MARCHEX, INC. 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 ofMarchex 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 endedDecember 31, 2020 , as amended, and those described from time to time in our future reports filed with theSEC . 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. In addition, the global economic climate and additional or unforeseen effects from the COVID-19 pandemic may amplify many of these risks. 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. The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operation and financial condition. You should read this analysis in conjunction with the attached condensed consolidated financial statements and related notes thereto, and with our audited consolidated financial statements and the notes thereto, included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 , as amended. Overview
References herein to "we," "us" or "our" refer to
We believe that we have a set of tools for enterprises that depend on phone calls, texts and other communication channels to help convert prospects into customers, to deliver compelling customer experiences during the sales process and maximize returns. Our mission is to help our customers grow by giving them real-time insights into the conversations they are having with their customers across phone, text and other communication channels.Marchex leverages proprietary data and conversational insights to deliver real-time AI-powered functionality that drives solutions that help enable brands to personalize customer interactions in order to accelerate sales and grow their business.
Our primary product offerings are:
• Marchex Call Analytics. Marchex Call Analytics is an analytics platform for
enterprises that depend on inbound phone calls to drive sales, appointments
and reservations. Marketers use this platform to understand which marketing
channels, advertisements, search keywords, or other digital marketing
advertising formats are driving calls to their business, allowing them to
optimize their advertising expenditures across media channels. Marchex Call
Analytics also includes technology that extracts data and insights about
what is happening during a call and measures the outcome of the calls and
return on investment. The platform also includes technology that can block
robocalls, telemarketers and spam calls to help save businesses time and
expense. Marchex Call Analytics data can integrate directly into third-party
marketer workflows such as Salesforce,
Software, Facebook and Instagram, in addition to other marketing dashboards
and tools. Customers pay us a fee for each call/text or call/text related
data element they receive from calls or texts, including call-based ads we
distribute through our sources of call distribution or for each phone number
tracked based on pre-negotiated rates.
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• Marchex Call Analytics, Conversation Edition. Marchex Call Analytics,
Conversation Edition is a product that can enable actionable insights for
enterprise, mid-sized and small businesses. It leverages our proprietary and
patent pending speech recognition technology. Marchex Call Analytics,
Conversation Edition incorporates machine and deep learning algorithms and
AI-powered conversation analysis functionality that can give customers
strategic, real-time visibility into company performance in customer
interactions. The product includes customizable dashboards and visual
analytics to make it easier for marketers, salespeople and call center teams
to realize actionable insights across a growing amount of call data.
According to a
market is expected to grow from $941 million in 2017 to $2.2 billion by
2022.
•
solution for intelligent mobile messaging that enables operations, sales,
and marketing teams in businesses to engage in two-way communications with
field staff, prospects and customers via text/SMS messages. This can enable
communication that is personal to occur at scale, leading to significant
increases in critical actions, customer engagement and conversions.
According to a 2018 study by Mobilesquared, there were 1.67 trillion
applications to consumer SMS messages globally with the number expected to
rise to 2.8 trillion by 2022. According to a 2017 study from
consumers prefer offers from businesses delivered via text and business
offers delivered via SMS text marketing had a 97% read-rate.
• Call Monitoring.
view into every inbound or outbound call, from providing a call recording,
to offering services to create customized call performance scorecards, both
of which can help businesses learn more about their customers and enhance
service quality and customer satisfaction. Through these services,
businesses can customize the insights they want in order to improve business
practices and to grow faster.
• Marchex Sales Edge. Marchex Sales Edge incorporates artificial
intelligence-based functionality within the product suite that can help
enable businesses to understand customer conversations in phone calls andvia text, in real-time and at scale, and can help enable businesses to learn
how to optimize the sales process in order to take the right actions to win
more business. These sales enablement solutions can arm businesses with the
data-driven intelligence they need to deliver on-demand and personalized
customer experiences. Marchex Sonar Intelligent Massaging also provides a
sales enablement solution for SMS text message-based conversations.
Sales Edge products include:
o Marchex Sales Edge Rescue. Marchex Sales Rescue combines Marchex
artificial intelligence and machine learning withconversational call
monitoring and scoring services and can alert businesses when
potential buyers hang up without making an appointment orpurchase, or
when certain calls did not meet the business' sales or customer
service standards. Marchex Sales Rescue can identify inreal-time when
potential high-value customer prospects engaged in conversations with
sales representatives are mishandled in any number of ways and can
give businesses the opportunity to re-engage immediately to capture
these potentially lost opportunities, as well as avoid undesired
customer experiences. It can give businesses a more complete picture
of the in-bound opportunities they are missing, while also measuring
the effectiveness and impact of capturing those opportunities through
outbound engagement.
o Marchex Sales Edge Enterprise. Marchex Sales Edge Enterprise is a
product for corporate managers that can provide conversation
performance insights and trends across a brand or network of
distributed business locations. The conversational dataanalyses can
provide critical sales insights that can help enterprises boost
outcomes across national and regional sales organizations.
o Marchex Marketing Edge. Marchex Marketing Edge is a conversational
analytics solution for marketers in enterprise, mid-sized and small
businesses that depend on inbound phone calls to drive sales,
appointments and reservations. It helps enable marketers to make
data-driven decisions that improve marketing performance. Marketers
can use this solution to understand which marketing channels,
advertisements, search keywords, or other digital marketing
advertising formats are driving calls to their business,enabling them
to optimize their advertising expenditures across mediachannels and
increase return on ad spend (ROAS). In addition to call and text
tracking, Marchex Marketing Edge also includes conversation
intelligence technology that can automatically transcribe, redact and
score calls. Marchex Marketing Edge also seamlessly integrates with
Marchex Sales Edge so sales teams can be empowered to receive
real-time text and/or email notifications when a caller showing high
purchase intent ends a conversation without making anappointment or a
purchase so they can reengage to save the sale. Marchex Marketing Edge
includes technology that can block robocalls, telemarketers and spam
calls to help save businesses time and expense. Marchex Marketing Edge
data can integrate directly into third-party systems such as Google
Ads, Google Analytics, Search Ads 360, Google Campaign Manager,
Microsoft Advertising , Adobe, Kenshoo, Acquisio, Salesforce and
HubSpot in addition to other marketing and chat offerings. In October
2020 , the Company sold certain assets related to its CallMarketplace,
Local Leads Platform, and other assets not related to core
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conversational analytics. As a result, the operating results related
to these assets are shown as discontinued operations in the Condensed
Consolidated Statements of Operations for all periods presented. See
Note 14. Discontinued Operations and Related Party Investment of the
Notes to the Condensed Consolidated Financial Statements for further
discussion.
