Good afternoon. My name is Celine. And I will be your conference operator today. At this time, I would like to welcome everyone to the Marchex First Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] Thank you. I would now like to hand the conference over to your speaker today Mr. Trevor Caldwell, Senior Vice President of Investor Relations. You may begin your conference.

Thank you, Good afternoon, everyone. Welcome to Marchex's business update first quarter 2021 conference call. Joining us today are Michael Arends and Russell Horowitz Co-CEOs; Leila Kirske our CFO. 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 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 take 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 this time, I'd like to turn the call over to Michael Arends.

Thank you, Trevor. Good afternoon and thank you everyone for joining us today. In the first quarter, we saw the early benefits of greater organizational clarity and singular focus on the conversational analytics and sales engagement opportunity. We began to see initial signs of a pandemic recovery in our sales pipeline and conversation volumes, all while innovating on our future product roadmap. Let me first address total conversation volumes which increased noticeably near the end of the first quarter. Although January was largely consistent with December, volumes started to pick up in February, and in March, we saw increased volumes that approached 2019 levels. This corresponded with several of our customers experiencing increased consumer activity, while also gradually reopening locations in multiple regions. For instance, we noted measurable improvements in conversation volumes at the end of the quarter in verticals such as auto services, dental, home services, and auto manufacturing in geographic regions that were reopening. As an example, in-home services and healthcare conversion volumes increased nearly 20% in March over the prior year. Again, those numbers are almost in line with 2019 levels. And importantly, we see that some of these trends have continued into the current quarter. Meanwhile, verticals such as travel have remained significantly disrupted in the first quarter relative to historical patterns. However, we hope to see a favorable shift in the coming month as the outlook for the pandemic improves. We also saw new sales and existing customer interest accelerate in the first quarter. In fact, we signed more new customers and upsells than at any point in the last 12 months. These new customers spent multiple product lines across a variety of sectors, including auto, home services, and advertising agencies, among others. Right now, businesses increasingly want to understand how to engage customers over…

Thanks, Mike. We're really encouraged to see the initial signs of momentum building in our business since the start of the year. Over the last 12 months, we've made the decision to more deeply concentrate on the transformational opportunity in conversational analytics and sales engagement solutions. We're now seeing early evidence of traction in our vision and strategy. We're creating a unified suite of sales engagement solutions across voice and text channels, which will empower our customers to capitalize on those actionable insights in real time. We're opening new markets and expanding our addressable market. With our auto dealer product, we will have the opportunity to sell into thousands of franchise dealers over the next several years. Through our investments in unifying our infrastructure, we can now take advantage of Marchex as a leading conversational data to innovate into the future, and create new opportunities to cross sell and upsell with easier integrations for our customers and new channel partnership possibilities. Our plans for 2021 are appropriately ambitious, and we intend to execute on all of them. In the first quarter, we saw the first signs of acceleration in our business, which demonstrates the strategy while in its early stages is starting to pay-off. As a result of this progress, we anticipate growth can sequentially accelerate and be on track to achieve our targets for this year, as well as set the stage for a strong long-term operating profile. As we look at our strategic priorities for 2021, we are focused on making substantial progress in introducing new AI-fueled products in driving increased momentum and auto tech and other core verticals. Furthermore, and importantly, we have simplified our business and created organizational clarity. This sets us up to execute well while establishing a leadership role in a very important transformative market. And with that, I will handle the call - I hand the call off to Leila.

