What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-26 compared with 2025-03-14 · 193 added, 183 removed, 487 unchanged (44% of the section changed)

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Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024

Notes to Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

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Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

These financial statements are the responsibility of management.

Our responsibility is to express an opinion on the financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of internal controls over financial reporting.

Accordingly, we express no such opinion.

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Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We believe that our audits provides a reasonable basis for our opinion.

Critical Audit Matter

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The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Occurrence of Pay per Call Revenue

As described in Note 1 of the consolidated financial statements, the Company generates revenue from the Company's conversational analytics technology platform when customers pay the Company a fee for call, text, or other communication related data element they receive from calls or texts or for each phone number tracked based on a pre-negotiated rate.

Revenue is recognized over time as the service is performed.

We identified the occurrence of pay per call revenue as a critical audit matter as the processes to track and record the calls on which revenue is recorded is based on data from internally developed systems, which are complex and require an increased audit effort around assessing the reliability of data.

Our audit procedures related to the occurrence of calls included performing the following audit procedures, among others:

• We obtained an understanding of the relevant controls related to the occurrence of calls and tested such controls for design and operating effectiveness.

• In order to assess the accuracy of information generated from the internally developed information systems, we reconciled the total call information to the third-party vendor bills.

• On a sample basis, we agreed the minutes from the call information to the vendor bill.

• On a sample basis, we listened to calls to determine the call occurred.

• On a sample basis, we obtained the customer invoice, the supporting call log data from the Company’s internal tracking system relating to the invoiced period, and the underlying customer contracts.

For each sample we recalculated the invoiced amount.

• We tested the reasonableness of changes in pay per call revenue by performing trend analysis which compared month-over month revenues.

Occurrence and Completeness of Revenue

As described in Note 1 of the consolidated financial statements, the Company generates revenue from the Company’s conversational analytics technology platform when customers pay the Company a fee for call, text, phone number or other communication related data element tracking, based on a pre-negotiated rate.

Revenue is recognized over time as the service is performed, which is generally measured by the delivery of the related data element per the terms of the customer contract.

We identified the occurrence and completeness of revenue as a critical audit matter as the process to record revenue which is billed in arrears creates complexity in auditing the timing of revenue recognition.

Revenue is driven by data derived from an internally developed system, which requires an increased audit effort to assess the reliability of data.

Our audit procedures related to the occurrence and completeness of revenue included performing the following audit procedures, among others:

• We obtained an understanding of the relevant controls related to the occurrence and completeness of data elements and tested the relevant controls for design and operating effectiveness.

• In order to assess the accuracy of data elements generated from the internally developed information system we reconciled the total data element information to the third-party vendor bills.

• On a sample basis, we agreed the minutes from the data element information to the vendor bill.

• On a sample basis, we listened to calls to determine the data element occurred.

• On a sample basis, we tested the timing of revenue recognized by selecting samples of transactions occurring around both quarter-end and year-end.

• We tested the accuracy of management's quarterly revenue close adjustment schedule to underlying supporting customer contracts, data elements information and to the adjustment made to the general ledger.

• We tested the reasonableness of changes in revenue by performing trend analysis which compared quarter-over quarter revenues.

/s/ RSM US LLP

We have served as the Company's auditor since 2022.

Seattle, Washington

Los Angeles, California

March 25, 2026

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Accounts receivable, net

Prepaid expenses and other current assets

Prepaid expenses

Other current assets

Total current assets

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Right-of-use lease assets

Intangible assets from acquisitions, net

Liabilities and Stockholders’ Equity

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Deferred tax liabilities

Finance lease liability, non-current

Operating lease liability, non-current

Other non-current

Total liabilities

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Cost of revenue (1)

Amortization of capitalized software development costs (1)

Total cost of revenue (1)

Sales and marketing (1)

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General and administrative

Acquisition settlement

Amortization of intangible assets from acquisitions

Acquisition and disposition related costs

Total operating expenses

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Net loss applicable to common stockholders

Basic and diluted net loss per Class A and B share

applicable to common stockholders

Shares used to calculate basic net loss per share

applicable to common stockholders:

Shares used to calculate diluted net loss per share

applicable to common stockholders:

Basic and diluted net loss per Class A and B share applicable to common stockholders

Shares used to calculate basic net loss per share applicable to common stockholders:

Shares used to calculate diluted net loss per share applicable to common stockholders:

(1) Excludes amortization of intangible assets from acquisitions

See accompanying Notes to the Consolidated Financial Statements.

