UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 15, 2025
(Exact name of registrant as specified in its charter)
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| (Address of principal executive offices, including zip code) | ||||||||
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act | |||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On January 15, 2025, MarketWise, Inc. issued a press release announcing preliminary selected unaudited financial and operational updates results for fourth quarter 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is herein incorporated by reference.
The foregoing information (including Exhibit 99.1) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
Item 7.01. Regulation FD Disclosure.
The Company has prepared a presentation concerning its business that it intends to use in connection with meetings with investors, analysts, and other interested parties. A copy of the presentation is furnished as Exhibit 99.2 hereto, incorporated herein by reference, and available on the Company’s investor relations site at investors.marketwise.com.
On January 15, 2025, MarketWise, Inc. issued a press release announcing that its Board of Directors declared a special dividend to holders of Class A common stock of $0.03 per share. The dividend will be paid on February 26, 2025. The Record Date is January 29, 2025. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in Item 7.01 to this Current Report on Form 8-K (including Exhibits 99.1 and 99.2) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits.
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MarketWise, Inc. | ||||||||
Date: January 15, 2025 | By: | /s/ Erik Mickels | ||||||
| Name: | Erik Mickels | |||||||
| Title: | Chief Financial Officer | |||||||
MarketWise Inc. Reports Preliminary Selected Unaudited Fourth Quarter 2024 Billings of $55 Million, over a 10% Increase from Prior Quarter; Announces Special Dividend of $0.03 Per Share
BALTIMORE, MD -- (GLOBE NEWSWIRE)—MarketWise, Inc. (NASDAQ: MKTW) (“MarketWise” or the “Company”), a leading multi-brand digital subscription services platform that provides premium financial research, software, education, and tools for self-directed investors, today reported preliminary selected unaudited financial and operational updates for fourth quarter 2024 below. Our objective is to provide investors with selected information on recent directional trends in advance of issuing our usual earnings press release announcing full year 2024 financial results, which we expect to release in March 2025.
The selected unaudited results in this press release are preliminary and subject to the Company’s normal quarter and year-end accounting procedures and external audit by the Company’s independent registered public accounting firm. Therefore, these preliminary unaudited results are subject to adjustment. In addition, these preliminary unaudited results are not a comprehensive statement of the Company’s financial results for the year ended December 31, 2024 and should not be viewed as a substitute for full, audited financial statements prepared in accordance with generally accepted accounting principles.
Q4 2024 Preliminary Selected Unaudited Financial and Operational Updates:
▪Consolidated Paid subscribers at December 31, 2024 were 506 thousand. Active Free subscribers were 3.3 million at December 31, 2024.
▪Billings for Q4 2024 totaled approximately $55 million, representing over a 10% sequential increase compared with Q3 2024.
▪The estimated increase in Billings in Q4, coupled with the benefits from operational efficiency initiatives, would result in a return to positive cash flow generation for the quarter, following three quarters of negative cash flow.
▪Cash and cash equivalents balance is estimated to have increased from $94 million at September 30, 2024 to $98 million at December 31, 2024.
▪The Company also announced a special dividend to shareholders of Class A common stock of $0.03 per share. The dividend which totals approximately $1.3 million in the aggregate, will be paid on February 26, 2025, to shareholders of record as of January 29, 2025.
Dr. David “Doc” Eifrig, Interim Chief Executive Officer, commented, “We are pleased with the progress we are making on our strategic pillars of growth, efficiency, and new business, as evidenced by the meaningful sequential increase in Billings and return to cash generation in the fourth quarter.” Doc continued, “I am grateful to our 400 plus employees that continue to deliver for our customers. If we continue to deliver on our plans, I also believe we can increase the intrinsic value per share for our owners over time. We look forward to providing more color in our full year reporting in March.”
Balance Sheet and Capital Structure
As of December 31, 2024, the Company is estimated to hold cash and cash equivalents of $98 million. Further, the Company currently has no debt outstanding. In October 2024, the Company’s line of credit expired unused as the Company is electing to avoid line fees at this time.
