Executive Summary / Key Takeaways

• MarketWise ($MKTW) is transforming its business model, leveraging a multi-brand digital platform and advanced technology, including AI, to enhance subscriber engagement and drive long-term value in a dynamic financial research market.
• Despite recent revenue declines influenced by the wind-down of its Legacy Research business and broader macroeconomic headwinds, the company demonstrates strong operational discipline, evidenced by improved Adjusted Cash Flow From Operations (CFFO) margins and strategic cost reductions.
• The company's focus on high-value and ultra high-value subscribers, coupled with a growing interest in AI-powered tools and macroeconomic themes, underpins its strategy for sustainable subscriber acquisition and retention, with ARPU showing signs of stabilization.
• MarketWise maintains a robust balance sheet with significant cash and no debt, supporting its capital allocation strategy which includes a consistent dividend and a disciplined approach to accretive mergers and acquisitions.
• An unsolicited acquisition proposal at $17.25 per share highlights potential undervaluation, while ongoing strategic initiatives in technology, content, and operational efficiency are poised to unlock further shareholder value.

The Digital Frontier of Investment Research

MarketWise, Inc. ($MKTW) stands as a prominent multi-brand platform, providing independent investment research, software, education, and tools to self-directed investors globally. Founded in 1999, the company built its foundation on delivering intelligent, independent, and in-depth investment research, fostering subscriber satisfaction as a cornerstone for long-term relationships and renewals. This ethos has guided its expansion into a comprehensive suite of solutions, encompassing well-known brands such as Stansberry Research, Chaikin Analytics, Altimetry, TradeSmith, InvestorPlace, and Brownstone Research. This diverse portfolio positions MarketWise as a "formidable engine of discovery" in the industry, capable of running numerous marketing experiments and campaigns daily to identify resonant themes and attract new subscribers.

The company's overarching strategy centers on cultivating enduring subscriber relationships, optimizing content delivery, achieving cost-effective customer acquisition, and driving high-margin conversions. MarketWise operates within an industry landscape characterized by persistent market volatility and macroeconomic uncertainty, which has shaped its strategic responses and technological roadmap.

Technological Edge and Innovation

MarketWise's core technological differentiation lies in its integrated multi-brand digital platform and a growing suite of proprietary software and analytical tools. This platform is designed to deliver a broad spectrum of investment research across various devices, including desktops, laptops, tablets, and mobile phones, ensuring channel-agnostic accessibility.

The company's investment in data science and artificial intelligence (AI) is a critical differentiator. MarketWise is integrating AI to enhance operational efficiencies across various functions, from customer service and human resources to copywriting and editorial production. Management anticipates achieving a "10% better" outcome in several operational areas through these integrations. More significantly for investors, AI is creating new lines of business. For instance, Predictive Alpha Prime, an AI-powered tool from the TradeSmith affiliate, saw a successful launch in Q2 2023, leading to the development of additional products, including options trading, new entry-level offerings, and bundled publications. AI themes are also driving new subscriptions at InvestorPlace, focusing on how to invest in AI and related sectors. These innovations are expected to contribute to MarketWise's competitive moat by improving conversion rates, reducing subscriber churn, and enhancing Average Revenue Per User (ARPU).

The pan-MarketWise technology platform, marketwise.com, launched in Q3 2022, serves as a unified digital destination. This platform integrates marketing and content across all brands, aiming to lower overall digital marketing costs and create new ad-based revenue streams as it develops. This strategic initiative enhances the company's ability to cross-sell and upsell, moving subscribers through their customer journey more efficiently.

Competitive Positioning

In the competitive landscape of financial research and tools, MarketWise distinguishes itself through its multi-brand platform, subscriber-centric approach, and emphasis on educational content. Compared to established players like Morningstar, Inc. (MORN), FactSet Research Systems Inc. (FDS), and S&P Global Inc. (SPGI), MarketWise's offerings are tailored more directly to the self-directed retail investor.

Morningstar, a leader in independent financial research, offers in-depth fund and stock analysis. While Morningstar benefits from strong brand trust and consistent revenue growth, MarketWise's diverse content portfolio and accessible tools may appeal to a broader retail audience. MarketWise's focus on a "formidable engine of discovery" through its multiple brands allows it to rapidly test and adapt content, potentially giving it an edge in subscriber acquisition within specific market trends. Morningstar's TTM P/E ratio of 23.78 and P/B ratio of 5.90 suggest a higher valuation compared to MarketWise's TTM P/E of 1.81 and P/B of -0.18, indicating a potential discount for MKTW.

FactSet Research Systems, primarily serving institutional investors with advanced data and analytics, typically exhibits strong revenue growth and high profitability. MarketWise's technological advantage lies in ease of use and personalized tools for individual investors, contrasting with FactSet's complex enterprise solutions. While FactSet's TTM P/E of 17.34 and P/B of 4.74 reflect its robust financial health, MarketWise's strategy aims to capture market share through a more accessible and educational approach, potentially leading to stronger customer loyalty among its target demographic.

