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Marchex Announces Fourth Quarter and Full Year 2021 Results

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SEATTLE, March 02, 2022--(BUSINESS WIRE)--Marchex, Inc. (NASDAQ: MCHX), the award-winning AI-powered conversation intelligence company that helps businesses turn strategic insights into the actions that drive their most valued sales outcomes, today announced its financial results for the fourth quarter and year ended December 31, 2021.

Q4 2021 and Full Year 2021 Financial Highlights

  • GAAP revenue was $12.8 million for the fourth quarter of 2021, compared to $12.7 million for the fourth quarter of 2020. GAAP revenue was $53.5 million for 2021, compared to $51.2 million in 2020.

  • Fourth quarter 2021 core analytics and solutions revenue was $12.8 million as compared to the fourth quarter of 2020 amount of $12.3 million, which excludes the benefit of recognizing $274,000 of revenue that was reserved at the end of the 2020 third quarter during the pandemic given it did not meet recognition criteria under our revenue recognition policies at such time. Including this amount, core analytics and solutions revenue for the fourth quarter of 2020 was $12.5 million. Core analytics and solutions revenue was $53.5 million in 2021, compared to $50.4 million in 2020.

  • Net loss from continuing operations was $2.0 million for the fourth quarter of 2021 or $0.04 per diluted share, compared to a net loss of $5.7 million or $0.13 per diluted share for the fourth quarter of 2020. Net loss from continuing operations was $4.4 million for 2021 or $0.10 per diluted share, compared to a net loss of $42.0 million for 2020 or $0.93 per diluted share for 2020.

Q4 2020

Q4 2021

FY 2020

FY 2021

GAAP Revenue

$12.7 million

$12.8 million

$51.2 million

$53.5 million

Non-GAAP Results:

Adjusted EBITDA from continuing operations

$(3.2) million

$60,000

$(15.0) million

$(3.5) million

  • Adjusted non-GAAP income (loss) per share from continuing operations for the fourth quarter of 2021 was ($0.01) compared to ($0.09) for the fourth quarter of 2020. Adjusted non-GAAP income (loss) per share from continuing operations for 2021 was ($0.12) compared to ($0.28) for 2020.

Strategic Priorities and Growth Initiatives

  • New Customer Traction and Existing Customer Expansion. Marchex saw continued momentum with new enterprise customers across multiple product lines in Auto, Home Services, Health Care and other verticals. This included traction with multiple OEM partners and the signing of a new large Home Services aggregator, which is expected to be onboarded later this year.

  • Company Maintains Profitability Metrics in the Fourth Quarter. In the fourth quarter of 2021, Marchex achieved break-even Adjusted EBITDA in part through continued progress with the Company’s cost initiatives, including its technology and cloud-based infrastructure projects.

  • Conversation Volumes. Conversation volume trends were sequentially flat in October versus recent prior months and the ensuing holiday periods embodied the historically normal seasonality trends of lower volumes.

  • Expansion of Market Opportunities.

    • Marchex Announces New Integration into Fortellis. Recently, Marchex announced its integration into the Fortellis Commerce Exchange Platform. This integration is designed to empower automotive dealers to easily deploy Marchex’s conversation intelligence and provide a better customer experience by automatically delivering up-to-date conversations, events, and outcomes within CDK Elead CRM, one of the auto industry’s largest CRMs. Through this integration, Marchex is enabling dealers to increase sales efficiency by taking the best actions needed to optimize every opportunity and sell more vehicles.

  • Accelerate Product Innovation.

    • Marchex Launches Conversation DNA™. The Company announced the launch of Conversation DNA, a core technology that enables voice and text conversation decoding, scoring, categorization and signal delivery across every Marchex conversation intelligence product. Powering such products as Marchex Anywhere, Engage and Engage for Automotive, and Marketing Edge, Conversation DNA identifies actionable insights from a growing base of more than one billion minutes of consumer-to-business voice conversations and hundreds of millions of text messages that Marchex’s AI powered conversation intelligence technology processes each year. The resulting AI signals enable businesses to take the actions that anticipate the needs of their consumers, deliver highly personalized experiences and increase sales.

