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): November 5, 2014
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.) |
520 Pike Street
Suite 2000
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 2.02 Results of Operations and Financial Condition.
On November 5, 2014, Marchex, Inc. (“Marchex”) is issuing a press release and holding a conference call regarding its financial results for the quarter ended September 30, 2014 (the “Press Release”). The full text of the Press Release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Item 2.02 (including Exhibit 99.1) 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. 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.
Marchex is referencing non-GAAP financial information in both the Press 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 Press 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 Press Release.
Item 2.06 Material Impairment.
In conjunction with the preparation of its financial statements for the quarter ended September 30, 2014, Marchex has made an assessment that it is more likely than not that Marchex will be unable to realize the value of gross deferred tax assets of $45.4 million and accordingly, Marchex has recorded a 100% valuation allowance related to these deferred tax assets. Marchex increased the valuation allowance by $22.3 million resulting in a non-cash income tax expense of $22.3 million during the quarter ended September 30, 2014.
A valuation allowance is required by U.S. GAAP if it is more likely than not that all or a part of a deferred tax asset cannot be realized in the future. Marchex considered a number of factors in making its assessment, including its taxable losses in 2012 and 2013, its projected taxable loss for 2014, and the loss of a significant customer during the third quarter of 2014 resulting in lower projected revenue and profitability.
The increase in the valuation allowance is not expected to result in any current or future cash expenditures. Marchex will provide additional information relating to the valuation allowance in its Form 10-Q for the quarterly period ended September 30, 2014.
Item 7.01 Regulation FD Disclosure.
In the Press Release Marchex announced that its Board of Directors has adopted a new share repurchase program to repurchase up to 3 million shares of Marchex’s Class B common stock through open market and privately negotiated transactions, at such times and in such amounts as the company deems appropriate, including without limitation pursuant to a Rule 10b5-1 purchase plan. This program supersedes Marchex’s previously disclosed share repurchase program.
The information in this Item 7.01 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.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
| Exhibit No. |
Description | |
| 99.1 | Press Release of Marchex, dated November 5, 2014. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Marchex has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: November 5, 2014 | MARCHEX, INC. | |||||
| By: | /s/ MICHAEL A. ARENDS | |||||
| Name: | Michael A. Arends | |||||
| Title: | Chief Financial Officer (Principal Financial Officer) | |||||
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Press Release of Marchex, dated November 5, 2014. | |
Exhibit 99.1
Marchex Announces Third Quarter 2014 Results and Announces Share Repurchase Program
SEATTLE — (BUSINESS WIRE) – November 5, 2014 — Marchex, Inc. (NASDAQ:MCHX), a mobile advertising technology company, today announced its financial results for the third quarter ended September 30, 2014.
“While the third quarter came with certain challenges, we continued to make progress with our customers and products,” said Russell Horowitz, Chairman and CEO of Marchex. “More and more consumers are searching for products and services on their smartphones and clicking to call businesses. This trend is accelerating demand for Marchex’s technology, which provides unique intelligence for advertisers that need to drive and measure the growing volume of over-the-phone sales.”
Q3 2014 Financial Highlights1
| • | GAAP revenue was $49.2 million for the third quarter of 2014, compared to $40.6 million for the third quarter of 2013. Non-GAAP revenue2, which excludes domain sales recorded in revenue, was $47.6 million for the third quarter of 2014. |
| • | GAAP net loss from continuing operations was $21.8 million for the third quarter of 2014, which includes the effect of a non-cash charge to income tax expense of $22.3 million for a valuation allowance on our deferred tax assets, compared to GAAP net income from continuing operations of $598,000 for the third quarter of 2013. |
| • | GAAP net loss from continuing operations attributable to common stockholders per diluted share was $0.53 for the third quarter of 2014. This compares to GAAP net income from continuing operations attributable to common stockholders per diluted share of $0.02 for the third quarter of 2013. |
| Q3 2014 | Q3 2013 | |||||||
| GAAP Revenue |
$ | 49.2 million | $ | 40.6 million | ||||
| Non-GAAP Results: |
||||||||
| Non-GAAP Revenue 2, 5, 6 |
$ | 47.6 million | $ | 39.7 million | ||||
| Call-Driven and Related Revenue 6 |
$ | 46.4 million | $ | 35.7 million | ||||
| Archeo Revenue including domain gains and sales 3, 5 |
$ | 2.8 million | $ | 5.9 million | ||||
| Archeo Revenue excluding domain gains and sales 3, 5 |
$ | 1.2 million | $ | 4.0 million | ||||
| Call-Driven Adjusted OIBA 5 |
$ | 3.3 million | $ | 1.7 million | ||||
| Call-Driven Adjusted EBITDA 5 |
$ | 4.2 million | $ | 2.6 million | ||||
| Adjusted OIBA 4, 5 |
$ | 4.2 million | $ | 4.4 million | ||||
| Adjusted EBITDA 4, 5 |
$ | 5.2 million | $ | 5.3 million | ||||
| Adjusted OIBA excluding domain gains and sales 5 |
$ | 2.7 million | $ | 2.5 million | ||||
| Adjusted EBITDA excluding domain gains and sales 5 |
$ | 3.6 million | $ | 3.4 million | ||||
| • | Adjusted non-GAAP EPS3 from continuing operations for the third quarter of 2014 was $0.06, compared to $0.08 for the third quarter of 2013. Adjusted non-GAAP EPS3 from continuing operations excluding domain gains and sales for the third quarter of 2014 and 2013 were both $0.04. |
| 1 | In July 2013, certain pay-per-click assets were sold. As a result, the financial results of these pay-per-click assets are presented as discontinued operations, net of tax in our condensed consolidated statements of operations in accordance with GAAP, and are excluded from all other results unless otherwise noted. |
| 2 | Excludes domain sales recognized in GAAP revenue. In September 2013 upon the launch of its domain marketplace, the Company commenced recognizing domain sales as revenue. |
| 3 | Includes/excludes domain sales recognized in GAAP revenue and domain sales recognized in gains on sales and disposals of intangible assets. |
| 4 | Adjusted OIBA, Adjusted EBITDA and Non-GAAP EPS include the impact of domain gains and sales. Historically, these non-GAAP measures excluded the impact of domain gains and sales. |
| 5 | 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. |
| 6 | Allstate contributed revenue of $15.4 million and the related distribution partner costs (a component of service costs) were $13.7 million resulting in a difference of $1.7 million in the third quarter of 2014. |
Marchex Q3 and Recent Call-Driven Business Highlights:
| • | Revenue. Call-Driven and related revenue was $46.4 million for the third quarter of 2014 compared to $35.7 million for the third quarter of 2013. |
| • | Products. Marchex announced the launch of Real Time Call DNA in October. This technology enables advertisers to visually map, analyze, and measure what happens inside a phone conversation after a consumer calls their business – without recording any of the actual dialogue. Real-Time Call DNA is the newest addition to Marchex Call Analytics, the leading enterprise platform for measuring phone calls from advertising. |
