Marchex Announces Record First Quarter Results

Company Reports Record Call-Driven Revenue and Growth

SEATTLE--(BUSINESS WIRE)--Marchex, Inc. (NASDAQ:MCHX), a mobile advertising technology company, today announced its financial results for the first quarter ended March 31, 2014.

“As the first quarter demonstrates, advertisers are increasingly turning to Marchex as they begin to boost spending in mobile performance advertising,” said Russell Horowitz, Chairman and CEO of Marchex. “With the rapid adoption of mobile, consumer phone calls are fast-becoming one of the most important outcomes of mobile ad campaigns. Advertisers now want a better understanding of these over-the-phone interactions. Marchex is ideally positioned to meet this new and growing market, based on our early investment in our Call Analytics technology platform and pay-for-call marketplace.”

Q1 2014 Financial Highlights¹

• GAAP revenue was $50.5 million for the first quarter of 2014, compared to $34.7 million for the first quarter of 2013. Non-GAAP revenue², which excludes domain sales recorded in revenue, was $48.6 million for the first quarter of 2014.
• GAAP net income from continuing operations was $846,000 for the first quarter of 2014, compared to a GAAP net income from continuing operations of $116,000 for the first quarter of 2013.
• GAAP net income from continuing operations attributable to common stockholders per diluted share was $0.02 for the first quarter of 2014. This compares to GAAP net income from continuing operations attributable to common stockholders per diluted share of $0.00 for the first quarter of 2013.

	Q1 2014	Q1 2013
GAAP Revenue	$50.5 million	$34.7 million
Non-GAAP Results:
Non-GAAP Revenue ^2, 4	$48.6 million	$34.7 million
Call-Driven and Related Revenue	$45.5 million	$31.1 million
Archeo Revenue excluding domain gains and sales ^2, 4	$3.1 million	$3.6 million
Call-Driven Adjusted OIBA^4	$2.4 million	$1.4 million
Call-Driven Adjusted EBITDA^4	$3.3 million	$2.2 million
Adjusted OIBA^3, 4	$4.7 million	$3.6 million
Adjusted EBITDA^3, 4	$5.7 million	$4.5 million
Adjusted OIBA excluding domain gains and sales^4	$2.8 million	$2.2 million
Adjusted EBITDA excluding domain gains and sales^4	$3.8 million	$3.2 million

• Adjusted non-GAAP EPS³ from continuing operations for the first quarter of 2014 was $0.08, compared to $0.07 for the first quarter of 2013. Adjusted non-GAAP EPS³ from continuing operations excluding domain gains and sales for the first quarter of 2014 was $0.05, compared to $0.04 for the first quarter of 2013.

¹ In July 2013, certain pay-per-click assets were sold. As a result, the financial results of these pay-per-click assets are presented as discontinued operations, net of tax in our condensed consolidated statements of operations in accordance with GAAP, and are excluded from all other results unless otherwise noted.

² Excludes domain sales recognized in GAAP revenue. In September 2013 upon the launch of its domain marketplace, the company commenced recognizing domain sales as revenue.

³ Adjusted OIBA, Adjusted EBITDA and Non-GAAP EPS include the impact of domain gains and sales. Historically, these non-GAAP measures excluded the impact of domain gains and sales.

⁴ Reconciliations of non-GAAP measures are included in the financial tables attached to this press release and we encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures.

Marchex Q1 and Recent Call-Driven Business Highlights:

• Revenue. Call-Driven and related revenue was $45.5 million for the first quarter of 2014 – a 46 percent increase compared to $31.1 million for the first quarter of 2013.
• Customers and Partners. Added more than a dozen new national and reseller customers across several categories, such as Auto Services, Financial Services, and Travel.
• Strategic Developments. Marchex raised $32 million as part of its public offering which was completed on April 4th. Marchex intends to use the net proceeds of the offering for general corporate purposes, which may include acquisitions or licenses of, or investments in, products, services, technologies or other businesses.

Archeo Q1 Business Highlights:

• Revenue. Archeo non-GAAP revenue was $3.1 million for the first quarter of 2014, which excludes domain sales recognized in GAAP revenue.
• Domains sales. During the first quarter of 2014, domain sales yielded $1.9 million.

