MarketWise Reports Net Income of $22.7 Million and Net Revenue of $97.2 Million for Third Quarter 2024
BALTIMORE, Nov. 07, 2024 (GLOBE NEWSWIRE) -- MarketWise, Inc. (NASDAQ:MKTW) ("MarketWise" or the "Company"), a leading multi-brand digital subscription services platform that provides premium financial research, software, education, and tools for self-directed investors, today reported financial results for third quarter 2024.
Third Quarter 2024 Highlights(1)
Paid Subscribers were 592 thousand as of September 30, 2024 compared with 774 thousand as of September 30, 2023
Total Net Revenue was $97.2 million in third quarter 2024 compared with $106.2 million in third quarter 2023
Total Billings was $48.9 million in third quarter 2024 compared with $95.5 million in third quarter 2023
Net Income was $22.7 million in third quarter 2024 compared with $12.0 million in third quarter 2023
Cash and Cash Equivalents were $94.1 million as of September 30, 2024
(1) See "Key Business Metrics and Non-GAAP Financial Measures" below. For a reconciliation of Adjusted CFFO and Adjusted CFFO margin, see "Non-GAAP Measures" below.
Dr. David "Doc" Eifrig, Interim Chief Executive Officer, commented, "I have been around this Company for two decades and have seen many business cycles and changes along the way. One thing that has remained constant is our commitment to providing high-quality independent research that empowers our customers. My deepest gratitude goes to the more than 400 employees dedicated to the experience of our subscribers. During my first 90 days, I have focused on evaluating the culture, capabilities, products, and processes at our Company. And while not yet evident in our Q3 financial results, I feel confident we are making progress."
Eifrig continued, "During the third quarter, we began to optimize parts of our business, which we believe will improve revenue and margins going forward. Further, we believe our new brand launches coupled with a strong product pipeline in Q4 will result in an inflection point in our Billings, after several quarters of sequential declines. Specifically, while our average monthly Billings during Q3 were approximately $16 million, our October Billings totaled approximately $19 million. While not yet a trend, we believe seedlings like these will bear fruit. Lastly, we are in the process of advancing our strategic priorities which will guide our Company's efforts around revenue growth, margin expansion, and inorganic opportunities. I remain bullish and honored to lead our Company and the team we have in place to deliver for our customers, shareholders, and employees. We sell trust and honest ideas with innovative technology to help our subscribers learn, invest, and lead a healthier and wealthier life."
YTD 3Q 2024 Highlights(1)
Total Net Revenue for the nine months ended September 30, 2024 was $311.2 million, a decrease of 7% compared with the same period in prior year.
Total Billings for the nine months ended September 30, 2024 was $183.7 million, a decrease of 36.4% compared with the same period in prior year.
Net Income for the nine months ended September 30, 2024 was $66.7 million, an increase of 27% compared with the same period in prior year.
Net Cash Used in Operating Activities was $28.1 million for the nine months ended September 30, 2024, compared with Net Cash Provided by Operating Activities of $44.9 million for the same period in prior year.
Our summary results are as follows:
(Unaudited)
3Q 2023
4Q 2023
1Q 2024
2Q 2024
3Q 2024
TTM 3Q2024
Paid Subscribers (in thousands)
774
737
683
645
592
592
Total net revenue (in millions)
$
106.2
$
112.2
$
109.0
$
105.0
$
97.2
$
423.4
New "Marketing" Billings (1)
$
73.7
$
67.7
$
54.8
$
38.7
$
32.3
$
193.5
Net "Renewal" Billings (2)
$
20.8
$
21.6
$
21.4
$
17.1
$
15.7
$
75.9
Other Billings (3)
$
1.0
$
4.2
$
1.0
$
1.8
$
0.9
$
7.9
Total Billings
$
95.5
$
93.6
$
77.2
$
57.6
$
48.9
$
277.3
ARPU
$
496
$
503
$
492
$
456
$
417
$
417
Net income (in millions)
$
12.0
$
1.9
$
22.7
$
21.2
$
22.7
$
68.6
CFFO (in millions)
$
12.1
$
15.7
$
(18.5
)
$
(3.8
)
$
(5.8
)
$
(12.4
)
Adjusted CFFO (in millions)
$
12.1
$
19.7
$
(18.5
)
$
(3.8
)
$
(5.8
)
$
(8.4
)
(1) Includes billings from all new subscription sales to new and existing subscribers.
(2) Includes billings attributable to renewal and maintenance fee payments. Excludes Membership sales.
