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MI

MARKETWISE, INC. (MKTW)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered $81.3 Million total net revenue, $17.9 Million net income, and $63.7 Million Billings (+30% YoY), with diluted EPS of $0.58; cash from operating activities was $2.2 Million, reflecting quarterly seasonality and ~$5.8 Million prepaid IT spend .
  • Management raised FY 2025 Billings target to ~$260 Million (from ~$250 Million) and expects to achieve ~$30 Million CFFO; total FY 2025 dividends increased to $1.90 per share (13% yield on Oct 29 price) .
  • Preliminary FY 2026 targets introduced: Billings ~$290 Million (+10% YoY), CFFO $45 Million (+50% YoY), and dividends of $1.60 per Class A share .
  • Capital allocation remains active: dividends declared, buybacks YTD of $2.9 Million at ~$16/share, then paused due to an unsolicited acquisition proposal at $17.25 per share from Monument & Cathedral Holdings; Special Committee review ongoing .

What Went Well and What Went Wrong

What Went Well

  • Strong Billings momentum: $63.7 Million (+30% YoY) and +9% sequential; October Billings ~$32 Million, the highest monthly total in nearly two years .
  • ARPU expansion to $566 alongside mix shift toward High/Ultra High Value customers (>60% vs ~50% mid-2024), improving monetization and margins; management: “our strategy is working” .
  • FY 2025 guidance raised/affirmed with line-of-sight to achieving Billings ~$260 Million and CFFO ~$30 Million; dividends announced bring FY 2025 total to $1.90 per share (13% yield) .

What Went Wrong

  • Revenue and net income declined YoY given legacy transitions and pricing pivot: total net revenue $81.3 Million (-16.4% YoY), net income $17.9 Million (-21.2% YoY), EBITDA $18.9 Million (-18.2% YoY) .
  • CFFO was $2.2 Million for Q3 (seasonally lower quarters and ~$5.8 Million prepaid IT spend hit near-term cash), driving Free Cash Flow to $1.7 Million in the quarter .
  • Paid subscribers declined to 379k reflecting legacy churn and higher pricing strategy; only stabilizing recently as acquisitions offset churn .

Financial Results

Sequential performance: Q1 2025 → Q2 2025 → Q3 2025

MetricQ1 2025Q2 2025Q3 2025
Total Net Revenue ($USD Millions)$83.5 $80.0 $81.3
Net Income ($USD Millions)$16.8 $15.3 $17.9
EBITDA ($USD Millions)$17.5 $15.7 $18.9
Cash from Operating Activities ($USD Millions)$1.7 $17.8 $2.2
Free Cash Flow ($USD Millions)$1.5 $17.5 $1.7
Diluted EPS ($USD)$0.41 $0.53 $0.58
Net Cash from Op Activities Margin (%)2.1% 22.3% 2.7%
Adjusted CFFO Margin (%)2.5% 30.7% 3.4%

YoY comparison: Q3 2024 → Q3 2025

MetricQ3 2024Q3 2025YoY Change
Total Net Revenue ($USD Millions)$97.2 $81.3 (16.4%)
Billings ($USD Millions)$48.9 $63.7 +30.2%
Net Income ($USD Millions)$22.7 $17.9 (21.2%)
EBITDA ($USD Millions)$23.2 $18.9 (18.2%)
CFFO ($USD Millions)($5.8) $2.2 +$8.0

Segment/KPIs

  • Billings breakdown
Metric ($USD Millions)Q1 2025Q2 2025Q3 2025
New “Marketing” Billings$51.3 $41.6 $48.7
Net “Renewal” Billings$18.3 $15.4 $14.1
Other Billings$0.8 $1.2 $0.8
Total Billings$70.5 $58.2 $63.7
  • Subscriber and ARPU KPIs
KPIQ1 2025Q2 2025Q3 2025
Paid Subscribers (thousands)473 394 379
ARPU (USD)$419 $474 $566

