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What changed in MARKETWISE, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MARKETWISE, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+428 added−533 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-07)

Top changes in MARKETWISE, INC.'s 2024 10-K

428 paragraphs added · 533 removed · 351 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

23 edited+2 added−2 removed34 unchanged
Biggest changeOur compensation programs include both fixed and variable components, an incentive award plan providing for equity grants, and an employee stock purchase plan, all of which we believe incentivizes our employees to perform at high levels, helps them establish long-term financial security, and encourages them to remain with us.
Biggest changeOur compensation programs include both fixed and variable components, an incentive award plan providing for equity grants, and an employee stock purchase plan, all of which we believe incentivizes our employees to perform at high levels, helps them establish long-term financial security, and encourages them to remain with us. 9 Our benefits package includes health and welfare plans that provide medical, dental, and vision coverage, health savings accounts, medical and dependent care flexible spending accounts, life insurance, disability insurance, 401(k) savings plan with a company match, paid time off and other assistance, fitness and wellness programs.
Additionally, some of our competitors and potential competitors are better capitalized than we are and able to obtain capital more easily, which could put us at a competitive disadvantage.” Our Technology We use technology to run our business efficiently and to better serve our customers. Our technology combines three cloud-based systems: software-as-a-service (“SaaS”); platform-as-a-service (“PaaS”); and infrastructure-as-a-service (“IaaS”).
Additionally, some of our competitors and potential competitors are better capitalized than we are and are able to obtain capital more easily, which could put us at a competitive disadvantage.” Our Technology We use technology to run our business efficiently and to better serve our customers. Our technology combines three cloud-based systems: software-as-a-service (“SaaS”); platform-as-a-service (“PaaS”); and infrastructure-as-a-service (“IaaS”).
Over the years, we have expanded our business into a comprehensive suite of investment research products and solutions. We now produce a diversified product portfolio from a variety of financial research brands such as Stansberry Research, Chaikin Analytics, InvestorPlace, and TradeSmith. Our entire investment research product portfolio is 100% digital and channel agnostic.
Over the years, we have expanded our business into a comprehensive suite of investment research products and solutions. We now produce a diversified product portfolio from a variety of financial research brands such as Stansberry Research, Chaikin Analytics, Brownstone Research, InvestorPlace, and TradeSmith. Our entire investment research product portfolio is 100% digital and channel agnostic.
We recognize that self-directed investors do not have the same research budget and resources at their disposal as institutional investors do. So we strive to provide them with institutional quality research at affordable price points. Unlike traditional institutional research, our offerings are significantly less expensive and more accessible.
We recognize that self-directed investors do not typically have the same research budget and resources at their disposal as institutional investors do. So we strive to provide them with institutional quality research at affordable price points. Unlike traditional institutional research, our offerings are significantly less expensive and more accessible.
As our subscribers learn and gain confidence as investors, they understand the need to deploy diverse investment strategies for different market conditions and they explore our broad and diverse product offerings. They gain an 8 understanding of the high quality of research that we strive to provide, and they tend to purchase additional research and software products.
As our subscribers learn and gain confidence as investors, they understand the need to deploy diverse investment strategies for different market conditions and they explore our broad and diverse product offerings. They gain an understanding of the high quality of research that we strive to provide, and they tend to purchase additional research and software products.
We use this information to deepen the customer experience and present offers to our subscribers for other products that they are likely to find interesting and useful. Deepen our relationship with our existing subscribers. In addition to our Paid Subscribers, all of our Free Subscribers have access to our extensive library of free and educational content.
We use this information to deepen the customer experience and present offers to our subscribers for other products that they are likely to find interesting and useful. 7 Deepen our relationship with our existing subscribers. In addition to our Paid Subscribers, all of our Free Subscribers have access to our extensive library of free and educational content.
Over the past ten years, we have developed several joint ventures and executed strategic acquisitions to accelerate our growth, as well as increase the value of our offerings to our subscribers. We have a strong track record of driving growth and delivering value through the successful integration of acquisitions and joint ventures.
Over the past several years, we have developed several joint ventures and executed strategic acquisitions to accelerate our growth, as well as increase the value of our offerings to our subscribers. We have a strong track record of driving growth and delivering value through the successful integration of acquisitions and joint ventures.
We believe that if we publish research to help our subscribers succeed in the financial markets, they will progressively become better investors, renew their subscriptions, and become long-term customers. We have proven out this thesis throughout our over 20-year history. We have formed lifelong relationships with our subscribers by providing superior value through our offerings.
We believe that if we publish research to help our subscribers succeed in the financial markets, they will progressively become better investors, renew their subscriptions, and become long-term customers. We have proven out this thesis throughout our over 25-year history. We have formed long-standing relationships with our subscribers by providing superior value through our offerings.
The SEC maintains a website at www.sec.gov that contains reports, proxy statements, and other information regarding SEC registrants, including MarketWise, Inc. 11
The SEC maintains a website at www.sec.gov that contains reports, proxy statements, and other information regarding SEC registrants, including MarketWise, Inc. 10
They are designed to be less technical and therefore more easily understood by the subscribers who aren’t finance professionals. At the same time, our offerings have premium content that is highly actionable.
They are designed to be less technical and therefore more easily understood by the subscribers who may not be finance professionals. At the same time, our offerings have premium content that is highly actionable.
We offer 6 our research across a variety of platforms, including desktop, laptop, and mobile devices, including tablets and mobile phones. As a result of the expansion of the business, we now have 79 editors and analysts covering a broad spectrum of investments, ranging from commodities to equities, to distressed debt and cryptocurrencies.
We offer our research across a variety of platforms, including desktop, laptop, and mobile devices, including tablets and mobile phones. As a result of the expansion of the business, we now have over 60 editors and analysts covering a broad spectrum of investments, ranging from commodities to equities, to distressed debt and cryptocurrencies.
When we acquire brands or form joint ventures, which we engage in periodically, we typically maintain the existing brands because we want to avoid disrupting those relationships by interjecting a new company name or persona, since subscribers may not have any prior relationship with us. We sold one of our brands, Crowdability, Inc.
When we acquire brands or form joint ventures, which we engage in periodically, we typically maintain the existing brands because we want to avoid 6 disrupting those relationships by interjecting a new company name or persona, since subscribers may not have any prior relationship with us.
Launch new products and target new markets. Over our greater than 20-year history, we have developed a breadth of products and services that are designed to educate, empower, and entertain our subscribers and provide them with actionable investment ideas.
Over our greater than 25-year history, we have developed a breadth of products and services that are designed to educate, empower, and entertain our subscribers and provide them with actionable investment ideas.
We provide a comprehensive suite of research solutions. Through 11 primary customer facing brands, we have 37 free products and 135 paid products. We cover various investment strategies, such as value investing, income, growth, commodities, cryptocurrencies, venture, crowdfunded investing, biotechnology, mutual funds, options, and trading.
We provide a comprehensive suite of research solutions. Through 12 primary customer facing brands, we currently have 27 free products and 116 paid products. We cover various investment strategies, such as value investing, income, growth, commodities, cryptocurrencies, venture, biotechnology, mutual funds, options, and trading.
Human Capital Resources As of December 31, 2023, we had 584 total employees across all of our businesses, of which 581 are full-time. Our employees and independent contractors work from our U.S. offices or remote locations. None of our employees are represented by a labor organization or are party to any collective bargaining arrangement.
Human Capital Resources As of December 31, 2024, we had 439 total employees across all of our businesses, substantially all of which are full-time. Our employees work from our U.S. offices or remote locations. None of our employees are represented by a labor organization or are party to any collective bargaining arrangement.
Our free subscription products serve as a significant source of new Paid Subscribers. We also offer members-only investing conferences where subscribers interact with our editors and analysts and can network with each other. We have a strong track record of cultivating these relationships with our subscribers, and we intend to continue that going forward.
We also offer members-only investing conferences where subscribers interact with our editors and analysts and can network with each other. We have a strong track record of cultivating these relationships with our subscribers, and we intend to continue that going forward. Launch new products and target new markets.
Risk Factors — “We face significant competition. Many of our competitors and potential competitors have larger customer bases, more established brand recognition, and greater financial, marketing, technological, and personnel resources than we do, which could put us at a competitive disadvantage.
For additional information regarding the competitive environment in which we operate, see Item 1A. Risk Factors — “We face significant competition. Many of our competitors and potential competitors have larger customer bases, more established brand recognition, and greater financial, marketing, technological, and personnel resources than we do, which could put us at a competitive disadvantage.
Finance and Seeking Alpha; • traditional financial news publishers, like the Wall Street Journal, Investor’s Business Daily, and Barron’s; • consumer-focused online subscription businesses, such as The Motley Fool; • institutional financial software providers, such as Bloomberg, FactSet, and IHS Markit; • low-cost, “mom and pop” newsletter subscription services, and • online investing tools, such as Atom Finance and Stocktwits. 9 For additional information regarding the competitive environment in which we operate, see Item 1A.
Finance and Seeking Alpha; • traditional financial news publishers, like the Wall Street Journal, Investor’s Business Daily, and Barron’s; • consumer-focused online subscription businesses, such as The Motley Fool; 8 • institutional financial software providers, such as Bloomberg, FactSet, and IHS Markit; • low-cost, “mom and pop” newsletter subscription services, and • online investing tools, such as Atom Finance and Stocktwits.
Billings represents fee amounts invoiced to customers. 7 Our Chaikin Analytics brand offers a suite of stock research tools and portfolio management services that help investors pick winning stocks and drop losing stocks ahead of market shifts.
Our software and analytical tool solutions represented 11% of our Billings on average from 2022 to 2024. Billings represents amounts invoiced to customers. Our Chaikin Analytics brand offers a suite of stock research tools and portfolio management services that help investors pick winning stocks and drop losing stocks ahead of market shifts.
We believe the names and marks associated with our brands are of significant value and are important to our business. Accordingly, as a general policy, we monitor the use of our marks and vigorously oppose any unauthorized use of the marks. We do not hold any patents. We seek to control access to and distribution of our proprietary information.
In addition, we have registered our domain names, including MarketWise.com , with MarkMonitor. We believe the names and marks associated with our brands are of significant value and are important to our business. Accordingly, as a general policy, we monitor the use of our marks and vigorously oppose any unauthorized use of the marks. We do not hold any patents.
We offer 37 free and 135 paid products on multiple platforms through our 11 primary customer-facing brands. This diversity of content has allowed our business to succeed and our subscription base to grow through the many economic cycles in our over 20-year history. We have an engaged subscriber base of approximately 737 thousand Paid Subscribers.
This diversity of content has allowed our business to succeed and our subscription base to grow through the many economic cycles in our over 25-year history. We have an engaged subscriber base of approximately 506 thousand Paid Subscribers.
We have registered certain of our trademarks and service marks in the United States with the U.S. Patent and Trademark Office and in Canada and China, and have registered copyrights on certain publications. In addition, we have registered our domain names, including MarketWise.com , with MarkMonitor.
Intellectual Property We rely on a combination of trademark and copyright to protect our intellectual property. We have registered certain of our trademarks and service marks in the United States with the U.S. Patent and Trademark Office and in Canada and China, and have registered copyrights on certain publications.
We also offer financial software and analytical tools. We continue to expand our research portfolio with software and analytical tool solutions, which include the Chaikin Power Gauge, TradeStops and the Altimeter. Our software and analytical tool solutions represented 10% of our Billings on average from 2021 to 2023.
We typically publish our research reports on a monthly basis, although some of our products publish more frequently. We also offer financial software and analytical tools. We continue to expand our research portfolio with software and analytical tool solutions, which include the Chaikin Power Gauge, TradeStops and the Altimeter.
Removed
(“Buttonwood Publishing”), a business we acquired in 2022 to a related party, during 2023 due to continuing losses. We typically publish our research reports on a monthly basis, although some of our products publish more frequently. We offer our entire investment research product portfolio across a variety of media, including desktops, laptops, tablets, and mobile.
Added
These deep relationships are evident in the fact that over 50% of our 2024 Billings are attributable to subscribers who have been with us for more than 4 years. Our free subscription products serve as a significant source of new Paid Subscribers.
Removed
Our benefits package includes health and welfare plans that provide medical, dental, and vision coverage, health savings accounts, medical and dependent care flexible spending accounts, life insurance, disability insurance, 401(k) savings plan with a company match, paid time off and other assistance, fitness and wellness programs. 10 Intellectual Property We rely on a combination of trademark and copyright to protect our intellectual property.
Added
We seek to control access to and distribution of our proprietary information.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

219 edited+38 added−81 removed139 unchanged
Biggest changeThe MarketWise Members may benefit from any value attributable to such cash balances if they acquire shares of our Class A common stock in exchange for their LLC Units, notwithstanding that such holders may previously have participated as holders of the LLC Units in distributions by MarketWise, LLC that resulted in such excess cash balances. 29 The Tax Receivable Agreement requires MarketWise, Inc. to make cash payments to the MarketWise Members in respect of certain tax benefits to which MarketWise, Inc. may become entitled, and no such payments will be made to any holders of our Class A common stock unless such holders are also MarketWise Members.
Biggest changeThe MarketWise Members may benefit from any value attributable to such cash balances if they acquire shares of our Class A common stock in exchange for their LLC Units, notwithstanding that such holders may previously have participated in distributions by MarketWise, LLC as holders of the LLC Units that resulted in such excess cash balances held by MarketWise, Inc.
Upon expiration or termination of any of our agreements with third-party vendors, we may not be able to replace the services provided to us in a timely manner or at all, or on terms and conditions, including service levels and cost, that are favorable to us, and a transition from one vendor to another vendor could subject us to operational delays and inefficiencies until the transition is complete.
