Marchex(MCHX) - 2025 Q2 - Quarterly Results

Marchex Second Quarter 2025 Results Marchex reported improved Q2 2025 profitability despite a slight revenue decrease, driven by strategic platform migration and operational efficiency Q2 2025 Financial Highlights 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 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] - Quarterly Adjusted EBITDA, excluding reorganization costs, improved by nearly $1 million compared to Q1 2025[4] - 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][9] Business Outlook and Strategic Initiatives 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 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] - Q4 2025 Outlook: Revenue and Adjusted EBITDA are expected to be sequentially lower than Q3 2025[6] - 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][9] 2025 Business Update and Recent Strategic Product and Operational Expansion 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] - Launched new AI-powered conversational intelligence solutions specifically for the Health Care industry, designed to deliver compliant operational intelligence from patient conversations[10] - Initiated channel expansion by launching its first product on the Microsoft Azure Marketplace and AppSource to reach a broader enterprise audience[10] - Marchex Engage for Auto Sales and Service won the "2025 AI Agent Product of the Year Award" from TMC[14] Additional New Growth Initiatives Planned for 2025 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] Financial Statements The company's Q2 2025 financial statements show improved net income and a stable balance sheet with decreased liabilities Consolidated Statements of Operations 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 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 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 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] - 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] Reconciliation of Net Income (Loss) to Adjusted EBITDA 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 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) |