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 Marchex Announces Fourth Quarter and Full Year 2016 Results
   Thursday, February 16, 2017 4:15:04 PM ET

Marchex, Inc. (MCHX ), a mobile advertising analytics company, today announced its financial results for the fourth quarter and full year ended December 31, 2016.

Q4 and Full Year 2016 Financial Highlights

-- GAAP revenue was $28.4 million for the fourth quarter of 2016, compared to $34.9 million for the fourth quarter of 2015. GAAP revenue was $129.5 million for 2016, compared to $143.0 million for 2015.

-- GAAP net loss from continuing operations was $5.7 million for the fourth quarter of 2016 or $0.14 per diluted share. For the fourth quarter of 2015, GAAP net income from continuing operations was $1.2 million or $0.03 per diluted share. GAAP net loss from continuing operations was $84.1 million for 2016 or $2.01 per diluted share. For 2015, GAAP net loss from continuing operations was $597,000 or $0.01 per diluted share.

                                                                                                  
                                                                                                Q4 2015                                                     Q4 2016                                                     FY 2015                                                        FY 2016
                                                                                           -----------------                                          ------------------                                          ------------------                                          -------------------------
GAAP Revenue                                                                                 $ 34.9 million                                             $  28.4 million                                             $ 143.0 million                                             $        129.5 million
Call-Driven Revenue(1)                                                                       $ 34.3 million                                             $  28.4 million                                             $ 139.9 million                                             $        129.5 million
                                                                                                                                                                                                                                                                                   
Non-GAAP Results(2):
Enterprise Revenue(3)                                                                        $ 25.3 million                                             $  22.4 million                                             $  99.7 million                                             $        100.1 million
Call-Driven Adjusted OIBA                                                                    $  1.6 million                                             $ (2.9) million                                             $   7.8 million                                             $        (9.9) million
Call-Driven Adjusted EBITDA                                                                  $  2.5 million                                             $ (2.1) million                                             $  11.5 million                                             $        (6.7) million
                                                                                                                                                                                                                                                                                   
Cash Balance                                                                                 $  109 million                                             $   104 million
                                                                                                                                                                                                                                                                                   

-- Adjusted non-GAAP earnings (loss) per share(2) from continuing operations for the fourth quarter of 2016 was ($0.04). For the fourth quarter of 2015, adjusted non-GAAP earnings (loss) per share(2) was $0.03. Adjusted non-GAAP earnings (loss) per share(2) from continuing operations for 2016 was ($0.16). For 2015, adjusted non-GAAP earnings (loss) per share(2) was $0.13.

-- During the fourth quarter of 2016, YP contributed $6.0 million in Call-Driven Revenue, compared to $9.0 million in the fourth quarter of 2015. During 2016, YP contributed $29.4 million in Call-Driven Revenue compared to $40.2 million in 2015.

_______________________
    1         Call-Driven revenue includes revenue generated from our
                                                                                                             contracts with YP.
                                          2                                                                  Reconciliations of non-GAAP measures are included in the
                                                                                                             financial tables attached to this press release and we encourage
                                                                                                             investors to examine the reconciling adjustments between the GAAP
                                                                                                             and non-GAAP measures.
                                          3                                                                  Enterprise Revenue represents Call-Driven revenue excluding
                                                                                                             revenue generated from our contracts with YP.
                                                                                                              

Strategic Priorities Update

-- Secure New Enterprise Clients and Grow Existing Relationships. Continued progress with our customer initiatives, including adding 30 new clients in 2016.