We operate primarily in domestic markets.
Our Strategy Innovating on Conversational Analytics Technology and Solutions. We plan to continue to expand and invest in our speech analytics technology and expand our AI, data science, and machine learning capabilities. We also plan to continue to expand our range of call, text, and other communication channels analytics and engagement product capabilities by growing our conversation analytics and solutions offerings, including AI-driven speech technology solutions, call tracking, call monitoring, text communications, keyword-level tracking, display ad impression measurement and other products as part of our owned, end-to-end, call and text-based advertising solutions. Our expanding capabilities are enabling us to develop new solutions, like sales acceleration and personalization solutions that enable us to take advantage of our growing conversational data assets. Supporting and Growing the Number of Customers Using Our Products and Services. We plan to continue to provide a consistently high level of service and support to our conversational analytics and solutions customers and we will continue to help them achieve their return on investment goals. We are focused on increasing our customer base through our direct sales and marketing efforts, including strategic sales, inside sales, and additional partnerships with resellers. Pursuing Selective Acquisition Opportunities. We intend to pursue select acquisition opportunities and will apply evaluation criteria to any acquisitions we may pursue in order to enhance our strategic position, strengthen our financial profile, augment our points of defensibility and increase shareholder value. We will focus on acquisition opportunities that represent one or more of the following characteristics:
• revenue growth and expanding margins and operating profitability or the
characteristics to achieve larger scale and profitability;
• opportunities for business model, product or service innovation, evolution
or expansion;
• under-leveraged and under-commercialized assets in related or unrelated
businesses;
• an opportunity to enhance efficiencies and provide incremental growth
opportunities for our operating businesses; and
• business defensibility.
Evolving Our Business Strategy. Our industry is undergoing significant change
and our business strategy is continuing to evolve to meet these changes. In
order to profitably grow our business, we may need to expand into new lines of
business beyond our current focus of providing mobile advertising analytics
products and services, which may involve pursuing strategic transactions,
including potential acquisitions of, or investments in, related or unrelated
businesses. In addition, we may seek divestitures of existing businesses or
assets. For example, in October 2020 , we sold certain assets related to our Call
Marketplace , Local Leads Platform and other assets not related to core
conversational analytics.
Developing New Markets. We intend to analyze opportunities and may seek to
expand our technology-based products into new business areas where our services
can be replicated on a cost-effective basis, or where the creation or
development of a product or service may be appropriate. We have technology
integration partnerships and referral agreements with Adobe, Google Search, and
Salesforce, Facebook, and other third-party marketers. We anticipate utilizing
various strategies to enter new markets, including developing strategic
relationships; innovating with existing proprietary technologies; acquiring
products that address a new category or opportunity; and creating joint venture
relationships.
We were incorporated in
We have offices in
Recent Developments New Product Launch InNovember 2020 , we launched Marchex Marketing Edge, a new solution that enables brand marketers and agencies to tie revenue-generating conversations back to the specific marketing campaigns that generated them. This new product captures 20
-------------------------------------------------------------------------------- conversational data across multiple communication channels, including calls, text, and chat - as well as web form completions - and uses AI-powered conversation intelligence to identify and classify the conversations that can drive sales. It helps enable businesses to complete and enrich the picture of their digital marketing performance and power automated actions by flowing conversational data into a growing list of third partyMartech , Adtech, CRM and chat systems, and makes it simpler to create custom integrations. Divestiture InOctober 2020 , we sold certain assets related to the Local Leads Platform,Call Marketplace and other assets not related to core conversational analytics (the "Divestiture"). The purchaser is a related party controlled by a shareholder and officers of the Company. At closing, we received cash consideration of approximately$2.3 million . The sale also includes (i) contingent consideration based on the achievement of certain revenue and thresholds from theCall Marketplace , Local Leads Platform and the purchaser's total business; (ii) certain contingent sale transaction consideration; (iii) shares of Class B common stock in the purchaser equal to the issuance of a 10% equity interest; and (iv) the cancellation of Company stock options for 1.5 million shares held by two executive officers of our Companywho were involved in the transaction.
In connection with the closing, we also entered into an administrative support services agreement with the purchaser pursuant to which we will provide administrative services to the purchaser for a support services fee, with certain guaranteed payments to us in the first year and contingently in the second year following closing.
