Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 Marchex, Inc. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to _ . Commission File Number 000-50658 (Exact name of Registrant as specified in its charter) Delaware 35-2194038 (State or ot ...

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $11.7 million, an increase from $11.4 million in Q1 2025, driven by new sales and upsells despite some offsets due to migration activities to the new Marchex Engage platform [9] - Cash increased to $10.5 million from $10 million at the end of Q1 2025, with expectations for stable to favorable cash balances in Q3 2025 [10] - The company reported positive net income of approximately $100,000 for Q2 2025 [10] Business Line Data and Key Metrics Changes - The company launched the Marchex Engage platform, which is expected to drive future growth through new user interfaces and AI solutions [4][5] - The Engage platform integrates AI-driven conversation intelligence, focusing on vertical markets such as automotive, healthcare, and home services [5][6] Market Data and Key Metrics Changes - The company noted that new federal tariffs on imports have adversely impacted various industries, including automotive and auto services, creating increased uncertainty in the market [11] - The current macroeconomic environment has also introduced challenges, affecting customer behavior and revenue predictability [11] Company Strategy and Development Direction - Marchex is focused on expanding its market opportunities through partnerships with Fortune 500 companies and launching innovative products [4][6] - The company aims to leverage first-party data and AI insights to enhance customer engagement and drive measurable outcomes [6][7] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by migration activities and macroeconomic factors, which may delay achieving annual revenue and adjusted EBITDA goals for 2025 [11][12] - Despite these challenges, the leadership team remains optimistic about executing their strategic plan and believes they are well-positioned for future growth [13] Other Important Information - The company anticipates that both revenue and adjusted EBITDA will sequentially increase in Q3 2025 compared to Q2 2025, with adjusted EBITDA potentially increasing by more than 50% [10] - The migration to the new Engage platform is mostly completed, but it has short-term revenue impacts due to timing and product utilization [11] Q&A Session Summary Question: Did bookings improve sequentially in the second quarter? - Management confirmed that sales or ACV was sequentially higher [18] Question: Any comments on the pipeline? - Management highlighted the progress with the Engage platform and upcoming product launches, which are expected to drive growth [19][20] Question: How is the demand for your service use case versus sales? - Management noted increasing average revenue per sale associated with the Engage platform and expressed excitement about expanding channel opportunities [23][24]

[Marchex Second Quarter 2025 Results](index=1&type=section&id=Marchex%20Announces%20Second%20Quarter%202025%20Results) Marchex reported improved Q2 2025 profitability despite a slight revenue decrease, driven by strategic platform migration and operational efficiency [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Marchex reported a slight revenue decrease in Q2 2025 but achieved profitability with improved net income and Adjusted EBITDA Q2 2025 Financial Performance | Financial Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | GAAP Revenue | $11.7 million | $12.1 million | | Net Income (Loss) | $0.1 million | ($0.8 million) | | Diluted EPS | $0.00 | ($0.02) | | Adjusted EBITDA | $0.6 million | $0.3 million | | Adjusted Non-GAAP EPS | $0.02 | ($0.01) | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management views 2025 as an inflection point, highlighting significant Adjusted EBITDA improvement and strategic platform migration for future growth - The company views **2025** as a potential inflection point, accelerating investment into growth initiatives[4](index=4&type=chunk) - Quarterly Adjusted EBITDA, excluding reorganization costs, improved by **nearly $1 million** compared to Q1 2025[4](index=4&type=chunk) - The migration of **over 1,000 customers** to the new Engage platform is largely complete. While