MARKETWISE INC

1. Organization

MarketWise, Inc. (“MarketWise,” “the Company,” “we,” “us,” or “our”) is a holding company that has no material assets other than its ownership in MarketWise, LLC, and operates and controls all of the businesses and operations of MarketWise, LLC and its subsidiaries. The Company provides independent investment research for investors around the world. We believe we are a leading content and technology multi-brand platform for self-directed investors. We offer a comprehensive portfolio of high-quality, independent investment research, as well as several software and analytical tools, on a subscription basis.

We operate multiple subsidiaries in the United States from our headquarters in Baltimore, Maryland.

On July 21, 2021, MarketWise, Inc. became a publicly traded company as a result of completing the business combination, recapitalization and other transactions with Ascendant Digital Acquisition Corp. (“ADAC” or “Sponsor”), a special purpose acquisition company, MarketWise, LLC, all of the members of MarketWise, LLC (the “MarketWise Members”), and Shareholder Representative Services LLC (collectively, the “Transactions”).

2. Summary of Significant Accounting Policies

Basis of Consolidation

The accompanying condensed consolidated financial statements (“financial statements”) include the accounts of MarketWise, Inc. and its subsidiary, MarketWise, LLC, a variable interest entity (“VIE”) for which MarketWise, Inc. is deemed to be the primary beneficiary.

MarketWise, Inc. is a holding company that owns a minority economic interest in MarketWise, LLC but, through its role as the managing member of MarketWise, LLC, controls all of the business and operations of MarketWise, LLC. Therefore, MarketWise, LLC and its subsidiaries are included in the Company’s financial statements. As of September 30, 2024, MarketWise, Inc. had a 12.3% ownership interest in MarketWise, LLC.

The Company determined that MarketWise, LLC is the primary beneficiary of a VIE, and therefore, the assets, liabilities, and results of operations of that VIE are included in the Company’s financial statements.

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation.

Unaudited Interim Financial Information

The accompanying unaudited financial statements and the related footnote disclosures have been prepared by us in accordance with GAAP for interim financial reporting and as required by Rule 10-01 of Regulation S-X. Accordingly, the unaudited financial statements may not include all of the information and notes required by GAAP for audited financial statements. The year-end December 31, 2023 consolidated balance sheet data included herein was derived from audited financial statements but does not include all disclosures required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly our financial position as of September 30, 2024, the results of operations, comprehensive income, stockholders’ deficit, and cash flows for the three and nine months ended September 30, 2024 and 2023. The results of operations for the three and nine months ended September 30, 2024 and 2023 are not necessarily indicative of the results to be expected for the full year. The information contained herein should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”). Management considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these condensed financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made in the accompanying financial statements include, but are not limited to, the fair value of common units, derivatives, warrants, valuation of assets acquired and liabilities assumed in business combinations, useful lives of intangible assets with definite lives, benefit period of deferred contract acquisition costs, determination of standalone selling prices, estimated life of lifetime customers, recoverability of goodwill and long-lived assets, valuation allowances on deferred tax assets, the incremental borrowing rates to calculate lease liabilities and right-of-use (“ROU”) assets and certain accruals. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors and adjust those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.

Emerging Growth Company

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our unaudited condensed financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Certain provisions of the JOBS Act are set to expire on December 31, 2025.

Noncontrolling Interest

Noncontrolling interest represents the Company’s noncontrolling interest in consolidated subsidiaries which are not attributable, directly or indirectly, to the controlling Class A common stock ownership of the Company.

Net income for the three and nine months ended September 30, 2024 and 2023 was attributable to consolidated MarketWise, Inc. and its respective noncontrolling interests.

As of September 30, 2024, MarketWise, Inc.’s controlling interest in MarketWise, LLC was 12.3% and the noncontrolling interest was 87.7%. For the three months ended September 30, 2024, net income attributable to controlling interests included a $973 tax provision, and for the nine months ended September 30, 2024, net income attributable to controlling interests included a $2,487 tax provision, both of which were solely attributable to the controlling interest.

