Marchex anticipates more than 50% adjusted EBITDA growth for Q3 2025 as Engage platform expansion advances

Earnings Call Insights: Marchex, Inc. (MCHX) Q2 2025

MANAGEMENT VIEW

* Edwin A. Miller, CEO, stated that "the second quarter saw continued progress toward making 2025 an inflection point for our company based on technical and product developments." He highlighted new partnerships with Fortune 500 companies and the launch of the Marchex Engage platform. Miller emphasized that the Engage platform, a result of the OneStack initiative, introduces a new user interface and streamlines customer access to AI-powered solutions, enabling simple click-to-purchase capability.
* Miller described the company's core focus on large vertical markets, including automotive, auto services, home services, health care, and advertising and media, with AI-driven solutions tailored for each sector. The Engage platform's agentic AI and prescriptive analytics are positioned as key drivers for measurable business outcomes.
* Brian Nagle, CFO, reported, "Revenue for the second quarter of 2025 was $11.7 million, which is up from $11.4 million for the first quarter of 2025. We saw a favorable impact of new sales and some upsells benefit the company in the period." Nagle also noted, "cash rose to $10.5 million from $10 million at the end of the first quarter of 2025."
* Nagle stated, "We anticipate that our gross profit margins can continue to improve as we are carrying an overall lower cost structure going forward, which could enable meaningful future operating and financial leverage for the business as new products and features sell through."
* Nagle further reported, "During the second quarter of 2025, the company reported positive net income of approximately $100,000."

OUTLOOK

* Nagle indicated, "We currently anticipate that both revenue and adjusted EBITDA will sequentially increase in the third quarter of 2025 as compared to the second quarter of 2025, with adjusted EBITDA potentially increasing by more than 50% over the second quarter levels."
* He added, "We also currently anticipate that both revenue and adjusted EBITDA will be sequentially lower in the fourth quarter of 2025 as compared to the third quarter of 2025 due to the revenue impact of certain customers not migrating, anticipated seasonality and current macroeconomic factors, which it is anticipated will delay the achievement of Marchex's annual revenue and adjusted EBITDA run rate goals previously set for 2025."
* The company acknowledged increased uncertainty regarding customer impacts due to macroeconomic conditions and new federal tariffs affecting key industries.

FINANCIAL RESULTS

* Nagle reported $11.7 million in revenue for Q2 2025, up from $11.4 million in Q1 2025, with cash rising to $10.5 million from $10 million. Operating efficiencies were achieved from organizational realignment and migration to the Engage platform, with most customer migrations now completed.
* Gross profit margins are expected to improve as the company benefits from a lower cost structure. Positive net income of approximately $100,000 was noted for Q2 2025.
* The company experienced short-term revenue impacts due to timing of new sales launches and migration-related dilution but expects stability or improvement in cash balance going into Q3 2025.

Q&A

* Vijay Devar, Northland Capital Markets: Did bookings improve sequentially in the second quarter? Russell C. Horowitz: "Yes, our sales or ACV was sequentially higher."
* Vijay Devar: Any comments on the pipeline? Russell C. Horowitz responded that the Engage platform and new UI are foundational for launching new products, mentioning upcoming launches of Benchmarking, Marchex GPT, and Agent Assist before year-end as key drivers for pipeline expansion.
* Vijay Devar: How is demand for your service use case versus sales? Horowitz noted that, "with Engage for sales and service...we are seeing, call it, increasing average revenue per sale associated with that and additional uptake as part of our channel efforts with auto dealers," with Miller and Horowitz expressing excitement about expanded opportunities and customer penetration.

SENTIMENT ANALYSIS

* Analysts' questions focused on sequential bookings improvement, pipeline strength, and product demand, with a neutral to slightly positive tone, seeking clarity on growth drivers.
* Management maintained a confident and optimistic tone in both prepared remarks and Q&A, frequently referencing new product launches, sales momentum, and channel expansion. Miller concluded, "I'm energized by the progress we are making." Nagle used phrases like "anticipate" and "potentially increasing by more than 50%," indicating cautious optimism.
* Compared to the previous quarter, the management tone remains confident, but with more explicit caution about macroeconomic uncertainty and tariff impacts. Analysts' tone was more probing this quarter, focusing on operational execution and future sales pipeline.

QUARTER-OVER-QUARTER COMPARISON

* Guidance language shifted from ambitious annual revenue and EBITDA run-rate targets in Q1 2025 to a more tempered outlook in Q2 2025, as management now anticipates a delay in achieving previous goals due to seasonality, migration impacts, and macroeconomic factors.
* Strategic focus shifted from technology foundation consolidation (Q1) to product commercialization and migration completion (Q2), with increased emphasis on the Engage platform and upcoming AI product launches.
* Analysts' questions evolved from general business transformation and partnerships in Q1 to specific pipeline, bookings, and product demand drivers in Q2.
* Management's confidence remains but is now paired with more explicit caveats about external risks and timing variability. Key metrics, such as revenue growth and cash position, showed modest improvement in Q2.

RISKS AND CONCERNS

* Management cited increased uncertainty from macroeconomic conditions and new federal tariffs, specifically affecting the automotive and auto services verticals.
* Migration of more than 1,000 customers to the Engage platform was largely completed, but timing and utilization continue to present short-term revenue risks.
* Management stated that predicting actual 2025 performance is more difficult due to these factors, and acknowledged that results "may be more variable in terms of revenue and adjusted EBITDA."

FINAL TAKEAWAY

Marchex's leadership highlighted significant progress in platform innovation, customer migration, and new AI product launches, positioning the company for future growth in key verticals. While revenue and cash increased modestly, management now anticipates more than 50% sequential adjusted EBITDA growth in Q3, with a more cautious outlook for Q4 due to lingering macroeconomic uncertainty and migration impacts. The company remains focused on leveraging its AI-driven Engage platform and expanding channel partnerships to drive long-term value, while acknowledging that timing and visibility for previously set annual goals have become less certain.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/mchx/earnings/transcripts]

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* Marchex, Inc. (MCHX) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4812834-marchex-inc-mchx-q2-2025-earnings-call-transcript]
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