Business Outlook

The following forward-looking statements reflect Marchex's expectations as of May 1, 2014 and exclude any contribution from Archeo operations, domain sales and discontinued operations. Archeo operating results would be incremental and additive to our Call-Driven revenue, profitability, and other measures below:

Call-Driven financial guidance for the fiscal year ending December 31, 2014
Call-Driven Revenue	$171 million or more
Call-Driven Adjusted OIBA ^1	$8 million or more
Call Driven Adjusted EBITDA ^1	$12 million or more

Call-Driven financial guidance for the Second Quarter ending June 30, 2014
Call-Driven Revenue	$43.5 million or more
Call-Driven Adjusted OIBA ^1	$1.5-$2.5 million
Call-Driven Adjusted EBITDA ^1	$2.5-$3.5 million

¹ These non-GAAP Call-Driven measures assign all Marchex corporate overhead costs to the Call-Driven results. Reconciliations of non-GAAP measures are included in the financial tables attached to this press release and we encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures.

Conference Call and Webcast Information

Management will hold a conference call, starting at 5:00 p.m. ET on Thursday, May 1, 2014 to discuss its first quarter ended March 31, 2014 financial results, and other company updates. Access to the live webcast of the conference call will be available online from the Investors section of Marchex’s website at www.marchex.com. An archived version of the webcast will also be available at the same location, beginning two hours after completion of the call.

About Marchex

Marchex is a mobile advertising technology company. The company provides a suite of products and services for businesses that depend on consumer phone calls to drive sales. Marchex’s mobile advertising platform delivers new customer phone calls to businesses, while its technology analyzes the data in these calls to help maximize ad campaign results. Marchex disrupts traditional advertising models by giving businesses full transparency into their ad campaign performance and charging them based on new customer acquisition.

Please visit www.marchex.com, blog.marchex.com or @marchex on Twitter (Twitter.com/Marchex), where Marchex discloses material information from time to time about the company, its financial information, and its business.

Forward-Looking Statements:

This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding our strategy, future operations, future financial position, future revenues, other financial guidance, acquisitions, projected costs, prospects, plans and objectives of management are forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. There are a number of important factors that could cause Marchex's actual results to differ materially from those indicated by such forward-looking statements which are described in the "Risk Factors" section of our most recent periodic report and registration statement filed with the SEC. All of the information provided in this release is as of May 1, 2014 and Marchex undertakes no duty to update the information provided herein.

Non-GAAP Financial Information:

To supplement Marchex's consolidated financial statements presented in accordance with GAAP and to provide clarity internally and externally, Marchex uses certain non-GAAP measures of financial performance and liquidity, including OIBA, Adjusted OIBA, Adjusted EBITDA, Revenue including and excluding domain gains and sales, Adjusted OIBA, EBITDA including and excluding domain gains and sales and Adjusted non-GAAP EPS including and excluding domain gains and sales. Marchex also provides Call-Driven Adjusted OIBA and EBITDA.

OIBA represents income (loss) from operations plus (1) stock-based compensation expense and (2) amortization of intangible assets from acquisitions. This measure, among other things, is one of the primary metrics by which Marchex evaluates the performance of its business. Additionally, Marchex's management uses Adjusted OIBA, which excludes separation related costs as this item is not indicative of Marchex’s recurring core operating results. Adjusted OIBA is the basis on which Marchex's internal budgets are based and by which Marchex's management is currently evaluated. Marchex believes these measures are useful to investors because they represent Marchex's consolidated operating results, taking into account depreciation and other intangible amortization, which Marchex believes is an ongoing cost of doing business, but excluding the effects of certain other expenses such as stock-based compensation, amortization of intangible assets from acquisitions and separation related costs. Adjusted EBITDA represents income before interest, income taxes, depreciation, amortization, stock compensation expense and separation related cost. Marchex believes that Adjusted EBITDA is another alternative measure of liquidity to GAAP net cash provided by operating activities that provides meaningful supplemental information regarding liquidity and is used by Marchex's management to measure its ability to fund operations and its financing obligations. Historically, these Non-GAAP measures excluded gain/loss on sales and disposals of intangible assets for each asset and any domain sales contribution.

