MARKETWISE INC

Previous wording

The following discussion and analysis of the financial condition and results of operations of MarketWise, Inc., a Delaware corporation (“MarketWise,” “we,” “us,” and “our”), should be read together with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Annual Report”). The following discussion contains forward-looking statements. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” in this report.

Current wording

The following discussion and analysis of the financial condition and results of operations of MarketWise, Inc., a Delaware corporation (“MarketWise,” “we,” “us,” and “our”), should be read together with our unaudited financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Annual Report”). The following discussion contains forward-looking statements. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” in this report.

Previous wording

MarketWise started in 1999 with the simple idea that, if we could publish intelligent, independent, insightful, and in-depth investment research and treat the subscriber the way we would want to be treated, then subscribers would renew their subscriptions and stay with us. 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, and InvestorPlace. 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.

Current wording

MarketWise started in 1999 with the simple idea that, if we could publish intelligent, independent, insightful, and in-depth investment research and treat the subscriber the way we would want to be treated, then subscribers would renew their subscriptions and stay with us. 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 and Chaikin Analytics. 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.

Previous wording

On February 8, 2024, the Company reported that its Board of Directors had committed to a strategic realignment and reorganization (the “Reorganization”) whereby we will wind-down the operations of our Legacy Research Group business (“Legacy Research”) in response to misconduct discovered at Legacy Research where certain managers violated the Company’s policies. For more information on the Legacy Reorganization, see “— Legacy Reorganization.”

Current wording

In first quarter 2024 the Company reported that its Board of Directors had committed to a strategic realignment and reorganization (the “Reorganization”) whereby we will wind-down the operations of our Legacy Research Group business (“Legacy Research”) in response to misconduct discovered at Legacy Research where certain managers violated the Company’s policies. During second quarter 2024 we substantially finalized actions with respect to the former Legacy employees and began transitioning customers to other brands within MarketWise. In August 2024, we expect to substantially complete certain of our Reorganization plans. For more information on the Legacy Reorganization, see “— Legacy Reorganization.”

Previous wording

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. We seek and typically achieve 90-day payback periods to cover this variable component of the direct marketing spend.

Current wording

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.

Previous wording

As of March 31, 2024, our paid subscriber base was 683 thousand, down 94 thousand, or 12.1% as compared to 777 thousand at March 31, 2023. Our base is comprised of subscribers obtained through both direct-to-paid acquisition and free-to-paid conversions. Since 2019, direct-to-paid acquisition has accounted for approximately two-thirds of our annual Paid Subscriber acquisition, and is largely driven by display ads and targeted email campaigns.

Current wording

As of June 30, 2024, our Paid Subscriber base was 645 thousand, down 105 thousand, or 14.0% as compared to 750 thousand at June 30, 2023. Our Paid Subscriber base is comprised of subscribers obtained through both direct-to-paid acquisition and free-to-paid conversions. Since 2019, direct-to-paid acquisition has accounted for approximately two-thirds of our annual Paid Subscriber acquisition and is largely driven by display ads and targeted email campaigns.

Previous wording

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 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. As we deepen our engagement with our subscribers, our customers tend to purchase more and higher-value products. Our ARPU (as defined below) as of March 31, 2024 was $492, which decreased 0.2% from $493 as of March 31, 2023. For more information on ARPU, see “Key Business Metrics—Average Revenue Per User.”

Current wording

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 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. As we deepen our engagement with our subscribers, our customers tend to purchase more and higher-value products. Our ARPU (as defined below) as of June 30, 2024 was $456, which decreased

Previous wording

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. 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 cumulative ultra high-value composition rate reflects the rate at which high value Paid Subscribers that have purchased more than $600 of our products over their lifetime convert into subscribers that have purchased more than $5,000. 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 March 31, 2024, our high-value composition rate and ultra high-value composition rate were 49% and 42%, respectively.

Current wording

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. 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 cumulative ultra high-value composition rate reflects the rate at which high value Paid Subscribers that have purchased more than $600 of our products over their lifetime convert into subscribers that have purchased more than $5,000. 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 June 30, 2024, our high-value composition rate and ultra high-value composition rate were 50% and 43%, respectively.