This Divestiture has been classified as discontinued operations for the three months endedMarch 31, 2020 . See Note 14. Discontinued Operations andRelated Party Investment of the Notes to Condensed Consolidated Financial Statements for further discussion. Tender Offer
In
COVID-19 In late 2019, an outbreak of COVID-19 emerged and by earlyMarch 2020 was declared a global pandemic by theWorld Health Organization . Acrossthe United States and the world, governments and municipalities instituted measures in an effort to control the spread of COVID-19, including quarantines, shelter-in-place orders, school closings, travel restrictions and the closure of non-essential businesses. By the end ofMarch 2020 , the macroeconomic impacts became significant, exhibited by, among other things, a rise in unemployment and market volatility. The rapid spread of COVID-19 globally has resulted in increased travel restrictions and disruption and shutdown of businesses. We have experienced adverse impacts from quarantines, market downturns and changes in customer behavior related to pandemic fears and impacts on our workforce due to COVID-19. In addition, many of our customers, reseller partners and agencies, service providers and suppliers have experienced financial distress, and may file for bankruptcy protection, go out of business, or suffer further disruptions in their business due to the coronavirus outbreak. The extent to which the coronavirus impacts our continuing results will depend on future developments, which are highly uncertain, but has resulted in a material adverse impact on our business, results of operations and financial condition at least for the near term. For most of the quarter endedMarch 31, 2020 , our results reflect historical trends and seasonality. However, beginning inMarch 2020 , we experienced a decline in revenues due to the impact of COVID-19 and the related reductions in global economic activity and reduced spending by our customers in response to the macroeconomic impact. We also assessed the realized and potential credit deterioration of our customers due to changes in the macroeconomic environment, which was reflected in our allowance for credit losses for accounts receivable as ofMarch 31, 2020 andDecember 31, 2020 . Additionally, we determined that indicators of impairment had occurred during the first quarter of 2020, which resulted in us performing an interim impairment analysis during the first quarter of 2020. As a result of this interim impairment test, we recognized an impairment of our intangible long-lived assets and goodwill during the first quarter of 2020. See the Notes to Condensed Consolidated Financial Statements for additional information. For additional information for the effects of the COVID-19 pandemic and resulting global disruptions on our business and operations, refer to "Results of Operations" within this discussion and analysis and Item 1.A of Part II, "Risk Factors". 21 --------------------------------------------------------------------------------
Factors Affecting our Performance
We utilize phone numbers as part of a number of analytics services to our customers such as our call and text analytics and communications. If we are not able to secure or retain sufficient phone numbers needed for our services or we are limited in the number of available telecommunication carriers or vendors to provide such phone numbers to us in the event of any industry consolidation or if telecommunication carriers or vendors were to experience system disruptions, our revenue and results of operations may be materially and adversely affected. We anticipate that these variables will fluctuate in the future, affecting our ability to grow and our financial results. In particular, it is difficult to project call and text usage, the number of calls or texts or other actions performed by users of our services. Our quarterly results have fluctuated in the past and may fluctuate in the future due to seasonality. Our experience has shown that during the spring and summer months, call volumes in certain verticals such as home services are generally higher than during other times of the year and during the latter part of the fourth quarter of the calendar year we generally experience lower call volumes. The extent to which call volumes may decrease during these off-peak periods is difficult to predict. Prolonged or severe decreases in call volumes during these periods may adversely affect our growth rate and results and in turn the market price of our securities. However, there can be no assurances such seasonal trends will consistently repeat each year. Historically, we have seen this trend generally reversing in the first quarter of the calendar year with increased call volumes and often new budgets at the beginning of the year for many of our customers with fiscal years endingDecember 31 . However, there can be no assurances such seasonal trends will consistently repeat each year. In addition, as discussed elsewhere in this report, we have and may continue to experience impacts from quarantines, market downturns and changes in customer behavior related to the pandemic. We believe that our future revenue growth will depend on, among other factors, our ability to attract new customers, compete effectively, maximize our sales efforts, successfully improve existing analytics products and sales engagement solutions, and develop successful new products and solutions. If we are unable to generate adequate revenue growth and to manage our expenses, we may continue to incur significant losses in the future and may not be able to achieve or maintain profitability.
Components of the Results of our Operations
Revenue We generate the majority of our revenues from core analytics and solutions services. Our call analytics technology platform provides data and insights that can measure the performance of calls and texts for our customers. We generate revenue from our call analytics technology platform when customers pay us a fee for each call/text or call/text related data element they receive from calls or texts including call-based ads we distribute through our sources of call distribution or for each phone number tracked based on a pre-negotiated rate. Customers typically receive the benefit of our services as they are performed and substantially all of our revenue is recognized over time as services are performed. In certain cases, we record revenue based on available and reported preliminary information from third parties. Collection on the related receivables may vary from reported information based upon third party refinement of the estimated and reported amounts owed that occurs subsequent to period ends.
Service Costs
Our service costs represent the cost of providing our services to our customers. These costs primarily consist of telecommunication costs, including the use of phone numbers relating to our services; colocation service charges of our network equipment; bandwidth and software license fees; network operations; and payroll and related expenses of personnel, including stock-based compensation.
Sales and Marketing
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. Product Development
Product development costs consist primarily of expenses incurred in the research and development, creation and enhancement of our products and services.
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Our research and development expenses include payroll and related expenses for
personnel; costs of computer hardware and software; costs incurred in developing
features and functionality of the services we offer; and stock-based
compensation of related personnel.
For the periods presented, substantially all of our product development expenses
are research and development. Product development costs are expensed as incurred
or capitalized into property and equipment in accordance U.S. GAAP.
General and Administrative
General and administrative expenses consist primarily of payroll and related expenses for executive and administrative personnel; professional services, including accounting, legal and insurance; bad debt provisions; facilities costs; other general corporate expenses; and stock-based compensation of related personnel. Stock-Based Compensation We measure stock-based compensation cost at the grant date based on the fair value of the award and recognize it as expense over the vesting or service period, as applicable, of the stock-based award using the straight-line method. We account for forfeitures as they occur. Stock-based compensation expense is included in the same lines as compensation paid to the same employees in the Condensed Consolidated Statements of Operations.
Amortization of Intangibles from Acquisitions
Amortization of intangible assets excluding goodwill relates to intangible assets identified in connection with our acquisitions. The intangible assets have been identified as customer relationships; acquired technology; non-competition agreements; tradenames. These assets are amortized over useful lives ranging from 12 to 60 months.
Provision for Income Taxes
We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in results of operations in the period that includes the enactment date.