Revenue including domain gains and sales represents GAAP revenue plus sales proceeds from the sale of domains recognized in gain/loss on sales and disposals of intangible assets. Revenue excluding domain gains and sales represents GAAP revenue excluding domain sales sold through Marchex’s Domain Marketplace which are recognized in GAAP revenue. Adjusted OIBA and EBITDA including domain gains and sales and Adjusted OIBA and EBITDA excluding domain gains and sales includes the above descriptions of Adjusted OIBA and EBITDA and includes/excludes domain sales contribution and gain/loss on sales and disposals of intangible assets. Call-Driven Adjusted OIBA and EBITDA includes the above descriptions of Adjusted OIBA and EBITDA for the Call-Driven segment. The Call-Driven Adjusted OIBA and EBITDA assigns all Marchex general corporate overhead costs to the Call-Driven results. Financial analysts and investors may use the non-GAAP historical Revenue including/excluding domain gains and sales and Adjusted OIBA and EBITDA including/excluding domain gains and sales to help with comparative financial evaluation to make informed investment decisions. Adjusted non-GAAP EPS represents Adjusted non-GAAP net income applicable to common stockholders divided by GAAP diluted shares outstanding. Adjusted non-GAAP net income applicable to common stockholders generally captures those items on the statement of operations that have been, or ultimately will be, settled in cash exclusive of certain items that are not indicative of Marchex’s recurring core operating results and represents net income applicable to common stockholders plus the net of tax effects of: (1) stock-based compensation expense, (2) amortization of intangible assets from acquisitions, (3) separation related costs, (4) interest and other income (expense), (5) discontinued operations, net of tax and (6) dividends paid to participating securities, and also excludes the effect of any tax valuation allowance. Financial analysts and investors may use Adjusted non-GAAP EPS to analyze Marchex's financial performance since these groups have historically used EPS related measures, along with other measures, to estimate the value of a company, to make informed investment decisions, and to evaluate a company's operating performance compared to that of other companies in its industry. Adjusted Non-GAAP EPS excluding domain gains and sales includes the above description of Adjusted non-GAAP EPS and excludes domain sales contribution and gain/loss on sales and disposals of intangible assets.

Marchex's management believes that investors should have access to, and Marchex is obligated to provide, the same set of tools that management uses in analyzing the company's results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, and should not be considered in isolation, as a substitute for, or superior to, GAAP results. Marchex’s non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar titled terms used by other companies, and accordingly, care should be exercised in understanding how Marchex defines its non-GAAP financial measures in this release. Marchex endeavors to compensate for the limitations of the non-GAAP measures presented by providing the comparable GAAP measure with equal or greater prominence, GAAP financial statements, and detailed descriptions of the reconciling items and adjustments, including quantifying such items, to derive the non-GAAP measure.

MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
		Three Months Ended
		March 31,
		2013			2014
Revenue		$	34,732		$	50,496
Expenses:
	Service costs (1)		20,148			32,354
	Sales and marketing (1)		2,644			3,382
	Product development (1)		6,808			7,560
	General and administrative (1)		4,797			5,361
	Amortization of intangible assets from acquisitions		1,055			403
	Separation related costs		345			-
	Total operating expenses		35,797			49,060
	Gain on sales and disposals of intangible assets, net		1,362			-
Income from operations			297			1,436
Interest expense and other, net			(17	)		(2	)
Income from continuing operations before provision for income taxes			280			1,434
Income tax expense			164			588
Net income from continuing operations			116			846
Discontinued operations, net of tax			(31	)		9
Net income			85			855
Dividends paid to participating securities			-			(36	)
Net income applicable to common stockholders		$	85		$	819
Basic net income per Class A and Class B share applicable to common stockholders:
	Continuing operations	$	0.00		$	0.02
	Discontinued operations, net of tax		(0.00	)		0.00
Basic net income per Class A and Class B share applicable to common stockholders		$	0.00		$	0.02
Diluted net income per Class A and Class B share applicable to common stockholders:
	Continuing operations	$	0.00		$	0.02
	Discontinued operations, net of tax		(0.00	)		0.00
Diluted net income per Class A and Class B share applicable to common stockholders		$	0.00		$	0.02
Dividends paid per share		$	-		$	0.02
Shares used to calculate basic net income per share applicable to common stockholders
	Class A		9,570			7,741
	Class B		25,585			29,035
Shares used to calculate diluted net income per share applicable to common stockholders
	Class A		9,570			7,741
	Class B		35,550			39,761
(1)	Includes stock-based compensation allocated as follows:
	Service costs	$	180		$	282
	Sales and marketing		60			204
	Product development		372			659
	General and administrative		1,295			1,738
	Total	$	1,907		$	2,883

