Marchex(US:MCHX)2022-11-06 17:06Financial Data and Key Metrics Changes - Revenue for Q3 2022 was $13.2 million, a decrease from $13.7 million in the same quarter last year, indicating a mixed performance due to macroeconomic pressures [19][25] - GAAP net loss for Q3 2022 was $1.6 million or $0.03 per diluted share, compared to a gain of $3.3 million or $0.07 per diluted share in Q3 2021 [24] - Adjusted EBITDA was positive $10,000, remaining consistent with Q3 2021, while adjusted non-GAAP loss was $0.01 per share, also consistent with the previous year [24] Business Line Data and Key Metrics Changes - Conversation volumes faced pressure due to macroeconomic events and inflation, particularly affecting small business listing providers and marketing services [5][19] - The automotive sector remained stable, while home services did not experience the usual seasonal uptick [32] Market Data and Key Metrics Changes - The auto industry is undergoing significant changes, with a shift towards direct-to-consumer sales and electronic vehicle sales, creating opportunities for Marchex [8][10] - There is a growing demand for conversational intelligence software across various sectors, including healthcare and home services, indicating a positive market trend [12][28] Company Strategy and Development Direction - Marchex is focusing on expanding its cloud-based product suite and enhancing its conversational intelligence capabilities to meet customer needs [11][12] - The company aims to leverage its technology to optimize costs and improve customer experiences, positioning itself as a leader in conversational intelligence [15][26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain economic climate but expressed confidence in the company's ability to emerge stronger, driven by ongoing investments and customer engagement [16][26] - The outlook for Q4 2022 anticipates a seasonal decline in revenue but expects to maintain similar revenue levels compared to the previous year, with a focus on sequential progress in 2023 [25][28] Other Important Information - Marchex won the APPEALIE SaaS award for customer success, highlighting its effectiveness in helping businesses recover lost opportunities [11] - The company ended Q3 2022 with over $23 million in cash on hand, providing a solid financial foundation for future growth [24] Q&A Session Summary Question: Revenue mix between verticals - Management noted that automotive remained stable, while home services did not see the expected seasonal uptick, with small business listing providers experiencing significant impacts [32] Question: Visibility on product rollout and monetization - Management confirmed that some new customers have been secured, and existing relationships are expanding, with expectations for sequential progress in 2023 [33][34] Question: Operating leverage and cost management - Management indicated that gross margin is expected to expand with increased revenue, and that sales and marketing costs may grow in line with revenue opportunities [35] Question: Growth of text messaging sales - Text messaging remains a small but growing part of the business, with plans to integrate it more fully into the product suite in 2023 [38] Question: Year-on-year growth in bookings - Management reported growth in secured new arrangements and increased activity in the pipeline across various verticals [39][40] Question: Gross margin trends and levers - Management expects gross margins to remain stable in the near term, with potential for significant improvement as new products contribute to revenue [41]