As disclosed previously, MarketWise, LLC is required to make quarterly tax distributions to the members of MarketWise, LLC, including MarketWise, Inc. at the prescribed rate of 49.75%. To the extent the tax distribution to MarketWise, Inc. exceeds its tax liability, the Company may distribute all or part of the excess to the shareholders of Class A common stock. On January 15, 2025, the Company announced a special dividend to shareholders of Class
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A common stock of $0.03 per share, funded from the excess tax distribution received by the Company. The dividend, which totals approximately $1.3 million in the aggregate, will be paid on February 26, 2025 to shareholders of record as of January 29, 2025. There are numerous factors which will impact the amount of future tax distributions and related special dividends, if any, and there can be no assurances that these special dividends will occur in future periods.
Upcoming Events
The Company plans to report full and audited results for the fourth quarter and year ended December 31, 2024 no later than March 31, 2025.
The Company will present at the Emerging Growth Conference on January 15, 2025. The Company will also host virtual meetings at the 27th Annual Needham Growth Conference on January 16, 2025.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the financial position, business strategy, and the plans and objectives of management for future operations of MarketWise. These forward-looking statements generally are identified by the words “estimate,” “believe,” “project,” “expect,” “anticipate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements are predictions, projections, and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including, but not limited to: our ability to attract new subscribers and to persuade existing subscribers to renew their subscription agreements with us and to purchase additional products and services from us; our ability to adequately market our products and services, and to develop additional products and product offerings; our ability to manage our growth effectively, including through acquisitions; failure to maintain and protect our reputation for trustworthiness and independence; our ability to attract, develop, and retain capable management, editors, and other key personnel; our ability to grow market share in our existing markets or any new markets we may enter; adverse or weakened conditions in the financial sector, global financial markets, and global economy; current macroeconomic events, including heightened inflation, rise in interest rates and the potential for an economic recession; failure to comply with laws and regulations or other regulatory action or investigations, including the Advisers Act; our ability to respond to and adapt to changes in technology and consumer behavior; failure to successfully identify and integrate acquisitions, or dispose of assets and businesses; our public securities’ potential liquidity and trading; the impact of the regulatory environment and complexities with compliance related to such environment; our future capital needs; our ability to maintain an effective system of internal control over financial reporting, and to address and remediate existing material weaknesses in our internal control over financial reporting; and other factors beyond our control.
The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of our filings with the U.S. Securities and Exchange Commission (the “SEC”). These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated.
Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and we assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. We do not give any assurance that we will achieve our expectations.
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MarketWise (MKTW) Investor Presentation January 2025
Important information 2 Cautionary Statement Regarding Forward-Looking Statements: This presentation contains forward-looking statements about MarketWise’s financial position, business strategy, and objectives for future operations. These forward-looking statements are generally identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions, but the absence of these words does not mean that a statement is not forward-looking. These statements are based on current expectations and assumptions. But the future is uncertain. Myriad factors beyond our control could cause our results to differ from our expectations. We detail these risks and uncertainties in the “Risk Factors” section of our quarterly (10-Q) and annual (10-K) reports. You should consider these risks before investing. Non-GAAP Financial Measures: This presentation uses several financial measures that are not recognized as Generally Accepted Accounting Principles (GAAP), including Adjusted CFFO, Adjusted Free Cash Flow, Adjusted CFFO Conversion, and Adjusted Free Cash Flow Margin. The Company defines Adjusted CFFO as net cash provided by operating activities plus profits distributions to Class B unitholders included in stock-based compensation, plus or minus any non-recurring items. The Company defines Adjusted Free Cash Flow as Adjusted CFFO minus capital expenditures. The Company defines Adjusted CFFO Conversion as Adjusted Free Cash Flow divided by Adjusted CFFO. The Company defines Adjusted Free Cash Flow Margin as Adjusted Free Cash Flow divided by Billings (i.e., amounts invoiced to customers). These financial measures are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing the Company's financial results. Therefore, these measures should not be considered in isolation or as an alternative to net income, cash flows from operations or other measures of profitability, liquidity or performance under GAAP. You should be aware that the Company's presentation of these measures may not be comparable to similarly-titled measures used by other companies. MarketWise uses these non-GAAP measures to evaluate ongoing operations and to forecast future performance. This non-GAAP financial information is presented for supplemental informational purposes only and is not a substitute for GAAP measures. However, we believe that when taken together with traditional GAAP metrics these non-GAAP figures give investors a more complete picture of our business. These non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures. We reconcile these non-GAAP figures with the corresponding GAAP measures in the appendix to this presentation.
