Marchex Reports Fourth Quarter 2011 Financial Results
2011 Revenue Growth of 50% was Driven by Digital Call Advertising Products
Fourth Quarter 2011 Consolidated Financial Results:
- Revenue was
$39.0 million for the fourth quarter of 2011, compared to$28.0 million for the same period of 2010. - GAAP net income applicable to common stockholders was
$920,000 for the fourth quarter of 2011 or$0.03 per diluted share. This compares to GAAP net income applicable to common stockholders of$593,000 or$0.02 per diluted share for the same period of 2010. The fourth quarter 2011 results included non-cash stock-based compensation expense of$3.7 million , compared to non-cash stock-based compensation expense of$2.9 million for the same period in 2010. - We provide a reconciliation of GAAP diluted EPS to Adjusted Non-GAAP EPS 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. Adjusted non-GAAP EPS for fourth quarter 2011 was
$0.08 , compared to$0.04 for the same period in 2010. - Adjusted operating income before amortization was
$5.5 million for the fourth quarter of 2011, compared to$2.3 million for the same period of 2010. A reconciliation of non-GAAP adjusted operating income before amortization to GAAP operating income is included in the financial tables attached to this release. - Adjusted EBITDA was
$6.5 million in the fourth quarter of 2011, compared to$3.4 million for the same period of 2010. A reconciliation of adjusted EBITDA to GAAP net cash provided by operating activities is included in the financial tables attached to this release.
Full Year 2011 Consolidated Financial Results
- Revenue for the year ended
December 31, 2011 was$146.7 million , compared to$97.6 million in 2010. - GAAP net income applicable to common stockholders was
$2.7 million or$0.08 per diluted share for 2011. This compares to GAAP net loss applicable to common stockholders of$3.2 million or$0.10 per diluted share in 2010. - As discussed in the summary of the fourth quarter 2011 consolidated financial results, a reconciliation is provided of GAAP diluted EPS to Adjusted Non-GAAP EPS 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. Adjusted non-GAAP EPS for 2011 was
$0.30 , compared to$0.06 in 2010. - Adjusted operating income before amortization was
$19.1 million for 2011, compared to$3.0 million in 2010. A reconciliation of non-GAAP adjusted operating income before amortization to GAAP operating income (loss) is included in the financial tables attached to this release. - Adjusted EBITDA was
$23.1 million for 2011, compared to$7.9 million in 2010. A reconciliation of adjusted EBITDA to GAAP net cash provided by operating activities is included in the financial tables attached to this release.
“We believe the rapid growth of the mobile marketplace will transform how advertisers buy and measure new customer phone calls as a lead source,” said
2011 Selected Highlights:
1. Increased Mobile Distribution.
a.
b. A
c. In November,
2. Call-Driven Revenues: For the fourth quarter of 2011, revenue from call advertising products was
3. During the fourth quarter,
4.
Marchex Guidance:
The following forward-looking statements reflect
Financial guidance for the fiscal year ending December 31, 2012: | ||
Revenue: | $150 million to $160 million | |
Adjusted Operating Income Before Amortization: | More than $15 million | |
Adjusted EBITDA: | Estimated add-backs of approximately $4.5 million in additional depreciation and amortization to adjusted operating income before amortization, implying an adjusted EBITDA of more than $19.5 million | |
Long Term Adjusted EBITDA Margin Target: |
20% or more |
2012 GAAP income (loss) from operations is expected to be
“We expect more than 20% growth from call-driven revenue sources in 2012. In addition, for the first quarter of 2012,
Conference Call and Webcast Information
Management will hold a conference call, starting at
About
Marchex’s mission is to unlock local commerce globally by helping advertisers reach customers through the phone when they are ready to buy.
Our performance-based call advertising products, Marchex Call Connect and Marchex Call Analytics, are reinventing how businesses acquire and upsell new customers through phone calls. Our award-winning Small Business Solutions products empower businesses to efficiently acquire new customers. Every day, our products support hundreds of thousands of advertisers and partners, ranging from global enterprises to local businesses.
