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MI

MARKETWISE, INC. (MKTW)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered resilient cash generation despite top-line pressure: Total net revenue was $80.0M, Net Income $15.3M, Cash from Operating Activities $17.8M, and Adjusted CFFO Margin 30.7% .
  • Sequential Billings softened to $58.2M from $70.5M in Q1, but were up ~10% YoY on an adjusted basis (excluding Legacy Research), with ARPU strengthening to $474, signaling effective monetization of the installed base .
  • Management reiterated FY 2025 Targets (Billings ≈$250M, CFFO and FCF ≈$30M, dividends $1.60–$1.80 per Class A share) and highlighted July Billings as “meaningfully” above Q2 monthly average; cash balance remained strong at $69.1M with no debt .
  • Capital return is a near-term catalyst: Board declared a combined $0.40 (regular + special) dividend for Class A shareholders and continued buybacks (117,673 shares for $1.9M since April) .
  • The company does not hold analyst calls; thus no Q2 earnings call transcript is available. Investors may submit written questions via IR channels .

What Went Well and What Went Wrong

What Went Well

  • Strong cash generation and margins: CFFO improved by $21.6M YoY to $17.8M and Adjusted CFFO Margin reached 30.7% (“cash generating machine, with virtually no CAPEX needed”) .
  • ARPU expansion: ARPU rose to $474, evidencing product value and monetization of the installed base (“ARPU continues to be strong”) .
  • Confidence and execution momentum: “Q3 is off to a good start with July Billings meaningfully exceeding the average monthly Billings for Q2,” and FY 2025 Targets are on track (“meet or exceed”) .

What Went Wrong

  • Top-line pressure vs prior year: Total net revenue declined 23.9% YoY to $79.95M and Net Income fell 27.9% YoY to $15.31M .
  • Subscriber headwinds: Paid Subscribers declined to 394k, continuing the churn impact from the Legacy Research shutdown (Q1 release flagged ongoing churn) .
  • Sequential Billings softness and EBITDA downtick: Billings fell to $58.2M from $70.5M in Q1; EBITDA decreased to $15.7M vs $17.5M in Q1 and $21.3M in Q2 2024 .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Total Net Revenue ($USD Millions)$105.0 $83.5 $80.0
Net Income ($USD Millions)$21.2 $16.8 $15.3
Net Income attributable to MarketWise, Inc. ($USD Millions)$1.544 $0.890 $1.297
Diluted EPS ($USD)$0.80 $0.41 $0.53
Income from Operations ($USD Millions)$21.334 $16.780 $14.811
EBITDA ($USD Millions)$21.3 $17.5 $15.7
Cash from Operating Activities (CFFO) ($USD Millions)$(3.8) $1.7 $17.8
Free Cash Flow ($USD Millions)$(4.3) $1.5 $17.5
Net Cash from Ops Margin (%)(3.6)% 2.1% 22.3%
Adjusted CFFO Margin (%)(6.6)% 2.5% 30.7%

Segment-like Billings Breakdown:

Billings Metric ($USD Millions)Q2 2024Q1 2025Q2 2025
New “Marketing” Billings$38.7 $51.3 $41.6
Net “Renewal” Billings$17.1 $18.3 $15.4
Other Billings$1.8 $0.8 $1.2
Total Billings$57.6 $70.5 $58.2

KPIs and Capital Return:

KPI / Capital ReturnQ2 2024Q1 2025Q2 2025
Paid Subscribers (thousands)645 473 394
ARPU ($)$456 $419 $474
Regular Dividend per Class A Share ($)$0.20 $0.20 $0.20
Special Dividend per Class A Share ($)— $0.60 $0.10
Total Dividends per Class A Share ($)$0.20 $0.80 $0.30
Cash and Cash Equivalents ($USD Millions)—$79.2 $69.1
Class A Shares (Millions, post-split)1.9 2.320 2.357
Class B Shares (Millions, post-split)14.0 13.733 13.613

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
BillingsFY 2025≈$250M; +20% vs annualized 2H’24 On track to meet or exceed prior Targets Maintained
Cash from Operating ActivitiesFY 2025≈$30M On track Maintained
Free Cash FlowFY 2025≈$30M On track Maintained
Dividends per Class A shareFY 2025$1.60–$1.80 total (quarterly + excess tax distributions) $1.60–$1.80 reiterated Maintained
Tax distributionsH2 2025—Expected to decline significantly vs $32.8M in H1 New/Clarified
Year-end cash balanceFY 2025—Expected materially consistent with 6/30/25 cash balance New/Clarified
Near-term dividendsQ3 2025—Declared $0.20 regular + $0.20 special; payable Sep 25, 2025 New

Earnings Call Themes & Trends

Note: Company does not host analyst calls; themes below reflect press releases.

