| [May 08, 2006] |
 |
Marchex Reports First Quarter 2006 Financial Results
SEATTLE --(Business Wire)-- May 8, 2006 -- Marchex, Inc. (NASDAQ:MCHX) (NASDAQ:MCHXP) today reported its results for the first quarter ended March 31, 2006.
Consolidated Financial Results:
-- Revenue was $31.1 million for the first quarter of 2006, a 69% increase compared to $18.4 million for the same period of 2005.
-- GAAP net loss applicable to common stockholders was $1.2 million for the first quarter of 2006 or $0.03 per share, compared to GAAP net income applicable to common stockholders of $388,000 or $0.01 per share for the same period of 2005. The first quarter 2006 results included stock-based compensation expense recorded under the fair value method of $3.5 million compared to stock-based compensation expense of $147,000 for the same period in 2005, as well as a one-time payout of $970,000, recorded as convertible preferred stock dividends and conversion payment, associated with the conversion of approximately 80,848 shares of the company's preferred stock into approximately 824,980 shares of Class B common stock. The first quarter 2006 results also included an after-tax gain of $151,000 as a cumulative effect of a change in accounting principle associated with Marchex's adoption of SFAS 123R.
-- We provide a reconciliation of GAAP EPS to Adjusted Non-GAAP EPS in the last financial tables attached to this press release and encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures. Adjusted non-GAAP EPS for the first quarter of 2006 was $0.09, compared to $0.07 for the same period of 2005. Some Wall Street analysts use non-GAAP measures to analyze our operating results, which may include adjusted non-GAAP EPS, adjusted operating income before amortization and adjusted EBITDA. We present GAAP measures with equal or greater prominence than non-GAAP measures and such non-GAAP measures should not be considered a substitute for, or superior to, GAAP results.
-- Adjusted operating income before amortization was $8.3 million for the first quarter of 2006, or 27% of revenue, which is an increase of 98% compared to $4.2 million for the same period of 2005. A reconciliation of non-GAAP adjusted operating income before amortization to GAAP operating income and GAAP net income is attached to the financial tables included in this release.
-- Adjusted EBITDA was $9.6 million in the first quarter of 2006, which is an increase of 102% compared to $4.7 million for the same period of 2005. A reconciliation of operating income before taxes, depreciation, amortization and gain/loss on sales of intangible assets to GAAP net cash provided by operating activities is attached to the financial tables included in this release.
"Marchex continues to be focused on the long-term opportunities that exist in our core markets. In the first quarter, Marchex continued to build a strong foundation for growth in our network of vertical and local Web sites, and also made solid progress on our marketing and monetization platform," said Russell C. Horowitz, Marchex Chairman and CEO. "The markets we operate in are large and growing, and we believe Marchex has a great opportunity to leverage our unique asset base to be an increasingly significant participant in these markets. As such, we are dedicated to making progress quarter-to-quarter and year-to-year while also accelerating our investment against these emerging opportunities."
Updated Proprietary Traffic Statistics and Recent Highlights:
-- Marchex today announced that its proprietary network of vertical and local Web sites attracted more than 28 million unique visitors for the month of March 2006, which excludes the more than 1 million unduplicated unique visitors per month that accompanied Marchex's AreaConnect asset acquisition, announced on May 2, 2006. Unique visitor statistics are based on internal traffic logs, which calculate unique IP (Internet protocol) addresses on an unduplicated basis during a given month.
-- Marchex continues to increase the monetization of its own traffic with its own advertisers. As such, revenue attributable to proprietary traffic sources is increasingly benefiting from the contributions of this integration with Marchex's search marketing merchant advertisers, as well as from the company's continued selected marketing efforts. For the first quarter in 2006, revenue attributable to proprietary traffic sources was $11.3 million.
Marchex Financial Guidance:
Marchex is updating its previous guidance provided on February 23, 2006, and is reiterating the company's long-term adjusted operating income before amortization margins as follows:
2006 consolidated revenue range estimate: $130 million to $134 million
--------------------------------------------------------------
--------
2006 adjusted operating income before $34 million to $38 million
amortization target range:
---------------------------------------------------------------
-------
Long-term adjusted operating income before 30% or more
amortization margins:
-------------------------------------------------------------
---------
Conference Call and Webcast Information:
Management will hold a conference call, starting at 5:00 p.m. EDT on Monday, May 8, 2006 to discuss its first quarter 2006 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/ir.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's (www.marchex.com) mission is to be a leader in delivering vertical and local online traffic to merchants. The company is focused on search marketing, local search, and direct navigation. Marchex's platform of integrated performance-based advertising and search marketing services enables merchants to efficiently market and sell their products and services across multiple online distribution channels, including search engines, product shopping engines, directories and selected Web properties.
