MARCHEX INC [MCHX] Filings

10-Q 1 mchx-20230930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 000-50658

Marchex, Inc.

(Exact name of Registrant as specified in its charter)


Delaware	35-2194038
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1200 5th Ave, Suite 1300
Seattle, WA (Address of Principal Executive Offices)	98101 (Zip Code)

Registrant’s telephone number, including area code: (206) 331-3300

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Class B Common Stock

MCHX

The Nasdaq Global Select Market

As of November 8, 2023, the registrant had 4,660,927 shares of Class A common stock, $.01 par value per share, and 38,655,837 shares of Class B common stock, $.01 par value per share, outstanding, respectively.

Marchex, Inc.

Form 10-Q

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26
Item 4.	Controls and Procedures	26

PART II.	OTHER INFORMATION	27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 4.	Mine Safety Disclosures	40
Item 6.	Exhibits	41
Signature		42

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

MARCHEX, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)


	December 31,			September 30,
	2022			2023
Assets
Current assets:
Cash and cash equivalents	$	20,474		$	13,717
Accounts receivable, net		8,396			8,132
Prepaid expenses and other current assets		2,015			2,107
Total current assets		30,885			23,956
Property and equipment, net		4,050			3,313
Right-of-use lease asset		738			1,745
Other assets, net		973			1,112
Assets held for sale		—			400
Goodwill		17,558			17,558
Intangible assets from acquisitions, net		2,590			997
Total assets	$	56,794		$	49,081
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,037		$	1,177
Accrued benefits and payroll		3,566			2,990
Other accrued expenses and current liabilities		3,825			3,762
Deferred revenue and deposits		1,384			1,212
Right of use liability, current		1,252			452
Finance lease, current		—			221
Total current liabilities		12,064			9,814
Deferred tax liabilities		233			233
Finance lease, non-current		-			424
Right of use liability non-current		385			1,336
Total liabilities		12,682			11,807
Commitments and contingencies - See Note 10
Stockholders’ equity:
Common stock, $0.01 par value, Authorized 137,500 shares
Class A: 12,500 shares authorized; 4,661 shares issued and outstanding at December 31, 2022 and September 30, 2023		49			49
Class B: 125,000 shares authorized; 38,497 shares issued and outstanding at December 31, 2022, including 1,105 shares of restricted stock; and 38,784 shares issued and outstanding at September 30, 2023, including 855 shares of restricted stock		385			387
Additional paid-in capital		354,999			356,926
Accumulated deficit		(311,321	)		(320,088	)
Total stockholders’ equity		44,112			37,274
Total liabilities and stockholders’ equity	$	56,794		$	49,081

See accompanying Notes to the Condensed Consolidated Financial Statements.

MARCHEX, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)


	Nine Months Ended September 30,						Three Months Ended September 30,
	2022			2023			2022			2023
Revenue	$	39,878		$	37,516		$	13,197		$	12,778
Expenses:
Service costs(1)(3)		14,791			15,899			4,992			5,057
Sales and marketing(1)(3)		10,172			8,920			3,388			2,319
Product development(1)(3)		10,515			12,202			3,524			3,942
General and administrative(1)(3)		7,397			7,412			2,351			2,249
Amortization of intangible assets from acquisitions(2)		1,593			1,593			531			531
Acquisition and disposition-related costs		37			12			10			—
Total operating expenses		44,505			46,038			14,796			14,098
Loss from operations		(4,627	)		(8,522	)		(1,599	)		(1,320	)
Interest income (expense) and other, net		33			(192	)		37			(218	)
Loss before provision for income taxes		(4,594	)		(8,714	)		(1,562	)		(1,538	)
Income tax expense (benefit)		77			53			(4	)		9
Net loss applicable to common stockholders	$	(4,671	)	$	(8,767	)	$	(1,558	)	$	(1,547	)
Basic and diluted net loss per Class A and Class B share applicable to common stockholders	$	(0.11	)	$	(0.21	)	$	(0.04	)	$	(0.04	)
Shares used to calculate basic net loss per share applicable to common stockholders:
Class A		4,661			4,661			4,661			4,661
Class B		38,735			37,927			38,861			38,103
Shares used to calculate diluted net loss per share applicable to common stockholders:
Class A		4,661			4,661			4,661			4,661
Class B		43,396			42,588			43,522			42,764
(1) Excludes amortization of intangibles from acquisitions
(2) Components of amortization of intangibles from acquisitions
Service costs		351			351			117			117
Sales and marketing		1,242			1,242			414			414
Total	$	1,593		$	1,593		$	531		$	531
(3) Components of related party support services fee recovery
Service costs	$	2,208		$	1,007		$	772		$	268
Sales and marketing		572			89			200			2
Product development		1,439			159			521			34
General and administrative		1,168			121			304			21
Total	$	5,387		$	1,376		$	1,797		$	325

See accompanying Notes to the Condensed Consolidated Financial Statements.