this has short-term revenue impacts, it is a key foundation for the company's plan to **exceed $100 million** in annualized revenue over time[7](index=7&type=chunk)[9](index=9&type=chunk) [Business Outlook and Strategic Initiatives](index=1&type=section&id=Business%20Outlook%20and%20Strategic%20Initiatives) Marchex anticipates sequential growth in Q3 2025 and is expanding its product suite and partnerships, despite expected delays in annual run rate goals [Financial Outlook for 2025](index=1&type=section&id=Financial%20Outlook%20for%202025) Marchex forecasts sequential growth in Q3 2025 revenue and Adjusted EBITDA, but anticipates a Q4 decline and delayed annual run rate goals - Q3 2025 Outlook: Both Revenue and Adjusted EBITDA are expected to increase sequentially compared to Q2 2025, with Adjusted EBITDA potentially growing by **more than 50%**[5](index=5&type=chunk) - Q4 2025 Outlook: Revenue and Adjusted EBITDA are expected to be sequentially lower than Q3 2025[6](index=6&type=chunk) - Annual 2025 goals for Revenue and Adjusted EBITDA run rates are expected to be delayed due to customer migration issues, seasonality, and macroeconomic factors, including new federal tariffs[6](index=6&type=chunk)[9](index=9&type=chunk) [2025 Business Update and Recent Strategic Product and Operational Expansion](index=2&type=section&id=2025%20Business%20Update%20and%20Recent%20Strategic%20Product%20and%20Operational%20Expansion) Marchex is strategically expanding in 2025 through new product launches, key partnerships, and channel development to drive future gross margin expansion - Expanded a multi-year partnership with FordDirect, providing its Engage for Sales and Service product to **over 3,000** franchised dealers[10](index=10&type=chunk) - Launched new AI-powered conversational intelligence solutions specifically for the Health Care industry, designed to deliver compliant operational intelligence from patient conversations[10](index=10&type=chunk) - Initiated channel expansion by launching its first product on the Microsoft Azure Marketplace and AppSource to reach a broader enterprise audience[10](index=10&type=chunk) - Marchex Engage for Auto Sales and Service won the **"2025 AI Agent Product of the Year Award"** from TMC[14](index=14&type=chunk) [Additional New Growth Initiatives Planned for 2025](index=3&type=section&id=Additional%20New%20Growth%20Initiatives%20Planned%20for%202025) The company plans to significantly expand its AI-powered product suite in 2025 with new launches including AI Benchmarking, AgentAI Optimizer, and Marchex GPT - Upcoming product launches include: * **AI Benchmarking**: To provide industry-specific sales and marketing insights from customer conversations * **AgentAI Optimizer**: To prescriptively analyze the performance of third-party AI agents * **Marchex GPT**: A large language model enabling businesses to search their own structured data[14](index=14&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) The company's Q2 2025 financial statements show improved net income and a stable balance sheet with decreased liabilities [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Marchex's Q2 2025 consolidated statements of operations show a revenue decrease but improved loss from operations and a positive net income Consolidated Statements of Operations (In Thousands) | (In Thousands) | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $11,655 | $12,074 | $23,058 | $23,646 | | Total operating expenses | $12,191 | $12,796 | $25,464 | $25,681 | | Loss from operations | ($536) | ($722) | ($2,406) | ($2,035) | | Net income (loss) | $85 | ($756) | ($1,897) | ($2,206) | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, Marchex's balance sheet shows a slight decrease in total assets and liabilities, with stable stockholders' equity Consolidated Balance Sheets (In Thousands) | (In Thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $10,491 | $12,767 | | Total current assets | $21,095 | $22,278 | | Total assets | $41,984 | $43,200 | | Total current liabilities | $8,732 | $9,267 | | Total liabilities | $9,941 | $10,567 | | Total stockholders' equity | $32,043 | $32,633 | [Non-GAAP Financial Measures and Reconciliations](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) Marchex provides non-GAAP financial measures like Adjusted EBITDA and Adjusted non-GAAP