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There's no doubt that money can be made by owning shares of unprofitable businesses. For example, although Amazon.com made losses for many years after listing, if you had bought and held the shares since 1999, you would have made a fortune. Having said that, unprofitable companies are risky because they could potentially burn through all their cash and become distressed.
So, the natural question for Marchex (NASDAQ:MCHX) shareholders is whether they should be concerned by its rate of cash burn. For the purposes of this article, cash burn is the annual rate at which an unprofitable company spends cash to fund its growth; its negative free cash flow. Let's start with an examination of the business' cash, relative to its cash burn.
How Long Is Marchex's Cash Runway?
A company's cash runway is calculated by dividing its cash hoard by its cash burn. When Marchex last reported its December 2024 balance sheet in March 2025, it had zero debt and cash worth US$13m. Importantly, its cash burn was US$1.5m over the trailing twelve months. So it had a cash runway of about 8.3 years from December 2024. While this is only one measure of its cash burn situation, it certainly gives us the impression that holders have nothing to worry about. The image below shows how its cash balance has been changing over the last few years.
Check out our latest analysis for Marchex
How Well Is Marchex Growing?
Happily, Marchex is travelling in the right direction when it comes to its cash burn, which is down 73% over the last year. But it was a bit disconcerting to see operating revenue down 3.6% in that time. We think it is growing rather well, upon reflection. Clearly, however, the crucial factor is whether the company will grow its business going forward. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company .
How Hard Would It Be For Marchex To Raise More Cash For Growth?
There's no doubt Marchex seems to be in a fairly good position, when it comes to managing its cash burn, but even if it's only hypothetical, it's always worth asking how easily it could raise more money to fund growth. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund growth. We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations.