Marchex Reports Third Quarter 2009 Financial Results

SEATTLE - Nov. 5, 2009 - Marchex, Inc. (NASDAQ: MCHX), a leading performance advertising company, today reported its results for the third quarter of 2009 ended September 30, 2009.

Third Quarter 2009 Consolidated Financial Results

* Revenue was $22.2 million for the third quarter of 2009, compared to $37.2 million for the same period of 2008.

* GAAP net income applicable to common stockholders was $743,000 for the third quarter of 2009 or $0.02 per diluted share. This compares to GAAP net income applicable to common stockholders of $1.3 million or $0.04 per diluted share for the same period of 2008. The third quarter 2009 results included non-cash stock-based compensation expense recorded under the fair value method of $2.3 million, compared to non-cash stock-based compensation expense of $3.2 million for the same period in 2008.

* We provide a reconciliation of GAAP diluted EPS to Adjusted non-GAAP EPS in the financial tables attached to this press release and encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures. Adjusted non-GAAP EPS for the third quarter of 2009 was $0.03, compared to $0.11 for the same period of 2008. Some Wall Street analysts use non-GAAP measures to analyze our operating results, which may include adjusted non-GAAP EPS, adjusted operating income before amortization and adjusted EBITDA. We present GAAP measures with equal or greater prominence than non-GAAP measures and such non-GAAP measures should not be considered a substitute for, or superior to, GAAP measures.

* Adjusted operating income before amortization was $1.9 million for the third quarter of 2009, compared to $6.6 million for the same period of 2008. A reconciliation of non-GAAP adjusted operating income before amortization to GAAP operating income and GAAP net income is included in the financial tables attached to this release.

* Adjusted EBITDA was $3.4 million in the third quarter of 2009, compared to $8.9 million for the same period of 2008. A reconciliation of adjusted EBITDA to GAAP net cash provided by operating activities is included in the financial tables attached to this release.

"During the quarter we saw strong internal execution on our core strategic themes: (1) continue to innovate across our product platform, (2) win more customer relationships and grow existing ones, (3) invest in our people and expand our talent base, and (4) continue to find operational efficiencies and maintain discipline around costs. These themes translated to sequential growth in all of our performance advertising products, including Marchex Connect and our call- and click-based products," said Russell C. Horowitz, Marchex Chairman and Chief Executive Officer. "Our commitment to customers and focus on strong products and operations is laying a solid foundation for growth and puts Marchex in a position to fully realize the benefits of the continued shift in local advertising to performance-based models as the economy and advertiser budgets recover."

Operating Highlights

Local Advertising Services: For the third quarter of 2009, revenue from Local Advertising Services was $15.9 million. Marchex ended the third quarter with more than 70,000 advertisers using its products and services. Based on ongoing progress, Marchex expects to add to its advertiser total in 2009.

Publishing (proprietary traffic sources): For the third quarter of 2009, revenue from Publishing was $6.3 million.

Non-Operating Highlights

During the quarter, Marchex sold a small number of non-strategic domains that yielded more than $1 million. There is still significant demand for high quality domains and Marchex believes that will remain the case for the foreseeable future.

In addition, during the third quarter of 2009, Marchex purchased 210,000 shares of its outstanding Class B common stock for a total price of $930,000, bringing its total shares repurchased under its stock repurchase program to 8.1 million shares, or 22% of its outstanding common stock.

Marchex Financial Guidance

"While there are some signs of stabilization and growth in core products, we continue to experience an advertising environment with shorter-term visibility as compared to prior years. As a result, we believe it prudent to not issue guidance at this time," said Horowitz. "Despite these factors, Marchex continues to generate cash every quarter and has no debt."

Source: Marchex