MARCHEX INC

Previous wording

Revenue decreased $0.8 million, or 7%, to $10.6 million for the three months ended March 31, 2026 from $11.4 million for the three months ended March 31, 2025. The three month comparative periods were impacted by offsets during the second half of 2025, largely due to customer migration activities from our legacy platforms onto the new Marchex Engage Platform. These offsets adversely impacted certain revenue run rates entering 2026 as compared to 2025.

Current wording

Revenue decreased $0.7 million, or 6%, to $11.0 million for the three months ended June 30, 2026 from $11.7 million for the three months ended June 30, 2025. Revenue decreased $1.5 million, or 6%, to $21.6 million for the six months ended June 30, 2026 from $23.1 million for the six months ended June 30, 2025. The three and six month current year periods were impacted by certain new sales during the periods as well as offsets during the second half of 2025, largely due to customer migration activities from our legacy platforms onto the new Marchex Engage Platform. These offsets adversely impacted certain revenue run rates entering 2026 as compared to 2025.

Previous wording

Cost of Revenue. Cost of revenue was $4.2 million for both the three months ended March 31, 2026 and 2025. As a percentage of revenue, cost of revenue was 40% and 37% for the three months ended March 31, 2026 and 2025, respectively. During the three months ended March 31, 2026 payroll costs increased $0.1 million as a result of reorganization charges of $0.1 million related to severance. The increase was offset by savings of $0.1 million realized as a result of the platform migration activities.

Current wording

Cost of revenue increased $0.3 million, or 4%, to $8.6 million for the six months ended June 30, 2026 from $8.3 million for the six months ended June 30, 2025. As a percentage of revenue, cost of revenue was 40% and 36% for the six months ended June 30, 2026 and 2025, respectively. During the six months ended June 30, 2026 depreciation costs increased $0.2 million and $0.2 million of other costs associated with customer pilot and other new revenue opportunities. The increase was offset by savings of $0.1 million realized as a result of the platform migration activities.

Previous wording

Sales and Marketing. Sales and marketing expenses were $3.3 million for both the three months ended March 31, 2026 and 2025. As a percentage of revenue, sales and marketing expenses were 31% and 29% for the three months ended March 31, 2026 and 2025, respectively. During the three months ended March 31, 2026 payroll costs decreased $0.1 million which was offset by an increase in contract asset amortization charges of $0.1 million. The three months ended March 31, 2026 includes reorganization charges related to severance of $0.4 million.

Current wording

Sales and marketing expenses decreased $0.8 million, or 13%, to $5.6 million for the six months ended June 30, 2026 from $6.4 million for the six months ended June 30, 2025. As a percentage of revenue, sales and marketing expenses were 26% and 28% for the six months ended June 30, 2026 and 2025, respectively. During the six months ended June 30, 2026 payroll costs decreased $0.9 million which was offset by an increase in contract asset amortization charges of $0.1 million. The six months ended June 30, 2026 includes reorganization charges related to severance of $0.4 million.

Previous wording

Product Development. Product development expenses decreased $0.3 million, or 11%, to $2.4 million for the three months ended March 31, 2026 from $2.7 million for the three months ended March 31, 2025. As a percentage of revenue, product development expenses were 23% and 24% for the three months ended March 31, 2026 and 2025, respectively. The three months ended March 31, 2026 includes reorganization charges of $0.2 million related to severance. Inclusive of the $0.2 million of reorganization charges the decrease was primarily attributable to $0.3 million in lower personnel and outside labor costs due the reorganization and realignment of our personnel that occurred in 2025 and 2026.

Current wording

Product Development. Product development expenses decreased $0.5 million, or 20%, to $2.0 million for the three months ended June 30, 2026 from $2.5 million for the three months ended June 30, 2025. As a percentage of revenue, product development expenses were 18% and 21% for the three months ended June 30, 2026 and 2025, respectively. The three months ended June 30, 2026 includes reorganization charges of $0.1 million related to severance. Inclusive of the $0.1 million of reorganization charges the decrease was primarily attributable to $0.5 million in lower personnel and outside labor costs due the reorganization and realignment of our personnel that occurred in 2025 and 2026.

Previous wording

General and Administrative. General and administrative expenses decreased $1.0 million, or 32%, to $2.1 million for the three months ended March 31, 2026 from $3.1 million for the three months ended March 31, 2025. As a percentage of revenue, general and administrative expenses were 20% and 27% for the three months ended March 31, 2026 and 2025, respectively. The change from prior year was primarily attributable to a decrease in personnel costs of $0.9 million and share-based compensation of $0.2 million, largely due to reorganization charges that occurred in 2025 and reduced the payroll cost run-rate entering 2026.

