MarketWise, Inc. Q2 FY2023 earnings call

• Q2 Results Overview: Investors remained engaged in financial research but at lower levels than 2020-2021. Metrics like landing page visits were slightly up, and conversion rates showed signs of improvement. The company focused on creating new content, managing overhead costs, and directing marketing spend efficiently.
• Marketing and Affiliates: In 2022, nearly 470 individual marketing campaigns were run. Multiple affiliates with different brands allowed for numerous campaigns and marketing experiments. AI initiatives, such as Predictive Alpha Prime from TradeSmith, had successful launches driving new subscriptions.
• Financials: GAAP revenue was $103.6 million, down 19% year-over-year. Billings were $96.2 million, down 18.2% year-over-year but flat quarter-over-quarter. Adjusted cash flow from operations was $29 million in Q2 2023, up from $26.8 million in Q2 2022. Total operating expenses were reduced by approximately $9.9 million or 9.5% year-over-year.
• Subscribers: Paid subscriber base declined to 750,000 from 898,000 year-over-year. Active free subscribers decreased. Over 290,000 long-term membership subscribers had increasing cumulative spend.
• Dividend and CFO: A $0.01 per share quarterly dividend was declared. Erik Mickels was set to join as permanent CFO; Steve Park was thanked for his service as interim CFO.

In the second quarter of 2023, MarketWise reported GAAP revenues of $103.6 million, a 19% decline compared to the prior year. Billings were $96.2 million, a 18.2% year-over-year decrease but flat to the prior quarter. Adjusted cash flow from operations was $29 million in Q2 2023, an increase from $26.8 million in Q2 2022. Regarding billings breakdown, approximately 36% came from membership subscriptions, 63% from term subscriptions, and 1% from other billings. ARPU declined to $490 from $580 in the second quarter of 2022.

• Cautiously optimistic about subscriber growth, with improvement seen in metrics like engagement and conversions. Expect revenue to increase as new subscribers come on, though with a lag due to subscription amortization.
• The second half of 2023 was expected to be consistent with the first half, possibly with a slight upside.

• Market volatility and economic uncertainty continued to impact results. Dependence on successful marketing campaigns and maintaining cost efficiencies were key risks. Potential unforeseen events could affect subscriber engagement and spending.

Q: On paid subscribers, cautious optimism and if approaching bottom.

A: Cautiously optimistic, seeing improvement in metrics but no guarantees.

Q: Content strategy, effective content types.

A: AI-related content (predictive, stock recommendations, investing in AI), global macro, software for portfolio management working; less effective not specified.

Q: M&A, types of opportunities.

A: Active in M&A, disciplined, looking for additive opportunities for shareholders.

Q: Churn, Schwab debt.

A: Churn declining, Schwab debt increase in Q1 due to bank runs, now back to trend.

Q: ARPU, new acquisitions.

A: Factor subscriber demographics in M&A; ARPU managed by efficient new subscriber acquisition, expected to stabilize and pick up.

Q: AI impact.

A: Excited about AI's efficiency in operations and new business opportunities; value in human connection and insight is key, not at risk immediately.