-- Accelerate Product Innovation. Marchex Omnichannel Analytics Cloud launched this month to help marketers connect customer conversions driven from all paid media channels - including search, display and video, social and sites - to phone calls made to a business. The results are smarter media spend and lower new customer acquisition costs, higher phone call conversion rates based on optimized media, and increased customer conversion and revenue to businesses. This integrated solution gives marketers a full and accurate understanding of which marketing activity is most successful to optimize overall marketing spend and ROI for industries that rely heavily on phone calls to schedule appointments and close sales, such as insurance, automotive, travel, and cable. Video and Display Analytics launched to general availability, which measures the impact of display and video advertising campaigns on inbound phone calls to call centers and stores. Marketers can expand their visibility into these campaigns by measuring video advertising units in both premium and programmatic video publishers.

-- Expand Strategic Partnerships. Our partnership with Facebook announced this month gives marketers a deeper understanding of what happens on a phone call that stems from a Facebook ad. This partnership will integrate across Facebook’s social analytics solution into the Marchex Omnichannel Analytics Cloud. Marketers can now quickly optimize their marketing spend across all paid media channels based on actionable insights into which channel drove offline consumer interactions, thereby boosting the efficiency of Facebook ads.

"Marchex continues to expand the unique insights we can deliver to enterprise advertisers as we build out a broad mobile advertising analytics solution," said Michael Arends, Chief Financial Officer. "The Office of the CEO is conducting a strategic review of each of Marchex’s product areas to determine how best to leverage the strengths of the business where there is customer momentum and to determine the best path forward in areas that present challenges. As part of this process, we are determined to make progress toward the goal of achieving profitability in the business and anticipate Marchex to be at or near breakeven for Adjusted EBITDA at some point in the second half of this year."

Business Outlook

The following forward-looking statements reflect Marchex’s expectations as of February 16, 2017. The revenue outlook for the first quarter is impacted primarily by three factors:

-- Reduced budget from an ongoing relationship with a large financial services customer.

-- Renegotiated economic terms of our extended relationship with YP.

-- Acquired customers referenced on our 2016 second quarter conference call.

Total Call-Driven financial guidance for the First Quarter ending March 31, 2017

Call-Driven Revenue(1)                         $22.5 million or more
Call-Driven Adjusted OIBA(2)                                                                  a loss of ($4) million to ($4.5) million
Call-Driven Adjusted EBITDA(2)                                                                a loss of ($3) million to ($3.5) million
                                                                                               

The guidance includes estimated reorganizational costs of approximately $800,000 to $1.5 million for the first quarter. In addition, the company believes that its cost reduction initiatives will yield more than $10 million in annualized savings. The benefit of these savings are expected to ramp throughout the year.

"While we remain vulnerable to shifting media tactics from some of our large customers, particularly on our Call Marketplace media product, we believe our analytics product area is a unique strategic asset with a strong customer base and favorable operating characteristics. As we progress through our strategic review, we expect that our overall corporate strategy may evolve, and that we can unlock value in our assets," said Michael Arends.

Conference Call and Webcast Information

Management will hold a conference call, starting at 5:00 p.m. ET on Thursday, February 16, 2017, to discuss its fourth quarter and year ended December 31, 2016 financial results and other company updates. Access to the live webcast of the conference call will be available online from the Investors section of Marchex’s website at www.marchex.com. An archived version of the webcast will also be available at the same location, beginning two hours after completion of the call.

About Marchex

Marchex is a mobile advertising analytics company that connects online behavior to real-world, offline actions. By linking critical touchpoints in the customer journey, Marchex’s products enable a 360-degree view of marketing effectiveness. Brands and agencies utilize Marchex’s products to transform business performance.

Please visit www.marchex.com, www.marchex.com/blog/ or @marchex on Twitter (Twitter.com/Marchex), where Marchex discloses material information from time to time about the Company, its financial information, and its business.

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, other financial guidance, acquisitions, dispositions, 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 February 16, 2017 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, Adjusted non-GAAP earnings (loss) per share and Call-Driven and Archeo and Other Adjusted OIBA and EBITDA. Marchex also provides Enterprise Revenue, which represents Call-Driven revenue excluding revenue generated from our contracts with Yellowpages.com LLC ("YP").

