MarketWise(MKTW) - 2025 Q2 - Quarterly Report

Financial Performance - Total net revenue for Q2 2025 was $80.0 million, a decrease of 23.9% compared to $105.0 million in Q2 2024[133] - Total net revenue for the second quarter 2025 was $79.95 million, a decrease from $105.05 million in the second quarter 2024[183] - Net income for Q2 2025 was $15.3 million, a decrease of 27.9% compared to $21.2 million in Q2 2024[213] - EBITDA for Q2 2025 was $15.7 million, down 26.7% from $21.3 million in Q2 2024[213] - Total net revenue for the six months ended June 30, 2025, was $163,457, a decrease of $50,580 or 23.6% compared to $214,037 in 2024[192] Subscriber Metrics - The paid subscriber base decreased by 251,000, or 39.0%, to 394,000 as of June 30, 2025, compared to 645,000 a year earlier[152] - Active free subscribers decreased by 2.5 million, or 52.9%, to 2.3 million as of June 30, 2025, down from 4.8 million a year earlier[149] - Subscriber churn rate ranged from approximately 2.4% to 3.3% per month between 2022 and 2024, with a net revenue retention rate averaging over 55% during the same period[155] Cash Flow and Operating Activities - Net cash provided by operating activities improved to $17.8 million in Q2 2025, an increase of $21.6 million compared to a cash outflow of $3.8 million in Q2 2024[133] - Adjusted CFFO for the three months ended June 30, 2025, was $17,842, a significant increase from $(3,795) in 2024, representing a change of 570.1%[204] - Free Cash Flow for the three months ended June 30, 2025, was $17,503, compared to $(4,291) in 2024, reflecting a change of 507.9%[211] - Net cash provided by operating activities for the six months ended June 30, 2025, was $19,575, down 187.8% from $(22,306) in 2024[209] - For the six months ended June 30, 2025, net cash provided by operating activities was $19.6 million, compared to a net cash used of $22.3 million in the same period of 2024[230][231] Revenue Composition - The average revenue per user (ARPU) increased by 3.9% to $474 in Q2 2025, compared to $456 in Q2 2024[148] - Average Revenue Per User (ARPU) increased by $18, or 3.9%, to $474 as of June 30, 2025, compared to $456 as of June 30, 2024[157] - Term subscription revenue decreased by $17.8 million, primarily due to the wind down of Legacy Research, which contributed $11.5 million to this decline[187] Expenses and Cost Management - Operating expenses for the second quarter 2025 totaled $65.14 million, down from $83.71 million in the second quarter 2024[183] - Total operating expenses for the three months ended June 30, 2025, were $65,139, down $18,573 or 22.2% from $83,712 in 2024[188] - Sales and marketing expenses decreased by $11,096 or 26.0%, primarily due to a $10.5 million decrease in amortization of deferred contract acquisition costs[190] - Operating expenses for the six months ended June 30, 2025, totaled $131,866, down $39,282 or 23.0% from $171,148 in 2024[195] Shareholder Returns and Capital Management - The company announced a quarterly and special dividend totaling $0.40 per Class A share on August 1, 2025[133] - The company repurchased 117,673 shares for a total of $1.9 million during the three and six months ended June 30, 2025[226] - Quarterly tax distributions of $22.8 million were made to MarketWise Members in Q2 2025, exceeding the corporate tax liability[223] - The company expects to incur a Tax Receivable Agreement liability of $4.3 million as of June 30, 2025[222] - Net cash used in financing activities for the six months ended June 30, 2025, was $47.8 million, primarily due to distributions to noncontrolling interests[234] Future Outlook and Strategic Initiatives - The company expects fluctuations in Adjusted CFFO and Adjusted CFFO Margin in future periods as it invests in its growth strategy[206] - The company anticipates future capital requirements will depend on subscription growth rates and the introduction of new products[221] - The payback period for customer acquisition costs was estimated at 1.7 years for 2024 and 2023, and 1.6 years for 2022[159] Other Financial Metrics - Cash and cash equivalents stood at $69.1 million as of June 30, 2025, with no debt outstanding[133] - As of June 30, 2025, the company's cash float was approximately $87.8 million, down from $119.7 million as of December 31, 2024[215] - The LTV/CAC ratio was approximately 1.3x, indicating the average customer lifetime billings relative to customer acquisition costs[136] - The high-value composition rate was 63% and the ultra high-value composition rate was 30% as of June 30, 2025[140]