For more information about
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
Non-GAAP Financial Information:
To supplement
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
Adjusted non-GAAP EPS represents Adjusted non-GAAP Net Income applicable to common stockholders divided by GAAP diluted shares outstanding. Prior to 2011,
MARCHEX, INC. AND SUBSIDIARIES | ||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||
(in thousands, except per share data) | ||||||||||||
(unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
December 31, | ||||||||||||
2010 | 2011 | |||||||||||
Revenue | $ | 27,975 | $ | 39,023 | ||||||||
Expenses: | ||||||||||||
Service costs (1) | 16,648 | 21,614 | ||||||||||
Sales and marketing (1) | 2,925 | 4,259 | ||||||||||
Product development (1) | 4,322 | 5,836 | ||||||||||
General and administrative (1) | 4,697 | 5,555 | ||||||||||
Amortization of intangible assets from acquisitions | 609 | 1,699 | ||||||||||
Acquisition related costs | - | 377 | ||||||||||
Total operating expenses | 29,201 | 39,340 | ||||||||||
Gain on sales and disposals of intangible assets, net | 2,122 | 2,309 | ||||||||||
Income from operations | 896 | 1,992 | ||||||||||
Interest expense and other, net | (5 | ) | (190 | ) | ||||||||
Income before provision for income taxes | 891 | 1,802 | ||||||||||
Income tax expense | 246 | 814 | ||||||||||
Net income | 645 | 988 | ||||||||||
Dividends paid to participating securities | (52 | ) | (68 | ) | ||||||||
Net income applicable to common stockholders | $ | 593 | $ | 920 | ||||||||
Basic and diluted net income per share applicable to Class A and Class B common stockholders | $ | 0.02 | $ | 0.03 | ||||||||
Dividends paid per share | $ | 0.02 | $ | 0.02 | ||||||||
Shares used to calculate basic net income per share applicable to common stockholders | ||||||||||||
Class A | 10,469 | 9,632 | ||||||||||
Class B | 21,861 | 24,017 | ||||||||||
Shares used to calculate diluted net income per share applicable to common stockholders | ||||||||||||
Class A | 10,469 | 9,632 | ||||||||||
Class B | 33,514 | 35,743 | ||||||||||
(1 | ) | Includes stock-based compensation allocated as follows: | ||||||||||
Service costs | $ | 197 | $ | 367 | ||||||||
Sales and marketing | 196 | 404 | ||||||||||
Product development | 274 | 242 | ||||||||||
General and administrative | 2,259 | 2,722 | ||||||||||
Total | $ | 2,926 | $ | 3,735 | ||||||||
MARCHEX, INC. AND SUBSIDIARIES | ||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||
(in thousands, except per share data) | ||||||||||||
(unaudited) | ||||||||||||
Twelve Months Ended | ||||||||||||
December 31, | ||||||||||||
2010 | 2011 | |||||||||||
Revenue | $ | 97,566 | $ | 146,726 | ||||||||
Expenses: | ||||||||||||
Service costs (1) | 57,557 | 81,835 | ||||||||||
Sales and marketing (1) | 13,530 | 15,434 | ||||||||||
Product development (1) | 16,804 | 22,794 | ||||||||||
General and administrative (1) | 17,507 | 22,709 | ||||||||||
Amortization of intangible assets from acquisitions | 2,729 | 5,455 | ||||||||||
Acquisition related costs | - | 1,890 | ||||||||||
Total operating expenses | 108,127 | 150,117 | ||||||||||
Gain on sales and disposals of intangible assets, net | 6,772 | 9,421 | ||||||||||
Income (loss) from operations | (3,789 | ) | 6,030 | |||||||||
Interest income (expense) and other, net | 129 | (458 | ) | |||||||||
Income (loss) before provision for income taxes | (3,660 | ) | 5,572 | |||||||||
Income tax expense (benefit) | (617 | ) | 2,613 | |||||||||
Net income (loss) | (3,043 | ) | 2,959 | |||||||||
Dividends paid to participating securities | (199 | ) | (259 | ) | ||||||||
Net income (loss) applicable to common stockholders | $ | (3,242 | ) | $ | 2,700 | |||||||
Basic and diluted net income (loss) per share applicable to Class A and Class B common stockholders | $ | (0.10 | ) | $ | 0.08 | |||||||
Dividends paid per share | $ | 0.08 | $ | 0.08 | ||||||||