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Issuance of common stock upon exercise of options, issuance and vesting of restricted stock and under employee stock purchase plan, net

Retirements of treasury stock

Stock-based compensation from options and restricted stock, net of forfeitures

Issuance of Class B common stock in connection with prior deferred issuance from acquisition

Balance at December 31, 2024

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Stock-based compensation from options and restricted stock, net of forfeitures

Issuance of Class B common stock in connection with prior deferred issuance from acquisition

Balance at December 31, 2025

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Net loss applicable to common stockholders

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization and depreciation

Allowance for credit losses

Adjustments to reconcile net loss to net cash from operating activities:

Amortization, depreciation, and loss on disposals

Gain on domain asset sale

Provision for doubtful accounts

Deferred income taxes

Loss on the disposal of capital assets

Stock-based compensation

Acquisition settlement

Change in certain assets and liabilities:

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Deferred revenue and deposits

Net cash used in operating activities

Net cash from (used in) operating activities

Cash flows from investing activities:

Capitalized software development costs

Purchases of property and equipment

Proceeds from sales of property and equipment

Net cash used in investing activities

Proceeds from domain asset sale

Net cash from (used in) investing activities

Cash flows from financing activities:

Proceeds from exercises of stock options, issuance and vesting of restricted stock and employee stock purchase plan, net

Proceeds from exercises of stock options, and issuance and vesting of restricted stock

Repayments under finance lease liabilities and related obligations

Net cash used in financing activities

Net decrease in cash and cash equivalents

Net cash from (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

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AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Description of Business and Summary of Significant Accounting Policies

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was incorporated in the state of Delaware on January 17, 2003.

The Company is a conversation intelligence company that harnesses the power of AI and conversational intelligence to provide actionable insights aligned with prescriptive vertical market data analytics, driving operational excellence and revenue acceleration.

Marchex enables executive, sales, and marketing teams to optimize customer journey experiences across all communication channels.

Through our prescriptive analytics solutions, we enable the alignment of enterprise strategy, empowering businesses to increase revenue through informed decision-making and strategic execution.

Marchex is a conversation intelligence company that harnesses the power of AI and conversation intelligence to provide actionable insights derived from prescriptive vertical market data analytics.

Marchex enables organizations across business functions to optimize customer acquisitions and experiences, transforming conversations into meaningful business outcomes.

Marchex provides AI-powered conversation intelligence solutions for market-leading companies in leading B2B2C vertical markets, including many of the world’s most innovative and successful brands.

The accompanying Consolidated Financial Statements have been prepared in accordance with U.S.

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The Company has used estimates related to several financial statement amounts, including revenues, the fair value of stock options awards, and the impairment of goodwill.

Actual results could differ from those estimates.

Actual results could differ from those estimates.Certain prior‑period cash flow amounts have been reclassified to conform to the current‑period presentation.

These reclassifications had no impact on net cash provided by (used in) operating, investing, or financing activities.

(b) Going Concern

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The Company considers any substantial doubt raised from recent net losses from operations to be alleviated by management's future operating plans, which consist of strategies for product innovation, increased sales, and cost cutting and efficiency efforts.

When evaluating the Company's ability to continue as a going concern, management analyzed our strong working capital and cash position, positive momentum from year over year operating performance, and absence of any internal or external matters outstanding that would cause operating plans to be significantly revised.

When evaluating the Company's ability to continue as a going concern, management analyzed our working capital and cash position, positive momentum from year over year operating performance, and absence of any internal or external matters outstanding that would cause operating plans to be significantly revised.

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Leasehold improvements are amortized straight-line over the shorter of the lease term or estimated useful lives of the assets generally ranging from five to eight years .

We capitalize certain software development costs incurred in connection with developing or obtaining computer software for internal use when both the preliminary project stage is completed, and it is probable that the software will be used as intended.

Capitalized software costs include (i) external direct costs of materials and services utilized in developing computer software, (ii) compensation and related benefits for employees who are directly associated with the software projects.

Capitalized software costs are amortized on a straight-line basis when placed into service over the estimated useful life of the software, generally averaging three years .

We capitalized $ 47.2 thousand in software development costs for the year ended December 31, 2024 and $ 0.4 million for the year ended December 31, 2023 .

In accordance with ASC 350-40, Internal-Use Software , the Company capitalizes eligible software development costs into Property and equipment, net on the Consolidated Balance Sheets.

The Company notes that our external-use projects fall under ASC 350-40 guidance, as opposed to ASC 985-20, Costs of Software to be Sold, Leased, or Marketed , because as a substantive plan to market the software externally to be sold exists, our customers access the software through cloud hosting arrangements and the customers don't have the right to take possession of the software at any time during the hosting period.

Under ASC 350-40, development costs for applicable projects will begin capitalization once the preliminary project stage is completed, management has committed to fully funding the computer software project, and it is probable that the project will be seen to completion and the software will be used to perform the function intended.

Eligible costs for the development of software as a service ("SaaS") products for customer-use are capitalized to the extent they are recoverable by the anticipated net realizable value of the product until it is available to customers.

Capitalized software costs are amortized on a straight-line basis when placed into service over the estimated useful life of the software, which is generally three years .

We capitalized $ 1.4 million and $ 47.2 thousand in software development costs for the years ended December 31, 2025 and 2024 , respectively.

The Company determines whether an arrangement is a lease or contains a lease at inception of the arrangement.

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If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds fair value.

Assets to be disposed of would be separately presented on the Company's Consolidated Balance Sheets and reported at the lower of their carrying amount or fair value less costs to sell, and no longer depreciated.

No impairment was recognized for the years ended December 31, 2025 and 2024 .

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and payroll and related expenses of personnel, including stock based compensation.

