mktw-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39405

MarketWise, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware			87-1767914
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)


1125 N. Charles Street Baltimore, Maryland			21201
(Address of principal executive offices)			(Zip Code)

(Address of principal executive offices, including zip code)

(888) 261-2693

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.0001 par value per share	MKTW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☑

Smaller reporting company

☑

Emerging growth company

☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 12 (a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

As of May 10, 2024, there were 43,173,283 shares of the registrant’s Class A common stock and 280,390,147 shares of the registrant’s Class B common stock, each with a par value of $0.0001 per share, outstanding.

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 (unaudited)	5
	Condensed Consolidated Statement of Operations for Three Months Ended March 31, 2024 and 2023 (unaudited)	7
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023 (unaudited)	8
	Condensed Consolidated Statements of Changes in Stockholders' Deficit for the Three Months Ended March 31, 2024 and 2023 (unaudited)	9
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited)	11
	Notes to the Condensed Consolidated Financial Statements (unaudited)	12
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

PART II.	OTHER INFORMATION	42
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	42
Signatures		44

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of federal securities law, and as such are not historical facts. This includes, without limitation, statements regarding our financial position and business strategy, and the plans and objectives of management for our future operations. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this report, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements are predictions, projections, and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this report, including, but not limited to:

▪our ability to attract new subscribers and to persuade existing subscribers to renew their subscription agreements with us and to purchase additional products and services from us;

▪our ability to adequately market our products and services, and to develop additional products and product offerings;

▪our ability to manage our growth effectively, including through acquisitions;

▪failure to maintain and protect our reputation for trustworthiness and independence;

▪our ability to attract, develop, and retain capable management, editors, and other key personnel;

▪our ability to grow market share in our existing markets or any new markets we may enter;

▪adverse or weakened conditions in the financial sector, global financial markets, and global economy;

▪our ability to respond to and adapt to changes in technology and consumer behavior;

▪failure to successfully identify and integrate acquisitions, or dispose of assets and businesses;

▪our public securities’ potential liquidity and trading;

▪the impact of the regulatory environment and complexities with compliance related to such environment;

▪our future capital needs;

▪our ability to maintain an effective system of internal control over financial reporting, and to address and remediate existing material weaknesses in our internal control over financial reporting;

▪our ability to maintain and protect our intellectual property; and

▪other factors detailed under the section of this report entitled “Risk Factors.”

These forward-looking statements are based on information available as of the date of this report and current expectations, forecasts, and assumptions, and involve a number of judgments, risks, and uncertainties. Additionally, as a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements for any reason, except as may be required under applicable securities laws.

PART 1—FINANCIAL INFORMATION

MARKETWISE, INC.

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share and per share data)

Item 1. Financial Statements.


	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	131,175	$	155,174
Accounts receivable	3,350		4,528
Prepaid expenses	10,555		9,305
Related party receivables	2,008		5,182


Deferred contract acquisition costs	83,423		91,480
Other current assets	2,046		2,172
Total current assets	232,557		267,841
Property and equipment, net	630		690
Operating lease right-of-use assets	6,827		7,331
Intangible assets, net	8,437		6,255
Goodwill	33,560		31,038
Deferred contract acquisition costs, noncurrent	67,713		73,420

Deferred tax assets	9,367		9,693
Other assets	199		287
Total assets	$	359,290	$	396,555
Liabilities and stockholders’ deficit
Current liabilities:
Trade and other payables	$	2,936	$	559
Related party payables, net	344		1,137
Accrued expenses	22,048		55,041
Deferred revenue and other contract liabilities	280,314		287,751

Operating lease liabilities	1,474		1,446

Other current liabilities	26,787		27,959
Total current liabilities	333,903		373,893
Long-term liabilities - related party	707		—

Deferred revenue and other contract liabilities, noncurrent	285,231		304,342
Related party tax receivable agreement liability, noncurrent	2,470		2,151
Other liabilities, noncurrent	2,378		746


Operating lease liabilities, noncurrent	3,987		4,366
Total liabilities	628,676		685,498
Commitments and Contingencies	—		—
Stockholders’ deficit:
Common stock - Class A, par value of $0.0001 per share, 950,000,000 shares authorized; 38,122,283 and 36,384,981 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	4		4
Common stock - Class B, par value of $0.0001 per share, 300,000,000 shares authorized; 287,592,303 and 288,092,303 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	29		29
Preferred stock - par value of $0.0001 per share, 100,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	—		—

MARKETWISE, INC.

