MarketWise(MKTW) - 2024 Q3 - Quarterly Report

Subscriber Metrics - Paid Subscribers decreased to 592 thousand as of September 30, 2024, down 182 thousand or 23.5% from 774 thousand as of September 30, 2023[95] - Free Subscribers decreased by 1.0 million, or 6.4%, to 15.3 million as of September 30, 2024, compared to 16.3 million at the same date in 2023[107] - Active Free Subscribers decreased by 0.7 million, or 17.5%, to 3.3 million as of September 30, 2024, compared to 4.0 million as of September 30, 2023[107] - Total Paid Subscribers decreased by 182 thousand, or 23.5%, to 592 thousand as of September 30, 2024, compared to 774 thousand at the same date in 2023[110] - The high-value composition rate was 52% of Paid Subscribers as of September 30, 2024[100] Financial Performance - Total net revenue for Q3 2024 was $97.2 million, a decrease of 8.4% compared to $106.2 million in Q3 2023[95] - Net income increased to $22.7 million in Q3 2024, compared to $12.0 million in Q3 2023[95] - For the nine months ended September 30, 2024, net revenue was $311,223, a decrease of 7.4% from $336,027 in the same period of 2023[136] - The net income for the nine months ended September 30, 2024, was $66.7 million, up from $52.4 million in the same period of 2023[159] Revenue and Billings - Total Billings in Q3 2024 were $48.9 million, down 48.8% from $95.5 million in Q3 2023[95] - New Marketing Billings were $32.3 million in Q3 2024, down 56.1% from $73.7 million in Q3 2023[105] - Net Renewal Billings were $15.7 million in Q3 2024, a decrease of 24.2% from $20.8 million in Q3 2023[105] - The decrease in net revenue was primarily driven by a $7.7 million decrease in term subscription revenue and a $1.0 million decrease in membership subscription revenue[129] - Total Billings decreased by $46.6 million, or 48.8%, to $48.9 million for the third quarter 2024, compared to $95.5 million for the third quarter 2023[112] Expenses and Cost Management - Total operating expenses for the three months ended September 30, 2024, were $75,284, down 20.8% from $95,108 in the same period of 2023[131] - Sales and marketing expenses decreased by 30.2% to $36,644, primarily due to a reduction in marketing spend and workforce[133] - Total operating expenses for the nine months ended September 30, 2024, were $246,432, down 13.7% from $285,458 in the same period of 2023[139] - Cost of revenue for the nine months ended September 30, 2024, decreased by 9.3% to $39,649, primarily due to a reduction in credit card fees and salaries[140] Cash Flow and Financing - Cash and cash equivalents stood at $94.1 million as of September 30, 2024[95] - The company reported a cash float of approximately $119.9 million as of September 30, 2024, compared to $120.5 million at the end of 2023[151] - For the nine months ended September 30, 2024, net cash used in operating activities was $28.1 million, a decrease from $44.9 million provided in the same period of 2023[159] - Net cash used in financing activities increased to $32.1 million for the nine months ended September 30, 2024, from $7.8 million in the same period of 2023[163] Management and Organizational Changes - The company appointed Dr. David Eifrig as Interim CEO in August 2024, with founder Porter Stansberry remaining on the Board[95] - The company plans to discontinue reporting Free Subscribers and will only report Active Free Subscribers starting from the first quarter of 2025[107] - The company incurred separation costs of approximately $1.3 million and $2.3 million for the three and nine months ended September 30, 2024, respectively, due to the Legacy Reorganization[154] - The annualized compensation cost savings associated with terminated employees from the Legacy Reorganization is estimated at $16.1 million[154] Other Financial Metrics - Average Revenue Per User (ARPU) was $417 as of September 30, 2024, a decrease of 15.9% from $496 as of September 30, 2023[100] - Adjusted CFFO for the three months ended September 30, 2024, was $(5,829) thousand, a decrease of 148.4% compared to $12,055 thousand for the same period in 2023[146] - Adjusted CFFO Margin for the three months ended September 30, 2024, was (11.9)%, down from 12.6% in the prior year[149] - Non-cash items in operating activities included stock-based compensation expense of $8.7 million and depreciation and amortization of $2.0 million for the nine months ended September 30, 2024[159]