OIBA represents income (loss) from operations excluding stock-based compensation expense. 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 acquisition and disposition related costs and impairment of goodwill, as these items are not indicative of Marchex’s recurring core operating results. 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 expenses such as stock-based compensation, acquisition and disposition related costs, and impairment of goodwill. Adjusted EBITDA represents income before interest, income taxes, depreciation, amortization, stock compensation expense, acquisition and disposition related costs, and impairment of goodwill. Marchex believes that Adjusted EBITDA is another alternative measure of liquidity to GAAP net cash provided by (used in) 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.

Call-Driven Adjusted OIBA and EBITDA and Archeo and Other Adjusted OIBA and EBITDA include the above descriptions of Adjusted OIBA and EBITDA for the Call-Driven and Archeo segments. The Call-Driven Adjusted OIBA and EBITDA includes all Marchex general corporate overhead costs. The Archeo and Other Adjusted OIBA and EBITDA in 2016 primarily includes transition activities provided to the buyer of the Archeo assets which are not material. Financial analysts and investors may use Adjusted OIBA and EBITDA and Enterprise Revenue to help with comparative financial evaluation to make informed investment decisions. Adjusted non-GAAP earnings (loss) per share represents Adjusted non-GAAP net income (loss) applicable to common stockholders divided by GAAP diluted shares outstanding. Adjusted non-GAAP net income (loss) applicable to common stockholders generally captures those items on the statement of operations that have been, or ultimately will be, settled in cash exclusive of certain items that are not indicative of Marchex’s recurring core operating results and represents net income (loss) applicable to common stockholders plus the net of tax effects of: (1) stock-based compensation expense, (2) acquisition and disposition related costs, (3) interest and other income (expense), (4) discontinued operations, net of tax, (5) dividends paid to participating securities and (6) impairment of goodwill. Financial analysts and investors may use Adjusted non-GAAP earnings (loss) per share 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. Marchex’s non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar titled terms used by other companies, and accordingly, care should be exercised in understanding how Marchex defines its non-GAAP financial measures in this release. 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
                                                                                                                                                                                          (in thousands, except per share data)
                                                                                                                                                                                                       (unaudited)
 