The Company has historically reported these costs under the caption "service costs" on the Consolidated Statement of Operations, but determined that the change to "cost of revenue" on a go-forward basis, beginning on December 31, 2024, better aligns the Company's financial reporting to its industry and competitors for comparison.

(l) Advertising Expenses

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(m) Product Development

Product development costs consist primarily of expenses incurred by the Company in the research and development, creation, and enhancement of the Company’s products and services.

Research and development costs are expensed as incurred and include compensation and related expenses, costs of computer hardware and software, and costs incurred in developing features and functionality of the services.

For the periods presented, substantially all of the product development expenses are related to research and development.

Product development costs consist primarily of expenses incurred by the Company in the R&D, creation, and enhancement of the Company’s products and services.

R&D costs are expensed as incurred and include compensation and related expenses, costs of computer hardware and software, and costs incurred in developing features and functionality of the services.

For the periods presented, substantially all of the product development expenses are related to R&D.

Product development costs are expensed as incurred or capitalized into property and equipment in accordance with FASB ASC 350.

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The effect on deferred tax assets and liabilities of a change in tax law is recognized in results of operations in the period that includes the enactment date.

The Company adopted ASU 2023-09, Improvements to Income Tax Disclosures , on January 1, 2025 using the prospective transition method.

The Notes to the Consolidated Financial Statements have been prepared accordingly to reflect the application of ASU 2023-09 guidance for the year ended December 31, 2025, through the additional income tax disclosures, particularly regarding the effective tax reconciliation and income taxes paid.

Taxes for additional information.

(o) Defined Contribution 401(k) Plan

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Diluted net loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common and dilutive common equivalent shares outstanding during the period.

The computation of the diluted net loss per share of Class B common stock assumes the conversion of Class A common stock to Class B common stock, while the diluted net loss per share of Class A common stock does not assume the conversion of those shares.

The computation of the diluted net loss per share of Class B common stock assumes the conversion of Class A to Class B common stock, while the diluted net loss per share of Class A common stock does not assume the conversion of those shares.

In accordance with the two class method, the undistributed losses for each year are allocated based on the contractual participation rights of the Class A and Class B common shares and the restricted shares as if the losses for the year had been distributed.

Considering the terms of the Company’s charter which provides that, if and when dividends are declared on its common stock in accordance with Delaware General Corporation Law, equivalent dividends shall be paid with respect to the shares of Class A common stock and Class B common stock and that both classes of common stock have identical dividend rights and would share equally in the Company’s net assets in the event of liquidation, the Company has allocated undistributed losses on a proportionate basis.

Stockholders' Equity of the Notes to Consolidated Financial Statements for additional information.

Considering the terms of the Company’s charter which provides that, if and when dividends are declared on its common stock in accordance with DGCL, equivalent dividends shall be paid with respect to the shares of Class A and Class B common stock and that both classes of common stock have identical dividend rights and would share equally in the Company’s net assets in the event of liquidation, the Company has allocated undistributed losses on a proportionate basis.

Instruments granted in unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities prior to vesting.

As such, the Company’s restricted stock awards are considered participating securities for purposes of calculating loss per share.

As such, the Company’s RSAs are considered participating securities for purposes of calculating loss per share.

Under the two class method, dividends paid on unvested restricted stock are allocated to these participating securities and therefore impact the calculation of amounts allocated to common stock.

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(s) Recent Accounting Pronouncement Not Yet Effective

In December 2023, the FASB issued Accounting Standards Update ("ASU") 2023-09, Improvements to Income Tax Disclosures , which requires public entities to disclose disaggregated information about their effective tax rate reconciliation as well as information on income taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and may be applied on a prospective basis, with early adoption permitted.

The Company is currently assessing the impact of this ASU on its Consolidated Financial Statements.

In January 2025, the FASB issued ASU 2025-01, which updates the effective date of the November 2024 issued ASU 2024-03, Disaggregation of Income Statement Expenses, that requires public entities to improve disclosures about their expenses and provide more detailed information about the types of expenses in commonly presented expense captions.

In January 2025, the FASB issued Accounting Standards Update ("ASU") 2025-01, which updates the effective date of the November 2024 issued ASU 2024-03, Disaggregation of Income Statement Expenses, that requires public entities to improve disclosures about their expenses and provide more detailed information about the types of expenses in commonly presented expense captions.

ASU 2024-03 is now effective for annual periods beginning after December 15, 2026 and interim periods within annual periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently assessing the impact of this ASU on its Consolidated Financial Statements.

The Company is currently assessing the impact of this ASU on its Consolidated Financial Statement disclosures.

In September 2025, the FASB issued ASU 2025-06, Accounting for Internal-Use Software, which makes improvements to internal-use software accounting guidance to better align with contemporary software development practices, rather than traditional, stage-based models.

Under the revised guidance, a Company may begin capitalizing internal-use software costs only when management has authorized and committed to funding the project and it's probable that the project will be completed and used for its intended function.

ASU 2025-06 is effective for annual periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently assessing the impact of this ASU on its Consolidated Financial Statements and related disclosures.

