MARCHEX INC

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believes”, “intends”, “expects”, “anticipates”, “plans”, “may”, “will” and similar expressions to identify forward-looking statements. All forward-looking statements, including, but not limited to, statements regarding our future operating results, financial position, prospects, acquisitions, dispositions, and business strategy, expectations regarding our growth and the growth of the industry in which we operate, and plans and objectives of management for future operations, are inherently uncertain as they are based on our expectations and assumptions concerning future events. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements we make. There are a number of important factors that could cause the actual results of Marchex to differ materially from those indicated by such forward-looking statements. Any or all of our forward-looking statements in this report may turn out to be inaccurate. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. They may be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including but not limited to the risks, uncertainties and assumptions described in this report, in Part II, Item 1A. under the caption “Risk Factors” and elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2024, as amended, and those described from time to time in our future reports filed with the SEC. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur as contemplated and actual results could differ materially from those anticipated or implied by the forward-looking statements. All forward-looking statements in this report are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement.

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believes”, “intends”, “expects”, “anticipates”, “plans”, “may”, “will” and similar expressions to identify forward-looking statements. All forward-looking statements, including, but not limited to, statements regarding our future operating results, financial position, prospects, acquisitions, dispositions, and business strategy, expectations regarding our growth and the growth of the industry in which we operate, and plans and objectives of management for future operations, are inherently uncertain as they are based on our expectations and assumptions concerning future events. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements we make. There are a number of important factors that could cause the actual results of Marchex to differ materially from those indicated by such forward-looking statements. Any or all of our forward-looking statements in this report may turn out to be inaccurate. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. They may be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including but not limited to the risks, uncertainties and assumptions described in this report, in Part II, Item 1A. under the caption “Risk Factors” and elsewhere in this report and in our Form 10-K for the year ended December 31, 2024, as amended, and those described from time to time in our future reports filed with the SEC. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur as contemplated and actual results could differ materially from those anticipated or implied by the forward-looking statements. All forward-looking statements in this report are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement.

Previous wording

We were incorporated in Delaware on January 17, 2003. We have office space in Seattle, Washington.

Current wording

We were incorporated in Delaware on January 17, 2003. We have office space in Seattle, WA.

Previous wording

Sales and marketing expenses consist primarily of payroll and related expenses for personnel engaged in marketing and sales functions; advertising and promotional expenditures including online and outside marketing activities; cost of systems used to sell to and serve customers; and stock-based compensation of related personnel.

Current wording

Sales and marketing expenses consist primarily of payroll and related expenses for personnel engaged in marketing and sales functions; advertising and promotional expenditures including online and outside marketing activities; and stock-based compensation of related personnel.

Previous wording

Revenue decreased $0.4 million, or 3%, to $11.7 million for the three months ended June 30, 2025 from $12.1 million for the three months ended June 30, 2024. Revenue decreased $0.5 million, or 2%, to $23.1 million for the six months ended June 30, 2025 from $23.6 million for the six months ended June 30, 2024. The three and six month comparative periods were impacted from lower call volumes in the 2025 period compared to the 2024 period, customer corporate development activities which consolidated customer contracts, customer migration revenue dilution, and impacts of the current uncertain macroeconomic environment (including new federal tariffs), resulting in decreased revenues.

Current wording

Revenue decreased $1.1 million, or 9%, to $11.5 million for the three months ended September 30, 2025 from $12.6 million for the three months ended September 30, 2024. Revenue decreased $1.6 million, or 4%, to $34.6 million for the nine months ended September 30, 2025 from $36.2 million for the nine months ended September 30, 2024. The three and nine month comparative periods were impacted from lower call volumes in the 2025 period compared to the 2024 period, customer corporate development activities, which consolidated customer contracts, customer migration revenue dilution, and impacts of the current uncertain macroeconomic environment (including new federal tariffs), resulting in decreased revenues.

Previous wording

Cost of Revenue. Cost of revenue decreased $0.1 million, or 2%, to $4.1 million for the three months ended June 30, 2025 from $4.2 million for the three months ended June 30, 2024. As a percentage of revenue, cost of revenue was 35% for both the three months ended June 30, 2025 and 2024. The change from the prior year was primarily attributable to a decrease in costs from personnel and outside labor costs of $0.1 million as we reorganized and realigned our personnel in 2025.

Current wording

Cost of Revenue. Cost of revenue was $4.2 million for both the three months ended September 30, 2025 and September 30, 2024. As a percentage of revenue, cost of revenue was 37% and 33% for the three months ended September 30, 2025 and 2024, respectively.