"In the fourth quarter of 2021 and continuing through today, Marchex continues to assemble the key ingredients to capitalize on our opportunity in conversational intelligence," said Russell Horowitz, Executive Chairman and Co-CEO. "Through expanding our opportunities with Fortune 500 customers and developing industry leading products, we are positioning ourselves to drive significant long-term growth. This year we will continue to invest in leveraging the growing base of billions of minutes of conversational data that flows through our platform to create first-ever AI-driven sales engagement signals and making those signals available to a broader base of businesses across more verticals. These investments, coupled with our cloud-based technology infrastructure initiatives, open the door to new growth opportunities as Marchex is solving an increasing array of mission critical problems for our customers across a growing number of direct and indirect sales channels.

Business Outlook

The following forward-looking statements reflect Marchex's expectations as of March 2, 2022.

"Throughout January and the first part of February 2022, with the pandemic resurgence, we saw customer conversation volumes in key categories remain suppressed, consistent with fourth quarter 2021 levels, which we expect will impact growth to a degree in the first quarter," said Mike Arends Co-CEO. "Despite this, we anticipate that sales traction will lead to sequential growth from last year’s fourth quarter and as compared to the first quarter of 2021. In addition, we believe we should be at or near break-even on an Adjusted EBITDA basis for the first quarter.

"Furthermore, as we continue to make progress with some of our largest customers as well as onboard new potentially significant relationships, and as our new products like our cloud-based Marchex Anywhere initiative begin to roll out, we believe we could see growth expand as we move through the year. These opportunities, along with continued traction with new product sales, are driving the expansion of our pipeline. In addition, if we see an unwinding of the pandemic impact on volumes at some point during the year, we believe that should convert to a tailwind in many of our verticals and enable us to achieve accelerating growth and potentially increasing double digit growth rates." said Arends.

Management will hold a conference call, starting at 5:00 p.m. ET on Wednesday, March 2, 2022 to discuss its fourth quarter and year ended December 31, 2021 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 two hours after completion of the call.

About Marchex

Marchex’s award-winning conversation intelligence platform, featuring AI-powered sales engagement and marketing solutions, helps businesses turn strategic insights into the actions that drive their most valued sales outcomes. Our multichannel voice and text capabilities enable sales and marketing teams to deliver the buying experiences that today’s customers expect. Marchex is the trusted conversation intelligence partner for market-leading companies in critical industries, including many of the world’s most innovative and successful brands.

Please visit http://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 including but not limited to product demand, order cancellations and delays, competition and general economic conditions. These factors are described in greater detail 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 March 2, 2022 and Marchex undertakes no duty to update the information provided herein.

In the event the press release contains links to third party websites or materials, the links are provided solely as a convenience to you. Marchex is not responsible for the content of linked third-party sites or materials and does not make any representations regarding the content or accuracy thereof.

Discontinued Operations:

In October 2020, the Company sold its interest in the Local Leads Platform, Call Marketplace and other assets not related to core conversational analytics and sales engagement solutions. As a result, the financial results of these dispositions are presented as discontinued operations net of tax in our condensed consolidated statements of operations in accordance with GAAP for the previous year presented.

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 Adjusted EBITDA, Adjusted OIBA, and Adjusted non-GAAP income (loss) per share.

Adjusted EBITDA from continuing operations represents net income (loss) from continuing operations before (1) gain on loan extinguishment, (2) interest, (3) income taxes, (4) amortization of intangible assets from acquisitions, (5) depreciation and amortization, (6) stock-based compensation expense, (7) acquisition and disposition-related costs (benefit), (8) impairment of goodwill and intangibles assets from acquisitions, and (9) foreign government assistance subsidies. Marchex believes that Adjusted EBITDA is an alternative measure used by our management to understand and evaluate our core operating performance and trends, and that provides meaningful supplemental information regarding performance and evaluating performance and liquidity to measure its ability to fund operations and its financing obligations.

Adjusted OIBA from continuing operations represents Adjusted EBITDA from continuing operations adjusted for depreciation and amortization. This measure, among other things, is another metric by which Marchex evaluates the performance of its business. 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 as detailed above. Financial analysts and investors may use Adjusted EBITDA and Adjusted OIBA to help with comparative financial evaluation to make informed investment decisions.

