News Release Details

Company Sees Strong Demand for Mobile, Call-Driven Products

Forecasts Record Call-Driven Revenue For 2014

SEATTLE --(BUSINESS WIRE)--Feb. 19, 2014-- Marchex, Inc. (NASDAQ:MCHX), a mobile advertising technology company, today announced its financial results for the fourth quarter and full year ended December 31, 2013.

“Marchex made significant strides in 2013 as we expanded our Call Analytics technology, won new clients and retained and grew important, existing relationships,” said Russell Horowitz, Chairman and CEO of Marchex. “Specifically, our Call Analytics platform connected and analyzed hundreds of millions of calls on behalf of our clients; we added new advertisers to our Call Marketplace and we grew our mobile distribution partner network. This progress builds a strong foundation for 2014 as we enter the year with product and business momentum.”

Q4 2013 Financial Highlights¹

• GAAP revenue was $39.7 million for the fourth quarter of 2013, compared to $32.4 million for the fourth quarter of 2012. Non-GAAP revenue², which excludes domain sales recorded in GAAP revenue, was $38.1 million for the fourth quarter of 2013.
• GAAP net income from continuing operations was $597,000 for the fourth quarter of 2013, compared to a GAAP net loss from continuing operations of $33.5 million for the fourth quarter of 2012.
• GAAP net income from continuing operations attributable to common stockholders per diluted share was $0.02 for the fourth quarter of 2013. This compares to GAAP net loss from continuing operations attributable to common stockholders per diluted share of $1.00 for the fourth quarter of 2012.

• Adjusted non-GAAP EPS³ from continuing operations for the fourth quarter of 2013 was $0.04, compared to $0.05 for the fourth quarter of 2012.

Full Year 2013 Consolidated Financial Results¹

• GAAP revenue was $152.6 million for 2013, compared to $132.8 million for 2012. Non-GAAP revenue², which excludes domain sales recorded in GAAP revenue, was $150.1 million for 2013.
• GAAP net income from continuing operations applicable to common stockholders was $957,000 or $0.03 per diluted share for 2013. This compares to GAAP net loss from continuing operations applicable to common stockholders of $34.3 million or $1.03 per diluted share in 2012.

• Adjusted non-GAAP EPS³ from continuing operations for 2013 was $0.17, compared to $0.25 in 2012.

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 income (loss) from discontinued operations, net of tax in our 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 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.

Marchex Q4 and Recent Call-Driven Business Highlights:

• Revenue. Call-Driven and other related revenue was $34.5 million for the fourth quarter of 2013 – a 21 percent increase compared to $28.5 million for the fourth quarter of 2012.
• Products. We recently released data showing that Marchex blocked approximately 40 million phone calls in 2013 to U.S. small businesses through its Clean Call™ technology. Marchex started aggressively going after spam calls in 2011, after noticing the detrimental effect these calls were having on businesses. Clean Call™ technology is now used by hundreds of thousands of advertisers to detect and block telemarketers, robocallers and other spam dialers. Marchex found that these calls cost small businesses about half a billion dollars a year in lost productivity.
• Customers and Partners. We recently announced a preferred partnership with MapQuest to connect mobile and online consumers to businesses via pay-for-call ads. MapQuest is one of the leading mapping brands online, reaching 28.4 million web users and 13.7 million mobile and tablet users, with 4.0 million users across devices in November 2013, according to comScore Media Metrix. The partnership allows Marchex to leverage MapQuest’s broad reach of consumers across every digital channel for Pay-for-Call advertising.

Archeo Q4 Business Highlights:

• Revenue. Archeo non-GAAP revenue was $3.7 million for the fourth quarter of 2013, which excludes domain sales recognized in GAAP revenue.
• Domains sales. During the fourth quarter of 2013, Archeo sold a total of 262 domains that yielded $1.6 million.

Business Outlook

“Our business is being driven by our advertiser demand for mobile performance. Our Call-Driven products and investments are centered on unlocking this opportunity,” said Mike Arends, Chief Financial Officer of Marchex. “Given the relative size and importance of our Call-Driven products, we believe that focusing on these revenue and profitability measures is the most appropriate way to communicate our business progress and guidance going forward. While advertiser budgets can change and we can experience period-to-period variability based on a variety of factors, we are excited about the ongoing progress we are making in our business. Today we are forecasting accelerated Call-Driven revenue year-over-year growth of approximately 30% in the first quarter.”

The following forward-looking statements reflect Marchex's expectations as of February 19, 2014 and exclude any contribution from Archeo operations, domain sales and discontinued operations. Archeo operating results would be incremental and additive to our Call-Driven revenue, profitability, and other measures below:

¹ These non-GAAP Call-Driven measures assign all Marchex indirect 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, February 19, 2014 to discuss its fourth quarter and year ended December 31, 2013 financial results, and other company updates. Access to the live webcast of the conference call will be available online from the Investors section of the 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 February 19, 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 excluding and including Domain Sales, and Adjusted OIBA and EBITDA excluding and including Domain Sales. Marchex also provides Call-Driven and Archeo Adjusted OIBA and EBITDA, and Adjusted non-GAAP EPS.

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 any gain/loss on sales and disposals of intangible assets for each asset and acquisition and separation related costs as these items are not indicative of Marchex’s recurring core operating results and any domain sales contribution. 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 or gain/loss such as stock-based compensation, amortization of intangible assets from acquisitions, acquisition and separation related costs, domain sales contribution and gain/loss on sales and disposals of intangible assets. Adjusted EBITDA represents income (loss) before interest, income taxes, depreciation, amortization, stock compensation expense, acquisition and separation related cost, domain sales contribution and gain/loss on sales and disposals of intangible assets. Marchex believes that Adjusted EBITDA is another alternative measure of liquidity to GAAP net cash provided by operating activities that provides meaningful supplemental information regarding liquidity and is used by Marchex's management to measure its ability to fund operations and its financing obligations.

Revenue excluding Domain Sales represents GAAP revenue excluding domain sales sold through Marchex’s Domain Marketplace which are recognized in GAAP revenue. Revenue with Domain Salesrepresents GAAP revenue plus sales proceeds from the sale of intangible assets. Adjusted OIBA and EBITDA with Domain Sales includes the above descriptions of Adjusted OIBA and EBITDA plus any 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 EBITDAassigns all Marchex indirect overhead costs to the Call-Driven results. Archeo non-GAAP Measures include the measures above for the Archeo segment. Financial analysts and investors may use the non-GAAP historical Revenue with Domain Sales, Adjusted OIBA and EBITDA with Domain Sales to help with comparative financial evaluation to make informed investment decisions.

Adjusted non-GAAP EPSrepresents 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) amortization of intangible assets from acquisitions, (3) domain sales contribution and gain/loss on sales and disposals of intangible assets and domain sales contribution, (4) acquisition and separation related costs, (5) interest and other income (expense), (6) discontinued operations and gain on sale of discontinued operations, net of tax and (7) dividends paid to participating securities, and also excludes the effect of the 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.

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.

Source: Marchex, Inc.

Marchex Investor Relations
Trevor Caldwell, 206-331-3600
Email: ir(at)marchex.com
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Marchex Corporate Communications
Sonia Krishnan, 206-331-3434
Email: skrishnan(at)marchex.com