                                                                                                                            Three Months Ended                                                                                                       Twelve Months Ended
                                                                                                                                                                                        December 31,                                                                                                                                                   December 31,
                                                                                                                                                    2015                                               2016                                                                                     2015                                               2016
                                                                                                                                    ------------------------------------                        ---------------------------------------------------------                                          ------------------------------------                        ---------------------------------------------------------
Revenue                                                                                                                                                $         34,900                                            $         28,401                                                                                   $        143,013                                            $        129,547
Expenses:
    Service costs (1)                                                                                                                                            19,601                                                      16,006                                                                                             78,767                                                      76,970
    Sales and marketing (1)                                                                                                                                       4,493                                                       5,574                                                                                             16,462                                                      22,307
    Product development (1)                                                                                                                                       7,450                                                       6,587                                                                                             31,058                                                      28,446
    General and administrative (1)                                                                                                                                3,585                                                       5,939                                                                                             18,510                                                      21,754
    Acquisition and disposition related costs                                                                                                     20                           --                                                          219                                      662  
                                                                                                                                    -------------------- --------------                         -------------------- -------------- --------------------                                           -------------------- --------------                         -------------------- -------------- --------------------
        Total operating expenses                                                                                                                                 35,149                                                      34,106                                                                                            145,016                                                     150,139
    Impairment of goodwill                                                                                                                               --                                              --                                                                                     --                                                     (63,305 )
    Gain on sale of Archeo assets                                                                                                              1,496                           --                                                        1,496                           --  
                                                                                                                                    -------------------- --------------                         -------------------- -------------- --------------------                                           -------------------- --------------                         -------------------- -------------- --------------------
Income (loss) from operations                                                                                                                                     1,247                                                      (5,705 )                                                                                             (507 )                                                   (83,897 )
Interest expense and other, net                                                                                                                  (11 )                                    (25 )                                                                           (63 )                                   (115 )
                                                                                                                                    -------------------- --------------                         -------------------- -------------- --------------------                                           -------------------- --------------                         -------------------- -------------- --------------------
Income (loss) from continuing operations before provision for income                                                                                              1,236                                                      (5,730 )                                                                                             (570 )                                                   (84,012 )
taxes
Income tax expense                                                                                                                                16                                       14                                                           27                                       54  
                                                                                                                                    -------------------- --------------                         -------------------- -------------- --------------------                                           -------------------- --------------                         -------------------- -------------- --------------------
Net income (loss) from continuing operations                                                                                                                      1,220                                                      (5,744 )                                                                                             (597 )                                                   (84,066 )
Discontinued operations:
    Income from discontinued operations, net of tax                                                                                                                  38                                              --                                                                                              5,123                                              --
    Gain on sale of discontinued operations, net of tax                                                                               --                           --                                                       22,195                           --  
                                                                                                                                    -------------------- --------------                         -------------------- -------------- --------------------                                           -------------------- --------------                         -------------------- -------------- --------------------
Discontinued operations, net of tax                                                                                                               38                           --                                                       27,318                           --  
                                                                                                                                    -------------------- --------------                         -------------------- -------------- --------------------                                           -------------------- --------------                         -------------------- -------------- --------------------
Net income (loss)                                                                                                                                                 1,258                                                      (5,744 )                                                                                           26,721                                                     (84,066 )
Dividends paid to participating securities                                                                                            --                           --                                                          (37 )                         --  
                                                                                                                                    -------------------- --------------                         -------------------- -------------- --------------------                                           -------------------- --------------                         -------------------- -------------- --------------------
Net income (loss) applicable to common stockholders                                                                                                    $          1,258                                            $         (5,744 )                                                                                 $         26,684                                            $        (84,066 )
                                                                                                                                    ==================== ==============                         ==================== ============== ====================                                           ==================== ==============                         ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                                
Basic and diluted net income (loss) per Class A and Class B share
applicable to common stockholders:
    Continuing operations                                                                                                                              $           0.03                                            $          (0.14 )                                                                                 $          (0.01 )                                          $          (2.01 )
    Discontinued operations, net of tax                                                                                                                $           0.00                                            $ --                                                                $           0.66                                            $ --  
                                                                                                                                    -------------------- --------------                         -------------------- -------------- --------------------                                           -------------------- --------------                         -------------------- -------------- --------------------
Basic and diluted net income (loss) per Class A and Class B share                                                                                      $           0.03                                            $          (0.14 )                                                                                 $           0.65                                            $          (2.01 )
applicable to common stockholders
Dividends paid per share                                                                                                                               $ --                                            $ --                                                                                   $           0.04                                            $ --
Shares used to calculate basic net income (loss) per share
applicable to common stockholders:
      Class A                                                                                                                                                     5,233                                                       5,062                                                                                              5,233                                                       5,190
      Class B                                                                                                                                                    35,804                                                      37,076                                                                                             35,935                                                      36,550
Shares used to calculate diluted net income (loss) per share
applicable to common stockholders:
      Class A                                                                                                                                                     5,233                                                       5,062                                                                                              5,233                                                       5,190
      Class B                                                                                                                                                    41,599                                                      42,138                                                                                             41,168                                                      41,740
                                                                                                                                                                                                                                                                                                                                                                
(1) Includes stock-based compensation allocated as follows:
      Service costs                                                                                                                                    $            143                                            $            128                                                                                   $          1,189                                            $            693
      Sales and marketing                                                                                                                                           414                                                         417                                                                                              1,307                                                       1,738
      Product development                                                                                                                                           567                                                         202                                                                                              2,410                                                       1,569
      General and administrative                                                                                                               1,091                                    2,190                                                        5,118                                    6,183  
                                                                                                                                    -------------------- --------------                         -------------------- -------------- --------------------                                           -------------------- --------------                         -------------------- -------------- --------------------
      Total                                                                                                                                            $          2,215                                            $          2,937                                                                                   $         10,024                                            $         10,183
                                                                                                                                                                                                                                                                                                                                                                                                    