EPS to offer clearer insights into core operating performance [Definition of Non-GAAP Measures](index=4&type=section&id=Definition%20of%20Non-GAAP%20Measures) Marchex defines non-GAAP measures, including Adjusted EBITDA and Adjusted non-GAAP income per share, to provide insights into core operating performance - **Adjusted EBITDA** is defined as net income (loss) before interest, income taxes, amortization of intangible assets from acquisitions, depreciation and amortization, stock-based compensation, and acquisition/disposition-related costs[19](index=19&type=chunk) - **Adjusted non-GAAP income (loss) per share** represents net income (loss) adjusted for the net of tax effects of stock-based compensation, acquisition/disposition costs, amortization of intangible assets from acquisitions, and net interest income/expense[20](index=20&type=chunk) [Reconciliation of Net Income (Loss) to Adjusted EBITDA](index=8&type=section&id=Reconciliation%20of%20Net%20Income%20(Loss)%20to%20Adjusted%20EBITDA) Marchex reconciled its Q2 2025 GAAP net income to Adjusted EBITDA, showing a significant increase compared to the prior year Reconciliation of Net Income (Loss) to Adjusted EBITDA (In Thousands) | (In Thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) | $85 | ($756) | | Adjustments | $563 | $1,007 | | **Adjusted EBITDA** | **$648** | **$251** | [Reconciliation of Net Income (Loss) per Share to Adjusted Non-GAAP Income (Loss) per Share](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20(Loss)%20per%20Share%20to%20Adjusted%20Non-GAAP%20Income%20(Loss)%20per%20Share) The company reconciled its Q2 2025 diluted GAAP EPS to Adjusted Non-GAAP income per share, reflecting a positive shift from the prior year Reconciliation of Net Income (Loss) per Share to Adjusted Non-GAAP Income (Loss) per Share | Per Share | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Diluted net income (loss) per share (GAAP) | $0.00 | ($0.02) | | Stock-based compensation | $0.01 | $0.01 | | Interest income (expense) and other, net | $0.01 | $0.00 | | **Adjusted non-GAAP income (loss) per share** | **$0.02** | **($0.01)** |

Revenue Performance - Revenue decreased by $0.2 million, or 2%, to $11.4 million for the three months ended March 31, 2025, compared to $11.6 million for the same period in 2024[72]. Cost and Expenses - Cost of revenue decreased by $0.2 million, or 5%, to $4.2 million for the three months ended March 31, 2025, representing 37% of revenue compared to 38% in 2024[73]. - Sales and marketing expenses increased by $0.5 million, or 18%, to $3.3 million for the three months ended March 31, 2025, accounting for 29% of revenue compared to 24% in 2024[74]. - Product development expenses decreased by $0.5 million, or 16%, to $2.7 million for the three months ended March 31, 2025, representing 24% of revenue compared to 28% in 2024[75]. - General and administrative expenses increased by $0.8 million, or 35%, to $3.1 million for the three months ended March 31, 2025, making up 27% of revenue compared to 20% in 2024[76]. - Total operating expenses increased to $13.3 million, or 116% of revenue, for the three months ended March 31, 2025, compared to $12.9 million, or 111% of revenue, in 2024[71]. Cash Flow and Financial Position - Cash used in operating activities was $2.6 million during the three months ended March 31, 2025, compared to $2.5 million for the same period in 2024[81]. - Cash and cash equivalents decreased to $10.0 million as of March 31, 2025, down from $12.8 million as of December 31, 2024[80]. - Cash used in investing activities was $0.3 million for the three months ended March 31, 2025, primarily for software development costs for new products[82]. - The company believes its resources will be sufficient to fund operations for at least twelve months, but additional financing may be needed for strategic initiatives[84]. Accounting and Compliance - No significant changes in critical accounting policies and estimates during Q1 2025 compared to the previous year[87]. - The company continues to prepare its financial statements in accordance with U.S. GAAP, focusing on estimates and assumptions that impact reported amounts[86]. - Investors can access financial reports and updates through the company's website and social media channels, ensuring compliance with Regulation Fair Disclosure[89].

