Good afternoon. My name is Doris, and I will be your conference operator today. At this time, I would like to welcome everyone to the Marchex Fourth Quarter Conference Call. [Operator Instructions].I will now turn the call over to our host, Mr. Ethan Caldwell, General Counsel. Sir, please go ahead.

Good afternoon, everyone, and welcome to Marchex' Business Update and Fourth Quarter 2017 Conference Call. Joining us today are Mike Arends and Russell Horowitz. Before we get started, I'd 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 or quarterly report filed with the Securities and Exchange Commission. 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 earnings press release is available on the Investor Relations section of our website at marchex.com. At this time, I'd like to turn the call over to our Chief Financial Officer, Mike Arends.

Thank you, Ethan. Good afternoon, and thank you, everyone, for joining us today. The fourth quarter represented another step forward. We're solidifying the foundation of our business, making progress with our products and establishing meaningful customer opportunities for 2018. Before we turn to the specifics of the quarter, I'd like to thank our employees who have worked diligently to help Marchex advance our long-term strategic goals to stabilize the business and create new opportunities that can drive long-term growth. Our consistent focus on delivering on our customers' most critical problems is at the center of everything we do and is the key driver of our progress. Some of our achievements in the fourth quarter and in 2017 include, first, Marchex launched 5 new products over the course of the last year. This has been the most robust launch cycle in our history and has given us a unique position in our markets in terms of the breadth and depth of insights we can deliver to our large enterprise marketers. Second, we added more than 40 new customers in 2017. In addition, we're building a broad pipeline of opportunity across multiple industries. Third, we returned the company to positive operating cash generation through a company-wide effort to concentrate our business in strategic product and sales areas. We've created a more focused and entrepreneurial Marchex, and we're beginning to see the benefit of these efforts. Over the course of the last year, we've continued to build and deploy what we believe is the most comprehensive and accurate conversion analytics platform in our industry. Our platform leverages proprietary machine learning and artificial intelligence to drive unique and growing business insights. Businesses have a growing need to understand what is happening across all customer channels, as mobile technology plays an ever larger role in…

Thanks, Mike. 2017 was a foundational year in which we refocused the company and reopened the door to meaningful opportunity. Today, we've realigned our business to better support our customers and are able to measure the results in a more timely manner. Marchex is a more disciplined company, with a growing base of customers and the capability to keep investing in their success. I want to briefly provide an update on our strategic review. As we've indicated previously, we continue to evaluate a variety of initiatives, which could include acquisitions. We took the first step in December when we announced the special dividend payable in the first quarter. Our growing confidence and our longer-term outlook gives us greater flexibility to execute on our strategic review process. As we move forward this year, we'll continue to assess business progress and evaluate a variety of options. We remain highly focused on improving our financials and further refining our long-term strategic goals. If 2017 is a measure of the type of progress we can make in 1 year, I look forward optimistically to what we can accomplish in 2018. And with that, I'll turn the call back to Mike.

Thanks, Russ. For the fourth quarter, revenues were $21.8 million. I mean, we know some of you had previously tracked our revenue without YP, so to help models with this framework in mind, revenue in the fourth quarter excluding YP was $17.7 million, and this compares to $22.4 million for the fourth quarter of 2016. And as a reminder, YP was acquired by Dex in 2017. Also of note, in the fourth quarter, we recognized over $500,000 of revenue related to an analytics customer we piloted in prior periods. And at this stage, we are moving to a full contractual relationship, and believe this can be a meaningful long-term customer for Marchex. On a year-over-year basis, as discussed on prior calls, the fourth quarter revenues without YP were primarily influenced by a decrease in budgets from customers who were the subject of acquisitions and from trends with the limited number of Call Marketplace customers. We're starting to see some favorable impact from our building customer trial pipeline, particularly in several of our analytics products launched last year. Many of these trials are initially small, and it will take time to determine the scope of the fully ramped relationships. We expect this expanding sales pipeline may have a meaningful impact for our long-term growth, particularly for our analytics products, though they are not yet at a scale that is impacting our financial profile in the immediate term. Looking further down the P&L for the fourth quarter, excluding stock-based compensation, total operating cost for the fourth quarter were $21.4 million. Service costs were $11.5 million, down from $15.9 million in the fourth quarter of 2016. Sales and marketing and product development costs were $3.3 million and $4.1 million, respectively, which were down year-over-year. Moving to profitability measures. Adjusted operating income before amortization…

[Operator Instructions]. We do have a question from the line of Darren Aftahi with Roth Capital Partners.

Just to see, if I may, first, can you just kind of give us a sense for the advertising landscape for some of your customers in 2018 for kind of your product portfolio kind of relative to 2017? And then on your Q1 sales guidance, I'm curious what your sort of embedded assumptions about YP is relative to the enterprise business. And then I got a couple of follow-ups.

Sure. This is Russell. On the first part of the question relative to the advertising landscape, mobile continues to be highly relevant and a big driver overall, and specifically, with the opportunity around conversational analytics. And so if you contrast that with 2017, clearly, that was a trend in 2017 as well. But we do see that catalyst as being accentuated. And we feel like the product launch, as we went through in 2017, have set us up increasingly better when you think about our opportunities to win new customers, grow existing customers and hope we see the combination of those things, be good catalyst to resume growth.

On the second part of your question, Darren, maybe -- this is Mike, maybe it's easiest if you could reiterate just to make sure we were clear on the question.

Yes. I'm just kind of curious within the Q1 sales guidance assumption, like what's implicitly assumed in terms of YP is that sort of a relative to the Enterprise business. Said it another way, are you still expecting YP to be a declining piece of revenue, vis-a-vis rest of your business?

So as we mentioned in the call, I think there's a number of different interesting facets of our relationship with DexYP. And as part of some of the historical relationships that we've had, those aspects of it, we think that recent historical trends are going to continue at least in the near term as part of the course of the relationship. There are many other facets that are in discussion or in progress, and we think, today and the early part 2018, we have many more opportunities for our company than we did at the beginning of 2017, or even for that matter, if you look back in the 2016 time period. And part of that comes from the new product introductions. Some of those new product introductions, we think, may be of interest with DexYP, and there are some discussions that are being pursued. And we look forward to providing more updates on that as we progress through the year. But I think it's a little bit too early at this stage of the year.

Fair enough. And just two more if I may. Just an update on the Facebook relationship kind of what you're seeing in terms of traction there? And then lastly, just as to cash dividend, like any updated plans in terms of the balance sheet?

Sure. This is Russell. I'll take the first part and Mike can take the second part. Yes, on the Facebook front, that's a relationship that we continue to value and appreciate. We've got various customers that we've launched with that product. That product has been an important element of our omnichannel offering. And as we think about it in 2018 and talk about increased opportunities and catalysts for us, it's part of the reason why we feel that way.

And on the second part, even without - ex the dividend, we still think we've got a very healthy balance sheet. We're debt-free. We're going to have a significant [indiscernible] of cash, which for us, given some of the stabilization that we've seen over the course of the last year in the business, we think it provides that strategic flexibility. It's still possible that we'll be able to take that remaining cash balance and build on it over the course of 2018. Time will tell. But again, we want to reiterate that we see with some of the new product introductions, with some of the trials going on with customers, more opportunity today for possible return to growth than we have in the recent past.

And I'd like to go ahead and hand it back to management for any closing remarks.

Thank you, everyone, for joining us on the conference call today, and we look forward to providing further updates as we progress throughout the course of the year.

And ladies and gentlemen, this does conclude today's conference call. You may now disconnect.