(3) Includes primarily billings from Revenue Share, Advertising, and Conferences.
Balance Sheet and Capital Structure
As of September 30, 2024 the consolidated Cash balance was $94.1 million as compared with $155.2 million at December 31, 2023. The majority of the decline in cash related to activity that occurred in the first half of this year. For the nine months ended September 30, 2024, interest income earned totaled $4.8 million.
Consistent with previous disclosure, the Company began making required tax distribution payments in the third quarter of 2024. Tax distributions of approximately $6 million were made during the quarter and are reflected in our statement of cash flows as cash used in financing activities. We will continue to make required quarterly tax distributions in future periods, which we expect to be significant. The amount of future tax distributions however, will be dependent on a variety of factors.
The Company's $150 million credit facility matured on October 29, 2024, with no amounts outstanding. While the Company currently has no immediate needs for external capital, and the business plan is fully funded, the Company may in the future consider entering into a new credit facility to enhance optionality around capital allocation alternatives.
MarketWise Inc.'s Class A common stock trades on the NASDAQ Global Market under the symbol "MKTW." As of September 30, 2024, the Company had 39,381,380 Class A common shares and 279,890,147 Class B common shares issued and outstanding.
About MarketWise
Founded with a mission to level the playing field for self-directed investors, today MarketWise is a leading multi-brand subscription services platform providing premium financial research, software, education, and tools for investors.
With more than 25 years of operating history, MarketWise serves a community of millions of free and paid subscribers. MarketWise's products are a trusted source for high-value financial research, education, actionable investment ideas, and investment software. MarketWise is a 100% digital, direct-to-customer company offering its research across a variety of platforms including mobile, desktops, and tablets. MarketWise has a proven, agile, and scalable platform and our vision is to become the leading financial solutions platform for self-directed investors.
Key Business Metrics and Non-GAAP Financial Measures
In this release we discuss certain key business metrics, which we believe provide useful information about the Company's business and the operational factors underlying the Company's financial performance. We are not aware of any uniform standards for calculating these key metrics, which may hinder comparability with other companies who may calculate similarly titled metrics in a different way.
Billings is defined as amounts invoiced to customers.
Free Subscribers are defined as unique subscribers who have subscribed to one of our free investment publications via a valid email address and continue to remain directly opted in, excluding any Paid Subscribers who also have free subscriptions. Active Free Subscribers are those Free Subscribers with whom we have engaged during the most recent quarter and represent those individuals who have received and/or consumed our content on a regular basis during that same quarter.
Paid Subscribers are defined as the total number of unique subscribers with at least one paid subscription at the end of the period.
Average revenue per user or ARPU is defined as the trailing four quarters of net Billings divided by the average number of quarterly total Paid Subscribers over that period.
In addition to our results determined in accordance with GAAP, we believe that the below non-GAAP financial measures are useful in evaluating our ability to generate cash. We use the below non-GAAP financial measures, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. This non-GAAP financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation is provided above for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
Adjusted CFFO is defined as cash flow from operations plus or minus any non-recurring items.
Adjusted CFFO Margin is defined as Adjusted CFFO as a percentage of Billings.
We believe that Adjusted CFFO and Adjusted CFFO Margin are useful indicators that provide information to management and investors about our ability to generate cash (without the effects of non-recurring items), and for internal planning and forecasting purposes.
We expect Adjusted CFFO and Adjusted CFFO Margin to fluctuate in future periods as we invest in our business to execute our growth strategy. These activities, along with any non-recurring items as described above, may result in fluctuations in Adjusted CFFO and Adjusted CFFO Margin in future periods.
Non-GAAP Measures
The following table provides a reconciliation of net cash provided by operating activities to Adjusted CFFO, and net cash provided by operating activities margin as a percentage of total net revenue to Adjusted CFFO Margin, in each case, the most directly comparable financial measure calculated in accordance with generally accepted accounting principles in the United States ("GAAP"):
(In thousands)
Third Quarter
Year to Date September 30,
2024
2023
% Change
2024
2023
% Change
Net cash (used in) provided by operating activities
$
(5,829
)
$
12,055
(148.4)%
$
(28,135
)
$
44,901
(162.7)%
Non-recurring expenses
—
—
NM
—
—
NM
Adjusted CFFO
$
(5,829
)
$
12,055
(148.4)%
$
(28,135
)
$
44,901
(162.7)%
Net cash (used in) provided by operating activities
$
(5,829
)
$
12,055
(148.4)%
$
(28,135
)
$
44,901
(162.7)%
Total net revenue
