MARCHEX INC (MCHX)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue was $11.4M and GAAP diluted EPS was $(0.05), with adjusted EBITDA loss of $(0.8)M; revenue declined 1.5% YoY and 4.4% QoQ, while EPS loss widened vs prior year and quarter .
• Results missed S&P Global consensus: revenue $11.92M* vs actual $11.40M (−4.3%), EPS −$0.02* vs actual −$0.05 (miss), and adjusted EBITDA −$0.404M* vs actual −$0.783M (wider loss) .
• Management expects Q2 2025 revenue to be sequentially up and adjusted EBITDA positive, and outlined a 2025 exit run-rate target of ≥$12.5M quarterly revenue ($50M annual) and ≥$1.5M quarterly adjusted EBITDA ($6M annual) .
• Strategic catalysts: new 3.0M-share repurchase authorization, Azure Marketplace listing launch, and expanded auto OEM channel (access to >3,000 franchised dealers; potential reach to ~9,000 U.S. dealers) .

What Went Well and What Went Wrong

What Went Well

• Expanded Fortune 500 auto OEM relationship providing multi-year access to >3,000 franchised dealers; Engage for Sales and new Engage for Service broaden the sell-through opportunity (“represents a new multimillion-dollar opportunity”) .
• OneStack platform unification completed and first unified UI launched with “click-to-buy” and benchmarking; Azure Marketplace go-to-market shift from one-to-one to one-to-many now live .
• Margin trajectory improving: management highlighted approximately 8% gross margin increase vs Q1 2023 and anticipates higher gross margins in 2025 versus 2024 .

What Went Wrong

• Top-line softness: GAAP revenue $11.4M declined 4.4% QoQ and missed consensus; management cited seasonality and timing of new sales benefits .
• Profitability deterioration vs estimates: adjusted EBITDA loss $(0.783)M vs consensus $(0.404)M*; EPS loss $(0.05) vs consensus $(0.02)* .
• Macro uncertainty: management cautioned that current conditions could increase variability of revenue and EBITDA during 2025; enterprise adoption pace and seasonal call volumes remain headwinds .

Financial Results

Notes:

• Adjusted EBITDA in Q1 2025 includes $0.6M reorg costs; excluding reorg, adjusted EBITDA loss would be ~$0.2M (also $0.2M in Q1 2024) .
• Seasonality and new sales timing impacted Q1 revenue trajectory .

KPIs and Balance Sheet:

Guidance Changes

Other Items:

• Domain monetization: sale of “phonenumbers.com” for proceeds of $0.8M (before commissions; paid over time) .
• Cash outlook: management expects Q2 cash balances stable to up vs Q1 .

Earnings Call Themes & Trends

Management Commentary

• “2025 first quarter revenue was affected by some seasonal factors and the timing of when we began to benefit from certain new sales… we believe 2025 second quarter revenue will be sequentially up, and adjusted EBITDA will be improved and positive (above breakeven).” — Edwin Miller, CEO .
• “Our gross margin has increased by approximately 8% compared to the first quarter of 2023… OneStack allows us to operate with a more efficient cost structure…” — Edwin Miller .
• “Our 2025 financial plan reflects the belief… we can grow to achieve more than $12.5 million in quarterly revenue… and more than $1.5 million in quarterly adjusted EBITDA.” — Brian Nagle .
• “We are actively executing on a long-term vision to scale Marchex into a $100 million annual revenue business in the years ahead.” — Edwin Miller .

Q&A Highlights

• Q1 2025 call: No analyst Q&A was recorded; management reiterated acceleration priorities and 2025 run-rate goals .
• Reference context from prior quarter:
  • Sequential accelerants (unified UI, click-to-buy, broader vertical signals) underpin confidence in 2025 trajectory .
  • Tariffs: management had not seen disruption to auto OEM strategic roadmaps at that time; acknowledged potential unknowns .

Estimates Context

Comparison to S&P Global consensus for Q1 2025:

Forward consensus (for context):

• Q2 2025 Revenue consensus: $12.44M*; EPS consensus: −$0.01* (management guides Q2 revenue up sequentially and adjusted EBITDA positive) .

Values retrieved from S&P Global.*

Implications: Expect models to reflect stronger Q2 sequential revenue and positive adjusted EBITDA vs prior negative consensus; top-line timing shifts from Q1 likely move into Q2.

Key Takeaways for Investors

• Q1 was soft vs consensus due to seasonality and ramp timing; however, management’s near-term outlook (Q2 sequential revenue up, adjusted EBITDA positive) suggests improving operating leverage as OneStack, unified UI, and channels scale .
• The quantified 2025 exit run-rate targets (≥$12.5M quarterly revenue; ≥$1.5M quarterly adjusted EBITDA) provide a clearer bridge for re-rating if execution tracks plan .
• Azure Marketplace launch and expanded auto OEM channel (>3,000 dealers, potential reach ~9,000) should accelerate ARR growth via one-to-many distribution and deeper vertical penetration .
• Gross margin trajectory improving with cloud infrastructure efficiencies; margin expansion is a key lever for EBITDA inflection as SaaS mix rises .
• New 3.0M-share repurchase authorization adds capital-return optionality; domain monetization ($0.8M) underscores balance-sheet flexibility for non-core assets .
• Model sensitivity: watch seasonality and macro variability flagged by management; pipeline conversion pace in Auto/Home Services and marketplace traction are critical to hitting run-rate targets .
• Trading setup: near-term positive EBITDA proof point in Q2 and channel updates (Azure, OEM) are the likely catalysts for sentiment improvement and estimate revisions .