Shares used to calculate basic net income (loss) applicable to common stockholders | ||||||||||||
Class A | 10,661 | 9,928 | ||||||||||
Class B | 21,993 | 23,358 | ||||||||||
Shares used to calculate diluted net income (loss) applicable to common stockholders | ||||||||||||
Class A | 10,661 | 9,928 | ||||||||||
Class B | 32,654 | 35,318 | ||||||||||
(1 | ) | Includes stock-based compensation allocated as follows: | ||||||||||
Service costs | $ | 805 | $ | 1,291 | ||||||||
Sales and marketing | 799 | 1,505 | ||||||||||
Product development | 1,015 | 1,416 | ||||||||||
General and administrative | 8,213 | 10,931 | ||||||||||
Total | $ | 10,832 | $ | 15,143 | ||||||||
MARCHEX, INC. AND SUBSIDIARIES | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(in thousands) | |||||||||
(unaudited) | |||||||||
December 31, | December 31, | ||||||||
Assets | 2010 | 2011 | |||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 37,328 | $ | 37,443 | |||||
Accounts receivable, net | 20,214 | 30,635 | |||||||
Prepaid expenses and other current assets | 3,567 | 3,614 | |||||||
Refundable taxes | 3,249 | 193 | |||||||
Deferred tax assets | 869 | 2,753 | |||||||
Total current assets | 65,227 | 74,638 | |||||||
Property and equipment, net | 4,710 | 6,187 | |||||||
Deferred tax assets | 50,769 | 46,310 | |||||||
Intangibles and other assets, net | 2,070 | 2,191 | |||||||
Goodwill | 35,337 | 82,644 | |||||||
Intangible assets from acquisitions, net | 1,577 | 8,088 | |||||||
Total assets | $ | 159,690 | $ | 220,058 | |||||
Liabilities and Stockholders' Equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 11,166 | $ | 12,896 | |||||
Accrued expenses and other current liabilities | 5,106 | 8,430 | |||||||
Deferred acquisition payments | - | 35,214 | |||||||
Deferred revenue | 1,650 | 1,930 | |||||||
Total current liabilities | 17,922 | 58,470 | |||||||
Other non-current liabilities | 2,076 | 2,580 | |||||||
Total liabilities | 19,998 | 61,050 | |||||||
Stockholders' equity: | |||||||||
Class A common stock | 105 | 99 | |||||||
Class B common stock | 255 | 281 | |||||||
Treasury stock | (1,360 | ) | (1,067 | ) | |||||
Additional paid-in capital | 281,421 | 297,465 | |||||||
Accumulated deficit | (140,729 | ) | (137,770 | ) | |||||
Total stockholders' equity | 139,692 | 159,008 | |||||||
Total liabilities and stockholders' equity | $ | 159,690 | $ | 220,058 | |||||
MARCHEX, INC. AND SUBSIDIARIES | ||||||||||
Reconciliation of GAAP Income (Loss) from Operations to Operating Income Before Amortization (OIBA) and Adjusted Operating Income Before Amortization (Adjusted OIBA) | ||||||||||
(in thousands) | ||||||||||
(unaudited) | ||||||||||
Three Months Ended | ||||||||||
December 31, | ||||||||||
2010 | 2011 | |||||||||
Income from operations | $ | 896 | $ | 1,992 | ||||||
Stock-based compensation | 2,926 | 3,735 | ||||||||
Amortization of intangible assets from acquisitions | 609 | 1,699 | ||||||||
Operating income before amortization (OIBA) | 4,431 | 7,426 | ||||||||
Acquisition related costs | - | 377 | ||||||||
Gain on sales and disposals of intangible assets, net | (2,122 | ) | (2,309 | ) | ||||||
Adjusted operating income before amortization (Adjusted OIBA) | $ | 2,309 | $ | 5,494 | ||||||
Twelve Months Ended | ||||||||||
December 31, | ||||||||||
2010 | 2011 | |||||||||
Income (loss) from operations | $ | (3,789 | ) | $ | 6,030 | |||||
Stock-based compensation | 10,832 | 15,143 | ||||||||
Amortization of intangible assets from acquisitions | 2,729 | 5,455 | ||||||||
Operating income before amortization (OIBA) | 9,772 | 26,628 | ||||||||
Acquisition related costs | - | 1,890 | ||||||||
Gain on sales and disposals of intangible assets, net | (6,772 | ) | (9,421 | ) | ||||||
Adjusted operating income before amortization (Adjusted OIBA) | $ | 3,000 | $ | 19,097 | ||||||
MARCHEX, INC. AND SUBSIDIARIES | ||||||||
Reconciliation from Net Cash provided (used) by Operating Activities to Adjusted EBITDA | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