S&P Global, a diversified provider of market intelligence and benchmarks, boasts global reach and strong financial performance. MarketWise's niche focus on independent research for individual investors allows for deeper engagement and tailored content. While S&P Global's scale and data breadth are significant, MarketWise's multi-brand ecosystem and direct-to-consumer model enable a more agile response to evolving retail investor interests. S&P Global's TTM P/E of 35.71 and P/B of 4.55 further underscore the valuation disparity with MarketWise.

MarketWise's competitive advantages stem from its subscription-based model, fostering recurring revenue and strong customer loyalty, and its proprietary research tools that enhance user experience. The company's "multiple affiliates that are essentially competitors, targeting the same potential customers" creates an internal competitive dynamic that accelerates learning and innovation. However, vulnerabilities include a potential reliance on a concentrated subscriber base and the need for continuous technological advancement to keep pace with larger, more diversified competitors.

A History of Adaptation and Strategic Discipline

MarketWise's journey has been marked by continuous adaptation. Following the boom years of 2020 and 2021, the company faced significant headwinds from market volatility and macroeconomic uncertainty in 2022 and 2023. This period saw subdued investor engagement and a decline in billings. In response, MarketWise swiftly implemented cost reduction initiatives starting in Q2 2022, targeting approximately $74 million in total savings from direct marketing and overhead expenses. These efforts led to a notable improvement in Adjusted CFFO margins, from 11% in H1 2022 to 15.3% in H2 2022, and further to 18.2% in Q4 2022. This demonstrated the company's ability to "rein in costs when times are tough, so that we can maintain our cash flow and profitability."

A significant strategic shift involved the wind-down of substantially all Legacy Research brands in 2024, with legal entities dissolved in Q2 2025. This reorganization, while impacting subscription revenues in the short term, is part of a broader effort to streamline operations and focus on core, high-growth areas. In Q3 2022, MarketWise also completed a tender offer to exchange all outstanding warrants for Class A common stock, simplifying its capital structure and increasing its public float by approximately 26% with minimal dilution.

Financial Performance and Operational Resilience

MarketWise's recent financial performance reflects both the impact of strategic adjustments and ongoing market challenges. For the three months ended September 30, 2025, total net revenue was $81.271 million, a 16.40% decrease from $97.186 million in the same period of 2024. This decline was primarily driven by a $11.10 million decrease in term subscription revenue and a $5.10 million decrease in membership subscription revenue, largely attributable to the wind-down of the Legacy Research business. For the nine months ended September 30, 2025, total net revenue decreased by 21.40% to $244.728 million from $311.223 million in 2024.

Despite the GAAP revenue decline, the company's "Billings" – a key indicator of current operating environment and demand – showed positive trends. Total Billings increased by 30.20% to $63.693 million in Q3 2025 from $48.929 million in Q3 2024. Excluding the Legacy Research Group brands, Billings increased by an even more robust 35.60%. New Marketing Billings surged by 50.70% to $48.721 million in Q3 2025, driven by successful campaigns targeting existing subscribers and momentum in software-related content across entry-level and higher-priced subscriptions. Net Renewal Billings, however, decreased by 10.20% to $14.139 million, primarily due to a significant decrease of approximately 227 thousand in average Paid Subscribers for the trailing twelve months.

Operational efficiency improvements are evident in expense management. For the three months ended September 30, 2025, cost of revenue decreased by 17.80% to $10.599 million, sales and marketing expenses decreased by 15% to $31.146 million, and general and administrative expenses decreased by 16.50% to $18.781 million. These reductions were driven by lower freelance editorial expenses, decreased stock-based compensation, workforce reductions, and reduced professional fees.

Adjusted CFFO for the nine months ended September 30, 2025, was $21.744 million, compared to $28.135 million in 2024. This was primarily due to net income of $50.066 million, adjusted for net non-cash items increasing cash by $12.50 million, partially offset by changes in operating assets and liabilities reducing cash by $40.80 million, including incentive compensation payouts. The Adjusted CFFO margin for Q3 2025 was 3.40%, compared to 11.90% in Q3 2024, and for the nine months ended September 30, 2025, it was 11.30% compared to 15.30% in 2024. Management notes that Q1 cash flow margins are typically lower due to annual bonus payments, suggesting a half-year view is more appropriate.

