MarketWise, Inc. Q4 FY2021 earnings call

• 2021 was a landmark year with record revenues, billings, and adjusted cash flow from operations. Paid subscribers grew 13% to nearly 1 million, and total subscribers reached almost 15 million.
• Key events included acquiring Chaikin Analytics, going public via NASDAQ listing, establishing a $150 million revolving credit facility and a $35 million share repurchase program.
• Strategies focus on expanding product offerings, adding investment research professionals, developing new distribution channels, deploying technology and data science, and delivering high-quality content for self-directed investors.

In 2021, MarketWise achieved record financial results. GAAP revenues climbed to $549 million, a 51% increase from 2020. Billings for the full year 2021 finished at an all-time high of $730 million, a 33% increase over 2020. Adjusted cash flow from operations rose to $197 million, up 47% from 2020. The paid subscriber base grew 13% to 972,000, and free subscribers increased from 9.5 million in 2020 to 13.7 million in 2021. For the fourth quarter of 2021, revenue was $146.7 million (a 37.3% increase from Q4 2020), billings decreased by 4.4% to $151.4 million, and paid subscribers grew to 972,000. Chaikin Analytics contributed $3.2 million in revenue and $7.1 million in new organic billings in Q4 2021. Revenue contribution: GAAP revenues in 2021 were 51% of total, billings in 2021 were 33% higher, adjusted cash flow from operations in 2021 was 47% up, paid subscribers in 2021 were 13% growth.

MarketWise is not providing detailed forward-looking financial guidance. The company focuses on long-term growth and profitability, avoiding short-term pressures. Instead, it will provide quarterly updates on operations, market trends, and relevant information. In 2022, the focus is on organic growth through expanding product offerings, hiring investment research professionals, developing distribution channels, and leveraging technology/data science. No specific revenue or financial targets are given.

• Market volatility: Geopolitical uncertainty and market fluctuations can impact customer engagement and business performance.
• Customer engagement volatility: Seasonal fluctuations in customer engagement, especially around summer and holiday seasons, can affect billings and revenue.
• Marketing and acquisition risks: Elevated customer acquisition costs (CAC) and challenges in managing marketing spend to maintain profitability.

Q: Commentary on core KPIs like billings, subscribers, traffic post recent market volatility A: Engagement was volatile, but conversion rates remained good. Trading volumes are a proxy for engagement, showing volatility. Market conditions and geopolitical events impact engagement, but the company focuses on content and long-term metrics.

Q: Capital allocation balance between buyback, organic investments, and M&A A: Buyback is accretive and continues, but capital allocation is long-term focused. Decisions prioritize long-term owner interests over short-term fluctuations, with M&A considered selectively.

Q: Subscriber growth and conversion from lower to higher value subscriptions A: Content is key to resonating with subscribers. While cohorts may show initial lower value, long-term metrics and content quality drive conversion to higher value subscriptions.

Q: Marketing spend environment and approach A: CAC was elevated in Q2-Q3 2021, improved in Q4. Marketers manage campaigns selectively, focusing on content and profitability. CAC is expected to remain elevated, but the business model can accommodate it.

Q: Sales and marketing efficiency and seasonality A: Sales and marketing efficiency is evaluated by gross adds and unit costs. Seasonality and global events impact performance, but long-term view and content focus are key.

Q: Reason for not providing 2022 guidance A: Philosophical choice to avoid short-term pressure, focus on long-term growth and profitability. Believes in balancing growth and profitability with an eye on profitability, not short-term metrics.

Q: Rule of 50 company goal A: The concept of balancing growth and profitability with an eye on profitability is valid, but detailed guidance is not provided to avoid short-term pressures.