Archeo Q3 Business Highlights:
| • | Revenue. Archeo non-GAAP revenue was $1.2 million for the third quarter of 2014, which excludes domain sales recognized in GAAP revenue. |
| • | Domains sales. During the third quarter of 2014, domain sales yielded $1.6 million. |
| • | During the third quarter of 2014, the company received earn-out consideration as part of the July 2013 pay-per-click asset sale transaction and recognized $278,000 of gain on sale, net of tax, on discontinued operations. |
Non-Operating Highlights:
| • | Share Repurchase Program. Marchex announced today that the Board of Directors has authorized a new share repurchase program, which supersedes and replaces any prior company repurchase programs. Under the new share repurchase program the Board of Directors has authorized the repurchase of up to 3 million shares of the company’s Class B common stock in the aggregate through open market and privately negotiated transactions at times and in such amounts as the company deems appropriate. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, capital availability, and other market conditions. This new share repurchase program does not have an expiration date and may be limited or terminated at any time without prior notice. |
Business Outlook
The following forward-looking statements reflect Marchex’s expectations as of November 5, 2014 and exclude any contribution from Archeo operations, domain sales and discontinued operations. Archeo operating results would be additive to our Call-Driven revenue, profitability, and other measures below:
Call-Driven financial guidance for the fiscal year ending December 31, 2014
| Call-Driven Revenue |
$167-$169 million | |
| Call-Driven Adjusted OIBA 1 |
$10.3 million or more | |
| Call Driven Adjusted EBITDA 1 |
$14 million or more |
Call-Driven financial guidance for the Fourth Quarter ending December 31, 2014
| Call-Driven Revenue |
$29-$31 million | |
| Call-Driven Adjusted OIBA 1 |
$1.7 million or more | |
| Call Driven Adjusted EBITDA 1 |
$2.7 million or more |
| 1 | These non-GAAP Call-Driven measures assign all Marchex corporate overhead costs to the Call-Driven results. 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. |
Conference Call and Webcast Information
Management will hold a conference call, starting at 5:00 p.m. ET on Wednesday, November 5, 2014 to discuss its third quarter ended September 30, 2014 financial results, and other company updates. Access to the live webcast of the conference call will be available online from the Investors section of Marchex’s website at www.marchex.com. An archived version of the webcast will also be available at the same location, beginning two hours after completion of the call.
About Marchex
Marchex is a mobile advertising technology company. The company provides a suite of products and services for businesses that depend on consumer phone calls to drive sales. Marchex’s mobile advertising platform delivers new customer phone calls to businesses, while its technology analyzes the data in these calls to help maximize ad campaign results. Marchex disrupts traditional advertising models by giving businesses full transparency into their ad campaign performance and charging them based on new customer acquisition.
Please visit www.marchex.com, blog.marchex.com or @marchex on Twitter (Twitter.com/Marchex), where Marchex discloses material information from time to time about the company, its financial information, and its business.
Forward-Looking Statements:
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding our strategy, future operations, future financial position, future revenues, other financial guidance, acquisitions, projected costs, prospects, plans and objectives of management are forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. There are a number of important factors that could cause 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. All of the information provided in this release is as of November 5, 2014 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, Revenue including and excluding domain gains and sales, Adjusted OIBA and EBITDA including and excluding domain gains and sales and Adjusted non-GAAP EPS including and excluding domain gains and sales. Marchex also provides Call-Driven Adjusted OIBA and EBITDA.
OIBA represents income (loss) from operations plus (1) stock-based compensation expense and (2) amortization of intangible assets from acquisitions. This measure, among other things, is one of the primary metrics by which Marchex evaluates the performance of its business. Additionally, Marchex’s management uses Adjusted OIBA, which excludes acquisition and separation related costs, as this item is not indicative of Marchex’s recurring core operating results. 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 expenses such as stock-based compensation, amortization of intangible assets from acquisitions and acquisition and separation related costs. Adjusted EBITDA represents income before interest, income taxes, depreciation, amortization, stock compensation expense and acquisition and separation related cost. 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. Historically, these Non-GAAP measures excluded gain/loss on sales and disposals of intangible assets for each asset and any domain sales contribution.
Non-GAAP Revenue represents GAAP revenue excluding domain sales sold through Marchex’s Domain Marketplace, which are recognized in GAAP revenue. Archeo revenue including or excluding domain gains and sales represents GAAP revenue and includes/excludes sales proceeds from the sale of domains recognized in gain/loss on sales and disposals of intangible assets and domain sales sold through Marchex’s Domain Marketplace which are recognized in GAAP revenue. Adjusted OIBA and EBITDA including or excluding domain gains and sales includes the above descriptions of Adjusted OIBA and EBITDA and includes/excludes domain sales contribution and gain/loss on sales and disposals of intangible assets. Call-Driven Adjusted OIBA and EBITDA includes the above descriptions of Adjusted OIBA and EBITDA for the Call-Driven segment. The Call-Driven Adjusted OIBA and EBITDA assigns all Marchex general corporate overhead costs to the Call-Driven results. Financial analysts and investors may use the non-GAAP historical Revenue including/excluding domain gains and sales and Adjusted OIBA and EBITDA including/excluding domain gains and sales to help with comparative financial evaluation to make informed investment decisions. Adjusted non-GAAP EPS represents Adjusted non-GAAP net income applicable to common stockholders divided by GAAP diluted shares outstanding. Adjusted non-GAAP net income applicable to common stockholders generally captures those items on the statement of operations that have been, or ultimately will be, settled in cash exclusive of certain items that are not indicative of Marchex’s recurring core operating results and represents net income applicable to common stockholders plus the net of tax effects of: (1) stock-based compensation expense, (2) amortization of intangible assets from acquisitions, (3) acquisition and separation related costs, (4) interest and other income (expense), (5) discontinued operations, net of tax and (6) dividends paid to participating securities, and also (7) excludes the effect of any tax valuation allowance. 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. Adjusted Non-GAAP EPS excluding domain gains and sales includes the above description of Adjusted non-GAAP EPS and excludes domain sales contribution and gain/loss on sales and disposals of intangible assets.
