Sign in

You're signed outSign in or to get full access.

MI

MARCHEX INC (MCHX)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered modest top-line softness but a clear inflection in profitability: revenue of $11.7M (-3.5% YoY) with GAAP net income of $0.1M (vs. $(0.8)M YoY) and adjusted EBITDA of $0.6M (vs. $0.3M YoY), aided by $0.626M interest and other income that offset an operating loss .
  • Versus S&P Global consensus, revenue missed by ~6% while EPS was above expectations: Revenue $11.7M vs. $12.4M estimate; EPS (Primary) $0.02 vs. $(0.01) estimate; adjusted EPS $0.02 and GAAP diluted EPS $0.00 *.
  • Management guided Q3 2025 revenue and adjusted EBITDA sequentially higher (adjusted EBITDA potentially >50% QoQ), but flagged Q4 2025 to be sequentially lower due to migration timing, seasonality, and macro/tariff headwinds—delaying previously stated 2025 annual run-rate goals ($50M revenue, $6M adj. EBITDA) .
  • Potential stock catalysts: Q3 profitability step-up (>50% adjusted EBITDA), expanded FordDirect distribution (access to >3,000 dealers), Azure Marketplace channel momentum, and healthcare AI launch; offsets include migration-related revenue dilution, tariff headwinds in auto, and Q4 seasonality .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA improved to $0.6M; excluding $0.1M reorg costs, ~$0.7M, up ~+$0.4M YoY; management emphasizes operating efficiency and platform progress driving leverage .
  • Distribution and product catalysts: expanded FordDirect partnership (multi-year access to >3,000 franchised dealers); Azure Marketplace listing; vertical AI launches (healthcare, home services), and the Engage platform/UI rollout .
  • CEO tone on inflection: “Technology and platform progress is leading to increasing operating and cost efficiencies… benefits will accrue to more growth opportunities, gross margin expansion and operating leverage.” .

What Went Wrong

  • Revenue declined YoY (Q2: $11.655M vs. $12.074M), with management citing migration revenue dilution and timing of sales launches/product utilization .
  • Operating loss persisted (loss from operations $(0.536)M), with profitability relying on interest/other income to reach positive net income .
  • Macro/tariff headwinds (notably in auto/auto services) increased uncertainty; Q4 2025 is guided to be sequentially lower vs. Q3, delaying 2025 annual run-rate targets ($50M revenue, $6M adj. EBITDA) .

Financial Results

Summary by Quarter (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$11.923 $11.402 $11.655
GAAP Diluted EPS ($)$(0.04) $(0.05) $0.00
Adjusted non-GAAP EPS ($)$(0.03) $(0.04) $0.02
Adjusted EBITDA ($USD Millions)$(0.386) $(0.783) $0.648
Cost of Revenue ($USD Millions)$4.381 $4.189 $4.068
Gross Profit ($USD Millions)$7.542 $7.213 $7.587
Gross Profit Margin (%)63.3% 63.2% 65.1%

Q2 2025 vs. S&P Global Consensus

MetricConsensusActualSurprise
Revenue ($USD Millions)$12.436*$11.655 -6.3%*
EPS (Primary) ($)$(0.01)*$0.02*Beat*

Values retrieved from S&P Global*

Balance Sheet KPIs (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Cash & Cash Equivalents ($USD Millions)$12.767 $10.020 $10.491
Accounts Receivable, net ($USD Millions)$7.072 $7.584 $7.561
Total Stockholders’ Equity ($USD Millions)$32.633 $31.374 $32.043

Segment reporting: Not provided; results are presented on a consolidated basis .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025—Sequentially higher vs. Q2 2025 Raised (directional)
Adjusted EBITDAQ3 2025—Sequentially higher; potentially >50% increase vs. Q2 2025 Raised (directional)
RevenueQ4 2025—Sequentially lower vs. Q3 2025; migration timing, seasonality, macro/tariffs headwinds Lowered (directional)
Full-year 2025 RevenueFY 2025Grow YoY; sequential acceleration potential Growth still anticipated but 2025 annual run-rate goal ($50M) delayed Maintained directional growth; delayed run-rate target
Full-year 2025 Adjusted EBITDAFY 2025Positive for full-year Positive for full-year; 2025 $6M run-rate goal delayed Maintained positive; delayed run-rate target
Gross MarginFY 2025Higher than FY 2024 Continues to anticipate meaningful expansion with SaaS mix/platform efficiencies Maintained

