UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 9, 2007
Marchex, Inc.
(Exact name of Registrant as Specified in its Charter)
| Delaware | 000-50658 | 35-2194038 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
413 Pine Street
Suite 500
Seattle, Washington 98101
(Address of Principal Executive Offices)
(206) 331-3300
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
Yahoo! Master Agreement. In a press release dated August 9, 2007, Marchex, Inc., a Delaware corporation (“Marchex”) announced it has entered into a new master agreement with Yahoo! Inc. (“Yahoo”) providing for the distribution of Yahoo paid search results within the Marchex network of Web sites. The new master agreement extends through June 30, 2009. The new master agreement also terminates and supersedes the prior agreement among the parties entered into in February 2005. A press release announcing the new master agreement was filed as Exhibit 99.1 to this Current Report on Form 8-K.
Agreement to Acquire VoiceStar. In a press release dated August 9, 2007, Marchex announced it has signed a definitive agreement (the “Merger Agreement”) to acquire privately held VoiceStar, Inc. (www.voicestar.com), a company operating in the call-based advertising market (“VoiceStar”). The anticipated purchase price (including debt being assumed) is approximately $12,900,000 in cash and Marchex will also issue approximately $7,100,000 of restricted Class B common stock that is subject to vesting over two-and-one half years from closing to certain employees of VoiceStar (the “Restricted Equity Consideration”).
The Merger Agreement contains customary representations and warranties and requires the VoiceStar Shareholders to indemnify Marchex for certain liabilities arising under the Merger Agreement, subject to certain limitations and conditions. At the closing, Marchex will deposit into escrow for a period of one year from the closing an amount of cash equal to $1,135,000 to partially secure the indemnification and other obligations under the Merger Agreement of the VoiceStar shareholders. The closing of the transaction is contingent on customary closing conditions. Marchex has also agreed to file a registration statement to register the shares of Restricted Equity Consideration on Form S-3. The transaction is currently expected to close on or before October 1, 2007.
Marchex currently anticipates investing approximately $8,000,000 in VoiceStar relating to products, infrastructure, human resources and other items through 2008.
A press release announcing the transaction was filed as Exhibit 99.2 to this Current Report on Form 8-K.
Item 2.02 Results of Operations and Financial Condition.
On August 9, 2007, Marchex is issuing a press release and holding a conference call regarding its financial results for the quarter ended June 30, 2007 (the “Earnings Release”). The full text of the Earnings Release is furnished as Exhibit 99.3 to this Current Report on Form 8-K.
The information in this Item 2.02 (including Exhibit 99.3) is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Marchex is referencing non-GAAP financial information in both the Earnings Release and on the conference call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached Earnings Release. Disclosures regarding definitions of these financial measures used by Marchex and why Marchex’s management believes these financial measures provide useful information to investors is also included in the Earnings Release.
Item 3.02 Unregistered Sale of Equity Securities.
The disclosures made in response to Item 1.01 above are incorporated herein by reference.
The issuance of Restricted Equity Consideration will be made in reliance upon an exemption from the registration provisions of the Securities Act of 1933, as amended, as set forth in Section 4(2) thereof on the basis that the offer and sale of the shares does not involve a public offering. No underwriters were involved in this transaction.
Item 7.01 Regulation FD Disclosure
The information in this Item 7.01 (including Exhibit 99.4) is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. Such information shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
On August 9, 2007, Marchex is issuing a press release announcing the appointment of Bill Day as Marchex’s Chief Media Officer. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.4 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Press Release dated August 9, 2007. | |
| 99.2 | Press Release dated August 9, 2007. | |
| 99.3 | Earnings Release dated August 9, 2007. | |
| 99.4 | Press Release dated August 9, 2007. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: August 9, 2007 | MARCHEX, INC. | |||
| By: | /s/ Russell C. Horowitz | |||
| Name: | Russell C. Horowitz | |||
| Title: | Chairman and Chief Executive Officer (Principal Executive Officer) | |||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release dated August 9, 2007. | |
| 99.2 | Press Release dated August 9, 2007. | |
| 99.3 | Earnings Release dated August 9, 2007. | |
| 99.4 | Press Release dated August 9, 2007. |
Exhibit 99.1
Marchex Renews Search Marketing Distribution Relationship with Yahoo!
SEATTLE, WA—August 9, 2007—Marchex, Inc. (NASDAQ: MCHX, MCHXP), a local online advertising company and leading publisher of local content, today announced that it has renewed a multi-year agreement in which Yahoo! will continue to deliver its sponsored search results to Marchex’s network of local and vertical Web sites. Marchex’s network reached approximately 31 million unique visitors in June 2007.*
“Marchex is one of our trusted partners and continuing our relationship with them is consistent with our goal to create the leading advertising marketplace,” said Hilary Schneider, Executive Vice President of the Local Markets and Commerce Division and the Yahoo! Publisher Network Division at Yahoo! “Marchex’s network of Web sites effectively extends our advertisers’ reach and provides them unique local and vertical targeting opportunities across a broad base of categories.”
“Yahoo!’s scale, broad advertiser base and robust platform enable Marchex to deliver relevant advertisements across our expanding network of local and vertical Web sites,” said John Keister, Marchex President and Chief Operating Officer. “Yahoo! has been an important partner for Marchex and will be key to our strategy moving forward as we continue to grow the traffic on our network, build out our local content and create new targeted opportunities for advertisers.”
Marchex separately announced today that it has named Internet veteran Bill Day as Chief Media Officer, effective immediately. Day, the co-founder and former CEO of About.com, will oversee Marchex’s media strategies, including the online content, consumer-facing initiatives and related advertising opportunities.
About Marchex, Inc.
Marchex (www.marchex.com) is a local online advertising company and leading publisher of local content. Marchex’s innovative advertising platform delivers search marketing products and services for local and national advertisers. Marchex’s local content network, one of the largest online, helps consumers make better, more informed local decisions though its network of content-rich Web sites that reach tens of millions of unique visitors each month.
* Unique visitor statistics are based on internal traffic logs, which calculate unique IP (Internet protocol) addresses on an unduplicated basis during a given month.
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, 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 Marchex’s actual results to differ materially from those indicated by such forward-looking statements which are described in the “Risk Factors” section of our most recent periodic report and registration statement filed with the SEC.