Upon expiration or termination of any of our agreements with third-party vendors, we may not be able to replace the services provided to us in a timely manner or at all, or on terms and conditions, including service levels and cost, that are favorable to us, A transition from one vendor to another vendor could subject us to operational delays and inefficiencies until the transition is complete.
The market price and trading volume of our securities has been volatile, could decline significantly, and you could lose all or part of your investment. Securities markets worldwide experience significant price and volume fluctuations.
The market price and trading volume of our securities has been volatile, and could decline significantly, and you could lose all or part of your investment. Securities markets worldwide experience significant price and volume fluctuations.
These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of our Board of Directors or taking other corporate actions, including effecting changes in our management.
These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of our Board or taking other corporate actions, including effecting changes in our management.
Among other things, Charter and Bylaws include the following provisions: • a classified Board of Directors with staggered, three-year terms; • the ability of our Board of Directors to issue shares of preferred stock, including “blank check” preferred stock, and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • prohibition on cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the limitation of the liability of, and the indemnification of, our directors and officers; 39 • the ability of our Board of Directors to amend the Bylaws, which may allow our Board of Directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our Board of Directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board of Directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Among other things, Charter and Bylaws include the following provisions: • a classified Board with staggered, three-year terms; • the ability of our Board to issue shares of preferred stock, including “blank check” preferred stock, and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • prohibition on cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the limitation of the liability of, and the indemnification of, our directors and officers; • the ability of our Board to amend the Bylaws, which may allow our Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Our Charter provides that, to the fullest extent permitted by law, and unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, other employees, or stockholders to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or our Bylaws or Charter (as each may be amended from time to time) or as to which the DGCL confers exclusive jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim governed by the internal affairs doctrine.
Our Charter provides that, to the fullest extent permitted by law, and unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, other employees, or stockholders to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or our Bylaws or Charter (as each may be amended from time to time) or as to which the DGCL confers exclusive 37 jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim governed by the internal affairs doctrine.
For as long as we continue to be an emerging growth company, we may choose to take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies, including, but not limited to: (i) not being required to comply with the auditor attestation 32 requirements of Section 404 of the Sarbanes-Oxley Act of 2022, as amended ("SOX"); (ii) reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements; and (iii) exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.
For as long as we continue to be an emerging growth company, we may choose to take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies, including, but not limited to: (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2022, as amended ("SOX"); (ii) reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements; and (iii) exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.
There can be no assurance that the market price of Class A common stock will not continue to fluctuate widely or decline significantly in the future, or that you will lose all or part of your investment, in response to a number of factors, including, among others, the following: • actual or anticipated fluctuations in our annual or quarterly financial condition and operating results; • actual or anticipated changes in our growth rate relative to our competitors; • failure to meet or exceed financial estimates and projections of the investment community 37 • speculation in the press or investment community about our business or industry; • issuance of new or updated research or reports by securities analysts, or the failure of securities analysts to provide adequate coverage of our Class A common stock in the future; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • Class A common stock and volume fluctuations attributable to inconsistent trading volume levels of our Class A common stock; • additions or departures of key personnel; • disputes or other developments related to proprietary rights; • additional or unexpected changes or proposed changes in laws or regulations or differing interpretations thereof affecting our business or enforcement of these laws and regulations, or announcements relating to these matters; • announcement or expectation of additional equity or debt financing efforts; • equity sales by us, the MarketWise Members, our insiders, or our other stockholders; • general economic and market conditions, including any impacts associated with inflation and increased interest rates; and • other factors described in this “Risk Factors” section and elsewhere in this report.
There can be no assurance that the market price of Class A common stock will not continue to fluctuate widely or decline significantly in the future, or that you will lose all or part of your investment, in response to a number of factors, including, among others, the following: • actual or anticipated fluctuations in our annual or quarterly financial condition and operating results; • actual or anticipated changes in our growth rate relative to our competitors; • failure to meet or exceed financial estimates and projections of the investment community • speculation in the press or investment community about our business or industry; • issuance of new or updated research or reports by securities analysts, or the failure of securities analysts to provide adequate coverage of our Class A common stock in the future; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • Class A common stock and volume fluctuations attributable to inconsistent trading volume levels of our Class A common stock; • additions or departures of key personnel; • disputes or other developments related to proprietary rights; • additional or unexpected changes or proposed changes in laws or regulations or differing interpretations thereof affecting our business or enforcement of these laws and regulations, or announcements relating to these matters; • announcement or expectation of additional equity or debt financing efforts; • equity sales by us, the MarketWise Members, our insiders, or our other stockholders; • general economic and market conditions, including any impacts associated with inflation and increased interest rates; and 35 • other factors described in this “Risk Factors” section and elsewhere in this report.
In order to maintain our qualification for this exclusion, our newsletter publications must be: (1) of a general and impersonal nature, in that the advice provided is not adapted to any specific portfolio or any client’s particular needs; (2) “bona fide” or genuine, in that it contains disinterested commentary and analysis as opposed to promotional material; and (3) of general and regular 20 circulation, in that it is not timed to specific market activity or to events affecting, or having the ability to affect, the securities industry.
In order to maintain our qualification for this exclusion, our newsletter publications must be: (1) of a general and impersonal nature, in that the advice provided is not adapted to any specific portfolio or any client’s particular needs; (2) “bona fide” or genuine, in that it contains disinterested commentary and analysis as opposed to promotional material; and (3) of general and regular circulation, in that it is not timed to specific market activity or to events affecting, or having the ability to affect, the securities industry.
Our ability to compete successfully depends on many factors, including the quality, originality, timeliness, insightfulness, and trustworthiness of our content and that of our competitors, the popularity and performance of our contributors, the success of our recommendations and research, our ability to introduce products and services that keep pace with new investing trends, our ability to adopt and deploy new technologies for running our business, the ease of use of services developed by us or our competitors, and the effectiveness of our sales and marketing efforts.
Our ability to compete successfully depends on many factors, including: • the quality, originality, timeliness, insightfulness, and trustworthiness of our content; • the popularity and performance of our contributors; 14 • the success of our recommendations and research; • our ability to introduce products and services that keep pace with new investing trends; • our ability to adopt and deploy new technologies for running our business; • the ease of use of services developed by us or our competitors, and the effectiveness of our sales and marketing efforts.
We have suffered in the past, and may in the future suffer, malicious attacks by individuals or groups (including criminal groups and those sponsored by nation-states, terrorist organizations, or global corporations seeking to illicitly obtain technology or other intellectual property) seeking to attack our products and services or penetrate our network infrastructure to gain access to confidential information, including personal information, or to launch or coordinate distributed denial of service attacks.
We have suffered in the past, and may in the future suffer, malicious attacks by individuals or groups (including criminal groups and those sponsored by nation-states, terrorist organizations, or global corporations seeking to illicitly obtain technology or other intellectual property) seeking to attack our products and services or penetrate our 21 network infrastructure to gain access to confidential information, including personal information, or to launch or coordinate distributed denial of service attacks.
Such risks and challenges include: • underperformance relative to our expectations and the price paid for the acquisition; • unanticipated demands on our management and operational resources; • failure to improve scalability; • difficulty in integrating personnel, operations, and systems; • retention of customers of the combined businesses; • inability to maintain relationships with key customers, suppliers, and partners of an acquired business; • assumption of contingent liabilities; and 17 • acquisition-related earnings charges.
Such risks and challenges include: • underperformance relative to our expectations and the price paid for the acquisition; • unanticipated demands on our management and operational resources; • failure to improve scalability; • difficulty in integrating personnel, operations, and systems; • retention of customers of the combined businesses; • inability to maintain relationships with key customers, suppliers, and partners of an acquired business; • assumption of contingent liabilities; and • acquisition-related earnings charges.
Recent well-publicized security breaches at other companies have led to further enhanced government and regulatory scrutiny of the measures taken by companies to protect against cyberattacks and may in the future result in heightened cybersecurity requirements, including the implementation of more robust internal measures and additional regulatory expectations for oversight of customers, vendors, and service providers.
Recent well-publicized security breaches at other companies have led to further enhanced government and regulatory scrutiny of the measures taken by companies to protect against cyberattacks. It may in the future result in heightened cybersecurity requirements, including the implementation of more robust internal measures and additional regulatory expectations for oversight of customers, vendors, and service providers.
These members of our Board of Directors can take actions that have the effect of delaying or preventing a change of control of MarketWise, LLC or discouraging others from making tender offers for our shares, which could prevent stockholders from receiving a premium for their shares. These actions may be taken even if other stockholders oppose them.
These members of our Board can take actions that have the effect of delaying or preventing a change of control of MarketWise, LLC or discouraging others from making tender offers for our shares, which could prevent stockholders from receiving a premium for their shares. These actions may be taken even if other stockholders oppose them.
In addition, MarketWise, Inc. may not be able to realize tax benefits covered under the Tax Receivable Agreement, and MarketWise, Inc. would not be able to recover any payments previously made by it under the Tax Receivable Agreement, even if the corresponding tax benefits (including any claimed increase in the tax basis of MarketWise, LLC’s assets) were subsequently determined to have been unavailable.
In addition, MarketWise, Inc. may not be able to realize tax benefits covered under the Tax Receivable Agreement, and MarketWise, Inc. would not be able to recover any payments previously made by it under the Tax Receivable 29 Agreement, even if the corresponding tax benefits (including any claimed increase in the tax basis of MarketWise, LLC’s assets) were subsequently determined to have been unavailable.
MarketWise, LLC is treated as a partnership for U.S. federal income tax purposes and, as such, generally will not be subject to any entity-level U.S. federal income tax. Instead, taxable income will be allocated to its equityholders, including MarketWise, Inc. Accordingly, MarketWise, Inc. will incur income taxes on its allocable share of any net taxable income of MarketWise, LLC.
MarketWise, LLC is treated as a partnership for U.S. federal income tax purposes and, as such, generally will not be subject to any entity-level U.S. federal income tax. Instead, taxable income will be allocated to its 26 equityholders, including MarketWise, Inc. Accordingly, MarketWise, Inc. will incur income taxes on its allocable share of any net taxable income of MarketWise, LLC.
In addition, to the extent that MarketWise, Inc. is unable to make payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid. There can be no assurance that MarketWise, Inc. will be able to fund or finance its obligations under the Tax Receivable Agreement.
In 28 addition, to the extent that MarketWise, Inc. is unable to make payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid. There can be no assurance that MarketWise, Inc. will be able to fund or finance its obligations under the Tax Receivable Agreement.
If MarketWise, Inc. does not have sufficient funds to pay tax or other liabilities or to fund our operations, it may have to borrow funds, which could materially adversely affect its liquidity and financial condition and subject us to various restrictions imposed by any such lenders.
If MarketWise, Inc. does not have sufficient funds to pay tax or other liabilities or to fund our operations, it may have to borrow funds, which could materially adversely affect its liquidity and financial condition and subject MarketWise, Inc. to various restrictions imposed by any such lenders.
Our ability to forecast our future results of operations is subject to a number of uncertainties, including our ability to effectively plan for and model future growth. We have encountered in the past, and may encounter in the future, risks and uncertainties frequently experienced by growing companies in rapidly changing industries.
Our ability to forecast our future results of operations is subject to a number of uncertainties, including our ability to effectively plan for and model future growth. We have encountered in the past, and may encounter in the future, risks and uncertainties frequently 13 experienced by growing companies in rapidly changing industries.
We could also be subject to claims from third parties, such as securities exchanges, from which we license and redistribute data and information that we have used or redistributed the data or information in ways not permitted by our license rights, or that we have inadequately permitted our subscribers to use such data.
We could also be subject to claims from third parties, such as securities exchanges, from which we license and redistribute data and information, alleging that we have used or redistributed the data or information in ways not permitted by our license rights, or that we have inadequately permitted our subscribers to use such data.
We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect our securityholders, which could depress the price of our securities. Our Charter authorizes us to issue one or more series of preferred stock.
We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect our securityholders, which could depress the price of our securities. 33 Our Charter authorizes us to issue one or more series of preferred stock.
Our Board of Directors will have the authority to determine the relative rights, limitations, preferences, privileges, restrictions, and other terms of the shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by stockholders.
Our Board will have the authority to determine the relative rights, limitations, preferences, privileges, restrictions, and other terms of the shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by stockholders.
Any payments made by MarketWise, Inc. to the MarketWise Members under the Tax Receivable Agreement will not be available for reinvestment in the business and will generally reduce the amount of cash that might have otherwise been available to MarketWise, Inc. and its subsidiaries.
Any payments made by MarketWise, Inc. to the MarketWise Members under the Tax Receivable Agreement will not be available for reinvestment in the business 27 and will generally reduce the amount of cash that might have otherwise been available to MarketWise, Inc. and its subsidiaries.
Our marketing efforts are designed to identify and attract prospective subscribers primarily within our target market and ultimately convert them into long term subscribers. We also employ marketing to promote our content, drive conversation about our content and services, and promote visits by our subscribers.
Our marketing efforts are designed to identify and attract prospective subscribers primarily within our target market and ultimately convert them into long-term subscribers. We also employ marketing to promote our content, drive conversation about our content and services, and promote website visits by our subscribers.
Further, the Jumpstart Our Business Startups Act of 2012, as amended, (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards.
Further, the Jumpstart Our Business Startups Act of 2012, as amended, (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private 31 companies are required to comply with the new or revised financial accounting standards.
In addition, 38 current and future litigation, regardless of its merits, could result in substantial legal fees, settlements, or judgment costs and a diversion of management’s attention and resources that are needed to successfully run our business.
In addition, current and future litigation, regardless of its merits, could result in substantial legal fees, settlements, or judgment costs and a diversion of management’s attention and resources that are needed to successfully run our business.
Many of our competitors and potential competitors have larger customer bases, more established brand recognition, and greater financial, marketing, technological, and personnel resources 15 than we do, which could put us at a competitive disadvantage.
Many of our competitors and potential competitors have larger customer bases, more established brand recognition, and greater financial, marketing, technological, and personnel resources than we do, which could put us at a competitive disadvantage.
Further, these rules and regulations may make it more difficult and more expensive for us to obtain certain types of insurance, including directors’ and officers’ liability insurance, which could make it more difficult for us to attract and retain qualified members of our Board of Directors.
Further, these rules and regulations may make it more difficult and more expensive for us to obtain certain types of insurance, including directors’ and officers’ liability insurance, which could make it more difficult for us to attract and retain qualified members of our Board.
Our inability to determine the number of our unique subscribers is a limitation in the data that we measure and may adversely affect our understanding of certain aspects 12 of our business and make it more challenging to manage our business.
Our inability to determine the number of our unique subscribers is a limitation in the data that we measure and may adversely affect our understanding of certain aspects of our business and make it more challenging to manage our business.
See Item 7 “Management’s Discussion & Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” for more information. The Company’s holdings may be concentrated in a relatively small number of issuers.
See Item 7 “Management’s Discussion & Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” for more information. The 36 Company’s holdings may be concentrated in a relatively small number of issuers.
We may not accurately predict renewal rates for our subscribers, and our renewal rates may decline or fluctuate as a result of a number of factors, including subscriber engagement and product utilization levels, quality of our content, price changes, expiration of temporary product promotions, number of products or services used by our subscribers, customer satisfaction or dissatisfaction with our products or services, pricing or capabilities of the products and services offered by our competitors, increased competition, reduction in customer spending levels, changes in our renewal policies or practices for subscribers, and deteriorating general economic conditions.
We may not accurately predict renewal rates for our subscribers, and our renewal rates may decline or fluctuate as a result of various factors, including subscriber engagement and product utilization levels, quality of our content, price changes, expiration of temporary product promotions, number of products or services used by our subscribers, customer satisfaction or dissatisfaction, pricing or capabilities of the products and services offered by our competitors, increased competition, reduction in customer spending levels, changes in our renewal policies or practices, and deteriorating general economic conditions.
In particular, we and our operating brands depend heavily on the ideas and reputation of their editors and editorial teams, and often name products and operating companies after members of those editorial teams.
In particular, our operating brands depend heavily on the ideas and reputation of their editors and editorial teams, and often name products and operating companies after members of those editorial teams.
The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our Charter to be inapplicable or unenforceable in such action. 40 Item 1B.
The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our Charter to be inapplicable or unenforceable in such action. 38 Item 1B.
In certain circumstances, tax distributions payable to MarketWise, Inc. may be substantial and in 28 excess of its tax liabilities and obligations under the Tax Receivable Agreement.
In certain circumstances, tax distributions payable to MarketWise, Inc. may be substantial and in excess of its tax liabilities and obligations under the Tax Receivable Agreement.
We may not be successful in developing, introducing, marketing, licensing, and implementing new products and enhancements on a timely and cost-effective basis or without impacting the performance, stability, security, or efficiency of existing products and customer systems. Further, any new products and enhancements may not adequately meet the needs of our target markets.
We may not always be successful in developing, introducing, marketing, licensing, and implementing new products and enhancements on a timely and 15 cost-effective basis or without impacting the performance, stability, security, or efficiency of existing products and customer systems. Further, any new products and enhancements may not adequately meet the needs of our target markets.
Our information technology systems interact with those of customers, vendors, and service providers. Our contracts with those parties typically require them to implement and maintain adequate security controls, but we may not have the ability to effectively monitor the security measures of all our customers, vendors, and service providers and otherwise meet such additional regulatory expectations.
Our information technology systems interact with those of customers, vendors, and service providers. Our contracts with those parties typically require them to implement and maintain adequate security controls, but we may not have the ability to effectively monitor the security measures of all our third-parties to meet such additional regulatory expectations.
Such laws and regulations restrict and set standards for how personal information is collected, processed, stored, used, and disclosed, and mandate certain security requirements, implement notice requirements regarding privacy practices, and provide individuals with certain rights regarding the maintenance, use, disclosure, and sale of their protected personal information.
Such laws and regulations restrict and set standards for how personal information is collected, processed, stored, used, and disclosed. These laws and regulations mandate security requirements, implement notice requirements regarding privacy practices, and provide individuals with rights regarding the maintenance, use, disclosure, and sale of their protected personal information.
The MarketWise Members have significant influence over us, including control over decisions that require the approval of MarketWise, Inc. stockholders. The MarketWise Members control in the aggregate, based on the information available to us, at least 87% of the voting power represented by all of our outstanding classes of stock.
The MarketWise Members have significant influence over us, including control over decisions that require the approval of MarketWise, Inc. stockholders. The MarketWise Members control in the aggregate, based on the information available to us, at least 86% of the voting power represented by all of our outstanding classes of stock.
Adverse litigation judgments or settlements resulting from legal proceedings relating to our business operations could materially adversely affect our business, results of operations, and financial condition. From time to time, we are subject to allegations, and have been and may become party to legal claims and regulatory proceedings, relating to our business operations.
Adverse litigation judgments or settlements resulting from legal proceedings relating to our business operations could materially adversely affect our business, results of operations, and financial condition. From time to time, we are subject to allegations and have been party to legal claims and regulatory proceedings relating to our business operations.
For example, we have in the past experienced higher transaction fees from our third-party processors as a result of chargebacks on credit card transactions. Frequently changing credit card company terms and conditions may result in the way we accept payments being deemed non-compliant and potentially cause us to be suspended or terminated by our payment processors.
For example, we have in the past experienced higher transaction fees from our third-party processors as a result of chargebacks on credit card transactions. Changing terms and conditions by credit card companies may result in the way we accept payments being deemed non-compliant and potentially cause us to be suspended or terminated by our payment processors.
Such events could cause delays in initiating or completing sales, impede our subscribers’ access to our products and services, disrupt or shut down critical client-facing and business processes, impede the travel of our personnel, dislocate our critical internal functions and personnel, and in general harm our ability to conduct normal business operations, any of which could negatively impact our financial condition and operating results.
Such events could cause delays in initiating or completing sales, impede our subscribers’ access to our products and services, disrupt or shut down critical client-facing and business processes, impede the travel of our personnel, dislocate our critical internal functions and personnel, and in general harm our ability to conduct normal business operations, any of which could damage our financial condition and operating results.
To protect our brands, our corporate policies, codes of conduct, and workplace culture demand that all of our content providers, whether employees or outside contributors, adhere to rigorous standards of integrity and independence, including guidelines that are designed to prevent any actual, potential, or perceived conflict of interest, and to comply with all applicable laws, including securities laws.
To protect our brands, our corporate policies, codes of conduct, and workplace culture demand that all of our content providers, whether employees or outside contributors, adhere to rigorous standards of integrity and independence. Our internal guidelines are designed to prevent any actual, potential, or perceived conflict of interest, and ensure we comply with all applicable laws, including securities laws.
Additionally, some of our competitors and potential competitors are better capitalized than we are and are able to obtain capital more easily, which could put us at a competitive disadvantage. We experience intense competition across all markets for our products, with competitors ranging in size from smaller, specialized publishers to multimillion-dollar corporations.
Additionally, some of our competitors and potential competitors are better capitalized than we are and are able to obtain capital more easily, which could put us at a competitive disadvantage. We experience intense competition across all markets for our products. Our competitors range in size from smaller, specialized publishers to multimillion-dollar corporations.
We utilize a broad mix of marketing programs and platforms to promote our services and content to current and prospective subscribers. Two of our primary means of communicating with our subscribers has been via email and text messages.
We use a broad mix of marketing programs and platforms to promote our services and content to current and prospective subscribers. Two of our primary means of communicating with our subscribers has been via email and text messages.
Given the sustained flow of investment into passive strategies that seek to track certain indexes, exclusion from stock indexes would likely preclude investment by many of these funds 33 and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class A common stock could be adversely affected.
Given the sustained flow of investment into passive strategies that seek to track certain indices, exclusion from stock indices would likely preclude investment by many of these funds and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class A common stock could be adversely affected.
The agreements with such exchanges and other data providers give them extensive data use audit rights, and such audits can be expensive and time consuming and potentially result in substantial fines. Defending claims based on the information we publish could be expensive and time-consuming and could adversely impact our business, operating results, and financial condition.
The agreements with such exchanges and other data providers give them extensive data use audit rights, and such audits can be expensive and time consuming and potentially result in substantial fines. Defending claims based on the information we publish could be expensive and time-consuming and could hurt our business, operating results, and financial condition.
MarketWise, Inc.’s board of directors (“Board of Directors”) will determine the appropriate uses for any excess cash so accumulated, which may include, among other uses, the payment of other expenses or dividends on MarketWise, Inc.’s stock, although MarketWise, Inc. will have no obligation to distribute such cash (or other available cash) to its stockholders.
MarketWise, Inc.’s board of directors (“Board”) will determine the appropriate uses for any excess cash so accumulated, which may include, among other uses, the payment of other expenses or dividends on MarketWise, Inc.’s stock, although MarketWise, Inc. will have no obligation to distribute such cash (or other available cash) to its stockholders.
For example, historically one of our primary means of communicating with our subscribers and keeping them engaged with our products has been via email communication. Our ability to communicate via email enables us to keep our subscribers updated on new products and present discount and promotional offers, among other things.
For example, email communication has historically been one of our primary means of communicating with our subscribers and keeping them engaged with our products. Our ability to communicate via email enables us to keep our subscribers updated on new products and present discount and promotional offers.
As consumer habits evolve in the era of web-enabled mobile devices and messaging/social networking apps, email use, particularly among the younger demographic, has declined. In addition, deliverability and other restrictions imposed by third-party email providers and/or applicable law have limited our ability to send emails to our current or prospective subscribers.
As consumer habits evolve in the era of web-enabled mobile devices and messaging/social networking apps, email usage, particularly among the younger demographic, has declined. In addition, restrictions imposed by third-party email providers and/or applicable law have limited our ability to send emails to our current or prospective subscribers.
Our editors and editorial team members have, in the past been, and continue to be, the subject of regulatory actions, accusations, claims, investigations, lawsuits, and/or settlements, which may have or may continue to have a negative impact on our reputation, subscriber base, and financial results. For example, in February 2024, a former employee was charged by the U.S.
Our editors and editorial team members have, in the past been, and continue to be, the subject of regulatory actions, accusations, claims, investigations, lawsuits, and/or settlements, which may have or may continue to damage our reputation, subscriber base, and financial results. For example, in February 2024, a former employee was charged by the U.S.
In addition, our ability to enforce and protect our intellectual property rights may be limited in certain countries outside the United States because of the differences in foreign laws concerning intellectual property rights, which could make it easier for competitors to capture a market position in such countries by utilizing technologies and products that are similar to those developed or owned by or licensed to us.
In addition, our ability to enforce and protect our intellectual property rights may be limited in certain countries outside the United States because of the differences in foreign laws that could make it easier for competitors to capture a market position by using technologies and products that are similar to those developed, owned by, or licensed to us.
If we are unable to successfully integrate acquisitions, identify and integrate future acquisitions, or dispose of assets and businesses, our results of operations could be adversely affected. As a part of our strategic plan, we have acquired businesses and we intend to continue to pursue selective acquisitions to support our business strategy.
If we are unable to successfully integrate acquisitions, identify and integrate future acquisitions, or dispose of assets and businesses, our results of operations could be adversely affected. We have acquired businesses in the past as part of our strategic plan, and we intend to continue to pursue selective acquisitions to support our business strategy.
If MarketWise, Inc. were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, MarketWise, Inc. and MarketWise, LLC might be subject to potentially significant tax inefficiencies, and MarketWise, Inc. would not be able to recover payments previously made by it under the Tax Receivable Agreement even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status. 31 We intend to operate such that MarketWise, LLC does not become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes.
If MarketWise, Inc. were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, MarketWise, Inc. and MarketWise, LLC might be subject to potentially significant tax inefficiencies, and MarketWise, Inc. would not be able to recover payments previously made by it under the Tax Receivable Agreement even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.
Rapid changes in technology and the ways in which people are reached can make this process more difficult. If we are unable to effectively and efficiently market our products and services, our business, results of operations, and financial condition may be adversely affected.
Rapid changes in technology and the ways in which people are reached can make this process more difficult. If we are unable to effectively and efficiently market our products and services, our business, results of operations, and financial condition may decline.
Independence is at the core of our brands and business, and we believe that our reputation and the reputation of our brands is one of our greatest corporate assets.
Independence is at the core of our brands and business, and we believe that the reputation of our company and our brands is one of our greatest assets.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our Board of Directors or management.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our Board or management.
If we are unable to exploit new and existing technologies to distinguish our products and services from those of our competitors or adapt to new distribution methods that provide optimal user experiences, our business, results of operations, and financial condition may be adversely affected.
If we are unable to exploit new and existing technologies to distinguish our products and services from those of our competitors or adapt to new distribution methods that provide optimal user experiences, our business, results of operations, and financial condition may weaken.
Our subscribers pay for our services using a variety of different payment methods, including credit and debit cards, prepaid gift cards, and direct debit. We rely on internal systems, as well as those of third parties, to process payments.
We are subject to payment processing risk. Our subscribers pay for our services using a variety of different payment methods, including credit and debit cards, prepaid gift cards, and direct debit. We rely on internal systems, as well as those of third parties, to process payments.
Acceptance and processing of these payment methods are subject to certain rules and regulations, including additional authentication requirements for certain payment methods, and require payment of interchange and other fees, which may increase over time and raise our operating costs and lower our profit margins.
Acceptance and processing of these payment methods are subject to rules and regulations, including additional authentication requirements for some payment methods. They also require payment of interchange and other fees, which may increase over time and raise our operating costs and lower our profit margins.
