MarketWise Inc.
11/05/2026 | Press release | Distributed by Public on 11/05/2026 07:31
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the financial condition and results of operations of MarketWise, Inc., a Delaware corporation ("MarketWise," "we," "us," and "our"), should be read together with our unaudited financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "Annual Report"). The following discussion contains forward-looking statements. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in the section entitled "Cautionary Statement Regarding Forward-Looking Statements" in this report.
Overview
We are a leading multi-brand platform of subscription businesses that provides premium financial research, software, education, and tools for self-directed investors. On a subscription basis, we offer a broad portfolio of high-quality, independent investment research along with a range of software and analytical tools.
MarketWise began in 1999 with a simple idea: if we published intelligent, independent, and in-depth investment research and treated subscribers the way we would want to be treated, they would renew and stay with us. Since then, we have grown into a full suite of investment research products and solutions. Today we offer a diversified portfolio of products across a range of financial research brands, including Stansberry Research, Chaikin Analytics, Altimetry, TradeSmith, InvestorPlace, and Brownstone Research. Our entire research portfolio is fully digital and channel agnostic, available across desktop, laptop, tablet, and mobile devices.
We benefit from the combination of a leading editorial team, a diverse portfolio of content and brands, and a comprehensive set of investor-focused tools that appeal to a broad subscriber base.
Third Quarter 2026 Highlights (1)
▪Total net revenue was $80.1 million in the third quarter 2026(2)
▪Total Billings were $80.7 million in the third quarter 2026, a year-over-year increase of 26.8%
▪Net Income was $15.1 million in the third quarter 2026
▪Cash Flow from Operating Activities, which represents net cash provided by operating activities in our Consolidated Statements of Cash Flows ("CFFO") was $7.8 million in the third quarter 2026, an increase of $5.6 million compared to the third quarter 2025. On a year-to-date basis, CFFO increased by $6.4 million compared to the nine months ended September 30, 2025.
▪Cash and cash equivalents were $27.4 million as of September 30, 2026, and no debt outstanding
(1) The third quarter 2026 and 2025 results reported herein are unaudited.
(2) Total Net Revenue (a GAAP measure) represents Billings that are recognized over the term of the subscription, which can be multiple years. Billings are amounts invoiced to customers in the period and are thus indicative of the current operating environment and demand for our products.
The following table presents net cash provided by operating activities, and the related margin as a percentage of total net revenue, Adjusted CFFO (as defined below), a non-GAAP measure, and the related margin as a percentage of Billings, and Free Cash Flow, a non-GAAP measure, for each of the periods presented. For more information on our non-GAAP measures, see "Non-GAAP Financial Measures."
| (In thousands) | Three Months Ended September 30, | |||||||||||||||||||
| 2026 | 2025 | % Change | ||||||||||||||||||
| CFFO | $ | 7,840 | 2,169 | 261.5 | % | |||||||||||||||
| Total net revenue | 80,090 | 81,271 | (1.5) | % | ||||||||||||||||
| CFFO Margin | 9.8 | % | 2.7 | % | ||||||||||||||||
| Adjusted CFFO | $ | 7,840 | $ | 2,169 | 261.5 | % | ||||||||||||||
| Billings | 80,741 | 63,693 | 26.8 | % | ||||||||||||||||
| Adjusted CFFO Margin | 9.7 | % | 3.4 | % | ||||||||||||||||
| Free Cash Flow | $ | 7,430 | $ | 1,692 | 339.1 | % | ||||||||||||||
Key Factors Affecting Our Performance
We believe that our growth and future success are dependent upon several factors, including those below and those noted in the "Risk Factors" section in the Annual Report. The key factors below represent significant business opportunities as well as challenges that we must successfully address in order to continue our growth and improve our financial results.
Growing our subscriber base with compelling unit economics. We are highly focused on continuing to acquire new subscribers to support our long-term growth. Marketing spend is a major driver of new subscriber growth. Our marketing strategy rests on strong unit economics, which combine long-term subscriber relationships, highly scalable content delivery, cost-effective customer acquisition, and high-margin conversions.
Our Paid Subscribers (as defined below) as of December 31, 2025 generated average customer lifetime Billings of approximately $2,031, resulting in a LTV/CAC (as defined below) ratio of approximately 2.0x. For more information on Billings and our LTV/CAC ratio and the components of this ratio, see "Key Business Metrics" and "Definitions of Metrics."
We adjust our marketing spend to drive efficient and profitable customer acquisition. We can adjust our marketing spend in near real-time, and we monitor costs per acquisition relative to the cart value of the initial subscription.
As of September 30, 2026, our Paid Subscriber base was 389 thousand, an increase of 10 thousand, or 2.8%, from 379 thousand at September 30, 2025. The increase in Paid Subscribers is a result of compelling products and content combined with the significant investment in Direct Marketing in the first half of 2026.
Our Paid Subscriber base is comprised of subscribers obtained through both direct-to-paid acquisition and free-to-paid conversions. Since 2023, direct-to-paid acquisition has accounted for approximately 48% - 58% of our annual Paid Subscriber acquisition, and is largely driven by display ads and targeted email campaigns. Our free subscription products also serve as a significant source of new Paid Subscribers, accounted for approximately 42% to 52% of our annual Paid Subscriber acquisition.