 
                                                                                                               MARCHEX, INC. AND SUBSIDIARIES
                                                                                                            Condensed Consolidated Balance Sheets
                                                                                                                       (in thousands)
                                                                                                                         (unaudited)
 
                                                                                             December 31,                                     December 31,
                                                                                                                                                          2015                                                                2016
                                                                                                                                             ------------------------------                         ---------------------------------------------------------
                                    Assets
Current assets:
    Cash and cash equivalents                                                                                                                                   $  109,155                                             $        103,950
    Accounts receivable, net                                                                                                                                        24,621                                                       18,922
    Prepaid expenses and other current assets                                                                                                                        1,784                                                        1,531
    Refundable taxes                                                                                                                                127                                        98  
                                                                                                                                             -------------------- --------                          -------------------- -------------- --------------------
        Total current assets                                                                                                                                       135,687                                                      124,501
    Property and equipment, net                                                                                                                                      5,778                                                        3,557
    Other assets, net                                                                                                                                                  222                                                          214
    Goodwill                                                                                                                                     63,305                            --  
                                                                                                                                             -------------------- --------                          -------------------- -------------- --------------------
        Total assets                                                                                                                                            $  204,992                                             $        128,272  
                                                                                                                                             ==================== ========                          ==================== ============== ====================
        Liabilities and Stockholders’ Equity
Current liabilities:
    Accounts payable                                                                                                                                            $    9,460                                             $          6,811
    Accrued expenses and other current liabilities                                                                                                                   6,712                                                        7,707
    Deferred revenue                                                                                                                                692                                       349  
                                                                                                                                             -------------------- --------                          -------------------- -------------- --------------------
        Total current liabilities                                                                                                                                   16,864                                                       14,867
Other non-current liabilities                                                                                                                       662                                       134  
                                                                                                                                             -------------------- --------                          -------------------- -------------- --------------------
        Total liabilities                                                                                                                                           17,526                                                       15,001
                                                                                                                                                                                                     
    Class A common stock                                                                                                                                                55                                                           53
    Class B common stock                                                                                                                                               368                                                          380
    Treasury Stock                                                                                                                                                    (238 )                                             --
    Additional paid-in capital                                                                                                                                     350,799                                                      360,422
    Accumulated deficit                                                                                                                        (163,518 )                                (247,584 )
                                                                                                                                             -------------------- --------                          -------------------- -------------- --------------------
        Total stockholders’ equity                                                                                   187,466                                   113,271  
                                                                                                                                             -------------------- --------                          -------------------- -------------- --------------------
        Total liabilities and stockholders’ equity                                                                                   $  204,992                                             $        128,272  
                                                                                                                                             ==================== ========                          ==================== ============== ====================
                                                                                                                                                                                                     
 
                                                                                                                                                                                                                                 MARCHEX, INC. AND SUBSIDIARIES
                                                                                                                                                                                                                                     (in thousands)
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                Reconciliation of GAAP Income (Loss) from Operations to Operating
                                                                                                                                                                                                                            Income (Loss) Before Amortization (OIBA)
                                                                                                                                                                                                                    and Adjusted Operating Income (Loss) Before Amortization
                                                                                                                                                                                                                                     (Adjusted OIBA)
 
