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DATE
Thursday, Nov. 13, 2025 at 5 p.m. ET
CALL PARTICIPANTS
- Executive Chairman and Co-CEO — Russell C. Horowitz
- Co-CEO — Troy Hotliss
- Chief Financial Officer — Brian Nagel
- General Counsel and Secretary — Frank Feeney
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TAKEAWAYS
- Revenue for 2025 was $11.5 million, reflecting a decrease from $11.7 million for 2025 due to legacy platform migration, partially offset by new sales and customer upsells.
- Cash Balance -- $10.3 million at period end, down from $10.5 million, with the decrease attributed to timing of customer payments.
- Adjusted EBITDA -- Margin improved sequentially with operating efficiencies following realignment and lower cost structure, although absolute figures were not provided.
- Guidance -- Management anticipates sequentially lower revenue and adjusted EBITDA in the next period due to seasonality and migration-related dilution, but expects run-rate revenue growth of approximately 10% and adjusted EBITDA margin of 10% or more in 2026.
- Sales Bookings -- Achieved the highest year-to-date level, with management citing visibility into sustainable sales growth entering 2026.
- Platform Migration -- Legacy customers (more than 1,000) being migrated to the new Marchex Engage platform, with completion targeted by year-end.
- Proposed Acquisition -- Entered an agreement in principle to acquire Arcane using a $10 million convertible promissory note and up to 4 million share earn-out, subject to financial audits and approval by disinterested stockholders.
- Combined Revenue Potential -- Marchex projects that the combined entity could achieve an approximately $15 million per quarter (approximately $60 million annualized) revenue run rate with potential annualized growth in the 15%-20% range in 2026.
- Strategic Focus -- Company strategy centers on AI-powered bundled solutions for customer acquisition and optimization, targeting large vertical markets with industry-specific offerings.
- Rule of 30 to 40 Trajectory -- Management expects the combined company could approach the sum of revenue growth rate plus adjusted EBITDA margin in the 30%-40% range if anticipated metrics are met.
SUMMARY
The call highlighted Marchex (MCHX 3.75%)'s transition to a lower-cost operating model and progress on key platform migration milestones, setting the stage for margin improvement and claimed operating leverage as sales bookings accelerate. Leaders announced an agreement in principle to acquire Arcane, intending to substantially boost scale, expand the product suite to include outcome-based AI solutions, and enhance cross-selling opportunities in large vertical markets. Management articulated the view that, if the transaction closes, the combined company’s annualized revenue run rate could rise to $60 million, with a projected combined annualized growth rate in the 15%-20% range, and adjusted EBITDA margin of 10% or higher. Special transaction approval steps are required, including audit deliverables and disinterested stockholder approval, before closing is possible.
- Executive management stated, "at a very positive inflection point, both strategically and operationally," citing expanding product capabilities and market reach.
- The transaction structure for Arcane involves both a convertible promissory note and an equity-based earn-out that is tied to future performance benchmarks.
- Leadership underscored that existing enterprise customers represent a substantial organic cross-sell opportunity for the new outcome-based solutions, projecting a path to $100 million revenue as "way more tangible and way more achievable much sooner" after the proposed deal.
- Closing of the Arcane acquisition is contingent on completion of definitive agreements, audited financials, a fairness opinion, and approval by disinterested shareholders.
INDUSTRY GLOSSARY
- Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, as modified to exclude certain nonrecurring items; used as a measure of ongoing operating performance.
- Platform Migration: The process of transferring customers and operations from legacy software systems to a new technology platform.
- Rule of 30 to 40: A metric combining annual revenue growth rate and adjusted EBITDA margin, used to gauge SaaS company performance targets.
- Convertible Promissory Note: A debt instrument that may be converted into equity of the issuing company, often used as consideration in acquisitions.
Full Conference Call Transcript
Russell C. Horowitz: Thanks, Frank. I'm gonna start with a few introductory remarks and then hand the call over to Troy, Brian, and then Frank. The main item I'd like to share is that we feel the company is at a very positive inflection point, both strategically and operationally. There's always more to accomplish, but we've come a long way with expanding our customer and opportunity footprint, evolving our product capabilities, and starting to create real sales momentum. With this progress and deeper strategic understanding, which is against the backdrop of the very real and very massive AI revolution, we've gained proprietary insight into what we believe may be a much bigger market opportunity.
One where we evolve beyond mainly providing strategic analytics to vertical market-leading companies to one where we accelerate delivering more comprehensive solutions that address higher value impact needs across the entire customer acquisition and optimization journey. At the end of the day, our customers fundamentally rely on our AI-driven strategic insights to more efficiently drive growth-oriented customer acquisition. We believe there's a significant opportunity for us to rapidly expand into highly measurable AI-powered bundled solutions which provide the strategic insights our customers need, the automated actions those insights inform, and the outcomes those actions achieve. We believe that there are significant untapped opportunities with our customers and solutions within each of our current verticals.
We believe selling such bundled solutions across the entire customer value chain will accelerate our business, and make us much more valuable, sticky, and scalable. And with that, I'll hand the call to Troy to briefly discuss the third quarter.