Marchex Press:
Mark S. Peterson
Vice President of Public Relations
Telephone: 206.331.3344
Email: mark@marchex.com
Marchex Investor Relations:
Trevor Caldwell
Vice President of Investor Relations & Strategic Initiatives
Telephone: 206.331.3600
Email: tcaldwell@marchex.com
#####
Exhibit 99.2
Marchex Adds Call-Based Advertising Services to Local
Advertising Platform with VoiceStar Acquisition
SEATTLE, WA—August 9, 2007—Marchex, Inc. (NASDAQ: MCHX, MCHXP), a local online advertising company and leading publisher of local content, today announced that it has entered into an agreement to acquire VoiceStar, one of the largest providers of call-based advertising services, including pay-per-phone-call and call-tracking, for local advertisers. The acquisition of VoiceStar gives Marchex a clear leadership position in local online advertising by adding call-based services to its local online advertising platform, making it one of the most comprehensive offerings available, and expanding Marchex’s base of local advertisers and large aggregators.
Marchex total anticipated investment to acquire VoiceStar will be $28 million, consisting of approximately $20 million in transaction consideration and $8 million in company investment. Specifically, transaction consideration consists of approximately $12.9 million in cash consideration and Marchex will also issue approximately $7.1 million in restricted stock that is subject to vesting over two-and-one-half years from closing to certain employees of VoiceStar; and company investment consists of $8 million relating to products, infrastructure, human resources and other items through 2008. The acquisition is expected to close by October 1, 2007. VoiceStar will continue to operate from its headquarters in Philadelphia, PA.
"With the addition of VoiceStar, Marchex offers one of the most comprehensive online advertising platforms and agency services for local advertisers at scale in the industry. We can now offer local aggregators a private label search- and call-based marketing platform with distribution for their advertisements in search engines, vertical Web sites, and on our network of local Web sites," said Peter Christothoulou, Marchex Chief Strategy Officer. “Additionally, we can now also add proprietary pay-per-phone call advertising units to our network of local Web sites, which allows us to increase the direct monetization of our own properties.”
We are very excited to be joining forces and bringing the value of our combined assets to a greater audience," said Todd Lieberman, VoiceStar CEO. “We share Marchex’s vision for unlocking growth opportunities in the local space and look forward to being a part of the innovative solutions Marchex brings to the marketplace.”
In addition to enabling Marchex to offer one of the most comprehensive local advertising platforms in the industry, the VoiceStar acquisition adds more than 100 local advertiser aggregators, including Comcast, The Cobalt Group, and YellowBook USA to Marchex’s current partner roster which already includes AT&T and Yellowpages.com. VoiceStar also increases Marchex’s ability to directly monetize its proprietary network of Web Sites, lessening its dependence on third-parties and increasing the revenue yield from its Web sites through the utilization of call-based advertising units which tend to have higher rates then pay-per-click listings.
Pay-Per-Phone-Call Offers Significant Growth Opportunities:
In addition to the growth opportunity associated with the pay-per-phone call market which the Kelsey Group estimates will reach up to $4 billion by 2009, Marchex believes that providing advertisers with call-based advertising options, in addition to search-based marketing tools, is a prerequisite to success in the local advertising channel. According to Piper Jaffray, only 42% of the estimated 20 million small- to medium-sized businesses (SMBs) in the U.S. have Web sites and many others are still are at the early stages of online marketing. As a result, call-based advertising will continue to be a priority for local advertisers, further evidenced by a recent Kelsey Group survey reporting that 71% of local advertisers would rather pay for phone calls versus clicks.
“We believe that call-based online advertising is not only a key extension of local search, but is also an important driver to close the gap between the vast number of consumers searching locally and the small percentage of local businesses advertising online,” said John Keister, Marchex President and Chief Operating Officer. “Phone calls have been, and will continue to be, a predominant way in which consumers connect with small businesses. Providers that deliver both search- and call-based solutions will be in a tremendous position to expose online advertising to the millions of SMBs who are not yet online.”
VoiceStar’s technology generates custom, trackable phone numbers for advertisers. Whenever an advertiser’s phone number is dialed by a consumer who sees a relevant
advertisement (online or offline), the calls are routed through VoiceStar’s servers to the advertiser. From that point, the call is tracked, monitored, recorded and billed. The technology supports multiple advertiser implementations, including: click-to-call, Web form-to-phone and other call-based products.
The combination of VoiceStar’s call-based offerings and technology with Marchex’s search-based offerings delivered through Marchex Connect, Marchex’s local online advertising platform, provides significant benefits for local advertisers and aggregators as well as national advertisers. Aggregators will now have expanded integrated search- and call-based offerings to present to their large base of local advertisers. In addition, national advertisers will increasingly benefit from integrated search- and call-based options from Marchex by enabling them to better target their ads locally and more effectively measure the offline revenue driven from their online marketing using call-tracking.
Marchex Updated Financial Guidance:
The VoiceStar transaction has the following anticipated financial impact to Marchex.
| 1. | While Marchex will only recognize a partial year contribution from VoiceStar, it believes that VoiceStar will generate revenue of approximately $1.5 million for the full year 2007, with an operating income loss. Revenue contribution to Marchex from VoiceStar for the remainder of 2007 is anticipated to be $0.5 million. Additionally, based on current VoiceStar growth rates, Marchex anticipates that VoiceStar’s 2008 contribution will more than double its total anticipated 2007 revenue, excluding cross-selling opportunities with Marchex. |
| 2. | Marchex expects that investment in VoiceStar and various call-related opportunities will total $3 million in 2007 and $5 million in 2008. The investment will primarily be directed toward: (i) increased infrastructure, communications platform investments, and investments in technology and development to drive integration into Marchex and launch marketplace systems (pay-per-phone call system for syndication across relevant proprietary and third party |
| Web sites); (ii) Marchex partner support; (iii) increased sales, marketing and business development initiatives; (iv) increased intellectual property development, (v) increased personnel costs; and (vi) increased expenses to support Marchex’s public company requirements. |
About Marchex, Inc.
Marchex (www.marchex.com) is a local online advertising company and leading publisher of local content. Marchex's innovative advertising platform delivers search marketing products and services for local and national advertisers. Marchex's local content network, one of the largest online, helps consumers make better, more informed local decisions though its network of content-rich Web sites that reach tens of millions of unique visitors each month.