Adjusted non-GAAP income (loss) per share from continuing operations represents Adjusted non-GAAP income (loss) from continuing operations divided by GAAP diluted shares outstanding. Adjusted non-GAAP income (loss) 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 (benefit), (3) amortization of intangible assets from acquisitions, (4) impairment of goodwill and intangibles assets from acquisitions, (5) gain on loan extinguishment, (6) interest income and other, net, (7) net income from discontinued operations, net of tax, and (8) estimated impact of income taxes. Financial analysts and investors may use Adjusted non-GAAP income (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.

MARCHEX, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

(In Thousands)

2020

2021

2020

2021

Revenue

$

12,691

$

12,790

$

51,218

$

53,476

Expenses:

Service costs (1)

5,459

5,305

20,888

21,694

Sales and marketing (1)

3,693

3,304

16,656

13,549

Product development (1)

5,169

2,823

21,001

16,112

General and administrative (1)

3,015

2,334

12,796

9,294

Amortization of intangible assets from acquisitions

1,156

773

5,331

4,481

Acquisition and disposition related costs (benefit)

(71

)

39

(1,043

)

142

Total operating expenses

18,421

14,578

75,629

65,272

Impairment of goodwill

(14,688

)

Impairment of intangible assets from acquisitions

(4,959

)

Loss from operations

(5,730

)

(1,788

)

(44,058

)

(11,796

)

Gain on loan extinguishment

-

-

5,185

Interest income (expense) and other, net

(16

)

-

123

2,453

Loss before provision for income taxes

(5,746

)

(1,788

)

(43,935

)

(4,158

)

Income tax (benefit)

(57

)

247

(1,917

)

232

Loss from continuing operations

(5,689

)

(2,035

)

(42,018

)

(4,390

)

Income from discontinued operations, net of tax

295

3,572

Net loss applicable to common stockholders

$

(5,394

)

$

(2,035

)

$

(38,446

)

$

(4,390

)

Basic and diluted net loss per Class A and Class B share applicable to common stockholders

Continuing operations

$

(0.13

)

$

(0.04

)

(0.91

)

(0.10

)

Discontinued operations, net of tax

$

0.01

$

0.08

-

Basic and diluted net loss per Class A and Class B share applicable to common stockholders

$

(0.12

)

$

(0.04

)

$

(0.83

)

$

(0.10

)

Shares used to calculate basic net loss per share applicable to common stockholders:

Class A

4,661

4,661

4,661

4,661

Class B

39,411

39,527

41,599

39,256

Shares used to calculate diluted net loss per share applicable to common stockholders:

Class A

4,661

4,661

4,661

4,661

Class B

44,072

44,188

46,260

43,917

(1) Includes stock-based compensation allocated as follows:

Service costs

$

7

$

34

$

36

$

49

Sales and marketing

283

207

1,041

870

Product development

97

66

358

296

General and administrative

596

360

2,172

1,459

Total

$

983

$

667

$

3,607

$

2,674

MARCHEX, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

December 31,

December 31,

(In Thousands)

2020

2021

Assets

Current assets:

Cash and cash equivalents

$

33,851

$

27,086

Accounts receivable, net

6,331

8,021

Prepaid expenses and other current assets

2,160

2,407

Total current assets

42,342

37,514

Property and equipment, net

2,747

2,817

Other assets, net

1,345

986

Right-of-use lease asset

3,744

2,238

Goodwill

17,558

17,558

Intangible assets from acquisitions, net

9,196

4,714

Total assets

$

76,932

$

65,827

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

2,424

$

1,363

Accrued benefits and payroll

5,975

3,631

Other accrued expenses and current liabilities

4,210

3,869

Deferred revenue and deposits

1,393

2,016

Lease liability current

1,827

1,794

Loan obligations, current

5,123

Total current liabilities

20,952

12,673

Deferred tax liabilities

156

186

Lease liability non-current

3,136

1,466

Total liabilities

24,244

14,325

Stockholders’ equity:

Class A common stock

49

49

Class B common stock

365

374

Additional paid-in capital

350,960

354,155

Accumulated deficit

(298,686

)

(303,076

)

Total stockholders’ equity

52,688

51,502

Total liabilities and stockholders’ equity

$

76,932

$

65,827

MARCHEX, INC. AND SUBSIDIARIES

(in thousands)

