MarketWise(MKTW) - 2025 Q3 - Quarterly Report

Financial Performance - Total net revenue for Q3 2025 was $81.3 million, a decrease of 16.4% compared to $97.2 million in Q3 2024[129] - Total billings increased by 30.2% year-over-year to $63.7 million in Q3 2025, up from $48.9 million in Q3 2024[129] - Net income attributable to MarketWise, Inc. was $1.5 million for the third quarter of 2025, compared to $1.7 million for the same period in 2024[177] - For the three months ended September 30, 2025, net income decreased by 21.2% to $17.9 million compared to $22.7 million in 2024[204] - For the nine months ended September 30, 2025, net income was $50.1 million, down 24.9% from $66.7 million in 2024[204] - EBITDA for the three months ended September 30, 2025, was $18,949,000, a decrease of $4,220,000 or 18.2% compared to $23,169,000 in 2024[203] - The company reported EBITDA of $18.9 million for the three months ended September 30, 2025, a decrease of 18.2% from $23.2 million in 2024[204] - For the nine months ended September 30, 2025, net revenue was $244,728,000, a decrease of $66,495,000 or 21.4% compared to $311,223,000 in 2024[186] Subscriber Metrics - The paid subscriber base decreased by 214,000, or 36.1%, to 379,000 as of September 30, 2025, compared to 592,000 a year earlier[148] - Active free subscribers decreased by 1.2 million, or 36.7%, to 2.1 million as of September 30, 2025, down from 3.3 million in the same period last year[145] - Average revenue per user (ARPU) increased by 35.5% to $566 in Q3 2025, compared to $417 in Q3 2024[144] - Average Revenue Per User (ARPU) increased by $148, or 35.5%, to $566 as of September 30, 2025, compared to $417 as of September 30, 2024, driven by a 34% decrease in trailing four-quarter Paid Subscribers[152] - 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, indicating strong subscriber satisfaction[150] Cash Flow and Expenses - Cash from operating activities improved to $2.2 million in Q3 2025, an increase of $8.0 million compared to a cash outflow of $5.8 million in Q3 2024[129] - Cash and cash equivalents stood at $50.5 million as of September 30, 2025, with no debt outstanding[129] - Operating expenses for the third quarter of 2025 totaled $63.5 million, down from $75.3 million in the same quarter of 2024[177] - Total operating expenses for the nine months ended September 30, 2025, were $195,317,000, a decrease of $51,115,000 or 20.7% from $246,432,000 in 2024[188] - Sales and marketing expenses decreased by $5,498,000 or 15.0%, primarily due to a $7.8 million decrease in amortization of deferred contract acquisition costs[184] - Adjusted CFFO for the three months ended September 30, 2025, was $2,169,000, a decrease of $7,998,000 or 137.2% from $(5,829,000) in 2024[196] - Free Cash Flow for the three months ended September 30, 2025, was $1,692,000, down $7,361,000 or 128.8% from $(5,869,000) in 2024[202] Dividends and Shareholder Actions - The company announced a quarterly and special dividend totaling $0.40 per Class A share on October 30, 2025[129] - The company repurchased 57,224 shares totaling $1.0 million during the three months ended September 30, 2025[218] Accounting and Financial Reporting - The financial statements are prepared in accordance with GAAP, requiring management to make estimates and assumptions affecting reported amounts of assets, liabilities, revenue, costs, and expenses[230] - Significant accounting policies include "Revenue Recognition" and "Transactions and Valuation of Goodwill and Other Acquired Intangible Assets," which are critical for understanding the financial condition and results of operations[231] - There were no material changes to the accounting policies during the three and nine months ended September 30, 2025[231] Other Financial Metrics - The company incurred $68.0 million in net cash used in financing activities for the nine months ended September 30, 2025, primarily due to $50.0 million in tax distributions[228] - The company expects fluctuations in Adjusted CFFO and Adjusted CFFO Margin in future periods as it invests in its business to execute its growth strategy[198] - The company expects to incur payment obligations under the Tax Receivable Agreement (TRA) with a liability of $4.3 million as of September 30, 2025[214] - The company recorded an impairment loss on leasehold improvement assets totaling $0.4 million during the nine months ended September 30, 2025[222] - As of September 30, 2025, the company's cash float was approximately $83.4 million, down from $119.7 million as of December 31, 2024[206]