MarketWise(MKTW) - 2024 Q4 - Annual Report

Subscriber Metrics - Paid Subscribers decreased by 231 thousand, or 31.4%, to 506 thousand as of December 31, 2024, compared to 737 thousand as of December 31, 2023[272]. - Free Subscribers decreased by 2.4 million, or 14.4%, to 14.1 million as of December 31, 2024, compared to 16.4 million as of December 31, 2023[292]. - Active Free Subscribers decreased by 0.7 million, or 18.1%, to 3.3 million as of December 31, 2024, compared to 4.1 million as of December 31, 2023[292]. - The high-value composition rate was 56% of Paid Subscribers as of December 31, 2024, indicating a strong retention of high-value customers[280]. - Subscriber churn rate ranged from approximately 2.4% to 3.3% per month between 2022 and 2024, with a net revenue retention rate averaging over 55% during the same period[298]. Financial Performance - Total net revenue was $408.7 million for the full year 2024, down from$448.2 million for the full year 2023, representing a decrease of 8.8%[272]. - Net revenue for 2024 was $405.357 million, a decrease from$443.245 million in 2023, reflecting ongoing challenges in subscriber engagement[331]. - Net income increased to $93.1 million for the full year 2024, compared to$54.3 million for the full year 2023, marking a growth of 71.6%[272]. - Average Revenue Per User (ARPU) decreased by 21.7% to $394 as of December 31, 2024, down from$503 as of December 31, 2023[279]. - Total Billings were $239.1 million for the full year 2024, a decline of 37.4$382.4 million for the full year 2023[272]. Revenue and Billing Details - Total Billings decreased by $143.3 million, or 37.5$239.1 million in 2024 compared to $382.4 million in 2023, primarily due to the winding down of Legacy Research Group brands[312]. - New Marketing Billings decreased by$115.5 million, or 41.5%, to $162.8 million in 2024 compared to$278.3 million in 2023, driven by ceasing new sales campaigns within Legacy Research Group brands[307]. - Net Renewal Billings decreased by $26.5 million, or 27.3$70.3 million in 2024 compared to $96.8 million in 2023, due to a significant decrease in average Paid Subscribers[309]. - Term subscription revenue decreased by$41.4 million, while membership subscription revenue increased by $3.6 million during the same period[335]. Operating Expenses and Cost Management - Operating expenses totaled$319.713 million in 2024, down from $396.377 million in 2023, indicating cost management efforts[331]. - Sales and marketing expenses decreased by$37.9 million or 19.1%, primarily due to reduced marketing spend and lower amortization of deferred contract acquisition costs[339]. - General and administrative expenses decreased by $34.5 million or 27.5$2.3 million related to the Legacy Reorganization within general and administrative expenses[383]. Cash Flow and Liquidity - Adjusted cash flow from operations (CFFO) was $(22.15) million in 2024, a decline of 133.4$66.4 million in 2023[353]. - The estimated amount of cash float was approximately $119.7 million as of December 31, 2024, slightly down from$120.5 million in 2023[362]. - Interest income earned on cash portfolio was $5.9 million in 2024, compared to$5.7 million in 2023[364]. - As of December 31, 2024, the company's principal sources of liquidity included cash, cash equivalents, and restricted cash totaling $97.9 million[367]. - For the year ended December 31, 2024, net cash used in operating activities was$22.2 million, primarily due to a net income of $93.1 million adjusted for non-cash items and changes in operating assets and liabilities[387]. Impairment and Tax Obligations - Impairment losses related to Legacy Research and Buttonwood Publishing businesses amounted to$4.445 million in 2024[324]. - Impairment losses increased by 72.1% to $4.4 million in 2024, attributed to charges related to deferred contract acquisition costs and intangible assets[341]. - The company expects to incur significant payment obligations under the Tax Receivable Agreement, which may adversely affect its liquidity and financial condition if not managed properly[370]. Shareholder Returns and Capital Management - The share repurchase program authorized up to$35.0 million, with $13.1 million spent to repurchase 2,484,717 shares during the year ended December 31, 2022[376]. - In 2023, the company initiated paying dividends to Class A common stockholders and distributions to holders of LLC Units, totaling$5.7 million in dividends paid[393]. - The company made a quarterly tax distribution of $15.1 million in January 2025, which exceeded its corporate tax liability and allowed for a special dividend declaration[371]. Accounting and Revenue Recognition - Subscription revenues are recognized evenly over the duration of the subscriptions, reflecting the consideration expected in exchange for services[399]. - The estimated life of membership customers was determined to be five years for the years ended December 31, 2024, 2023, and 2022[400]. - The amortization period for capitalized contract costs was approximately four years for each of the years ended December 31, 2024, 2023, and 2022[402]. - Management evaluates significant accounting estimates and assumptions that affect reported amounts of assets, liabilities, revenue, costs, and expenses[396]. - The company recognizes revenue related to membership subscriptions over the estimated customer lives, which is five years[400].