MARCHEX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
			December 31,			March 31,
Assets			2013			2014
Current assets:
	Cash and cash equivalents		$	30,912		$	38,526
	Accounts receivable, net			30,005			35,045
	Prepaid expenses and other current assets			2,943			2,810
	Refundable taxes			97			86
	Deferred tax assets			1,016			1,292
		Total current assets		64,973			77,759
	Property and equipment, net			5,440			5,441
	Deferred tax assets			25,138			23,750
	Intangibles and other assets, net			484			1,440
	Goodwill			65,679			65,679
	Intangible assets from acquisitions, net			434			31
		Total Assets	$	162,148		$	174,100
Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable		$	15,922		$	22,094
	Accrued expenses and other current liabilities			7,988			9,974
	Deferred revenue			1,388			1,631
		Total current liabilities		25,298			33,699
	Other non-current liabilities			2,095			1,455
		Total Liabilities		27,393			35,154
	Class A common stock			80			58
	Class B common stock			309			332
	Treasury stock			(2	)		-
	Additional paid-in capital			305,517			308,850
	Accumulated deficit			(171,149	)		(170,294	)
		Total Stockholders' Equity		134,755			138,946
		Total Liabilities and Stockholders' Equity	$	162,148		$	174,100

MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP Income from Operations to Operating Income Before Amortization (OIBA)
and Adjusted Operating Income Before Amortization (Adjusted OIBA)
(in thousands)
(unaudited)
		Three Months Ended
		March 31,
		2013			2014
Income from operations		$	297		$	1,436
	Stock-based compensation		1,907			2,883
	Amortization of intangible assets from acquisitions		1,055			403
Operating income before amortization (OIBA)			3,259			4,722
	Separation related costs		345			-
Adjusted operating income before amortization (Adjusted OIBA)		$	3,604		$	4,722
	Domain sales contribution		-			(1,893	)
	Gain on sales and disposals of intangible assets, net		(1,362	)		-
Adjusted OIBA excluding domain gains and sales		$	2,242		$	2,829
Certain reclassifications have been made to prior periods to conform to current presentation.

MARCHEX, INC. AND SUBSIDIARIES
Reconciliation from Net Cash provided by Operating Activities to Adjusted EBITDA
(in thousands)
(unaudited)
		Three Months Ended
		March 31,
		2013			2014
Net cash provided by operating activities		$	2,141		$	8,078
	Changes in assets and liabilities		463			(2,984	)
	Income tax expense		164			588
	Separation related costs		345			-
	Interest expense and other, net		17			2
	Gain on sales and disposals of intangible assets, net		1,362			-
	Discontinued operations, net of tax		17			(9	)
	Excess tax benefits related to stock compensation		7			-
Adjusted EBITDA		$	4,516		$	5,675
	Domain sales contribution		-			(1,893	)
	Gain on sales and disposals of intangible assets, net		(1,362	)		-
Adjusted EBITDA excluding domain gains and sales		$	3,154		$	3,782
Net cash provided by (used in) investing activities		$	512		$	(807	)
Net cash provided by (used in) financing activities		$	(1,483	)	$	343
Certain reclassifications have been made to prior periods to conform to current presentation.

MARCHEX, INC. AND SUBSIDIARIES
Reconciliation of GAAP EPS to Adjusted Non-GAAP EPS
(in thousands, except per share data)
(unaudited)
		Three Months Ended
		March 31,
		2013			2014
Adjusted Non-GAAP EPS from continuing operations		$	0.07		$	0.08
Net income from continuing operations applicable to common stockholders - diluted (GAAP EPS)		$	0.00		$	0.02
Shares used to calculate diluted net income per share applicable to common stockholders			35,550			39,761
Net income applicable to common stockholders		$	85		$	819
	Stock-based compensation		1,907			2,883
	Separation related costs		345			-
	Amortization of intangible assets from acquisitions		1,055			403
	Interest expense and other, net		17			2
	Dividends paid to participating securities		-			36
	Tax valuation allowance		425			-
	Discontinued operations, net of tax		31			(9	)
	Estimated impact of income taxes		(1,524	)		(1,068	)
Adjusted Non-GAAP net income from continuing operations		$	2,341		$	3,066
	Domain sales contribution		-			(1,893	)
	Gain on sales and disposals of intangible assets, net		(1,362	)		-
	Estimated impact of income taxes on domain gains and sales		477			664
Adjusted Non-GAAP net income from continuing operations excluding domain gains and sales		$	1,456		$	1,837
Adjusted Non-GAAP EPS from continuing operations		$	0.07		$	0.08
Adjusted Non-GAAP EPS from continuing operations excluding domain gains and sales		$	0.04		$	0.05
Diluted shares used to calculate Adjusted Non-GAAP EPS (1)			35,550			39,761