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. Marchex’s non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar titled terms used by other companies, and accordingly, care should be exercised in understanding how Marchex defines its non-GAAP financial measures in this release. 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, contact:
Trevor Caldwell
Marchex Investor Relations
Telephone: 206.331.3600
Email: ir(at)marchex.com
Or
MEDIA INQUIRIES
Sonia Krishnan
Marchex Corporate Communications
Telephone: 206.331.3434
Email: skrishnan(at)marchex.com
MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2013 | 2014 | |||||||
| Revenue |
$ | 40,560 | $ | 49,181 | ||||
| Expenses: |
||||||||
| Service costs (1) |
25,293 | 32,055 | ||||||
| Sales and marketing (1) |
2,801 | 2,940 | ||||||
| Product development (1) |
6,833 | 7,581 | ||||||
| General and administrative (1) |
4,679 | 5,380 | ||||||
| Amortization of intangible assets from acquisitions |
709 | — | ||||||
| Acquisition and separation related costs |
286 | — | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
40,601 | 47,956 | ||||||
| Gain on sales and disposals of intangible assets, net |
1,047 | — | ||||||
|
|
|
|
|
|||||
| Income from operations |
1,006 | 1,225 | ||||||
| Interest expense and other, net |
(19 | ) | (19 | ) | ||||
|
|
|
|
|
|||||
| Income from continuing operations before provision for income taxes |
987 | 1,206 | ||||||
| Income tax expense |
389 | 22,980 | ||||||
|
|
|
|
|
|||||
| Net income (loss) from continuing operations |
598 | (21,774 | ) | |||||
| Discontinued operations: |
||||||||
| Loss from discontinued operations, net of tax |
(46 | ) | — | |||||
| Gain on sale from discontinued operations, net of tax |
929 | 278 | ||||||
|
|
|
|
|
|||||
| Discontinued operations, net of tax |
883 | 278 | ||||||
| Net income (loss) |
1,481 | (21,496 | ) | |||||
| Dividends paid to participating securities |
— | (29 | ) | |||||
|
|
|
|
|
|||||
| Net income (loss) applicable to common stockholders |
$ | 1,481 | $ | (21,525 | ) | |||
|
|
|
|
|
|||||
| Basic and diluted net income (loss) per Class A and Class B share applicable to common stockholders: |
||||||||
| Continuing operations |
$ | 0.02 | $ | (0.53 | ) | |||
| Discontinued operations, net of tax |
0.02 | 0.01 | ||||||
|
|
|
|
|
|||||
| Basic and diluted net income (loss) per Class A and Class B share applicable to common stockholders |
$ | 0.04 | $ | (0.52 | ) | |||
| Dividends paid per share |
$ | — | $ | 0.02 | ||||
| Shares used to calculate basic net income (loss) per share applicable to common stockholders |
||||||||
| Class A |
8,377 | 5,233 | ||||||
| Class B |
27,308 | 36,041 | ||||||
| Shares used to calculate diluted net income (loss) per share applicable to common stockholders |
||||||||
| Class A |
8,377 | 5,233 | ||||||
| Class B |
37,277 | 41,274 | ||||||
| (1) Includes stock-based compensation allocated as follows: |
||||||||
| Service costs |
$ | 455 | $ | 373 | ||||
| Sales and marketing |
211 | 226 | ||||||
| Product development |
361 | 666 | ||||||
| General and administrative |
1,338 | 1,759 | ||||||
|
|
|
|
|
|||||
| Total |
$ | 2,365 | $ | 3,024 | ||||
|
|
|
|
|
|||||
MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2013 | 2014 | |||||||
| Revenue |
$ | 112,870 | $ | 149,353 | ||||
| Expenses: |
||||||||
| Service costs (1) |
68,025 | 96,728 | ||||||
| Sales and marketing (1) |
8,350 | 9,161 | ||||||
| Product development (1) |
20,586 | 22,599 | ||||||
| General and administrative (1) |
15,003 | 16,127 | ||||||
| Amortization of intangible assets from acquisitions |
2,500 | 434 | ||||||
| Acquisition and separation related costs |
940 | (68 | ) | |||||
|
|
|
|
|
|||||
| Total operating expenses |
115,404 | 144,981 | ||||||
| Gain on sales and disposals of intangible assets, net |
3,739 | — | ||||||
|
|
|
|
|
|||||
| Income from operations |
1,205 | 4,372 | ||||||
| Interest expense and other, net |
(48 | ) | (43 | ) | ||||
|
|
|
|
|
|||||
| Income from continuing operations before provision for income taxes |
1,157 | 4,329 | ||||||
| Income tax expense |
797 | 24,277 | ||||||
|
|
|
|
|
|||||
| Net income (loss) from continuing operations |
360 | (19,948 | ) | |||||
| Discontinued operations: |
||||||||
| Income (loss) from discontinued operations, net of tax |
(77 | ) | 9 | |||||
| Gain on sale from discontinued operations, net of tax |
929 | 278 | ||||||
|
|
|
|
|
|||||
| Discontinued operations, net of tax |
852 | 287 | ||||||
|
|
|
|
|
|||||
| Net income (loss) |
1,212 | (19,661 | ) | |||||
| Dividends paid to participating securities |
— | (98 | ) | |||||
|
|
|
|
|
|||||
| Net income (loss) applicable to common stockholders |
$ | 1,212 | $ | (19,759 | ) | |||
|
|
|
|
|
|||||
| Basic and diluted net income (loss) per Class A and Class B share applicable to common stockholders: |
||||||||
| Continuing operations |
$ | 0.01 | $ | (0.51 | ) | |||
| Discontinued operations, net of tax |
$ | 0.02 | $ | 0.01 | ||||
|
|
|
|
|
|||||
| Basic and diluted net income (loss) per Class A and Class B share applicable to common stockholders |
$ | 0.03 | $ | (0.50 | ) | |||
| Dividends paid per share |
$ | — | $ | 0.06 | ||||
| Shares used to calculate basic net income (loss) per share applicable to common stockholders |
||||||||
| Class A |
9,168 | 6,062 | ||||||
| Class B |
26,280 | 33,546 | ||||||
| Shares used to calculate diluted net income (loss) per share applicable to common stockholders |
||||||||
| Class A |
9,168 | 6,062 | ||||||
| Class B |
36,371 | 39,608 | ||||||
| (1) Includes stock-based compensation allocated as follows: |
||||||||
| Service costs |
$ | 818 | $ | 1,017 | ||||
| Sales and marketing |
474 | 663 | ||||||
| Product development |
1,127 | 2,017 | ||||||
| General and administrative |
4,456 | 5,327 | ||||||
|
|
|
|
|
|||||
| Total |
$ | 6,875 | $ | 9,024 | ||||
|
|
|
|
|
|||||
MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
| December 31, | September 30, | |||||||
| 2013 | 2014 | |||||||
