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, 2016
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 August 9, 2016, Marchex, Inc. (“Marchex”) is issuing a press release and holding a conference call regarding its financial results for the quarter ended June 30, 2016 (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 June 30, 2016, Marchex recorded an estimated pre-tax $63.3 million non-cash impairment charge based on the preliminary results of the company’s goodwill tests. The goodwill impairment analysis is not final and is expected to be completed in the third quarter of 2016. We believe that the preliminary estimate of goodwill impairment is reasonable and represents our best estimate of the impairment loss to be incurred; however, it is possible that adjustments to the preliminary estimate maybe required as the calculations are finalized.
The foregoing charges when finalized will not result in any current or future cash expenditures. Marchex will provide additional information relating to this charge in its Form 10-Q for the quarterly period ended June 30, 2016.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit |
Description | |
| 99.1 | Press Release of Marchex, dated August 9, 2016. | |
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: August 9, 2016 | MARCHEX, INC. | |||||
| By: | /S/ MICHAEL A. ARENDS | |||||
| Name: | Michael A. Arends | |||||
| Title: | Chief Financial Officer (Principal Financial and Accounting Officer) | |||||
Exhibit 99.1
Marchex Announces Second Quarter 2016 Results
SEATTLE — (BUSINESS WIRE) – August 9, 2016—Marchex, Inc. (NASDAQ:MCHX), a leading mobile advertising analytics company, today announced its financial results for the second quarter ended June 30, 2016.
“We are disappointed with our Q2 financial results and revised 2016 outlook, which were primarily driven by a small number of our large clients that reduced their marketing spend,” said Pete Christothoulou, CEO. “It does not impact our long-term relationship with these clients or our belief in the Online-to-Offline opportunity. Our new client wins and strong customer feedback point to a growing pipeline. We are eager to see our strategic progress flow through to our financial performance and, ultimately, category leadership.”
Q2 2016 Financial Highlights
| • | GAAP revenue was $34.4 million for the second quarter of 2016, compared to $35.3 million for the second quarter of 2015. |
| • | GAAP net loss from continuing operations was $68.8 million for the second quarter of 2016 or $1.65 per diluted share, which includes the effect of an estimated pre-tax $63.3 million, or $1.52 per diluted share2, non-cash impairment charge based on the preliminary results of the company’s goodwill impairment tests. Excluding the impact of the impairment, net loss from continuing operations was $5.5 million2 or $0.13 per diluted share2 for the second quarter of 2016. For the second quarter of 2015, GAAP net loss from continuing operations was $1.3 million or $0.03 per diluted share. |
| Q2 2015 | Q2 2016 | |||||||
| GAAP Revenue |
$35.3 million | $34.4 million | ||||||
| Call-Driven Revenue1 |
$34.5 million | $34.4 million | ||||||
| Non-GAAP Results2: |
| |||||||
| Enterprise Revenue3 |
$24.1 million | $26.3 million | ||||||
| Call-Driven Adjusted OIBA |
$1.4 million | ($1.6) million | ||||||
| Call-Driven Adjusted EBITDA |
$2.4 million | ($0.8) million | ||||||
| Cash Balance |
$104 million | $106 million | ||||||
| • | Adjusted non-GAAP earnings (loss) per share2 from continuing operations for the second quarter of 2016 was ($0.02), compared to $0.02 for the second quarter of 2015. |
| • | During the second quarter of 2016, YP contributed $8.1 million in Call-Driven Revenue, compared to $10.4 million in the second quarter 2015. |
| 1 | Call-Driven revenue includes revenue generated from our contracts with YP. |
| 2 | 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 |
| 3 | Enterprise Revenue, also referred to as “Call-Driven Revenue excluding YP”, represents Call-Driven revenue excluding revenue generated from our contracts with YP. |
Strategic Priorities Update
The following highlights our recent progress:
Grow New and Existing Enterprise Client Relationships
| • | We are seeing positive progress in our sales metrics, including new clients, estimated annualized new client bookings, and our pipeline. We have added more than 15 enterprise scale clients in the second quarter and are beginning to more deeply penetrate our core verticals, such as Travel and Communications. For example, we work with four of the largest Hotel brands of which three were signed in the first half of 2016. Our estimated annualized new client bookings through the first half of 2016 have grown more than 50% from the annualized run rate of the fourth quarter of 2015 despite many of our new sales reps not being fully ramped. |
Accelerate Product Innovation
| • | We continue to execute our omni-channel analytics strategy. We are on track to deliver several new products including Display Analytics for general availability in the near term. These products enable clients to measure the effectiveness of display and other digital media in driving call conversions. Upon launching Display Analytics, we expect to also measure the consumer journey and interplay between Display and Search. |
| • | We have integrated our Display Analytics technology with more than 40 of the world’s leading mobile publishers, including more than half of comScore’s top ten digital media properties. |
Expand Global Strategic Partnerships
| • | We have a new integration with Adobe’s Marketing Cloud that delivers better return on advertising spend for enterprise search marketers that rely upon inbound phone calls to drive sales. The integration delivers automated insights on phone calls directly into the Adobe Media Optimizer for each keyword, including call outcomes and Interactive Voice Response (IVR) inputs. These insights allow marketers to properly automate paid search bidding by allocating budgets towards keywords that best drive over-the-phone purchases. |
Business Outlook
The following forward-looking statements reflect Marchex’s expectations as of August 9, 2016.