About MarketWise • Founded with a mission to level the playing field for self-directed investors • MarketWise is a leading multi-brand subscription services platform providing premium financial research, software, education, and tools for investors. • We serve a community of millions of free and paid subscribers. • Our products are a trusted source for high-value financial research, education, actionable investment ideas, and investment software. • 100% digital, direct-to-customer company offering its research across a variety of platforms including mobile, desktops, and tablets. • Our vision is to become the leading financial solutions platform for self- directed investors. 3
Our Core Principles • MarketWise was founded in 1999 with three core principles: • To deliver great investing ideas to investors • To present these ideas in a manner that can be easily understood • To treat our subscribers the way we would want to be treated if roles were reversed • These core principles are still in place today and have allowed us to: • Become a leading multi-brand subscription services platform serving millions of self- directed investors • Provide a comprehensive suite of research, software and analytical tools • Develop long-term relationships with our subscribers • Generate a stable base of recurring revenues 4
Company Timeline Stansberry Research launches 1999 2000-2021 Company grows organically and through a series of acquisitions. Peak annual Billings of over $700M July 2021, Company rebrands as MarketWise and goes public at $3 billion valuation 2022 2022-2024 Period of Billings decline post the Covid related tailwinds. Operational and leadership changes lead to a series of restructuring actions. Early signs of recovery in Q4 2024. Strategic Refresh for 2025. 2025
Investment Thesis 1. Massive Market Opportunity 2. Robust Ecosystem with Diversified Product Set 3. Asset-lite Business Model 4. Meaningful Scale with Strong Balance Sheet 5. Compelling Capital Allocation Strategy 6 1.Includes active free (free subscribers with whom we’ve engaged over the past quarter) and Paid Subscribers 2.Adjusted CFFO is calculated as net cash provided by operating activities plus or minus any non-recurring items (see appendix for reconciliation to the nearest GAAP measure) 3.Billings represents amounts invoiced to customers. $222M represents the annualization of our estimated and unaudited 4Q’24 Billings of $55.4M 4.Estimated and unaudited • Large and growing market • Strong secular tailwinds with overall democratization of investing • 3.8M active platform members1 • Installed base of over 500K paid subscribers • 12 market facing brands with over 100 curated investment products (research & software tools) • Minimal capex • Ability to scale quickly to maximize ROI • Durable cash flows (Adj CFFO of approx. $100M from 2022 through 3Q 2024)2 • Annualized Q4 2024 customer Billings of $222M3 • Approx. $98M in cash as of December 31, 20244 • No Debt Outstanding • Potential for opportunistic and accretive M&A • Track record of returning capital through dividends
7 Key Drivers Of Our Success DATA / TECHNOLOGY • Real-time campaign feedback • Rapid scalability SCALABLE MODEL • Industry-leading ROI on new customer acquisition • Upsell to higher ARPU products with almost all of the upsell revenues falling to the bottom line • Focus on proven formula to launch & scale new products in a low-risk capital way CUSTOMER FOCUS • Emphasis on developing long-term relationship with the subscriber • Typical paid subscriber journey includes multiple subscription purchases POWERFUL CONTENT PLATFORM • Compelling content fosters relationships between readers and editors, creates customer loyalty and brand goodwill • Insightful and engaging content drives conversion of users from free to paid subscribers • Over 50% of ‘24 Billings came from subscribers who’ve been with us for 4+ years