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, projected costs, acquisitions, 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 Marchex's actual results to differ materially from those indicated by such forward-looking statements which are described in the "Risk Factors" section of our most recent periodic report and registration statement filed with the SEC. In addition, Marchex’s acquisition of VoiceStar remains subject to customary closing conditions. All of the information provided in this release is as of August 9, 2007 and Marchex undertakes no duty to update the information provided herein.
Marchex Press:
Mark S. Peterson
Vice President of Public Relations
Telephone: 206.331.3344
Email: mark@marchex.com
Marchex Investor Relations:
Trevor Caldwell
Vice President of Investor Relations & Strategic Initiatives
Telephone: 206.331.3600
Email: tcaldwell@marchex.com
Exhibit 99.3
Marchex Reports Second Quarter 2007 Financial Results
SEATTLE, WA—August 9, 2007—Marchex, Inc. (NASDAQ: MCHX, MCHXP) today reported its results for the second quarter ended June 30, 2007.
Consolidated Financial Results:
| • | Revenue was $34.7 million for the second quarter of 2007, a 9% increase compared to $31.7 million for the same period of 2006. |
| • | GAAP net income applicable to common stockholders was $354,000 for the second quarter of 2007 or $0.01 per share. This compares to GAAP net loss applicable to common stockholders of $612,000 or $0.02 per share for the same period of 2006. The second quarter 2007 results included non-cash stock-based compensation expense recorded under the fair value method of $2.3 million, compared to non-cash stock-based compensation expense of $3.4 million for the same period in 2006. |
| • | We provide a reconciliation of GAAP EPS to Adjusted Non-GAAP EPS in the last financial tables attached to this press release and encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures. Adjusted non-GAAP EPS for the second quarter of 2007 was $0.10, compared to $0.12 for the same period of 2006. Some Wall Street analysts use non-GAAP measures to analyze our operating results, which may include adjusted non-GAAP EPS, adjusted operating income before amortization and adjusted EBITDA. We present GAAP measures with equal or greater prominence than non-GAAP measures and such non-GAAP measures should not be considered a substitute for, or superior to, GAAP results. |
| • | Adjusted operating income before amortization was $6.4 million for the second quarter of 2007, which is a decrease of 23% compared to $8.3 million for the same period of 2006. A reconciliation of non-GAAP adjusted operating income before amortization to GAAP operating income and GAAP net income is attached to the financial tables included in this release. |
| • | Adjusted EBITDA was $8.6 million in the second quarter of 2007, compared to $9.7 million for the same period of 2006. A reconciliation of operating income before taxes, depreciation, amortization and gain/loss on sales of intangible assets to GAAP net cash provided by operating activities is attached to the financial tables included in this release. |
Marchex’s second quarter results were impacted by the following:
| - | Adjusted operating income before amortization and adjusted EBITDA were impacted by Marchex’s decision to accelerate the investment in its advertising services platform for local advertisers by $600,000 to support its largest aggregator partners. Marchex believes this investment will help accelerate the rate at which it is adding advertisers as well as adding competitive product features and further scalability to its local advertising platform. Adjusted operating income before amortization was also impacted by the increase of approximately $300,000 of amortization costs associated with the Spanish language Web site acquisitions, which was referenced by the company at the time of their acquisition. This item did not affect adjusted EBITDA; and |
| - | Datacenter outages, which resulted in a decrease of $500,000 to revenue and adjusted operating income before amortization to Marchex’s proprietary traffic sources. While these outages were not anticipated and involved certain internal and external factors, Marchex views this as non-recurring and is now transitioned to its new datacenter, which it believes can support its anticipated growth for years to come. |
“Aside from the reconciling items we have noted today, the second quarter’s financial results were largely in the range of our expectations.” said Russell C. Horowitz, Marchex Chairman and Chief Executive Officer. “Operationally, we are excited that we achieved significant product milestones during the second quarter and that Marchex’s various initiatives over the last three years are now converging around a tremendous opportunity in the local space. With the launch of 100,000 locally targeted sites, Marchex has one of the largest online local consumer networks, where we help millions of users make locally focused purchasing decisions. In addition, Marchex has what we believe is the industry’s most sophisticated local advertising platform, offering local advertisers the ability to create, manage, fulfill and report on both search- and call-based advertiser programs at scale. In total, we are going to continue investing in the local opportunity, our greatest area of strength, which means an incremental investment of $13 million this year. This will help Marchex capitalize on the momentum we are seeing in both our local advertising and consumer-facing initiatives. We believe this investment will support Marchex’s position as a local leader while also reducing risks and dependencies. We are committed to delivering the best solutions anywhere for local advertisers and consumers and believe by doing this, we will create the most value for our shareholders.”
Marchex Focus and Commitment to the Online Local Marketplace:
Over the last three years, Marchex has achieved strength in the local marketplace through building initial critical mass on both the local advertiser side, and the local consumer side. On the local advertiser side, Marchex now has more than 30,000 advertisers, exclusive of Voicestar, who are using Marchex’s advertising technology and services platform to create, manage, fulfill and report against search marketing campaigns. Additionally, based on (i) the combination of new services Marchex will offer, (ii) the number of large local advertiser aggregators leveraging Marchex and Voicestar technologies, such as AT&T, The Cobalt Group and Yellowbook USA, and (iii) the momentum Marchex is currently seeing in new local advertiser sign-ups, Marchex expects that its local advertiser coverage will more than double by the end of 2009. On the local consumer side, Marchex has more than 200,000 Web sites that contain more than one billion pages of targeted local content to help local consumers make better decisions. These Web sites generate tens of millions of visitors for our network and delivered more than 40 million look-ups and referrals in the second quarter.
The industry forecasts for online local advertising growth are very powerful. Today, there are more than 15 million businesses in the U.S. spending more than $100 billion annually in offline, locally-targeted marketing. Piper Jaffray estimates that over the next ten years, local online advertising spending will grow from $5 billion to $25 billion. In addition, Borrell Associates estimates annual growth rates over the next four years as high as 42.8% for local paid search and 15% for the entire local Internet ad market. As a result, as these sources indicate, local paid search will drive the paid search and overall online advertising space for years to come.