                                                                                                                                          Three Months Ended                                                                                                                                              Twelve Months Ended
                                                                                                                                                                                                      December 31,                                                                                                                                                                                          December 31,
                                                                                                                                                        2015                                                         2016                                                                                               2015                                                         2016
                                                                                                                              ------------------------------------------------------                                             ------------------------------------------------------                                             ------------------------------------------------------                                             ------------------------------------------------------
Income (loss) from operations                                                                                                                    $          1,247                                                                                   $         (5,705 )                                                                                 $           (507 )                                                                                 $        (83,897 )
    Stock-based compensation                                                                                                             2,215                                                        2,937                                                       10,024                                                       10,183  
                                                                                                                              -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Operating income (loss) before amortization (OIBA)                                                                                                          3,462                                                                                             (2,768 )                                                                                            9,517                                                                                            (73,714 )
    Acquisition and disposition related costs                                                                                                                  20                                                                                     --                                                                                                219                                                                                                662
    Impairment of goodwill                                                                                                                         --                                                                                     --                                                                                     --                                                                                             63,305
    Gain on sale of Archeo assets                                                                                                       (1,496 )                                                                --                                                       (1,496 )                                                                --  
                                                                                                                              -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Adjusted operating income (loss) before amortization (Adjusted                                                                                   $          1,986                                                                                   $         (2,768 )                                                                                 $          8,240                                                                                   $         (9,747 )
OIBA) - Consolidated
Less: Archeo and Other Adjusted OIBA(1)                                                                                                    386                                                           82                                                          431                                                          127  
                                                                                                                              -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Call-Driven Adjusted OIBA(1)                                                                                                                     $          1,600                                                                $         (2,850 )                                                                                 $          7,809                                                                $         (9,874 )
                                                                                                                              ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                  Reconciliation from Net Cash provided by (used in) Operating
                                                                                                                                                                                                                                  Activities to Adjusted EBITDA
 
                                                                                                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                   Three Months Ended                                                                                                                                                                                    Twelve Months Ended
                                                                                                                                                                                                      December 31,                                                                                                                                                                                          December 31,
                                                                                                                                                        2015                                                                                               2016                                                                                               2015                                                                                               2016
                                                                                                                              ---------------------------------------------------------                                          ---------------------------------------------------------                                          ---------------------------------------------------------                                          ---------------------------------------------------------
Net cash provided by (used in) operating activities                                                                                              $            753                                                                                   $           (796 )                                                                                 $         12,753                                                                                   $         (3,669 )
    Changes in assets and liabilities                                                                                                                       2,150                                                                                             (1,273 )                                                                                            3,963                                                                                             (3,711 )
    Income tax expense                                                                                                                                         16                                                                                                 14                                                                                                 27                                                                                                 54
    Acquisition and disposition related costs                                                                                                                  20                                                                                     --                                                                                                219                                                                                                662
    Interest expense and other, net                                                                                                                            11                                                                                                 25                                                                                                 63                                                                                                112
    Income from discontinued operations, net of tax                                                                                        (38 )                                                                --                                                       (5,140 )                                                                --  
                                                                                                                              -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Adjusted EBITDA - Consolidated                                                                                                                   $          2,912                                                                                   $         (2,030 )                                                                                 $         11,885                                                                                   $         (6,552 )
Less: Archeo and Other Adjusted EBITDA(1)                                                                                                  386                                                           82                                                          431                                                          127  
                                                                                                                              -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Call-Driven Adjusted EBITDA(1)                                                                                                                   $          2,526                                                                $         (2,112 )                                                                                 $         11,454                                                                $         (6,679 )
                                                                                                                              ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                        
Net cash provided by (used in) investing activities                                                                                              $            242                                                                $            395                                                                $         21,822                                                                $         (1,224 )
                                                                                                                              ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                        
Net cash used in financing activities                                                                                                            $           (776 )                                                                                 $           (134 )                                                                                 $         (5,452 )                                                                                 $           (312 )
                                                                                                                              ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                        
1       The financial results have been derived from the condensed
                                                                 consolidated financial statements. In April 2015, Marchex divested
                                                                 certain Archeo domain name and related assets and the operating
                                                                 results of these divested assets are included in discontinued
                                                                 operations, net of tax, in the condensed consolidated financial
                                                                 statements. In December 2015, Marchex sold the remaining Archeo
                                                                 assets and its operating results are included in continuing
                                                                 operations for 2015. Unless otherwise indicated, information
                                                                 presented in these financial tables relates only to Marchex’s
                                                                 continuing operations. In 2016, Other operating results related
                                                                 primarily to transition activities provided to the buyer of the
                                                                 Archeo assets and were not significant.
                                                                  