| Assets | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 30,912 | $ | 80,652 | ||||
| Accounts receivable, net |
30,005 | 33,531 | ||||||
| Prepaid expenses and other current assets |
2,943 | 3,132 | ||||||
| Refundable taxes |
97 | 92 | ||||||
| Deferred tax assets |
1,016 | — | ||||||
|
|
|
|
|
|||||
| Total current assets |
64,973 | 117,407 | ||||||
| Property and equipment, net |
5,440 | 5,286 | ||||||
| Deferred tax assets |
25,138 | — | ||||||
| Intangibles and other assets, net |
484 | 328 | ||||||
| Goodwill |
65,679 | 65,679 | ||||||
| Intangible assets from acquisitions, net |
434 | — | ||||||
|
|
|
|
|
|||||
| Total Assets |
$ | 162,148 | $ | 188,700 | ||||
|
|
|
|
|
|||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 15,922 | $ | 20,620 | ||||
| Accrued expenses and other current liabilities |
7,988 | 8,622 | ||||||
| Deferred revenue |
1,388 | 1,592 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
25,298 | 30,834 | ||||||
| Other non-current liabilities |
2,095 | 1,221 | ||||||
|
|
|
|
|
|||||
| Total Liabilities |
27,393 | 32,055 | ||||||
| Class A common stock |
80 | 55 | ||||||
| Class B common stock |
309 | 376 | ||||||
| Treasury stock |
(2 | ) | — | |||||
| Additional paid-in capital |
305,517 | 347,023 | ||||||
| Accumulated deficit |
(171,149 | ) | (190,809 | ) | ||||
|
|
|
|
|
|||||
| Total Stockholders’ Equity |
134,755 | 156,645 | ||||||
|
|
|
|
|
|||||
| Total Liabilities and Stockholders’ Equity |
$ | 162,148 | $ | 188,700 | ||||
|
|
|
|
|
|||||
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP Income from Operations to Operating Income Before Amortization (OIBA)
and Adjusted Operating Income Before Amortization (Adjusted OIBA)
(in thousands)
(unaudited)
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2013 | 2014 | |||||||
| Income from operations |
$ | 1,006 | $ | 1,225 | ||||
| Stock-based compensation |
2,365 | 3,024 | ||||||
| Amortization of intangible assets from acquisitions |
709 | — | ||||||
|
|
|
|
|
|||||
| Operating income before amortization (OIBA) |
4,080 | 4,249 | ||||||
| Acquisition and separation related costs |
286 | — | ||||||
|
|
|
|
|
|||||
| Adjusted operating income before amortization (Adjusted OIBA) |
$ | 4,366 | $ | 4,249 | ||||
| Domain sales contribution |
(839 | ) | (1,552 | ) | ||||
| Gain on sales and disposals of intangible assets, net |
(1,047 | ) | — | |||||
|
|
|
|
|
|||||
| Adjusted OIBA excluding domain gains and sales |
$ | 2,480 | $ | 2,697 | ||||
|
|
|
|
|
|||||
| Nine Months Ended September 30, |
||||||||
| 2013 | 2014 | |||||||
| Income from operations |
$ | 1,205 | $ | 4,372 | ||||
| Stock-based compensation |
6,875 | 9,024 | ||||||
| Amortization of intangible assets from acquisitions |
2,500 | 434 | ||||||
|
|
|
|
|
|||||
| Operating income before amortization (OIBA) |
10,580 | 13,830 | ||||||
| Acquisition and separation related costs |
940 | (68 | ) | |||||
|
|
|
|
|
|||||
| Adjusted operating income before amortization (Adjusted OIBA) |
$ | 11,520 | $ | 13,762 | ||||
| Domain sales contribution |
(839 | ) | (5,662 | ) | ||||
| Gain on sales and disposals of intangible assets, net |
(3,739 | ) | — | |||||
|
|
|
|
|
|||||
| Adjusted OIBA excluding domain gains and sales |
$ | 6,942 | $ | 8,100 | ||||
|
|
|
|
|
|||||
Certain reclassifications have been made to prior periods to conform to current presentation.
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation from Net Cash provided by Operating Activities to Adjusted EBITDA
(in thousands)
(unaudited)
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2013 | 2014 | |||||||
| Net cash provided by operating activities |
$ | 4,332 | $ | 6,750 | ||||
| Changes in assets and liabilities |
(1,374 | ) | (24,736 | ) | ||||
| Income tax expense |
389 | 22,980 | ||||||
| Acquisition and separation related costs |
286 | — | ||||||
| Interest expense and other, net |
15 | 18 | ||||||
| Gain on sales and disposals of intangible assets, net |
1,047 | — | ||||||
| Loss on discontinued operations, net of tax |
43 | — | ||||||
| Tax effect on gain on sale of discontinued operations |
563 | 143 | ||||||
| Excess tax benefits related to stock compensation |
13 | — | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
$ | 5,314 | $ | 5,155 | ||||
| Domain sales contribution |
(839 | ) | (1,552 | ) | ||||
| Gain on sales and disposals of intangible assets, net |
(1,047 | ) | — | |||||
|
|
|
|
|
|||||
| Adjusted EBITDA excluding domain gains and sales |
$ | 3,428 | $ | 3,603 | ||||
|
|
|
|
|
|||||
| Net cash provided by (used in) investing activities |
$ | 1,235 | $ | (826 | ) | |||
|
|
|
|
|
|||||
| Net cash provided by (used in) financing activities |
$ | 842 | $ | (222 | ) | |||
|
|
|
|
|
|||||
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2013 | 2014 | |||||||
| Net cash provided by operating activities |
$ | 7,487 | $ | 18,117 | ||||
| Changes in asset and liabilities |
482 | (26,048 | ) | |||||
| Income tax expense |
797 | 24,277 | ||||||
| Acquisition and separation related costs |
940 | — | ||||||
| Interest expense and other, net |
44 | 43 | ||||||
| Gain on sales and disposals of intangible assets, net |
3,739 | — | ||||||
| (Income) loss on discontinued operations, net of tax |
49 | (9 | ) | |||||
| Tax effect on gain on sale of discontinued operations |
563 | 143 | ||||||
| Excess tax benefits related to stock compensation |
209 | — | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
$ | 14,310 | $ | 16,523 | ||||
| Domain sales contribution |
(839 | ) | (5,662 | ) | ||||
| Gain on sales and disposals of intangible assets, net |
(3,739 | ) | — | |||||
|
|
|
|
|
|||||
| Adjusted EBITDA excluding domain gains and sales |
$ | 9,732 | $ | 10,861 | ||||
|
|
|
|
|
|||||
| Net cash provided by (used in) investing activities |
$ | 2,197 | $ | (2,178 | ) | |||
|
|
|
|
|
|||||
| Net cash provided by (used in) financing activities |
$ | (463 | ) | $ | 33,801 | |||
|
|
|
|
|
|||||
Certain reclassifications have been made to prior periods to conform to current presentation.