Total Call-Driven financial guidance for the Third Quarter ending September 30, 2016
| Call-Driven Revenue1 |
$30 million or more | |
| Call-Driven Adjusted OIBA2 |
a loss of ($2) million to a loss of ($4) million | |
| Call-Driven Adjusted EBITDA2 |
a loss of ($1) million to a loss of ($3) million |
We are providing annual guidance on Call-Driven revenue which includes anticipated contributions by YP due to increased visibility in the remaining year outlook from this customer. We anticipate Enterprise Revenue for the full year will be lower than our previously stated annual guidance, primarily due to increasing variability in marketing budgets from a small number of our largest enterprise customers.
Total Call-Driven financial guidance for the year ending December 31, 2016
| Call-Driven Revenue1 |
$128 million or more |
Conference Call and Webcast Information
Management will hold a conference call, starting at 5:00 p.m. ET on Tuesday, August 9, 2016 to discuss its second quarter ended June 30, 2016 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 analytics company that connects online behavior to real-world, offline actions. By linking critical touchpoints in the customer journey, Marchex’s products enable a 360-degree view of marketing effectiveness. Brands and agencies utilize Marchex’s products to transform business performance.
Please visit www.marchex.com, www.marchex.com/blog/ 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, dispositions, projected costs, prospects, plans and objectives of management are forward-looking statements. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. There are a number of important factors that could cause 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 August 9, 2016 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, Adjusted non-GAAP earnings (loss) per share and Call-Driven and Archeo and Other Adjusted OIBA and EBITDA. Additionally, Marchex also provides Enterprise Revenue, which represents Call-Driven revenue excluding revenue generated from our contracts with Yellowpages.com LLC (“YP”).
OIBA represents income (loss) from operations plus stock-based compensation expense. 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 disposition related costs and preliminary estimate of impairment of goodwill, as these items are 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, acquisition and disposition related costs, and preliminary estimate of impairment of goodwill. Adjusted EBITDA represents income before interest, income taxes, depreciation, amortization, stock compensation expense, acquisition and disposition related costs, and preliminary estimate of impairment of goodwill. Marchex believes that Adjusted EBITDA is another alternative measure of liquidity to GAAP net cash provided by (used in) 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.