Revenue Recognition

The majority of the Compan y’s customers are invoiced on a monthly basis following the month of the delivery of services and are required to make payments under standard credit terms.

Net accounts receivable, including unbilled accounts receivable, consists of the following:

Net a ccounts receivable was $ 7.4 million, including unbilled accounts receivable of $ 1.5 million, at January 1, 2024.

Net accounts receivable, including unbilled accounts receivable, consists of the following as of the periods below:

(In Thousands)

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Accounts receivable, net

Accounts receivable, net was $ 8.4 million as of January 1, 2023, which included Unbilled accounts receivable of $ 2.1 million.

Customer payments received in advance of revenue recognition are considered contract liabilities and are recorded as deferred revenue.

The deferred revenue balance and revenue recognized that was included in these contract liabilities at the beginning of the period consists of the following:

Customer payments received in advance of revenue recognition or the Company's unconditional right to invoice are considered contract liabilities and are recorded as deferred revenue.

The beginning and ending deferred revenue balances and activity during the period consists of the following:

(In Thousands)

Deferred revenue and deposits

Revenue recognized in the period from contract liability at beginning of period

Balance at December 31, 2024

Current year deferral of revenue

Revenue earned from beginning deferred revenue

Balance at December 31, 2025

The Company’s incremental direct costs of obtaining a contract, which consist primarily of sales incentive compensation including commissions, are generally deferred and amortized to sales and marketing expense over the estimated life of the relevant customer relationship.

The Company’s contract acquisition costs shown below consist of $ 0.8 million in Prepaid expenses and other current assets and $ 2.6 million in Other assets, net on the December 31, 2024 Consolidated Balance Sheet.

The full gross balance was included in Other assets, net at December 31, 2023.

The net amounts consist of the following:

The Company’s net contract acquisition costs shown below consist of $ 1.0 million and $ 0.8 million in Prepaid expenses and other current assets on the December 31, 2025 and December 31, 2024 Consolidated Balance Sheets, respectively, and $ 0.2 million and $ 0.4 million in Other assets, net on the December 31, 2025 and December 31, 2024 Consolidated Balance Sheets, respectively.

The gross and net amounts consist of the following:

(In Thousands)

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For the years ended December 31, 2025 and 2024 , the Company operated in a single segment comprised of its conversational analytics and related solutions.

In accordance with ASC 280, Segment Reporting , Edwin Miller, Chief Executive Officer , functions as the Company's chief operating decision maker for segment reporting purposes.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting , which improved reportable segment disclosure requirements, on an annual and interim basis, primarily through enhanced disclosures about significant segment expenses.

The Company adopted ASU 2023-07 during the year ended December 31, 2024 with no material impact to the Company's Consolidated Financial Statements.

In accordance with ASC 280, Segment Reporting , this single segment presentation is the basis upon which the Company's chief operating decision maker relies for performance evaluation and benchmarking.

Long-lived assets by geographical region are based on the location of the legal entity that owns the assets.

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Revenues from customers by geographical areas are tracked on the basis of the location of the customer.

The majority of the Company’s revenue and accounts receivable are derived from domestic sales to customers.

The majority of the Company’s revenue and accounts receivable are derived from sales to domestic customers.

Revenues by geographic region are as follows:

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(In Percentages)

The Company has one customer that generally represents more than 10% of consolidated accounts receivable.

The Company has one customer that represents more than 10% of consolidated accounts receivable.

The Company also has a significant concentration of credit risk arising from receivables due from a network of independent dealers that is above the 10 % threshold.

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The Company has two classes of authorized common stock:

Class A common stock and Class B common stock.

Class A and Class B common stock.

Except with respect to voting rights, the Class A and Class B shares have identical rights.

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In accordance with the stockholders’ agreement signed by the founding Class A common stockholders, the following provisions survived the Company’s initial public offering:

Class A stockholders other than Russell C.

Horowitz may only sell, assign or transfer their Class A stock to existing Class A stockholders or to the Company and in the event of transfers of Class A stock not expressly permitted by the stockholders’ agreement, such shares of Class A stock shall be converted into shares of Class B common stock.

In November 2014, the Company’s board of directors authorized a new share repurchase program (“2014 Repurchase Program”), which superseded and replaced any prior repurchase programs.

Class A stockholders other than Russell Horowitz may only sell, assign or transfer their Class A stock to existing Class A stockholders or to the Company and in the event of transfers of Class A stock not expressly permitted by the stockholders’ agreement, such shares of Class A stock shall be converted into shares of Class B common stock.

I n May 2025, the Company’s board of directors authorized a new share repurchase program, which supersedes and replaces all prior repurchase programs.

Under the 2025 Repurchase Program, the Company is authorized to repurchase up to 3,000,000 shares of the Company’s Class B common stock in the aggregate through open market and privately negotiated transactions, at such times and in such amounts as the Company deems appropriate.

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The 2025 Repurchase Program does not have an expiration date and may be expanded, limited, or terminated at any time without prior notice.

The Company made no repurchases under the 2014 Repurchase Program for the years ended December 31, 2024 and 2023.

Shares repurchased but not yet retired by the Company are classified as treasury stock on the Consolidated Balance Sheet before retirement.