Previous wording

Cost of revenue decreased $0.3 million, or 3%, to $8.3 million for the six months ended June 30, 2025 from $8.6 million for the six months ended June 30, 2024. As a percentage of revenue, cost of revenue was 36% for both the six months ended June 30, 2025 and 2024. The change from the prior year was primarily attributable to a decrease in costs from investment in its cloud infrastructure and platform integration and personnel and outside labor costs of $0.3 million as we reorganized and realigned our personnel in 2025.

Current wording

Cost of revenue decreased $0.3 million, or 2%, to $12.5 million for the nine months ended September 30, 2025 from $12.8 million for the nine months ended September 30, 2024. As a percentage of revenue, cost of revenue was 36% and 35% for the nine months ended September 30, 2025 and 2024, respectively. The change from the prior year was primarily attributable to a decrease in costs from investment in cloud infrastructure and platform integration, and personnel and outside labor costs of $0.3 million, as we reorganized and realigned our personnel in 2025.

Previous wording

Sales and Marketing. Sales and marketing expenses increased $0.5 million, or 19%, to $3.2 million for the three months ended June 30, 2025 from $2.7 million for the three months ended June 30, 2024. As a percentage of revenue, sales and marketing expenses were 27% and 22% for the three months ended June 30, 2025 and 2024, respectively. The change from prior year was primarily attributable to an increase in payroll and benefit related charges of $0.1 million, contract asset amortization charges of $0.1 million and depreciation charges of $0.1 million.

Current wording

Sales and Marketing. Sales and marketing expenses decreased $0.3 million, or 9%, to $2.9 million for the three months ended September 30, 2025 from $3.2 million for the three months ended September 30, 2024. As a percentage of revenue, sales and marketing expenses were 25% for both the three months ended September 30, 2025 and 2024. The change from prior year was primarily attributable to a decrease in payroll and benefit related charges of $0.3 million, partially offset by an increase in contract asset amortization charges of $0.1 million.

Previous wording

Sales and marketing expenses increased $0.9 million, or 16%, to $6.4 million for the six months ended June 30, 2025 from $5.5 million for the six months ended June 30, 2024. As a percentage of revenue, sales and marketing expenses were 28% and 23% for the six months ended June 30, 2025 and 2024, respectively. The change from prior year was primarily attributable to an increase payroll and benefit related charges of $0.3 million, contract asset amortization charges of $0.3 million and depreciation charges of $0.2 million.

Current wording

Sales and marketing expenses increased $0.5 million, or 6%, to $9.3 million for the nine months ended September 30, 2025 from $8.8 million for the nine months ended September 30, 2024. As a percentage of revenue, sales and marketing expenses were 27% and 24% for the nine months ended September 30, 2025 and 2024, respectively. The change from prior year was primarily attributable to an increase contract asset amortization charges of $0.5 million.

Previous wording

Product Development. Product development expenses decreased $0.7 million, or 22%, to $2.5 million for the three months ended June 30, 2025 from $3.2 million for the three months ended June 30, 2024. As a percentage of revenue, product development expenses were 21% and 26% for the three months ended June 30, 2025 and 2024, respectively. The change from the prior year was primarily attributable to $0.5 million in lower personnel and outside labor costs due to the capitalization of software development costs in 2025 and the reorganization and realignment of our personnel in 2025.

Current wording

Product Development. Product development expenses decreased $0.7 million, or 23%, to $2.4 million for the three months ended September 30, 2025 from $3.1 million for the three months ended September 30, 2024. As a percentage of revenue, product development expenses were 21% and 25% for the three months ended September 30, 2025 and 2024, respectively. The change from the prior year was primarily attributable to $0.7 million in lower personnel and outside labor costs due to the capitalization of software development costs in 2025 and the reorganization and realignment of our personnel in 2025.

Previous wording

Product development expenses decreased $1.3 million, or 20%, to $5.2 million for the six months ended June 30, 2025 from $6.5 million for the six months ended June 30, 2024. As a percentage of revenue, product development expenses were 23% and 28% for the six months ended June 30, 2025 and 2024, respectively. The change from the prior year was primarily attributable to $0.8 million in lower personnel and outside labor costs due to the capitalization of software development costs in 2025 and the reorganization and realignment of our personnel in 2025.