 
                                                                                                                                                                                                                                     MARCHEX, INC. AND SUBSIDIARIES
                                                                                                                                                                                                                       Reconciliation of GAAP Earnings (Loss) Per Share to Adjusted
                                                                                                                                                                                                                                    Non-GAAP Earnings (Loss) Per Share
                                                                                                                                                                                                                                   (in thousands, except per share data)
                                                                                                                                                                                                                                     (unaudited)
 
                                                                                                                                                    Three Months Ended                                                                                                                                              Twelve Months Ended
                                                                                                                                                                                                                December 31,                                                                                                                                                                                          December 31,
                                                                                                                                                                  2015                                                         2016                                                                                               2015                                                         2016
                                                                                                                                        ---------------------------------------------------------                                          ---------------------------------------------------------                                          ---------------------------------------------------------                                          ---------------------------------------------------------
Adjusted Non-GAAP earnings (loss) per share from continuing                                                                                                $           0.03                                                                $          (0.04 )                                                                                 $           0.13                                                                $          (0.16 )
operations
                                                                                                                                        ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Net Income (loss) from continuing operations applicable to common                                                                                          $           0.03                                                                                   $          (0.14 )                                                                                 $          (0.01 )                                                                                 $          (2.01 )
stockholders - diluted (GAAP earnings (loss) per share)
Shares used to calculate diluted net income (loss) from continuing                                                                                                   41,599                                                                                             42,138                                                                                             41,168                                                                                             41,740
operations per share applicable to common stockholders
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Net income (loss) applicable to common stockholders                                                                                                        $          1,258                                                                                   $         (5,744 )                                                                                 $         26,684                                                                                   $        (84,066 )
    Stock-based compensation                                                                                                                                          2,215                                                                                              2,937                                                                                             10,024                                                                                             10,183
    Acquisition and disposition related costs                                                                                                                            20                                                                                     --                                                                                                219                                                                                                662
    Impairment of goodwill                                                                                                                                   --                                                                                     --                                                                                     --                                                                                             63,305
    Gain on sale of Archeo assets                                                                                                                                    (1,496 )                                                                                   --                                                                                             (1,496 )                                                                                   --
    Interest expense and other, net                                                                                                                                      11                                                                                                 25                                                                                                 63                                                                                                115
    Dividends paid to participating securities                                                                                                               --                                                                                     --                                                                                                 37                                                                                     --
    Discontinued operations, net of tax                                                                                                                                 (38 )                                                                                   --                                                                                            (27,318 )                                                                                   --
    Estimated impact of income taxes                                                                                                                (682 )                                                                           931                                                       (2,863 )                                                                         3,273  
                                                                                                                                        -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Adjusted Non-GAAP net income (loss) from continuing operations                                                                                             $          1,288                                                                $         (1,851 )                                                                                 $          5,350                                                                $         (6,528 )
                                                                                                                                        ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================
Adjusted Non-GAAP earnings (loss) per share from continuing                                                                                                $           0.03                                                                $          (0.04 )                                                                                 $           0.13                                                                $          (0.16 )
operations
                                                                                                                                        ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Shares used to calculate diluted net income (loss) from continuing                                                                                                   41,599                                                                                             42,138                                                                                             41,168                                                                                             41,740
operations per share applicable to common stockholders (GAAP)
    Weighted average stock options and common shares subject to purchase                                                                  --                                               --                                                          421                                               --  
    or cancellation (if applicable)
                                                                                                                                        -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Diluted shares used to calculate Adjusted Non-GAAP earnings (loss)                                                                                41,599                                                       42,138                                                       41,589                                                       41,740  
per share (1)
                                                                                                                                        ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
1       For the purpose of computing the number of diluted shares for
                                                                 Adjusted Non-GAAP earnings (loss) per share, Marchex uses the
                                                                 accounting guidance that would be applicable for computing the
                                                                 number of diluted shares for GAAP earnings (loss) per share.
                                                                  