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP EPS to Adjusted Non-GAAP EPS
(in thousands, except per share data)
(unaudited)
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2013 | 2014 | |||||||
| Adjusted Non-GAAP EPS from continuing operations |
$ | 0.08 | $ | 0.06 | ||||
|
|
|
|
|
|||||
| Net income (loss) applicable to common stockholders - diluted (GAAP EPS) |
$ | 0.02 | $ | (0.53 | ) | |||
| Shares used to calculate diluted net income (loss) per share applicable to common stockholders |
37,277 | 41,274 | ||||||
| Net income (loss) applicable to common stockholders |
$ | 1,481 | $ | (21,525 | ) | |||
| Stock-based compensation |
2,365 | 3,024 | ||||||
| Acquisition and separation related costs |
286 | — | ||||||
| Amortization of intangible assets from acquisitions |
709 | — | ||||||
| Interest expense and other, net |
19 | 19 | ||||||
| Dividends paid to participating securities |
— | 29 | ||||||
| Tax valuation allowance |
— | 22,345 | ||||||
| Discontinued operations, net of tax |
(883 | ) | (278 | ) | ||||
| Estimated impact of income taxes |
(1,155 | ) | (855 | ) | ||||
|
|
|
|
|
|||||
| Adjusted Non-GAAP net income from continuing operations |
$ | 2,822 | $ | 2,759 | ||||
| Domain sales contribution |
(839 | ) | (1,552 | ) | ||||
| Gain on sales and disposals of intangible assets, net |
(1,047 | ) | — | |||||
| Estimated impact of income taxes on domain gains and sales |
667 | 551 | ||||||
|
|
|
|
|
|||||
| Adjusted Non-GAAP net income excluding domain gains and sales |
$ | 1,603 | $ | 1,758 | ||||
|
|
|
|
|
|||||
| Adjusted Non-GAAP EPS from continuing operations |
$ | 0.08 | $ | 0.06 | ||||
|
|
|
|
|
|||||
| Adjusted Non-GAAP EPS excluding domain gains and sales |
$ | 0.04 | $ | 0.04 | ||||
|
|
|
|
|
|||||
| Shares used to calculate diluted net income (loss) per share applicable to common stockholders (GAAP) |
37,277 | 41,274 | ||||||
| Weighted average stock options and common shares subject to purchase or cancellation (if applicable) |
— | 2,286 | ||||||
|
|
|
|
|
|||||
| Diluted shares used to calculate Adjusted Non-GAAP EPS (1) |
37,277 | 43,560 | ||||||
|
|
|
|
|
|||||
| (1) | For the purpose of computing the number of diluted shares for Adjusted Non-GAAP EPS, Marchex uses the accounting guidance that would be applicable for computing the number of diluted shares for GAAP EPS. |
Certain reclassifications have been made to prior periods to conform to current presentation.
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP EPS to Adjusted Non-GAAP EPS
(in thousands, except per share data)
(unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2013 | 2014 | |||||||
| Adjusted Non-GAAP EPS from continuing operations |
$ | 0.21 | $ | 0.21 | ||||
|
|
|
|
|
|||||
| Net income (loss) from continuing operations applicable to common stockholders - diluted (GAAP EPS) |
$ | 0.01 | $ | (0.51 | ) | |||
| Shares used to calculate diluted net income (loss) per share applicable to common stockholders |
36,371 | 39,608 | ||||||
| Net income (loss) applicable to common stockholders |
$ | 1,212 | $ | (19,759 | ) | |||
| Stock-based compensation |
6,875 | 9,024 | ||||||
| Acquisition and separation related costs |
940 | (68 | ) | |||||
| Amortization of intangible assets from acquisitions |
2,500 | 434 | ||||||
| Interest expense and other, net |
48 | 43 | ||||||
| Dividends paid to participating securities |
— | 98 | ||||||
| Tax valuation allowance |
651 | 22,345 | ||||||
| Discontinued operations, net of tax |
(852 | ) | (287 | ) | ||||
| Estimated impact of income taxes |
(3,898 | ) | (2,897 | ) | ||||
|
|
|
|
|
|||||
| Adjusted Non-GAAP net income from continuing operations |
$ | 7,476 | $ | 8,933 | ||||
| Domain sales contribution |
(839 | ) | (5,662 | ) | ||||
| Gain on sales and disposals of intangible assets, net |
(3,739 | ) | — | |||||
| Estimated impact of income taxes on domain gains and sales |
1,607 | 2,001 | ||||||
|
|
|
|
|
|||||
| Adjusted Non-GAAP net income from continuing operations excluding domain gains and sales |
$ | 4,505 | $ | 5,272 | ||||
|
|
|
|
|
|||||
| Adjusted Non-GAAP EPS from continuing operations |
$ | 0.21 | $ | 0.21 | ||||
|
|
|
|
|
|||||
| Adjusted Non-GAAP EPS from continuing operations excluding domain gains and sales |
$ | 0.12 | $ | 0.12 | ||||
|
|
|
|
|
|||||
| Shares used to calculate diluted net income (loss) per share applicable to common stockholders (GAAP) |
36,371 | 39,608 | ||||||
| Weighted average stock options and common shares subject to purchase or cancellation (if applicable) |
— | 2,698 | ||||||
|
|
|
|
|
|||||
| Diluted shares used to calculate Adjusted Non-GAAP EPS (1) |
36,371 | 42,306 | ||||||
|
|
|
|
|
|||||
| (1) | For the purpose of computing the number of diluted shares for Adjusted Non-GAAP EPS, Marchex uses the accounting guidance that would be applicable for computing the number of diluted shares for GAAP EPS. |
Certain reclassifications have been made to prior periods to conform to current presentation.