As of September 30, 2023, MarketWise, Inc.’s controlling interest in MarketWise, LLC was 10.6% and the noncontrolling interest was 89.4%. For the three months ended September 30, 2023, net income attributable to controlling interests included a $691 tax provision, and for the nine months ended September 30, 2023, net income attributable to controlling interests included a $2,046 tax provision, both of which were 100% attributable to the controlling interest.

Reclassifications

Certain prior period amounts presented within the Condensed Consolidated Statements of Cash Flows have been reclassified to conform with the current period presentation. Specifically, the profits interest expense during the nine months ended September 30, 2023 has been reclassified from the “change in fair value of derivative and other liabilities, noncurrent” line to the “stock-based compensation” line.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures,(“ASU 2023-07”) which is aimed at improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 also requires additional interim disclosures. ASU 2023-07 is effective for the Company for the annual period beginning January 1, 2024, and interim periods beginning on January 1, 2025. Early adoption is permitted. The enhanced segment disclosure requirements apply retrospectively to all prior periods presented in the financial statements, and prior period disclosures shall be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

3. Revenue Recognition

Disaggregation of revenues

The following table depicts the disaggregation of revenue according to customer type and is consistent with how we evaluate our financial performance. We believe this depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Revenue recognition by subscription type was as follows:

Revenue for the membership and term subscription types are determined based on the terms of the subscription agreements. Non-subscription revenue consists of revenue from advertising and other revenue from revenue share arrangements and the sale of print products and events, such as webinars and conferences.

Net revenue by principal geographic areas was as follows:

Revenue by location is determined by the billing entity for the customer.

Contract Balances

The timing of revenue recognition, Billings (which represents amounts invoiced to customers), cash collections and refunds affects the recognition of accounts receivable, contract assets and deferred revenue. Our current deferred revenue balance is presented within the deferred revenue and other contract liabilities line item in the condensed consolidated balance sheets and includes the obligation for refunds for contracts where the provision for refund has not lapsed. Accounts receivable, deferred revenue and obligation for refunds are as follows:

We recognized $65,476 and $69,978 of revenue during the three months ended September 30, 2024 and 2023, respectively, and $237,125 and $256,627 during the nine months ended September 30, 2024 and 2023, respectively, that was included within the beginning contract liability balance of the respective periods. The Company has collected all amounts included in deferred revenue other than $2,224 and $4,528 as of September 30, 2024 and December 31, 2023, respectively, related to the timing of cash settlement with our credit card processors.

Assets Recognized from Costs to Obtain a Contract with a Customer

The following table presents the opening and closing balances of our capitalized costs associated with contracts with customers:

We didnot recognize any impairment on capitalized costs associated with contracts with customers for the three and nine months ended September 30, 2024 and 2023.

Remaining Performance Obligations

As of September 30, 2024, the Company had $462,831 of remaining performance obligations presented as deferred revenue in the condensed consolidated balance sheets. We expect to recognize approximately 50% of that amount as revenues over the next twelve months, with the remainder recognized thereafter.

4. Legacy Reorganization

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.

Following the commitment to the Reorganization, Legacy Research continued to serve existing subscribers and fulfill existing subscriptions, but began to significantly curtail business activities including any marketing efforts to acquire new subscribers.

During second quarter 2024, we began the process of offering certain Legacy Research subscribers similar products published by other MarketWise brands, consistent with past Company practice when we cease a publication. We continued this process during third quarter 2024.

In October 2024, we completed our Reorganization and operational transition plans with respect to substantially all of the Legacy Research brands, which resulted in the transfer of the related assets and related fulfillment obligations to other businesses within MarketWise for fair consideration. We also entered into agreements in October 2024 to sell certain Legacy Research brands that had immaterial year-to-date September 2024 Billings, one of which was to a related party.

Separation costs incurred in the three and nine months ended September 30, 2024 totaled approximately $1.3 million and $2.3 million, respectively, within general and administrative expenses.

Legacy Research has leased office space and the current lease end date for this property is December 2028. As of September 30, 2024, the operating lease right-of-use asset and related leasehold improvements totaled approximately $2.7 million. The Company has ceased using this property in its operations and is evaluating various alternatives with respect to this property as of September 30, 2024.