Thank you, Russ. I'm excited to be here today and share my thoughts on our business and our progress so far this year. At high level, while the overall environment continues to be characterized by the impact that COVID-19 has had on our lives and those of our customers, we've seen some encouraging signs during the first quarter. Most notably, as Mike mentioned, we saw conversation volumes increase over the course of the quarter and positive developments in our sales pipeline. And while we cannot predict when the economy will return to normal. We believe our customers and our prospects, businesses will benefit from gradual reopening. That, combined with our ongoing product initiatives, she provided tailwind from our checks this year and going forward. For today's commentary, I will focus on financial results from continuing operations. On that basis, but only for the first quarter was $13 million. Conversation volumes remain somewhat depressed during January but started to recover in February, while March saw healthy volumes as we approach 2019 levels. Notably, we saw some key customer categories like home services and healthcare experience a healthy growth in March that continued into April. While the COVID environment continues to impact categories like hospitality and dental versus a normalized environment, we did see some positive progression in March in those areas. In addition, the gradual reopening of the economy has led to a rise in new customer wins and upsells. In fact, as Mike mentioned in the first quarter, new enterprise customer sales represented a high relative to the last 12 months. As we introduce new products over the course of 2021, we expect that these products will contribute to further build our sales pipeline. Now let's get to the P&L for the first quarter. Excluding stock-based compensation, amortization of intangible…

Thank you. [Operator Instructions] We have our first question coming from the line of Mike Lattimore with Marchex [ph]. Your line is open.

Hi, guys, this is [Indiscernible] on for Mike. People go back to work and talk, [indiscernible] your volume generally. Like a key Marchex value is monitoring sales effectiveness from a remote location?

In terms of the volumes and whether we're helping measure sales effectiveness from remote locations, I think the primary focal point is how a consumer engages with the business. And as long as the consumer is engaging with the business through a channel that's dedicated primarily to a mobile device, whether it's voice or text. We absolutely see those trends benefiting our volume. And we think over the course of 2021 with some of the greater engagement activity between consumers and businesses that we expect will come with an unwinding of a pandemic. There should be momentum there and volume increases.

And I'll take that. This is Russ. One of the elements for us when we look at the last year is a lot of our customers are service-based businesses, or national companies that had a distributed national footprint in terms of locations. And they were the first to really face the brunt of shutdowns. What's happening now, when you look at reopenings in combination with renewed sales initiatives? Because once you set your locations, trying to drive more customers to those locations obviously doesn't make sense. And so that was the disruption we all face. But we're, - we believe we're on the other side of it now. And as those reopenings continue to happen, that those initiatives to drive more customer leads and conversions continue to happen. And the volume of move in parallel, that becomes a tailwind. That helps us in addition to our product progress, and our sales momentum.

All right. How are the call volumes tracking in April and May? Is it improving from first quarter?

Yes, this is Leila. Our car volumes have been pretty steady quarter-over-quarter. Pretty much any higher than the prior and tracking consistently this current year.

Right. And how's your traction with messaging services?

This is Russ. Texting is one of the catalysts for us. We see that on the customer front. Consumers are driving a real - steepening of the adoption curve. Because consumers want the ability not just to call, but to text, it ends up being just a much more efficient way to connect either on the consumer inbound basis on the business outreach back to the consumer. And so as businesses see that consumer traction, and as we kind of touched on in the course of our formal presentation. There's an increasing urgency, just given some of the complexity of the existing business infrastructure to find integrated solutions that support both voice and text. And that lines up. It's right in line with what we believed would be a significant opportunity for Marchex. And so when we talk about our catalyst, we hit on the auto vertical as an example. And we hit on our text products in our text and these products specifically, because of the increased recognition and urgency around adoption and integration.

All right. Thank you.

Thank you.

[Operator Instructions] There are no further questions at this time. I will now turn the call over back to the speakers for additional comments.

Hi, this is Russ. Appreciate everyone's participation today. Just a few closing thoughts, that last question on text. Text was really the first product that started to take off this year. And we touched on some of the other catalysts that we're seeing unfold. But when we think about some of the key themes that we see, it's really kind of our current view and seeing this convergence of our three key positive elements with new product releases, or increased sales momentum. And again, these macro trends that are leading to overall volume growth. And we think the combination of these three and other elements are leading to this increasingly positive outlook of increased acceleration in our quarter-to-quarter growth, as well as a bigger opportunity footprint. So again, as things down now we feel really good with the way 2021 is shaping up for us. And we appreciate all your ongoing interest and involvement with Marchex. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.