Advances in technology have led to an increasing number of methods for delivery of content and have resulted in a wide variety of consumer demands and expectations, which are also rapidly evolving. The increasing number of digital media options available on the Internet, through social networking tools and through mobile and other devices distributing content, is expanding consumer choice significantly.
Advances in technology have led to an increasing number of methods for delivery of content and have resulted in a wide and evolving variety of consumer demands and expectations. The increasing number of digital media options available on the Internet, through social-networking tools and through mobile and other devices, is expanding consumer choice significantly.
Failure to adequately protect our intellectual property could harm our brand, devalue our proprietary content, and affect our ability to compete effectively. Further, any infringement claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources on our part, which could materially adversely affect our business, results of operations, and financial condition.
Failure to adequately protect our intellectual property could harm our brand, devalue our proprietary content, and limit our ability to compete effectively. Further, any infringement claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources on our part, which could hurt our business, results of operations, and financial condition.
We have from time to time been subject to claims by third parties alleging infringement, misappropriation, dilution, or violation of, or conflict with, their intellectual property rights and other related claims. Such claims can also be alleged against clients, customers, or distributors of our products or services whom we have agreed to indemnify against third-party claims of infringement.
We have been subject to claims in the past by third parties alleging infringement, misappropriation, dilution, or violation of, or conflict with, their intellectual property rights and other related claims. Such claims can also be alleged against clients, customers, or distributors of our products or services whom we have agreed to indemnify against third-party claims of infringement.
To the extent there are increases in payment processing fees or the cash reserves required by third party payment processors, material changes in the payment ecosystem, such as large re-issuances of payment cards, changes in public perception and confidence in the payment systems we are utilizing, delays in receiving payments from payment processors, changes to rules or regulations concerning payments, loss of payment partners, and/or disruptions or failures in our payment processing systems, partner systems, or payment products, including products we use to update payment information, our revenue, operating expenses, and results of operations could be adversely impacted.
Our revenues, operating expenses, and results of operations could be weakened by: • increases in payment processing fees or the cash reserves required by third party payment processors, • material changes in the payment ecosystem, such as large re-issuances of payment cards, • changes in public perception and confidence in the payment systems we are utilizing, • delays in receiving payments from payment processors, • changes to rules or regulations concerning payments, • loss of payment partners, and/or • disruptions or failures in our payment processing systems, partner systems, or payment products, including products we use to update payment information.
In addition, our business, results of operations, and financial condition could suffer from attacks on the reputation of any of our current or former directors, officers, key contributors, editors, or editorial staff were harmed for any reason. We believe our portfolio of brands are highly regarded because of the integrity of their editorial content.
In addition, our business, results of operations, and financial condition could suffer from attacks on the reputation of any of our current or former directors, officers, key contributors, editors, or editorial staff. 12 We believe our portfolio of brands are highly regarded because of the integrity of their editorial content.
If we fail to offer our content in the manner or on the platforms in which our audience desires to consume it, or if we do not have offerings that are as compelling and/or cost effective as those of our competitors, our business, results of operations, and financial condition may be materially adversely affected.
If we fail to offer our content in the manner or on the platforms in which our audience desires to consume it, or if we do not have offerings that are as compelling and/or cost effective as those of our competitors, our business, results of operations, and financial condition may suffer.
In certain cases, future payments under the Tax Receivable Agreement to the MarketWise Members may be accelerated or significantly exceed the actual benefits MarketWise, Inc. realizes in respect of the tax attributes subject to the Tax Receivable Agreement. 30 The Tax Receivable Agreement provides that if (i) MarketWise, Inc. materially breaches any of its material obligations under the Tax Receivable Agreement, (ii) certain mergers, asset sales, other forms of business combinations, or other changes of control were to occur, or (iii) MarketWise, Inc. elects an early termination of the Tax Receivable Agreement, then MarketWise, Inc.’s future obligations, or its successor’s future obligations, under the Tax Receivable Agreement to make payments thereunder would accelerate and become due and payable, based on certain assumptions, including an assumption that MarketWise, Inc. would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement, and an assumption that, as of the effective date of the acceleration, any MarketWise Member that has LLC Units not yet exchanged shall be deemed to have exchanged such LLC Units on such date, even if MarketWise, Inc. does not receive the corresponding tax benefits until a later date when the LLC Units are actually exchanged.
The Tax Receivable Agreement provides that if (i) MarketWise, Inc. materially breaches any of its material obligations under the Tax Receivable Agreement, (ii) certain mergers, asset sales, other forms of business combinations, or other changes of control were to occur, or (iii) MarketWise, Inc. elects an early termination of the Tax Receivable Agreement, then MarketWise, Inc.’s future obligations, or its successor’s future obligations, under the Tax Receivable Agreement to make payments thereunder would accelerate and become due and payable, based on certain assumptions, including an assumption that MarketWise, Inc. would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement, and an assumption that, as of the effective date of the acceleration, any MarketWise Member that has LLC Units not yet exchanged shall be deemed to have exchanged such LLC Units on such date, even if MarketWise, Inc. does not receive the corresponding tax benefits until a later date when the LLC Units are actually exchanged.
Our compliance with these changing and increasingly burdensome, and sometimes conflicting regulations and requirements, may cause us to incur substantial costs or require us to change our business practices, which may impact financial results. If we fail to comply with these regulations or requirements, we may be exposed to litigation expenses and possible significant liability, fees, or fines.
Our compliance with these changing, increasingly burdensome, and sometimes conflicting regulations and requirements may cause us to incur substantial costs or require us to change our business practices. If we fail to comply with these regulations or requirements, we may be exposed to litigation expenses and possible significant 22 liability, fees, or fines.
Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business or results of operations Risks Related to Our Business and Industry Our business depends on our ability to attract new subscribers and to persuade existing subscribers to renew their subscriptions with us and to purchase additional products and services from us.
Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that challenge our business or results of operations Risks Related to Our Business and Industry Our business depends on our ability to attract new subscribers and persuade them to renew their subscriptions and purchase additional products and services from us.
For example, in February 2024, we terminated a content provider for violations of our corporate policies and announced a wind-down of the operations of Legacy Research. See Note 18 – Subsequent Events to our consolidated financial statements included elsewhere in this annual report.
For example, in February 2024, we terminated a content provider for violations of our corporate policies and announced a wind-down of the operations of Legacy Research. See Note 4 – Legacy Reorganization to our consolidated financial statements included elsewhere in this annual report.
Once we lose our “emerging growth company” and/or “smaller reporting company” status, we will no longer be able to take advantage of certain exemptions from reporting, and we will also be required to comply with the auditor attestation requirements of Section 404 of SOX.
Once we lose our “emerging growth company” and/or “smaller reporting company” status, we will no longer be able to take advantage of certain exemptions from reporting. If we lose our "non-accelerated filer" status, we will be required to comply with the auditor attestation requirements of Section 404 of SOX.
During the year ended December 31, 2023, pursuant to the terms of the MarketWise Operating Agreement, MarketWise Members exchanged an aggregate of 3,000,000 LLC Units, 34 together with an equal number of shares of Class B common stock for 3,000,000 newly-issued shares of our Class A common stock.
During the year ended December 31, 2024, pursuant to the terms of the MarketWise Operating Agreement, MarketWise Members exchanged an aggregate of 1,000,000 LLC Units, together with an equal number of shares of Class B common stock for 1,000,000 newly-issued shares of our Class A common stock.
For example, investors may take legal action against us if they rely on published information that contains an error, or a company may claim that we have made a defamatory statement about it or its employees. We rely on a variety of outside parties as the original sources for the information we use in our published data.
For example, investors may take legal 19 action against us if they rely on published information that contains an error, or a company may claim that we have made a defamatory statement about it or its employees. We rely on a variety of outside sources for the information we use in our published material.
Many of our competitors have larger customer bases, more established name recognition, a greater market share, and larger financial, marketing, technological, and personnel resources than we do. In general, there are few barriers to entry into our industry, and we expect to face additional competition from new entrants into the financial publishing industry.
Many of our competitors have larger customer bases, more established name recognition, greater market share, and larger financial, marketing, technological, and personnel resources than we do. Our industry has few barriers to entry, and we expect to face additional competition from new entrants into the financial publishing industry.
Ensuring compliance with the GDPR could involve substantial costs, and it is possible that, despite our efforts, competent authorities or third parties will assert that our business practices fail to comply.
Ensuring compliance with the GDPR could involve substantial costs. Despite our efforts, competent authorities or third parties will assert that our business practices fail to comply.
If our organization experiences growth or we are required to implement more complex organizational management structures, we may find it increasingly difficult to maintain the benefits of our corporate culture, including our ability to quickly develop and launch new and innovative products and solutions. This could negatively affect our business performance.
If our organization experiences growth or we are required to implement more complex organizational management structures, we may find it increasingly difficult to maintain the benefits of our corporate culture, including our ability to quickly develop and launch new and innovative products and solutions.
We, and our third-party service providers may modify, enhance, upgrade, and implement new systems, procedures, and controls to reflect changes in our business, technological advancements, and industry trends. These upgrades can create risks associated with implementing new systems and integrating them with existing ones, such as the disruption of our electronic delivery systems, data management, and sales and service processes.
We, along with our third-party service providers, may modify, enhance, upgrade, and implement new systems, procedures, and controls to reflect changes in our business, technological advancements, and industry trends. Implementing new systems and integrating them with existing ones creates risks, such as the disruption of our electronic delivery systems, data management, and sales and service processes.
Any failure to develop or take advantage of new means of communication or limitations on those means of communications imposed by laws, device manufacturers, or other sources could have an adverse effect on our business, financial condition, and results of operations.
Any failure to develop or take advantage of new means of communication or limitations on those means of communications imposed by laws, device manufacturers, or other sources could hurt our business, financial condition, and results of operations.
We make significant investments in servers, storage, and other network infrastructure to prevent incidents of network failure and downtime, but we cannot guarantee that these efforts will work as planned.
We cannot guarantee that these efforts will work as planned. We make significant investments in servers, storage, and other network infrastructure to prevent such incidents, but cannot guarantee that these efforts will work as planned.
Although the cybersecurity incidents that we have experienced to date, as well as those reported to us by our third-party partners, have not had a material effect on our business, financial condition or results of operations, such incidents could have a material adverse effect on us in the future.
Although the cybersecurity incidents that we have experienced to date, as well as those reported to us by our third-party partners, have not had a material effect on our business, financial condition or results of operations, they could be more damaging in the future.
Our business requires that we securely collect, process, store, transmit, and dispose of confidential information relating to our operations, subscribers, employees, and other third parties. In particular, Paid Subscribers are required to furnish certain information (including name, mailing address, phone number, email address, and credit card information) (collectively “personal information”), which we use to administer our services.
Our business requires that we securely collect, process, store, transmit, and dispose of confidential information relating to our operations, subscribers, employees, and other third parties. In particular, Paid Subscribers must give us information (including name, mailing address, phone number, email address, and credit card information) (collectively “personal information”), which we use to administer our services.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCybersecurity Governance Our Board, in coordination with the Nominating and Governance (“Nom Gov”) Committee, oversees our cybersecurity program, including the management of risks from cybersecurity threats.
Biggest changeCybersecurity Governance Our Board, in coordination with the Audit Committee, oversees our cybersecurity program, including the management of risks from cybersecurity threats.
In coordination with our executive team, our CIO and our Senior Vice President of IT Operations work collaboratively across the Company to implement a program intended to protect our information 41 systems from cybersecurity threats and to promptly respond to any cybersecurity incidents in accordance with our incident response plan.
In coordination with our executive team, our CIO and our Senior Vice President of IT Operations work collaboratively across the Company to implement a program intended to protect our information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents in accordance with our incident response plan.
When appropriate, the Board also receives reports concerning the detection, mitigation and remediation of cybersecurity threats and incidents Our CIO has over 25 years of software engineering experience including over ten years of being responsible for MarketWise’s cybersecurity.
When appropriate, the Board also receives reports concerning the detection, mitigation and remediation of cybersecurity threats and incidents 39 Our CIO has over 25 years of software engineering experience including over ten years of being responsible for MarketWise’s cybersecurity.
The Nom Gov Committee receives regular presentations and reports on cybersecurity risks from our Chief Information Officer (“CIO”), which address a wide range of topics including recent developments, vulnerability assessments, third-party and independent reviews, the threat environment, incident response planning, remediation efforts, employee training and awareness (including the results of our annual cybersecurity training), and information security considerations arising with respect to our peers and third parties.
The Audit Committee receives regular presentations and reports on cybersecurity risks from our Chief Information Officer (“CIO”), which address a wide range of topics including recent developments, vulnerability assessments, third-party and independent reviews, the threat environment, incident response planning, remediation efforts, employee training and awareness (including the results of our annual cybersecurity training), and information security considerations arising with respect to our peers and third parties.
On a regular basis, our Nom Gov Committee discusses our approach to cybersecurity risk management with our CIO, including planned initiatives to help the Board evaluate the effectiveness of our cybersecurity program. The Board receives occasional updates from the Nom Gov Committee and CIO on the effectiveness of our cybersecurity program.
On a regular basis, our Audit Committee discusses our approach to cybersecurity risk management with our CIO, including planned initiatives to help the Board evaluate the effectiveness of our cybersecurity program. The Board receives occasional updates from the Audit Committee and CIO on the effectiveness of our cybersecurity program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocation Type Square Feet Baltimore, MD Office Space and headquarters 46,000 Delray Beach, FL Office Space 19,000 Tampa, FL Office Space 2,600 Fernandina Beach, FL Office Space 2,200 Arlington, VA Office Space 300
Biggest changeLocation Type Square Feet Baltimore, MD Office Space and headquarters 46,000 Delray Beach, FL Office Space 19,000 Tampa, FL Office Space 2,600
Item 2. Properties. We lease all of our properties and do not own any real property. Our headquarters house our executive management team, content-producing teams, and the functional groups of information technology, accounting and finance, human resources, and legal.