Results of Operations
The following table presents revenue and results from continuing operations and as a percentage of revenue (in thousands):
Three months Three months
ended March ended March
31, 2020 % of revenue 31, 2021 % of revenue
Revenue $ 12,008 100 % $ 12,980 100 %
Expenses:
Service costs 4,828 40 % 5,422 42 %
Sales and marketing 4,170 35 % 3,637 28 %
Product development 5,358 45 % 5,322 41 %
General and administrative 3,453 29 % 2,620 20 %
Amortization of intangible assets from
acquisitions 1,763 15 % 1,181 9 %
Acquisition and disposition-related
costs (benefit) (635 ) -5 % 45 0 %
Total operating expenses 18,937 158 % 18,227 140 %
Impairment of goodwill (14,688 ) -122 % - 0 %
Impairment of intangible assets from
acquisitions (4,959 ) -41 % - 0 %
Loss from operations (26,576 ) -221 % (5,247 ) -40 %
Interest income (expense) and other, net 110 1 % (12 ) 0 %
Loss before provision for income taxes (26,466 ) -220 % (5,259 ) -41 %
Income tax expense (benefit) (943 ) -8 % 73 1 %
Net loss applicable to continuing
operations $ (25,523 ) -213 % $ (5,332 ) -41 %
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Stock-based compensation expense was included in the following operating expense categories as follows (in thousands):
Three months ended March 31,
2020 2021
Service costs $ 16 $ 8
Sales and marketing 261 229
Product development 81 97
General and administrative 604 410Total stock-based compensation $ 962 $ 744
See Note 6. Stockholder's Equity of the Notes to Condensed Consolidated Financial Statements as well as our Critical Accounting Policies for additional information about stock-based compensation.
Revenue
Revenue increased 8% from$12.0 million for the three months endedMarch 31, 2020 to$13.0 million for the three months endedMarch 31, 2021 . The three months endedMarch 31, 2020 was affected by the impact of the coronavirus pandemic on customer usage, rate discounts and credits provided as a result of customer distress. These same impacts did not recur to the same extent during the three months endedMarch 31, 2021 and are the primary reason for the increase in revenue. In the immediate near term, we expect our revenues to be similar to modestly higher than levels of our most recent quarter as a result of potential volume increases as the business disruption caused by the continuing coronavirus pandemic unwinds and as we gain traction with new customers. While we saw some recovery in the first part of 2021, we expect potential near term revenue increases would be potentially greater, if not for the pandemic disruption to our customers and our prospective customers that will continue to cause further delays in the sales process, delays in signing new customers, and a decrease in business and rates from existing customers. We expect this would result in further delay in launching pilots and tests and new customer programs that were previously planned, resulting in possible lower near term revenues from our customers as well as lower than anticipated future new revenues from our prospective customers. We also expect that financial difficulties and business interruptions caused by the coronavirus impact has and will continue to result in some cases in payment delays, and an impairment of our customers' ability to make payments, which we expect will further reduce our revenues from recent quarterly results. In the longer term, we believe that our new product releases and growth initiatives may enable the Company to have an opportunity for potential revenue growth. A preliminary indicator of this potential growth is that several customers and prospective customers have indicated that they plan to initiate trials and are considering the adoption of new products, which would result in new revenue opportunities.
For additional discussion of trends and other factors in our business, refer to Industry and Market Factors in Item 2 of this Quarterly Report on Form 10-Q.
Expenses Service Costs. Service costs increased 12% from$4.8 million for the three months endedMarch 31, 2020 to$5.4 million for the three months endedMarch 31, 2021 . As a percentage of revenues, service costs were 40% and 42% for the three months endedMarch 31, 2020 and 2021, respectively. The increase in dollars was primarily due to an increase in communication and network costs totaling$657,000 resulting from our infrastructure initiatives, which include cloud migration initiatives, certain platform integrations and other initiatives. We expect in the near and intermediate term that service costs in absolute dollars will be similar in relation to the most recent periods. Upon completion of various infrastructure efficiency initiatives, there may also be a positive impact on service costs as a percentage of revenue and further benefit in the event we generate contribution from new launches of analytics products and sales engagement solutions. Sales and Marketing. Sales and marketing expenses decreased 13% from$4.2 million for the three months endedMarch 31, 2020 to$3.6 million for the three months endedMarch 31, 2021 . As a percentage of revenue, sales and marketing expenses were 35% and 28% for the three months endedMarch 31, 2020 and 2021, respectively. The net decrease in dollars and as a percentage of revenue was primarily attributable to an aggregate net decrease in personnel and outside service provider costs and stock-based compensation costs totaling$445,000 and a decrease in travel related costs largely due to pandemic influenced restrictions totaling$195,000 , offset by an increase in marketing costs of$125,000 . The decrease in personnel costs was primarily the result of less incentive compensation in part stemming from pandemic influences on new business initiatives. The percentage of revenue decrease 24 -------------------------------------------------------------------------------- was partially attributable to the benefit obtained from a portion of the sales and marketing expenses being fixed in nature and the percentage benefiting as a result of higher revenues in 2021. We expect some volatility in sales and marketing expenses based on the timing of marketing initiatives but expect sales and marketing expenses in the near term to increase in connection with any revenue increase. We also expect, to the extent that we increase our marketing activities, this could correspondingly also cause an increase as a percentage of revenue. We also believe that if pandemic related restrictions ease, travel related costs will increase as compared to the year endedDecember 31, 2020 . Product Development. Product development expenses decreased slightly from$5.4 million for the three months endedMarch 31, 2020 to$5.3 million for the three months endedMarch 31, 2021 . As a percentage of revenue, product development expenses were 45% and 41% for the three months endedMarch 31, 2020 and 2021, respectively. The percentage of revenue decrease was attributable to higher revenues in 2021.
In the immediate and longer term, to the extent our revenues increase, we expect that product development expenses will increase in absolute dollars as we increase the number of personnel and consultants to enhance our service offerings.