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $11.4 million, impacted by seasonal call traffic factors and timing of new sales [13] - Gross margin increased by approximately 8% compared to Q1 2023, indicating improved financial efficiency [6] - The company anticipates achieving over $12.5 million in quarterly revenue by the end of 2025, translating to an annualized revenue run rate of $50 million or better [14] Business Line Data and Key Metrics Changes - The company has consolidated its technology stack into a single cloud-based architecture, enhancing operational efficiency and product offerings [5] - The launch of the Engage for Service product aims to boost revenue for auto service departments, which handle about 50% of inbound calls [8] - Marchex has exclusive access to approximately 9,000 auto franchise dealerships, expanding its market footprint [9] Market Data and Key Metrics Changes - The company is strategically positioned in four core verticals: auto, auto services, home services, and healthcare, with plans to deepen its presence in these markets [7] - The partnership with Microsoft through the Cloud AI Partner Program allows Marchex's solutions to reach a broader enterprise audience via Azure [10] Company Strategy and Development Direction - Marchex aims to scale into a $100 million annual revenue business by launching innovative AI-driven solutions and broadening sales channels [17] - The focus for 2025 is on acceleration, leveraging first-party conversational data to drive innovative solutions for Fortune 500 businesses [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledges uncertainty due to the macroeconomic climate but remains optimistic about the company's current momentum and growth potential [14][15] - The company is confident in its ability to drive sustainable growth and deliver value to customers and shareholders [18] Other Important Information - Marchex has adopted a new share repurchase program and sold an unused domain, indicating proactive financial management [16] Q&A Session Summary - There were no questions during the Q&A session, indicating a lack of immediate inquiries from participants [19]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $11.4 million, impacted by seasonal call traffic factors and timing of new sales, but expected to benefit overall financial plan for 2025 [13] - Gross margin increased by approximately 8% compared to Q1 2023, indicating improved financial profile due to operational efficiencies [6][13] - The company anticipates achieving more than $12.5 million in quarterly revenue by the end of 2025, translating to an annualized revenue run rate of $50 million or better [14] Business Line Data and Key Metrics Changes - The company has consolidated its technology stack into a single cloud-based architecture, enhancing operational efficiency and enabling the introduction of new AI products [5][6] - The launch of the Engage for Service product aims to help auto service departments recover missed opportunities and increase revenue, representing a multimillion-dollar opportunity [8] - Marchex now has deferred or exclusive access to approximately 9,000 auto franchise dealerships, expanding its market footprint [9] Market Data and Key Metrics Changes - The company is strategically positioned in four core verticals: auto, auto services, home services, and healthcare, with plans to deepen its presence in these markets [7] - The partnership with Microsoft through the Microsoft Cloud AI Partner Program allows Marchex's solutions to reach a broader enterprise audience via Azure [10] Company Strategy and Development Direction - Marchex is focused on accelerating growth by launching innovative AI solutions, expanding sales channels, and strengthening its position in high-value verticals [7][17] - The company aims to scale into a $100 million annual revenue business in the coming years, leveraging its first-party conversational data [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledges uncertainty due to the macroeconomic climate but believes current business momentum positions the company well for future growth [14][15] - The company is committed to maintaining financial discipline and delivering value to customers and shareholders [18] Other Important Information - Marchex has adopted a new share repurchase program and reported the sale of an unused domain [16] Q&A Session Summary - There were no questions during the Q&A session, indicating a lack of immediate inquiries from participants [19]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $11.4 million, impacted