Marchex Buys Sonar Technologies with Cash, Stok

Marchex, Inc. (NASDAQ:MCHX), a provider of call analytics that drive, measure, and convert callers into customers, has announced the acquisition of Sonar Technologies, an enterprise text and messaging sales engagement and analytics company (www.send-sonar.com), for consideration of USD 12.5 million in a combination of cash and stock and up to an additional USD 1.5 million in stock subject to certain sales performance targets, the company said.

Sonar provides an enterprise-level text and messaging platform for companies looking to increase revenue by improving consumer experience and engagement. The company´s innovative technology enables enterprises to deliver timely and highly personalized experiences via text, one of the most heavily utilized mobile consumer communication channels.

The company processes millions of messages for organizations in real estate, consumer lending, travel, automotive and other industries. In addition, Sonar further expands the footprint of Marchex´s conversational data set, expanding Marchex´s ability to use artificial intelligence to surface deep consumer intent signals across texts, messaging and voice communication channels.

The combined company will offer businesses a unified view of the customer across voice and text communication channels, including calls, text and messaging on both an inbound and outbound basis, while enabling actionable insights and solutions to allow businesses to increase sales and improve consumer engagement.

By combining Marchex´s footprint of conversational data with a robust enterprise text and messaging solution, Marchex will expand its base of AI-driven, consumer intent signals. These signals are the fuel for Marchex´s product roadmap and will now include insights across voice and text while giving businesses the capabilities to deliver these critical insights into highly personalized customer experiences across multiple conversation channels on an inbound and outbound basis.

The combined company will be able to leverage conversational insights across two of the most utilized mobile consumer engagement channels. In addition, the company will be able to utilize its flexible platform to further open integration opportunities into the sales and marketing data and software ecosystem while increasing potential cross sell opportunities among existing customers in 2020 and beyond.

Consideration of USD 12.5 million, with USD 8.5 million paid in cash at the closing, and USD 4 million (or 1,036,269 aggregate shares of Marchex Class B common stock calculated based on the 10-day trailing average of Marchex´s closing stock price prior to December 12, 2019) in stock to be issued in three installments on each annual anniversary of the closing date, subject to certain conditions.

In addition, as part of the total consideration, contingent payments of up to USD 1.5 million in stock (the number of shares to be calculated on the same 10-day trailing average basis) will be awarded subject to achieving certain sales performance targets in 2020. If earned, the payment issuance would be in two equal annual installments, subject to certain conditions.

In addition, Marchex will issue restricted stock units up to USD 1 million to certain employees of Sonar Technologies subject to vesting over four years. A portion of these units may be settled in cash.

For the year ended December 31, 2019, Sonar Technologies is projecting to have near USD 1.4 million in messaging platform revenue1 and has been operating near breakeven for both operating income and adjusted OIBA.

Marchex does not expect the acquisition to have any meaningful impact on its results of operations for the remainder of 2019.

In 2020, Marchex expects 20% or more annual revenue growth in messaging platform revenue (that is generally subject to renewal contract streams). Additional synergies are anticipated beyond the 2020 earnout period.

Marchex expects amortization of intangible assets from acquisition will impact GAAP results. For 2020, Marchex expects the acquisition to be have a small accretive impact to Adjusted OIBA2 on a non-GAAP basis and no meaningful impact to operating income excluding amortization.
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