Call-Driven Adjusted OIBA and EBITDA include the above descriptions of Adjusted OIBA and EBITDA for the Call-Driven segment. The Call-Driven Adjusted OIBA and EBITDA includes all Marchex general corporate overhead costs. Archeo and Other Adjusted OIBA and EBITDA includes the above descriptions of Adjusted OIBA and EBITDA for the Archeo segment in 2015, and in 2016, Other operating results primarily includes transition activities provided to buyer of Archeo assets which are not material. Enterprise Revenue represents Call-Driven revenue excluding revenue generated through our contracts
with YP. Financial analysts and investors may use Adjusted OIBA and EBITDA and Enterprise Revenue to help with comparative financial evaluation to make informed investment decisions. Net loss from continuing operations excluding impairment of goodwill and related per diluted share amount represents GAAP net loss from continuing operations adding back the impact of the preliminary estimate of impairment of goodwill with the corresponding diluted share amount derived by using GAAP diluted shares outstanding. Adjusted non-GAAP earnings (loss) per share represents Adjusted non-GAAP net income (loss) applicable to common stockholders divided by GAAP diluted shares outstanding. Adjusted non-GAAP net income (loss) 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 (loss) applicable to common stockholders plus the net of tax effects of: (1) stock-based compensation expense, (2) acquisition and disposition related costs, (3) interest and other income (expense), (4) discontinued operations, net of tax, (5) dividends paid to participating securities and (6) preliminary estimate of impairment of goodwill. Financial analysts and investors may use Adjusted non-GAAP earnings (loss) per share 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. 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
Marchex Corporate Communications
Telephone: 206.331.3434
Email: pr(at)marchex.com
MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
| Three months ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2015 | 2016 | 2015 | 2016 | |||||||||||||
| Revenue |
$ | 35,346 | $ | 34,412 | $ | 71,261 | $ | 70,397 | ||||||||
| Expenses: |
||||||||||||||||
| Service costs (1) |
19,797 | 20,477 | 39,163 | 42,459 | ||||||||||||
| Sales and marketing (1) |
4,245 | 5,649 | 7,703 | 11,171 | ||||||||||||
| Product development (1) |
8,147 | 7,555 | 15,839 | 15,027 | ||||||||||||
| General and administrative (1) |
4,505 | 5,833 | 10,204 | 10,495 | ||||||||||||
| Acquisition and disposition related costs |
118 | 304 | 118 | 308 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses |
36,812 | 39,818 | 73,027 | 79,460 | ||||||||||||
| Impairment of goodwill |
— | (63,305 | ) | — | (63,305 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss from operations |
(1,466 | ) | (68,711 | ) | (1,766 | ) | (72,368 | ) | ||||||||
| Interest expense and other, net |
(16 | ) | (68 | ) | (41 | ) | (75 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss from continuing operations before provision for income taxes |
(1,482 | ) | (68,779 | ) | (1,807 | ) | (72,443 | ) | ||||||||
| Income tax expense (benefit) |
(185 | ) | 12 | (180 | ) | 25 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss from continuing operations |
(1,297 | ) | (68,791 | ) | (1,627 | ) | (72,468 | ) | ||||||||
| Discontinued operations: |
||||||||||||||||
| Income (loss) from discontinued operations, net of tax |
(92 | ) | — | 5,047 | — | |||||||||||
| Gain on sale from discontinued operations, net of tax |
22,257 | — | 22,032 | — | ||||||||||||
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|
|
|
|
|
|
|||||||||
| Discontinued operations, net of tax |
22,165 | — | 27,079 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
20,868 | (68,791 | ) | 25,452 | (72,468 | ) | ||||||||||
| Dividends paid to participating securities |
(19 | ) | — | (37 | ) | — | ||||||||||
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|
|
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|
|
|
|
|||||||||
| Net income (loss) applicable to common stockholders |
$ | 20,849 | $ | (68,791 | ) | $ | 25,415 | $ | (72,468 | ) | ||||||
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|||||||||
| Basic and diluted net income (loss) per Class A and Class B share applicable to common stockholders: |