by seasonal call traffic factors and timing of new sales, but expected to benefit the overall 2025 financial plan on a run rate basis [14] - Gross margin increased by approximately 8% compared to Q1 2023, indicating a strengthened financial profile due to operational efficiencies [6][14] - The company anticipates achieving more than $12.5 million in quarterly revenue by the end of 2025, translating to an annualized revenue run rate of $50 million or better [15] Business Line Data and Key Metrics Changes - The company has consolidated its technology stack into a single cloud-based architecture, enhancing operational efficiency and enabling the introduction of new AI products [5][6] - The launch of the Engage for Service product aims to help auto service departments recover missed opportunities and increase revenue, representing a multimillion-dollar opportunity [8][10] Market Data and Key Metrics Changes - Marchex has secured deferred or exclusive access to approximately 9,000 auto franchise dealerships, expanding its market footprint significantly [10] - The company is strategically positioned in four core verticals: auto, auto services, home services, and healthcare, with plans to deepen its presence in these high-value markets [7] Company Strategy and Development Direction - The company is focused on accelerating growth through innovative AI solutions, expanding sales channels, and enhancing its product capabilities across all business functions [7][12] - Marchex aims to scale into a $100 million annual revenue business in the coming years, leveraging its first-party conversational data to drive innovative solutions for Fortune 500 companies [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledges some uncertainty due to the macroeconomic climate but believes the current momentum positions the company well for future growth [15][16] - The company is committed to maintaining financial discipline while driving sustainable growth and delivering value to customers and shareholders [18] Other Important Information - Marchex has adopted a new share repurchase program and reported the sale of an unused domain, indicating proactive financial management [16] Q&A Session Summary - There were no questions from participants during the Q&A session, indicating a lack of immediate inquiries or concerns from stakeholders [19]

[First Quarter 2025 Performance and Corporate Announcements](index=1&type=section&id=First%20Quarter%202025%20Performance%20and%20Corporate%20Announcements) Marchex reported its Q1 2025 financial results, including a net loss and adjusted EBITDA loss, alongside the authorization of a new share repurchase program [Q1 2025 Financial Highlights](index=1&type=section&id=Q1%202025%20Financial%20Highlights) Marchex reported Q1 2025 GAAP revenue of $11.4 million, a net loss of $2.0 million, and an adjusted EBITDA loss of $0.8 million Q1 2025 Key Financial Metrics (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Revenue | $11.4 | $11.6 | | Net Loss | $(2.0) | $(1.5) | | Net Loss per Diluted Share | $(0.05) | $(0.03) | | Adjusted EBITDA | $(0.8) | $(0.4) | | Adjusted Non-GAAP Loss per Share | $(0.04) | $(0.02) | - Excluding reorganization costs of **$0.6 million** in Q1 2025 and **$0.2 million** in Q1 2024, the adjusted EBITDA loss would have been flat year-over-year at **$0.2 million** for both quarters[4](index=4&type=chunk) - CEO Edwin Miller stated that Q1 revenue was affected by seasonal factors and timing of new sales, but expects sequential revenue growth and positive adjusted EBITDA in **Q2 2025**[3](index=3&type=chunk) [New Share Repurchase Program](index=1&type=section&id=New%20Share%20Repurchase%20Program) The Board of Directors authorized a new share repurchase program for up to 3,000,000 shares of Class B common stock - The 2025 Repurchase Program authorizes the repurchase of up to **3,000,000 shares** of the Company's Class B common stock[3](index=3&type=chunk) - Repurchases can be made through open market transactions, privately negotiated transactions, or under a Rule 10b5-1 plan[3](index=3&type=chunk) - The program has no expiration date and can be modified or terminated at any time without prior notice[3](index=3&type=chunk) [Business Update and Outlook](index=2&type=section&id=Business%20Update%20and%20Outlook) The company outlined its 2025 business outlook with financial targets, detailed recent strategic expansions and new growth initiatives, and reported on other corporate developments [2025 Business Outlook and Financial Targets](index=2&type=section&id=2025%20Business%20Outlook%20and%20Financial%20Targets) Marchex