Recent Highlights and Updated Statistics:
Voicestar Acquisition: Marchex today announced that it has entered into an agreement to acquire Voicestar (www.voicestar.com), a leader in providing call-based advertising services for local advertisers, such as: as pay-per-phone-call, call-tracking, and other services. Voicestar is one of the largest providers of call-based advertising services with more than 100 local advertiser aggregators leveraging Voicestar’s products, such as: Comcast, The Cobalt Group, and YellowBook USA. With Voicestar, Marchex can offer advertisers and aggregator partners a complete text- and call-based advertising platform along with distribution for their advertisements in search engines, vertical Web sites, and on our local Web sites. Marchex plans to make significant investments in pay-per-phone-call going forward to support Voicestar’s expansion as part of Marchex. In order to succeed in serving the local advertising channel, in addition to providing search marketing solutions, Marchex believes that supporting call-based services is a prerequisite and provides the ability to assist those advertisers that already have a Web presence, as well as those who don’t.
Bill Day Hired as Chief Media Officer: Marchex today announced that it has strengthened its executive team with the addition of Bill Day, who will serve as Marchex’s Chief Media Officer and oversee Marchex’s media strategy, including the online content, consumer experience and related advertising opportunities. Day is a world-class operator and pioneer in providing vertically focused original content destinations, and in growing media properties at scale, given his experience at About.com, where he co-founded the company and served as President and then CEO. Day grew About.com to a top 20 online global media network that covered more than 700 topics and 50,000 subjects. About.com was, and still is today, used by tens of millions of monthly users to find highly targeted, useful information. In order to build a major consumer-facing network, Marchex believed it was important to bring in someone with deep consumer experience who had run a first tier online media company at scale.
Yahoo! Renewal: Marchex today announced an agreement with Yahoo! to extend its existing Web site monetization relationship through June, 2009. There were other potential providers who were highly interested in working with Marchex, and who the company also considered during its process. However, based on a number of factors, including Marchex’s need for product flexibility, economics, reporting, and other terms, Marchex believed Yahoo! represented the best strategic fit and it looks forward to working closely with Yahoo! on this and other strategic opportunities. Marchex is focused on complementing the Yahoo! relationship with its own advertising initiatives so it may be in a position to be the primary driver of revenue on its Web sites by the end of 2009. Marchex expects this growth will be driven by its expectations of advertiser growth and product innovation, including the roll out of new relevant proprietary ad formats, such as pay-per-phone call ads.
Unique Visitors and Revenue Attributable to Proprietary Traffic Sources: Marchex today announced that its proprietary network of vertical and local Web sites attracted approximately 31 million unique visitors for the month of June 2007. Unique visitor statistics are based on internal traffic logs, which calculate unique IP (Internet protocol) addresses on an unduplicated basis during a given month. For the second quarter of 2007, revenue attributable to proprietary traffic sources was $13.5 million.
Local Consumer Network: Marchex’s consumer network of Web sites delivered more than 40 million look-ups and referrals in the second quarter, which are defined as business searches on primary proprietary sites such as Yellow.com and Openlist.com and referral clicks on advertisement listings on our proprietary Web sites such as www.bostonmortgage.com. Marchex believes that metrics like this will significantly expand over the next 24 months based on increased traffic and usage levels at its Web sites, including the upcoming re-launch of openlist.com in September.
Local Consumer Products: In late June, Marchex launched more than 100,000 of its local and vertical Web sites leveraging its Open List technology to publish more than one billion Web pages of locally-targeted content, features and functionality for consumers looking for local services and information online, along with highly targeted local advertising inventory. These Open List-powered Web sites have received very positive feedback from users and the early metrics point toward positive revenue and page view growth. The newly launched sites feature more than 15 million business listings across all major yellow pages categories, a deep refinement system, user-generated reviews and ratings, and third-party expert reviews. The Web sites include tens of thousands of vertical, local and local-vertical Web sites, such as www.cuisine.com, www.locksmiths.com and www.remodeling.com; www.bayareahotels.com, www.newyorkdoctors.com, and www.denverautorepair.com; and Marchex’s ZIP Code Web sites, which cover 96% of all ZIP Code areas nationwide, such as www.90210.com.
Spanish-Language Web site Development Alliance with Fox: During the quarter Marchex and Fox’s Latin American Channels division, a wholly owned subsidiary of News Corporation, announced a partnership to jointly develop a set of Spanish-language Web sites owned by Marchex, including cocina.com (English translation is “Kitchen” or “Cook”), fotos.com (Photos), futbol.com (Soccer), deportes.com (Sports), mascotas.com (Pets), mujer.com (Woman), peliculas.com (Movies), salud.com (Health), and tarjetas.com (Greeting Cards). Fox will provide localized content and community features to the Web sites including: videos, forums, blogs, personal home pages, and photo albums.
New Search Marketing Product Relationship: During the quarter, Marchex announced a new relationship with Yahoo! in which Marchex is sending its direct pay-per-click advertisers into Yahoo! Sponsored Search distribution.
Stock Buy-Back:
Marchex purchased approximately 44,000 of shares of common stock for approximately $600,000 in August under the terms of its previously announced stock repurchase program. The company is reviewing the scope of this repurchase program in light of its stock price and prevailing market conditions and anticipates expanding or modifying this program as a result of this review.
Marchex Financial Guidance:
The following forward-looking statements reflect Marchex’s expectations as of August 9, 2007.
Revenue: Marchex anticipates 2007 Revenue of $136 million to $142 million. Adjustments from our prior guidance of $144 million to $150 million are based on:
| - | a loss of $500,000 in revenue during the second quarter resulting from the datacenter outages; |
| - | a $500,000 anticipated revenue increase from the Voicestar acquisition; |
| - | a $4 million decrease resulting from an anticipated reduction in Web site marketing; |
| - | a $4 million decrease in revenue based on our increased direct monetization of our proprietary Web sites and impact from Yahoo!’s quality-based pricing initiatives. |
Adjusted operating income before amortization: Marchex anticipates 2007 adjusted operating income before amortization of $21 million to $25 million. Adjustments from our prior guidance of $34 million to $38 million are based on:
| - | a $1.1 million decrease in adjusted operating income before amortization from our second quarter results due to the increased investment in our advertising services platform for local advertisers plus datacenter outage impacts; |
| - | the $4 million increased investment in the accelerated build out of our advertising services platform for local advertisers we provide to partners like AT&T and other aggregator partners, as well as supporting potential new relationships; |
| - | a $3 million investment in accelerating the product and infrastructure build out for Voicestar, as well as the initial integration with Marchex’s advertising services platform; |
| - | a $1 million decrease resulting from an anticipated reduction in Web site marketing; |
| - | a $4 million decrease based on direct monetization of our proprietary Web sites and impact from Yahoo’s quality-based pricing initiatives. |
Adjusted EBITDA: For adjusted EBITDA, Marchex anticipates add-backs of approximately $8 million in additional depreciation and amortization to its adjusted operating income before amortization range, implying an adjusted EBITDA range of $29 million to $33 million. Our prior guidance on add-backs to adjusted operating income before amortization was approximately $7 million in additional depreciation and amortization.