(1)	For the purpose of computing the number of diluted shares for Adjusted Non-GAAP EPS, Marchex uses the accounting guidance that would be applicable for computing the number of diluted shares for GAAP EPS.
Certain reclassifications have been made to prior periods to conform to current presentation.

MARCHEX, INC. AND SUBSIDIARIES
(in thousands)
(unaudited)
Reconciliation of GAAP Income (Loss) from Operations to Operating Income before Amortization (OIBA)
and Adjusted Operating Income Before Amortization (Adjusted OIBA)
		3 months ended
		3/31/2013			6/30/2013			9/30/2013			12/31/2013			3/31/2014
Income (loss) from operations		$	297		$	(98	)	$	1,006		$	1,544		$	1,436
	Stock-based compensation		1,907			2,603			2,365			2,362			2,883
	Amortization of intangible assets from acquisitions		1,055			736			709			426			403
Operating income before amortization (OIBA)			3,259			3,241			4,080			4,332			4,722
	Separation related costs		345			309			286			(62	)		-
Adjusted operating income before amortization (Adjusted OIBA)		$	3,604		$	3,550		$	4,366		$	4,270		$	4,722
	Domain sales contribution		-			-			(839	)		(1,549	)		(1,893	)
	Gain on sales and disposals of intangible assets, net		(1,362	)		(1,330	)		(1,047	)		(35	)		-
Adjusted OIBA excluding domain gains and sales		$	2,242		$	2,220		$	2,480		$	2,686		$	2,829
Reconciliation from Net Cash provided by Operating Activities to Adjusted EBITDA
		3 months ended
		3/31/2013			6/30/2013			9/30/2013			12/31/2013			3/31/2014
Net cash provided by operating activities		$	2,141		$	1,014		$	4,332		$	6,109		$	8,078
	Changes in assets and liabilities		463			1,393			(1,374	)		(1,636	)		(2,984	)
	Income tax expense		164			243			389			958			588
	Separation related costs		345			309			286			-			-
	Gain on sales and disposals of intangible assets, net		1,362			1,330			1,047			35			-
	Discontinued operations, net of tax		17			(11	)		43			(7	)		(9	)
	Tax effect of gain on sale of discontinued operations		-			-			563			-			-
	Interest expense and other, net		17			12			15			(14	)		2
	Excess tax benefits related to stock compensation		7			189			13			(209	)		-
Adjusted EBITDA		$	4,516		$	4,479		$	5,314		$	5,236		$	5,675
	Domain sales contribution		-			-			(839	)		(1,549	)		(1,893	)
	Gain on sales and disposals of intangible assets, net	$	(1,362	)	$	(1,330	)	$	(1,047	)	$	(35	)	$	-
Adjusted EBITDA excluding domain gains and sales		$	3,154		$	3,149		$	3,428		$	3,652		$	3,782
Net cash provided by (used in) investing activities		$	512		$	449		$	1,235		$	(549	)	$	(807	)
Net cash provided by (used in) financing activities		$	(1,483	)	$	179		$	842		$	202		$	343

MARCHEX, INC. AND SUBSIDIARIES
Quarterly Financial Summary Information
(in thousands)
NON-GAAP MEASURES
Amounts below exclude Discontinued Operations
CONSOLIDATED	Q113		Q213		Q313		Q413		Q114
GAAP Revenue	$	34,732	$	37,578	$	40,560	$	39,680	$	50,496
Adjusted OIBA	$	3,604	$	3,550	$	4,366	$	4,270	$	4,722
Adjusted EBITDA	$	4,516	$	4,479	$	5,314	$	5,236	$	5,675
CALL-DRIVEN AND RELATED	Q113		Q213		Q313		Q413		Q114
GAAP Revenue	$	31,108	$	33,893	$	35,668	$	34,457	$	45,492
Adjusted OIBA	$	1,371	$	1,508	$	1,693	$	1,725	$	2,411
Adjusted EBITDA	$	2,247	$	2,400	$	2,598	$	2,618	$	3,312
ARCHEO	Q113		Q213		Q313		Q413		Q114
GAAP Revenue	$	3,624	$	3,685	$	4,892	$	5,223	$	5,004
Adjusted OIBA	$	2,233	$	2,042	$	2,673	$	2,545	$	2,311
Adjusted EBITDA	$	2,269	$	2,079	$	2,716	$	2,618	$	2,363
Due to rounding, the sum of quarterly amounts may not equal amounts reported for year-to-date periods.

