Marchex (MCHX -11.03%), a provider of artificial intelligence (AI) and analytics solutions for businesses that rely on customer conversations to drive revenue, released its Q2 FY2025 results on August 12, 2025. The earnings report spotlighted strong progress on profitability compared to Q2 2024, showing a clear turnaround from a loss to positive net income (GAAP) compared to Q2 2024. However, GAAP revenue came in below the analyst consensus, missing by $0.75 million, or about 6%. The quarter showed that while operational discipline and product advances are moving the company in a positive direction, topline growth remains a challenge. Management described the quarter as an inflection point, buoyed by technology milestones but tempered by ongoing customer migrations and external pressures.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.02 | $(0.01) | $(0.01) | $0.03 |
| Revenue (GAAP) | $11.7 million | $12.4 million | N/A | -5.6 % |
| Net Income (GAAP) | $0.1 million | $(0.8 million) | N/A | |
| Adjusted EBITDA | $0.6 million | $0.3 million | 100.0 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Company Overview and Recent Focus
Marchex operates in the conversational intelligence market, providing businesses with analytics tools that dig into inbound conversations from calls, text messages, and other channels. Its platforms allow companies, especially in automotive, healthcare, and other service-driven sectors, to convert voice and text data into actionable sales and marketing insights.
The company’s recent focus has been on expanding its AI-powered offerings, migrating customers to its next-generation Engage platform, and extending its reach in key industries. Marchex sees its ability to use AI and machine learning to turn large volumes of conversation data into business value as a core competitive factor. Scalability and operational efficiency have become key priorities as the company shifts to more SaaS (software as a service) and AI-based solutions.
Quarterly Performance and Notable Developments
During Q2 2025, Marchex returned to profitability, with GAAP net income moving from a $0.8 million loss in Q2 2024 to a slight gain. Adjusted EBITDA—a measure of core earnings excluding certain non-cash items and one-time costs—doubled to $0.6 million compared to $0.3 million for Q2 2024. GAAP revenue slipped 3.5% compared to the second quarter of 2024, largely due to ongoing migration of more than 1,000 customers to its new Engage platform. Management confirmed this migration was a "critical company accomplishment" and is now mostly complete, but it diluted reported GAAP revenue as legacy and new contracts transitioned.
Operationally, the company ramped up its investment in sales and marketing, with GAAP expenses rising to $3.17 million from $2.74 million in Q2 2024. The company pursued expanded opportunities in the automotive sector, including the extension of a partnership with FordDirect. This relationship now covers more than 3,000 franchised dealers, greatly expanding Marchex’s reach in that vertical. The company also launched its first offering on the Microsoft Azure Marketplace, opening up a broader enterprise sales channel.
On the technology side, Marchex made several enhancements to its AI product family. It launched a unified user interface for its conversational analytics tools and announced new AI feature development—including industry benchmarking, improved analytics for AI agents, and Marchex GPT, its own large language model for business data search. Marchex also showed a deliberate move into verticals with complex privacy requirements. Marchex Engage for Auto Sales and Service won an industry award, adding credibility to its position in automotive-focused products.
Adjusted EBITDA improved, helped by reduced operating costs and migration to more SaaS-based and cloud-driven revenue. Despite the profitability gains, cash and equivalents fell to $10.49 million as of June 30, 2025. Product development costs fell, while stock-based compensation and diluted share count both edged up slightly compared to Q2 2024.
Looking Ahead: Guidance and Key Areas for Watch
Management expects both revenue and adjusted EBITDA to rise sequentially. They project that Adjusted EBITDA could increase by more than 50% from Q2 2025 levels. However, this forecast is balanced by warnings about seasonality, the lingering impact of customer migrations, and macroeconomic factors such as new federal tariffs, as noted in management commentary for Q4 2025. Management stated that these issues are delaying previous goals of reaching a $50.0 million annualized revenue run rate and $6.0 million in adjusted EBITDA (non-GAAP) by year-end 2025.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