||||||||||||||||
| Continuing operations |
$ | (0.03 | ) | $ | (1.65 | ) | $ | (0.04 | ) | $ | (1.75 | ) | ||||
| Discontinued operations, net of tax |
$ | 0.53 | $ | — | $ | 0.66 | $ | — | ||||||||
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|
|||||||||
| Basic and diluted net income (loss) per Class A and Class B share applicable to common stockholders |
$ | 0.50 | $ | (1.65 | ) | $ | 0.62 | $ | (1.75 | ) | ||||||
| Dividends paid per share |
$ | 0.02 | $ | — | $ | 0.04 | $ | — | ||||||||
| Shares used to calculate basic net income (loss) per share applicable to common stockholders |
||||||||||||||||
| Class A |
5,233 | 5,233 | 5,233 | 5,233 | ||||||||||||
| Class B |
36,072 | 36,499 | 35,919 | 36,238 | ||||||||||||
| Shares used to calculate diluted net income (loss) per share applicable to common stockholders |
||||||||||||||||
| Class A |
5,233 | 5,233 | 5,233 | 5,233 | ||||||||||||
| Class B |
41,305 | 41,732 | 41,152 | 41,471 | ||||||||||||
| (1) Includes stock-based compensation allocated as follows: |
||||||||||||||||
| Service costs |
$ | 552 | $ | 207 | $ | 772 | $ | 405 | ||||||||
| Sales and marketing |
309 | 529 | 554 | 968 | ||||||||||||
| Product development |
644 | 629 | 1,223 | 1,161 | ||||||||||||
| General and administrative |
1,162 | 2,136 | 2,909 | 2,933 | ||||||||||||
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| Total |
$ | 2,667 | $ | 3,501 | $ | 5,458 | $ | 5,467 | ||||||||
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MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
| December 31, 2015 |
June 30, 2016 |
|||||||
| Assets | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 109,155 | $ | 105,777 | ||||
| Accounts receivable, net |
24,621 | 25,301 | ||||||
| Prepaid expenses and other current assets |
1,784 | 2,393 | ||||||
| Refundable taxes |
127 | 124 | ||||||
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|
|||||
| Total current assets |
135,687 | 133,595 | ||||||
| Property and equipment, net |
5,778 | 4,454 | ||||||
| Intangibles and other assets, net |
222 | 222 | ||||||
| Goodwill |
63,305 | — | ||||||
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|||||
| Total Assets |
$ | 204,992 | $ | 138,271 | ||||
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|||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 9,460 | $ | 9,614 | ||||
| Accrued expenses and other current liabilities |
6,712 | 7,583 | ||||||
| Deferred revenue |
692 | 333 | ||||||
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|||||
| Total current liabilities |
16,864 | 17,530 | ||||||
| Other non-current liabilities |
662 | 407 | ||||||
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|
|||||
| Total Liabilities |
17,526 | 17,937 | ||||||
| Class A common stock |
55 | 55 | ||||||
| Class B common stock |
368 | 381 | ||||||
| Treasury stock |
(238 | ) | (95 | ) | ||||
| Additional paid-in capital |
350,799 | 355,979 | ||||||
| Accumulated deficit |
(163,518 | ) | (235,986 | ) | ||||
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|
|||||
| Total Stockholders’ Equity |
187,466 | 120,334 | ||||||
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|
|||||
| Total Liabilities and Stockholders’ Equity |
$ | 204,992 | $ | 138,271 | ||||
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MARCHEX, INC. AND SUBSIDIARIES
(in thousands)
(unaudited)
Reconciliation of GAAP Loss from Operations to Operating Income Before Amortization (OIBA)
and Adjusted Operating Income Before Amortization (Adjusted OIBA)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2015 | 2016 | 2015 | 2016 | |||||||||||||
| Loss from operations |
$ | (1,466 | ) | $ | (68,711 | ) | $ | (1,766 | ) | $ | (72,368 | ) | ||||
| Stock-based compensation |
2,667 | 3,501 | 5,458 | 5,467 | ||||||||||||
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|
|||||||||
| Operating income before amortization (OIBA) |
1,201 | (65,210 | ) | 3,692 | (66,901 | ) | ||||||||||
| Acquisition and disposition related costs |
118 | 304 | 118 | 308 | ||||||||||||
| Impairment of goodwill |
— | 63,305 | — | 63,305 | ||||||||||||
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| Adjusted operating income before amortization (Adjusted OIBA) - Consolidated |
$ | 1,319 | $ | (1,601 | ) | $ | 3,810 | $ | (3,288 | ) | ||||||
| Less: Archeo and Other Adjusted OIBA1 |