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 8, 2006 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. In light of Marchex's IndustryBrains acquisition in 2005, and the Name Development and Pike Street Industries asset acquisitions in 2005, Marchex also provides Pro Forma Revenue information.
OIBA represents income 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 any gain/loss on sales of intangible assets as this is 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 available to common shareholders plus: (1) stock based compensation expense, (2) amortization of acquired intangible assets, (3) gain/loss on sales of intangible assets, (4) other income (expense) and (5) the cumulative effect of changes in accounting principles. Adjusted non-GAAP EPS includes dilution from options and warrants per the treasury stock method and includes the weighted average number of all potential common shares relating to convertible preferred stock and restricted stock. 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.
MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
Three Months Ended
March 31,
2005 2006
------------ ------------
Revenue $18,395,983 $31,112,325
------------ ------------
Expenses:
Service costs (1) 10,670,707 14,851,949
Sales and marketing (1) 1,354,493 5,866,684
Product development (1) 785,214 2,227,024
General and administrative (1) 1,556,600 3,409,508
Amortization of acquired intangible
assets 3,083,157 4,870,673
------------ ------------
Total operating expenses 17,450,171 31,225,838
------------ ------------
Gain on sales of intangible assets,
net - 179,208
------------ ------------
Income from operations 945,812 65,695
Interest income and other, net 270,523 734,282
------------ ------------
Income before provision for income taxes 1,216,335 799,977
Income tax expense 478,933 653,648
------------ ------------
Income before cumulative effect of a change
in accounting principle 737,402 146,329
Cumulative effect of a change in accounting
principle, net of tax (2) - 151,341
------------ ------------
Net income 737,402 297,670
Convertible preferred stock dividends and
conversion payment 348,993 1,493,935
------------ ------------
Net income (loss) applicable to common
stockholders $388,409 $(1,196,265)
============ ============
Basic and diluted net income (loss) applicable to common
stockholders:
Prior to cumulative effect of change
in accounting principle $0.01 (0.04)
Cumulative effect of a change in
accounting principle, net of tax - 0.01
------------ ------------
Basic and diluted net income (loss)
applicable to common stockholders $0.01 $(0.03)
============ ============
Shares used to calculate basic net income (loss) per
share applicable to
common stockholders 30,245,678 37,124,298
Shares used to calculate diluted net income
(loss) per share applicable
to common stockholders 32,920,472 37,124,298
(1) Includes stock-based compensation as
follows:
Service costs $1,800 $236,211
Sales and marketing 29,507 1,047,271
Product development 10,665 735,187
General and administrative 104,566 1,502,074
------------ ------------
Total stock-based compensation
expense $146,538 $3,520,743
============ ============
Prior to January 1, 2006, Marchex accounted for stock-based
compensation under Accounting Principles Board, Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25). In accordance with
APB 25, Marchex historically used the intrinsic value method to
account for stock-based compensation. As of January 1, 2006, Marchex
accounts for stock-based compensation under the fair value method as
prescribed by Statement of Financial Accounting Standards No. 123-R
(SFAS 123R). As Marchex adopted the modified prospective method,
results for the prior year have not been restated under the fair value
method for GAAP purposes.
In accordance with SEC Staff Accounting Bulletin No. 107,
stock-based compensation is no longer presented as a separate line
item on the Consolidated Statement of Operations. The stock-based
compensation is now presented in the same lines as cash compensation
paid to the same individuals. Stock-based compensation recognized in
the prior period has been reclassed to conform with the presentation
in the current period.
(2) As a result of the adoption of SFAS 123R, Marchex recorded an
amount from the cumulative impact of the accounting change.
MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
December 31, March 31,
2005 2006
------------- -------------
Assets
Current assets:
Cash and cash equivalents $63,090,941 $72,524,933
Trade accounts receivable, net 14,401,814 13,597,504
Prepaid expenses and other current
assets 1,818,211 2,114,250
Refundable taxes 3,835,542 3,811,829
Deferred income tax assets 428,855 232,519
------------- -------------
Total current assets 83,575,363 92,281,035
Property and equipment, net 3,402,262 5,008,289
Deferred income tax assets - 507,074
Intangibles and other assets, net 15,447,504 14,757,921
Goodwill 180,637,076 180,253,986
Intangible assets from acquisitions,
net 51,346,944 46,323,431
------------- -------------
Total assets $334,409,149 $339,131,736
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $9,258,423 $9,740,025
Accrued expenses and other current
liabilities 1,755,970 1,919,234
Deferred revenue 2,291,374 2,266,930
------------- -------------
Total current liabilities 13,305,767 13,926,189
Deferred income tax liabilities 397,481 -
Other non-current liabilities 92,309 92,475
------------- -------------
Total liabilities 13,795,557 14,018,664
Stockholders' equity:
Convertible preferred stock 54,121,678 34,116,491
Class A common stock 119,282 119,282
Class B common stock 254,839 265,605
Additional paid-in capital 271,949,963 294,736,619
Deferred stock-based compensation (3,042,016) -
Accumulated deficit (2,790,154) (4,124,925)
------------- -------------
Total stockholders' equity 320,613,592 325,113,072
------------- -------------
Total liabilities and
stockholders' equity $334,409,149 $339,131,736
============= =============
- -
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of Revenue to Pro Forma Revenue
(unaudited)
Three months ended
March 31, March 31,
2005 2006
------------ ------------
Revenue, as reported $18,395,983 $31,112,325
Name Development pro forma revenue 2,544,459 -
Pike Street pro forma revenue 963,198 -
IndustryBrains pro forma revenue 2,716,620 -
Pro forma eliminations (23,332) -
------------ ------------
Proforma Revenue $24,596,928 $31,112,325
============ ============
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Income (Loss) to Operating Income (Loss)
Before Amortization (OIBA) and Adjusted Operating Income (Loss) Before
Amortization (Adjusted OIBA)
(unaudited)
Three Months Ended
March 31,
2005 2006
----------- ------------
Net income (loss) applicable to common
stockholders $388,409 $(1,196,265)
Convertible preferred stock dividends
and conversion payment 348,993 1,493,935
----------- ------------
Net income 737,402 297,670
Cumulative effect of a change in
accounting principle, net of tax (1) - 151,341
----------- ------------
Income before cumulative effect of a change
in accounting principle 737,402 146,329
Income tax expense 478,933 653,648
----------- ------------
Income before provision for income taxes 1,216,335 799,977
Interest income and other, net (270,523) (734,282)
----------- ------------
Income from operations 945,812 65,695
Stock-based compensation 146,538 3,520,743
Amortization of acquired intangible
assets 3,083,157 4,870,673
----------- ------------
Operating income before amortization (OIBA) 4,175,507 8,457,111
Gain on sales of intangible assets, net - (179,208)
----------- ------------
Adjusted operating income before
amortization (Adjusted OIBA) $4,175,507 $8,277,903
=========== ============
(1) As a result of the adoption of SFAS 123R, Marchex recorded an
amount from the cumulative impact of the accounting change.
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation from Net Cash provided by Operating
Activities to Adjusted EBITDA
(unaudited)
Three Months Ended
March 31,
2005 2006
----------- -----------
Net cash provided by operating activities $1,758,826 $9,430,099
Changes in asset and liabilities, net of
effects of acquisitions 2,885,731 210,886
Provision for income taxes 478,933 653,648
Other items - facility relocation 8,738 17,643
Interest income and other, net (266,523) (736,145)
Tax benefits from exercise of stock options (129,774) -
----------- -----------
Adjusted EBITDA $4,735,931 $9,576,131
=========== ===========
(1) As a result of the adoption of SFAS 123R, Marchex recorded an
amount from the cumulative impact of the accounting change.
MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP EPS to Adjusted Non-GAAP EPS
(unaudited)
Three Months Ended
March 31,
2005 2006
----------- ------------
----------- ------------
Adjusted Non-GAAP EPS $0.07 $0.09
=========== ============
Net income (loss) per share applicable to
common stockholders - diluted (GAAP EPS) $0.01 $(0.03)
Shares used to calculate diluted net
income (loss) per share applicable to common
stockholders 32,920,472 37,124,298
Net income (loss) applicable to common
stockholders $388,409 $(1,196,265)
Stock-based compensation 146,538 3,520,743
Amortization of acquired intangible
assets 3,083,157 4,870,673
Gain on sales of intangible assets,
net - (179,208)
Cumulative effect of a change in
accounting principle, net of tax (1) - (151,341)
Interest income and other, net (270,523) (734,282)
Estimated impact of income taxes (1,120,704) (2,355,370)
----------- ------------
Adjusted Non-GAAP net income applicable to
common stockholders $2,226,877 $3,774,950
=========== ============
----------- ------------
Adjusted Non-GAAP EPS $0.07 $0.09
=========== ============
Shares used to calculate diluted net
income (loss) per share applicable to
common stockholders 32,920,472 37,124,298
Weighted average stock options and
warrants and common shares subject
to repurchase or cancellation (if
applicable) - 2,765,734
----------- ------------
Shares used to calculate Adjusted
Non-GAAP EPS 32,920,472 39,890,032
=========== ============
For Adjusted Non-GAAP EPS, 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 on a
treasury stock method basis.
(1) As a result of the adoption of SFAS 123R, Marchex recorded an
amount from the cumulative impact of the accounting change.
[ Back To TMCnet.com's Homepage ]
|
TMCnet LOGIN
Webinars