General and Administrative. General and administrative expenses decreased 24% from$3.5 million for the three months endedMarch 31, 2020 to$2.6 million for the three months endedMarch 31, 2021 . As a percentage of revenue, general and administrative expenses were 29% and 20% for the three months endedMarch 31, 2020 and 2021, respectively. The decrease in dollars was primarily comprised of a decrease in personnel and outside service provider costs and stock-based compensation costs totaling$275,000 , a decrease in travel related costs of$209,000 , and a decrease in bad debt expenses of$178,000 that were largely a result of pandemic influences on customers in the three months endedMarch 31, 2020 . We also expect our general and administrative expenses to increase to the extent that we expand our operations and incur additional costs in connection with being a public company, including expenses related to professional fees and insurance, and as a result of stock-based compensation expense. We also expect fluctuations in our general and administrative expenses to the extent the recognition timing of stock compensation is impacted by market conditions relating to our stock price. In addition, we anticipate that our general and administrative expenses will be adversely impacted by the continuing COVID-19 pandemic at least for the near term. Amortization of Intangible Assets from Acquisitions. Intangible amortization expense was$1.8 million and$1.2 million for the three months endedMarch 31, 2020 and 2021, respectively. The amortization of intangibles related to service costs, sales and marketing and general and administrative expenses. During the three months endedMarch 31, 2020 , we recorded an impairment charge totaling$5.0 million relating to our intangible assets from acquisitions, resulting in a decrease in amortization for the three months endedMarch 31, 2021 as compared to the same period in 2020. For additional information, see the discussion in "Impairment ofGoodwill and Impairment of Intangible Assets from Acquisitions" below. Acquisition and Disposition-related Costs (Benefits). The change in the acquisition and disposition-related benefits from$635,000 for the three months endedMarch 31, 2020 to a cost of$45,000 for the three months endedMarch 31, 2021 was primarily due to an adjustment in 2020 to the estimated fair value of our contingent consideration liabilities related to our acquisition of Telmetrics inNovember 2018 and our acquisition of Sonar inDecember 2019 , offset by accretion of interest expense and professional and related fees primarily associated with acquisition and disposition related matters during the three months endedMarch 31, 2020 . Impairment ofGoodwill and Impairment of Intangible Assets from Acquisitions. For the three months endedMarch 31, 2020 , our stock price was impacted by volatility in theU.S. financial markets as a result of the rapid spread of the coronavirus globally which has resulted in increased travel restrictions and disruption and shutdown of businesses, and traded below the then book value for an extended period of time. Accordingly, we tested our goodwill for impairment and concluded that the carrying value exceeded the estimated fair value of our single reporting unit and recognized an estimated impairment loss during the first quarter of 2020 of$14.7 million . The estimated fair value of our single reporting unit was based on estimates of future operating results, discounted cash flows and other market-based factors, including our stock price. The goodwill impairment loss resulted primarily from a sustained decline in our common stock share price and market capitalization as well as lower projected revenue growth rates and profitability levels compared to historical results. The lower projected operating results reflect changes in assumptions related to organic revenue growth rates, market trends, business mix, cost structure, and other expectations about the anticipated short-term and long-term operating results. As ofMarch 31, 2021 , we have$17.6 million of goodwill remaining on our balance sheet. In addition, we performed an interim impairment test of our long-lived intangible assets using an undiscounted cash flow analysis to determine if the cash flows expected to be generated by the asset groups over the estimated remaining useful life of the primary assets were sufficient to recover the carrying value of the asset groups, which were determined to be at the acquisition level (Telmetrics, Callcap and Sonar). Based on this analysis, which included evaluating various cash flow scenarios, the undiscounted cash flows were not sufficient to recover the carrying value of the groups. As a result, we were required to determine the fair value of each asset group. To estimate the fair value, we utilized both the cost recovery and income approach, which is based on a discounted cash flow (DCF) analysis and calculates the fair value by estimating the after-tax cash flows attributable to the asset group and then discounting the after-tax cash flows to present value using a risk-adjusted discount rate. Assumptions used in the DCF require significant judgment, including judgment about appropriate discount rates and terminal values, growth rates, and the amount and 25
-------------------------------------------------------------------------------- timing of expected future cash flows. The forecasted cash flows are based on our most recent strategic plan and for periods beyond the strategic plan, our estimates were based on assumed growth rates expected as of the measurement date. We believe our assumptions were consistent with the plans and estimates that a market participant would use to manage the business. Based on the results of this testing, we recorded a pretax non-cash impairment totaling$5.0 million in the first quarter of 2020 relating to customer relationships, technologies, non-compete agreements and tradenames. This charge is reflected in our Condensed Consolidated Statements of Operations for the three months endedMarch 31, 2020 . The identified intangible assets acquired in the Telmetrics, Callcap and Sonar acquisitions, after this charge, are$8.0 million in aggregate as ofMarch 31, 2021 and are being amortized on a straight-line basis over a range of useful lives of 12 to 60 months. The current business environment is subject to evolving market conditions and requires significant management judgment to interpret the potential impact to our assumptions. To the extent that changes in the current business environment impact our ability to achieve levels of forecasted operating results and cash flows, or should other events occur indicating the remaining carrying value of our assets might be impaired, we would test our goodwill and intangible assets for impairment and may recognize an additional impairment loss to the extent that the carrying amount exceeds such assets' fair values. No additional impairment of our intangible assets has been discovered since the first quarter of 2020. We will continue to monitor our financial performance, stock price and other factors in order to determine if there are any additional indicators of impairment. As a result, we may record an additional impairment loss in the near or intermediate term, which could have an adverse effect on our financial condition and results of operations. Income Tax (Benefit). The income tax expense (benefit) from continuing operations for the three months endedMarch 31, 2020 and 2021 was ($943,000 ) and$73,000 , respectively. The income tax benefit for the three months endedMarch 31, 2020 consisted primarily of deferred tax benefits related to one of our foreign jurisdictions, tax benefits from the release of a portion of our valuation allowance resulting from the acquisition of Sonar, and an allocation of profits to discontinued operations. The income tax expense for the three months endedMarch 31, 2021 consisted primarily of deferred tax benefits related to one of our foreign jurisdictions offset byU.S. state income tax expense. The effective tax rate differed from the expected tax rate of 21% due to a full valuation allowance and to a lesser extent due to state income taxes, non-deductible stock-based