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Billings trajectoryQ4: sequential +10% QoQ; Q1: +27% QoQ vs Q4 Q2: adjusted YoY +10%; sequentially down vs Q1; July Billings strong Mixed
Paid SubscribersQ4: 506k; Q1: 473k with Legacy-related churn Q2: 394k; focus on acquisition/retention Declining subs; actions underway
ARPUQ4: $394; Q1: $419 Q2: $474; “continues to be strong” Improving
Capital allocationQ4: $50M buyback authorized ; Q1: $0.80 dividend; buybacks started Q2: $0.40 combined dividend; 117,673 shares repurchased for $1.9M since April Proactive returns
Listing/complianceQ1: regained Nasdaq compliance; planned reverse split Q2: reverse split effective; shares post-split disclosed Resolved
FY 2025 TargetsIntroduced in Q1 (Billings/CFFO/FCF/dividends) Reiterated “on track” Maintained
Legacy Research impactQ1: elevated churn, lower acquisition Q2: adjusted YoY Billings excludes Legacy; subscriber rebuild focus Normalizing over time
Macro/spendingQ1: noted uncertainty may impact spending Q2: not emphasized; focus on efficiency and cash gen Lingering but downplayed

Management Commentary

  • “The strength of our business model was displayed during the second quarter as the company generated Cash from Operating Activities of over $17 million and Adjusted CFFO Margins of over 30%. When we are executing well, our business is a cash generating machine, with virtually no CAPEX needed.”
  • “Our average revenue per user, or ARPU, continues to be strong… we are also focused on increasing the number of paid subscribers. We are developing exciting initiatives to increase customer acquisition and improve engagement and retention.”
  • “From a FY 2025 Guidance perspective, I am pleased to report that we are on track to achieve the FY 2025 Targets we communicated earlier this year… rewarding our shareholders with an attractive yield, opportunistically buying back shares, and investing sensibly in our business.”

Q&A Highlights

  • No analyst conference call held; investors may submit written questions via [email protected]. As such, no live Q&A themes or clarifications were provided this quarter .

Estimates Context

  • S&P Global Wall Street consensus for Q2 2025 EPS and revenue was unavailable for MKTW at the time of review, so a beat/miss assessment versus consensus cannot be made. Values retrieved from S&P Global.
  • Internal commentary emphasized FY 2025 Targets are “on track,” suggesting limited need for material estimate revisions absent new macro or subscriber acquisition developments .

Key Takeaways for Investors

  • Cash engine intact: 22.3% net cash-from-ops margin and 30.7% Adjusted CFFO Margin with minimal CAPEX underpin near-term dividend capacity and buybacks .
  • Monetization strength vs subscriber trough: ARPU rose to $474 even as Paid Subscribers fell to 394k; watch balance between acquisition ramp and ARPU durability .
  • Billings trajectory: Sequential decline from Q1 to Q2 warrants monitoring, but adjusted YoY growth and strong July Billings suggest positive Q3 entry momentum .
  • Capital return as catalyst: $0.40 total dividend declared (regular + special) and ongoing buybacks ($1.9M since April) may support shares into Q3 .
  • FY 2025 Targets maintained: Billings ≈$250M and CFFO/FCF ≈$30M frame medium-term cash generation; focus on execution pace and marketing efficiency to hit Billings growth .
  • Corporate structure considerations: Large noncontrolling interest share of net income results in low Net Income attributable to MarketWise, Inc. ($1.297M in Q2), a valuation and cash flow attribution consideration .
  • Macro and spend elasticity: Q1 cautioned that uncertainty may impact self-directed investor spend; marketing ROI and retention initiatives are key to stabilizing subscriber base .