Third Quarter 2007: For color on Marchex’s quarterly revenue expectations, given the various new strategic initiatives and impacts, the company currently anticipates that Q3 revenue will be more than $32.5 million. Regarding quarterly adjusted operating income before amortization, given that Marchex has significantly ramped up our investment in building local marketplace leadership and valuable intellectual property, Marchex currently anticipates that Q3 will be more than $4 million. Marchex expects adjusted EBITDA to be $2 million higher than operating income before amortization, given additional depreciation and amortization add-backs, implying more than $6 million in adjusted EBITDA.
Conference Call and Webcast Information:
Management will hold a conference call, starting at 5:00 p.m. EDT on Thursday, August 9, 2007 to discuss its second quarter 2007 results and other company updates. To access the call by live Webcast, please log onto the Investor Relations section of the Marchex Web site (www.marchex.com/ir.html). An archived version of the Webcast will also be available, beginning two hours after completion of the call, at the same location.
About Marchex, Inc.
Marchex (www.marchex.com) is a local online advertising company and leading publisher of local content. Marchex’s innovative advertising platform delivers search- and call-based marketing products and services for local and national advertisers. Marchex’s local content network, one of the largest online, helps consumers make better, more informed local decisions though its network of content-rich Web sites that reach tens of millions of unique visitors each month.
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, 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 Marchex’s actual results to differ materially from those indicated by such forward-looking statements which are described in the “Risk Factors” section of our most recent periodic report and registration statement filed with the SEC. In addition, Marchex’s acquisition of VoiceStar remains subject to customary closing conditions. All of the information provided in this release is as of August 9, 2007 and Marchex undertakes no duty to update the information provided herein.
Non-GAAP Financial Information:
To supplement Marchex’s consolidated financial statements presented in accordance with GAAP and to provide clarity internally and externally, Marchex uses certain non-GAAP measures of financial performance and liquidity, including OIBA, Adjusted OIBA, Adjusted EBITDA and Adjusted non-GAAP EPS. Marchex also provides Pro Forma Revenue information for the three and six months ended June 30, 2006 and 2007 as if the AreaConnect and Open List asset acquisitions in 2006 occurred as of January 1, 2006.
OIBA represents income (loss) from operations plus (1) stock-based compensation expense and (2) amortization of acquired intangible assets. This measure, among other things, is one of the primary metrics by which Marchex evaluates the performance of its business. Additionally, Marchex’s management uses Adjusted OIBA which excludes (1) any gain/loss on sales of intangible assets and (2) facility relocation as these are viewed as non-recurring in nature. Adjusted OIBA is the basis on which Marchex’s internal budgets are based and by which Marchex’s management is currently evaluated. Marchex believes these measures are useful to investors because they represent Marchex’s consolidated operating results, taking into account depreciation and other intangible amortization, which Marchex believes is an ongoing cost of doing business, but excluding the effects of certain other non-cash and non-recurring expenses. Adjusted EBITDA represents income before interest, income taxes, depreciation, amortization, stock compensation expense, and gain/loss on sales of intangible assets. Marchex believes that Adjusted EBITDA is another alternative measure of liquidity to GAAP net cash provided by operating activities that provides meaningful supplemental information regarding liquidity and is used by Marchex’s management to measure its ability to fund operations and its financing obligations.
Adjusted non-GAAP EPS represents Adjusted Net Income divided by weighted average fully diluted shares outstanding for Adjusted non-GAAP EPS purposes. Adjusted Net Income generally captures those items on the statement of operations that have been, or ultimately will
be, settled in cash exclusive of certain non-recurring items and represents net income (loss) available to common stockholders plus: (1) stock based compensation expense, (2) amortization of acquired intangible assets, (3) gain/loss on sales of intangible assets, (4) other income (expense), (5) the cumulative effect of changes in accounting principles, (6) facility relocation and less (7) discount on preferred stock redemption. Adjusted non-GAAP EPS includes dilution from options and warrants per the treasury stock method, includes the weighted average number of all potential common shares relating to convertible preferred stock and restricted stock and excludes the weighted average common share equivalents for redeemed preferred shares. Shares outstanding for Adjusted non-GAAP EPS purposes are therefore higher than shares outstanding for GAAP EPS purposes. Financial analysts and investors may use Adjusted non-GAAP EPS to analyze Marchex’s financial performance since these groups have historically used EPS related measures, along with other measures, to estimate the value of a company, to make informed investment decisions and to evaluate a company's operating performance compared to that of other companies in its industry.
Marchex’s management believes that investors should have access to, and Marchex is obligated to provide, the same set of tools that management uses in analyzing the company’s results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, and should not be considered in isolation, as a substitute for, or superior to, GAAP results. These non-GAAP terms, as defined by Marchex, may not be comparable to similarly titled measures used by other companies. Marchex endeavors to compensate for the limitations of the non-GAAP measures presented by providing the comparable GAAP measure with equal or greater prominence, GAAP financial statements and detailed descriptions of the reconciling items and adjustments, including quantifying such items, to derive the non-GAAP measure.
For further information:
Investor Relations:
Trevor Caldwell
Vice President of Investor Relations & Strategic Initiatives
Marchex, Inc.
