Revenue Performance - For the nine months ended September 30, 2022, revenue was $39.9 million, a decrease of $808,000, or 2%, compared to $40.7 million for the same period in 2021[90] - The decrease in revenue is primarily due to lower conversational volumes compared to the recovery period in 2021, along with ongoing impacts from COVID-19 variants, supply chain disruptions, inflation, and labor shortages[90] - Revenue decreased by $808,000 or 2%, from $40.7 million for the nine months ended September 30, 2021 to $39.9 million for the same period in 2022[104] - The company expects revenues to be slightly lower in the near term due to reduced seasonal call volume, particularly in the latter part of the fourth quarter[105] - The company expects revenues to recover if macroeconomic conditions improve and business interruptions subside, but potential disruptions from COVID-19 and supply chain issues could lower revenues[127] Operating Expenses - Service costs decreased by $1.6 million or 10%, from $16.4 million for the nine months ended September 30, 2021 to $14.8 million for the same period in 2022, representing 40% and 37% of revenue respectively[108] - Product development expenses decreased by $2.8 million or 21%, from $13.3 million for the nine months ended September 30, 2021 to $10.5 million for the same period in 2022, accounting for 33% and 26% of revenue respectively[114] - General and administrative expenses increased by $413,000 or 6%, from $7.0 million for the nine months ended September 30, 2021 to $7.4 million for the same period in 2022, representing 17% and 19% of revenue respectively[117] - Stock-based compensation expense totaled $2.034 million for the nine months ended September 30, 2022, compared to $2.007 million for the same period in 2021[103] - The company anticipates stable to modestly higher expenditures for product development initiatives in the near and intermediate term[129] Financial Position - The net loss for the nine months ended September 30, 2022, was $4.7 million, an increase from a net loss of $2.4 million for the same period in 2021[124] - Cash used in operating activities was $1.8 million for the nine months ended September 30, 2022, compared to $5.8 million for the same period in 2021[126] - Cash used in investing activities increased to $2.0 million for the nine months ended September 30, 2022, from $504,000 in the same period in 2021[128] - Cash provided by financing activities was $30,000 for the nine months ended September 30, 2022, down from $252,000 in the same period in 2021[130] - The company had cash and cash equivalents of $23.3 million as of September 30, 2022, down from $27.1 million as of December 31, 2021[125] - Long-term contractual obligations as of September 30, 2022, totaled $4.9 million, including $2.0 million for rent under facility operating leases[125] - The company believes its resources will be sufficient to fund operations for at least twelve months, but additional financing may be needed for acquisitions and long-term obligations[131] Strategic Initiatives - Marchex's primary product offerings include Marchex Call Analytics, which helps businesses optimize advertising expenditures and measure call outcomes[80] - Marchex launched Marchex Conversation DNA in March 2022, enabling voice and text conversation decoding and scoring across its products, utilizing over one billion minutes of voice conversations[89] - Marchex plans to expand its conversational intelligence technology and invest in AI, data science, and machine learning capabilities[83] - The company aims to grow its customer base by integrating its products with existing communication providers, enhancing accessibility for businesses[84] - Marchex is pursuing selective acquisition opportunities to enhance its strategic position and increase shareholder value[85] - The company continues to focus on improving marketing performance through its conversational analytics solutions, which received the MarTech Best Marketing Attribution Solution award in 2021[81] Market Outlook - The global conversational AI market is projected to grow at a compounded annual growth rate of 22%, from $6.8 billion in 2021 to $18.4 billion by 2026[81] - The company anticipates volatility in results due to the ongoing impacts of the coronavirus pandemic and macroeconomic conditions[105] - The company believes new product releases and growth initiatives may provide opportunities for potential revenue growth in the longer term[106] Tax and Valuation - As of September 30, 2022, the company recorded a 100% valuation allowance of $54.7 million against its net deferred tax assets, compared to $53.0 million at December 31, 2021[123] - Amortization of intangible assets from acquisitions was $3.7 million for the nine months ended September 30, 2021, decreasing to $1.6 million for the same period in 2022[120] - Interest income decreased significantly from $2.5 million for the nine months ended September 30, 2021 to $33,000 for the same period in 2022[121] Lease Accounting - The company has elected the short-term lease recognition exemption for all qualifying leases, meaning no ROU assets or lease liabilities are recognized for these leases[154] - Operating lease ROU assets and liabilities are recognized at commencement based on the present value of lease payments over the lease term[153] - The company primarily leases office facilities classified as operating leases and does not have finance leases[153] - Lease payments included in the measurement of lease liability are comprised of fixed payments[153] - The company uses its incremental borrowing rate to determine the present value of lease payments as the implicit interest rate is not readily determinable[153] - The lease term includes the non-cancellable period of the lease, with options for lease renewals excluded from the lease term[153] Investor Relations - The company provides access to its financial reports and material information through its investor relations website and social media channels[156] - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk[157]
Marchex(MCHX) - 2022 Q3 - Quarterly Report