targets an annual revenue run rate of $50.0 million and adjusted EBITDA of over $6.0 million for 2025, focusing on strategic product launches and market expansion 2025 Financial Run Rate Targets (in millions) | Metric | Target Run Rate | | :--- | :--- | | Annual Revenue | $50.0+ | | Quarterly Revenue | $12.5+ | | Annual Adjusted EBITDA | $6.0+ | | Quarterly Adjusted EBITDA | $1.5+ | - Key strategic priorities for 2025 include: Launching new products on the Marchex Engage Platform, increasing investment in sales and marketing including expanding the sales force and entering new channels like the Microsoft Azure Marketplace, leveraging proprietary first-party data in Auto, Auto Services, Home Services, and Healthcare verticals, and expanding gross profit margins through SaaS revenue growth and efficiency gains[6](index=6&type=chunk) - The company acknowledges that the current macroeconomic environment creates uncertainty, which could cause variability in actual financial results[7](index=7&type=chunk) [Recent Strategic and Operational Expansion](index=3&type=section&id=Recent%20Strategic%20and%20Operational%20Expansion) Marchex expanded its Auto OEM relationship to over 3,000 dealers, launched a unified UI, and introduced new AI-powered solutions for auto and home services - Expanded a relationship with a **Fortune 500** auto OEM, providing access to over **3,000 franchised dealers** for its sales and service products[9](index=9&type=chunk) - Launched a comprehensive **unified interface (UI)** for customers, enabling a unified experience and seamless upsell opportunities with **'click-to-buy' functionality**[9](index=9&type=chunk) - Introduced **Marchex Engage for Service**, an **AI-powered solution** for auto service centers, and new **AI-driven solutions** for the **Home Services industry** focused on lead outcomes and topic analysis[9](index=9&type=chunk) [Additional New Growth Initiatives Planned for 2025](index=4&type=section&id=Additional%20New%20Growth%20Initiatives%20Planned%20for%202025) Marchex plans 2025 growth initiatives including expanding sales channels, leveraging its 'OneStack' platform, and launching new AI products like Marchex GPT - Marchex has launched its initial product in the **Microsoft Azure Marketplace** and plans to add more products and partners to expand its sales channels[12](index=12&type=chunk) - The company completed its **'OneStack' platform unification**, consolidating its technology into a single cloud-based architecture to power **generative AI applications** and improve customer experience[12](index=12&type=chunk) - Upcoming product launches in 2025 include: - **AI Benchmarking:** Providing industry-specific sales and marketing insights - **AgentAI Optimizer:** Analyzing the performance of third-party AI agents - **Marchex GPT:** A business-specific large language model for searching structured data[12](index=12&type=chunk)[16](index=16&type=chunk) [Other Corporate Developments](index=3&type=section&id=Other%20Corporate%20Developments) Marchex sold the domain phonenumbers.com for $0.8 million and continues to explore monetization of other non-core assets - The company sold the domain name phonenumbers.com for **$0.8 million** in proceeds before commissions[8](index=8&type=chunk) - Marchex is continuing to review its portfolio of unused domain assets for other potential monetization opportunities[8](index=8&type=chunk) [Financial Statements and Reconciliations](index=8&type=section&id=Financial%20Statements%20and%20Reconciliations) Detailed financial statements for Q1 2025 are presented, including consolidated statements of operations, balance sheets, and non-GAAP reconciliations [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) Marchex reported Q1 2025 revenue of $11.4 million and a net loss of $2.0 million, with increased operating expenses Q1 2025 Statement of Operations (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $11,402 | $11,573 | | Total operating expenses | $13,273 | $12,886 | | Loss from operations | $(1,871) | $(1,313) | | Net loss | $(1,982) | $(1,450) | | Diluted net loss per share | $(0.05) | $(0.03) | [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, Marchex reported $10.0 million in cash, total assets of $40.6 million, and total stockholders' equity of $31.4 million Balance Sheet Highlights (in thousands) | Line Item | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $10,020 | $12,767 | | Total current assets | $19,928 | $22,278 | | Total assets | $40,633 | $43,200 | | Total current liabilities | $7,965 | $9,267 | | Total