compensation related to incentive stock options recorded under the fair-value method, federal research and development credits, and other non-deductible amounts. AtMarch 31, 2021 , based on all the available evidence, both positive and negative, we determined that it is not more likely than not that our deferred tax assets (excluding certain insignificant Canadian deferred tax assets) will be realized and accordingly, we have recorded a 100% valuation allowance of$47.4 million against our net deferred tax assets ($48.6 million of deferred tax assets that are partially offset by$1.2 million in reversing deferred tax liabilities). This compares to a 100% valuation allowance of$43.3 million atDecember 31, 2020 ($44.6 million of deferred tax assets that are partially offset by$1.3 million in reversing deferred tax liabilities). In assessing the realizability of deferred tax assets, based on all the available evidence, both positive and negative, we considered whether it is more likely than not that some or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. We considered the future reversal of deferred tax liabilities, carryback potential, projected taxable income, and tax planning strategies as well as the Company's history of taxable income or losses in the relevant jurisdictions in making this assessment. We have incurred federal taxable losses in 2020 and 2021. Discontinued Operations, net of tax. InOctober 2020 , we sold certain assets related to the Local Leads Platform,Call Marketplace and other assets not related to core conversational analytics to a related party controlled by a shareholder and officers of the Company. The operating results related to these dispositions are shown as discontinued operations, net of tax. Income from discontinued operations, net of tax, was$648,000 for the three months endedMarch 31, 2020 . See Note 14. Discontinued Operations andRelated Party Investment of the Notes to Condensed Consolidated Financial Statements for further discussion. Net Loss. Net loss from continuing operations was$25.5 million for the three months endedMarch 31, 2020 compared to net loss of$5.3 million for the three months endedMarch 31, 2021 . The decrease in loss for the three months endedMarch 31, 2021 was primarily attributable to a long-lived intangible assets and an estimated goodwill impairment charge in the three months endedMarch 31, 2020 with no corresponding amounts in for the three months endedMarch 31, 2021 .
Liquidity and Capital Resources
As ofDecember 31, 2020 andMarch 31, 2021 , we had cash and cash equivalents of$33.9 million and$28.2 million , respectively. As ofMarch 31, 2020 , we had current debt of$5.1 million and current and long-term contractual obligations of$6.0 million , of which$4.9 million is for rent under our facility operating leases. Cash used in operating activities was$5.6 million for the three months endedMarch 31, 2021 . The cash used in operating activities was primarily a result of a net loss of$5.3 million , adjusted for non-cash items of$2.5 million , which primarily included depreciation and amortization and stock-based compensation, and changes in working capital of$2.8 million , which primarily 26 --------------------------------------------------------------------------------
included increases in accounts receivable and other current asset balances and decreases in accounts payable and accrued payroll account balances.
Cash used in operating activities was$1.7 million during the three months endedMarch 31, 2020 , of which approximately$2.4 million was used by continuing operations and$730,000 was provided by discontinued operations. The cash used in continuing operating activities was primarily a result of a net loss of$25.5 million adjusted for non-cash items of$22.6 million , which primarily included the aggregate estimated impairment of goodwill and intangible assets from acquisitions of$19.6 million , in addition to depreciation and amortization, stock based compensation, the allowance for doubtful accounts and other changes in working capital. We expect that, at least for the near term, our revenues will be impacted as a result of business disruption to our customers and prospects caused by the continuing pandemic. We do believe the disruption will impact our business in the intermediate and long term as well in part because several customers have had their operations permanently impacted or shut down. Further, we expect in 2021, that in some cases financial difficulties and business interruptions caused by the COVID-19 outbreak have and will result in further payment delays and an impairment of our customers to make payments. In turn, this will also cause our revenues to be lower than current levels if customers are unable to procure our services at the same volumes as previously, which we expect will be the case for several of our customers. It will also adversely impact our collectability associated with our accounts receivable balances and result in higher bad debt expenses. In addition, we expect it will reduce our cash flows from the levels we have experienced in recent periods. This expected adverse impact on our operating cash flows will correspondingly reduce our liquidity Additionally, theSeattle, WA City Council recently implemented a new employee payroll tax which imposed a quarterly tax on businesses with rates ranging from 0.7% to 2.4% on certain employee and independent contractor earnings and was effectiveJanuary 1, 2021 . This new employee payroll tax expense will result in an increase in our operating expenses since a number of our employees are based inSeattle . In addition, we expect it will reduce our cash flows to some extent from the levels we have experienced in recent periods. This expected impact on our operating cash flows will correspondingly reduce our liquidity. Cash used in investing activities for the three months endedMarch 31, 2021 was$100,000 and was primarily attributable to cash paid for purchases of property and equipment. Cash used in investing activities was$509,000 during the three months endedMarch 31, 2020 , which was almost entirely attributable to amounts used by continuing operations and primarily attributable to purchases of property and equipment. We expect property and equipment purchases in the near and intermediate term to be modestly higher compared to our most recent periods. We expect any increase to our operations to have a corresponding increase in expenditures for our systems and personnel. We plan to continue a strategic expense investment in 2021 to address various infrastructure initiatives, including consolidating infrastructure and data centers. In consideration of the strategic expense initiative, we expect our expenditures for product development initiatives will be relatively stable to modestly higher in the near and intermediate term and increase in the longer term in absolute dollars with any acceleration in development activities and as we increase the number of personnel and consultants to enhance our service offerings. In the intermediate to long term, we also expect to increase the number of personnel supporting our sales, marketing and related growth initiatives. Cash provided by financing activities was$33,000 during the three months endedMarch 31, 2021 . The cash used was primarily attributable to proceeds from the employee stock purchase program.
Cash provided by continuing financing activities for the three months ended
Based on our operating plans we believe that our resources will be sufficient to fund our operations, including any investments in strategic initiatives, for at least twelve months, however the length and severity of the pandemic could influence our operating plans and resources significantly. Additional equity and debt financing may be needed to support our acquisition strategy, our long-term obligations and our company's needs. There can be no assurance that, if we needed additional funds, financing arrangements would be available in amounts or on terms acceptable to us, if at all. Failure to generate sufficient revenue or raise additional capital could have a material adverse effect on our ability to continue as a going concern and to achieve our intended business objectives.