MARCHEX, INC. AND SUBSIDIARIES
(in thousands)
(unaudited)
Reconciliation of GAAP Income (Loss) from Operations to Operating Income before Amortization (OIBA)
and Adjusted Operating Income Before Amortization (Adjusted OIBA)
| 3 months ended | Nine Months Ended | |||||||||||||||||||||||||||
| 9/30/2013 | 12/31/2013 | 3/31/2014 | 6/30/2014 | 9/30/2014 | 9/30/2013 | 9/30/2014 | ||||||||||||||||||||||
| Income from operations |
$ | 1,006 | $ | 1,544 | $ | 1,436 | $ | 1,711 | $ | 1,225 | $ | 1,205 | $ | 4,372 | ||||||||||||||
| Stock-based compensation |
2,365 | 2,362 | 2,883 | 3,117 | 3,024 | 6,875 | 9,024 | |||||||||||||||||||||
| Amortization of intangible assets from acquisitions |
709 | 426 | 403 | 31 | — | 2,500 | 434 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Operating income before amortization (OIBA) |
4,080 | 4,332 | 4,722 | 4,859 | 4,249 | 10,580 | 13,830 | |||||||||||||||||||||
| Acquisition and separation related costs |
286 | (62 | ) | — | (68 | ) | — | 940 | (68 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Adjusted operating income before amortization (Adjusted OIBA) |
$ | 4,366 | $ | 4,270 | $ | 4,722 | $ | 4,791 | $ | 4,249 | $ | 11,520 | $ | 13,762 | ||||||||||||||
| Domain sales contribution |
(839 | ) | (1,549 | ) | (1,893 | ) | (2,217 | ) | (1,552 | ) | (839 | ) | (5,662 | ) | ||||||||||||||
| Gain on sales and disposals of intangible assets, net |
(1,047 | ) | (35 | ) | — | — | — | (3,739 | ) | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Adjusted OIBA excluding domain gains and sales |
$ | 2,480 | $ | 2,686 | $ | 2,829 | $ | 2,574 | $ | 2,697 | 6,942 | 8,100 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Reconciliation from Net Cash provided by Operating Activities to Adjusted EBITDA | ||||||||||||||||||||||||||||
| 3 months ended | Nine Months Ended | |||||||||||||||||||||||||||
| 9/30/2013 | 12/31/2013 | 3/31/2014 | 6/30/2014 | 9/30/2014 | 9/30/2013 | 9/30/2014 | ||||||||||||||||||||||
| Net cash provided by operating activities |
$ | 4,332 | $ | 6,109 | $ | 8,078 | $ | 3,289 | $ | 6,750 | $ | 7,487 | $ | 18,117 | ||||||||||||||
| Changes in assets and liabilities |
(1,374 | ) | (1,636 | ) | (2,984 | ) | 1,672 | (24,736 | ) | 482 | (26,048 | ) | ||||||||||||||||
| Income tax expense |
389 | 958 | 588 | 709 | 22,980 | 797 | 24,277 | |||||||||||||||||||||
| Acquisition and separation related costs |
286 | — | — | — | — | 940 | — | |||||||||||||||||||||
| Gain on sales and disposals of intangible assets, net |
1,047 | 35 | — | — | — | 3,739 | — | |||||||||||||||||||||
| Discontinued operations, net of tax |
43 | (7 | ) | (9 | ) | — | — | 49 | (9 | ) | ||||||||||||||||||
| Tax effect of gain on sale of discontinued operations |
563 | — | — | — | 143 | 563 | 143 | |||||||||||||||||||||
| Interest expense and other, net |
15 | (14 | ) | 2 | 22 | 18 | 44 | 43 | ||||||||||||||||||||
| Excess tax benefits related to stock compensation |
13 | (209 | ) | — | — | — | 209 | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Adjusted EBITDA |
$ | 5,314 | $ | 5,236 | $ | 5,675 | $ | 5,692 | $ | 5,155 | $ | 14,310 | $ | 16,523 | ||||||||||||||
| Domain sales contribution |
(839 | ) | (1,549 | ) | (1,893 | ) | (2,217 | ) | (1,552 | ) | (839 | ) | (5,662 | ) | ||||||||||||||
| Gain on sales and disposals of intangible assets, net |
$ | (1,047 | ) | $ | (35 | ) | $ | — | $ | — | $ | — | $ | (3,739 | ) | $ | — | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Adjusted EBITDA excluding domain gains and sales |
$ | 3,428 | $ | 3,652 | $ | 3,782 | $ | 3,475 | $ | 3,603 | $ | 9,732 | $ | 10,861 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net cash provided by (used in) investing activities |
$ | 1,235 | $ | (549 | ) | $ | (807 | ) | $ | (545 | ) | $ | (826 | ) | $ | 2,197 | $ | (2,178 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net cash provided by (used in) financing activities |
$ | 842 | $ | 202 | $ | 343 | $ | 33,680 | $ | (222 | ) | $ | (463 | ) | $ | 33,801 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Due to rounding, the sum of quarterly amounts may not equal amounts reported for year-to-date periods.
MARCHEX, INC. AND SUBSIDIARIES
Quarterly Financial Summary Information
(in thousands)
NON-GAAP MEASURES
Amounts below exclude Discontinued Operations
| CONSOLIDATED |
Q113 | Q213 | Q313 | Q413 | Q114 | Q214 | Q314 | |||||||||||||||||||||
| GAAP Revenue |
$ | 34,732 | $ | 37,578 | $ | 40,560 | $ | 39,680 | $ | 50,496 | $ | 49,676 | $ | 49,181 | ||||||||||||||
| Adjusted OIBA |
$ | 3,604 | $ | 3,550 | $ | 4,366 | $ | 4,270 | $ | 4,722 | $ | 4,791 | $ | 4,249 | ||||||||||||||
| Adjusted EBITDA |
$ | 4,516 | $ | 4,480 | $ | 5,314 | $ | 5,236 | $ | 5,675 | $ | 5,692 | $ | 5,155 | ||||||||||||||
| CALL-DRIVEN AND RELATED |
Q113 | Q213 | Q313 | Q413 | Q114 | Q214 | Q314 | |||||||||||||||||||||
| GAAP Revenue |
$ | 31,107 | $ | 33,893 | $ | 35,668 | $ | 34,457 | $ | 45,492 | $ | 45,857 | $ | 46,379 | ||||||||||||||
| Adjusted OIBA |
$ | 1,371 | $ | 1,508 | $ | 1,693 | $ | 1,725 | $ | 2,411 | $ | 2,897 | $ | 3,279 | ||||||||||||||
| Adjusted EBITDA |
$ | 2,246 | $ | 2,401 | $ | 2,598 | $ | 2,618 | $ | 3,312 | $ | 3,764 | $ | 4,170 | ||||||||||||||
| ARCHEO |
Q113 | Q213 | Q313 | Q413 | Q114 | Q214 | Q314 | |||||||||||||||||||||
| GAAP Revenue |
$ | 3,625 | $ | 3,685 | $ | 4,892 | $ | 5,223 | $ | 5,004 | $ | 3,819 | $ | 2,802 | ||||||||||||||
| Adjusted OIBA |
$ | 2,233 | $ | 2,042 | $ | 2,673 | $ | 2,545 | $ | 2,311 | $ | 1,894 | $ | 970 | ||||||||||||||
| Adjusted EBITDA |
$ | 2,270 | $ | 2,079 | $ | 2,716 | $ | 2,618 | $ | 2,363 | $ | 1,928 | $ | 985 | ||||||||||||||
Due to rounding, the sum of quarterly amounts may not equal amounts reported for year-to-date periods.