Three Months Ended | ||||||||
December 31, | ||||||||
2010 | 2011 | |||||||
Net cash provided by operating activities | $ | 5,920 | $ | 3,675 | ||||
Changes in asset and liabilities, net of acquisitions | (2,814 | ) | 1,727 | |||||
Income tax expense | 246 | 814 | ||||||
Acquisition related costs | - | 5 | ||||||
Interest (income) expense and other, net | 7 | 14 | ||||||
Excess tax benefits related to stock compensation | 36 | 229 | ||||||
Adjusted EBITDA | $ | 3,395 | $ | 6,464 | ||||
Net cash provided by investing activities | $ | 1,364 | $ | 938 | ||||
Net cash provided used in financing activities | $ | (1,960 | ) | $ | (2,658 | ) | ||
Twelve Months Ended | ||||||||
December 31, | ||||||||
2010 | 2011 | |||||||
Net cash provided by operating activities | $ | 9,388 | $ | 16,782 | ||||
Changes in asset and liabilities, net of acquisitions | (745 | ) | 1,220 | |||||
Income tax expense (benefit) | (617 | ) | 2,613 | |||||
Acquisition related costs | - | 1,518 | ||||||
Interest (income) expense and other, net | (127 | ) | (57 | ) | ||||
Excess tax benefits related to stock compensation | 36 | 1,032 | ||||||
Adjusted EBITDA | $ | 7,935 | $ | 23,108 | ||||
Net cash provided by (used in) investing activities | $ | 3,223 | $ | (10,392 | ) | |||
Net cash used in financing activities | $ | (8,921 | ) | $ | (6,275 | ) | ||
MARCHEX, INC. AND SUBSIDIARIES | ||||||||||||
Reconciliation of GAAP EPS to Adjusted Non-GAAP EPS | ||||||||||||
(in thousands, except per share data) | ||||||||||||
(unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
December 31, | ||||||||||||
2010 | 2011 | |||||||||||
Adjusted Non-GAAP EPS | $ 0.04 | $ | 0.08 | |||||||||
Net income per Class B share applicable to common stockholders - diluted (GAAP EPS) | $ 0.02 | $ | 0.03 | |||||||||
Shares used to calculate diluted net income per Class B share applicable to common stockholders | 33,514 | 35,743 | ||||||||||
Net income applicable to common stockholders | $ 593 | $ | 920 | |||||||||
Stock-based compensation | 2,926 | 3,735 | ||||||||||
Acquisition related costs | - | 377 | ||||||||||
Amortization of intangible assets from acquisitions | 609 | 1,699 | ||||||||||
Gain on sales and disposals of intangible assets, net | (2,122 | ) | (2,309 | ) | ||||||||
Interest (income) expense and other, net | 5 | 190 | ||||||||||
Dividends paid to participating securities | 52 | 68 | ||||||||||
Estimated impact of income taxes | (665 | ) | (1,337 | ) | ||||||||
Adjusted Non-GAAP net income applicable to common stockholders | $ 1,398 | $ | 3,343 | |||||||||
Adjusted Non-GAAP EPS | $ 0.04 | $ | 0.08 | |||||||||
Shares used to calculate diluted net income (loss) per Class B share applicable | ||||||||||||
to common stockholders | 33,514 | 35,743 | ||||||||||
Weighted average common shares related to deferred acquisition payments (1) | - | 5,988 | ||||||||||
Diluted shares used to calculate Adjusted Non-GAAP EPS (2) | 33,514 | 41,731 | ||||||||||
(1) For the three months ended December 31, 2011, these shares were excluded from the computation | ||||||||||||
of diluted net income per share as their effect would be anti- dilutive. | ||||||||||||
(2) Marchex calculates diluted shares in accordance with GAAP in the computation of Non-GAAP EPS. Marchex had previously calculated diluted shares using the following methodology as calculated and described below. | ||||||||||||
|
|
|
||||||||||
Shares used to calculate diluted net income per Class B share applicable to common stockholders |
33,514 |
35,743 |
||||||||||
Weighted average stock options and common shares subject | ||||||||||||
to repurchase or cancellation (a) | 2,657 | 2,973 | ||||||||||
Weighted average common shares related to deferred acquisition payments | - | 5,988 | ||||||||||
Non-GAAP shares used to calculate Adjusted Non-GAAP EPS | 36,171 | 44,704 | ||||||||||
Adjusted Non-GAAP EPS (computed using Non-GAAP shares) | $ 0.04 | $ | 0.07 | |||||||||
