performance and
returning
Business Outlook
The following forward-looking statements reflect
Total Call-Driven financial guidance for the
Fourth Quarter ending
Call-Driven Revenue1 | $26 million or more | |||
Call-Driven Adjusted OIBA2 | a loss of ($3) million to a loss of ($4) million | |||
Call-Driven Adjusted EBITDA2 | a loss of ($2) million to a loss of ($3) million | |||
Total Call-Driven financial guidance for the
Fiscal Year ending
Call-Driven Revenue1 | $127 million or more | |||
Call-Driven Adjusted OIBA2 | a loss of ($10) million to a loss of ($11) million | |||
Call-Driven Adjusted EBITDA2 | a loss of ($6.5) million to a loss of ($7.5) million | |||
Conference Call and Webcast Information
Management will hold a conference call, starting at
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or @marchex
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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
and Archeo and Other Adjusted OIBA and EBITDA
include the above descriptions of Adjusted OIBA and EBITDA for the
Call-Driven and Archeo segments. The Call-Driven Adjusted OIBA and
EBITDA includes all
MARCHEX, INC. AND SUBSIDIARIES | |||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
(unaudited) | |||||||||||||||
Three months ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2016 | 2015 | 2016 | ||||||||||||
Revenue | $ | 36,852 | $ | 30,749 | $ | 108,113 | $ | 101,146 | |||||||
Expenses: | |||||||||||||||
Service costs (1) | 20,003 | 18,505 | 59,166 | 60,964 | |||||||||||
Sales and marketing (1) | 4,266 | 5,562 | 11,969 | 16,733 | |||||||||||
Product development (1) | 7,769 | 6,832 | 23,608 | 21,859 | |||||||||||
General and administrative (1) | 4,721 | 5,320 | 14,925 | 15,815 | |||||||||||
Acquisition and disposition related costs | 81 | 354 | 199 | 662 | |||||||||||
Total operating expenses | 36,840 | 36,573 | 109,867 | 116,033 | |||||||||||
Impairment of goodwill | — | — | — | (63,305 | ) | ||||||||||
Income (loss) from operations | 12 | (5,824 | ) | (1,754 | ) | (78,192 | ) | ||||||||
Interest expense and other, net | (12 | ) | (15 | ) | (52 | ) | (90 | ) | |||||||
Loss from continuing operations before provision for income taxes | 0 | (5,839 | ) | (1,806 | ) | (78,282 | ) | ||||||||
Income tax expense | 191 | 15 | 11 | 40 | |||||||||||
Net loss from continuing operations | (191 | ) | (5,854 | ) | (1,817 | ) | (78,322 | ) | |||||||
Discontinued operations: | |||||||||||||||
Income from discontinued operations, net of tax | 37 | — | 5,084 | — | |||||||||||
Gain on sale from discontinued operations, net of tax | 163 | — | 22,195 | — | |||||||||||
Discontinued operations, net of tax | 200 | — | 27,279 | — | |||||||||||
Net income (loss) | 9 | (5,854 | ) | 25,462 | (78,322 | ) | |||||||||
Dividends paid to participating securities | — | — | (37 | ) | — | ||||||||||
Net income (loss) applicable to common stockholders | $ | 9 | $ | (5,854 | ) | $ | 25,425 | $ | (78,322 | ) | |||||
Basic and diluted net income (loss) per Class A and Class
B share applicable to common stockholders: |
|||||||||||||||
Continuing operations | $ | (0.00 | ) | $ | (0.14 | ) | $ | (0.04 | ) | $ | (1.88 | ) | |||
Discontinued operations, net of tax | $ | 0.00 | $ | — | $ | 0.66 | $ | — | |||||||
Basic and diluted net income (loss) per Class A and Class
B share applicable to common stockholders |
$ | 0.00 | $ | (0.14 | ) | $ | 0.62 | $ | (1.88 | ) | |||||
Dividends paid per share | $ | — | $ | — | $ | 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 | 36,120 | 36,639 | 35,980 | 36,372 | |||||||||||
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 | 41,353 | 41,872 | 41,213 | 41,605 | |||||||||||
(1) Includes stock-based compensation allocated as follows: | |||||||||||||||
Service costs | $ | 273 | $ | 160 | $ | 1,046 | $ | 565 | |||||||
