MarketWise(MKTW) - 2025 Q4 - Annual Report

Subscriber Metrics - Paid Subscribers decreased by 132 thousand, or 26.0%, to 374 thousand as of December 31, 2025, compared to 506 thousand as of December 31, 2024, primarily due to elevated churn associated with the shutdown of the Legacy Research business [264]. - Active Free Subscribers decreased by 1.3 million, or 38.8%, to 2.0 million as of December 31, 2025, compared to 3.3 million as of December 31, 2024 [276]. - The high-value composition rate was 63% of Paid Subscribers as of December 31, 2025, reflecting the ability to retain existing subscribers [267]. - The ultra high-value composition rate was 30% of Paid Subscribers as of December 31, 2025, indicating successful long-term relationships with subscribers [267]. Revenue and Billings - Total net revenue was $328.1 million for the full year 2025, down from $408.7 million for the full year 2024, representing a decrease of approximately 19.7% [259]. - Total Billings increased to $271.2 million for the full year 2025, compared to $239.1 million for the full year 2024, reflecting an increase of approximately 13.8% [259]. - New Marketing Billings increased by $36.4 million, or 22.3%, to $199.1 million in 2025 compared to $162.8 million in 2024, driven by sales of software-related content [289]. - Net Revenue decreased by $80.6 million, or 19.7%, to $328.1 million in 2025 compared to $408.7 million in 2024, primarily due to a decrease in term and membership subscription revenue [312]. - Net Renewal Billings decreased by $5.0 million, or 7.0%, to $65.4 million in 2025 compared to $70.3 million in 2024, attributed to a significant decrease in average Paid Subscribers [291]. Financial Performance - Cash from Operating Activities (CFFO) was $46.0 million for the full year 2025, a significant improvement from $(22.2) million for the full year 2024 [259]. - Net income attributable to MarketWise, Inc. was $5.6 million in 2025, down from $7.1 million in 2024, reflecting the overall decrease in revenue [310]. - Income from operations decreased to $62.6 million in 2025 from $89.0 million in 2024, indicating a decline in operational efficiency [310]. - The company reported a net income of $64.0 million for the year ended December 31, 2025, adjusted for non-cash items which increased cash by $14.3 million [361]. Cost Management - Cost of revenue decreased to $44.3 million in 2025 from $50.7 million in 2024, reflecting a reduction in employee compensation costs and other expenses [310]. - Total operating expenses decreased by $54.2 million, or 16.9%, from $319.7 million in 2024 to $265.5 million in 2025 [316]. - Sales and marketing expenses decreased by $29.8 million, or 18.5%, driven by a $34.0 million decrease in amortization of deferred contract acquisition costs [316][318]. - General and administrative expenses decreased by $12.4 million, or 13.7%, primarily due to a $8.1 million decrease in professional fees and a $2.9 million decrease in salaries [316][319]. Cash Flow and Liquidity - Free Cash Flow for 2025 was $44.39 million, compared to $(22.83) million in 2024 [340]. - The company's cash float was approximately $98.2 million as of December 31, 2025, down from $119.7 million in 2024 [342]. - As of December 31, 2025, the company's principal sources of liquidity included cash, cash equivalents, and restricted cash totaling $70.1 million [346]. - The company anticipates that its operating cash flows will improve as it increases operational efficiency and experiences economies of scale [346]. Shareholder Returns - The company declared total dividends of $2,249,000 for the year ended December 31, 2025, including a special dividend of $1,249,000 [349]. - The company repurchased 209,726 shares of Class A common stock totaling $3.4 million during the year ended December 31, 2025 [356]. - The company has authorized a stock repurchase program of up to $50 million, which may be modified or suspended at any time [356]. Impairment and Accounting - Impairment losses decreased significantly by 91.5% from $4.4 million in 2024 to $0.38 million in 2025 [316][320]. - The company believes that significant accounting policies involve a greater degree of judgment and complexity, which are critical for understanding its financial condition [369].