206.331.3316
tcaldwell@marchex.com
Press:
Mark S. Peterson
Vice President of Public Relations
206.331.3344
mark@marchex.com
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MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
| Three Months Ended June 30, |
||||||||
| 2006 | 2007 | |||||||
| Revenue |
$ | 31,714,720 | $ | 34,665,637 | ||||
| Expenses: |
||||||||
| Service costs (1) |
15,020,319 | 16,764,588 | ||||||
| Sales and marketing (1) |
5,407,200 | 7,112,929 | ||||||
| Product development (1) |
2,553,395 | 2,662,779 | ||||||
| General and administrative (1) |
3,846,212 | 4,057,643 | ||||||
| Amortization of intangible assets from acquisitions |
5,164,191 | 4,074,254 | ||||||
| Facility relocation |
— | 121,124 | ||||||
| Total operating expenses |
31,991,317 | 34,793,317 | ||||||
| Gain on sales and disposals of intangible assets, net |
174,071 | 123,246 | ||||||
| Loss from operations |
(102,526 | ) | (4,434 | ) | ||||
| Interest income and other, net |
751,826 | 748,314 | ||||||
| Income before provision for income taxes |
649,300 | 743,880 | ||||||
| Income tax expense |
838,804 | 412,978 | ||||||
| Net income (loss) |
(189,504 | ) | 330,902 | |||||
| Convertible preferred stock dividends and discount on preferred stock redemption, net |
422,147 | (23,482 | ) | |||||
| Net income (loss) applicable to common stockholders |
$ | (611,651 | ) | $ | 354,384 | |||
| Basic net income (loss) applicable to common stockholders |
$ | (0.02 | ) | $ | 0.01 | |||
| Diluted net income (loss) applicable to common stock holders |
$ | (0.02 | ) | $ | 0.01 | |||
| Shares used to calculate basic net income (loss) per share applicable to common stockholders |
38,311,448 | 39,597,600 | ||||||
| Shares used to calculate diluted net income (loss) per share applicable to common stockholders |
38,311,448 | 40,534,319 | ||||||
(1) Includes stock-based compensation allocated as follows: |
||||||||
| Service costs |
$ | 255,742 | $ | 31,741 | ||||
| Sales and marketing |
943,978 | 89,800 | ||||||
| Product development |
827,187 | 450,692 | ||||||
| General and administrative |
1,401,001 | 1,770,488 | ||||||
| Total |
$ | 3,427,908 | $ | 2,342,721 | ||||
MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
| Six Months Ended June 30, |
||||||||
| 2006 | 2007 | |||||||
| Revenue |
$ | 62,827,045 | $ | 68,889,038 | ||||
| Expenses: |
||||||||
| Service costs (1) |
29,872,268 | 32,005,816 | ||||||
| Sales and marketing (1) |
11,273,884 | 14,622,850 | ||||||
| Product development (1) |
4,780,419 | 5,260,435 | ||||||
| General and administrative (1) |
7,255,720 | 8,238,418 | ||||||
| Amortization of intangible assets from acquisitions |
10,034,864 | 8,597,388 | ||||||
| Facility relocation |
— | 121,124 | ||||||
| Total operating expenses |
63,217,155 | 68,846,031 | ||||||
| Gain on sales and disposals of intangible assets, net |
353,279 | 155,510 | ||||||
| Income (loss) from operations |
(36,831 | ) | 198,517 | |||||
| Interest income and other, net |
1,486,108 | 1,460,301 | ||||||
| Income before provision for income taxes |
1,449,277 | 1,658,818 | ||||||
| Income tax expense |
1,492,452 | 886,766 | ||||||
| Income (loss) before cumulative effect of a change in accounting principle |
(43,175 | ) | 772,052 | |||||
| Cumulative effect of a change in accounting principle, net of tax (2) |
151,341 | — | ||||||
| Net income |
108,166 | 772,052 | ||||||
| Convertible preferred stock dividends, conversion payment and discount on preferred stock redemption, net |
1,916,082 | (130,030 | ) | |||||
| Net income (loss) applicable to common stockholders |
$ | (1,807,916 | ) | $ | 902,082 | |||
| Basic net income (loss) per share applicable to common stockholders |
$ | (0.05 | ) | $ | 0.02 | |||
| Diluted net income (loss) per share applicable to common stockholders |
$ | (0.05 | ) | $ | 0.02 | |||
| Basic net income (loss) applicable to common stockholders |
37,693,506 | 39,382,979 | ||||||
| Diluted net income (loss) applicable to common stock holders |
37,693,506 | 40,371,282 | ||||||
(1) Includes stock-based compensation allocated as follows: |
||||||||
| Service costs |
$ | 491,953 | $ | 150,276 | ||||
| Sales and marketing |
1,991,249 | 462,158 | ||||||
| Product development |
1,562,374 | 939,944 | ||||||
| General and administrative |
2,903,075 | 3,677,557 | ||||||
| Total |
$ | 6,948,651 | $ | 5,229,935 | ||||
| (2) | As a result of the adoption of SFAS 123R, Marchex recorded an amount from the cumulative impact of the accounting change. |
MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
| December 31, 2006 |
June 30, 2007 |
|||||||
| Assets | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 46,105,827 | $ | 53,892,263 | ||||
| Trade accounts receivable, net |
22,035,343 | 20,204,440 | ||||||
| Prepaid expenses and other current assets |
2,221,550 | 2,301,477 | ||||||
| Refundable taxes |
1,837,166 | 4,500,841 | ||||||
| Deferred tax assets |
670,624 | 547,084 | ||||||
| Total current assets |
72,870,510 | 81,446,105 | ||||||
| Property and equipment, net |
7,280,075 | 8,318,727 | ||||||
| Deferred tax assets |
2,444,782 | 4,462,965 | ||||||
| Intangibles and other assets, net |
13,318,801 | 20,297,528 | ||||||
| Goodwill |
200,738,098 | 195,699,928 | ||||||
| Intangible assets from acquisitions, net |
36,735,570 | 27,910,324 | ||||||
| Total assets |
$ | 333,387,836 | $ | 338,135,577 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 10,739,231 | $ | 10,828,757 | ||||
| Accrued expenses and other current liabilities |
2,913,152 | 2,025,432 | ||||||
| Deferred revenue |
2,430,644 | 2,572,077 | ||||||
| Total current liabilities |
16,083,027 | 15,426,266 | ||||||
| Other non-current liabilities |
91,907 | 80,360 | ||||||
| Total liabilities |
16,174,934 | 15,506,626 | ||||||
| Stockholders’ equity: |
||||||||
| Convertible preferred stock |
2,342,884 | 1,446,649 | ||||||
| Class A common stock |
119,217 | 118,217 | ||||||
| Class B common stock |
276,361 | 306,886 | ||||||
| Additional paid-in capital |
320,607,113 | 326,156,302 | ||||||
| Accumulated deficit |
(6,132,673 | ) | (5,399,103 | ) | ||||
| Total stockholders’ equity |
317,212,902 | 322,628,951 | ||||||
| Total liabilities and stockholders’ equity |
$ | 333,387,836 | $ | 338,135,577 | ||||
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of Revenue to Pro Forma Revenue
(unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, | |||||||||||||
| 2006 | 2007 | 2006 | 2007 | |||||||||||
| Revenue, as reported |