As of September 30, 2024, the Legacy Research reporting unit had goodwill totaling $8.6 million and a negative carrying value, which we considered in our related goodwill impairment assessment as of that date.

5. Acquisitions and Disposals

MMP Acquisition

On January 1, 2024, we acquired 100% ownership of certain assets and liabilities from Money Map Press, LLC (“MMP Acquisition”), a provider of financial newsletters, which is a related party. The Company will pay contingent consideration based on the level of subscription sales it achieves from certain customers beginning from the sale date through January 1, 2026, as defined in the sale agreement. The fair value of the contingent consideration was estimated to be $707. The contingent consideration will be remeasured at the end of each reporting period. The MMP Acquisition was accounted for using the acquisition method of accounting for business combinations. The purchase price allocation is preliminary pending completion of valuations of certain acquired assets and liabilities. The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date:

The excess purchase consideration over the fair values of assets acquired and liabilities assumed was recorded as goodwill. The acquired intangible assets related to the MMP Acquisition are amortized over their estimated useful lives. Accordingly, the tradenames are amortized over 8.7 years and customer relationships are amortized over 6.2 years. Amortization for the acquired intangible assets was $99 and $294 for the three and nine months ended September 30, 2024, respectively.

In October 2024, we entered into an agreement to dispose of certain assets and liabilities that we had previously acquired as part of the MMP Acquisition (“MMP Business”) to a related party. Billings for the MMP Business were approximately $1.5 million for the nine months ended September 30, 2024.

6. Goodwill and Intangible Assets, Net

Goodwill

The carrying amounts of goodwill are as follows:

Intangible assets, net

Intangible assets, net consisted of the following as of the dates indicated:

We recorded amortization expense related to finite-lived intangible assets of $576 and $936 for the three months ended September 30, 2024 and 2023, respectively, and $1,822 and $2,775 for the nine months ended September 30, 2024 and 2023, respectively, within depreciation and amortization in the accompanying condensed consolidated statement of operations. These amounts include amortization of capitalized software development costs of $318 and $187 for the three months ended September 30, 2024 and 2023, respectively, and $860 and $476 for the nine months ended September 30, 2024 and 2023, respectively.

We recorded (reductions) additions to capitalized software development costs of $(38) and 526 for the three months ended September 30, 2024 and 2023, respectively, and $736 and $1,498 for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, the total expected future amortization expense for finite-lived intangible assets is as follows:

7. Fair Value Measurements

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of the dates indicated:

The level 3 assets relate to contingent consideration receivable from a related party associated with the Buttonwood Publishing sale, see Note 4 - Acquisitions and Disposals in our Annual Report on Form 10-K for the year ended December 31, 2023, and the level 3 liabilities relate to contingent consideration liability to a related party associated with the MMP Acquisition and profits interests, see Note 5 - Acquisitions and Note 9 – Stock-Based Compensation, respectively.

The following table summarizes the changes in fair value of the recurring Level 3 fair value measurements during the nine months ended September 30, 2024:

The following table provides quantitative information regarding the recurring Level 3 fair value measurements inputs for the contingent consideration receivable, profits interests, and contingent consideration liability at their measurement dates:

The Company heldno derivative liabilities during the nine months ended September 30, 2024. The following table summarizes the change in fair value of the derivative liabilities during the nine months ended September 30, 2023:

8. Balance Sheet Components

Capitalized Implementation Costs

We capitalized cloud computing implementation costs for customer-relationship management, revenue management, and enterprise resource planning systems of $43 and $0 for the three months ended September 30, 2024 and 2023, respectively, and $99 and $71 for the nine months ended September 30, 2024 and 2023, respectively. The capitalized implementation costs are capita lized within other current assets and other assets on the condensed consolidated balance sheets. Amortization expense related to capitalized cloud computing implementation costs was $245 and $238, for thethree months ended September 30, 2024 and 2023, respectively, and $723 and$689 for the nine months ended September 30, 2024 and 2023, respectively.

