Good afternoon. And thank you for attending today's Marchex First Quarter 2022 Earnings Call. My name is Jayson, and I will be your moderator for the call today. [Operator Instructions] I'd now like to pass the conference over to our host, Trevor Caldwell, SVP of Strategic Initiatives and Investor Relations. Please proceed.

Thank you, Jayson. Good afternoon, everyone and welcome to Marchex's business update and first quarter 2022 conference call. Joining us today are Michael Arends and Russell Horowitz, our Co-CEOs. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements, including references to our financial and operational performance, and actual results may differ materially from those contemplated by these forward-looking statements. Risks and uncertainties that could cause these results to differ materially are set forth in today's earnings press release and in our most recent annual and quarterly report filed with the SEC. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements for subsequent events. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release. The press release is available on the Investor Relations section of our website. At this time, I'd like to turn the call over to Michael Arends.

Thank you, Trevor. Hello everyone. Thanks for joining the call. In the first quarter we saw continued progress with execution on our opportunity and the conversational intelligence in sales engagement space. Our product momentum is expanding our sales pipeline and our innovations are solving increasingly complicated and challenging problems for businesses as they tackle customer communications across multiple communication channels. Our focus on providing the kind of conversational intelligence Fortune 500 companies both want and need is resonating with existing customers and growing relationships, as well as winning new ones. In the past quarter, we have made sales traction with some of our largest customers, and we are starting to on board new relationships with potentially significant customers, including a large home services aggregator, which we expect to begin to on board this quarter. We anticipate all of these factors will help enhance our go-forward growth profile. With this noted, the pandemic and the resulting economic fallout continue to be factors that are impacting our customers. While we did see conversation volumes pick up modestly during the first quarter from January when the first Omicron variant seemed to peak in the United States, conversational volumes were not as robust in March as the year ago, period. Now this leads us to believe there are still lingering effects from the ongoing pandemic relative to the strong volumes of the second quarter of 2021, when the economy first reopened. In addition, supply chain disruptions and low inventory challenges relative to the year ago period, continue to impact our largest verticals. And we expect that this will take time to unwind. But once it does unwind, we think we will be benefactors in terms of potential growth impacts as increasing volumes could convert into a tailwind in many of our verticals and enables…

Thanks Mike. In the first quarter of 2022 through today, Marchex is continuing to focus on meeting the needs of businesses that are looking to leverage the growing capabilities of conversational intelligence to enhance the consumer buying experience and grow sales. By solving mission-critical challenges for businesses, Marchex is innovating rapidly and expanding our footprint with industry-leading brands and integration partners. These businesses want to create better buying experiences for their customer prospects and grow their businesses. And they need our conversational intelligence capabilities to do it. Throughout the year we expect to launch new sales engagement products supported by our award-winning conversation DNA technology, along with new channel partnerships and integrations. These initiatives will enhance the growth profile of Marchex, both sequentially and over the long-term. By staying through to our mission, to help our customers create better buying experiences and know the outcomes of their customer conversations, Marchex is expanding our market opportunity and putting ourselves in a unique position to emerge as a leader. I'm looking forward to updating you more in the coming months. And with that, I'll hand the call back to Mike.

Thank you, Russ. At a high level, our first quarter 2022 results saw the business grow from the fourth quarter of 2021 and from the prior year. Overall, our growth continues to be influenced by the pandemic and macroeconomic factors, which are suppressing overall conversation volumes in many of our largest verticals. More specifically our volumes in the auto and auto services verticals continue to be impacted by pandemic and geopolitical related shifts in supply chain disruptions, parts, availability, and inflationary pricing pressures. As we have previously communicated, these factors may take time to unwind even as we grow the scale and number of relationships we're winning in those verticals. Over the course of the remainder of this year, we believe we may be able to overcome these macroeconomic factors through our momentum and sales wins with new customers and verticals such as home services and ongoing relationship expansion with several of our existing Fortune 500 customers. And further, based on recent conversations, we believe we will still continue to grow some of our largest customers, potentially, meaningfully. Looking more closely at the first quarter of 2022, January and much of February remained largely consistent with the suppressed conversation volumes of the fourth quarter of 2021, likely due to the extended spread of Omicron. As the quarter progressed, we saw some uptick from January levels, but due to the factors outlined, we did not see the robust conversation volume growth that we saw last or last March or into April. Looking at the more favorable takeaways from the quarter, we continued to see consistent sell through on new products with new and existing customers. And overall, we feel very good about our long-term customer and prospect pipeline and its ability to drive a more meaningful growth profile, as well as…

Thank you. [Operator Instructions] Our first question comes from Mike Latimore from Northland Capital. Please proceed.

Hi, I'm Vivek [ph] calling on behalf of Mike Latimore. I have a couple of questions here. The first one is, are new prospects looking mainly for voice or voice messaging service from you?

So this is Mike. Thank you for the question. I think from a voice perspective and a phone call perspective, that's a key constituent of our product offering today, but more and more so there continues to be conversations for some of the other channels of our product offerings, which include text today. Uh, and there clearly are other discussions which also relate to our overall channel strategy from a product perspective and a roadmap about expanding into other avenues that consumers are engaging with businesses, which include other types of voice communications and other type of messaging applications. But there continues to be robust engagement today in both voice and increasingly, so with text messaging conversations that our customers are looking too.

Yes. And this is Russell, and the other part I'll just add to what Mike said is, you look at our history, voice – our expansion into voice and text and recognition of multi-channel over time. And so with our platform services strategy, part of that is to set ourselves up so that we can plug in those incremental channels based on customer needs as we evolve over time and expand those opportunities.

Okay. My second question is what's the verticals that are improving or slowing?

So this is Mike again, I think the ones that are more significantly impacted by some of the things that we've mentioned on the call today and our remarks on the past. Including the pandemic, including some of the macro events that are affecting parts availability, inventory and supply chain disruption. And the inflationary price pressures, automotive would be one of those, that would be impacted, I think automotive services is impacted in the more recent time periods particularly with some of the macro conditions affecting inflationary pricing pressure, home services to some extent has been impacted as well. We see all of those areas with an opportunity to give us with an unwinding of some of these pressures at some point, which we believe will happen in the future, and particularly in the automotive area, we see from some of our conversations with the OEMs that there are periods whether it's the end of this year or into 2023 an unwinding of some of the inventory shortages as that come through – comes through, we are hearing from our customers that they expect conversational volumes to increase that naturally provides benefit to some of the services and the offerings that we have, how it affects our revenue. We do expect to see a tailwind or an uplift that comes even just with our existing base of customers.

All right, sounds good. Thank you.

There are no more questions waiting at this time. So I'll pass the conference back over to the management team for closing remarks.

Great. This is Russ. To just give you some final thoughts; first and foremost we like our industry. We also really like our opportunity within our industry and we like our position a lot as well. We have the right products, customers and customer prospects to drive higher growth both sequentially and over time. And despite the macro elements noted we have various growth catalysts and multiple ways to win and accelerate any macro unwinding will likely only help and amplify our progress and growth. And with that, we look forward to updating you all on all of our progress very – again very soon. Thanks everybody for participating. Bye and be well, and we will be updating you on our progress soon.

That concludes the Marchex first quarter 2022 earnings call. Thank you for your participation. You may now disconnect your lines.