Item 2. Properties. We lease all of our properties and do not own any real property. Our headquarters house our executive management team, content-producing teams, and our information technology, accounting and finance, human resources, and legal functional groups.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlthough the outcomes of these claims cannot be predicted with certainty, in the opinion of management, the ultimate resolution of these matters would not be expected to have a material adverse effect on our financial position, results of operations, or cash flows. Item 4. Mine Safety Disclosures. Not applicable. 42 PART II
Biggest changeAlthough the outcomes of these claims cannot be predicted with certainty, in the opinion of management, the ultimate resolution of these matters would not be expected to have a material adverse effect on our financial position, results of operations, or cash flows.
Added
On November 22, 2024, the Company's former Chief Executive Officer, Mark Arnold ("Claimant"), filed a demand for arbitration ("Demand") with the American Arbitration Association ("AAA").
Added
The Demand includes claims against MarketWise, Inc. and MarketWise, LLC (collectively, the "Respondent") for (i) breach of employment agreement between Claimant and Respondent dated December 1, 2019; (ii) breach of letter agreement between Claimant and Respondent dated November 17, 2022; and (iii) violation of the Maryland Payment and Collection Wage Act.
Added
Claimant seeks (i) money damages in excess of $9,000,000; (ii) treble damages pursuant to the Maryland Payment and Collection Wage Act; (iii) incidental and consequential damages; (iv) attorneys' fees and costs; and (v) prejudgment interest. We have defenses and intend to vigorously defend against the claims brought by Mark Arnold in this matter. Item 4. Mine Safety Disclosures.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividend Policy In 2023, we commenced paying quarterly dividends on shares of our Class A common stock and distributions on our LLC units. We also declared a special dividend and a special distribution on October 18, 2023. There can be no assurance that we will continue to pay dividends in the future.
Biggest changeThere are also 23 holders of record of our Class B common stock. Dividend Policy In 2024, we paid quarterly dividends on shares of our Class A common stock and distributions on our LLC Units. We also declared a special dividend on shares of our Class A common stock on January 15, 2025.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Securities. Market Information Our Class A common stock is traded on The Nasdaq Global Market, or Nasdaq, under the symbol “MKTW.” Our Class B common stock is not listed or traded on any exchange.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our Class A common stock is traded on The Nasdaq Global Market, or Nasdaq, under the symbol “MKTW.” Our Class B common stock is not listed or traded on any exchange.
The payment of any future dividends and distributions will be at the discretion of our Board of Directors and will depend on our results of operations, capital requirements, financial condition, prospects, contractual arrangements, any limitations on payment of dividends present in any debt agreements, and other factors that our Board of Directors may deem relevant.
There can be no assurance that we will continue to pay dividends in the future. The payment of any future dividends and distributions will be at the discretion of our Board and will depend on our results of operations, capital requirements, financial condition, prospects, contractual arrangements, and other factors that our Board may deem relevant.
Securities Authorized for Issuance Under Equity Compensation Plans 43 Information regarding the Securities Authorized for Issuance under Equity Compensation Plans can be found under Item 12 of this report. Issuer Purchases of Equity Securities In November 2021, our Board of Directors authorized the repurchase of up to $35.0 million in aggregate of shares of our Class A common stock.
Securities Authorized for Issuance Under Equity Compensation Plans Information regarding the Securities Authorized for Issuance under Equity Compensation Plans can be found under Item 12 of this report. Issuer Purchases of Equity Securities None. Item 6. [Reserved.] Not applicable. 41
Holders As of December 31, 2023, there were 43 holders of record of our Class A common stock, which does not reflect the beneficial ownership of shares held in nominee name, and 26 holders of record of our Class B common stock.
Holders As of December 31, 2024, there were 40 holders of record of our Class A common stock. The actual number of stockholders is significantly greater than this number of record holders, and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Removed
Use of Proceeds On July 28, 2020, ADAC consummated its initial public offering of 41,400,000 units, inclusive of 5,400,000 units sold to the underwriters upon the election to fully exercise their over-allotment option, at a price of $10.00 per unit, generating total gross proceeds of $414.0 million.
Removed
Each unit consisted of one Class A ordinary share of ADAC, and one-third of one redeemable warrant of ADAC. Each whole warrant entitled the holder thereof to purchase one Class A ordinary share, par value $0.0001, for $11.50 per share, subject to adjustment. UBS Securities LLC acted as the sole book-running manager.
Removed
The securities sold in the offering were registered under the Securities Act on registration statements on Form S-1 (No. 333-239623). The registration statements became effective on July 24, 2020.
Removed
Simultaneously with the consummation of the initial public offering and the exercise of the over-allotment option, ADAC consummated a private placement of 10,280,000 Private Placement Warrants (as defined and discussed in our Current Report on Form 8-K filed with the SEC on July 28, 2021) to its Sponsor, Ascendant Sponsor LP, at a price of $1.00 per Private Placement Warrant, generating total additional proceeds of $10,280,000.
Removed
Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. ADAC incurred $23.4 million in transaction costs, including $14.5 million of underwriting fees.
Removed
Following the initial public offering, the exercise of the over-allotment option and the sale of the Private Placement Warrants, a total of $414.6 million was placed in a trust account.
Removed
On July 21, 2021, after deducting payments to existing stockholders of $387.7 million in connection with the exercise of their redemption rights, the payment of the $14.5 million of deferred underwriting fees, and a total of $48.8 million in expenses in connection with the Transaction (defined below) paid from the trust account, and after including the proceeds of $150.0 million from the issuance and sale of our Class A common stock from the PIPE investment, we recorded $113.6 million net cash proceeds, which has been used to fund operating expenses.
Removed
There were no share repurchases made by or on behalf of MarketWise, Inc. of its common stock during the three months ended December 31, 2023. The share repurchase program expired by its terms on November 3, 2023. Item 6. [Reserved.] Not applicable. 44

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFor the post-Transactions period, net income attributable to controlling interests included a $15.7 million gain on warrant liabilities and a $2.4 million tax provision, both of which are 100% attributable to the controlling interest. 54 Results of Operations The following table sets forth our results of operations for the periods presented: (In thousands) Year Ended December 31, 2023 2023 2022 2021 Net revenue $ 443,245 $ 510,040 $ 547,899 Related party revenue 4,937 2,363 1,284 Total net revenue 448,182 512,403 549,183 Operating expenses: Cost of revenue (1)(2) 56,802 62,697 239,251 Sales and marketing (1)(2) 198,592 235,326 296,934 General and administrative (1)(2) 125,176 114,810 960,183 Research and development (1)(2) 8,831 8,817 7,487 Depreciation and amortization 3,821 3,091 2,676 Impairment losses 2,583 — — Related party expense 572 379 10,245 Total operating expenses 396,377 425,120 1,516,776 Income (loss) from operations 51,805 87,283 (967,593) Other income (expense), net (611) 15,672 16,178 Interest (expense) income, net 4,904 (295) (110) Income (loss) before income taxes 56,098 102,660 (951,525) Income tax expense 1,803 1,490 2,358 Net income (loss) 54,295 101,170 (953,883) Net income attributable to noncontrolling interests 52,513 83,180 59,426 Net income (loss) attributable to MarketWise, Inc. $ 1,782 $ 17,990 $ (1,013,309) __________________ (1) Included within cost of revenue, sales and marketing, and general and administrative expenses are stock-based compensation expenses as follows: (In thousands) Year Ended December 31, 2021 2023 2022 2021 Cost of revenue $ 2,922 $ 1,972 $ 171,804 Sales and marketing 3,185 2,209 48,098 General and administrative 17,277 4,864 843,449 Total stock based-compensation expense $ 23,384 $ 9,045 $ 1,063,351 (2) Cost of revenue, sales and marketing, general and administrative, and research and development expenses are exclusive of depreciation and amortization shown as a separate line item. 55 The following table sets forth our consolidated statements of operations data expressed as a percentage of net revenue for the periods indicated: Year Ended December 31, 2023 2023 2022 2021 Net revenue 100.0 % 100.0 % 100.0 % Operating expenses: Cost of revenue (1) 12.7 % 12.2 % 43.6 % Sales and marketing (1) 44.3 % 45.9 % 54.1 % General and administrative (1) 27.9 % 22.4 % 174.8 % Research and development (1) 2.0 % 1.7 % 1.4 % Depreciation and amortization 0.9 % 0.6 % 0.5 % Impairment losses 0.6 % — % — % Related party expense 0.1 % 0.1 % 1.9 % Total operating expenses 88.4 % 83.0 % 276.2 % Income (loss) from operations 11.6 % 17.0 % (176.2) % Other income (expense), net (0.1) % 3.1 % 2.9 % Interest (expense) income, net 1.1 % (0.1) % 0.0 % Income (loss) before income taxes 12.5 % 20.0 % (173.3) % Income tax expense 0.4 % 0.3 % 0.4 % Net income (loss) 12.1 % 19.7 % (173.7) % Net income attributable to noncontrolling interests 11.7 % 16.2 % 10.8 % Net income (loss) attributable to MarketWise, Inc. 0.4 % 3.5 % (184.5) % __________________ (1) Cost of revenue, sales and marketing, general and administrative, and research and development expenses are exclusive of depreciation and amortization shown as a separate line item.
Biggest changeFor the year ended December 31, 2023 net income attributable to controlling interests included a $1.8 million tax provision, which is 100% attributable to the controlling interest. 49 Results of Operations The following table sets forth our results of operations for the periods presented: (In thousands) Year Ended December 31, 2024 2023 2022 Net revenue $ 405,357 $ 443,245 $ 510,040 Related party revenue 3,344 4,937 2,363 Total net revenue 408,701 448,182 512,403 Operating expenses: Cost of revenue (1) 50,663 56,802 62,697 Sales and marketing (1) 160,707 198,592 235,326 General and administrative (1) 90,712 125,176 114,810 Research and development (1) 9,908 8,831 8,817 Depreciation and amortization 2,753 3,821 3,091 Impairment losses 4,445 2,583 — Related party expense 525 572 379 Total operating expenses 319,713 396,377 425,120 Income from operations 88,988 51,805 87,283 Other income (expense), net 2,085 (611) 15,672 Interest income (expense), net 5,288 4,904 (295) Income before income taxes 96,361 56,098 102,660 Income tax expense 3,253 1,803 1,490 Net income 93,108 54,295 101,170 Net income attributable to noncontrolling interests 86,049 52,513 83,180 Net income attributable to MarketWise, Inc. $ 7,059 $ 1,782 $ 17,990 (1) Cost of revenue, sales and marketing, general and administrative, and research and development expenses are exclusive of depreciation and amortization shown as a separate line item. 50 The following table sets forth our consolidated statements of operations data expressed as a percentage of net revenue for the periods indicated: Year Ended December 31, 2024 2023 2022 Net revenue 100.0 % 100.0 % 100.0 % Operating expenses: Cost of revenue (1) 12.4 % 12.7 % 12.2 % Sales and marketing (1) 39.3 % 44.3 % 45.9 % General and administrative (1) 22.2 % 27.9 % 22.4 % Research and development (1) 2.4 % 2.0 % 1.7 % Depreciation and amortization 0.7 % 0.9 % 0.6 % Impairment losses 1.1 % 0.6 % — % Related party expense 0.1 % 0.1 % 0.1 % Total operating expenses 78.2 % 88.4 % 83.0 % Income from operations 21.8 % 11.6 % 17.0 % Other income (expense), net 0.5 % (0.1) % 3.1 % Interest income (expense), net 1.3 % 1.1 % (0.1) % Income before income taxes 23.6 % 12.5 % 20.0 % Income tax expense 0.8 % 0.4 % 0.3 % Net income 22.8 % 12.1 % 19.7 % Net income attributable to noncontrolling interests 21.1 % 11.7 % 16.2 % Net income attributable to MarketWise, Inc. 1.7 % 0.4 % 3.5 % __________________ (1) Cost of revenue, sales and marketing, general and administrative, and research and development expenses are exclusive of depreciation and amortization shown as a separate line item.
If MarketWise, LLC does not have sufficient cash to fund distributions to MarketWise, Inc. in amounts sufficient to cover MarketWise, Inc.’s obligations under the Tax Receivable Agreement, it may have to borrow funds, which could materially adversely affect its liquidity and financial condition and subject it to various restrictions imposed by any such lenders.
If MarketWise, LLC does not have sufficient cash to fund distributions to MarketWise, Inc. in amounts sufficient to cover MarketWise, Inc.’s obligations under the Tax Receivable Agreement, it may have to borrow funds, which could materially adversely affect its liquidity and financial condition and subject it to various restrictions imposed by any such lenders.
Financing Activities For the year ended December 31, 2023, net cash used in financing activities was $64.0 million, primarily due to $52.9 million in distributions to noncontrolling interests and $5.7 million in dividends paid. We initiated paying dividends to Class A common stockholders and distributions to holders of LLC Units in 2023.
For the year ended December 31, 2023, net cash used in financing activities was $64.0 million, primarily due to $52.9 million in distributions to noncontrolling interests and $5.7 million in dividends paid. We initiated paying dividends to Class A common stockholders and distributions to holders of LLC Units in 2023.
Comparison of Years Ended December 31, 2023 and 2022 Net Revenue (In thousands) Year Ended December 31, $ Change % Change 2023 2022 Net revenue $ 448,182 $ 512,403 $ (64,221) (12.5) % The decrease in net revenue was primarily driven by a $56.5 million decrease in term subscription revenue and a $10.0 million decrease in membership subscription revenue, partially offset by a $2.3 million increase in non-subscription revenue.