Current wording

General and Administrative. General and administrative expenses increased $0.2 million, or 8%, to $2.7 million for the three months ended June 30, 2026 from $2.5 million for the three months ended June 30, 2025. As a percentage of revenue, general and administrative expenses were 25% and 21% for the three months ended June 30, 2026 and 2025, respectively. The change from prior year was primarily attributable to nonrecurring professional service charges related to the acquisition of Archenia of $0.8 million which were offset by a decrease in personnel costs of $0.4 million and share-based compensation of $0.1 million, largely due to reorganization charges that occurred in 2025 and reduced the payroll cost run-rate entering 2026.

Previous wording

Income Tax. Income tax expense was $0.2 million and $0.1 million for the three months ended March 31, 2026 and 2025, respectively. 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 $0.1 million and $5.0 thousand for the three months ended June 30, 2026 and 2025, respectively. Income tax expense was $0.3 million and $0.1 million for the six months ended June 30, 2026 and 2025, respectively. 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 March 31, 2026 and December 31, 2025, we had cash and cash equivalents of $9.0 million and $9.9 million, respectively. As of March 31, 2026, we had current and non-current contractual obligations of $6.0 million, of which $0.6 million is for payments due under our facility lease.

Current wording

As of June 30, 2026 and December 31, 2025, the Company had cash and cash equivalents of $8.2 million and $9.9 million, respectively. As of June 30, 2026, the Company had current and non-current contractual obligations of $1.7 million, of which $0.5 million is for payments due under our facility operating lease.

Previous wording

Cash used in operating activities was $0.5 million during the three months ended March 31, 2026. The cash used in operating activities was primarily a result of a net loss of $1.7 million, adjusted for an increase in cash due to non-cash items of $1.6 million, which primarily included depreciation, amortization, and stock-based compensation, partially offset by a decrease in cash due to changes in working capital of $0.4 million. The change in working capital was driven primarily by a decrease in accounts payable and an increase in accounts receivable and prepaid expenses, other current assets, and other assets. Cash used in operating activities was $2.6 million for the three months ended March 31, 2025. The cash used in operating activities was primarily a result of a net loss of $2.0 million adjusted for an increase in cash due to non-cash items of $1.1 million, which primarily included depreciation, amortization, losses on disposals, and stock-based compensation, offset by a decrease in cash due to changes in working capital of $1.7 million, which primarily included a decrease in accrued benefits and payroll, other accrued expenses, and other current liabilities and an increase in accounts receivable.

Current wording

Cash used in operating activities was $1.2 million during the six months ended June 30, 2026. The cash used in operating activities was primarily a result of a net loss of $2.1 million, adjusted for an increase in cash due to non-cash items of $2.7 million, which primarily included depreciation, amortization, and stock-based compensation, partially offset by a decrease in cash due to changes in working capital of $1.8 million. The change in working capital was driven primarily by a decrease in accrued benefits and payroll, other accrued expenses, and other liabilities. Cash used in operating activities was $1.8 million for 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, losses on disposals, stock-based compensation, and gain on a domain asset sale, 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 liabilities and an increase in prepaid expenses, other current assets, and other assets, all partially offset by an increase in accounts payable.

Previous wording

Cash used in investing activities for the three months ended March 31, 2026 and 2025, was $0.4 million and $0.3 million, respectively. During the three months ended March 31, 2026 the cash used in investing activities was primarily attributable to software development costs for new products in development, partially offset by proceeds for the prior year domain asset sale. During the three months ended March 31, 2025, the cash used in investing activities was attributable to software development costs for new products in development.

Current wording

Cash used in investing activities for the six months ended June 30, 2026 and 2025, was $0.7 million and $0.5 million, respectively. During the six months ended June 30, 2026 the cash used in investing activities was primarily attributable to software development costs for new products in development, partially offset by proceeds from the prior year domain asset sale. During the six months ended June 30, 2025, the cash used in investing activities was also primarily attributable to software development costs for new products in development, partially offset by proceeds from the domain asset sale.

Previous wording

Cash from financing activities for the three months ended March 31, 2026 and 2025 was $2.0 thousand and $0.2 million, respectively. During the three months ended March 31, 2026, the cash from financing activities was attributable to cash received from the exercise of stock options. During the three months ended March 31, 2025, the cash from financing activities was primarily attributable to cash received from the exercise of stock options, partially offset by payments made for equipment financing lease obligations.

Current wording

Cash from financing activities for the six months ended June 30, 2026 and 2025 was $0.1 million and $0.1 million, respectively. During the six months ended June 30, 2026, the cash from financing activities was attributable to cash received from the exercise of stock options. During the six months ended June 30, 2025, the cash from financing activities was primarily attributable to cash received from the exercise of stock options, partially offset by 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 months ended March 31, 2026, 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, 2025, filed with the SEC on March 26, 2026.

Current wording

There have been no significant changes in our critical accounting policies and estimates during the three and six months ended June 30, 2026, 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, 2025, filed with the SEC on March 26, 2026.