8-K: Marchex Acquires Archenia, Reports Mixed Q3 2025 Results

Marchex announced an agreement in principle to acquire AI-driven Archenia for $10 million and contingent shares, alongside reporting a Q3 2025 revenue decline but improved Adjusted EBITDA.

Summary

• Marchex entered into an Agreement in Principle (AIP) on November 13, 2025, to acquire 100% of Archenia, Inc., a performance-based customer qualification and acquisition company.
• The acquisition consideration includes a $10 million convertible promissory note with 6% interest, convertible into Marchex Class B common stock at $1.80 per share.
• Contingent consideration involves issuing 2 million shares of Class B common stock for each of the first and second 12-month periods post-closing, if Archenia's revenue and Adjusted EBITDA exceed agreed thresholds.
• The AIP was approved by a special committee of independent directors due to certain sellers being related parties, and the transaction requires approval by a majority of Marchex's disinterested stockholders.
• The closing of the acquisition is anticipated in the first half of 2026.
• Marchex reported GAAP revenue of $11.5 million for Q3 2025, a decrease from $12.6 million in Q3 2024.
• Net loss for Q3 2025 was $1.0 million, or $(0.02) per diluted share, compared to a net loss of $0.8 million, or $(0.02) per diluted share, in Q3 2024.
• Adjusted EBITDA for Q3 2025 was a gain of $0.6 million, improving from a gain of $0.3 million in Q3 2024. Excluding $0.5 million in reorganization costs, Adjusted EBITDA was $1.1 million.
• Adjusted non-GAAP income per share for Q3 2025 was $0.00, an improvement from a loss of $(0.01) per share in Q3 2024.
• Archenia estimates its revenue for the nine months ended September 30, 2025, was more than $14 million with positive Adjusted EBITDA, and full-year 2025 revenue is anticipated to be more than $17 million.
• Marchex has launched or is launching new AI-powered products, including AI Benchmarking, AgentAI Optimizer, Marchex Engage GPT, and vertical solutions for healthcare and senior living industries.

Sentiment

Score: 6

Explanation: The sentiment is cautiously positive. While Q3 revenue declined and net loss increased, Adjusted EBITDA showed strong improvement. The strategic acquisition of Archenia and the robust pipeline of new AI product launches, coupled with optimistic 2026 growth and margin targets, suggest a positive long-term outlook. However, the anticipated sequential decline in Q4 2025 and the related-party nature of the acquisition introduce some caution.

Positives

• Adjusted EBITDA improved to a gain of $0.6 million in Q3 2025 from $0.3 million in Q3 2024, and $1.1 million excluding reorganization costs.
• Adjusted non-GAAP income per share improved to $0.00 in Q3 2025 from a loss of $(0.01) in Q3 2024.
• The strategic acquisition of Archenia is expected to create a vertically focused, AI-driven customer acquisition and outcome-optimization platform, potentially expanding market reach and enhancing strategic flexibility.
• Management reported accelerating sales bookings to their highest levels this year in Q3 2025.
• The company anticipates increased, sustainable sales growth moving into 2026, with revenue growth on a run rate basis in the 10% range from year-end levels.
• Marchex expects Adjusted EBITDA margins of 10% or more in 2026, with Archenia contributing additional positive Adjusted EBITDA.
• Several new AI-powered products and vertical solutions have been launched or are expected to launch soon, enhancing product capabilities.

Negatives

• GAAP revenue declined to $11.5 million in Q3 2025 from $12.6 million in Q3 2024.
• Net loss increased to $1.0 million in Q3 2025 from $0.8 million in Q3 2024.
• Cash and cash equivalents decreased to $10.321 million as of September 30, 2025, from $12.767 million as of December 31, 2024.
• Total assets decreased to $41.145 million as of September 30, 2025, from $43.200 million as of December 31, 2024.
• Marchex anticipates both Revenue and Adjusted EBITDA to be sequentially lower in the fourth quarter of 2025 compared to the third quarter of 2025 due to seasonality and revenue migration dilution.