MARCHEX, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

(unaudited)


	Class A				Class B											Additional					Total
	common stock				common stock						Treasury stock					paid-in		Accumulated			stockholders’
	Shares		Amount		Shares			Amount			Shares			Amount		capital		deficit			equity
Balances at December 31, 2021		4,661	$	49		37,391		$	374			(23	)	$	—	$	354,155	$	(303,076	)	$	51,502
Issuance of common stock upon exercise of options, issuance and vesting of restricted stock and under employee stock purchase plan, net		—		—		285			3			—			—		13		—			16
Retirement of treasury stock		—		—		(23	)		—			23			—		—		—			—
Stock-based compensation from options and restricted stock, net of forfeitures		—		—		—			—			—			—		695		—			695
Net loss		—		—		—			—			—			—		—		(1,582	)		(1,582	)
Balances at March 31, 2022		4,661	$	49		37,653		$	377			—		$	—	$	354,863	$	(304,658	)	$	50,631
Issuance of common stock upon exercise of options, issuance and vesting of restricted stock and under employee stock purchase plan, net		—		—		5			—			—			—		7		—			7
Stock-based compensation from options and restricted stock, net of forfeitures		—		—		—			—			—			—		714		—			714
Net loss		—		—		—			—			—			—		—		(1,531	)		(1,531	)
Balances at June 30, 2022		4,661	$	49		37,658		$	377			—		$	—	$	355,584	$	(306,189	)	$	49,821
Issuance of common stock upon exercise of options, issuance and vesting of restricted stock and under employee stock purchase plan, net		—		—		82			—			—			—		7		—			7
Stock-based compensation from options and restricted stock, net of forfeitures		—		—		—			—			—			—		625		—			625
Net loss		—		—		—			—			—			—		—		(1,558	)		(1,558	)
Balances at September 30, 2022		4,661	$	49		37,740		$	377			—		$	—	$	356,216	$	(307,747	)	$	48,895

	Class A				Class B											Additional					Total
	common stock				common stock						Treasury stock					paid-in		Accumulated			stockholders’
	Shares		Amount		Shares			Amount			Shares			Amount		capital		deficit			equity
Balances at December 31, 2022		4,661	$	49		38,497		$	385			—		$	—	$	354,999	$	(311,321	)		44,112
Issuance of common stock upon exercise of options, issuance and vesting of restricted stock and under employee stock purchase plan, net		—		—		282			3			—			—		9		—			12
Retirements of treasury stock		—		—		(105	)		(1	)		—			—		—		—			(1	)
Stock-based compensation from options and restricted stock, net of forfeitures		—		—		—			—			—			—		799		—			799
Net loss		—		—		—			—			—			—		—		(4,476	)		(4,476	)
Balances at March 31, 2023		4,661	$	49		38,674		$	387			—		$	-	$	355,807	$	(315,797	)		40,446
Issuance of common stock upon exercise of options, issuance and vesting of restricted stock and under employee stock purchase plan, net		—		—		22			—			—			—		7		—			7
Stock-based compensation from options and restricted stock, net of forfeitures		—		—		—			—			—			—		701		—			701
Net loss		—		—		—			—			—			—		—		(2,744	)		(2,744	)
Balances at June 30, 2023		4,661	$	49		38,696		$	387			—		$	-	$	356,515	$	(318,541	)		38,410
Issuance of common stock upon exercise of options, issuance and vesting of restricted stock and under employee stock purchase plan, net		—		—		88			1			—			—		4		—			5
Retirements of treasury stock		—		—		(129	)		(1	)		—			—		—		—			(1	)
Stock-based compensation from options and restricted stock, net of forfeitures		—		—		—			—			—			—		407		—			407
Net loss		—		—		—			—			—			—		—		(1,547	)		(1,547	)
Balances at September 30, 2023		4,661	$	49		38,655		$	387			—		$	-	$	356,926	$	(320,088	)		37,274

See accompanying Notes to the Condensed Consolidated Financial Statements.

MARCHEX, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Nine Months Ended September 30,
	2022			2023
Cash flows from operating activities:
Net loss applicable to common shareholders	$	(4,671	)	$	(8,767	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization and depreciation		2,894			3,126
Allowance for doubtful accounts and advertiser credits		495			209
Stock-based compensation		2,034			1,907
Loss on the disposal of capital assets		—			192
Deferred income taxes		66			—
Change in operating assets and liabilities:
Accounts receivable, net		(911	)		53
Prepaid expenses, other current assets and other assets		(469	)		(276	)
Accounts payable		(47	)		(860	)
Accrued expenses and other current liabilities		(43	)		(1,563	)
Deferred revenue and deposits		(1,139	)		(170

MARCHEX INC [MCHX] Filings
10-Q	[2023-11-13]
10-Q	[2023-08-04]
10-Q	[2023-05-05]
10-K	[2023-03-31]
10-Q	[2022-11-04]
10-Q	[2022-08-10]
10-Q	[2022-05-13]
10-K	[2022-03-29]
10-Q	[2021-11-10]
10-Q	[2021-08-12]
10-Q	[2021-05-13]
10-K	[2021-03-31]
10-Q	[2020-11-05]
10-Q	[2020-08-10]
10-Q	[2020-05-19]
10-K	[2020-03-13]
10-Q	[2019-11-08]
10-Q	[2019-08-08]
10-Q	[2019-05-10]
10-K	[2019-03-18]
10-Q	[2018-11-09]
10-Q	[2018-08-06]
10-Q	[2018-05-09]
10-K	[2018-03-14]
10-Q	[2017-11-06]
10-Q	[2017-08-04]
10-Q	[2017-05-09]
10-K	[2017-03-08]
10-Q	[2016-11-07]
10-Q	[2016-08-09]
10-Q	[2016-05-06]
10-K	[2016-03-07]
10-Q	[2015-11-06]
10-Q	[2015-08-10]
10-Q	[2015-05-11]
10-K	[2015-03-10]
10-Q	[2014-11-10]
10-Q	[2014-08-11]
10-Q	[2014-05-12]
10-K	[2014-03-03]
10-Q	[2013-11-12]
10-Q	[2013-08-08]
10-Q	[2013-05-08]
10-K	[2013-03-12]
10-Q	[2012-11-08]
10-Q	[2012-08-08]
10-Q	[2012-05-08]
10-K	[2012-03-12]