MarketWise(US:MKTW)2021-11-11 23:53Financial Data and Key Metrics Changes - In Q3 2021, MarketWise reported revenues of $140.7 million, a 43.1% increase from $98.1 million in Q3 2020 [16] - Year-to-date billings reached $578 million, surpassing the total billings of $549 million for the previous year [8] - Adjusted cash flow from operations for the year-to-date was $192 million, compared to $134 million for all of 2020 [8][20] Business Line Data and Key Metrics Changes - Total subscribers, both free and paid, grew by 54%, reaching almost 14 million [10] - Paid subscribers increased from 786,000 in Q3 2020 to 965,000 in Q3 2021, representing a 22.8% increase [21] - The average revenue per user (ARPU) improved to $772 from $752 year-over-year [21] Market Data and Key Metrics Changes - The company experienced a decrease in engagement due to a travel and leisure boom, impacting subscriber acquisition [16][19] - In October, total landing page visits increased by 17.5% compared to the average from June to September [10] - The company noted a modest decrease in per unit subscriber acquisition costs as engagement began to normalize [10][22] Company Strategy and Development Direction - MarketWise aims to be a leading financial wellness platform for self-directed investors, focusing on high-quality research and expanding its product offerings [10] - The company has adopted a share repurchase program of up to $35 million to support its stock price and provide capital allocation flexibility [7][15] - The management emphasized a conservative approach to leverage, with a new credit facility of $150 million to support potential acquisitions [5][14] Management's Comments on Operating Environment and Future Outlook - Management noted that while the travel and leisure boom affected engagement, there are early signs of normalization in subscriber activity [10][12] - The leadership team expressed confidence in the company's ability to adapt to changing market conditions and maintain profitability [12][29] - Future guidance adjustments were made to reflect the impact of reduced engagement on subscriber growth and billings forecasts [23][24] Other Important Information - The company reported a net loss of $366.2 million in Q3 2021, primarily due to increased stock-based compensation [20] - Stock-based compensation for the quarter was significantly higher at $333.6 million compared to $58.8 million in the previous year [20] - The company has a strong cash position, with $240 million on the balance sheet, and plans to retain earnings for future acquisitions [36][38] Q&A Session Summary Question: Impact of travel and leisure boom on advertising and marketing - Management indicated that advertising volume from the travel and leisure sector has not significantly decreased, but engagement and conversion rates have improved in October [33][34] Question: Buyback program and excess capital strategy - The company plans to maintain a cash reserve of around $100 million while utilizing excess capital for potential M&A opportunities [36][38] Question: Subscriber growth and engagement metrics - Management confirmed a significant uptick in gross new subscriber additions in October, indicating a positive trend in engagement [45][46] Question: Churn rates and gross adds in Q3 - Churn rates remained at the higher end of historical ranges, with the net reduction in paid subscribers primarily due to lower gross adds [54][55] Question: Future guidance and subscriber growth outlook - Management plans to provide detailed guidance for fiscal year 2022 in the upcoming fourth quarter cycle, emphasizing a long-term view on business performance [49][52]