Previous wording

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. Our analysis indicates that this population of Active Free Subscribers is more likely to continue to consume content and convert to a Paid Subscriber. Passive Free Subscribers represent those individuals who have not directly received our content during the most recent quarter, however, they remain included in our Free Subscriber population as defined above and may continue to consume content from our platforms. We expect the composition of our Active and Passive Free

Current wording

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. Our experience indicates that this population of Active Free Subscribers is more likely to continue to consume content and convert to a Paid Subscriber. Passive Free Subscribers represent those individuals who have not directly received our content during the most recent quarter, however, they remain included in our Free Subscriber population as defined above and may continue to consume content from our platforms. 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.

Previous wording

Free Subscribers was flat at 16.7 million as of March 31, 2024 as compared to 16.4 million as of December 31, 2023. As of March 31, 2024, average Active Free Subscribers decreased by 0.3 million, or 7.0% to 3.8 million, compared to 4.1 million as of December 31, 2023, again as a result of cessation of engagement with our Legacy Research Group free subscribers as the wind down of this business began in February 2024.

Current wording

Free Subscribers decreased by 1.4 million, or 8.5% to 15.2 million as of June 30, 2024 as compared to 16.7 million as of March 31, 2024. As of June 30, 2024, Active Free Subscribers increased by 998 thousand, or 26.4% to 4.8 million, compared to 3.8 million as of March 31, 2024, again as a result of reaching out to previously passive Legacy Research Free Subscribers in the quarter to notify them that their subscriptions were transferred over to like subscriptions in other brands within MarketWise.

Previous wording

Paid Subscribers. We define Paid Subscribers as the total number of unique subscribers with at least one paid subscription at the end of the period. 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 grow our Paid Subscriber base through performance marketing directly to prospective and existing subscribers across a variety of media, channels, and platforms.

Current wording

Paid Subscribers. We define Paid Subscribers as the total number of unique subscribers with at least one paid subscription at the end of the period. 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. We grow our Paid Subscriber base through marketing directly to prospective and existing subscribers across a variety of media, channels, and platforms.

Previous wording

Total Paid Subscribers decreased by 94 thousand, or 12.1%, to 683 thousand as of March 31, 2024 as compared to 777 thousand at March 31, 2023, driven by continued soft consumer engagement. While gross new subscribers increased 16.4% over the same quarter in the prior year, churn was elevated due to expiring subscriptions in our Legacy Research Group which likely came as a result of the wind down of this business which began in February 2024. The decreases from these factors were partially offset by the addition of approximately 25 thousand Paid Subscribers that joined our list with the MMP acquisition in first quarter 2024.

Current wording

Total Paid Subscribers decreased by 105 thousand, or 14.0%, to 645 thousand as of June 30, 2024 as compared to 750 thousand at June 30, 2023, driven by continued soft consumer engagement as well as elevated churn due to expiring subscriptions in our Legacy Research Group which likely came as a result of the wind down of this business which began in February 2024.

Previous wording

Subscriber count churn has ranged from approximately 2.4% to 2.7% per month between 2021 and 2023. As of March 31, 2024, the average monthly churn over the trailing twelve months was at the higher end of the this range. Almost all of the subscribers who churned in first quarter 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 believe our net revenue retention rate, which has averaged over 70% from 2021 to 2023, is a more meaningful gauge of subscriber satisfaction.

Current wording

Subscriber count churn has ranged from approximately 2.3% to 2.7% per month between 2021 and 2023. As of June 30, 2024, the average monthly churn over the trailing twelve months was in the middle of this range. Almost all of the subscribers who churned in second quarter 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 believe our net revenue retention rate, which has averaged over 70% from 2021 to 2023, is a more meaningful gauge of subscriber satisfaction.

Previous wording

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 ARPU is a key indicator of how successful we are in attracting subscribers to higher-value content. We believe that our high ARPU is indicative of the trust we build with our subscribers and of the value they see in our products and services.

Current wording

Average Revenue Per User. 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 ARPU is a key indicator of how successful we are in attracting subscribers to higher-value content. We believe that our high ARPU is indicative of the trust we build with our subscribers and of the value they see in our products and services.

Previous wording

ARPU decreased by $1, or 0.2%, to $492 as of March 31, 2024 as compared to $493 as of March 31, 2023. Both trailing four quarter Billings and trailing four quarter Paid Subscribers decreased by 14%. The decrease in trailing four quarter Billings was driven by reduced engagement of prospective and existing subscribers, as further discussed in Billings below.

Current wording

ARPU decreased by $33, or 6.8%, to $456 as of June 30, 2024 as compared to $490 as of June 30, 2023. The year-over-year decrease was driven by a 19% decrease in trailing four quarter Billings, while trailing four quarter Paid Subscribers only decreased by 13%. The decrease in trailing four quarter Billings was largely driven by cessation of selling to our Legacy Research subscribers as further discussed in Billings below.