Comparison of the Years Ended December 31, 2023 and 2022 Net Revenue (In thousands) Year Ended December 31, $ Change % Change 2023 2022 Net revenue $ 448,182 $ 512,403 $ (64,221) (12.5) % The decrease in net revenue was primarily driven by a $56.5 million decrease in term subscription revenue and a $10.0 million decrease in membership subscription revenue, partially offset by a $2.3 million increase in non- 52 subscription revenue.
The Company may allocate a portion of our “float” to investments meeting pre-determined guidelines, including U.S.-listed equity securities, with the objective to provide an acceptable rate of return while complying with established risk tolerances and liquidity parameters. The Board of Directors is responsible for approving investment decisions.
The Company may allocate a portion of our “float” to investments meeting pre-determined guidelines, including U.S.-listed equity securities, with the objective to provide an acceptable rate of return while complying with established risk tolerances and liquidity parameters. The Board is responsible for approving investment decisions.
The key estimates related to our revenue recognition are related to our estimated customer lives for our membership subscriptions, determination of standalone selling prices, and the amortization period for our capitalized contract costs. 65 We also offer membership subscriptions where we receive an upfront payment upon entering into the contract and receive a lower amount annually thereafter.
The key estimates related to our revenue recognition are related to our estimated customer lives for our membership subscriptions, determination of standalone selling prices, and the amortization period for our capitalized contract costs. We also offer membership subscriptions where we receive an upfront payment upon entering into the contract and receive a lower amount annually thereafter.
During the year ended December 31, 2022, we repurchased 2,484,717 shares totaling $13.1 million in the aggregate, including fees and commissions. Since the inception of the program we have repurchased 2,984,987 total shares. The share repurchase program expired by its terms on November 3, 2023.
During the year ended December 31, 2022, we repurchased 2,484,717 shares totaling $13.1 57 million in the aggregate, including fees and commissions. Since the inception of the program we have repurchased 2,984,987 total shares. The share repurchase program expired by its terms on November 3, 2023.
While we believe that Billings provides valuable insight into the cash that will be generated from sales 50 of our subscriptions, this metric may vary from period to period for a number of reasons and, therefore, Billings has a number of limitations as a quarter-over-quarter or year-over-year comparative measure.
While we believe that Billings provides valuable insight into the cash that will be generated from sales of our subscriptions, this metric may vary from period to period for a number of reasons and, therefore, Billings has a number of limitations as a quarter-over-quarter or year-over-year comparative measure.
Share Repurchase Program As previously disclosed in our Annual Report, on November 4, 2021, our Board of Directors authorized the repurchase of up to $35.0 million in aggregate of shares of the Company’s Class A common stock, with the authorization to expire on November 3, 2023.
Share Repurchase Program As previously disclosed in our Annual Report, on November 4, 2021, our Board authorized the repurchase of up to $35.0 million in aggregate of shares of the Company’s Class A common stock, with the authorization to expire on November 3, 2023.
The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.
The 60 excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.
We view the number of Paid Subscribers at the end of a given period as a key indicator of the attractiveness of our products and services, as well as the efficacy of our marketing in converting Free Subscribers to Paid Subscribers and generating direct-to-paid Paid Subscribers.
We view the number of Paid Subscribers at the end of a given period as a key indicator of the attractiveness of our products and services, as well as the efficacy of our marketing in converting Free Subscribers to Paid Subscribers and generating direct-to-paid acquisitions.
To the extent that MarketWise, 62 Inc. is unable to make timely payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid.
To the extent that MarketWise, Inc. is unable to make timely payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid.
The following discussion and analysis of the financial condition and results of operations of MarketWise, Inc., a Delaware corporation (“MarketWise,” “the Company,” “we,” “us,” and “our”), should be read together with our audited consolidated financial statements as of December 31, 2023 and 2022 and for each of the years ended December 31, 2023, 2022 and 2021 included elsewhere in this report.
The following discussion and analysis of the financial condition and results of operations of MarketWise, Inc., a Delaware corporation (“MarketWise,” “the Company,” “we,” “us,” and “our”), should be read together with our audited consolidated financial statements as of December 31, 2024 and 2023 and for each of the years ended December 31, 2024, 2023 and 2022 included elsewhere in this report.
Key Business Metrics We review the following key business metrics to measure our performance, identify trends, formulate financial projections, and make strategic decisions. We are not aware of any uniform standards for calculating these key 48 metrics, which may hinder comparability with other companies who may calculate similarly titled metrics in a different way.
Key Business Metrics 44 We review the following key business metrics to measure our performance, identify trends, formulate financial projections, and make strategic decisions. We are not aware of any uniform standards for calculating these key metrics, which may hinder comparability with other companies who may calculate similarly titled metrics in a different way.
We grow our Paid Subscriber base through performance marketing directly to prospective and existing subscribers across a variety of media, channels, and platforms.
We grow our Paid Subscriber base through marketing directly to prospective and existing subscribers across a variety of media, channels, and platforms.
The estimated life of membership customers was five years for each of the years ended December 31, 2023, 2022 and 2021. Our contracts with subscribers may include multiple performance obligations if subscription services are sold with other subscriptions, products, or events within one contract.
The estimated life of membership customers was five years for each of the years ended December 31, 2024, 2023 and 2022. Our contracts with subscribers may include multiple performance obligations if subscription services are sold with other subscriptions, products, or events within one contract.
Total Paid Subscribers decreased by 104 thousand, or 12.4%, to 737 thousand as of December 31, 2023 as compared to 841 thousand at December 31, 2022, driven by soft consumer engagement and a significant decrease in direct marketing spend as we focus on maintenance of profitability .
Total Paid Subscribers decreased by 104 thousand, or 12.4%, to 737 thousand as of December 31, 2023 as compared to 841 thousand as of December 31, 2022, driven by soft consumer engagement and a significant decrease in direct marketing spend as we focused on maintenance of profitability.
Our analysis indicates that this population of Active Free Subscribers is more likely to continue to consume content and convert to a Paid Subscriber.
Our experience indicates that this population of Active Free Subscribers is more likely to continue to consume content and convert to a Paid Subscriber.
Furthermore, to the extent we have taxable income, we will make distributions to the MarketWise Members in amounts sufficient for MarketWise Members to pay taxes due on their share of MarketWise income at prevailing individual income tax rates, which for the 2023 tax year the highest federal, state and local tax rate the Company used was 49.75%.
Furthermore, to the extent we have taxable income, we will make distributions to the MarketWise Members and to MarketWise, Inc. in amounts sufficient for the recipients to pay taxes due on their share of MarketWise income at prevailing individual income tax rates, which for the 2024 tax year the highest federal, state and local tax rate the Company used was 49.75%.
Impairment Losses Impairment losses increased due to charges related to deferred contract acquisition costs, intangible assets, and operating lease right of use assets related to our Buttonwood Publishing business that we sold in December 2023.
Impairment losses in 2023 were due to the charges related to deferred contract acquisition costs, intangible assets, and operating lease right of use assets of our Buttonwood Publishing business that we sold in December 2023.
We believe our net revenue retention rate, which has averaged over 70% from 2021 to 2023, is a more meaningful gauge of subscriber satisfaction. Average Revenue Per User (“ARPU”). We calculate ARPU as the trailing four quarters of net Billings divided by the average number of quarterly total Paid Subscribers over that period.
We believe our net revenue retention rate, which has averaged over 55% from 2022 to 2024, is a more meaningful gauge of subscriber satisfaction. Average Revenue Per User (“ARPU”). We calculate ARPU as the trailing four quarters of net Billings divided by the average number of quarterly total Paid Subscribers over that period.
The difference between Adjusted CFFO and CFFO in 2023 is $3.9 million, which are one-time costs related to severance payments. The difference between Adjusted CFFO and CFFO in 2022 is $11.0 million, which are one-time costs related to severance payments and professional fees related to our warrant exchange transaction.
The difference between Adjusted CFFO and CFFO in 2023 was $3.9 million, which were one-time costs related to severance payments. The difference between Adjusted CFFO and CFFO in 2022 was $11.0 million, which were one-time costs related to severance payments and professional fees related to our warrant exchange transaction.
Sales and Marketing Sales and marketing expenses consist primarily of payroll and related costs, amortization of deferred contract acquisition costs, agency costs, advertising campaigns, and branding initiatives. Sales and marketing expenses are exclusive of depreciation and amortization shown as a separate line item.
Sales and Marketing Sales and marketing expenses consist primarily of employee compensation costs, amortization of deferred contract acquisition costs, agency costs, advertising campaigns, and branding initiatives. Sales and marketing expenses are exclusive of depreciation and amortization shown as a separate line item.
General and Administrative General and administrative expenses consist primarily of payroll and related costs associated with our finance, legal, information technology, human resources, executive, and administrative personnel, legal fees, corporate insurance, office expenses, professional fees, and travel and entertainment costs.
General and Administrative General and administrative expenses consist primarily of employee compensation costs associated with our finance, legal, information technology, human resources, executive, and administrative personnel, legal fees, corporate insurance, office expenses, professional fees, and travel and entertainment costs.
As of December 31, 2023, Active Free Subscribers decreased by 0.2 million, or 5.3%, to 4.1 million as compared to 4.3 million as of December 31, 2022. The year over year decline in Active Free Subscribers is a result of decreased engagement with our Free Subscriber community as consumer engagement continues to be soft.
As of December 31, 2023, Active Free Subscribers decreased by 0.2 million, or 5.3%, to 4.1 million as compared to 4.3 million as of December 31, 2022. The year over year 45 decline in Active Free Subscribers was a result of decreased engagement with our Free Subscriber community as consumer engagement continued to be soft. Paid Subscribers.
ARPU decreased by $16, or 3.1%, to $503 as of December 31, 2023 as compared to $519 as of December 31, 2022. The year-over-year decrease was driven by a 17% decrease in trailing four quarter Billings, while trailing four quarter average Paid Subscribers only decreased by 14%.
ARPU decreased by $16, or 3.1%, to $503 as of December 31, 2023 as compared to $519 as of December 31, 2022. The year-over-year decrease was driven by a 17% decrease in trailing four quarter Billings in 2021, which significantly outpaced the decrease in trailing four quarter average Paid Subscribers of 14%.
Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company’s results of operations. As of December 31, 2023, our principal sources of liquidity were cash, cash equivalents, and restricted cash of $155.2 million.
Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company’s results of operations. 55 As of December 31, 2024, our principal sources of liquidity were cash, cash equivalents, and restricted cash of $97.9 million.
Membership subscription revenue, which is initially deferred and recognized over a five-year period, decreased during the year ended December 31, 2023 as a result of lower volume of membership subscriptions in current and prior years. 56 Operating Expenses (In thousands) Year Ended December 31, $ Change % Change 2023 2022 Operating expenses: Cost of revenue $ 56,802 $ 62,697 $ (5,895) (9.4) % Sales and marketing 198,592 235,326 (36,734) (15.6) % General and administrative 125,176 114,810 10,366 9.0 % Research and development 8,831 8,817 14 0.2 % Depreciation and amortization 3,821 3,091 730 23.6 % Impairment losses 2,583 — 2,583 N/M Related party expenses 572 379 193 50.9 % Total operating expenses $ 396,377 $ 425,120 $ (28,743) (6.8) % Cost of Revenue Cost of revenue decreased primarily driven by a $3.1 million decrease in salaries, taxes and benefits, a $2.1 million decrease in credit card fees, a $1.2 million decrease in outside labor, primarily related to customer service, and a $0.6 million decrease related to subscription printing and postage.
Operating Expenses (In thousands) Year Ended December 31, $ Change % Change 2023 2022 Operating expenses: Cost of revenue $ 56,802 $ 62,697 $ (5,895) (9.4) % Sales and marketing 198,592 235,326 (36,734) (15.6) % General and administrative 125,176 114,810 10,366 9.0 % Research and development 8,831 8,817 14 0.2 % Depreciation and amortization 3,821 3,091 730 23.6 % Impairment losses 2,583 — 2,583 N/M Related party expenses 572 379 193 50.9 % Total operating expenses $ 396,377 $ 425,120 $ (28,743) (6.8) % Cost of Revenue Cost of revenue decreased primarily driven by a $3.1 million decrease in salaries, taxes and benefits, a $2.1 million decrease in credit card fees, a $1.2 million decrease in outside labor, primarily related to customer service, and a $0.6 million decrease related to subscription printing and postage.
Our Paid Subscribers as of December 31, 2023 generated average customer lifetime Billings of approximately $1,494, resulting in a LTV/CAC ratio (as defined below) of approximately 2.3x.
Our Paid Subscribers (as defined below) as of December 31, 2024 generated average customer lifetime Billings of approximately $1,120, resulting in a LTV/CAC (as defined below) ratio of approximately 1.3x.
Investing Activities For the year ended December 31, 2023, net cash used in investing activities was $1.9 million, primarily driven by the payment of $1.7 million related to capitalized software development costs.
Investing Activities For the year ended December 31, 2024, net cash used in investing activities was $0.7 million, primarily driven by the payment of $0.5 million related to capitalized software development costs.
On average, over the past three years, it has taken approximately 1.1 to 1.6 years for a Paid Subscriber’s cumulative net revenue to exceed the total cost of acquiring that subscriber (which includes fixed costs, such as marketing salaries).
On average it takes us approximately 1.6 to 1.7 years for a Paid Subscriber’s cumulative net revenue to exceed the total cost of acquiring that subscriber (which includes fixed costs, such as marketing salaries).
Term subscription revenue decreased during the year ended December 31, 2022 primarily due to lower Billings as compared to the 2021 period — our highest Billings in company history — which was driven by reduced engagement of prospective and existing subscribers in the 2022 period.
Term subscription revenue decreased during the year ended December 31, 2024 primarily due to lower Billings as compared to the 2023 period which was driven by reduced engagement of prospective and existing subscribers in the 2024 period.