$ | 31,714,720 | $ | 34,665,637 | $ | 62,827,045 | $ | 68,889,038 | ||||||
| AreaConnect pro forma revenue |
152,362 | — | 649,675 | — | ||||||||||
| Open List pro forma revenue |
55,670 | — | 156,511 | — | ||||||||||
| Pro forma eliminations |
(5,008 | ) | — | (22,259 | ) | — | ||||||||
| Pro forma Revenue |
$ | 31,917,744 | $ | 34,665,637 | $ | 63,610,972 | $ | 68,889,038 | ||||||
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Income (Loss) to Operating Income Before Amortization (OIBA) and
Adjusted Operating Income Before Amortization (Adjusted OIBA)
(unaudited)
| Three Months Ended June 30, |
||||||||
| 2006 | 2007 | |||||||
| Net income (loss) applicable to common stockholders |
$ | (611,651 | ) | $ | 354,384 | |||
| Convertible preferred stock dividends and discount on preferred stock redemption, net |
422,147 | (23,482 | ) | |||||
| Net income (loss) |
(189,504 | ) | 330,902 | |||||
| Income tax expense |
838,804 | 412,978 | ||||||
| Income before provision for income taxes |
649,300 | 743,880 | ||||||
| Interest income and other, net |
(751,826 | ) | (748,314 | ) | ||||
| Loss from operations |
(102,526 | ) | (4,434 | ) | ||||
| Stock-based compensation |
3,427,908 | 2,342,721 | ||||||
| Amortization of intangible assets from acquisitions |
5,164,191 | 4,074,254 | ||||||
| Operating income before amortization (OIBA) |
8,489,573 | 6,412,541 | ||||||
| Facility relocation |
— | 121,124 | ||||||
| Gain on sales and disposals of intangible assets, net |
(174,071 | ) | (123,246 | ) | ||||
| Adjusted operating income before amortization (Adjusted OIBA) |
$ | 8,315,502 | $ | 6,410,419 | ||||
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Income (Loss) to Operating Income Before Amortization (OIBA) and
and Adjusted Operating Income Before Amortization (Adjusted OIBA)
(unaudited)
| Six Months Ended June 30, |
||||||||
| 2006 | 2007 | |||||||
| Net income (loss) applicable to common stockholders |
$ | (1,807,916 | ) | $ | 902,082 | |||
| Convertible preferred stock dividends, conversion payment and discount on preferred stock redemption, net |
1,916,082 | (130,030 | ) | |||||
| Net income |
108,166 | 772,052 | ||||||
| Cumulative effect of a change in accounting principle, net of tax (1) |
151,341 | — | ||||||
| Income (loss) before cumulative effect of a change in accounting principle |
(43,175 | ) | 772,052 | |||||
| Income tax expense |
1,492,452 | 886,766 | ||||||
| Income before provision for income taxes |
1,449,277 | 1,658,818 | ||||||
| Interest income and other, net |
(1,486,108 | ) | (1,460,301 | ) | ||||
| Income (loss) from operations |
(36,831 | ) | 198,517 | |||||
| Stock-based compensation |
6,948,651 | 5,229,935 | ||||||
| Amortization of intangible assets from acquisitions |
10,034,864 | 8,597,388 | ||||||
| Operating income before amortization (OIBA) |
16,946,684 | 14,025,840 | ||||||
| Facility relocation |
— | 121,124 | ||||||
| Gain on sales and disposals of intangible assets, net |
(353,279 | ) | (155,510 | ) | ||||
| Adjusted operating income before amortization (Adjusted OIBA) |
$ | 16,593,405 | $ | 13,991,454 | ||||
| (1) | As a result of the adoption of SFAS 123R, Marchex recorded an amount from the cumulative impact of the accounting change. |
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation from Net Cash provided by Operating Activities to Adjusted EBITDA
(unaudited)
| Three Months Ended June 30, |
||||||||
| 2006 | 2007 | |||||||
| Net cash provided by operating activities |
$ | 6,251,428 | $ | 4,282,562 | ||||
| Changes in asset and liabilities, net of effects of acquisitions |
2,997,470 | 3,697,066 | ||||||
| Provision for income taxes |
838,804 | 412,978 | ||||||
| Other item - facility relocation |
25,788 | 17,106 | ||||||
| Interest income and other, net |
(751,826 | ) | (756,841 | ) | ||||
| Income and excess tax benefits related to stock options |
354,735 | 953,773 | ||||||
| Adjusted EBITDA |
$ | 9,716,399 | $ | 8,606,644 | ||||
| Six Months Ended June 30, |
||||||||
| 2006 | 2007 | |||||||
| Net cash provided by operating activities |
$ | 15,681,527 | $ | 16,760,683 | ||||
| Changes in asset and liabilities, net of effects of acquisitions |
1,730,391 | (559,074 | ) | |||||
| Provision for income taxes |
1,492,452 | 886,766 | ||||||
| Other item - facility relocation |
43,431 | 17,106 | ||||||
| Interest income and other, net |
(1,487,971 | ) | (1,463,544 | ) | ||||
| Income and excess tax benefits related to stock options |
1,832,700 | 2,446,764 | ||||||
| Adjusted EBITDA |
$ | 19,292,530 | $ | 18,088,701 | ||||
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP EPS to Adjusted Non-GAAP EPS
(unaudited)
| Three Months Ended June 30, |
||||||||
| 2006 | 2007 | |||||||
| Adjusted Non-GAAP EPS |
$ | 0.12 | $ | 0.10 | ||||
| Net income (loss) per share applicable to common stockholders - diluted (GAAP EPS) |
$ | (0.02 | ) | $ | 0.01 | |||
| Shares used to calculate diluted net income (loss) per share applicable to common stockholders |
38,311,448 | 40,534,319 | ||||||
| Net income (loss) applicable to common stockholders |
$ | (611,651 | ) | $ | 354,384 | |||
| Discount on preferred stock redemption |
— | (40,923 | ) | |||||
| Stock-based compensation |
3,427,908 | 2,342,721 | ||||||
| Facility relocation |
— | 121,124 | ||||||
| Amortization of intangible assets from acquisitions |
5,164,191 | 4,074,254 | ||||||
| Gain on sales and disposals of intangible assets, net |
(174,071 | ) | (123,246 | ) | ||||
| Interest income and other, net |
(751,826 | ) | (748,314 | ) | ||||
| Estimated impact of income taxes |
(2,158,103 | ) | (1,895,669 | ) | ||||
| Adjusted Non-GAAP net income applicable to common stockholders |
$ | 4,896,448 | $ | 4,084,331 | ||||
| Adjusted Non-GAAP EPS |
$ | 0.12 | $ | 0.10 | ||||
| Shares used to calculate diluted net income (loss) per share applicable to common stockholders |
38,311,448 | 40,534,319 | ||||||
| Weighted average common share equivalents for redeemed preferred shares |
— | (3,266 | ) | |||||
| Weighted average stock options and warrants and common shares subject to repurchase or cancellation (if applicable) |
2,206,249 | 2,328,137 | ||||||
| Shares used to calculate Adjusted Non-GAAP EPS |
40,517,697 | 42,859,190 | ||||||
For Adjusted Non-GAAP EPS, the impact of restricted stock (common shares subject to repurchase or cancellation) is based on the weighted average of restricted stock outstanding as compared with diluted shares for GAAP purposes, which included restricted stock on a treasury stock method basis.