Current wording

Product development expenses decreased $2.1 million, or 22%, to $7.5 million for the nine months ended September 30, 2025 from $9.6 million for the nine months ended September 30, 2024. As a percentage of revenue, product development expenses were 22% and 27% for the nine months ended September 30, 2025 and 2024, respectively. The change from the prior year was primarily attributable to $1.5 million in lower personnel and outside labor costs due to the reorganization and realignment of our personnel in 2025 and the capitalization of software development costs in 2025. Additionally, there were approximately $0.4 million less in cloud infrastructure costs in 2025 due to the completion of the certain One Stack development activities in 2024 which resulted in those costs being incorporated in cost of revenue upon completion of the development activities.

Previous wording

General and administrative expenses increased $0.8 million, or 17%, to $5.6 million for the six months ended June 30, 2025 from $4.8 million for the six months ended June 30, 2024. As a percentage of revenue, general and administrative expenses were 24% and 20% for the six months ended June 30, 2025 and 2024, respectively. The change from prior year was primarily attributable to an increase in personnel costs, which largely consist of one-time reorganization charges as we reorganized and realigned our personnel in 2025 as well as timing of professional services costs.

Current wording

General and administrative expenses increased $1.0 million, or 13%, to $8.5 million for the nine months ended September 30, 2025 from $7.5 million for the nine months ended September 30, 2024. As a percentage of revenue, general and administrative expenses were 25% and 21% for the nine months ended September 30, 2025 and 2024, respectively. The change from prior year was primarily attributable to an increase in personnel costs and share-based compensation costs, which largely consist of one-time reorganization charges as we reorganized and realigned our personnel throughout 2025 as well as timing of professional services costs.

Previous wording

Amortization of Intangible Assets from Acquisitions. Intangible amortization expense was $0 and $0.2 million for the three months ended June 30, 2025 and 2024, respectively, and $0 and $0.3 million for the six months ended June 30, 2025 and 2024, respectively. During 2024, the intangible assets acquired from acquisitions all reached the end of their useful lives and consequently there is no amortization expense in 2025.

Current wording

Amortization of Intangible Assets from Acquisitions. Intangible amortization expense was $0 and $0.2 million for the three months ended September 30, 2025 and 2024, respectively, and $0 and $0.5 million for the nine months ended September 30, 2025 and 2024, respectively. During 2024, the intangible assets acquired from acquisitions all reached the end of their useful lives and consequently there is no amortization expense in 2025.

Previous wording

Income Tax. Income tax expense was $5.0 thousand and $3.0 thousand for the three months ended June 30, 2025 and 2024, respectively. Income tax expense was $0.1 million for both the six months ended June 30, 2025 and 2024. The income tax expense consists primarily of deferred tax expense and U.S. state income taxes. The effective tax rate differed from the expected tax rate of 21% in both years primarily due to the valuation allowance and, non-deductible stock-based compensation related to incentive stock options recorded under the fair-value method, and other non-deductible amounts.

Current wording

Income Tax. Income tax expense was $27.0 thousand and $25.0 thousand for the three months ended September 30, 2025 and 2024, respectively. Income tax expense was $0.1 million for both the nine months ended September 30, 2025 and 2024. The income tax expense consists primarily of deferred tax expense and U.S. state income taxes. The effective tax rate differed from the expected tax rate of 21% in both years primarily due to the valuation allowance and, non-deductible stock-based compensation related to incentive stock options recorded under the fair-value method, and other non-deductible amounts.

Previous wording

As of June 30, 2025 and December 31, 2024, we had cash and cash equivalents of $10.5 million and $12.8 million, respectively. As of June 30, 2025, we had current and non-current contractual obligations of $9.7 million, of which $1.2 million is for payments due under our facility and financed equipment leases.

Current wording

As of September 30, 2025 and December 31, 2024, we had cash and cash equivalents of $10.3 million and $12.8 million, respectively. As of September 30, 2025, we had current and non-current contractual obligations of $8.5 million, of which $0.9 million is for payments due under our facility and financed equipment leases.

Previous wording

Cash used in operating activities was $1.8 million during the six months ended June 30, 2025. The cash used in operating activities was primarily a result of a net loss of $1.9 million, adjusted for an increase in cash due to non-cash items of $2.2 million, which primarily included depreciation, amortization, and stock-based compensation, partially offset by a decrease in cash due to changes in working capital of $2.1 million. The change in working capital was driven primarily by a decrease in accrued benefits and payroll, other accrued expenses and other current liabilities and an increase in prepaid expenses, other current assets, and other assets. Cash used in operating activities was $2.4 million for the six months ended June 30, 2024. The cash used in operating activities was primarily a result of a net loss of $2.2 million adjusted for an increase in cash due to non-cash items of $1.9 million, which primarily included depreciation and amortization and stock-based compensation, offset by a decrease in cash due to changes in working capital of $2.1 million, which primarily included a decrease in accrued benefits and payroll, other accrued expenses and other current liabilities and an increase in prepaid expenses, other current assets, and other assets.