The Company has made no repurchases under the 2025 Repurchase Program and additionally no repurchases were made under the superseded 2014 Repurchase Program for the years ended December 31, 2025 and 2024.

Shares repurchased but not yet retired by the Company will be classified as treasury stock on the Consolidated Balance Sheets before retirement.

Retirement of treasury stock results in reductions to common stock and additional paid-in capital.

(b) Stock Option Plan

The Company’s active stock incentive plan (“2021 Plan”), which was established in 2021, allows for grants of stock options, restricted stock units and restricted stock awards to eligible participants and such options may be designated as incentive or non-qualified stock options at the discretion of the 2021 Plan’s Administrative Committee.

Prior to the 2021 Plan, the Company granted stock-based awards under its 2012 Stock Incentive Plan (“2012 Plan”).

The Company’s active stock incentive plan, which was established in 2021, allows for grants of stock options, RSAs, and RSUs to eligible participants and such options may be designated as incentive or non-qualified stock options at the discretion of the 2021 Plan’s Administrative Committee.

Prior to the 2021 Plan, the Company granted stock-based awards under its 2012 Stock Incentive Plan.

No further awards were made under the 2012 Plan after December 31, 2021.

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The Company may issue new shares or reissue treasury shares for stock option exercises and restricted stock grants.

Generally, stock options have 10 -year terms and vest 25 % each year either annually or quarterly, over a 4 -year period and restricted stock awards and units vest 25 % each year annually over a 4 -year period.

The Company did no t grant any options with exercise prices less than the then current market value during 2024 or 2023.

The Company measures stock-based compensation cost at the grant date based on the fair value of the award and recognizes it as expense over the vesting or service period, as applicable, of the stock award using the straight-line method.

Generally, stock options have 10 -year terms and vest 25 % each year either annually or quarterly, over a 4 -year period and RSAs and RSUs vest 25 % each year annually over a 4 -year period.

The Company accounts for forfeitures as they occur.

Stock-based compensation has been included in the same lines as compensation paid to the same employees in the Consolidated Statements of Operations.

Stock-based compensation expense has been included in the same lines as compensation paid to the same employees in the Consolidated Statements of Operations.

The Company did no t grant any options with exercise prices less than the then current market value during 2025 or 2024.

Stock-based compensation expense was included in the following operating expense categories:

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Total stock-based compensation

Stock-based compensation expense as reported in the Consolidated Statements of Operations for the year ended December 31, 2023, varies from the reported Stock-based compensation from options and restricted stock, net of forfeitures in the Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2023, because of a reclassification of a $ 0.8 million payment owed to a former employee in connection with the Sonar acquisition.

This payment was to be made, at the Company's election, in any mix of cash or restricted stock.

The Company had previously determined its intent and ability to settle this obligation in restricted stock;

however, in December 2023, the Company chose to settle in cash, resulting in a reclassification of this payment obligation from Additional paid-in capital to Other accrued expenses and current liabilities in the Consolidated Statements of Balance Sheets.

This caused a decrease to Stock-based compensation from options and restricted stock, net of forfeitures in the Consolidated Statements of Stockholders’ Equity, with no corresponding decrease in stock-based compensation as reported in the Consolidated Statements of Operations, for the year ended December 31, 2023.

The Company uses the Black-Scholes option pricing model to estimate the per share fair value of stock option grants with time-based vesting.

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For the years ended December 31, 2025 and 2024 , the expected life of each award granted was determined based on historical experience with similar awards, giving consideration to contractual terms, anticipated exercise patterns, and vesting schedules.

Expected volatility is based on historical volatility levels of the Company’s Class B common stock and the expected volatility of companies in similar industries that have similar vesting and contractual terms.

Expected volatility is based on historical volatility levels of the Company’s Class B common stock.

The risk-free interest rate is based on the implied yield currently available on U.S.

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The Company uses an expected annual dividend yield in consideration of the Company’s common stock dividend payments, which we consider to be zero .

The following assumptions were used in determining the fair value of time-vested stock options granted for the periods indicated:

The following assumptions were used in determining the fair value of time-vested stock option grants for the periods indicated:

Year Ended December 31,

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Expected volatility

Stock option activity during the period is as follows:

As of December 31, 2025, there were $ 2.2 million of unrecognized compensation costs related to stock options.

These costs are expected to be recognized over the weighted average period of 2.29 years.

Stock option activity during the period was as follows:

(in thousands)

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Balance at December 31, 2025

As of December 31, 2024, there was $ 3.1 million of unrecognized compensation costs related to stock options.

RSAs and RSUs are generally measured at fair value on the date of grant based on the number of awards granted and the quoted price of the Company’s common stock.

RSAs and RSUs are expensed on a straight-line basis over the vesting or service period, as applicable, and forfeitures are recognized as they occur.

RSUs entitle the holder to receive one share of the Company’s Class B common stock upon satisfaction of certain service conditions.

As of December 31, 2025, there were $ 0.9 million of unrecognized compensation costs related to restricted stock.

These costs are expected to be recognized over the weighted average period of 1.88 years.