MARCHEX, INC. AND SUBSIDIARIES
Quarterly Financial Summary Information
(in thousands)
NON-GAAP MEASURES
Amounts below exclude Domain Gains and Sales and Discontinued Operations
CONSOLIDATED	Q113		Q213		Q313		Q413		Q114
Non-GAAP Revenue	$	34,732	$	37,578	$	39,661	$	38,124	$	48,598
Adjusted OIBA	$	2,242	$	2,220	$	2,480	$	2,686	$	2,829
Adjusted EBITDA	$	3,155	$	3,149	$	3,428	$	3,652	$	3,782
CALL-DRIVEN AND RELATED	Q113		Q213		Q313		Q413		Q114
GAAP Revenue	$	31,108	$	33,893	$	35,668	$	34,457	$	45,492
Adjusted OIBA	$	1,371	$	1,508	$	1,693	$	1,725	$	2,411
Adjusted EBITDA	$	2,247	$	2,400	$	2,598	$	2,618	$	3,312
ARCHEO	Q113		Q213		Q313		Q413		Q114
Non-GAAP Revenue	$	3,624	$	3,685	$	3,993	$	3,667	$	3,106
Adjusted OIBA	$	871	$	712	$	787	$	961	$	418
Adjusted EBITDA	$	908	$	749	$	830	$	1,034	$	470
Due to rounding, the sum of quarterly amounts may not equal amounts reported for year-to-date periods.

MARCHEX, INC. AND SUBSIDIARIES
Financial Summary by Segment
(in thousands)
(unaudited)
		Three months ended
		3/31/2013		6/30/2013		9/30/2013		12/31/2013		3/31/2014
Marchex - Consolidated^5
	Revenue - GAAP^2	$	34,732	$	37,578	$	40,560	$	39,680	$	50,496
	Revenue including domain gains^3	$	36,094	$	38,908	$	41,607	$	39,715	$	50,496
	Adjusted OIBA including domain gains and sales^4	$	3,604	$	3,550	$	4,366	$	4,270	$	4,722
	Adjusted OIBA excluding domain gains and sales^4	$	2,242	$	2,220	$	2,480	$	2,686	$	2,829
	Adjusted EBITDA including domain gains and sales^4	$	4,516	$	4,479	$	5,314	$	5,236	$	5,675
	Adjusted EBITDA excluding domain gains and sales^4	$	3,154	$	3,149	$	3,428	$	3,652	$	3,782
Call-Driven and Related^1
	Revenue - GAAP	$	31,108	$	33,893	$	35,668	$	34,457	$	45,492
	Adjusted OIBA	$	1,371	$	1,508	$	1,693	$	1,725	$	2,411
	Adjusted EBITDA	$	2,246	$	2,400	$	2,598	$	2,618	$	3,312
Archeo^1,5
	Revenue - GAAP^2	$	3,624	$	3,685	$	4,892	$	5,223	$	5,004
	Revenue including domain gains^3	$	4,986	$	5,015	$	5,939	$	5,258	$	5,004
	Adjusted OIBA including domain gains and sales^4	$	2,233	$	2,042	$	2,673	$	2,545	$	2,311
	Adjusted OIBA excluding domain gains and sales^4	$	871	$	712	$	787	$	961	$	418
	Adjusted EBITDA including domain gains and sales^4	$	2,270	$	2,079	$	2,716	$	2,618	$	2,363
	Adjusted EBITDA excluding domain gains and sales^4	$	908	$	749	$	830	$	1,034	$	470