For the year ended December 31, 2022, net cash used in investing activities was $13.2 million, primarily driven by the payment of $12.8 million related to the Buttonwood Publishing acquisition.
For the year ended December 31, 2023, net cash used in investing activities was $1.9 million, primarily driven by the payment of $1.7 million related to capitalized software development costs. For the year ended December 31, 2022, net cash used in investing activities was $13.2 million, primarily driven by the payment of $12.8 million related to the Buttonwood Publishing acquisition.
For more information on Adjusted CFFO and Adjusted CFFO Margin (as defined below), see “— Non-GAAP Financial Measures.” (In thousands) Year Ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 62,428 $ 48,374 $ 63,632 Total net revenue 448,182 512,403 549,183 Net cash provided by operating activities margin 13.9 % 9.4 % 11.6 % Adjusted CFFO $ 66,368 $ 59,324 $ 197,081 Billings 382,411 459,487 729,893 Adjusted CFFO Margin 17.4 % 12.9 % 27.0 % Key Factors Affecting Our Performance We believe that our growth and future success are dependent upon several factors, including those below and those noted in the “Risk Factors” section in this report.
For more information on Adjusted CFFO and Adjusted CFFO Margin (as defined below), see “— Non-GAAP Financial Measures.” (In thousands) Year Ended December 31, 2024 2023 2022 Net cash provided by operating activities $ (22,150) $ 62,428 $ 48,374 Total net revenue 408,701 448,182 512,403 Net cash (used in) provided by operating activities margin (5.4 %) 13.9 % 9.4 % Adjusted CFFO $ (22,150) $ 66,368 $ 59,324 Billings 239,083 382,411 459,487 Adjusted CFFO Margin (9.3 %) 17.4 % 12.9 % Key Factors Affecting Our Performance We believe that our growth and future success are dependent upon several factors, including those below and those noted in the “Risk Factors” section in this report.
Cash Flows The following table presents a summary of our consolidated cash flows provided by (used in) operating, investing, and financing activities for the periods indicated: (In thousands) Year Ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 62,428 $ 48,374 $ 63,632 Net cash used in investing activities (1,897) (13,238) (8,311) Net cash used in financing activities (63,953) (16,192) (30,678) Operating Activities For the year ended December 31, 2023, net cash provided by operating activities was $62.4 million, primarily due to net income of $54.3 million adjusted for net non-cash items which increased cash by $37.1 million, and net changes in our operating assets and liabilities which reduced cash by $29.0 million, largely due to timing differences in the net receipt of cash.
Cash Flows The following table presents a summary of our consolidated cash flows provided by (used in) operating, investing, and financing activities for the periods indicated: (In thousands) Year Ended December 31, 2024 2023 2022 Net cash (used in) provided by operating activities $ (22,150) $ 62,428 $ 48,374 Net cash used in investing activities (681) (1,897) (13,238) Net cash used in financing activities (34,458) (63,953) (16,192) 58 Operating Activities For the year ended December 31, 2024, net cash used in operating activities was $22.2 million, primarily due to net income of $93.1 million, adjusted for net non-cash items which increased cash by $22.8 million, and net changes in our operating assets and liabilities which reduced cash by $138.0 million, largely due to timing differences in the net receipt of cash.
While we believe that our existing cash and cash equivalents and cash flow from operations will be sufficient to support working capital and capital expenditure requirements for the long term, our future capital requirements will depend on many factors, including our subscription growth rate, subscription renewal activity, including the timing and the amount of cash received from subscribers, the pace of expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the introduction of new and enhanced products, and the level of costs to operate as a public company.
Our future capital requirements will depend on many factors, including our subscription growth rate, subscription renewal activity, including the timing and the amount of cash received from subscribers, the pace of expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the introduction of new and enhanced products, and the level of costs to operate as a public company.
Net Renewal Billings are Billings from renewals and maintenance fee payments. Net Renewal Billings decreased by $23.5 million, or 19.5%, to $96.8 million in 2023 as compared to $120.3 million in 2022. This is primarily a function of a significant decrease (approximately 120 thousand) in average Paid Subscribers in 2023 versus 2022.
This was primarily a function of a significant decrease (approximately 150 thousand) in average Paid Subscribers in 2024 versus 2023. Net Renewal Billings decreased by $23.5 million, or 19.5%, to $96.8 million in 2023 as compared to $120.3 million in 2022.
Such amounts will be reflected in MarketWise, Inc.’s statement of cash flows as cash used in financing activities, and so will not decrease the amount of cash from operations or net income reflected in MarketWise, Inc.’s financial statements. However, such distributions will decrease the amount of cash available to us for use in our business.
Such distributions are reflected in our statement of cash flows as cash used in financing activities, and do not decrease the amount of cash from operations or net income reflected in our financial statements. However, such distributions decrease the amount of cash available for use in our business.
In addition, we paid a special dividend and special distribution in 2023. For the year ended December 31, 2022, net cash used in financing activities was $16.2 million, primarily due to $13.1 million in share repurchases and $4.6 million in distributions to noncontrolling interests.
In addition, we paid a special dividend and special distribution in 2023. 59 For the year ended December 31, 2022, net cash used in financing activities was $16.2 million, primarily due to $13.1 million in share repurchases and $4.6 million in distributions to noncontrolling interests. Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with GAAP.
Employee Compensation Costs Employee compensation costs, or payroll and payroll-related costs, include salaries, bonuses, benefits, and stock-based compensation for employees classified within cost of revenue, sales and marketing, and general and administrative, and also includes sales commissions for sales and marketing employees.
Employee Compensation Costs Employee compensation costs, or payroll and payroll-related costs, include salaries, bonuses, benefits, and stock-based compensation for employees classified within cost of revenue, sales and marketing, and general and administrative, and also includes sales commissions for sales and marketing employees. Stock-based compensation includes amounts related to our 2021 Incentive Award Plan, our ESPP, and profits interests.
We break down our Billings into three sub-categories: New Marketing Billings, Net Renewal Billings, and Other Billings. New Marketing Billings are Billings from all new subscription sales. New Marketing Billings decreased by $55.4 million, or 16.6%, to $278.3 million in 2023 as compared to $333.6 million in 2022.
We break down our Billings into three sub-categories: New Marketing Billings, Net Renewal Billings, and Other Billings. New Marketing Billings are Billings from all new subscription sales. New Marketing Billings decreased by $115.5 million, or 41.5%, to $162.8 million in 2024 as compared to $278.3 million in 2023.
We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We have incurred and we will continue to incur public company expenses related to our operations, plus we expect to incur payment obligations under the Tax Receivable Agreement in the future, which we expect to be significant.
We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We expect to incur payment obligations under the Tax Receivable Agreement in the future, which we expect to be significant.
Membership subscription revenue, which is initially deferred and recognized over a five-year period, increased as a result of higher volume of membership subscriptions in current and prior years, which continued to benefit us for the year ended December 31, 2022.
Membership subscription revenue, which is initially deferred and recognized over a five-year period, decreased during the year ended December 31, 2023 as a result of lower volume of membership subscriptions in current and prior years.
Active Free Subscribers are those Free Subscribers with whom we have engaged during the most recent quarter and represent those individuals who have received and/or consumed our content and offers to purchase other publications on a regular basis during that same quarter.
In order to better describe our universe of Free Subscribers, we recognize sub-categories of Free Subscribers – Active and Passive Free Subscribers. Active Free Subscribers are those Free Subscribers with whom we have engaged during the most recent quarter and represent those individuals who have received and/or consumed our content on a regular basis during that same quarter.
We expect that our operating cash flows, in addition to cash on hand, will enable us to continue to make investments in the future, and to pay dividends.
We expect that our anticipated operating cash flows, in addition to cash on hand, will enable us to continue to make investments in the future, and to pay dividends. We expect our operating cash flows to further improve as we increase our operational efficiency and experience economies of scale.
We now produce a diversified product portfolio from a variety of financial research brands such as Stansberry Research, Chaikin Analytics, InvestorPlace, and TradeSmith. Our entire investment research product portfolio is 100% digital and channel agnostic, and we offer all of our research across a variety of platforms, including desktop, laptop, and mobile devices, including tablets and mobile phones.
Our entire investment research product portfolio is 100% digital and channel agnostic, and we offer all of our research across a variety of platforms, including desktop, laptop, and mobile devices, including tablets and mobile phones.
The changes in operating assets and liabilities were primarily driven by an increase in deferred revenue of $175.6 million due to our overall increase in sales, and an increase in accrued expenses of $14.2 million, partially offset by a net increase in deferred contract acquisition costs of $95.8 million.
The changes in operating assets and liabilities were primarily driven by a decrease in deferred revenue, which reduced cash by $162.1 million due to our overall decrease in sales, partially offset by a net increase in deferred contract acquisition costs of $63.5 million, and a decrease in accrued expenses of $31.8 million.
Other Billings are Billings from revenue share, advertising and conferences. Other Billings increased by $1.8 million or 31.8 % to $7.4 million in 2023 as compared to $5.6 million in 2022 as a result of increasing revenue share activity with external parties.
Other Billings increased by $1.8 million or 31.8% to $7.4 million in 2023 as compared to $5.6 million in 2022 as a result of increasing revenue share activity with third parties. Total Billings decreased by $143.3 million, or 37.5%, to $239.1 million in 2024 as compared to $382.4 million in 2023.
We expect the composition of our Active and Passive Free Subscribers will change over time as we refine our marketing and data analysis techniques aimed at converting Free Subscribers to Paid Subscribers. Free Subscribers increased by 0.7 million, or 4.7%, to 16.4 million at December 31, 2023 as compared to 15.7 million at December 31, 2022.
We expect the composition of our Active and Passive Free Subscribers will change over time as we refine our marketing and data analysis techniques aimed at converting Free Subscribers to Paid Subscribers.
We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance.
We use the below non-GAAP financial measures, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance.
Subscriber count churn has ranged from approximately 2.3% to 2.7% per month between 2021 and 2023. Almost all of the subscribers who churned in 2023 did so having owned only one entry level publication. This is evidenced by the fact that their ARPU approximately matched the subscription price of our entry level publications.
Almost all of the subscribers who churned in 2024 did so having owned only one entry level publication. This is evidenced by the fact that their ARPU approximately matched the subscription price of our entry level publications.
We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all.
We expect MarketWise, Inc. will receive quarterly tax distributions in future quarters however the amount is uncertain. 56 We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all.
For more information on our LTV/CAC ratio and the components of this ratio, see “ —Definitions of Metrics. ” We adjust our marketing spend to drive efficient and profitable customer acquisition. We can adjust our marketing spend in near real-time, and we monitor costs per acquisition relative to the cart value of the initial subscription.
For more information on Billings and our LTV/CAC ratio and the components of this ratio, see “ —Key Business Metrics ” and “ —Definitions of Metrics, ” We adjust our marketing spend to drive efficient and profitable customer acquisition.
We believe that our existing cash and cash equivalents and cash flow from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.
There is no guarantee that shares of our Class A common stock will appreciate or even maintain their value. We believe that our existing cash and cash equivalents and cash flow from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.
Other Billings decreased by $6.4 million or 53.1% to $5.6 million in 2022 as compared to $12.0 million in 2021 as a result of decreasing revenue share activity with external parties. Total Billings decreased by $77.1 million, or 16.8%, to $382.4 million in 2023 as compared to $459.5 million in 2022.
Other Billings decreased by $1.4 million or 18.9% to $6.0 million in 2024 as compared to $7.4 million in 2023 as a result of decreasing revenue share activity with external parties.
Comparison of the Years Ended December 31, 2022 and 2021 Net Revenue (In thousands) Year Ended December 31, $ Change % Change 2022 2021 Net revenue $ 512,403 $ 549,183 $ (36,780) (6.7) % 57 The decrease in net revenue was primarily driven by a $38.1 million decrease in term subscription revenue and a $1.8 million decrease in non-subscription revenue, partially offset by a $3.1 million increase in membership subscription revenue.
Comparison of Years Ended December 31, 2024 and 2023 Net Revenue (In thousands) Year Ended December 31, $ Change % Change 2024 2023 Net revenue $ 408,701 $ 448,182 $ (39,481) (8.8) % The decrease in net revenue was primarily driven by a $41.4 million decrease in term subscription revenue and a $1.7 million decrease in non-subscription revenue, partially offset by a $3.6 million increase in membership subscription revenue.
The investment allocation decisions are based in part on the anticipated liquidity requirements of the Company including working capital, estimated tax related distributions, and broader capital allocation objectives. For the year ended December 31, 2023, the Company earned interest income of $5.7 million on our cash portfolio.
The investment allocation decisions are based in part on the anticipated liquidity requirements of the Company including working capital, estimated tax related distributions, and broader capital allocation objectives.
Adjusted CFFO decreased by $137.8 million, or 69.9%, in 2022, primarily driven by an decrease of $270.4 million in Billings. Liquidity and Capital Resources General A substantial portion of our cash on hand is the result of the nature of our subscription business. We receive cash up front from our sales of annual, multi-year, and membership subscriptions.
Liquidity and Capital Resources General A substantial portion of our cash on hand is the result of the nature of our subscription business. We receive cash up front from our sales of annual, multi-year, and membership subscriptions.
We believe our high-value composition rate reflects our ability to retain existing subscribers through renewals and our ability to expand our relationship with them when those subscribers purchase higher-value subscriptions.
We believe our high-value composition rate reflects our ability to retain existing subscribers through renewals and our ability to expand our relationship with them when those subscribers purchase higher-value subscriptions. Our ultra high-value composition rate reflects the percentage of Paid Subscribers that have purchased more than $5,000 of our products over their lifetime.