Restricted stock awards and restricted stock unit activity during the period is as follows:

RSA and RSU activity during the period was as follows:

(In Thousands)

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Unvested at December 31, 2025

Restricted stock awards and restricted stock units are generally measured at fair value on the date of grant based on the number of awards granted and the quoted price of the Company’s common stock.

Restricted stock awards and restricted stock units are expensed on a straight-line basis over the vesting or service period, as applicable, and forfeitures are recognized as they occur.

Restricted stock units entitle the holder to receive one share of the Company’s Class B common stock upon satisfaction of certain service conditions.

As of December 31, 2024, there was $ 0.3 million of unrecognized compensation costs related to restricted stock.

These costs are expected to be recognized over the weighted average period of 1.08 years.

Net Loss Per Share

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The following table presents the computation of basic net loss per share applicable to common stockholders for the periods ended:

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Computer and other related equipment

Purchased and internally developed software

Purchased software

Furniture and fixtures

Construction in progress

Software development costs

Software development costs - in progress

accumulated depreciation and amortization

Property and equipment, net

During the year ended December 31, 2025 , the Company recorded a loss on disposal of $ 25.0 thousand that is included within Product development on the Consolidated Statement of Operations.

During the year ended December 31, 2025, the Company also recorded a loss on disposal of $ 84.6 thousand, for assets that were located at the Wichita, KS office space associated with the operating lease termination described in Note 9:

Leases below, that is included within Interest income (expense) and other, net on the Consolidated Statement of Operations.

Depreciation and amortization expense related to property and equipment was as follows:

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Depreciation and amortization expense

The Company has operating leases for its corporate office headquarters in Seattle, Washington, and office space in Wichita, Kansas.

The Company has an operating lease for its corporate office headquarters in Seattle, WA.

The Company had an operating lease for office space in Wichita, KS, which was terminated during the second quarter of 2025.

The Company recognizes its operating lease agreements in accordance with ASC 842, Leases , and recognizes rent expense on a straight-line basis over the lease term with any lease incentives amortized as a reduction of rent expense over the lease term.

Assets under operating leases are included in Right-of-use lease assets, and the related liabilities are included in Operating lease liability, current and Operating lease liability, non-current on the Consolidated Balance Sheets.

Assets under finance leases, which primarily represent computer equipment, are subject to a rental agreement for a third-party's utilization of this equipment;

however, we retain our primary obligation under the original financing terms.

Therefore, the Company does not have a right-of-use asset, but it does carry the lease liability related to this financed equipment, on the Consolidated Balance Sheets.

The present value of the rent receivable from the rental agreement is included in Other assets, net , and the related lease liability is included in Other accrued expenses and current liabilities and Finance lease liability, non-current on the Consolidated Balance Sheets.

Assets that were under finance leases, which primarily represented computer equipment, were subject to a rental agreement for a third-party's utilization of this equipment;

however, we retained our primary obligation under the original financing terms.

Therefore, the Company did not have a right-of-use asset, but did carry the lease liability related to this financed equipment, on the Consolidated Balance Sheets.

During the fourth quarter of 2025, the Company made its final payment under the finance leases and therefore does not carry any liabilities related to these previous obligations as of December 31, 2025.

Lease cost recognized in the Consolidated Statements of Operations and other lease information is summarized as follows:

Year Ended December 31,

(In Thousands)

(In Thousands, Except Lease Terms and Percentages)

Operating lease cost

Finance lease cost:

Amortization of right-of-use assets

Interest on lease liabilities

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Cash paid for finance leases

As of December 31, 2024, the Company’s future payments under operating and finance lease liabilities were as follows:

As of December 31, 2025, the Company’s future payments under operating lease liabilities were as follows:

(In Thousands)

Operating Leases

Finance Leases

2029 and thereafter

Gross future lease payments

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Total long-term lease liabilities

Commitments, Contingencies, and Taxes

The Company has commitments for future payments related to office facilities and financed equipment leases, as well as other contractual obligations primarily related to minimum payments due to outside service providers.

Commitments and Contingencies

The Company has commitments for future payments related to its office facility, as well as other contractual obligations primarily related to minimum payments due to outside service providers.

For information regarding the Company's lease commitments, see Note 9:

Leases of the Notes to the Consolidated Financial Statements.

Leases above.

Future minimum payments on the Company's other contractual obligations are approximately as follows:

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See (p) Guarantees section of Note 1:

Description of Business and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for additional information.

Description of Business and Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for additional information.

In certain agreements, the Company has agreed to indemnification provisions of varying scope and terms with customers, vendors and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of agreements or representations and warranties made by the Company, services to be provided by the Company and intellectual property infringement claims made by third parties.

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On July 17, 2024, the U.S.

District Court Judge adopted portions of the Magistrate Judge's recommendation.

The parties have begun discovery.

While we believe we have meritorious defenses to this lawsuit and are vigorously defending against it, litigation is inherently uncertain and we cannot currently predict the ultimate outcome of this matter.

While any litigation contains an element of uncertainty, the Company is not aware of any legal proceedings or claims which are pending that the Company believes, based on current knowledge, will have, individually or taken together, a material adverse effect on the Company’s financial condition, results of operations or liquidity.