Premium Subscription Content, Software & Tools ACTIONABLE IDEAS SOFTWARE & TOOLS 8
9 Diverse Research Portfolio Across Different Asset Classes DIVERSE RESEARCH PRODUCTS (% OF BILLINGS - 2024) • 140+ product offerings at 12/31/24 • Provides a portfolio of investing ideas for self- directed investors • Breadth of ideas provides relevant content in most market conditions
Provides Diverse, Actionable & Affordable Content
11 Subscriber Composition SELECTED EXAMPLES CUMULATIVE LIFETIME SPEND1 # OF SUBSCRIBERS1 126K2 156K2 224K2 >$5,000 $600-$5,000 <$600 Ultra High Value Product bundles High Value More advanced investing strategies - Value Investing, Microcaps, Real Estate, Options, Trading, Cryptocurrencies Paid Mega Cap equities and basic investment strategies Active Free General market commentary, current events - Insightful and educational • Stansberry Digest • Whitney Tilson’s Daily • Hypergrowth Investing • Fry’s Investment Report - $249 • Retirement Millionaire - $199 • Crypto Capital - $5,000 • Chaikin Power Gauge Investor - $5,000 • Alliance - $34,000 one-time + $499 annually • Total Portfolio - $15,000 one-time + $499 annually 3.3M 1.As of December 31, 2024 2.Number of subscribers indicated correspond with the cumulative lifetime spend to the right (e.g., 224K of the 506K total paid subscribers have less than $600 of cumulative lifetime spend)
Financial Summary and Capital Structure
13 Financial Summary (3Q24) 1.Quarterly numbers are unaudited 2.Billings represents amounts invoiced to customers 3.Adjusted CFFO = net cash provided by operating activities plus profits distributions to Class B unitholders included in stock-based compensation expense plus or minus any non-recurring items. Adjusted CFFO Margin = Adjusted CFFO/ Billings. 17%Margin 13% BILLINGS ($ IN MILLIONS)1,2 ADJUSTED CFFO ($ IN MILLIONS)1,3 REVENUE ($ IN MILLIONS)1 13% -12%27% • Estimated and unaudited Q4 2024 Billings were approximately $55m, more than a 10% sequential increase • Significant difference between Revenue and Billings due to amortization of cash receipts • Billings decline and restructuring costs led to reduction in CFFO
14 1.Adjusted CFFO is calculated as net cash provided by operating activities plus or minus any non-recurring items 2.Billings represents amounts invoiced to customers 3.4Q24 Billings are estimated and unaudited • While Billings have been in decline, cash generation has remained resilient • Negative cash flow in 2024 largely due to reorganization and restructuring efforts (headcount declined by 145 or 25% year over year) • Some seasonality in Adjusted CFFO due to timing of compensation and royalty payments Recovery in Billings Expected to Result in Higher Adj CFFO1 3
Capital Structure 15 TYPE SHARES OWNERSHIP Class A Shareholders 39,562,797 12.4% Class B Unitholders 279,890,147 87.6% Total 319,452,9441 100.0% Share Price as of Dec. 31, 2024 $0.57 Market Cap as of Dec. 31, 2024 $182.1M As of December 31, 2024 1.Excludes 24M unvested RSUs that vest over time
Appendix
17 Our Customer-Facing Brands