Year Ended December 31, 2023 2022 2021 Free Subscribers 16,446,752 15,702,545 13,699,910 Active Free Subscribers 4,067,199 4,295,508 4,528,969 Paid Subscribers 737,140 841,277 971,534 ARPU $ 503 $ 519 $ 742 New "Marketing" Billings (in thousands) $ 278,260 $ 333,612 $ 596,732 Net "Renewal" Billings (in thousands) $ 96,767 $ 120,272 $ 121,205 Other Billings (in thousands) $ 7,384 $ 5,603 $ 11,956 Total Billings (in thousands) $ 382,411 $ 459,487 729,893 Free Subscribers .
Year Ended December 31, 2024 2023 2022 Free Subscribers 14,082,039 16,446,752 15,702,545 Active Free Subscribers 3,331,437 4,067,199 4,295,508 Paid Subscribers 505,889 737,140 841,277 ARPU $ 394 $ 503 $ 519 New "Marketing" Billings (in thousands) $ 162,782 $ 278,260 $ 333,612 Net "Renewal" Billings (in thousands) $ 70,313 $ 96,767 $ 120,272 Other Billings (in thousands) $ 5,988 $ 7,384 $ 5,603 Total Billings (in thousands) $ 239,083 $ 382,411 $ 459,487 Free Subscribers .
We also capitalize revenue share fees that are payable to other companies, including related parties, who share their customer lists with us for each successful sale we make to a customer from their list.
We also capitalize revenue share fees that are payable to other companies, including related parties, who share their customer lists with us for each successful sale we make to a customer from their list. Capitalized costs are amortized on a straight-line basis over the expected benefit period related directly to those costs, which is approximately four years.
While they have declined somewhat recently, our ARPUs remain high relative to other subscription businesses, and we attribute this to the quality of our content and effective sales and marketing efforts regarding higher value content, bundled subscriptions and membership subscriptions. These subscriptions have compelling economics that allow us to recoup our initial marketing spend made to acquire these subscribers.
The decrease in trailing four quarter Billings was largely driven by cessation of prospective and existing subscribers. While they have declined somewhat recently, our ARPUs remain high relative to other subscription businesses, and we attribute this to the quality of our content and effective sales and marketing efforts regarding higher value content, bundled subscriptions and membership subscriptions.
The decreases from these 49 factors were compounded by the loss of approximately 16 thousand paid subscribers as part of the sale of Buttonwood Publishing in fourth quarter 2023.
The decreases from these factors were compounded by the loss of approximately 16 thousand Paid Subscribers as part of the sale of Buttonwood Publishing in fourth quarter 2023. Subscriber count churn rate has ranged from approximately 2.4% to 3.3% per month between 2022 and 2024.
The following table provides a reconciliation of net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted CFFO for each of the periods presented: (In thousands) Year Ended December 31, % change 2023 2022 2021 2023 vs 2022 2022 vs 2021 Net cash provided by operating activities $ 62,428 $ 48,374 $ 63,632 29.1 % (24.0) % Profits distributions to Class B unitholders included in stock-based compensation expense — — 123,449 N/M (100.0) % Non-recurring expenses 3,940 10,950 10,000 (64.0) % 9.5 % Adjusted CFFO $ 66,368 $ 59,324 $ 197,081 11.9 % (69.9) % The following table provides the calculation of net cash provided by operating activities margin as a percentage of total net revenue, the most directly comparable financial measure in accordance with GAAP, and Adjusted CFFO Margin for each of the periods presented: (In thousands) Year Ended December 31, % change 2023 2022 2021 2023 vs 2022 2022 vs 2021 Net cash provided by operating activities $ 62,428 $ 48,374 $ 63,632 29.1 % (24.0) % Total net revenue 448,182 512,403 549,183 (12.5) % (6.7) % Net cash provided by operating activities margin 13.9 % 9.4 % 11.6 % Adjusted CFFO $ 66,368 $ 59,324 $ 197,081 11.9 % (69.9) % Billings 382,411 459,487 729,893 (16.8) % (37.0) % Adjusted CFFO Margin 17.4 % 12.9 % 27.0 % 60 CFFO for the year ended December 31, 2023 was primarily due to net income of $54.3 million adjusted for non-cash items of $37.1 million and a net decrease in our operating assets and liabilities of $29.0 million.
The following table provides a reconciliation of net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted CFFO for each of the periods presented: (In thousands) Year Ended December 31, % change 2024 2023 2022 2024 vs 2023 2023 vs 2022 Net cash (used in) provided by operating activities $ (22,150) $ 62,428 $ 48,374 (135.5) % 29.1 % Non-recurring expenses — 3,940 10,950 (100.0) % (64.0) % Adjusted CFFO $ (22,150) $ 66,368 $ 59,324 (133.4) % 11.9 % 54 The following table provides the calculation of net cash provided by operating activities as a percentage of total net revenue, the most directly comparable financial measure in accordance with GAAP, and Adjusted CFFO Margin for each of the periods presented: (In thousands) Year Ended December 31, % change 2024 2023 2022 2024 vs 2023 2023 vs 2022 Net cash provided by operating activities $ (22,150) $ 62,428 $ 48,374 (135.5) % 29.1 % Total net revenue 408,701 448,182 512,403 (8.8) % (12.5) % Net cash (used in) provided by operating activities margin (5.4 %) 13.9 % 9.4 % Adjusted CFFO $ (22,150) $ 66,368 $ 59,324 (133.4) % 11.9 % Billings 239,083 382,411 459,487 (37.5) % (16.8) % Adjusted CFFO Margin (9.3 %) 17.4 % 12.9 % CFFO and Adjusted CFFO were negative for the year ended December 31, 2024 primarily driven by lower Billings during the period, partially due to the Legacy wind down, incentive compensation payouts during the first quarter, and payments related to renegotiated employment agreements.
We believe our ultra high-value composition rate reflects our ability to successfully build lifetime relationships with our subscribers, often across multiple products and brands. Investors should consider ultra high-value composition rate as a factor in evaluating our ability to retain and expand our relationship with our subscribers.
We believe our ultra high-value composition rate reflects our ability to successfully build lifetime relationships with our subscribers, often across multiple products and brands. As of December 31, 2024, 56% of our Paid Subscribers were high-value subscribers and 25% of our Paid Subscribers were ultra high-value subscribers.
Research and development expenses are exclusive of depreciation and amortization shown as a separate line item. 53 Depreciation and Amortization Depreciation and amortization expenses consist of amortization of trade names, customer relationship intangibles, and software development costs, as well as depreciation on other property and equipment such as leasehold improvements, furniture and fixtures, and computer equipment.
Depreciation and Amortization Depreciation and amortization expenses consist of amortization of trade names, customer relationship intangibles, and software development costs, as well as depreciation on other property and equipment such as leasehold improvements, furniture and fixtures, and computer equipment. 48 Impairment of Intangible Assets Impairment of intangible assets consists of impairment losses related to our Legacy Research and Buttonwood Publishing businesses.
While the growth of 12 month inflation rates has declined year over year, the consumer price index was still up 3.4%. We believe this continues to create reluctance among prospective and existing subscribers to purchase our higher priced subscriptions. Billings decreased by $270.4 million, or 37.0%, to $459.5 million in 2022 as compared to $729.9 million in 2021.
The decrease was primarily driven by the winding down of our Legacy Research Group brands which began in mid-February 2024. While the growth of 12-month inflation rates has declined year over year, the consumer price index was still up 2.9%. We believe this continues to create reluctance among prospective and existing subscribers to purchase our higher priced subscriptions.
We believe that we have a significant opportunity to expand our relationships with our large base of Free Subscribers and Paid Subscribers. Thanks to the quality of our products, we believe our customers will continue their relationship with us and extend and increase their subscriptions over time.
Thanks to the quality of our products, we believe our customers will continue their relationship with us and extend and increase their subscriptions over time. As we deepen our engagement with our subscribers, our customers tend to purchase more and higher-value products.
High-value composition rate: Our high-value composition rate reflects the number of Paid Subscribers who have purchased >$600 in aggregate over their lifetime as of a particular point in time divided by the total number of Paid Subscribers as of that same point in time.
These are: High-value composition rate: High-value composition rate is the number of high-valued subscribers divided by Paid Subscribers. High-value subscribers are Paid Subscribers who have purchased >$600 in aggregate over their lifetime. LTV/CAC ratio: We calculate LTV/CAC ratio as LTV divided by CAC.
We expect that as we grow our business, the amount of our float will increase. The Company estimates that the amount of float was approximately $120.5 million and $94.1 million as of December 31, 2023 and December 31, 2022, respectively. The Company invests a portion of this cash in financial instruments to achieve reasonable returns on a risk-adjusted basis.
We expect that as we grow our business, the amount of our float will increase. The Company estimates that the amount of float was approximately $119.7 million and $120.5 million as of December 31, 2024 and 2023, respectively.
As of December 31, 2023, MarketWise, Inc.’s controlling interest in MarketWise, LLC was 11.2% and the noncontrolling interest was 88.8%.
For the year ended December 31, 2024 net income attributable to controlling interests included a $3.3 million tax provision, which is 100% attributable to the controlling interest. As of December 31, 2023, MarketWise, Inc.’s controlling interest in MarketWise, LLC was 11.2% and the noncontrolling interest was 88.8%.
Ultra high-value composition rate: Our ultra high-value composition rate reflects the number of Paid Subscribers who have purchased >$5,000 in aggregate over their lifetime as of a particular point in time divided by the number of high-value subscribers as of that same point in time.
Monthly subscriber count churn rate is defined by the annual subscriber count churn divided by twelve months. Ultra high-value composition rate: Ultra high-value composition rate is the number of ultra high-valued subscribers divided by Paid Subscribers. Ultra high-value subscribers are Paid Subscribers who have purchased >$5,000 in aggregate over their lifetime.
Since 2021, direct-to-paid acquisition has accounted for approximately 58% of our annual Paid Subscriber acquisition, and is largely driven by display ads and targeted email campaigns. Our free subscription products also serve as a significant source of new Paid Subscribers, accounting for approximately 42% of our annual Paid Subscriber acquisition. Retaining and expanding relationships with existing subscribers.
Our free subscription products also serve as a significant source of new Paid Subscribers, accounting for approximately 50% of our annual Paid Subscriber acquisition. Retaining and expanding relationships with existing subscribers. We believe that we have a significant opportunity to expand our relationships with our large base of Free Subscribers and Paid Subscribers.
Our high-value composition rate reflects the rate at which Paid Subscribers that have purchased less than $600 of our products over their lifetime convert into subscribers that have purchased more than $600.
For more information on ARPU, see “ Key Business Metrics — Average Revenue Per User. ” 43 Our high-value composition rate reflects the percentage of Paid Subscribers that have purchased more than $600 of our products over their lifetime.
Soft consumer engagement driven by external factors led us to significantly decrease our direct marketing spend to maintain profitability. As a result, we generated fewer new subscribers. Existing subscribers were also reluctant to purchase higher priced subscriptions, also contributing to the decline.
New Marketing Billings decreased by $55.4 million, or 16.6%, to $278.3 million in 2023 as compared to $333.6 million in 2022. Soft consumer engagement driven by external factors led us to significantly decrease our direct marketing spend to maintain profitability. As a result, we generated fewer new subscribers.
Sales and Marketing Sales and marketing expense decreased primarily driven by a $46.4 million decrease in stock-based compensation expense related to holders of Class B Units, and a $46.0 million decrease in marketing as we have reduced our marketing spend as part of our cost reduction initiatives and due to higher per unit subscriber acquisition costs resulting from higher post-COVID increases in demand for display advertising.
Sales and Marketing Sales and marketing expense decreased primarily driven by a $14.5 million decrease in amortization of deferred contract acquisition costs, a $14.1 million decrease in marketing expense as we have reduced our marketing spend as part of our cost reduction initiatives and due to higher per unit subscriber acquisition costs, and an $8.5 million decrease in salaries, taxes and benefits.
Impairment Losses Impairment losses include charges for deferred contract acquisition costs, intangible assets, and right of use assets related to our Buttonwood Publishing business. Related Party Expense Related party expenses primarily consist of Board of Director compensation, revenue share expenses, and expenses for certain corporate functions performed by a related party for certain historic periods.
Related Party Expense Related party expenses primarily consist of Board of Director compensation, revenue share expenses and expenses for certain corporate functions performed by a related party for certain historic periods. Other Income (Expense), Net Other income (expense), net primarily consists of the net gains or losses on our embedded derivative instruments.
We define Adjusted CFFO Margin as Adjusted CFFO as a percentage of Billings. We believe that Adjusted CFFO and Adjusted CFFO Margin are useful indicators that provide information to management and investors about our ability to generate cash, and for internal planning and forecasting purposes.
(In thousands) Year Ended December 31, % change 2024 2023 2022 2024 vs 2023 2023 vs 2022 Adjusted CFFO $ (22,150) $ 66,368 $ 59,324 (133.4) % 11.9 % Adjusted CFFO Margin (9.3) % 17.4 % 12.9 % Adjusted CFFO / Adjusted CFFO Margin We believe that Adjusted CFFO and Adjusted CFFO Margin are useful indicators that provide information to management and investors about our ability to generate cash, and for internal planning and forecasting purposes.
We have financed our operations primarily through cash received from operations, and our sources of liquidity have enabled us to make continued investments in supporting the growth of our business. The 2021 Credit Facility (as defined and further discussed below) can be used to finance permitted acquisitions, for working capital and general corporate purposes.
Cash and cash equivalents are comprised of bank deposits, money market funds, and certificates of deposit. We have financed our operations primarily through cash received from operations, and our sources of liquidity have enabled us to make continued investments in supporting the growth of our business.
Capitalized costs are amortized on a straight-line basis over the shorter of the expected customer life and the expected benefit related directly to those costs, which is approximately four years. The amortization period for contract costs was approximately four years for each of the years ended December 31, 2023, 2022 and 2021.
The amortization period for contract costs was approximately four years for each of the years ended December 31, 2024, 2023 and 2022.

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