(81 | ) | 11 | (222 | ) | 27 | ||||||||||
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| Call-Driven Adjusted OIBA1 |
$ | 1,400 | $ | (1,612 | ) | $ | 4,032 | $ | (3,315 | ) | ||||||
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Reconciliation from Net Cash provided by (used in) Operating Activities to Adjusted EBITDA
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2015 | 2016 | 2015 | 2016 | |||||||||||||
| Net cash provided by (used in) operating activities |
$ | (1,814 | ) | $ | (386 | ) | $ | 4,437 | $ | (2,653 | ) | |||||
| Changes in asset and liabilities |
3,883 | (785 | ) | 6,111 | 647 | |||||||||||
| Income tax expense (benefit) |
(185 | ) | 12 | (180 | ) | 25 | ||||||||||
| Acquisition and disposition related costs |
118 | 304 | 118 | 308 | ||||||||||||
| Interest expense and other, net |
16 | 68 | 41 | 75 | ||||||||||||
| Loss (income) from discontinued operations, net of tax |
91 | — | (5,065 | ) | — | |||||||||||
| Tax effect on gain on sale of discontinued operations |
163 | — | 163 | — | ||||||||||||
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| Adjusted EBITDA - Consolidated |
$ | 2,272 | $ | (787 | ) | $ | 5,625 | $ | (1,598 | ) | ||||||
| Less: Archeo and Other Adjusted EBITDA1 |
(81 | ) | 11 | (222 | ) | 27 | ||||||||||
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| Call-Driven Adjusted EBITDA1 |
$ | 2,353 | $ | (798 | ) | $ | 5,847 | $ | (1,625 | ) | ||||||
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| Net cash provided by (used in) investing activities |
$ | 23,767 | $ | (119 | ) | $ | 22,840 | $ | (594 | ) | ||||||
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| Net cash used in financing activities |
$ | (1,181 | ) | $ | (321 | ) | $ | (2,878 | ) | $ | (131 | ) | ||||
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| 1 | The financial results have been derived from the condensed consolidated financial statements. In April 2015, Marchex divested certain Archeo domain name and related assets and the operating results of these divested assets are included in discontinued operations, net of tax, in the condensed consolidated financial statements. In December 2015, Marchex sold the remaining Archeo assets and its operating results are included in continuing operations for 2015. Unless otherwise indicated, information presented in these financial tables relates only to Marchex’s continuing operations. In 2016, Other operating results related primarily to transition activities provided to the buyer of the Archeo assets and were not significant. |
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP earnings (loss) per share to Adjusted Non-GAAP earnings (loss) per share
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2015 | 2016 | 2015 | 2016 | |||||||||||||
| Adjusted Non-GAAP earnings (loss) per share from continuing operations |
$ | 0.02 | $ | (0.02 | ) | $ | 0.06 | $ | (0.05 | ) | ||||||
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| Net loss from continuing operations applicable to common stockholders - diluted (GAAP loss per share) |
$ | (0.03 | ) | $ | (1.65 | ) | $ | (0.04 | ) | $ | (1.75 | ) | ||||
| Shares used to calculate diluted net loss from continuing operations per share applicable to common stockholders |
41,305 | 41,732 | 41,152 | 41,471 | ||||||||||||
| Net income (loss) applicable to common stockholders |
$ | 20,849 | $ | (68,791 | ) | $ | 25,415 | $ | (72,468 | ) | ||||||
| Stock-based compensation |
2,667 | 3,501 | 5,458 | 5,467 | ||||||||||||
| Acquisition and disposition related costs |
118 | 304 | 118 | 308 | ||||||||||||
| Impairment of goodwill |
— | 63,305 | — | 63,305 | ||||||||||||
| Interest expense and other, net |
16 | 68 | 41 | 75 | ||||||||||||
| Dividends paid to participating securities |
19 | — | 37 | — | ||||||||||||
| Discontinued operations, net of tax |
(22,165 | ) | — | (27,079 | ) | — | ||||||||||
| Estimated impact of income taxes |
(646 | ) | 746 | (1,516 | ) | 1,093 | ||||||||||
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| Adjusted Non-GAAP net income (loss) from continuing operations |
$ | 858 | $ | (867 | ) | $ | 2,474 | $ | (2,220 | ) | ||||||
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| Adjusted Non-GAAP earnings (loss) per share from continuing operations |
$ | 0.02 | $ | (0.02 | ) | $ | 0.06 | $ | (0.05 | ) | ||||||