Risks

• Actual results or events could differ materially from forward-looking statements due to factors such as product demand, order cancellations and delays, competition, changes in business strategy or development plans, and general economic and business conditions.
• The entering into a Definitive Agreement for the Archenia acquisition, its terms, and the consummation of the Transaction are subject to substantial risks and uncertainties.
• There is no guarantee that the thresholds for the contingent consideration contemplated by the AIP will be satisfied.
• The acquisition is subject to conditions, including receipt of audited financial statements for Archenia, a fairness opinion, and approval by a majority of Marchex's disinterested stockholders.
• The company is undergoing a technology platform migration which has caused some revenue migration dilution.

Future Outlook

Marchex anticipates continued increases in sales bookings and expects to complete its primary technology platform migration by year-end 2025. For 2026, the company believes it can achieve revenue growth on a run rate basis in the 10% range from year-end levels and Adjusted EBITDA margins of 10% or more, driven by increasing revenue and lower operating expenses. However, for the fourth quarter of 2025, both Revenue and Adjusted EBITDA are expected to be sequentially lower compared to Q3 2025 due to typical seasonality and ongoing revenue migration dilution.

Management Comments

• "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, we improved quarterly Adjusted EBITDA, net of reorganization costs, to $1.1 million, or approximately 50% over the 2025 second quarter, 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."

Industry Context

The announcement highlights the rapid emergence of AI accelerating the industry's shift towards 'Pay-Per-Event' models, aligning with the capabilities of the potential combined Marchex-Archenia entity. Marchex's continued expansion of AI-driven conversational intelligence solutions, particularly in vertical markets like healthcare and senior living, reflects a broader industry trend towards specialized AI applications for enhanced customer acquisition and operational efficiency.

Corporate Governance

Related Party Transactions

• Marchex's Agreement in Principle to acquire Archenia, Inc. involves certain sellers who are related parties to Marchex. This necessitated approval by a special committee of independent directors and will require approval by a majority of Marchex's disinterested stockholders.

Stakeholder Impact

• Shareholders: Potential for future growth and increased operating leverage from the Archenia acquisition and new product launches, but also potential dilution from the convertible note and contingent share issuances. Current Q3 results show revenue decline but improved Adjusted EBITDA, with Q4 expected to be sequentially lower.
• Customers: Benefit from expanded AI-driven product offerings, new vertical solutions, and a unified user interface, potentially leading to more effective customer acquisition and outcome optimization.
• Employees: The strategic acquisition and growth initiatives could lead to expanded opportunities within the combined company, though no specific employee impacts were detailed.

Next Steps

• Promptly negotiate a definitive purchase agreement for the Archenia acquisition.
• Obtain audited financial statements of Archenia as required by SEC rules.
• Receive a customary fairness opinion by a financial advisor selected by the Special Committee.
• Obtain approval of the Archenia acquisition by a majority of Marchex's disinterested stockholders.
• Complete the primary technology platform migration by year-end 2025.
• Launch AgentAI Optimizer soon.
• Launch Marchex Engage GPT later in the fourth quarter.

Key Dates

Recommendation

The Q3 2025 results present a mixed picture with declining GAAP revenue and increased net loss, but a notable improvement in Adjusted EBITDA, particularly when excluding reorganization costs. The strategic acquisition of Archenia, while involving related parties and potential dilution, offers a clear path to expanded market reach, higher revenue run rates, and improved Adjusted EBITDA margins in 2026. The company's robust pipeline of new AI-powered product launches further supports future growth. However, the anticipated sequential decline in Q4 2025 and the conditional nature of the acquisition warrant a cautious approach. A 'hold' recommendation is appropriate as investors should monitor the successful closing of the Archenia acquisition, the integration process, and the realization of the projected 2026 financial improvements before making further investment decisions.

Keywords

Marchex, Archenia, acquisition, AI, conversational intelligence, Q3 2025 earnings, financial results, convertible note, MCHX, technology platform, customer acquisition, EBITDA, revenue growth, software, SaaS