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share and per share data)


Additional paid-in capital	115,259		115,164

Accumulated other comprehensive income	27		65
Accumulated deficit	(124,686)		(126,343)
Total stockholders’ deficit attributable to MarketWise, Inc.	(9,367)		(11,081)
Noncontrolling interest	(260,019)		(277,862)
Total stockholders’ deficit	(269,386)		(288,943)
Total liabilities and stockholders’ deficit	$	359,290	$	396,555

The accompanying notes are an integral part of these condensed consolidated financial statements.

MARKETWISE, INC.

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share data)


	Three Months Ended March 31,
	2024		2023
Net revenue	$	108,612	$	125,615
Related party revenue	379		618
Total net revenue	108,991		126,233
Operating expenses:
Cost of revenue (1)	13,368		15,290
Sales and marketing (1)	47,297		48,727
General and administrative (1)	23,802		28,033
Research and development (1)	2,149		2,463
Depreciation and amortization	693		984
Related party expense	127		128
Total operating expenses	87,436		95,625
Income from operations	21,555		30,608
Other income, net	234		387
Interest income, net	1,658		538
Income before income taxes	23,447		31,533
Income tax expense	735		928
Net income	22,712		30,605
Net income attributable to noncontrolling interests	21,055		29,138
Net income attributable to MarketWise, Inc.	$	1,657	$	1,467

Net income per Class A common share – basic	$	0.05	$	0.05

Net income per Class A common share – diluted	$	0.04	$	0.05

Weighted average shares outstanding – basic	36,726		29,172

Weighted average shares outstanding – diluted	39,436		30,496









(1) Cost of revenue, sales and marketing, general and administrative, and research and development expenses are exclusive of depreciation and amortization shown as a separate line item

The accompanying notes are an integral part of these condensed consolidated financial statements.

MARKETWISE, INC.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)


	Three Months Ended March 31,
	2024		2023
Net income	$	22,712	$	30,605
Other comprehensive (loss) income:
Cumulative translation adjustment	(38)		21
Total comprehensive income	$	22,674	$	30,626

The accompanying notes are an integral part of these condensed consolidated financial statements.

MARKETWISE, INC.

Condensed Consolidated Statement of Stockholders’ Deficit (Unaudited)

(In thousands, except share and per share data)


	Common Stock - Class A		Common Stock - Class B			Preferred Stock			Additional paid-in capital		Accumulated deficit			Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Deficit Attributable to MarketWise, Inc.		Noncontrolling Interest		Total Stockholders’ Deficit
		Shares	Amount		Shares	Amount		Shares					Amount
Balance at January 1, 2023		29,039,655	$	3	291,092,303	$	29	—	$	—	$	106,852		$	(128,125)	$	44	$	(21,197)	$	(277,186)	$	(298,383)
Equity-based compensation		—	—		—	—		—	—		3,703			—		—		3,703		—		3,703

Vesting of restricted stock units		873,835	—		—	—		—	—		—			—		—		—		—		—
Restricted stock units withheld to pay taxes		—	—		—	—		—	—		(630)			—		—		(630)		—		(630)
Distributions		—	—		—	—		—	—		—			—		—		—		20		20
Foreign currency translation adjustments		—	—		—	—		—	—		—			—		21		21		—		21

Net income (loss)		—	—		—	—		—	—		—			1,467		—		1,467		29,138		30,605
Balance at March 31, 2023		29,913,490	$	3	291,092,303	$	29	—	$	—	$	109,925		$	(126,658)	$	65	$	(16,636)	$	(248,028)	$	(264,664)

MARKETWISE, INC.

Condensed Consolidated Statement of Stockholders’ Deficit (Unaudited)

(In thousands, except share and per share data)

SEC Form 10-Q filed by MarketWise Inc.