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 March 31, 2024

☐ 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

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, $0.01 par value per share

    MCHX

    The NASDAQ STOCK MARKET LLC 
(NASDAQ Global Select Market)

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 ☒

As of May 7, 2024, the registrant had 4,660,927 shares of Class A common stock outstanding. The number of shares of Registrant’s Class B common stock outstanding as of May 7, 2024 was 39,017,668..

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 (unaudited)	1
	Condensed Consolidated Statements of Operations (unaudited)	2
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited)	3
	Condensed Consolidated Statements of Cash Flows (unaudited)	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	23

PART II.	OTHER INFORMATION	24
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	39
	Signature	40

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

MARCHEX, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)


	December 31,			March 31,
	2023			2024
Assets
Current assets:
Cash and cash equivalents	$	14,607		$	12,032
Accounts receivable, net		7,394			8,145
Prepaid expenses and other current assets		1,805			2,298
Total current assets		23,806			22,475
Property and equipment, net		2,398			2,093
Other assets, net		1,482			1,489
Right-of-use lease asset		1,631			1,515
Goodwill		17,558			17,558
Intangible assets from acquisitions, net		602			452
Total assets	$	47,477		$	45,582
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,533		$	1,455
Accrued benefits and payroll		3,294			1,566
Other accrued expenses and current liabilities		3,217			3,608
Deferred revenue and deposits		1,214			1,916
Lease liability current		462			472
Total current liabilities		9,720			9,017
Deferred tax liabilities		249			276
Finance lease, non-current		421			340
Lease liability, non-current		1,217			1,096
Total liabilities	$	11,607		$	10,729
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, 2023 and March 31, 2024		49			49
Class B: 125,000 shares authorized; 38,661 shares issued and outstanding at December 31, 2023 including 720 shares of restricted stock; and 39,017 shares issued and outstanding at March 31, 2024, including 615 shares of restricted stock		386			389
Additional paid-in capital		356,666			357,096
Accumulated deficit		(321,231	)		(322,681	)
Total stockholders’ equity		35,870			34,853
Total liabilities and stockholders’ equity	$	47,477		$	45,582

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)


	Three Months Ended March 31,
	2023			2024
Revenue	$	12,216		$	11,573
Expenses:
Service costs (1)(3)		5,424			4,414
Sales and marketing (1)(3)		3,970			2,787
Product development (3)		4,164			3,245
General and administrative (1)(3)		2,617			2,289
Amortization of intangible assets from acquisitions (2)		531			151
Acquisition and disposition related benefits		13			—
Total operating expenses		16,719			12,886
Loss from operations		(4,503	)		(1,313	)
Interest income (expense) and other, net		57			(78	)
Loss before provision for income taxes		(4,446	)		(1,391	)
Income tax expense		(30	)		(59	)
Net loss applicable to common stockholders	$	(4,476	)	$	(1,450	)
Basic and diluted net loss per Class A and B share applicable to common stockholders	$	(0.11	)	$	(0.03	)
Shares used to calculate basic net loss per share applicable to common stockholders:
Class A		4,661			4,661
Class B		37,835			38,393
Shares used to calculate diluted net loss per share applicable to common stockholders:
Class A		4,661			4,661
Class B		42,496			43,054
(1) Excludes amortization of intangibles from acquisitions
(2) Components of amortization of intangibles from acquisitions:
Service costs		117			117
Sales and marketing		414			34
Total	$	531		$	151
(3) Components of related party support services fee recovery
Service costs		380			31
Sales and marketing		50			—
Product development		67			—
General and administrative		54			33

SEC Form 10-Q filed by Marchex Inc.