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| Shares used to calculate diluted net income (loss) from continuing operations per share applicable to common stockholders (GAAP) |
41,305 | 41,732 | 41,152 | 41,471 | ||||||||||||
| Weighted average stock options and common shares subject to purchase or cancellation (if applicable) |
415 | — | 366 | — | ||||||||||||
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| Diluted shares used to calculate Adjusted Non-GAAP earnings (loss) per share 1 |
41,720 | 41,732 | 41,518 | 41,471 | ||||||||||||
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| 1 | For the purpose of computing the number of diluted shares for Adjusted Non-GAAP earnings (loss) per share, Marchex uses the accounting guidance that would be applicable for computing the number of diluted shares for GAAP earnings (loss) per share. |
Reconciliation of GAAP net loss from continuing operations to Non-GAAP net loss from continuing operations
excluding impairment of goodwill
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2015 | 2016 | 2015 | 2016 | |||||||||||||
| Net loss from continuing operations (GAAP) |
$ | (1,297 | ) | $ | (68,791 | ) | $ | (1,627 | ) | $ | (72,468 | ) | ||||
| Impairment of goodwill |
— | 63,305 | — | 63,305 | ||||||||||||
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| Net loss from continuing operations excluding goodwill impairment (NON-GAAP) |
$ | (1,297 | ) | $ | (5,486 | ) | $ | (1,627 | ) | $ | (9,163 | ) | ||||
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| Net loss from continuing operations applicable to common stockholders - diluted (GAAP loss per share) |
$ | (0.03 | ) | $ | (1.65 | ) | $ | (0.04 | ) | $ | (1.75 | ) | ||||
| Impairment of goodwill per diluted share |
|
— |
|
1.52 | |
— |
|
1.53 | ||||||||
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| Net loss from continuing operations excluding goodwill impairment per diluted share (NON-GAAP) |
$ | (0.03 | ) | $ | (0.13 | ) | $ | (0.04 | ) | $ | (0.22 | ) | ||||
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| Shares used to calculate diluted net loss from continuing operations per share applicable to common stockholders (GAAP) and diluted net loss from continuing operations excluding goodwill impairment (NON-GAAP) |
41,305 | 41,732 | 41,152 | 41,471 | ||||||||||||
MARCHEX, INC. AND SUBSIDIARIES
Financial Summary Information
(in thousands)
(unaudited)
| NON-GAAP MEASURES |
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| CONSOLIDATED1 | Q215 | Q216 | YTD Q215 | YTD Q216 | ||||||||||||
| GAAP Revenue |
$ | 35,346 | $ | 34,412 | $ | 71,261 | $ | 70,397 | ||||||||
| Adjusted OIBA |
$ | 1,319 | $ | (1,601 | ) | $ | 3,810 | $ | (3,288 | ) | ||||||
| Adjusted EBITDA |
$ | 2,272 | $ | (787 | ) | $ | 5,625 | $ | (1,598 | ) | ||||||
| CALL-DRIVEN | Q215 | Q216 | YTD Q215 | YTD Q216 | ||||||||||||
| GAAP Revenue |
$ | 34,458 | $ | 34,412 | $ | 69,486 | $ | 70,376 | ||||||||
| Adjusted OIBA |
$ | 1,400 | $ | (1,612 | ) | $ | 4,032 | $ | (3,315 | ) | ||||||
| Adjusted EBITDA |
$ | 2,353 | $ | (798 | ) | $ | 5,847 | $ | (1,625 | ) | ||||||
| ENTERPRISE REVENUE2 | Q215 | Q216 | YTD Q215 | YTD Q216 | ||||||||||||
| Call-Driven GAAP Revenue |
$ | 34,458 | $ | 34,412 | $ | 69,486 | $ | 70,376 | ||||||||
| Less: YP Revenue |
$ | 10,362 | $ | 8,091 | $ | 21,119 | $ | 16,610 | ||||||||
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| Enterprise Revenue |
$ | 24,096 | $ | 26,321 | $ | 48,367 | $ | 53,766 | ||||||||
| 1 | In April 2015, Marchex divested certain Archeo domain name and related assets and the operating results of these divested assets are included in discontinued operations, net of tax, in the condensed consolidated financial statements. In December 2015, Marchex sold the remaining Archeo assets and its operating results are included in continuing operations for 2015. In 2016, there were Other operating activities that related primarily to transition activities provided to the buyer of the Archeo assets and were not significant. Unless otherwise indicated, information presented in these financial tables relates only to Marchex’s continuing operations. |
| 2 | Enterprise Revenue, also referred to as “Call-Driven Revenue excluding YP”, represents Call-Driven revenue excluding revenue generated from our contracts with YP. |