liabilities | $9,259 | $10,567 | | Total stockholders' equity | $31,374 | $32,633 | [Non-GAAP Reconciliations](index=10&type=section&id=Non-GAAP%20Reconciliations) The company provided reconciliations for non-GAAP financial measures, including adjusted EBITDA and adjusted non-GAAP loss per share Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss | $(1,982) | $(1,450) | | Depreciation and amortization | $633 | $324 | | Stock-based compensation | $455 | $433 | | Other adjustments | $111 | $288 | | **Adjusted EBITDA** | **$(783)** | **$(405)** | Reconciliation of Net Loss per Share to Adjusted Non-GAAP Loss per Share (in dollars) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss per share, diluted | $(0.05) | $(0.03) | | Stock-based compensation | $0.01 | $0.01 | | **Adjusted non-GAAP loss per share** | **$(0.04)** | **$(0.02)** |

Revenue Performance - Revenue decreased by $1.8 million, or 4%, to $48.1 million for the year ended December 31, 2024, compared to $49.9 million for 2023, primarily due to lower conversational volumes and non-recurring analytics revenue in 2023 [139]. - Revenue for the year ended December 31, 2024, was $48,122 million, a decrease of 3.6% from $49,910 million in 2023 [182]. - The majority of the company's revenue is generated from conversational intelligence product offerings, with revenue recognized over time as services are performed [156]. - The company reported that 99% of its revenue for both 2024 and 2023 was derived from the United States, indicating a strong domestic market presence [231]. Expenses and Cost Management - Cost of revenue decreased by $3.4 million, or 17%, to $17.2 million for the year ended December 31, 2024, representing 36% of revenue, down from 41% in 2023, driven by lower conversational data processing costs and efficient vendor management [140]. - Sales and marketing expenses increased by $0.7 million, or 6%, to $12.1 million for the year ended December 31, 2024, accounting for 25% of revenue, up from 23% in 2023, mainly due to higher personnel costs [141]. - Product development expenses decreased by $3.0 million, or 19%, to $12.4 million for the year ended December 31, 2024, representing 26% of revenue, down from 31% in 2023, attributed to lower personnel and contractor costs [142]. - General and administrative expenses remained consistent at $10.2 million for both years, accounting for 21% of revenue in 2024, compared to 20% in 2023 [143]. - Total operating expenses decreased to $52,569 million in 2024 from $59,553 million in 2023, representing a reduction of 11.7% [182]. Net Loss and Financial Position - Net loss decreased by $5.0 million, or 51%, to $4.9 million for the year ended December 31, 2024, from $9.9 million in 2023, primarily due to a $7.0 million decrease in operating expenses [147]. - Net loss applicable to common stockholders improved to $(4,947) million in 2024 compared to $(9,910) million in 2023, a decrease of 50.1% [182]. - Basic and diluted net loss per share applicable to common stockholders was $(0.11) in 2024, down from $(0.23) in 2023, reflecting a 52.2% improvement [182]. - The company reported a loss before income tax expense of $4,567,000 in 2024, an improvement from a loss of $9,816,000 in 2023 [260]. Cash Flow and Liquidity - Cash and cash equivalents as of December 31, 2024, were $12.8 million, down from $14.6 million in 2023 [148]. - Cash used in operating activities was $1.1 million for the year ended December 31, 2024, compared to $4.4 million in 2023, reflecting a reduction in net loss and adjustments for non-cash items [149]. - Cash used in investing activities was $0.4 million for the year ended December 31, 2024, down from $1.3 million in 2023, primarily for technology infrastructure and capitalized software development costs [150]. - The company believes its resources will be sufficient to fund operations for at least twelve months, but additional financing may be needed for strategic initiatives and acquisitions [152]. Assets and Liabilities - Total assets decreased from $47,477,000 in 2023 to $43,200,000 in 2024, reflecting a decline of approximately 9.5% [180]. - Total liabilities decreased from $11,607,000 in 2023 to $10,567,000 in 2024, a reduction of about 8.9% [180]. - The company's accumulated deficit increased from $(321,231,000) in 2023 to $(326,178,000) in 2024, indicating a worsening of approximately 1.5% [180]. - Accounts receivable, net, decreased from $7,394,000 in 2023 to $7,072,000 in 2024, a decline of approximately 4.4% [180]. Stock and Compensation - Stock-based compensation decreased to $1,707 million