Sales and marketing | 339 | 353 | 893 | 1,321 | |||||||||||
Product development | 620 | 206 | 1,843 | 1,367 | |||||||||||
General and administrative | 1,119 | 1,060 | 4,027 | 3,993 | |||||||||||
Total | $ | 2,351 | $ | 1,779 | $ | 7,809 | $ | 7,246 | |||||||
MARCHEX, INC. AND SUBSIDIARIES | |||||||
Condensed Consolidated Balance Sheets | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
December 31, | September 30, | ||||||
Assets | 2015 | 2016 | |||||
Current assets: | |||||||
Cash and cash equivalents | $ | 109,155 | $ | 105,275 | |||
Accounts receivable, net | 24,621 | 21,579 | |||||
Prepaid expenses and other current assets | 1,784 | 1,995 | |||||
Refundable taxes | 127 | 117 | |||||
Total current assets | 135,687 | 128,966 | |||||
Property and equipment, net | 5,778 | 3,913 | |||||
Intangibles and other assets, net | 222 | 220 | |||||
Goodwill | 63,305 | — | |||||
Total Assets | $ | 204,992 | $ | 133,099 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 9,460 | $ | 7,960 | |||
Accrued expenses and other current liabilities | 6,712 | 8,300 | |||||
Deferred revenue | 692 | 362 | |||||
Total current liabilities | 16,864 | 16,622 | |||||
Other non-current liabilities | 662 | 266 | |||||
Total Liabilities | 17,526 | 16,888 | |||||
Class A common stock | 55 | 55 | |||||
Class B common stock | 368 | 381 | |||||
Treasury stock | (238 | ) | (2 | ) | |||
Additional paid-in capital | 350,799 | 357,617 | |||||
Accumulated deficit | (163,518 | ) | (241,840 | ) | |||
Total Stockholders' Equity | 187,466 | 116,211 | |||||
Total Liabilities and Stockholders' Equity | $ | 204,992 | $ | 133,099 | |||
MARCHEX, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||
Reconciliation of GAAP Income (Loss) from Operations to Operating Income (Loss) Before Amortization (OIBA) | |||||||||||||||||||||||||
and Adjusted Operating Income (Loss) Before Amortization (Adjusted OIBA) | |||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||
2015 | 2016 | 2015 | 2016 | ||||||||||||||||||||||
Income (loss) from operations | $ | 12 | $ | (5,824 | ) | $ | (1,754 | ) | $ | (78,192 | ) | ||||||||||||||
Stock-based compensation | 2,351 | 1,779 | 7,809 | 7,246 | |||||||||||||||||||||
Operating income (loss) before amortization (OIBA) | 2,363 | (4,045 | ) | 6,055 | (70,946 | ) | |||||||||||||||||||
Acquisition and disposition related costs | 81 | 354 | 199 | 662 | |||||||||||||||||||||
Impairment of goodwill | — | — | — | 63,305 | |||||||||||||||||||||
Adjusted operating income (loss) before amortization
(Adjusted OIBA) - Consolidated |
$ | 2,444 | $ | (3,691 | ) | $ | 6,254 | $ | (6,979 | ) | |||||||||||||||
Less: Archeo and Other Adjusted OIBA1 | 267 | 18 | 45 | 45 | |||||||||||||||||||||
Call-Driven Adjusted OIBA1 | $ | 2,177 | $ | (3,709 | ) | $ | 6,209 | $ | (7,024 | ) | |||||||||||||||
Reconciliation from Net Cash provided by (used in) Operating Activities to Adjusted EBITDA |
|||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||
2015 | 2016 | 2015 | 2016 | ||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 7,563 | $ | (220 | ) | $ | 12,000 | $ | (2,873 | ) | |||||||||||||||
Changes in asset and liabilities | (4,299 | ) | (3,085 | ) | 1,813 | (2,438 | ) | ||||||||||||||||||
Income tax expense | 191 | 15 | 11 | 40 | |||||||||||||||||||||
Acquisition and disposition related costs | 81 | 354 | 199 | 662 | |||||||||||||||||||||
Interest expense and other, net | 12 | 12 | 52 | 87 | |||||||||||||||||||||
Income from discontinued operations, net of tax | (37 | ) | — | (5,102 | ) | — | |||||||||||||||||||
Tax effect on gain on sale of discontinued operations | (163 | ) | — | — | — | ||||||||||||||||||||
Adjusted EBITDA - Consolidated | $ | 3,348 | $ | (2,924 | ) | $ | 8,973 | $ | (4,522 | ) | |||||||||||||||
Less: Archeo and Other Adjusted EBITDA1 | 267 | 18 | 45 | 45 | |||||||||||||||||||||