Previous wording

ARPU decreased by $11, or 2.2%, to $492 as of March 31, 2024 as compared to $503 as of December 31, 2023. The sequential decrease was driven by a 5% decrease in trailing four-quarter Billings, while trailing four-quarter average Paid Subscribers only decreased 3%.

Current wording

ARPU decreased by $36, or 7.3%, to $456 as of June 30, 2024 as compared to $492 as of March 31, 2024. The sequential decrease was driven by a 11% decrease in trailing four-quarter Billings, while trailing four-quarter average Paid Subscribers only decreased 4%.

Previous wording

New Marketing Billings are Billings from all new subscription sales. New Marketing Billings decreased by $12.0 million, or 17.9%, to $54.8 million for first quarter 2024 as compared to $66.7 million for first quarter 2023. The decrease was primarily driven by ceasing new sales campaigns within our Legacy Research Group brands, which began winding down operations in mid-February 2024.

Current wording

New Marketing Billings are Billings from all new subscription sales. New Marketing Billings decreased by $31.4 million, or 44.8%, to $38.7 million for second quarter 2024 as compared to $70.1 million for second quarter 2023. The decrease was primarily driven by ceasing new sales campaigns within our Legacy Research Group brands, which began winding down operations in mid-February 2024.

Previous wording

New Marketing Billings decreased by $12.9 million, or 19.1% to $54.8 million for first quarter 2024 as compared to $67.7 million in fourth quarter 2023. The decrease was primarily driven by ceasing new sales campaigns within our Legacy Research Group brands, which began winding down operations in mid-February 2024.

Current wording

New Marketing Billings decreased by $16.1 million, or 29.4% to $38.7 million for second quarter 2024 as compared to $54.8 million in first quarter 2024. The decrease was primarily driven by ceasing new sales campaigns within our Legacy Research Group brands, which began winding down operations in mid-February 2024.

Previous wording

Net Renewal Billings are Billings from renewals and maintenance fee payments. Net Renewal Billings decreased by $7.7 million, or 26.3%, to $21.4 million for first quarter 2024 as compared to $29.1 million for first quarter 2023. This is primarily a function of a significant decrease (approximately 120 thousand) in average Paid Subscribers for the trailing twelve months ended March 31, 2024 versus the trailing twelve months ended March 31, 2023.

Current wording

Net Renewal Billings are Billings from renewals and maintenance fee payments. Net Renewal Billings decreased by $8.2 million, or 32.4%, to $17.1 million for second quarter 2024 as compared to $25.3 million for second quarter 2023. This is primarily a function of a significant decrease (approximately 106 thousand) in average Paid Subscribers for the trailing twelve months ended June 30, 2024 versus the trailing twelve months ended June 30, 2023.

Previous wording

Other Billings are Billings from revenue share, advertising and conferences. Other Billings decreased by $0.3 million, or 24.8% to $1.0 million for first quarter 2024 as compared to $1.3 million for first quarter 2023.

Current wording

Other Billings are Billings from revenue share, advertising and conferences. Other Billings increased by $1.0 million, or 123.5% to $1.8 million for second quarter 2024 as compared to $0.8 million for second quarter 2023 as a result of increasing revenue share activity with a related party and increased advertising sales.

Previous wording

Other Billings decreased by $3.3 million or 76.6% to $1.0 million for first quarter 2024 as compared to $4.3 million for fourth quarter 2023 as a result of decreasing revenue share activity with external parties.

Current wording

Other Billings increased by $0.8 million or 79.0% to $1.8 million for second quarter 2024 as compared to $1.0 million for first quarter 2024 as a result of increasing revenue share activity with external parties.

Previous wording

Total Billings decreased by $19.9 million, or 20.5%, to $77.2 million for the first quarter 2024 as compared to $97.2 million for first quarter 2023. While consumer engagement remains soft, we believe the decrease was primarily driven by our Legacy Research Group brands, which began winding down operations in mid-February 2024.

Current wording

Total Billings decreased by $38.6 million, or 40.1%, to $57.6 million for the second quarter 2024 as compared to $96.2 million for second quarter 2023. While consumer engagement remains soft, we believe the decrease was primarily driven by our Legacy Research Group brands, which began winding down operations in mid-February 2024.