 
                                                                                                                                        MARCHEX, INC. AND SUBSIDIARIES
                                                                                                                                         Financial Summary Information
                                                                                                                                                (in thousands)
                                                                                                                                                  (unaudited)
 
NON-GAAP MEASURES
 
CONSOLIDATED(1)                   Q415                    Q416                    FY 2015                     FY 2016
                                                                                        ----------                                          ------------------------------                                          ------------                                          ------------------------------------
GAAP Revenue                                                                             $ 34,900                                           $ 28,401                                                                  $ 143,013                                                $ 129,547
Adjusted OIBA                                                                            $  1,986                                           $ (2,768 )                                                                $   8,240                                                $  (9,747 )
Adjusted EBITDA                                                                          $  2,912                                           $ (2,030 )                                                                $  11,885                                                $  (6,552 )
                                                                                                                                                                                                                                                                           
CALL-DRIVEN                                                                                Q415                                                          Q416                                       FY 2015                                                           FY 2016
                                                                                        --------                                            ---------------------------                                             ----------                                            ---------------------------------
GAAP Revenue                                                                             $ 34,265                                           $ 28,401                                                                  $ 139,886                                                $ 129,526
Adjusted OIBA                                                                            $  1,600                                           $ (2,850 )                                                                $   7,809                                                $  (9,874 )
Adjusted EBITDA                                                                          $  2,526                                           $ (2,112 )                                                                $  11,454                                                $  (6,679 )
                                                                                                                                                                                                                                                                           
ENTERPRISE REVENUE(2)                                                                      Q415                                                          Q416                                                          FY 2015                                                           FY 2016
                                                                                        ----------                                          ------------------------------                                          ------------                                          ------------------------------------
Call-Driven GAAP Revenue                                                                 $ 34,265                                           $ 28,401                                                                  $ 139,886                                                $ 129,526
    Less: YP Revenue                                                                     $  8,963                                           $  6,031                                               $  40,210                                                $  29,388  
                                                                                        -- ------                                           - ------ --------------------                                           --- -------                                           ------ ------- --------------------
Enterprise Revenue                                                                       $ 25,302                                           $ 22,370                                                                  $  99,676                                                $ 100,138
                                                                                                                                                                                                                                                                           
1       In April 2015, Marchex divested certain Archeo domain name and
                                                                 related assets and the operating results of these divested assets
                                                                 are included in discontinued operations, net of tax, in the
                                                                 condensed consolidated financial statements. In December 2015,
                                                                 Marchex sold the remaining Archeo assets and its operating results
                                                                 are included in continuing operations for 2015. In 2016, there were
                                                                 Other operating activities that related primarily to transition
                                                                 activities provided to the buyer of the Archeo assets and were not
                                                                 significant. Unless otherwise indicated, information presented in
                                                                 these financial tables relates only to Marchex’s continuing
                                                                 operations.
                                                                  
2                                                                Enterprise Revenue, also referred to as "Call-Driven Revenue
                                                                 excluding YP", represents Call-Driven revenue excluding revenue
                                                                 generated from our contracts with YP.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170216006264r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170216006264/en/

SOURCE: Marchex, Inc.

Marchex Investor Relations 
Trevor Caldwell, 206-331-3600 
Email: ir(at)marchex.com 
or 
MEDIA INQUIRIES 
Marchex Corporate Communications 
206-331-3434 
Email: pr(at)marchex.com


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