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
BillingsFY 2025~$250 Million ~$260 Million Raised
Cash from Operating ActivitiesFY 2025~ $30 Million Expect to achieve ~$30 Million Maintained
Free Cash FlowFY 2025~ $30 Million Expect to achieve target Maintained
Dividends (per Class A share)FY 2025$1.60–$1.80 $1.90 (incl. $0.40 declared Oct 30) Raised
BillingsFY 2026 (prelim)N/A~$290 Million New
CFFOFY 2026 (prelim)N/A$45 Million New
Dividends (per Class A share)FY 2026 (prelim)N/A$1.60 New

Earnings Call Themes & Trends

Note: An earnings call transcript for Q3 2025 was not available in our document set; themes reflect management’s press release commentary across quarters .

TopicPrevious Mentions (Q2 2025 and Q1 2025)Current Period (Q3 2025)Trend
Pricing strategy & ARPUEmphasis on ARPU strength and efficiency; “cash generating machine… virtually no CAPEX needed” ; pricing pivot noted in Q1 ARPU up to $566; mix shifted to >60% High/Ultra High Value customers; CEO: “our strategy is working” Improving monetization
Subscriber base & churnLegacy Research-related churn and lower acquisition; expectation of continued churn in Q2 Stabilization as acquisition offsets churn; focus on efficient growth Stabilizing
Cash flow seasonalityQ2 high CFFO, Q1 low; margins over 30% in Q2 Q3 CFFO lower due to seasonality and ~$5.8 Million prepaid IT Seasonal pattern continues
Capital allocation (dividends/buybacks)Regular/special dividends; buybacks began in April $0.40 dividends declared; FY 2025 total $1.90; buybacks paused due to proposal; YTD $2.9 Million repurchased Shareholder returns; temporary pause on buybacks
Strategic/CorporateRegained Nasdaq compliance in Q1 Unsolicited proposal at $17.25 per share under review by Special Committee Potential corporate action

Management Commentary

  • “Our strategy is working… with Billings increasing 30% year over year and 9% higher than last quarter.” – CEO Dr. David Eifrig .
  • “Higher prices… attract more serious investors… would renew and remain with us… This shift… resulted in higher revenue per user and better overall margins.” – CEO Dr. David Eifrig .
  • “We expect we will achieve or beat our FY 2025 Billings and CFFO targets.” – CEO Dr. David Eifrig .
  • “FY 2026… will drive both top line growth and margin expansion… disciplined approach to capital allocation with a mix of dividends, opportunistic buybacks, and prudent investments.” – CEO Dr. David Eifrig .

Q&A Highlights

  • An earnings call transcript for Q3 2025 was not found in the available documents; therefore, specific Q&A themes and clarifications are not available in this recap [List: earnings-call-transcript returned 0 for Q3 2025].

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2025 EPS and revenue was unavailable; as a result, we cannot classify beats/misses versus consensus for this quarter. Values retrieved from S&P Global were unavailable for MKTW in Q3 2025.

Key Takeaways for Investors

  • Billings momentum and ARPU expansion are the core drivers: Q3 Billings $63.7 Million (+30% YoY) and ARPU $566, supported by mix shift toward high-value customers .
  • Cash flow exhibits strong seasonality; Q3 CFFO was $2.2 Million, dampened by ~$5.8 Million prepaid IT spend that should benefit future periods .
  • Shareholder returns remain substantial: FY 2025 dividends increased to $1.90 per share (13% cash yield on Oct 29 price) .
  • FY 2026 preliminary targets imply continued operating momentum: Billings ~$290 Million (+10% YoY) and CFFO $45 Million (+50% YoY) .
  • Corporate overhang/catalyst: unsolicited $17.25 per share proposal may influence trading and valuation; buybacks paused pending review .
  • Capital structure: $50.5 Million cash at 9/30 and no debt; cash balances rose to $65.5 Million by end of October, with expectation of Q4 cash increase as tax distributions subside .
  • October Billings strength (~$32 Million) signals positive start to Q4 and supports management’s confidence in achieving FY 2025 targets .