MARCHEX, INC. AND SUBSIDIARIES
Quarterly Financial Summary Information
(in thousands)
NON-GAAP MEASURES
Amounts below exclude Domain Gains and Sales and Discontinued Operations
| CONSOLIDATED |
Q113 | Q213 | Q313 | Q413 | Q114 | Q214 | Q314 | |||||||||||||||||||||
| Non-GAAP Revenue |
$ | 34,732 | $ | 37,578 | $ | 39,661 | $ | 38,124 | $ | 48,598 | $ | 47,430 | $ | 47,610 | ||||||||||||||
| Adjusted OIBA |
$ | 2,242 | $ | 2,220 | $ | 2,480 | $ | 2,686 | $ | 2,829 | $ | 2,574 | $ | 2,697 | ||||||||||||||
| Adjusted EBITDA |
$ | 3,154 | $ | 3,150 | $ | 3,428 | $ | 3,652 | $ | 3,782 | $ | 3,475 | $ | 3,603 | ||||||||||||||
| CALL-DRIVEN AND RELATED |
Q113 | Q213 | Q313 | Q413 | Q114 | Q214 | Q314 | |||||||||||||||||||||
| GAAP Revenue |
$ | 31,107 | $ | 33,893 | $ | 35,668 | $ | 34,457 | $ | 45,492 | $ | 45,857 | $ | 46,379 | ||||||||||||||
| Adjusted OIBA |
$ | 1,371 | $ | 1,508 | $ | 1,693 | $ | 1,725 | $ | 2,411 | $ | 2,897 | $ | 3,279 | ||||||||||||||
| Adjusted EBITDA |
$ | 2,246 | $ | 2,401 | $ | 2,598 | $ | 2,618 | $ | 3,312 | $ | 3,764 | $ | 4,170 | ||||||||||||||
| ARCHEO |
Q113 | Q213 | Q313 | Q413 | Q114 | Q214 | Q314 | |||||||||||||||||||||
| Non-GAAP Revenue |
$ | 3,624 | $ | 3,685 | $ | 3,993 | $ | 3,667 | $ | 3,106 | $ | 1,573 | $ | 1,231 | ||||||||||||||
| Adjusted OIBA |
$ | 871 | $ | 712 | $ | 787 | $ | 961 | $ | 418 | $ | (323 | ) | $ | (582 | ) | ||||||||||||
| Adjusted EBITDA |
$ | 908 | $ | 749 | $ | 830 | $ | 1,034 | $ | 470 | $ | (289 | ) | $ | (567 | ) | ||||||||||||
Due to rounding, the sum of quarterly amounts may not equal amounts reported for year-to-date periods.
MARCHEX, INC. AND SUBSIDIARIES
Financial Summary by Segment
(in thousands)
(unaudited)
| Three months ended | Nine Months Ended | |||||||||||||||||||||||||||
| 9/30/2013 | 12/31/2013 | 3/31/2014 | 6/30/2014 | 9/30/2014 | 9/30/2013 | 9/30/2014 | ||||||||||||||||||||||
| Marchex - Consolidated5 |
||||||||||||||||||||||||||||
| Revenue - GAAP2 |
$ | 40,560 | $ | 39,680 | $ | 50,496 | $ | 49,676 | $ | 49,181 | $ | 112,870 | $ | 149,353 | ||||||||||||||
| Revenue including domain gains3 |
$ | 41,607 | $ | 39,715 | $ | 50,496 | $ | 49,676 | $ | 49,181 | $ | 116,609 | $ | 149,353 | ||||||||||||||
| Adjusted OIBA including domain gains and sales4 |
$ | 4,366 | $ | 4,270 | $ | 4,722 | $ | 4,791 | $ | 4,249 | $ | 11,520 | $ | 13,762 | ||||||||||||||
| Adjusted OIBA excluding domain gains and sales4 |
$ | 2,480 | $ | 2,686 | $ | 2,829 | $ | 2,574 | $ | 2,697 | $ | 6,942 | $ | 8,100 | ||||||||||||||
| Adjusted EBITDA including domain gains and sales4 |
$ | 5,314 | $ | 5,236 | $ | 5,675 | $ | 5,692 | $ | 5,155 | $ | 14,310 | $ | 16,523 | ||||||||||||||
| Adjusted EBITDA excluding domain gains and sales4 |
$ | 3,428 | $ | 3,652 | $ | 3,782 | $ | 3,475 | $ | 3,603 | $ | 9,732 | $ | 10,861 | ||||||||||||||
| Call-Driven and Related1 |
||||||||||||||||||||||||||||
| Revenue - GAAP |
$ | 35,668 | $ | 34,457 | $ | 45,492 | $ | 45,857 | $ | 46,379 | $ | 100,668 | $ | 137,728 | ||||||||||||||
| Adjusted OIBA |
$ | 1,693 | $ | 1,725 | $ | 2,411 | $ | 2,897 | $ | 3,279 | $ | 4,572 | $ | 8,587 | ||||||||||||||
| Adjusted EBITDA |
$ | 2,598 | $ | 2,618 | $ | 3,312 | $ | 3,764 | $ | 4,170 | $ | 7,245 | $ | 11,247 | ||||||||||||||
| Archeo1,5 |
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| Revenue - GAAP2 |
$ | 4,892 | $ | 5,223 | $ | 5,004 | $ | 3,819 | $ | 2,802 | $ | 12,202 | $ | 11,625 | ||||||||||||||
| Revenue including domain gains3 |
$ | 5,939 | $ | 5,258 | $ | 5,004 | $ | 3,819 | $ | 2,802 | $ | 15,941 | $ | 11,625 | ||||||||||||||
| Adjusted OIBA including domain gains and sales4 |
$ | 2,673 | $ | 2,545 | $ | 2,311 | $ | 1,894 | $ | 970 | $ | 6,948 | $ | 5,175 | ||||||||||||||
| Adjusted OIBA excluding domain gains and sales4 |
$ | 787 | $ | 961 | $ | 418 | $ | (323 | ) | $ | (582 | ) | $ | 2,370 | $ | (487 | ) | |||||||||||
| Adjusted EBITDA including domain gains and sales4 |
$ | 2,716 | $ | 2,618 | $ | 2,363 | $ | 1,928 | $ | 985 | $ | 7,065 | $ | 5,276 | ||||||||||||||
| Adjusted EBITDA excluding domain gains and sales4 |
$ | 830 | $ | 1,034 | $ | 470 | $ | (289 | ) | $ | (567 | ) | $ | 2,487 | $ | (386 | ) | |||||||||||
| 1 | The financial results for Call-Driven and Archeo are preliminary and have been derived from the unaudited condensed consolidated financial statements of Marchex, Inc. for all periods presented. |
The unaudited Call-Driven financial results include certain direct operating expenses and general corporate overhead expenses in all periods presented.