Property and Equipment, Net

Property and equipment, net consists of the following:

Depreciation and amortization expense for property and equipment was $59 and $65 for the three months ended September 30, 2024 and 2023, respectively, and $175 and $204 for the nine months ended September 30, 2024 and 2023, respectively.

Accrued Expenses

Accrued expenses consist of the following:

9. Stock-Based Compensation

Included within cost of revenue, sales and marketing, and general and administrative expenses are total stock-based compensation expenses as follows:

Total stock-based compensation expense for the three and nine months ended September 30, 2024 and 2023 includes expenses related to our MarketWise, Inc. 2021 Incentive Award Plan (the “2021 Incentive Award Plan”) our 2021 Employee Stock Purchase Plan (“ESPP”), and profits interests as follows:

2021 Incentive Award Plan

During the nine months ended September 30, 2024, we granted 19,485,767 restricted stock units (“RSUs”) to certain employees and service providers in aggregate under our 2021 Incentive Award Plan.

For employees and service providers, both RSUs and stock appreciation rights (“SARs”) are primarily time-based and typically vest ratably over four years, as specified in the individual grant notices. The RSUs may entitle the recipients to dividend equivalents if approved by the Plan Administrator, which are subject to the same vesting terms and accumulate during the vesting period. Upon vesting, the RSU holder will be issued a corresponding number of the Company’s Class A common stock. The SARs will be settled in the Company’s Class A common stock upon exercise. The shares to be issued upon exercise of a SAR will have a total market value equal to the SAR value calculated as (x) number of shares underlying such SAR, multiplied by (y) any excess of the Company’s share value on the date of exercise over the exercise price set in each individual grant notice.

The fair value of the RSU is the same as the Company’s share price on the date of grant. The fair value of the SARs was determined using a Black-Scholes model.

The activities of the RSUs and SARs and the related weighted average grant-date fair value of the respective share classes, including granted, exercised and forfeited, from January 1, 2024 to September 30, 2024, are summarized as follows:

The stock compensation expense related to the RSU and SAR grants was $3,124 and $2,848 for the three months ended September 30, 2024 and 2023, respectively, and $6,897 and $8,893 for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024,990,181 of the SARs were exercisable and they have a remaining contractual term of 6.6 years.

On July 1, 2024, we granted approximately 18.1 million RSUs to employees, which vest ratably over 4 years.

Employee Stock Purchase Plan

The Company recognized $36 and $84 of stock-based compensation expense related to the ESPP during the three months ended September 30, 2024 and 2023, respectively, and $204 and $276 for the nine months ended September 30, 2024 and 2023, respectively. The Company issued 216,517 shares of Class A common stock for $213 related to employee purchases under the ESPP during thenine months ended September 30, 2024.

Profits Interests

The stock-based compensation expense related to the profits interests, which are liability classified, was $44 and $643 for the three months ended September 30, 2024 and 2023, respectively, and $1,567 and $643 for the nine months ended September 30, 2024 and 2023, respectively.

10. Earnings Per Share

The following tables set forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2024 and 2023:

The Company’s potentially dilutive securities and their impact on the computation of diluted earnings per share is as follows:

▪Sponsor and MarketWise Management Member Earnout Shares: the 3,051,000 Sponsor Earnout Shares and the 2,000,000 MarketWise Management Member Earnout Shares (as defined and discussed in our Current Report on Form 8-K filed with the SEC on July 28, 2021) held in escrow are excluded from the earnings per share computation in both periods since the earnout contingency has not been met.

▪Restricted stock units: The basic earnings per share calculation includes the impact of vested RSUs. The diluted earnings per share calculation includes the impact of unvested RSUs, where the impact is dilutive, unless the Company has a net loss.

▪Stock appreciation rights: The diluted earnings per share calculation excludes the impact of SARs since the effect was antidilutive.

▪ESPP: The diluted earnings per share calculation includes the impact of dilutive shares and excludes the impact of antidilutive shares under the ESPP as of September 30, 2024 and 2023.