Troy Hotliss: Thank you, Russ. The third quarter represented continued progress with launching new products and accelerating sales bookings to our highest levels this year. While we did see some additional revenue migration dilution, as we near completion of our technology platform migration at this year's end, we still saw meaningfully improved sequential adjusted EBITDA, showing the magnitude of our operating leverage. Based on this overall progress, with accelerating sales bookings, which we anticipate can continue and compound, we believe we are gaining visibility on increased sustainable sales growth moving into 2026. We have a core focus on select very large vertical markets where the combination of our unique capabilities combined with first-party data create unique solutions for world-class market-leading companies.
To that end, we deliver industry-specific AI solutions for automotive, auto services, home services, healthcare, and advertising and media, as well as other industries and sub-verticals. Overall, our AI-driven products revolve around the mission of understanding and capitalizing on customer conversations and leveraging first-party data for our customer's strategic and financial benefit. Our AI-driven conversational intelligence platform integrates universal and industry AI models with extensive API integrations and industry-specific applications. The Engage platform is driven by AgenTek AI and enables any client to easily understand their insight to action path, allowing business leaders across multiple business functions to make complex decisions leveraging prescriptive analytics across the full customer journey.
Of the new products and features we have launched or anticipate launching in the course of 2025 are key components of our go-forward growth strategy. With that, I'll turn the call over to Brian to provide an overview of the third quarter financial results.
Brian Nagel: Thank you, Troy. Revenue for 2025 was $11.5 million, which is down from $11.7 million for 2025. We saw the favorable impact of new sales and existing customer upsells benefit the period. We also saw some offsets to that growth due to migration activities from our legacy platforms onto our new Marchex Engage platform. For operating expenditures, we saw efficiencies throughout the business as we had a full quarter of benefit from the realignment of the organization that took place in 2025 following the completion of certain technology platform initiatives.
We anticipate that our gross profit margins can continue to improve over time 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. On the balance sheet, cash decreased to $10.3 million from $10.5 million at the end of 2025. The decrease in cash was primarily due to the timing of customer payments at the end of the quarter.
Moving to guidance, as previously communicated in the 2025 earnings announcement, based on typical seasonality, and the revenue migration dilution associated with migrating more than 1,000 customers onto the new technology platform, we currently anticipate that both revenue and adjusted EBITDA will be sequentially lower in 2025 as compared to 2025. That being said, as Troy previously noted, in 2025, we saw meaningful increases in sales bookings. With this and the ongoing launch of our various new products, we believe we can continue to see sales levels increase going forward, which will in turn drive increased revenue growth.
So with the sales expansion currently underway, and the primary platform migration completion by year's end, we currently believe that in the course of 2026, we can see revenue growth on a run rate basis in the 10% range from year-end levels. We also believe that in the course of 2026, the combination of increasing revenue growth combined with lower overall operating expenses can lead to adjusted EBITDA margins of 10% or more. With that, I will hand the call to Frank.
Frank Feeney: Thank you, Brian. I would like to take a moment to walk through today's announced agreement in principle to acquire Arcanium. The details regarding the potential transaction are included in today's earnings press release, as well as certain Arcane estimated financial metrics. At a high level, Marchex has entered into an agreement in principle to acquire Arcadia for consideration consisting of a $10 million convertible promissory note and an earn-out in the two years following closing of up to 4 million shares. The extent Arcane's revenue and adjusted EBITDA exceeds thresholds to be agreed to in the definitive agreement of the transaction.
A special committee of Marchex's board of directors consisting solely of independent directors has approved Marchex entering into the agreement in principle because certain of the sellers are related parties. Parties have agreed to promptly commence to negotiate a definitive purchase agreement relating to the transaction. Conditions entering into the definitive agreement, including receipt of audited financial statements of Arcane for such periods as required by SEC rules, and receipt of a customary fairness opinion by a financial adviser selected by this special committee.
Conditions to closing the transaction shall include approval of the transaction by a majority of Marchex's disinterested stockholders, and the closing date in the event the definitive agreement is entered into, the transaction is approved by disinterested stockholders, is anticipated to occur in 2026. For your reference, Arcane is a performance-based customer qualification and acquisition company, which transforms consumer intent into AI-verified outcome-based results. Leveraging advanced AI signals, natural language analytics, and automated decisioning, Arcane detects consumer intent, and advertiser value in real-time, optimizing customer acquisition campaigns dynamically across channels. With machine learning models that continuously refine qualification accuracy and ROI, Arcadia enables its customers to pay for verified AI-validated outcomes such as appointments, sales, and high-intent conversations.
We believe that Marchex's potential combination with Arcane, if successfully consummated, will create a vertically focused AI-driven customer acquisition and outcome optimization platform integrating deep insights, automated actions, and verifiable outcomes. Additionally, we believe that the expanded AI-driven product offerings across insights, actions, outcomes could create more ways to win new business, and the bundling of solutions could create greater customer value, stickiness, and risk mitigation. We believe that the potential combined company could have the potential to achieve greater revenue scale and growth, higher margins, expanded market reach, and enhanced strategic flexibility.
