Marchex Reports First Quarter 2008 Financial Results
May 7, 2008; 06:25 AM
SEATTLE, WA - May 6, 2008 - Marchex, Inc. (NASDAQ: MCHX, MCHXP), a local online search and advertising company, today reported its results for the first quarter ended March 31, 2008.
First Quarter 2008 Consolidated Financial Results:
"Marchex's focus on the local online industry continues to drive growth in our business," said Russell C. Horowitz, Marchex Chairman and CEO. "Local is increasingly recognized as one of the most dynamic opportunities in the online universe and Marchex is well positioned to be a leader across both the local advertising and search ecosystems. We will continue to stay focused on executing on our objectives related to strategic partnerships, product milestones and operational objectives as we move through 2008."
Local Advertising Services: For the first quarter of 2008, revenue from Local Advertising Services was $22.3 million. One of the primary factors driving growth on a year-over-year basis was the continued increase in the number of new advertisers using Marchex products and services. In the first quarter, Marchex added more than 10,000 new advertisers through its local aggregator partnerships and direct sales channel. Marchex now has more than 65,000 advertisers using its products and services and, based on current growth rates, is updating its forecast to reflect that it now anticipates it will have more than 100,000 advertisers using its products and services by the end of 2009, up from a forecast of 80,000 advertisers previously.
Local Search Network (proprietary traffic sources): For the first quarter of 2008, revenue from Marchex's Local Search Network was $14.7 million. Additionally, Marchex attracted more than 30 million unique visitors for the month of March 2008 and delivered more than 85 million revenue-generating events and referrals in the first quarter. Unique visitor statistics are based on internal traffic logs, which calculate unique IP (Internet protocol) addresses on an unduplicated basis during a given month.
Stock Repurchase Program:
During the first quarter of 2008, Marchex purchased 786,000 shares of its outstanding Class B common stock for a total price of $7.2 million, bringing its total shares repurchased under its stock repurchase program to 3 million shares, or 7% of its outstanding common stock.
Marchex Financial Guidance:
The following forward-looking statements reflect Marchex's expectations as of May 6, 2008.
Guidance for fiscal year 2008 (Year ending December 31, 2008):
Adjusted EBITDA: For adjusted EBITDA, Marchex anticipates add-backs of approximately $9 million in additional depreciation and amortization to its adjusted operating income before amortization range, implying an adjusted EBITDA of $31 million or more for 2008.
Guidance for second quarter 2008:
Adjusted EBITDA: For adjusted EBITDA, Marchex anticipates add-backs of approximately $2.3 million in additional depreciation and amortization to its adjusted operating income before amortization range, implying an adjusted EBITDA of $7.3 million for the second quarter 2008.
For color on guidance for the second quarter of 2008, while Marchex anticipates continued momentum in the growth of new local advertisers using its products and services, the company does expect a seasonal impact from certain categories of advertisers lowering their budgets with the seasonally slow summer months. Additionally, Marchex anticipates revenue from proprietary traffic sources will be in a similar range to or slightly better than the first quarter of 2008. This is based on anticipated increases in consumer usage on Marchex's Local Search Network, with certain offsets from the company's ongoing efforts to increase direct sales of proprietary advertising inventory.
Conference Call and Webcast Information:
Management will hold a conference call, starting at 5:00 p.m. EDT on Tuesday, May 6, 2008 to discuss its first quarter 2008 financial results and other company updates. To access the call by live Webcast, please log onto the Investor Relations section of the Marchex Web site (www.marchex.com/investors/earningsreleases.html). An archived version of the Webcast will also be available, beginning two hours after completion of the call, at the same location.
About Marchex, Inc.
Marchex (www.marchex.com) is a local search and advertising company. Marchex's innovative advertising platform delivers search- and call-based marketing products and services for local and national advertisers. Marchex's local search network, one of the largest online, helps consumers make better, more informed local decisions through its content-rich Web sites that reach tens of millions of unique visitors each month.
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, 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 May 6, 2008 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 and Adjusted non-GAAP EPS. Marchex also provides Pro Forma Revenue information for the three months ended March 31, 2007 and 2008 as if the VoiceStar acquisition in September 2007 occurred as of January 1, 2007.
OIBA represents income (loss) from operations plus (1) stock-based compensation expense and (2) amortization of acquired intangible assets. 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 (1) any gain/loss on sales and disposals of intangible assets and (2) facility relocation as these are viewed as non-recurring in nature. 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 non-cash and non-recurring expenses. Adjusted EBITDA represents income before interest, income taxes, depreciation, amortization, stock compensation expense, and gain/loss on sales 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.
Adjusted non-GAAP EPS represents Adjusted Net Income divided by weighted average fully diluted shares outstanding for Adjusted non-GAAP EPS purposes. Adjusted Net Income generally captures those items on the statement of operations that have been, or ultimately will be, settled in cash exclusive of certain non-recurring items and represents net income (loss) available to common stockholders plus: (1) stock based compensation expense, (2) amortization of acquired intangible assets, (3) gain/loss on sales and disposals of intangible assets, (4) other income (expense), (5) the cumulative effect of changes in accounting principles, (6) facility relocation and less (7) discount on preferred stock redemption. Adjusted non-GAAP EPS includes dilution from options and warrants per the treasury stock method, includes the weighted average number of all potential common shares relating to convertible preferred stock and restricted stock and excludes the weighted average common share equivalents for redeemed preferred shares. Shares outstanding for Adjusted non-GAAP EPS purposes are therefore higher than shares outstanding for GAAP EPS purposes. 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. These non-GAAP terms, as defined by Marchex, may not be comparable to similarly titled measures used by other companies. 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.
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