Marchex (MCHX) Updates Q3, FY14 Call-Driven Revenue Guidance

Marchex (Nasdaq: MCHX) announced it is updating its outlook for the remainder of 2014.

As a result of revised commitments from Allstate in the fourth quarter, Marchex is lowering its 2014 call-driven revenue outlook. However, given the growth and progress with its other customers, such as Time Warner, Bridgestone, Dish Networks, and T-Mobile, the company is reiterating its prior outlook for 2014 call-driven adjusted EBITDA. The Company is also increasing its third quarter call-driven financial outlook.

While Marchex’s technology has allowed it to exceed customer set goals and metrics on a pay for call basis, leading to accelerated spending of their planned commitments for the year and indications of increases for the fourth quarter, Allstate has now indicated its desire to move to a fixed fee model going forward. Under this proposed model, Marchex’s economic upside would have been limited, while financial exposure to Marchex would have remained. Marchex does not believe it is in its best long-term interest to work under such an arrangement. Marchex will continue to work with Allstate as an integration partner utilizing its call analytics technology. Marchex expects this will be a relatively small financial contributor.

“This outcome is disappointing, as we believe that a performance-based model is the way most companies are progressing. This is the trend we are seeing with our customer base,” said Russell Horowitz, Chairman and CEO. "Beyond Allstate, we continue to experience growth in our customer base for call-driven advertising products and believe we are early in the customer adoption phase of mobile and call-driven advertising. We will continue to focus on advancing our products and technology, investing in our existing customers and winning new ones.”

Business Outlook

The following forward-looking statements reflect Marchex's expectations as of September 18, 2014 and exclude any contribution from Archeo operations, domain sales and discontinued operations. Archeo operating results would be additive to Call-Driven revenue, profitability, and other measures below:

1 These non-GAAP Call-Driven measures assign all Marchex corporate overhead costs to the Call-Driven results.2 For the third quarter, the Company expects Allstate will contribute between $17-$17.5 million in revenue and revenues less distribution partner costs (a component of service costs) are anticipated to range between $1.5-$2 million.3 For the six months ended June 30, 2014 Allstate contributed $33.4 million in revenue.

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