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Marchex Announces Second Quarter 2013 Results

Marchex, Inc. (NASDAQ:MCHX), a leader in mobile performance advertising, today announced its financial results for the second quarter ended June 30, 2013.

“Our strong second quarter reflects the growing demand for Call Advertising products that deliver what businesses want most: exposure to mobile consumers and transparency on ad campaign performance,” said Russell Horowitz, Chief Executive Officer and Chairman of Marchex. “Advertisers spend billions each year on campaigns that get mobile consumers to call and they want the returns to show for it. We will continue to invest in solutions that drive this momentum and position us well for long-term growth.”

Q2 2013 Financial Highlights:

  • Revenue was $39.0 million for the second quarter of 2013, compared to $34.0 million for the same period in 2012.
  • GAAP net loss applicable to common stockholders was $354,000 for the second quarter of 2013 or $0.01 per diluted share. This compares to a GAAP net income applicable to common stockholders of $330,000 or $0.01 per diluted share for the same period in 2012. The second quarter 2013 results included non-cash stock-based compensation expense of $2.6 million, compared to non-cash stock-based compensation expense of $4.8 million for the same period in 2012.
  • Adjusted non-GAAP EPS 1 for the second quarter of 2013 was $0.04, compared to $0.06 for the same period in 2012.
  • Adjusted OIBA 1 was $2.2 million for the second quarter of 2013, compared to $3.7 million for the same period in 2012.
  • Adjusted EBITDA 1 was $3.2 million for the second quarter of 2013, compared to $4.6 million for the same period in 2012.

1Reconciliations 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.

Marchex Q2 and Recent Call-Driven Business Highlights:

  • Revenue. Call-driven and other related revenue was $33.9 million for the second quarter of 2013 – a 23 percent increase compared to $27.5 million for the second quarter of 2012.
  • Products. For Publishers, we rolled out upgrades to our mobile and call advertising network technology. These enhancements include:
    • Performance-based monetization. This means high-quality publishers – those that deliver outcomes like call conversions – get paid based on measurable, data-driven results. In turn, these publishers yield more through Marchex’s Pay For Call ads than through integrations with other types of advertising, such as display or click.
    • Further integration of our proprietary Call Analytics technology to determine and score publisher quality.
    • Updates to our proprietary Clean Call technology to detect and block spam and prevent fraudulent calls to advertisers.
    • Updated APIs to streamline partner integration.

For Advertisers, we launched a new solution designed to optimize campaign performance for businesses with local branches. These advertisers have traditionally run marketing campaigns through separate national and local initiatives, but that has created widespread inefficiencies. Early customer data shows our solution helps drive brand consistency and greater customer conversions at the local level.

  • Customers and Partners. We added 5 new publisher partners to our call advertising network and more than 20 new national and local reseller customers across several categories, including Financial Services, Home Services and Travel.

Archeo Q2 Highlights and Transaction Update:

  • Archeo, Inc. (“Archeo”), a division of Marchex, includes non-call driven assets, which consist of domain assets and a pay-per-click advertising marketplace.
  • Archeo revenue was $5.1 million for the second quarter of 2013.
  • During the second quarter of 2013, Archeo sold a total of 70 domains that yielded $1.3 million.
  • Archeo Transaction Update. In July, certain pay-per-click assets were sold for proceeds totaling up to $2.6 million as part of a transaction to focus Archeo’s business on creating a premium domain marketplace. Those assets contributed $1.4 million in revenue and close to $100,000 in adjusted EBITDA in the second quarter and were on pace to contribute a projected $3 million in revenue and $200,000 in adjusted EBITDA for the remainder of 2013. Marchex estimates the full year impact for 2013 to be $6 million in revenue and $300,000 in EBITDA. Going forward, we anticipate this sale will be presented in our financial results as discontinued operations.
  • As a result of this sale, and Marchex’s need to update and refile the Form 10 for Archeo, it is currently anticipated the spinoff will occur not earlier than the fourth quarter of 2013. During this time, Marchex will continue to review the strategic pieces of Archeo’s revised profile to optimize its value for shareholders.

Marchex Guidance

The following forward-looking statements reflect Marchex's expectations as of August 6, 2013. Marchex anticipates providing updates in the event of completion of the spin-off.

Financial guidance for the fiscal year ending December 31, 2013:
Revenue:       $145-$148 million, with Call-Driven revenue of $132-$134 million;

$151-$154 million on an adjusted comparative basis, including $6 million in revenue from discontinued operations (see Archeo Transaction Update above for details).

Adjusted

OIBA:

$9-$10 million;

$9.3-$10.3 million on an adjusted comparative basis including $0.3 million in adjusted OIBA from discontinued operations.

Adjusted

EBITDA:

$13-$14 million based on estimated add-backs of approximately $4 million in additional depreciation and amortization to adjusted OIBA;

$13.3-$14.3 million on an adjusted comparative basis including $0.3 million in adjusted EBITDA from discontinued operations.

For Call-Driven adjusted EBITDA 2, Marchex had $4 million in adjusted EBITDA for the six months ended June 30, 2013 and the company expects more than $9 million in adjusted EBITDA for the full year 2013.

2This non-GAAP Call-Driven measure is an alternate approach to Call-Driven profitability measures in that all Marchex indirect overhead costs are assigned to the Call-Driven results versus a portion to Archeo. 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.

2013 GAAP income (loss) from operations is expected to be ($3.0) million or better, assuming stock-based compensation between $9-$10.5 million and amortization of intangible assets from acquisitions between $3-$3.5 million. This estimate excludes any prospective gain or loss on sales and disposals of intangible assets or costs related to the separation of Archeo.

Financial guidance for the Third Quarter ending September 30, 2013:
Revenue:       $37-$38.5 million, with Call-Driven revenue of $34-$35 million;

$38.5-$40 million on an adjusted comparative basis, including $1.5 million in revenue from discontinued operations (see Archeo Transaction Update above for details).

Adjusted

OIBA:

$1.5-$2.5 million;

$1.6-$2.6 million on an adjusted comparative basis including $0.1 million in adjusted OIBA from discontinued operations.

Adjusted

EBITDA:

$2.5-$3.5 million, including estimated add-backs of approximately $1 million in additional depreciation and amortization to adjusted OIBA;

$2.6-$3.6 million on an adjusted comparative basis including $0.1 million in adjusted EBITDA from discontinued operations.

Third quarter GAAP income (loss) from operations is expected to be ($2.5) million or better, assuming stock-based compensation between $2-$3 million and amortization of intangible assets from acquisitions between $0.6-$1 million. This estimate excludes any prospective gain or loss on sales and disposals of intangible assets. In the short-term, the above estimates for our measures of profitability may be impacted further by the timing of investments and costs related to the separation of Archeo.

Stock quotes in this article: MCHX 

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