(unaudited)

Reconciliation of GAAP Net Loss from Continuing Operations to Adjusted EBITDA from Continuing Operations and Adjusted Operating Income (Loss) Before Amortization (OIBA) from Continuing Operations

Three Months Ended

Twelve Months Ended

December 31,

December 31,

(In Thousands)

2020

2021

2020

2021

Net loss from continuing operations

$

(5,689

)

$

(2,035

)

$

(42,018

)

$

(4,390

)

Gain on loan extinguishment

-

-

-

(5,185

)

Interest income (expense) and other, net

16

-

(123

)

(2,453

)

Income tax expense (benefit)

(57

)

247

(1,917

)

232

Amortization of intangible assets from acquisitions

1,156

773

5,331

4,481

Depreciation and amortization

500

379

1,918

1,487

Stock-based compensation

983

667

3,607

2,674

Acquisition and disposition-related costs (benefit)

(71

)

39

(1,043

)

142

Impairment of goodwill

14,688

Impairment of intangible assets from acquisitions

4,959

Foreign government paycheck assistance and rent subsidies1

(46

)

(10

)

(415

)

(444

)

Adjusted EBITDA from continuing operations

$

(3,208

)

$

60

$

(15,013

)

$

(3,456

)

Depreciation and amortization

500

379

1,918

1,487

Adjusted OIBA from continuing operations

$

(3,708

)

$

(319

)

$

(16,931

)

$

(4,943

)

1

Includes pandemic related wage and rent relief subsidies, recognized as a reduction of wages or rent during the period received.

MARCHEX, INC. AND SUBSIDIARIES

(in thousands)

(unaudited)

Reconciliation of GAAP Net Loss per Share to Adjusted Non-GAAP Loss from Continuing Operations per Share

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2020

2021

2020

2021

Net loss applicable to common stockholders, diluted

$

(0.12

)

$

(0.04

)

$

(0.83

)

$

(0.10

)

Stock-based compensation

0.02

0.01

0.08

0.06

Acquisition and disposition-related costs (benefit)

-

-

(0.02

)

-

Amortization of intangible assets from acquisitions

0.02

0.02

0.11

0.10

Impairment of goodwill

-

-

0.32

-

Impairment of intangible assets from acquisitions

-

-

0.10

-

Gain on loan extinguishment

-

-

-

(0.12

)

Interest income and other, net

-

-

-

(0.05

)

Income from discontinued operations, net of tax

(0.01

)

-

(0.08

)

-

Foreign government paycheck assistance and rent subsidies

-

-

(0.01

)

(0.01

)

Estimated impact of income taxes

-

-

0.05

-

Adjusted non-GAAP loss from continuing operations per share

$

(0.09

)

$

(0.01

)

$

(0.28

)

$

(0.12

)

Shares used to calculate diluted net loss per share applicable to common stockholders (GAAP) and Adjusted Non-GAAP loss from continuing operations per share

44,072

44,188

46,260

43,917

1

For the purpose of computing the number of diluted shares for Adjusted Non-GAAP income (loss) from continuing operations per share, Marchex uses the accounting guidance that would be applicable for computing the number of diluted shares for GAAP net income (loss) per share.

MARCHEX, INC. AND SUBSIDIARIES

(in thousands)

(unaudited)

Revenue Reconciliation

Three Months Ended

Twelve Months Ended

December 31,

December 31,

($ in thousands)

2020

2021

2020

2021

Core Analytics & Solutions Revenue1

$

12,546

$

12,790

$

50,421

$

53,476

Other analytics2

145

-

797

-

Total Revenue

$

12,691

$

12,790

$

51,218

$

53,476

1

Core analytics and solutions revenue includes revenue from analytics and sales engagement solutions customers, including those that are purchasing or buying products derived from the company’s speech technology platform.

2

Includes revenue from consulting services or other analytics revenues.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220302005935/en/

Contacts

Trevor Caldwell
Marchex Investor Relations
Telephone: 206.331.3600
Email: ir@marchex.com
Or
MEDIA INQUIRIES
Marchex Corporate Communications
Telephone: 206.331.3434
Email: pr(at)marchex.com