Income Statement (3Q24) 18 3Q23 3Q24 Total Revenue 100% 100% Operating Expenses Cost of Revenue 13% 13% Sales and Marketing 49% 38% General and Administrative 24% 23% Research and Development 2% 3% Depreciation and Amortization 1% 1% Impairment of Intangible Assets 1% 0% Related Party Expenses 0% 0% Total Operating Expenses 90% 77% Income (Loss) from Operations 10% 23% Other Income (Expense), net 0% 1% Interest Income (Expense), net 1% 1% Net Income (Loss) Before Income Taxes 12% 24% Income Tax Expense 1% 1% Net Income (Loss) 11% 23% 3Q23 3Q24 Stock-Based Compensation Line Item Summary Cost of Revenue 1% 1% Sales and Marketing 1% 1% General and Administrative 2% 1% Total Stock-Based Compensation Expense 3% 3% 1.Quarterly results are unaudited ($ in 000's) 3Q23 3Q241 % Variance Total Revenue 106,150 97,186 -8% Operating Expenses Cost of Revenue 13,812 12,902 -7% Sales and Marketing 52,466 36,644 -30% General and Administrative 25,005 22,480 -10% Research and Development 2,085 2,614 25% Depreciation and Amortization 1,001 635 -37% Impairment of Intangible Assets 584 - N/M Related Party Expenses 155 9 -94% Total Operating Expenses 95,108 75,284 -21% Income (Loss) from Operations 11,042 21,902 98% Other Income (Expense), net 182 632 247% Interest Income (Expense), net 1,511 1,185 -22% Net Income (Loss) Before Income Taxes 12,735 23,719 86% Income Tax Expense/(Benefit) 691 973 41% Net Income (Loss) 12,044 22,746 89% ($ in 000's) 3Q23 3Q241 % Variance Stock-Based Compensation Expense 2021 Incentive Award Plan stock-based compensation expense 2,848 3,124 10% Employee Stock Purchase Plan 84 36 -57% Profits interests 643 44 -93% Total Stock-Based Compensation Expense 3,575 3,204 -10% Stock-Based Compensation Line Item Summary Cost of Revenue 688 889 29% Sales and Marketing 711 880 24% General and Administrative 2,176 1,435 -34% Total Stock-Based Compensation Expense 3,575 3,204 -10%
Balance Sheet (as of September 30, 2024) 19 1. Quarterly results are unaudited ($ in 000's) Dec 31, 2023Sep 30, 20241 ($ in 000's) Dec 31, 2023 Sep 30, 20241 Assets Liabilities and Stockholders' Deficit Current Assets Current Liabilities Cash and Cash Equivalents 155,174 94,111 Trade and Other Payables 559 2,326 Accounts Receivable 4,528 2,224 Related Party Payables 1,137 1,133 Prepaid Expenses 9,305 8,993 Accrued Expenses 55,041 22,370 Related Party Receivables 5,182 930 Deferred Revenue and Other Contract Liabilities 287,751 229,735 Deferred Contract Acquisition Costs 91,480 64,757 Operating Lease Liabilities 1,446 1,639 Other Current Assets 2,172 1,480 Other Current Liabilities 27,959 26,769 Total Current Assets 267,841 172,495 Total Current Liabilities 373,893 283,972 Property and Equipment, Net 690 567 Long-Term Liabilities - Related Party - 316 Opearting Lease Right-of-Use Assets 7,331 5,801 Deferred Revenue and Other Contract Liabilities, Noncurrent 304,342 233,096 Intangible Assets, Net 6,255 7,687 Related Party Tax Receivable Agreement Liability, Noncurrent 2,151 2,669 Goodwill 31,038 33,560 Other Liabilities, Noncurrent 746 2,313 Deferred Contract Acquisition Costs, Noncurrent 73,420 49,746 Operating Lease Liabilities, Noncurrent 4,366 3,100 Deferred Tax Assets 9,693 8,469 Total Liabilities 685,498 525,466 Other Assets 287 26 Stockholders' Deficit Total Assets 396,555 278,351 Common Stock - Class A 4 4 Common Stock - Class B 29 28 Preferred Stock - - Additional Paid-In Capital 115,164 101,857 Accumulated Other Comprehensive Income 65 56 Accumulated Deficit (126,343) (121,422) Total Stockholders' Deficit Attributable to MarketWise, Inc. (11,081) (19,477) Noncontrolling Interest (277,862) (227,638) Total Stockholders' Deficit (288,943) (247,115) Total Liabilities and Stockholders' Deficit 396,555 278,351