Which could include first, a potentially expanded addressable market with the opportunity to cross-sell and bundle, Marchex believes the combined ability to sell insights, actions, and outcomes would meaningfully expand our addressable market into new large vertical markets. Additionally, we believe we would have the ability to relatively quickly offer or bundle Arcadia's outcome-based solutions to many of Marchex's insights-based enterprise customers. Second, greater potential revenue scale and growth. Marchex believes that revenue run rates for the potential combined company are approximately $15 million quarterly, or approximately $60 million annualized, which could grow in the 15% to 20% range in the course of 2026. Third, we see the potential for adjusted EBITDA expansion.
Marchex believes that our adjusted EBITDA margins are anticipated to trend up to 10% or more in 2026, and that Arcadia could contribute additional positive adjusted EBITDA beyond these levels. And finally, rule of 30 to rule of 40 trajectory. For reference, the rule of 30 to 40 metric represents the combination of annual revenue growth rates plus adjusted EBITDA margins. If we are able to achieve the anticipated revenue run rate growth in the 15-20% range, and combine this with improving adjusted EBITDA margins in double digits, the combined company could be positioned to potentially achieve these Rule of 30 to 40 metrics over time. Which we believe helps highlight the unique opportunity of the combined company if consummated.
With that, I will hand the call back to Russ for closing remarks.
Russell C. Horowitz: Thank you, Frank. We've already covered a whole lot today, so I simply want to close out by thanking all of our investors, partners, and other stakeholders for all of your ongoing support. Additionally, I want to deeply thank our employees for their unique expertise, sense of urgency, and continued commitment while we execute on what we believe is an increasingly dynamic opportunity. And with that, I will hand the call back to the operator.
Operator: To ask a question, it is star followed by one on your telephone keypad. If for any reason you would like to remove that question, it is star followed by two. Again, to ask a question, it is star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. I'll pause briefly here as questions are registered. Again, it is star one. Our first question comes from Ross Kohler with the company, Kohler Capital. Ross, your line is now open.
Ross Kohler: Awesome. Hey, guys. Congrats on the proposed acquisition.
Russell C. Horowitz: Thank you.
Ross Kohler: I have a couple of questions on what the go-forward business looks like. Well, first, can you discuss how you view the TAM for the combined solution?
Russell C. Horowitz: Good question. Yeah. We think the opportunity in the addressable market when you look at the combined company's ability to sell insights, actions, and outcomes, is multiples of our existing one. We're predominantly selling insights only. You know, our insights, we believe, are tied to meaningful, nine-figure customer acquisition budgets, and, you know, we get used strategically to inform those. And our ability to continue to deliver more capabilities across that insights, actions, outcomes, value chain translates to a significantly larger TAM, one we believe could be of what we're operating against today.
Ross Kohler: Great. Can you talk about how you're thinking about the trade-off between growth and profitability as you scale up the business?
Russell C. Horowitz: Definitely. It's obviously an internal focus. You know, when we think about arbitrating, you know, validating that the investments we've made are translating into growth. We're pleased that on the back end of the migration, we're at an inflection point on a stand-alone basis where we believe we're seeing that happen now. And we can build on that. But net-net, as we look at the acquisition and our ability to accelerate growth potentially to the extent it gets consummated, we're just focused on maximizing the revenue growth and maintaining some baseline positive adjusted EBITDA margins in that 10% or more range.
You know, we believe emphasizing customer penetration, really scaling up while prioritizing our growth rates is gonna be the best approach for us for now.
Ross Kohler: Perfect. And lastly, can you discuss how you view the growth breaking down between new versus existing customers? And also, how big a business can you build just inside your current installed base?
Russell C. Horowitz: Yeah. Look. I think the best way to frame it if you've heard us say historically, you know, that we believe we have a $100 million revenue opportunity over time. But on a combined basis, you know, this deal closes, we really believe that $100 million in revenue is way more tangible and way more achievable much sooner even just with the existing or installed base. You know, we look at the verticals we operate in, and we look at the market-leading companies that we work in those verticals.
And we look at the opportunities even within the sub-verticals and call it the virtuous cycle of the expertise that we're putting together combined with the unique first-party data we have that informs our expanding set of solutions. And we think there's other customers we don't have that look like them, and we're gonna be more relevant to. With more capabilities that are easier to say yes to. But on a kind of a stand-alone basis with the existing installed base, yeah, the combined company is well-positioned in a more tangible way to get to a $100 million rate much sooner.
Ross Kohler: Awesome. Thank you.
Russell C. Horowitz: Appreciate the questions. Thank you. And the support.
Operator: At this time, there are no more questions registered in the queue. I'd like to pass the conference back over to our hosting team for closing remarks.
Russell C. Horowitz: Look. I appreciate everybody's interest in Marchex. Obviously, we're excited about where we are. You know, and, you know, what our possible opportunity can look like as we move forward. We've got a lot of congruency and clarity around what that looks like. And, we just appreciate all your ongoing support. And, look forward to keeping you posted as we execute. And hope we make that happen. Thank you, everyone.
Operator: That will conclude today's conference call. Thanks for your participation, and enjoy the rest of your day.