|
||||||||||||
(a) |
The impact of restricted stock (common shares subject to repurchase or cancellation) is based on the weighted average of restricted stock outstanding as compared with diluted shares for GAAP purposes, which included restricted stock using the treasury stock method in periods with income. The impact of restricted stock units and options subject to market conditions have or will be included once the market conditions have been met. |
|||||||||||
MARCHEX, INC. AND SUBSIDIARIES | ||||||||||||
Reconciliation of GAAP EPS to Adjusted Non-GAAP EPS | ||||||||||||
(in thousands, except per share data) | ||||||||||||
(unaudited) | ||||||||||||
Twelve Months Ended | ||||||||||||
December 31, | ||||||||||||
2010 |
2011 |
|||||||||||
Adjusted Non-GAAP EPS | $ 0.06 |
$ |
0.30 |
|||||||||
Net income (loss) per Class B share applicable to common stockholders - diluted (GAAP EPS) | $ (0.10 | ) |
$ |
0.08 |
||||||||
Shares used to calculate diluted net income (loss) per Class B share applicable to common stockholders | 32,654 |
35,318 |
||||||||||
Net income (loss) applicable to common stockholders | $(3,242 | ) |
$ |
2,700 |
||||||||
Stock-based compensation | 10,832 |
15,143 |
||||||||||
Acquisition related costs | - |
1,890 |
||||||||||
Amortization of intangible assets from acquisitions | 2,729 |
5,455 |
||||||||||
Gain on sales and disposals of intangible assets, net | (6,772 | ) |
(9,421 |
) | ||||||||
Interest (income) expense and other, net | (129 | ) |
458 |
|||||||||
Dividends paid to participating securities | 199 |
259 |
||||||||||
Estimated impact of income taxes | (1,784 | ) |
(4,390 |
) | ||||||||
Adjusted Non-GAAP net income applicable to common stockholders | $ 1,833 |
$ |
12,094 |
|||||||||
Adjusted Non-GAAP EPS | $ 0.06 |
$ |
0.30 |
|||||||||
Shares used to calculate diluted net income (loss) per Class B share applicable to common stockholders | 32,654 |
35,318 |
||||||||||
Weighted average stock options and common shares subject | ||||||||||||
to repurchase or cancellation (if applicable) (1) | 550 |
- |
||||||||||
Weighted average common shares related to deferred acquisition payments (1) | - |
4,396 |
||||||||||
Diluted shares used to calculate Adjusted Non-GAAP EPS (2) | 33,204 |
39,714 |
||||||||||
(1) For the year ended December 31, 2010 and 2011, these shares were excluded from the computation of | ||||||||||||
diluted net income (loss) per share as their effect would be anti-dilutive. | ||||||||||||
(2) Marchex calculates diluted shares in accordance with GAAP in the computation of Non-GAAP EPS. Marchex had previously calculated diluted shares using the following methodology as calculated and described below. | ||||||||||||
Shares used to calculate diluted net income (loss) per Class B share applicable to common stockholders | 32,654 |
35,318 |
||||||||||
Weighted average stock options and common shares subject to repurchase or cancellation (a) |
3,058 |
3,126 |
||||||||||
Weighted average common shares related to deferred acquisition payments | - |
4,396 |
||||||||||
Non-GAAP shares used to calculate Adjusted Non-GAAP EPS | 35,712 |
42,840 |
||||||||||
Adjusted Non-GAAP EPS (computed using Non-GAAP shares) | $ 0.05 |
$ |
0.28 |
|||||||||
(a) |
The impact of restricted stock (common shares subject to repurchase or cancellation) is based on the weighted average of restricted stock outstanding as compared with diluted shares for GAAP purposes, which included restricted stock using the treasury stock method in periods with income. The impact of restricted stock units and options subject to market conditions have or will be included once the market conditions have been met. |
Click here to view Marchex's Fourth Quarter 2011 Financial Tables (.pdf format)
1 Findings derived from
Source:
Marchex Investor Relations
Trevor Caldwell, 206-331-3600
ir@marchex.com
or
MEDIA INQUIRIES
Weber Shandwick
Katie Riese, 206-576-5507
kriese@webershandwick.com