The components of the loss before income tax expense consisted of the following:

District Court Judge adopted portions of the Magistrate Judge's recommendation, and the parties subsequently commenced discovery.

During the period, the Company and the plaintiffs made significant progress in negotiating a settlement.

Based on the current status of those discussions and an evaluation of the relevant facts and circumstances, the Company has determined that a loss is probable and reasonably estimable and, accordingly, recorded an additional $ 1.4 million as Acquisition expense in the Consolidated Statement of Operations and has recorded an accrual of $ 2.1 million, the expected settlement amount, related to this matter, of which $ 1.6 million is recorded in other accrued expenses and current liabilities and $ 0.5 million in other non-current within liabilities at December 31, 2025 on the Consolidated Balance Sheet.

The accrual reflects management’s current estimate of the probable loss associated with the litigation;

however, the ultimate resolution of this matter may differ from the amount accrued.

While any litigation contains an element of uncertainty, the Company is not aware of any other legal proceedings or claims which are pending that the Company believes, based on current knowledge, will have, individually or taken together, a material adverse effect on the Company’s financial condition, results of operations or liquidity.

The components of the Company's loss before income tax expense consisted of the following:

Year Ended December 31,

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Loss before income tax expense

Income tax expense consisted of the following:

The Company's income tax expense consisted of the following components:

Year Ended December 31,

(In Thousands)

Current federal provision

Current provision

Deferred provision (benefit)

Total income tax expense

As noted in Note 1:

Description of Business and Summary of Significant Accounting Policies , the Company adopted ASU 2023-09 on a prospective-basis for the year ended December 31, 2025.

The Company's income tax expense differed from the amounts computed by applying the U.S.

federal statutory rate to the loss before provision for income taxes as a result of the following:

federal statutory rate to the loss before the provision for income taxes in accordance with ASU 2023-09 for the following items:

(In Thousands, Except Percentages)

Year Ended December 31, 2025

% of Loss Before Income Tax

Income tax benefit at U.S.

statutory rate

State taxes, net of valuation allowance (1)

Foreign tax effects:

Statutory rate differences

Provincial Tax (Ontario)

Canadian credits

Permanent differences

Deferred adjustments

Canadian valuation allowance

Tax law changes

Valuation allowance

Nondeductible items

Deferred adjustments

Stock based compensation

Total income tax expense

(1) Michigan state taxes made up the majority (greater than 50%) of this item

(2) Includes non-deductible stock-based compensation and excess tax benefits and shortfalls from stock-based compensation

Prior to the adoption of ASU 2023-09, for the year ended December 31, 2024, the Company's income tax expense differed from the amounts computed by applying the U.S.

federal statutory rate to the loss before the provision for income taxes for the following items:

Year Ended December 31,

(In Thousands)

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(1) Includes non-deductible stock-based compensation and excess tax benefits and shortfalls from stock-based compensation

In accordance with the adoption of ASU 2023-09 on a prospective-basis for the year ended December 31, 2025, the following table summarizes activity related to cash payments for income taxes (net of refunds):

(In Thousands)

Year Ended December 31, 2025

All other states

Income tax paid, net of refunds

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below and reflect the 21 % U.S.

federal statutory rate for the years ended December 31, 2024 and 2023:

federal statutory rate as of December 31, 2025 and 2024:

As of December 31, 2025

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Lease liability

Capitalized research and development

Capitalized R&D

Gross deferred tax assets

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As of December 31, 2025, the Company’s federal and state net operating loss ("NOL") carryforwards were approximately $ 190.6 million and $ 67.6 million , respectively.

Of the total federal NOL carryforwards reported, we have accumulated $ 56.7 million with an indefinite life as of December 31, 2024.

Of the total federal NOL carryforwards reported, the Company has accumulated $ 67.5 million with an indefinite life as of December 31, 2025.

The remaining federal and state NOL carryforwards will begin to expire in 2027 and 2029 , respectively, for income tax purposes.

As of December 31, 2024, the Company’s federal research and development credit carryforwards were $ 6.5 million , which will begin to expire in 2029 .

As of December 31, 2025, the Company’s federal R&D credit carryforwards were $ 6.2 million , which will begin to expire in 2029 .

The Tax Reform Act of 1986 limits the use of NOL and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company.

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The Company has recorded a deferred tax asset for stock-based compensation recorded on unexercised non-qualified stock options and certain restricted shares and restricted share units.

The ultimate realization of this asset is dependent upon the fair value of the Company’s stock when the options are exercised and when restricted shares or restricted share units vest, and generation of sufficient taxable income to realize the benefit of the related tax deduction.

The ultimate realization of this asset is dependent upon the fair value of the Company’s stock when the options are exercised and when restricted shares vest, and generation of sufficient taxable income to realize the benefit of the related tax deduction.

The Tax Cuts and Jobs Act contained a provision which requires the capitalization of Section 174 costs incurred in years beginning on or after January 1, 2022.

Section 174 costs are expenditures which represent research and development costs that are incident to the development or improvement of a product, process, formula, invention, computer software, or technique.

