MARCHEX INC

Previous wording

We were incorporated in Delaware on January 17, 2003. We have offices in Seattle, Washington and Wichita, Kansas.

Current wording

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

Previous wording

The following table presents revenue and certain of our operating results as a percentage of revenue:

Current wording

The following tables present revenue and certain of our operating results as a percentage of revenue:

Previous wording

Revenue decreased $0.2 million, or 2%, to $11.4 million for the three months ended March 31, 2025 from $11.6 million for the three months ended March 31, 2024. The three month comparative periods were impacted from lower call volumes in the 2025 period compared to the 2024 period as well as customer corporate development activities which consolidated customer contracts resulting in decreased revenues.

Current 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.

Previous wording

Cost of Revenue. Cost of revenue decreased $0.2 million, or 5%, to $4.2 million for the three months ended March 31, 2025 from $4.4 million for the three months ended March 31, 2024. As a percentage of revenue, cost of revenue was 37% and 38% for the three months ended March 31, 2025 and 2024, respectively. 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 $0.2 million as we reorganized and realigned our personnel in 2025.

Current 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.

Previous wording

Sales and Marketing. Sales and marketing expenses increased $0.5 million, or 18%, to $3.3 million for the three months ended March 31, 2025 from $2.8 million for the three months ended March 31, 2024. As a percentage of revenue, sales and marketing expenses were 29% and 24% for the three months ended March 31, 2025 and 2024, respectively. The change from prior year was primarily attributable to an increase in contract asset amortization charges of $0.3 million and depreciation charges of $0.1 million.

Current 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.

Previous wording

Product Development. Product development expenses decreased $0.5 million, or 16%, to $2.7 million for the three months ended March 31, 2025 from $3.2 million for the three months ended March 31, 2024. As a percentage of revenue, product development expenses were 24% and 28% for the three months ended March 31, 2025 and 2024, respectively. The change from the prior year was primarily attributable to $0.4 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 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.

Previous wording

General and Administrative. General and administrative expenses increased $0.8 million, or 35%, to $3.1 million for the three months ended March 31, 2025 from $2.3 million for the three months ended March 31, 2024. As a percentage of revenue, general and administrative expenses were 27% and 20% for the three months ended March 31, 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 $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.

Previous wording

Amortization of Intangible Assets from Acquisitions. Intangible amortization expense was $0.0 million and $0.2 million for the three months ended March 31, 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 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.

Previous wording

Income Tax. Income tax expense was $0.1 million for both the three months ended March 31, 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 $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.

Previous wording

As of March 31, 2025 and December 31, 2024, we had cash and cash equivalents of $10.0 million and $12.8 million, respectively. As of March 31, 2025, we had current and non-current contractual obligations of $10.2 million, of which $1.5 million is for payments due under our facilities and financed equipment leases.

Current 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.

Previous wording

Cash used in operating activities was $2.6 million during 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 and amortization and stock-based compensation, offset by a decrease in cash due to changes in working capital of $1.7 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 accounts receivable, net. Cash used in operating activities was $2.5 million for the three months ended March 31, 2024. The cash used in operating activities was primarily a result of a net loss of $1.5 million adjusted for an increase in cash due to non-cash items of $1.0 million, which primarily included depreciation and amortization and stock-based compensation, and a decrease in cash due to changes in working capital of $2.0 million, which primarily included a decrease in accounts payable, accrued expenses and other current liabilities, and deferred revenue and deposits, and an increase in prepaid expenses, other current assets and other assets.

Current 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.

Previous wording

Cash used in investing activities for the three months ended March 31, 2025 and 2024, was $0.3 million and $0.0 million, respectively. During the three months ended March 31, 2025 the costs were primarily attributable to software development costs for new products in development as of March 31, 2025.

Current 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.

Previous wording

Cash from (used in) financing activities for the three months ended March 31, 2025 and 2024 was $0.2 million and $(0.1) million, respectively. During the three months ended March 31, 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 three months ended March 31, 2024, the cash used in financing activities was primarily attributable to payments made related to equipment financing lease obligations.

Current 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.

Previous wording

There have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, 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 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.