The unaudited Archeo financial results include direct operating expenses for all periods presented.
| 2 | In September 2013, Marchex announced and launched its Domains Marketplace and through it, commenced buying and selling of domains. |
Domain sales occurring after this date are included in GAAP revenue and related cost in service cost. Prior to this date, domain sales were recognized in gain on sales and disposals of intangible assets in the unaudited condensed consolidated financial statements.
| 3 | Domain sales recognized in gain on sales and disposals of intangible assets, net. |
| 4 | Domain sales recognized in either gain on sales and disposals of intangible assets, net or in revenue and service costs in the unaudited condensed consolidated financial statements for each applicable period. |
| 5 | Amounts presented exclude results of discontinued operations. Operating results of discontinued operations relate to certain pay-per-click assets sold in July 2013 and are included in discontinued operations, net of tax in the unaudited condensed consolidated financial statements. |
Due to rounding, the sum of quarterly amounts may not equal amounts reported for year-to-date periods.
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation to Reported Financial and Non-GAAP Information
(in thousands)
(unaudited)
| Three months ended | Nine Months Ended | |||||||||||||||||||||||||||
| 9/30/2013 | 12/31/2013 | 3/31/2014 | 6/30/2014 | 9/30/2014 | 9/30/2013 | 9/30/2014 | ||||||||||||||||||||||
| Revenue6 |
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| Consolidated - GAAP1 |
$ | 40,560 | $ | 39,680 | $ | 50,496 | $ | 49,676 | $ | 49,181 | $ | 112,870 | $ | 149,353 | ||||||||||||||
| Add: Domain Gains2 |
1,047 | 35 | — | — | — | 3,739 | — | |||||||||||||||||||||
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| Consolidated including Domain Gains and Sales3 |
41,607 | 39,715 | 50,496 | 49,676 | 49,181 | 116,609 | 149,353 | |||||||||||||||||||||
| Less: Archeo including Domain Gains and Sales3,4 |
5,939 | 5,258 | 5,004 | 3,819 | 2,802 | 15,941 | 11,625 | |||||||||||||||||||||
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| Call-Driven4 and related |
$ | 35,668 | $ | 34,457 | $ | 45,492 | $ | 45,857 | $ | 46,379 | $ | 100,668 | $ | 137,728 | ||||||||||||||
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| Adjusted operating income6 |
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| Consolidated excluding Domain Gains and Sales5 |
$ | 2,480 | $ | 2,686 | $ | 2,829 | $ | 2,574 | $ | 2,697 | $ | 6,942 | $ | 8,100 | ||||||||||||||
| Add: Domain Gains and Sales5 |
1,886 | 1,584 | 1,893 | 2,217 | 1,552 | 4,578 | 5,662 | |||||||||||||||||||||
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| Consolidated including Domain Gains and Sales |
4,366 | 4,270 | 4,722 | 4,791 | 4,249 | 11,520 | 13,762 | |||||||||||||||||||||
| Less: Archeo including Domain Gains and Sales4,5 |
2,673 | 2,545 | 2,311 | 1,894 | 970 | 6,948 | 5,175 | |||||||||||||||||||||
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| Call-Driven4 and related |
$ | 1,693 | $ | 1,725 | $ | 2,411 | $ | 2,897 | $ | 3,279 | $ | 4,572 | $ | 8,587 | ||||||||||||||
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| Adjusted EBITDA6 |
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| Consolidated excluding Domain Gains and Sales5 |
$ | 3,428 | $ | 3,652 | $ | 3,782 | $ | 3,475 | $ | 3,603 | $ | 9,732 | $ | 10,861 | ||||||||||||||
| Add: Domain Gains and Sales5 |
1,886 | 1,584 | 1,893 | 2,217 | 1,552 | 4,578 | 5,662 | |||||||||||||||||||||
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| Consolidated including Domain Gains and Sales |
5,314 | 5,236 | 5,675 | 5,692 | 5,155 | 14,310 | 16,523 | |||||||||||||||||||||
| Less: Archeo including Domain Gains and Sales4,5 |
2,716 | 2,618 | 2,363 | 1,928 | 985 | 7,065 | 5,276 | |||||||||||||||||||||
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| Call-Driven4 and related |
$ | 2,598 | $ | 2,618 | $ | 3,312 | $ | 3,764 | $ | 4,170 | $ | 7,245 | $ | 11,247 | ||||||||||||||
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| 1 | In September 2013, Marchex announced and launched its Domains Marketplace and through it, commenced buying and selling of domains. |
Domain sales occurring after this date are included in GAAP revenue and related cost in service cost. Prior to this date, domain sales were recognized in gain on sales and disposals of intangible assets in the unaudited condensed consolidated financial statements.
| 2 | Domain sales recognized in gain on sales and disposals of intangible assets, net in the unaudited consolidated financial statements. |
| 3 | Domain sales recognized in either gain on sales and disposals of intangible assets or in revenue and service costs in the unaudited condensed consolidated financial statements for each applicable period. |
| 4 | The financial results for Call-Driven and Archeo are preliminary and have been derived from the unaudited condensed consolidated financial statements of Marchex, Inc. for all periods presented. |
The unaudited Call-Driven financial results include certain direct operating expenses and general corporate overhead expenses in all periods presented.
The unaudited Archeo financial results include direct operating expenses for all periods presented.
| 5 | These are non-GAAP measures of operating results and liquidity. These non-GAAP measures are adjusted for net gains from sales of intangible assets, direct contribution of domain sales sold through Marchex’s Domains Marketplace. |
| 6 | Amounts presented exclude results of discontinued operations. Financial results of discontinued operations related to certain pay-per-click assets sold in July 2013 and are included in discontinued operations, net of tax in the unaudited consolidated condensed financial statements. |
Due to rounding, the sum of quarterly amounts may not equal amounts reported for year-to-date periods.