in 2024 from $2,393 million in 2023, a reduction of 28.7% [188]. - The company did not grant any stock options with exercise prices less than the current market value during 2024 or 2023 [241]. - The unrecognized compensation costs related to stock options as of December 31, 2024, were $3,100,000, expected to be recognized over 2.59 years [246]. - The company has authorized a total of 138,500,000 shares, including 137,500,000 shares of common stock and 1,000,000 shares of preferred stock [236]. Intangible Assets and Amortization - The total identifiable intangible assets from acquisitions amounted to $26,530,000 as of December 31, 2023, with a net carrying amount of $602,000 after amortization and impairment [270]. - Amortization of intangible assets decreased from $1,987,000 in 2023 to $602,000 in 2024, indicating a significant reduction of approximately 69.7% [271]. - Customer relationships intangible assets had a gross carrying amount of $13,018,000 with accumulated amortization of $9,588,000 as of December 31, 2023 [271]. - Technologies intangible assets had a gross carrying amount of $9,369,000 with accumulated amortization of $8,307,000 as of December 31, 2023 [271]. Future Commitments and Legal Matters - Future minimum payments related to other contractual obligations are approximately $9,612,000 [255]. - The company is currently involved in litigation regarding an earnout of up to $3.0 million related to a previous acquisition [258].

Financial Data and Key Metrics Changes - For Q4 2024, revenue was $11.9 million, a decrease from $12.4 million in the same quarter last year, reflecting typical seasonal call volume decreases [17] - Adjusted EBITDA was a loss of $386,000 for Q4 2024, down from an adjusted EBITDA of $112,000 for Q4 2023, indicating increased investments in infrastructure initiatives [22] - GAAP net loss for Q4 2024 was $1.9 million, or negative $0.04 per diluted share, compared to a loss of $1.1 million or negative $0.02 per diluted share for Q4 2023 [22] Business Line Data and Key Metrics Changes - Cost of revenues for Q4 2024 was $4.4 million, with improvements in cost as a percentage year-over-year [18] - Sales and marketing costs increased to approximately $3.4 million for the quarter, reflecting higher investments in go-to-market teams [20] - Product development costs were $2.8 million for Q4 2024, as the company continued to invest in expanding its AI product suite [21] Market Data and Key Metrics Changes - The company experienced a typical seasonal decrease in call volumes of 10% to 15% across core verticals in Q4 [17] - The company anticipates revenue growth for fiscal year 2025, with opportunities for sequential revenue acceleration throughout the year [25] Company Strategy and Development Direction - The company aims to build a $100 million revenue-plus business and is taking deliberate steps to achieve this goal [11] - Key initiatives include the launch of a unified user interface and single sign-on to enhance customer experience and streamline access to services [12][13] - The company is focused on leveraging its cloud platform and AI-driven solutions to serve enterprise customers more effectively [10] Management's Comments on Operating Environment and Future Outlook - Management views 2025 as a year of acceleration, building on the foundational progress made in 2024 [28] - The company expects to achieve significant positive adjusted EBITDA progress for the full year, demonstrating both revenue growth and operational discipline [27] - Management is optimistic about the potential for sequential growth driven by customer demand and the expansion of product offerings [27] Other Important Information - The company ended Q4 2024 with approximately $12.8 million in cash on hand [23] - The company plans to complete multiple technology advances in the coming months to enhance its product offerings and customer experience [12] Q&A Session Summary Question: Can you talk about your outlooks and confidence in revenue improvement? - Management highlighted technological progress and the emergence of generative AI as key factors for expanding conversation volumes and capturing more value from customers [35] - The unified platform and single UI are expected to facilitate easier access and adoption of services, differentiating the company from past performance [37] Question: How might tariffs impact your market presence, particularly with Auto OEMs? - Management indicated that there are currently no specific disruptions anticipated from tariffs, and the focus remains on strategic roadmaps of customers [48]