Average Revenue Per User (ARPU) increased significantly by 35.50% to $566 as of September 30, 2025, from $417 a year prior. This was driven by a 34% decrease in trailing four-quarter Paid Subscribers, while trailing four-quarter Billings only decreased by 11%. The payback period for subscriber acquisition remained elevated at an estimated 1.70 years for 2024 and 2023, primarily due to increased customer acquisition costs and lower conversion rates on higher-value products. As of September 30, 2025, the high-value composition rate (subscribers purchasing over $600 lifetime) was 63%, and the ultra high-value composition rate (subscribers purchasing over $5000 lifetime) was 30%.

Liquidity and Prudent Capital Allocation

MarketWise maintains a strong liquidity position, with cash and cash equivalents of $50.535 million as of September 30, 2025. The company operates with no outstanding debt, a significant strength in the current economic climate. The "float" from upfront subscription payments, though decreasing from $119.70 million at December 31, 2024, to $83.40 million at September 30, 2025, remains a valuable resource for investment and operational expansion.

The company's capital allocation strategy prioritizes rewarding shareholders while maintaining financial flexibility. MarketWise declared quarterly and special dividends totaling $0.40 per Class A share on October 30, 2025, bringing the total FY 2025 dividends to $1.90 per share, representing a 13% cash yield. This dividend policy, initiated in Q1 2023, underscores the company's ability to generate positive annual cash flow "even near the bottom of the cycle."

A stock repurchase program, authorized for up to $50 million of Class A common stock, saw repurchases of $1.050 million in Q3 2025 and $2.901 million for the nine months ended September 30, 2025. However, this program was suspended effective October 30, 2025, following the receipt of an unsolicited proposal from Monument Cathedral Holdings, LLC to acquire outstanding equity interests for $17.25 per share. This proposal, contingent on the termination of the company's tax receivable agreement, is currently under review by a Special Committee of the Board.

Outlook and Strategic Initiatives

Management expresses "cautious optimism" regarding future subscriber growth, noting "green shoots" in engagement and conversion rates in recent weeks. While revenue might lag initially due to the longer customer journey for higher-priced products, new high-quality subscribers are expected to drive future revenue increases. ARPU is believed to have "probably bottomed" and is expected to remain "steady-ish" or see slight increases.

MarketWise anticipates its operating cash flows to improve further through increased operational efficiency and economies of scale. The company expects to recognize approximately 50% of its $374.926 million in remaining performance obligations as revenue over the next twelve months. Ongoing efforts to reduce professional fees and centralize functions are expected to yield additional cost savings.

The company's strategic roadmap includes:

• Content Innovation: Continuously developing new content, particularly around "big ideas" like AI and global macro themes, to resonate with investor interest.
• Data Science & AI Integration: Further leveraging data science to improve marketing efficiency, conversion rates, and subscriber retention.
• Technology Platform Expansion: Utilizing marketwise.com to integrate brands, reduce marketing costs, and develop new ad-based revenue streams.
• Talent Acquisition & Retention: Focusing on attracting and retaining top-tier analysts, copywriters, marketers, and operational staff.
• Accretive M&A: Actively seeking opportunities to acquire complementary businesses, editorial teams, software, and technologies, while maintaining a disciplined approach to valuation and risk.

Risks and Challenges

MarketWise operates in an environment subject to several risks. Macroeconomic factors such as heightened inflation, rising interest rates, and the potential for an economic recession continue to influence investor sentiment and engagement. The company's ability to attract and retain subscribers, market its products effectively, and manage growth remains critical. Regulatory compliance, particularly with the Investment Advisers Act of 1940, poses ongoing challenges.

The unsolicited acquisition proposal introduces uncertainty, and its outcome could significantly impact the company's future direction and share price. While AI presents opportunities, it also poses a long-term threat to "commodity" financial content, though management believes MarketWise's focus on "human connection," "insight analysis ideas" positions it favorably against this disruption. The payback period for subscriber acquisition remains elevated, indicating that sustained investment in marketing may be required to drive growth, and there is no guarantee that future financing, if needed, would be on acceptable terms.

Conclusion

MarketWise is at a pivotal juncture, demonstrating resilience and strategic foresight in a challenging market. The company's core investment thesis rests on its ability to leverage a diversified multi-brand platform, innovative technology, and disciplined cost management to capture and retain self-directed investors. Despite the headwinds from the Legacy Research wind-down and broader macroeconomic uncertainty, MarketWise's focus on high-value subscribers, the burgeoning interest in AI-powered tools, and its robust capital allocation strategy, including a significant dividend, position it for long-term value creation.

The unsolicited acquisition proposal underscores the potential intrinsic value within MarketWise, while its ongoing strategic initiatives in technology, content, and operational efficiency are designed to unlock this value for shareholders. The company's clean balance sheet and commitment to prudent capital deployment provide a strong foundation. While the path ahead involves navigating market volatility and competitive pressures, MarketWise's adaptive business model and technological leadership offer a compelling narrative for discerning investors seeking exposure to the evolving landscape of digital financial research.