MarketWise(US:MKTW)2022-11-05 17:29Financial Data and Key Metrics Changes - For Q3 2022, the company reported revenues of $119.9 million, a decline of 14.7% compared to $140.7 million in Q3 2021 [9][31] - Billings decreased by 23.9% year-over-year to $105.1 million, down from $139.1 million in the previous year [10][31] - Adjusted cash flow from operations was $13.1 million, down from $34.7 million in the same quarter last year, with an adjusted CFFO margin of 12.5% compared to 25.2% last year [10][42] Business Line Data and Key Metrics Changes - The decline in revenue was primarily driven by a $16.9 million decrease in term subscription revenue [31] - Approximately 33% of billings came from membership subscriptions, while 66% came from term subscriptions, indicating a shift from the previous year where 45% were from membership subscriptions [33] Market Data and Key Metrics Changes - The company noted a decline in consumer engagement and fewer new subscribers due to ongoing market volatility and reduced direct marketing spend [10][28] - Landing feature visits were approximately 27 million, down 15% from both Q1 and Q2 2022 [29] Company Strategy and Development Direction - The company is focusing on cost reduction initiatives targeting $74 million in total expense savings, with a goal of reducing overhead by approximately $37 million [34][36] - New content was launched, including five new publications addressing current market themes such as healthcare investing and options trading strategies [15] - The integration of data science and AI into operations is ongoing, aimed at improving conversion rates and reducing customer churn [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that as the economy stabilizes and inflation is controlled, investor engagement will return [8] - The company is managing its business prudently by focusing on efficiencies and maintaining margins in the current market environment [13][46] Other Important Information - A tender offer was initiated to exchange all outstanding warrants for shares of Class A common stock, increasing public shares by approximately 26% [21][45] - The company executed a small acquisition of a publishing group to enhance its existing media entity [24] Q&A Session Summary Question: Concerns about cash costs and future expectations - Management acknowledged the increase in cash costs and explained that one-time items affected the cash flow calculations, with expectations for continued cost reductions [51][54] Question: Impact of inflation on subscriptions - Management indicated that while high-value customers are less sensitive to inflation, overall engagement has slowed due to market volatility [76][80] Question: Monetization opportunities beyond subscriptions - Management highlighted the potential for new revenue streams through the recently launched marketwise.com, which could enhance subscriber acquisition and ad-based revenue [85][86]