Critical Accounting Policies
Our Condensed Consolidated Financial Statements have been prepared using accounting principles generally accepted inthe United States (U.S. GAAP). Our critical accounting policies are those that we believe have the most significant impact to reported amounts of assets, liabilities, revenue and expenses and the related disclosures of contingent assets and liabilities and that require the most difficult, subjective, or complex judgements. 27 -------------------------------------------------------------------------------- The policies below are critical to our business operations and the understanding of our results of operations. In the ordinary course of business, we make a number of estimates and assumptions relating to the reporting of our results. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We believe the following topics reflect our critical accounting policies and our more significant judgement and estimates used in the preparation of our financial statements.
Principles of Consolidation
Our Company consolidates all entities that we control by ownership of a majority voting interest. Additionally, there are situations in whichU.S. GAAP requires consolidation even though the usual condition of consolidation (ownership of a majority voting interest) does not apply. Generally, this occurs when an entity holds an interest in another business enterprise that was achieved through arrangements that do not involve voting interests, which results in a disproportionate relationship between such entity's voting interests in, and its exposure to the economic risks and potential rewards of, the other business enterprise. This disproportionate relationship results in what is known as a variable interest, and the entity in which we have the variable interest is referred to as a "VIE." An enterprise must consolidate a VIE if it is determined to be the primary beneficiary of the VIE. The primary beneficiary has both (1) the power to direct the activities of the VIE that most significantly impact the entity's economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Our Company holds a remaining interest in the related party purchaser of our divested operations, for which we determined we were not the primary beneficiary. Our variable interests in this VIE primarily relate to the issuance of a 10% equity interest in the related party purchaser; contingent consideration related to the transaction; and an administrative support services arrangement. Refer to Note 14, Discontinued Operations andRelated Party Investment . Although this financial arrangement resulted in our holding variable interests in this related party entity, it did not empower us to direct the strategic and operational activities of the VIE that most significantly impact the VIE's economic performance.
All inter-company transactions and balances have been eliminated in consolidation. Certain reclassifications have been made to the Condensed Consolidated Financial Statements in the prior periods to conform to the current period presentation.
Revenue We generate the majority of our revenues from core analytics and solutions services. Our call analytics technology platform provides data and insights that can measure the performance of calls and texts for our customers. We generate revenue from our call analytics technology platform when customers pay us a fee for each call/text or call/text related data element they receive from calls or texts including call-based ads we distribute through our sources of call distribution or for each phone number tracked based on a pre-negotiated rate. As such, the majority of total revenue is derived from contracts that include consideration that is variable in nature. The variable elements of these contracts primarily include the number of transactions (for example, the number qualified phone calls). Customers typically receive the benefit of our services as they are performed and substantially all of our revenue is recognized over time as services are performed. The majority of the Company's customers are invoiced on a monthly basis following the month of the delivery of services and are required to make payments under standard credit terms. For arrangements that include multiple performance obligations, the transaction price from the arrangement is allocated to each respective performance obligation based on its relative standalone selling price and recognized when revenue recognition criteria for each performance obligation are met. The standalone selling price for each performance obligation is established based on the sales price at which we would sell a promised good or service separately to a customer or the estimated standalone selling price. In certain cases, we record revenue based on available and reported preliminary information from third parties. Collection on the related receivables may vary from reported information based upon third-party refinement of the estimated and reported amounts owed that occurs subsequent to period ends.
Stock-Based Compensation
FASB ASC Topic 718, Compensation - Stock Compensation (ASC 718) requires the
measurement and recognition of compensation for all stock-based awards made to
employees, non-employees and directors including stock options, restricted stock
issuances, and restricted stock units be based on estimated fair values. We
account for forfeitures as they occur. We measure stock-
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based compensation cost at the grant date based on the fair value of the award
and recognize it as expense over the vesting or service period, as applicable,
of the stock-based award using the straight-line method.
We generally use the Black-Scholes option pricing model as our method of
valuation for stock-based awards with time-based vesting. Our determination of
the fair value of stock-based awards on the date of grant using an option
pricing model is affected by our stock price as well as assumptions regarding a
number of highly complex and subjective variables. These variables include, but
are not limited to, the expected life of the award, our expected stock price,
volatility over the term of the award and actual and projected exercise
behaviors.
Although the fair value of stock-based awards is determined in accordance with
ASC 718, Compensation - Stock Compensation the assumptions used in calculating
fair value of stock-based awards and the use of the Black-Scholes option pricing
model is highly subjective, and other reasonable assumptions could provide
differing results. As a result, if factors change and we use different
assumptions, our stock-based compensation expense could be materially different
in the future. See Note 6. Stockholder's Equity in the Notes to Condensed
Consolidated Financial Statements for additional information.
Allowance for Doubtful Accounts and Advertiser Credits
Accounts receivable balances are presented net of allowance for doubtful accounts and advertiser credits. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our accounts receivable. We determine our allowance based on analysis of historical bad debts, advertiser concentrations, advertiser creditworthiness and current economic trends. We review the allowance for collectability on a quarterly basis. Account balances are written off against the allowance after all reasonable means of collection have been exhausted and the potential recovery is considered remote. If the financial condition of our advertisers were to deteriorate, resulting in an impairment of their ability to make payments, or if we underestimated the allowances required, additional allowances may be required which would result in increased general and administrative expenses in the period such determination was made. We determine our allowance for advertiser credits and adjustments based upon our analysis of historical credits. Material differences may result in the amount and timing of our revenue for any period if our management made different judgments and estimates.