11. Income Taxes

We are subject to U.S. federal and state taxes with respect to our allocable share of any taxable income or loss of MarketWise, LLC, as well as any stand-alone income or loss we generate. MarketWise, LLC is treated as a partnership for U.S. income tax purposes and for most applicable state and local income tax purposes and generally does not pay income taxes in most jurisdictions. Instead, MarketWise, LLC’s taxable income or loss is passed through to its members, including us.

Our effective tax rate was 4.1% and 3.6% for the three and nine months ended September 30, 2024, respectively, and 5.4% and 3.8% for the three and nine months ended September 30, 2023, respectively. The main driver of the effective income tax rate for the three and nine months ended September 30, 2024 was the income allocation to the non-controlling interest. The main driver of the decrease in the effective tax rate from the three and nine months ended September 30, 2023 is the change in the income allocation to the non-controlling interest. Our effective tax rate for the three and nine months ended September 30, 2024 differs from the U.S. federal statutory rate primarily because we generally do not record income taxes for the non-controlling portion of pre-tax income.

As a result of Transactions, we recorded a deferred tax asset resulting from the outside basis difference in our interest in MarketWise, LLC. The Company considers both positive and negative evidence when measuring the need for a valuation allowance. A valuation allowance is not required to the extent that, in management’s judgment, positive evidence exists with a magnitude and duration sufficient to result in a conclusion that it is more likely than not (a likelihood of more than 50%) that the Company’s deferred tax assets will be realized.

In evaluating the need for a valuation allowance on the deferred tax asset, the company considered positive evidence related to its historic earnings, forecasted income and reversal of temporary differences. Therefore, the Company recorded a valuation allowance in the amount of $29,869 for certain deferred tax assets that are not more likely than not to be realized.

As part of Transactions, we entered into Tax Receivable Agreements (“TRAs”) with certain shareholders. Pursuant to our election under Section 754 of the Code, as amended, and the regulations issued thereunder, we expect to receive a step up in the tax basis of our ownership in MarketWise, LLC as exchanges of the LLC Units (as defined herein) occur. These increases in tax basis may reduce the amount we may otherwise pay to various tax authorities in the future. The TRA liability will represent approximately 85% of the calculated tax savings based on basis adjustments and other carryforward attributes assumed that we anticipate to be able to utilize in future years. We will retain the remaining 15% of calculated tax savings. The payments contemplated by the TRA are not conditioned upon any continued ownership interest in MarketWise, LLC. The timing and amount of aggregate payments due pursuant to the TRA may vary based on several factors including the timing and amount of future taxable income, as well as future applicable tax rates. As such, significant inputs and assumptions are used to estimate the future expected payments under the TRA. During the nine months ended September 30, 2024, Members of MarketWise, LLC exchanged an aggregate of 1,000,000 common units of MarketWise, LLC (“LLC Units”) together with an equal number of shares of Class B common stock for 1,000,000 newly-issued shares of Class A common stock. As a result, we have recorded a cumulative liability of $2,669 under the TRA as of September 30, 2024. No payments have been made under the TRA and no payments are expected in the next 12 months.

As of September 30, 2024, we hadno unrecognized tax positions and we do not anticipate any changes to uncertain tax positions within the next 12 months.

12. Related Party Transactions

We have certain revenue share agreements with related parties. Accordingly, we recognized revenue from related parties of $211 and $351 for the three months ended September 30, 2024 and 2023, respectively, and $1,462 and $1,250 for the nine months ended September 30, 2024 and 2023, respectively.

We incurred costs related to revenue share agreements with related parties which are capitalized within deferred contract acquisition costs. We capitalized $1,028 and $1,952 for the three months ended September 30, 2024 and 2023, respectively, and $3,086 and $4,039 for the nine months ended September 30, 2024 and 2023, respectively.

Additionally, a related party provided call center support and other services to the Company for which we recorded an expense within cost of revenue of $64 and $80 for the three months ended September 30, 2024 and 2023, respectively, and $284 and $433 for the nine months ended September 30, 2024 and 2023, respectively.

A related party provided marketing and copywriting services to the Company for which we recorded an expense within cost of revenue of $166 and $644 for the three months ended September 30, 2024 and 2023, respectively, $892 and $1,229 for the nine months ended September 30, 2024 and 2023, respectively.