1	The financial results for Call-Driven and Archeo are preliminary and have been derived from the unaudited condensed consolidated financial statements of Marchex, Inc. for all periods presented.
	The unaudited Call-Driven financial results include certain direct operating expenses and general corporate overhead expenses in all periods presented.
	The unaudited Archeo financial results include direct operating expenses for all periods presented.
2	In September 2013, Marchex announced and launched its Domains Marketplace and through it, commenced buying and selling of domains.
	Domain sales occurring after this date are included in GAAP revenue and related cost in service cost. Prior to this date, domain sales were recognized in gain on sales and disposals of intangible assets in the unaudited condensed consolidated financial statements.
3	Domain sales recognized in gain on sales and disposals of intangible assets, net.
4	Domain sales recognized in either gain on sales and disposals of intangible assets, net or in revenue and service costs in the unaudited condensed consolidated financial statements for each applicable period.
5	Amounts presented exclude results of discontinued operations. Operating results of discontinued operations relate to certain pay-per-click assets sold in July 2013 and are included in discontinued operations, net of tax in the unaudited condensed consolidated financial statements.
	Due to rounding, the sum of quarterly amounts may not equal amounts reported for year-to-date periods.

MARCHEX, INC. AND SUBSIDIARIES
Reconciliation to Reported Financial and Non-GAAP Information
(in thousands)
(unaudited)
			Three months ended
			3/31/2013		6/30/2013		9/30/2013		12/31/2013		3/31/2014
Revenue^6
	Consolidated - GAAP^1		$	34,732	$	37,578	$	40,560	$	39,680	$	50,496
		Add: Domain Gains^2		1,362		1,330		1,047		35		-
	Consolidated including Domain Gains and Sales^3			36,094		38,908		41,607		39,715		50,496
		Less: Archeo including Domain Gains and Sales^3,4		4,986		5,015		5,939		5,258		5,004
	Call-Driven^4and related		$	31,108	$	33,893	$	35,668	$	34,457	$	45,492
Adjusted operating income^6
	Consolidated excluding Domain Gains and Sales^5		$	2,242	$	2,220	$	2,480	$	2,686	$	2,829
		Add: Domain Gains and Sales^5		1,362		1,330		1,886		1,584		1,893
	Consolidated including Domain Gains and Sales			3,604		3,550		4,366		4,270		4,722
		Less: Archeo including Domain Gains and Sales^4,5		2,233		2,042		2,673		2,545		2,311
	Call-Driven^4and related		$	1,371	$	1,508	$	1,693	$	1,725	$	2,411
Adjusted EBITDA^6
	Consolidated excluding Domain Gains and Sales^5		$	3,154	$	3,149	$	3,428	$	3,652	$	3,782
		Add: Domain Gains and Sales^5		1,362		1,330		1,886		1,584		1,893
	Consolidated including Domain Gains and Sales			4,516		4,479		5,314		5,236		5,675
		Less: Archeo including Domain Gains and Sales^4,5		2,270		2,079		2,716		2,618		2,363
	Call-Driven^4and related		$	2,246	$	2,400	$	2,598	$	2,618	$	3,312

1	In September 2013, Marchex announced and launched its Domains Marketplace and through it, commenced buying and selling of domains.
	Domain sales occurring after this date are included in GAAP revenue and related cost in service cost. Prior to this date, domain sales were recognized in gain on sales and disposals of intangible assets in the unaudited condensed consolidated financial statements.
2	Domain sales recognized in gain on sales and disposals of intangible assets, net in the unaudited consolidated financial statements.
3	Domain sales recognized in either gain on sales and disposals of intangible assets or in revenue and service costs in the unaudited condensed consolidated financial statements for each applicable period.
4	The financial results for Call-Driven and Archeo are preliminary and have been derived from the unaudited condensed consolidated financial statements of Marchex, Inc. for all periods presented.
	The unaudited Call-Driven financial results include certain direct operating expenses and general corporate overhead expenses in all periods presented.
	The unaudited Archeo financial results include direct operating expenses for all periods presented.
5	These are non-GAAP measures of operating results and liquidity. These non-GAAP measures are adjusted for net gains from sales of intangible assets, direct contribution of domain sales sold through Marchex's Domains Marketplace.
6	Amounts presented exclude results of discontinued operations. Financial results of discontinued operations related to certain pay-per-click assets sold in July 2013 and are included in discontinued operations, net of tax in the unaudited consolidated condensed financial statements.
	Due to rounding, the sum of quarterly amounts may not equal amounts reported for year-to-date periods.