Call-DrivenAdjusted EBITDA1 | $ | 3,081 | $ | (2,942 | ) | $ | 8,928 | $ | (4,567 | ) | |||||||||||||||
Net cash provided by (used in) investing activities | $ | (1,260 | ) | $ | (235 | ) | $ | 21,580 | $ | (829 | ) | ||||||||||||||
Net cash used in financing activities | $ | (1,798 | ) | $ | (47 | ) | $ | (4,676 | ) | $ | (178 | ) | |||||||||||||
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 loss per share to Adjusted Non-GAAP earnings (loss) per share | ||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||
(unaudited) | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2015 | 2016 | 2015 | 2016 | |||||||||||
Adjusted Non-GAAP earnings (loss) per share from
continuing operations |
$ | 0.04 | $ | (0.06 | ) | $ | 0.10 | $ | (0.11 | ) | ||||
Net loss from continuing operations applicable to
common stockholders - diluted (GAAP loss per share) |
$ | (0.00 | ) | $ | (0.14 | ) | $ | (0.04 | ) | $ | (1.88 | ) | ||
Shares used to calculate diluted net loss from continuing
operations per share applicable to common stockholders |
41,353 | 41,872 | 41,213 | 41,605 | ||||||||||
Net income (loss) applicable to common stockholders | $ | 9 | $ | (5,854 | ) | $ | 25,425 | $ | (78,322 | ) | ||||
Stock-based compensation | 2,351 | 1,779 | 7,809 | 7,246 | ||||||||||
Acquisition and disposition related costs | 81 | 354 | 199 | 662 | ||||||||||
Impairment of goodwill | — | — | — | 63,305 | ||||||||||
Interest expense and other, net | 12 | 15 | 52 | 90 | ||||||||||
Dividends paid to participating securities | — | — | 37 | — | ||||||||||
Discontinued operations, net of tax | (200 | ) | — | (27,279 | ) | — | ||||||||
Estimated impact of income taxes | (662 | ) | 1,248 | (2,182 | ) | 2,342 | ||||||||
Adjusted Non-GAAP net income (loss) from
continuing operations |
$ | 1,591 | $ | (2,458 | ) | $ | 4,061 | $ | (4,677 | ) | ||||
Adjusted Non-GAAP earnings (loss) per share from
continuing operations |
$ | 0.04 | $ | (0.06 | ) | $ | 0.10 | $ | (0.11 | ) | ||||
Shares used to calculate diluted net income (loss) from
continuing operations per share applicable to common stockholders (GAAP) |
41,353 | 41,872 | 41,213 | 41,605 | ||||||||||
Weighted average stock options and common shares
subject to purchase or cancellation (if applicable) |
394 | — | 373 | — | ||||||||||
Diluted shares used to calculate Adjusted Non-GAAP earnings
(loss) per share 1 |
41,747 | 41,872 | 41,586 | 41,605 | ||||||||||
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. |
MARCHEX, INC. AND SUBSIDIARIES | ||||||||||||||
Financial Summary Information | ||||||||||||||
(in thousands) | ||||||||||||||
(unaudited) | ||||||||||||||
NON-GAAP MEASURES | ||||||||||||||
CONSOLIDATED1 | Q315 | Q316 | YTD Q315 | YTD Q316 | ||||||||||
GAAP Revenue | $ | 36,852 | $ | 30,749 | $ | 108,113 | $ | 101,146 | ||||||
Adjusted OIBA | $ | 2,444 | $ | (3,691 | ) | $ | 6,254 | $ | (6,979 | ) | ||||
Adjusted EBITDA | $ | 3,348 | $ | (2,924 | ) | $ | 8,973 | $ | (4,522 | ) | ||||
CALL-DRIVEN | Q315 | Q316 | YTD Q315 | YTD Q316 | ||||||||||
GAAP Revenue | $ | 36,135 | $ | 30,749 | $ | 105,621 | $ | 101,125 | ||||||
Adjusted OIBA | $ | 2,177 | $ | (3,709 | ) | $ | 6,209 | $ | (7,024 | ) | ||||
Adjusted EBITDA | $ | 3,081 | $ | (2,942 | ) | $ | 8,928 | $ | (4,567 | ) | ||||
ENTERPRISE REVENUE2 | Q315 | Q316 | YTD Q315 | YTD Q316 | ||||||||||
Call-Driven GAAP Revenue | $ | 36,135 | $ | 30,749 | $ | 105,621 | $ | 101,125 | ||||||
Less: YP Revenue | $ | 10,128 | $ | 6,747 | $ | 31,247 | $ | 23,357 | ||||||
Enterprise Revenue | $ | 26,007 | $ | 24,002 | $ | 74,374 | $ | 77,768 | ||||||
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/20161102006637/en/
Source:
Marchex Investor Relations
Trevor Caldwell, 206-331-3600
Email:
ir(at)marchex.com
or
MEDIA INQUIRIES
Marchex
Corporate Communications
206-331-3434
Email: pr(at)marchex.com