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP EPS to Adjusted Non-GAAP EPS
(unaudited)
| Six Months Ended June 30, |
||||||||
| 2006 | 2007 | |||||||
| Adjusted Non-GAAP EPS |
$ | 0.22 | $ | 0.21 | ||||
| Net income (loss) per share applicable to common stockholders - diluted (GAAP EPS) |
$ | (0.05 | ) | $ | 0.02 | |||
| Shares used to calculate diluted net income (loss) per share applicable to common stockholders |
37,693,506 | 40,371,282 | ||||||
| Net income (loss) applicable to common stockholders |
$ | (1,807,916 | ) | $ | 902,082 | |||
| Discount on preferred stock redemption |
— | (163,867 | ) | |||||
| Stock-based compensation |
6,948,651 | 5,229,935 | ||||||
| Facility relocation |
— | 121,124 | ||||||
| Amortization of intangible assets from acquisitions |
10,034,864 | 8,597,388 | ||||||
| Gain on sales and disposals of intangible assets, net |
(353,279 | ) | (155,510 | ) | ||||
| Cumulative effect of a change in accounting principle, net of tax (1) |
(151,341 | ) | — | |||||
| Interest income and other, net |
(1,486,108 | ) | (1,460,301 | ) | ||||
| Estimated impact of income taxes |
(4,512,701 | ) | (4,154,741 | ) | ||||
| Adjusted Non-GAAP net income applicable to common stockholders |
$ | 8,672,170 | $ | 8,916,110 | ||||
| Adjusted Non-GAAP EPS |
$ | 0.22 | $ | 0.21 | ||||
| Shares used to calculate diluted net income per share applicable to common stockholders |
37,693,506 | 40,371,282 | ||||||
| Weighted average common share equivalents for redeemed preferred shares |
— | (7,058 | ) | |||||
| Weighted average stock options and warrants and common shares subject to repurchase or cancellation (if applicable) |
2,492,164 | 2,425,488 | ||||||
| Shares used to calculate Adjusted Non-GAAP EPS |
40,185,670 | 42,789,712 | ||||||
For Adjusted Non-GAAP EPS, the impact of restricted stock (common shares subject to repurchase or cancellation) is based on the weighted average of restricted stock outstanding as compared with diluted shares for GAAP purposes, which included restricted stock on a treasury stock method basis.
| (1) | As a result of the adoption of SFAS 123R, Marchex recorded an amount from the cumulative impact of the accounting change. |
Exhibit 99.4
Marchex Names Bill Day, Co-Founder and Former CEO of About.com, as Chief
Media Officer
SEATTLE, WA—August 9, 2007—Marchex, Inc. (NASDAQ: MCHX, MCHXP), a local online advertising company and leading publisher of local content, today announced that it has named Internet veteran Bill Day as Chief Media Officer. In this newly created role, Day will oversee Marchex’s media strategy, including its online content, consumer-facing initiatives and related advertising strategies.
With this announcement, Day assumes responsibility for certain areas and strategies which previously were directed by Marchex Chairman and Chief Executive Officer Russell C. Horowitz. Day, who assumes his new position immediately, will report directly to Horowitz.
“Local search and locally developed and oriented content will be one of the key drivers for the search market over the next five years and Marchex is in a phenomenal position to be a leader in this category,” said Day. “I believe that Marchex’s innovative content initiatives are truly ahead of the curve and I look forward to building on the current momentum and helping to take Marchex’s local consumer experience and related advertising opportunities to the next level.”
“Bill’s extensive track record and expertise in building innovative, consumer media properties and in operating online advertising businesses will enable him to provide important strategic direction to our consumer-facing initiatives” said Horowitz. “With Bill’s leadership, we are well positioned to realize the significant growth potential of our network and develop it into a leading brand in the local space.”
Prior to joining Marchex, Day was a co-founder and CEO of About.com, a pioneer in providing vertically focused original consumer information and advice. He grew About.com to one of the most highly trafficked content destinations on the Internet, a top 20 global online media network covering more than 700 topics and 50,000 subjects used by tens of millions of monthly users to find highly targeted, useful information. While at About.com, he also pioneered contextual pay-per-click advertising through the launch of the Sprinks Network. Following Primedia’s acquisition of About.com in 2000, Day continued as CEO of About.com, running the division within Primedia through 2003. More recently, from 2004 to 2007, he has been the CEO of MeMedia (formerly WhenU), a privately-held behavioral advertising network. He received his B.S. in Mechanical Engineering from Yale University, and his M.B.A. from the Wharton School of the University of Pennsylvania.
About Marchex, Inc.
Marchex (www.marchex.com) is a local online advertising company and leading publisher of local content. Marchex’s innovative advertising platform delivers search marketing products and services for local and national advertisers. Marchex’s local content network, one of the largest online, helps consumers make better, more informed local decisions though its network of content-rich Web sites that reach tens of millions of unique visitors each month.
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, 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 Marchex’s actual results to differ materially from those indicated by such forward-looking statements which are described in the “Risk Factors” section of our most recent periodic report and registration statement filed with the SEC.
Marchex Press:
Mark S. Peterson
Vice President of Public Relations
Telephone: 206.331.3344
Email: mark@marchex.com
Marchex Investor Relations:
Trevor Caldwell
Vice President of Investor Relations & Strategic Initiatives
Telephone: 206.331.3600
Email: tcaldwell@marchex.com
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