A related party also provided certain corporate functions to the Company and the costs of these services are charged to us. We recorded $32 and $24 for the three months ended September 30, 2024 and 2023, respectively, and $70 and $78 for the nine months ended September 30, 2024 and 2023, respectively, within related party expense in the accompanying condensed consolidated statement of operations. We held balances of $1,105 and $1,220 as of September 30, 2024 and December 31, 2023, respectively, of related party payables related to revenue share expenses, call center support, and the services noted above. The balances with this related party are presented net and are included in related party payables in the condensed consolidated balance sheet.

We earned fees and provided certain accounting and marketing services to companies owned by certain of MarketWise’s Class B stockholders. As a result, we recognized $93 and $97 in other income, net for the three months ended September 30, 2024 and 2023, respectively, and $354 and $604 for the nine months ended September 30, 2024 and 2023, respectively. Related party receivables related to these services were $93 and $239 as of September 30, 2024 and December 31, 2023, respectively.

We lease offices from related parties. Lease payments made to related parties were $435 and $441 for the three months ended September 30, 2024 and 2023, respectively, and $1,306 and $1,309 for the nine months ended September 30, 2024 and 2023, respectively. Related party rent expense was $603 and $602 for the three months ended September 30, 2024 and 2023, respectively, and $1,808 and $1,802 for the nine months ended September 30, 2024 and 2023, respectively, and was recognized in general and administrative expenses. At September 30, 2024 and December 31, 2023, ROU assets of $5,776 and $7,261 and lease liabilities of $4,713 and $5,740, respectively, are associated with leases with related parties.

13. Supplemental Cash Flow Information

Supplemental cash flow disclosures are as follows:

14. Stockholders’ Equity

The Company’s capital stock consists of (i) issued and outstanding Class A common stock with a par value of $0.0001 per share, and (ii) issued and outstanding Class B common stock with a par value of $0.0001 per share.

The table set forth below reflects information about the Company’s equity, as of September 30, 2024. The 3,051,000 Sponsor Earnout Shares held in escrow and the 2,000,000 Management Member Earnout Shares are considered contingently issuable shares and therefore excluded from the number of Class A common stock issued and outstanding in the table below.

Each share of Class A and Class B common stock entitles the holderone vote per share. Holders of Class A common stock have the right to receive dividends while holders of Class B common stock have the right to receive a proportionate amount of distributions. In the event of liquidation, dissolution or winding up of the affairs of the Company, only holders of Class A common stock have the right to receive liquidation proceeds, while the holders of Class B common stock are entitled to only the par value of their shares. Class B common stock can be issued only to members of MarketWise, LLC, their respective successors and permitted transferees. Under the terms of the Third Amended and Restated Limited Liability Company Operating Agreement of MarketWise, LLC (the “MarketWise Operating Agreement”), and subject to certain restrictions set forth therein, the MarketWise Members are entitled to have their LLC Units redeemed or exchanged for shares of our Class A common stock, at our option. If redeemed for cash at the Company’s option, such cash would have to be generated through an offering of shares to the market such that there would not be any situation where there would be a net cash obligation to the Company for such redemption. Shares of our Class B common stock held by any such redeeming or exchanging MarketWise Member will be canceled for no additional consideration on aone-for-one basis with the redeemed or exchanged LLC Units whenever the MarketWise Members’ LLC Units are so redeemed or exchanged. The MarketWise Members may exercise such redemption rights for as long as their LLC Units remain outstanding. Our Board has discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.

In April 2024, we purchased 7.2 million LLC Units for $10.8 million and canceled the same amount of Class B shares. In July 2024, we canceled 8.4 million LLC Units and Class B shares, which we reinstated in November 2024 effective as of the cancellation date.

In 2023, we commenced paying quarterly dividends on shares of our Class A common stock and distributions on our LLC Units. 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 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.

The dividends and distributions declared during the nine months ended September 30, 2024 were as follows:

15. Subsequent Events

Subsequent events have been evaluated through November 7, 2024, which is the date that the financial statements were issued.