Previous wording

Total Billings decreased by $16.3 million, or 17.5%, to $77.2 million for first quarter 2024 as compared to $93.6 million for fourth quarter 2023. The decrease was primarily driven by our Legacy Research Group brands, which began winding down operations in mid-February 2024.

Current wording

Total Billings decreased by $19.6 million, or 25.4%, to $57.6 million for second quarter 2024 as compared to $77.2 million for first quarter 2024. The decrease was primarily driven by our Legacy Research Group brands, which began winding down operations in mid-February 2024 with some additional decline seen in other brands as the overall subscriber base continues to decline.

Previous wording

Cost of revenue consists primarily of employee compensation costs associated with producing and publishing MarketWise’s content, hosting fees, customer service, credit card processing fees, product costs, and allocated overhead. Cost of revenue is exclusive of depreciation and amortization, which is shown as a separate line item.

Current wording

Cost of revenue consists primarily of employee compensation costs associated with producing and publishing our content, hosting fees, customer service, credit card processing fees, product costs, and allocated overhead. Cost of revenue is exclusive of depreciation and amortization, which is shown as a separate line item.

Previous wording

Research and development expenses consist primarily of employee compensation costs, technical services, software expenses, and hosting expenses. Research and development expenses are exclusive of depreciation and amortization shown as a separate line item.

Current wording

Research and development expenses consist primarily of employee compensation costs, technical services, software expenses, and hosting expenses associated with maintaining and enhancing the functionality of our platforms, including our software and analytical tools. Research and development expenses are exclusive of depreciation and amortization shown as a separate line item.

Previous wording

Other income (expense), net primarily consists of the net gains on our embedded derivative instruments.

Current wording

Other income (expense), net primarily consists of the net gains or losses on our embedded derivative instruments.

Previous wording

As of March 31, 2023, MarketWise, Inc.’s controlling interest in MarketWise, LLC was 9.3% and the noncontrolling interest was 90.7%. For the three months ended March 31, 2023 net income attributable to controlling interests included a $0.9 million tax provision, which is 100% attributable to the controlling interest.

Current wording

As of June 30, 2024, MarketWise, Inc.’s controlling interest in MarketWise, LLC was 12.1% and the noncontrolling interest was 87.9%. For the three and six months ended June 30, 2024, net income attributable to controlling interests included a $0.8 million tax provision and a $1.5 million tax provision, respectively, both of which were solely attributable to the controlling interest.

Previous wording

As of March 31, 2024, MarketWise, Inc.’s controlling interest in MarketWise, LLC was 11.7% and the noncontrolling interest was 88.3%. For the three months ended March 31, 2024 net income attributable to controlling interests included a $0.7 million tax provision, which is 100% attributable to the controlling interest.

Current wording

As of June 30, 2023, MarketWise, Inc.’s controlling interest in MarketWise, LLC was 10.0% and the noncontrolling interest was 90.0%. For the three and six months ended June 30, 2023, net income attributable to controlling interests included a $0.4 million tax provision and a $1.4 million tax provision, respectively, both of which are 100% attributable to the controlling interest.

Previous wording

The following table sets forth our condensed consolidated statements of operations data expressed as a percentage of net revenue for the periods indicated:

Current wording

The following table sets forth our consolidated statements of operations data expressed as a percentage of net revenue for the periods indicated:

Previous wording

The decrease in net revenue was primarily driven by a $18.4 million decrease in term subscription revenue, partially offset by a $1.2 million increase in membership subscription revenue.

Current wording

The increase in net revenue was primarily driven by a $7.2 million increase in membership subscription revenue, partially offset by a $6.6 million decrease in term subscription revenue.

Previous wording

Term subscription revenue decreased during the three months ended March 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.

Current wording

Membership subscription revenue increased during the three months ended June 30, 2024 primarily driven by the runoff of deferred revenue from previous periods. Term subscription revenue decreased during the three months ended June 30, 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.

Previous wording

Cost of revenue decreased primarily driven by a $1.0 million decrease in salaries, taxes and benefits, a $0.5 million decrease in credit card fees, and a $0.4 million decrease in stock-based compensation expense.

Current wording

Cost of revenue decreased primarily driven by a $1.1 million decrease in salaries, taxes and benefits, and a $1.0 million decrease in credit card fees. This was partially offset by a $0.9 million increase in incentive compensation.

Previous wording

General and administrative expense decreased primarily driven by a $3.3 million decrease in incentive compensation, and a $1.1 million decrease in professional fees.

