This summary is based on the first quarter fiscal 2008 earnings call conducted by Marchex Inc. (MCHX: chart) on May 6, 2008.
Management:
Chairman and CEO: Russell C Horowitz
President and COO: John Keister
CFO: Michael Arends
Chief Administrative Officer and General Counsel: Ethan Caldwell
Key Investor Issues:
- Quarterly revenue increased 8.2% from last year’s $34.2 million.
- The company repurchased 786,000 shares of its Class B common stock for $7.2 million.
- Q2 revenue is forecast to similar to Q1 levels of $37 million.
First-Quarter Financial Highlights:
The first quarter results included non-cash stock based compensation expense recorded under the fair value method of $3.1 million.
This is in comparison with non-cash stock-based compensation expense of $2.9 million in the year ago quarter.
The adjusted non-GAAP EPS for the first quarter of 2008 was 8 cents versus 11 cents for the same period last year.
The management advised that certain Wall Street analysts use non-GAAP measures to analyze the company’s operating results, which may include adjusted non-GAAP EPS, adjusted operating income before amortization and adjusted EBITDA.
The adjusted operating income before amortization was $5.1 million for the quarter.
- For the first quarter of 2007, the adjusted operating income before amortization was $7.6 million.
- Adjusted EBITDA was $7.7 million for the quarter compared with $9.5 million for the same period in 2007.
Total operating costs, excluding stock-based compensation and amortization of intangible assets, were $31.9 million compared to $26.6 million in Q1 of 2007.
- Looking at the mix in operating costs for the first quarter, the service costs, excluding stock-based compensation, increased as a percentage of revenue on a year-over-year basis.
- This was largely due to the shift in revenue mix, which led to increases in distribution partner payments and contemplated investments in increased personnel, contractors, and infrastructure.
- Excluding stock-based compensation expense, sales and marketing was 17% of revenue, which represents a decrease on a year-over-year basis.
- In the first quarter, sales and marketing included some of the planned investment in Voice Star, much of which is sales and marketing-related.
- During the quarter, the company increased sales and marketing-related hiring and marketing initiatives to acquire direct advertiser relationships. The company also increased marketing for local websites as aggregator demand for traffic from this channel continues to be robust.
- Other operating costs for the first quarter included additional investment and product development, increased technology infrastructure costs and additional professional fees including intellectual property initiatives.
During the quarter, the company repurchased 786,000 shares of its outstanding Class B common stock.
- The repurchase was for a total cost of $7.2 million.
- The total shares repurchased under the company’s stock repurchase program are now three million or 7% of the outstanding common stock.
- The company had approximately $34.5 million cash on hand as of March 31, 2008.
The management highlighted several prime objectives for the company.
- The first objective is to operate the industry’s most local-centric advertising platform at scale. This implies providing both click- and call-based solutions that can score hundreds of thousands of local advertisers.
- Secondly, the company is focused on delivering an unparalleled local search experience that provides the highest utility and relevance to tens of millions of local consumers.
- The management is of the opinion that local is in the early stages of becoming one of the most valuable online opportunities.