Section 174 costs are expenditures which represent R&D costs that are incident to the development or improvement of a product, process, formula, invention, computer software, or technique.

This provision changes the treatment of Section 174 costs such that the expenditures are no longer allowed as an immediate deduction but rather must be capitalized and amortized.

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federal, certain U.S.

states, and certain foreign tax returns.

Generally, U.S.

federal, U.S.

state, and foreign tax returns filed for years after 2013 are within the statute of limitations and are subject to review and adjustment by the Internal Revenue Service.

state, and certain foreign tax returns.

The Company's federal and state returns for all years will remain open to examination by federal and state tax authorities for three and four years, respectively, from the date of utilization of any net operating loss carryforwards.

On July 4, 2025, President Trump signed H.R.

1, the “One Big Beautiful Bill Act,” into law.

The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense.

These changes were not material to the income tax provision for the year ended December 31, 2025.

The following table summarizes activity related to tax contingencies, which are recorded as an offset to deferred tax assets:

(In Thousands)

Gross tax contingencies—January 1, 2023

Gross increases to current period tax positions

Gross tax contingencies—December 31, 2024

Gross increases to current period tax positions

Gross decrease to current period tax positions

Gross tax contingencies—December 31, 2025

Identifiable Intangible Assets from Acquisitions

Intangible assets from acquisitions represent customer relationships, acquired technology, non-competition agreements, and trade names.

These assets are determined to have definite lives and are amortized on a straight-line basis over the estimated period over which we expect to realize economic value related to the intangible asset.

The amortization periods range from one to five years .

As of December 31, 2024, the net identifiable intangible assets have been fully amortized.

Identifiable intangible assets from acquisitions consisted of the following:

As of December 31, 2024

(In Thousands)

Gross Carrying

Customer relationships

Non-compete agreements

Total identifiable intangible assets from acquisitions

As of December 31, 2023

(In Thousands)

Gross Carrying

Customer relationships

Non-compete agreements

Total identifiable intangible assets from acquisitions

The amortization of intangible assets is separately presented on the Consolidated Statements of Operations;

if these amortization costs were not separately stated, they would be reported as follows:

Year Ended December 31,

(In Thousands)

Components of amortization of intangibles from acquisitions:

Cost of revenue

Sales and marketing

Divestiture Support Services Fee

In October 2020, the Company sold certain assets to a related party controlled by a shareholder and officers of the Company.

In connection with the closing, th e Company also entered into an administrative support services agreement with the related party purchaser pursuant to which the Company was to provide services to the related party purchaser for a support services fee.

The support services fees are included in the Consolidated Statements of Operations, net of the related expenses, within C ost of revenue, Sales and marketing , Product development , and General and administrative.

As of December 31, 2024 and 2023 , the net amount due from the purchaser of $ 40.5 thousand and $ 0.4 million , respectively, is included in the Company’s Consolidated Balance Sheet within Prepaid expenses and other current assets .

The components of related party support services fees in the Consolidated Statements of Operations are as follows:

Year Ended December 31,

(In Thousands)

Components of related party support services fee recovery

Cost of revenue

Sales and marketing

Product development

General and administrative

Domain Asset Sale

In April 2025, the Company sold one of its domain assets to a third-party buyer for a total sales price of $ 0.8 million, with payments to be made over a four-year period.

Each payment that the Company receives from the buyer will be reduced by a 15 % commission fee, resulting in total net cash proceeds of approximately $ 0.7 million.

Approximately $ 0.6 million was recognized as a gain within Interest income (expense) and other, net on the Consolidated Statement of Operations for the year ended December 31, 2025.

The remaining amount of approximately $ 48.2 thousand will be recognized as interest income over the four-year payment period due to the financing component of the agreement.

At December 31, 2025, there was approximately $ 0.2 million of the receivable recorded within Other current assets and $ 0.3 million within Other assets, net on the Consolidated Balance Sheet.

Acquisition Agreement in Principle ("AIP")

Marchex entered into an AIP on November 13, 2025 to acquire 100 % of the stock of Archenia, Inc.

from its stockholders (the “Sellers”) for consideration consisting of a $ 10.0 million convertible promissory note, with interest at 6 %, payable in three equal tranches on the 12, 18 and 24 monthly anniversaries of the closing date of the transaction.

Principal and interest under the note would be convertible in whole or in part into shares of Marchex’s Class B common stock at $ 1.80 per share (the 30-day average closing price through November 11, 2025).

A special committee of Marchex’s Board of Directors consisting solely of independent directors (the “Special Committee”) has approved Marchex entering into the AIP because certain of the Sellers are related parties.

The parties have agreed to promptly commence to negotiate a definitive purchase agreement relating to the transaction.

Conditions to entering into the definitive agreement include receipt of audited financial statements of Archenia for such periods as required by SEC rules, and receipt of a customary fairness opinion by a financial advisor selected by the Special Committee.

Conditions to closing the transaction shall include approval of the transaction by a majority of Marchex’s disinterested stockholders.

The closing date, in the event a definitive agreement is entered into and the transaction is approved by disinterested stockholders, is anticipated to occur in June 2026.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data