Current wording

General and administrative expense decreased primarily driven by a $1.7 million decrease in incentive compensation, and a $1.4 million decrease in stock-based compensation expense.

Previous wording

Sales and marketing expense decreased primarily driven by a $2.2 million decrease in salaries, taxes and benefits, and a $0.5 million decrease in stock-based compensation expense. This was partially offset by a $1.3 million increase in amortization of deferred contract acquisition costs.

Current wording

General and administrative expense decreased primarily driven by a $4.2 million decrease in incentive compensation and profits interest expense, a $2.0 million decrease in stock-based compensation expense, a $1.1 million decrease in salaries, taxes and benefits, and a $0.5 million decrease in insurance expense. This was partially offset by a $1.3 million increase in professional fees.

Previous wording

In addition to our results determined in accordance with GAAP, we believe that the below non-GAAP financial measures are useful in evaluating our operating 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. This non-GAAP financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

Current wording

In addition to our results determined in accordance with GAAP, we believe that the below non-GAAP financial measures are useful in evaluating our operating 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. This non-GAAP financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related

Previous wording

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:

Current wording

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:

Previous wording

We refer to this accumulation of cash as our “float” which we view as a valuable resource that we may invest or use to expand our operations. 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 $127.0 million and $120.5 million as of March 31, 2024 and December 31, 2023, respectively. As part of the Company's broader capital allocation strategy, our consolidated cash balance may from time to time decline below our estimate of the long term float requirement.

Current wording

We refer to this accumulation of cash as our “float” which we view as a valuable resource that we may invest or use to expand our operations. 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 $124.4 million and $120.5 million as of June 30, 2024 and December 31, 2023, respectively. As part of the Company's broader capital allocation strategy, our consolidated cash balance may from time to time decline below our estimate of the long term float requirement.

Previous wording

For the quarter ended March 31, 2024, the Company earned interest income of $1.7 million on our cash portfolio.

Current wording

For the three and six months ended June 30, 2024, the Company earned interest income of $1.5 million and $3.4 million, respectively, on our cash portfolio.

Previous wording

As of March 31, 2024, our principal sources of liquidity were cash, cash equivalents, and restricted cash of $131.2 million. Cash and cash equivalents are comprised of bank deposits, money market funds, and certificates of deposit. Restricted cash is comprised of reserves held with credit card processors for chargebacks and refunds. 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. Our 2021 Credit Facility (as defined and further discussed below) can be used to finance permitted acquisitions, for working capital and general corporate purposes. 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 our operating cash flows to further improve as we increase our operational efficiency and experience economies of scale.

Current wording

As of June 30, 2024, our principal sources of liquidity were cash and cash equivalents, and restricted cash of $109.3 million. 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. Our 2021 Credit Facility (as defined and further discussed below) can be used to finance permitted acquisitions, for working capital and general corporate purposes. 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 our operating cash flows to further improve as we increase our operational efficiency and experience economies of scale.

Previous wording

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. MarketWise, Inc. intends to cause MarketWise, LLC to make distributions to MarketWise, Inc. in an amount sufficient to allow MarketWise, Inc. to pay its tax obligations and operating expenses, including distributions to fund any payments due under the Tax Receivable Agreement. 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. 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. For additional information regarding the Tax Receivable Agreement, see the section entitled “Management’s Discussion and Analysis of Financial

Current wording

We expect to incur payment obligations under the Tax Receivable Agreement in the future, which we expect to be significant. MarketWise, Inc. intends to cause MarketWise, LLC to make distributions to MarketWise, Inc. in an amount sufficient to allow MarketWise, Inc. to pay its tax obligations and operating expenses, including distributions to fund any payments due under the Tax Receivable Agreement. 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. 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. For additional information regarding the Tax Receivable Agreement, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Tax Receivable Agreement” in the Annual Report.

Previous wording

On February 8, 2024, the Company reported that its Board of Directors had committed to a strategic realignment and reorganization (the “Reorganization”) whereby the Company will wind-down the operations of its Legacy Research Group business (“Legacy Research”) in response to misconduct discovered at Legacy Research where certain managers violated the Company’s policies.

Current wording

On February 8, 2024, the Company reported that its Board of Directors had committed to a strategic realignment and Reorganization whereby the Company will wind-down the operations of its Legacy Research business in response to misconduct discovered at Legacy Research where certain managers violated the Company’s policies.