Current wording

Cash used in operating activities was $1.5 million during the nine months ended September 30, 2025. The cash used in operating activities was primarily a result of a net loss of $2.9 million, adjusted for an increase in cash due to non-cash items of $3.4 million, which primarily included depreciation, amortization, and stock-based compensation, partially offset by a decrease in cash due to changes in working capital of $2.1 million. The change in working capital was driven primarily by a decrease in accrued benefits and payroll, other accrued expenses, and other current liabilities and a decrease in deferred revenue and deposits, partially offset by an increase in accounts payable. Cash used in operating activities was $2.0 million for the nine months ended September 30, 2024. The cash used in operating activities was primarily a result of a net loss of $3.0 million adjusted for an increase in cash due to non-cash items of $3.0 million, which primarily included depreciation, amortization, and stock-based compensation, offset by a decrease in cash due to changes in working capital of $2.0 million, which primarily included a decrease in accrued benefits and payroll, other accrued expenses, and other current liabilities and accounts payable.

Previous wording

Cash used in investing activities for the six months ended June 30, 2025 and 2024, was $0.5 million and $0.1 million, respectively. During the six months ended June 30, 2025 the costs were primarily attributable to software development costs for new products in development and launched in 2025.

Current wording

Cash used in investing activities for the nine months ended September 30, 2025 and 2024, was $0.9 million and $0.3 million, respectively. During the nine months ended September 30, 2025 the cash used in investing activities was primarily attributable to software development costs for new products in development and launched in 2025. During the nine months ended September 30, 2024, the cash used in investing activities was attributable to purchases of property and equipment.

Previous wording

Cash from (used in) financing activities for the six months ended June 30, 2025 and 2024 was $0.1 million and $(0.2) million, respectively. During the six months ended June 30, 2025, the cash from financing activities consisted of cash received from the exercise of stock options, partially offset by payments made related to equipment financing lease obligations. During the six months ended June 30, 2024, the cash used in financing activities was attributable to payments made related to equipment financing lease obligations.

Current wording

Cash used in financing activities for the nine months ended September 30, 2025 and 2024 was $25.0 thousand and $0.3 million, respectively. During the nine months ended September 30, 2025, the cash used in financing activities consisted of payments made for equipment financing lease obligations, partially offset by cash received from the exercise of stock options. During the nine months ended September 30, 2024, the cash used in financing activities was attributable to payments made for equipment financing lease obligations.

Previous wording

There have been no significant changes in our critical accounting policies and estimates during the three and six months ended June 30, 2025, as compared to those disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 14, 2025.

Current wording

There have been no significant changes in our critical accounting policies and estimates during the three and nine months ended September 30, 2025, as compared to those disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Form 10-K for the year ended December 31, 2024, filed with the SEC on March 14, 2025.

Previous wording

Our website, www.marchex.com, provides access, without charge, to our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such materials are electronically filed with the SEC. To view these filings, please go to our website and click on “Investor Relations” and then click on “SEC Filings.” Investors and others should note that we announce material financial information to our investors using our investor relations website, press releases, SEC filings, and public conference calls and webcasts. We also use the following social media channels as a means of disclosing information about us, our services, and other matters, and for complying with our disclosure obligations under Regulation Fair Disclosure:

Current wording

Our website, www.marchex.com, provides access, without charge, to our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such materials are electronically filed with the SEC. To view these filings, please go to our website and under the "Company" tab click on “Investor Relations” and then click on “Financial Information.” Investors and others should note that we announce material financial information to our investors using our investor relations website, press releases, SEC filings, public conference calls, and webcasts. We also use the following social media channels as a means of disclosing information about us, our services, and other matters, and for complying with our disclosure obligations under Regulation Fair Disclosure:

Previous wording

Marchex Company Blog (https://www.marchex.com/blog/)

Current wording

Marchex Company Blog (www.marchex.com/blog/)

Previous wording

Marchex LinkedIn Account (https://linkedin.com/company/marchex)

Current wording

Marchex LinkedIn Account (www.linkedin.com/company/marchex)

Previous wording

The information we post through these social media channels may be deemed material. Accordingly, investors should monitor the above accounts and blog, in addition to following our investor relations website, press releases, SEC filings, and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this Quarterly Report on Form 10-Q.

Current wording

The information we post through these social media channels may be deemed material. Accordingly, investors should monitor the above accounts and blog, in addition to following our investor relations website, press releases, SEC filings, and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this Form 10-Q.