Marchex Q2 Earnings Call Highlights

Key Points

• Marchex reported Q2 revenue of $11 million, up from $10.6 million in Q1, and forecast Q3 revenue of $16 million to $16.5 million with adjusted EBITDA of $2.3 million to $2.5 million, including a full quarter of Archenia’s contribution.
• The Archenia acquisition expands Marchex from conversational analytics into automated lead qualification, customer acquisition and measurable outcomes. Management expects the combined platform to support cross-selling and capture more customer-acquisition spending.
• Early cross-selling efforts have produced customer expansions and paid pilots, while management identified a double-digit number of customers with potential for at least $1 million in incremental annual revenue. Marchex ended Q2 with $8.2 million in cash and plans selective investments to support future growth while maintaining cost discipline.

Marchex NASDAQ: MCHX reported second-quarter revenue of $11 million, up from $10.6 million in the first quarter, as new sales and customer upsells contributed to growth. The company also outlined its post-acquisition strategy following the July 1 closing of its purchase of Archenia, which management said expands Marchex’s ability to combine conversational intelligence with automated customer-acquisition and qualification tools.

The second-quarter results did not include Archenia because the transaction closed after the quarter ended. For the third quarter, Marchex forecast revenue of $16 million to $16.5 million and adjusted EBITDA of $2.3 million to $2.5 million, reflecting a full quarter of Archenia’s expected financial contribution as well as continued growth in Marchex’s existing business.

Acquisition centers on insights, actions and outcomes

Chairman Russ Horowitz said the Archenia acquisition is intended to extend Marchex’s AI-powered conversational analytics business beyond customer insights and toward actions and measurable outcomes. Archenia contributes performance-based customer qualification and acquisition technology, including AI-powered lead qualification, conversational IVR and performance marketing infrastructure, according to management.

“By combining Marchex’s conversational intelligence and analytics capabilities with Archenia’s performance-based customer qualification and acquisition technology, we are creating a highly differentiated, more comprehensive AI-powered solution,” Horowitz said.

Management said the combined platform is designed to identify customer opportunities from conversation data, automate actions based on those insights and measure resulting business outcomes. Horowitz said this approach could enable the company to capture a larger share of customers’ spending related to acquisition and bottom-of-funnel performance than a model focused solely on analytics.

Chief Operating Officer Francis Feeney said Marchex is focused on scaling financial performance toward a potential “Rule of 30 to Rule of 40” trajectory over time, a measure combining annual revenue growth and adjusted EBITDA margin. He said reaching that level would depend on achieving anticipated revenue growth while improving margins.

Cross-selling efforts produce early customer expansions

Marchex said its top 100 customers account for approximately 90% of revenue and have been the initial target for combined-product sales efforts. Management had previously presented new offerings to nearly one-third of those customers, with about half purchasing one or more products through recurring arrangements or paid pilots. Horowitz said the company has continued to make progress since then.

The company cited three examples of customer expansions:

• An existing home-services client producing about $500,000 in annualized analytics revenue adopted Marchex’s AI-verified outcomes offering, bringing its total annualized revenue contribution to more than $1 million.
• An auto-services customer generating more than $300,000 in annualized analytics revenue began a paid pilot to improve sales-agent performance across 40 retail locations. The program has expanded to more than 60 locations. The customer operates thousands of locations, and Marchex said a broader rollout could represent at least $1 million in annualized revenue if performance objectives are met.
• An advertising and media customer with about $400,000 in annualized analytics revenue launched a paid pilot for a Marchex Conversational AI Agent designed to improve call handling. Marchex said a broader deployment could add incremental revenue in 2026 and increase annualized revenue from the customer by 50% or more in 2027.

Horowitz said the company sees a double-digit number of customers with potential for at least $1 million in incremental annual revenue. He added that many of those customers could potentially generate multiple millions of dollars in incremental annual revenue over time, though he emphasized that realization depends on execution and customer adoption.

Management identified AI-verified outcomes and Conversational AI Agents as early examples of offerings that combine the companies’ capabilities. Horowitz said Marchex has about five products in its broader combined-product roadmap, with one or two at later stages of development.

Costs, cash and capital allocation

Chief Financial Officer Brian Nagle said Marchex saw operating efficiencies from organizational realignment and other expense initiatives during the second quarter. Those benefits were partly offset by acquisition-related costs associated with completing the Archenia transaction. Nagle said the company expects overall margins to improve over time under its lower cost structure, potentially creating operating leverage as new products and features gain traction.

Marchex ended the second quarter with $8.2 million in cash, compared with $9 million at the end of the first quarter. Nagle said the decline primarily reflected payments for transaction expenses, organizational realignment activities and other efficiency measures.

During the question-and-answer session, Horowitz said the company will assess the best use of increasing cash generation as it progresses, noting that Marchex is a low-capital-expenditure business and has meaningful tax shields. He also pointed to an existing authorization to repurchase 3 million shares, while noting that the company has previously used buybacks, self-tender offers and special dividends.

Horowitz said management plans to make selective investments in sales and development resources to support 2027 growth opportunities while continuing to manage expenses carefully. The company expects to provide fourth-quarter guidance and an initial 2027 business outlook when it reports third-quarter results, currently anticipated in early November.

About Marchex (NASDAQ:MCHX)

Marchex, Inc NASDAQ: MCHX operates a call data and analytics platform designed to help businesses measure and optimize customer interactions. The company's core services include call tracking, conversational analytics and performance marketing solutions that attribute phone calls to specific advertising campaigns. By capturing and analyzing voice interactions, Marchex enables advertisers, agencies and brands to gain actionable insights into caller intent, marketing ROI and customer behavior.

Through its suite of technologies, Marchex offers real-time call monitoring, keyword spotting and AI-driven transcription to surface trends and conversion signals from inbound calls.

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