Goodwill represents the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed in business combinations accounted for under the purchase method. Intangible assets from acquisitions represent customer relationships, technologies, non-compete agreements, and tradenames related to previous acquisitions. These assets are determined to have definite lives and are amortized on a straight-line basis over the estimated period over which we expect to realize economic value related to the intangible asset. The amortization periods range from one year to 5 years. We apply the provisions of the FASB ASC Topic 350, "Intangibles -Goodwill and Other" (ASC 350) whereby assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead test for impairment at least annually. ASC 350 also requires that intangible assets with definite useful lives be amortized over the respective estimated lives to their estimated residual values and reviewed for impairment in accordance with ASC 360, "Property Plant and Equipment" (ASC 360). Intangible assets are "grouped" and evaluated for impairment at the lowest level of identifiable cash flows.Goodwill is tested annually onNovember 30 for impairment.Goodwill and intangible assets are also tested more frequently if events and circumstances indicate that the assets might be impaired. The provisions of the accounting standard for goodwill and other intangible assets allow us to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. Events and circumstances considered in determining whether the carrying value of goodwill and intangible assets may not be recoverable include but are not limited to significant changes in performance relative to expected operating results; significant changes in the use of the assets; and significant changes in competition and market dynamics. These estimates are inherently uncertain and can be affected by numerous factors, including changes in economic, industry or market conditions, changes in business operations, a loss of a significant customer, changes in competition or changes in the share price of common stock and market capitalization. If our stock price were to trade below book value per share for an extended period of time and/or we experience adverse effects of a continued downward trend in the overall economic environment, changes in the business itself, including changes in projected earnings and cash flows, we may have to recognize an impairment of all or some portion of our goodwill and intangible assets. An impairment loss is recognized to the extent that the carrying amount exceeds the asset or asset group's fair value. If the fair value is lower than the carrying value, a material impairment charge may be reported in our financial results. We exercise judgment in the assessment of the related useful lives of intangible assets, the fair values, and the recoverability. In certain instances, the fair value is determined in part based on cash flow forecasts and discount rate estimates. We cannot accurately predict the amount and timing of any impairment of goodwill or intangible assets. Should the value of goodwill or intangible assets become impaired, we would record the appropriate charge, which could have an adverse effect on our financial condition and results of operations.
Any future impairment charges could have a material adverse effect on our financial results.
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--------------------------------------------------------------------------------Provision for Income Taxes
We are subject to income taxes in theU.S. and certain international jurisdictions. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in results of operations in the period that includes the enactment date. We determined that it is not more likely than not that our deferred tax assets (excluding certain insignificant Canadian deferred tax assets) will be realized and accordingly recorded 100% valuation allowance against these deferred tax assets as ofDecember 31, 2020 andMarch 31, 2021 . In assessing whether it is more likely than not that our deferred tax assets will be realized, factors considered included: historical taxable income, historical trends related to advertiser usage rates, projected revenues and expenses, macroeconomic conditions, issues facing the industry, existing contracts, our ability to project future results and any appreciation of its other assets. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. We considered the future reversal of deferred tax liabilities, carryback potential, projected taxable income, and tax planning strategies as well as its history of taxable income or losses in the relevant jurisdictions in making this assessment. Based on the level of historical taxable losses and the uncertainty of projections for future taxable income over the periods for which the deferred tax assets are deductible, we concluded that it is not more likely than not that the gross deferred tax assets will be realized. From time to time, various state, federal, and other jurisdictional tax authorities undertake reviews of us and our filings. We believe any adjustments that may ultimately be required as a result of any of these reviews will not be material to the financial statements.
Leases
We determine if an arrangement is a lease at inception. This determination
generally depends on whether the arrangement conveys to us the right to control
the use of an explicitly or implicitly identified fixed asset for a period of
time in exchange for consideration. Control of an underlying asset is conveyed
to us if we obtain the rights to direct the use of and to obtain substantially
all of the economic benefits from using the underlying asset. We have lease
agreements which include lease components. We do not have lease agreements which
include non-lease components or variable lease components.
Operating leases are included in right of use assets ("ROU") and lease
liabilities on our Condensed Consolidated Balance Sheets. Operating lease ROU
assets and liabilities are recognized at commencement date based on the present
value of lease payments over the lease term. Operating lease payments are
recognized as lease expense on a straight-line basis over the lease term. We
primarily leases office facilities which are classified as operating leases. We
do not have finance leases. ASC 842 requires a lessee to discount its unpaid
lease payments using the interest rate implicit in the lease or, if that rate
cannot be readily determined, its incremental borrowing rate. As an implicit
interest rate is not readily determinable in our leases, we use our incremental
borrowing rate based on the information available at commencement date in
determining the present value of lease payments. The lease term for all of our
leases includes the non-cancellable period of the lease. Options for lease
renewals have been excluded from the lease term (and lease liability) for our
leases as the reasonably certain threshold is not met. Lease payments included
in the measurement of the lease liability are comprised of fixed payments.
The new standard also provides practical expedients for an entity's ongoing
accounting. We elected the short-term lease recognition exemption for all leases
that qualify. This means, for those leases that qualify, we did not recognize
ROU assets or lease liabilities, and this included not recognizing ROU assets or
lease liabilities for existing short-term leases of those assets in transition.
We also elected the practical expedient to not separate lease and non-lease
components for all of its leases.
Recent Accounting Pronouncement Not Yet Effective
For discussion regarding recent accounting pronouncements not yet effective, see Note 1. Description of Business and Basis of Presentation of the Notes to our Condensed Consolidated Financial Statements.
Web site
Our web site, 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 theSecurities and Exchange Commission . To view these filings, please go to our web site and click on "Investor Relations" and then click on "SEC Filings." Investors and others should note that we announce material financial 30 -------------------------------------------------------------------------------- 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 FD: • Marchex Twitter Account (https://twitter.com/marchex) • Marchex Company Blog (http://wwwblog.marchex.com/blog) • Marchex LinkedIn Account (http://linkedin.com/company/marchex) The information we post through these social media channels may be deemed material. Accordingly, investors should monitor the above account and the 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.
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