Note: Company did not provide numerical ranges for quarterly guidance; changes are directional with qualitative drivers .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
AI/Technology initiativesAnnounced vertical-specific advanced AI solutions; Microsoft Cloud AI Partner Program OneStack unified platform; unified UI; Sentiment Suite; Azure Marketplace planned Engage platform live; new UI; AI vertical capabilities; healthcare AI solution Accelerating
Engage platform migrationFoundational infrastructure completed, set for 2025 acceleration OneStack completed; unified UI rollout Vast majority of >1,000 customers migrated; some revenue dilution/timing impacts Transition nearing completion; near-term dilution
Tariffs/macro headwindsNoted typical seasonality in Q4 Increased macro uncertainty; tariffs impacting auto/services Continued macro/tariff headwinds; Q4 sequentially lower outlook Worsening headwinds
OEM/channel expansionMicrosoft partnership/Marketplace; expanding channels Expanded OEM access (multi-year; >3,000 dealers) and Engage for Service launch Expanded FordDirect partnership; Azure Marketplace live; VP Channel Sales hire Expanding footprint
Healthcare verticalNot highlighted—Healthcare AI Solution launched; patient insights and attribution New vertical momentum

Management Commentary

  • CEO (press release): “Our technology and platform progress is leading to increasing operating and cost efficiencies… benefits will accrue to more growth opportunities, gross margin expansion and operating leverage…” .
  • CEO (press release): “We believe these primary migration initiatives will be completed by year end… bodes well for 2026, when sales will be in a position to accelerate on top of the substantial operating cost efficiencies achieved throughout 2025.” .
  • Chairman (Q&A): Pipeline catalysts include Benchmarking, Marchex GPT, and Agent Assist launching by year-end, expected to accelerate ACV/sales .
  • CFO (prepared remarks): “We currently anticipate that both revenue and adjusted EBITDA will sequentially increase in [Q3], with adjusted EBITDA potentially increasing by more than 50% over second quarter levels.” .
  • CEO (press release): Positioning Marchex as “a market leading, vertically-focused conversational AI company with a growth path to more than $100 million in annualized revenue over time.” .

Q&A Highlights

  • Bookings/ACV: ACV was sequentially higher in Q2, underscoring early demand momentum .
  • Pipeline & product launches: Engage platform live; new UI; impending launches (Benchmarking, Marchex GPT, Agent Assist) seen as growth drivers .
  • Sales vs. Service demand: Engage for Sales & Service in market; increasing ARPS and uptake via auto dealer channel expansion (Ford) .
  • Guidance clarifications: Q3 sequential increase; Q4 sequential decline due to non-migration, seasonality, macro (tariffs) .

Estimates Context

  • Q2 2025: Revenue missed consensus (~6%); EPS exceeded consensus (Primary EPS $0.02 vs. $(0.01) estimate). Adjusted non-GAAP EPS was $0.02; GAAP diluted EPS was $0.00 *.
  • Q3 2025: Management’s >50% QoQ adjusted EBITDA uplift implies upside risk to EBITDA expectations; revenue guided higher sequentially vs. Q2 *.
  • FY 2025: While YoY growth and positive adjusted EBITDA remain the base case, 2025 annual run-rate targets ($50M revenue; $6M adjusted EBITDA) are now delayed, likely tempering longer-term consensus run-rate assumptions *.

Values retrieved from S&P Global*

Key Takeaways for Investors

  • Profitability inflection underway: Adjusted EBITDA turned positive and improved sequentially; operating efficiency and interest income supported GAAP net income despite an operating loss .
  • Near-term setup: Q3 should show sequential revenue and >50% adjusted EBITDA growth; watch delivery against migration completion and new product launches to validate operating leverage .
  • Demand catalysts: Expanded FordDirect access (>3,000 dealers), Azure Marketplace listing, and healthcare AI entry broaden go-to-market and vertical TAM .
  • Headwinds/risks: Migration dilution, tariff impacts in auto/services, and Q4 seasonality drive sequential downtick and delay to 2025 run-rate goals; monitor macro sensitivity and churn/non-migration .
  • Margin trajectory: Mix shift to SaaS and platform efficiencies support anticipated gross margin expansion; watch gross profit progression and opex discipline through Q3/Q4 .
  • Model implications: Adjust Q3 EBITDA higher per guidance; temper FY run-rate targets; align revenue path with migration timing and channel ramp .
  • Execution bar: Delivery on Benchmarking/Marchex GPT/Agent Assist and deeper OEM/channel penetration will be key to sustaining momentum into 2026 .

Additional References (Q2-related press releases)

  • Healthcare AI solution launch (patient insights, marketing attribution) .
  • Azure Marketplace & AppSource availability for Marketing Edge .
  • AI Agent Product of the Year (Engage for Auto Sales & Service) .
  • VP Channel Sales appointment (channel ecosystem build-out) .