Retaining and expanding relationships with existing subscribers. We believe we have a significant opportunity to deepen our relationships with our large base of Active Free and Paid Subscribers. Because of the quality of our products, we believe subscribers will stay with us and expand their subscriptions over time. As our engagement with subscribers deepens, they tend to buy more products and higher-value ones. Our ARPU (defined below) was $860 as of September 30, 2026 , which increased by $294, or 51.9% from $566 as of September 30, 2025. For more information, see "Key Business Metrics - Average Revenue Per User."
Our high-value composition rate reflects the percentage of Paid Subscribers that have purchased more than $600 of our products over their lifetime. We believe our high-value composition rate reflects our ability to retain existing subscribers through renewals and our ability to expand our relationship with them when those subscribers purchase higher-value subscriptions. Our ultra high-value composition rate reflects the percentage of Paid Subscribers that have purchased more than $5,000 of our products over their lifetime. We believe our ultra high-value composition rate reflects our ability to successfully build lifetime relationships with our subscribers, often across multiple products and brands. As of September 30, 2026, 61% of our Paid Subscribers were high-value subscribers and 29% of our Paid Subscribers were ultra high-value subscribers.
Definitions of Metrics
Throughout this discussion and analysis, a number of our financial and operating metrics are referenced which we do not consider to be key business metrics, but which we review to monitor performance, and which we believe may be useful to investors. These are:
High-value composition rate: High-value composition rate is the number of high-valued subscribers divided by Paid Subscribers. High-value subscribers are Paid Subscribers who have purchased greater than $600 in aggregate over their lifetime.
LTV/CAC ratio:
Lifetime Value ("LTV") represents the average margin on customer lifetime Billings (that is, the estimated cumulative spend across a customer's lifetime). Customer Acquisition Costs ("CAC") are comprised of: direct marketing expenses; external revenue share expenses; retention and renewal expenses, copywriting and marketing salaries; telesales salaries and commissions; and customer service commissions.
We calculate LTV/CAC ratio as LTV divided by CAC. We use LTV/CAC ratio because we believe it is a standard metric for subscription-based businesses, and we believe that an LTV/CAC ratio above 3x is considered to be indicative of strong profitability and marketing efficiency. We believe that an increasing LTV per subscriber reflects our existing subscribers recognizing our value proposition, which will expand their relationship with us across our platform over time, either through a combination of additional product purchases or by joining our membership offerings. We believe investors should consider this metric when evaluating our ability to achieve a return on our marketing investment.
Net revenue retention: Net revenue retention is defined as Billings in the current period from subscriber cohorts acquired in prior periods, divided by total Billings in the prior period. We believe that a high net revenue retention rate is a measure of customer retention and an indicator of the engagement of our subscribers with our products. Investors should consider net revenue retention as an ongoing measure when evaluating our subscribers' interest in continuing to subscribe to our products and spending more with us over time.
Subscriber count churn rate: Our subscriber count churn rate is defined as the number of paid subscribers who either cancelled or failed to renew all of their paid subscriptions during the period divided by the number of unique paid subscribers at the beginning of the period plus the number of new subscribers obtained during the period. The monthly subscriber count churn rate is the annual subscriber count churn rate divided by twelve months.
Ultra high-value composition rate: Ultra high-value composition rate is the number of ultra high-valued subscribers divided by Paid Subscribers. Ultra high-value subscribers are Paid Subscribers who have purchased more than $5,000 in aggregate over their lifetime.
Key Business Metrics
We review the following key business metrics to measure our performance, identify trends, formulate financial projections, and make strategic decisions. We are not aware of any uniform standards for calculating these key
metrics, which may hinder comparability with other companies that may calculate similarly titled metrics in a different way.
|
As of and for the Three Months Ended September 30, |
As of and for the Nine Months Ended September 30, |
|||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % change | 2026 | 2025 | % change | |||||||||||||||||||||||||||||||||
| Active Free Subscribers | 2,015,632 | 2,066,907 | (2.5)% | 2,015,632 | 2,066,907 | (2.5)% | ||||||||||||||||||||||||||||||||
| Paid Subscribers | 389,062 | 378,588 | 2.8% | 389,062 | 378,588 | 2.8% | ||||||||||||||||||||||||||||||||
| ARPU | $ | 860 | $ | 566 | 51.9% | $ | 860 | $ | 566 | 51.9% | ||||||||||||||||||||||||||||
| New Marketing Billings (in thousands) | $ | 63,310 | $ | 48,721 | 29.9% | $ | 197,830 | $ | 141,654 | 39.7% | ||||||||||||||||||||||||||||
| Net Renewal Billings (in thousands) | $ | 16,210 | $ | 14,139 | 14.6% | $ | 51,593 | $ | 47,873 | 7.8% | ||||||||||||||||||||||||||||
| Other Billings (in thousands) | $ | 1,221 | $ | 833 | 46.6% | $ | 3,850 | $ | 2,814 | 36.8% | ||||||||||||||||||||||||||||
| Total Billings (in thousands) | $ | 80,741 | $ | 63,693 | 26.8% | $ | 253,274 | $ | 192,341 | 31.7% | ||||||||||||||||||||||||||||
Active Free Subscribers. Active Free Subscribers are defined as unique subscribers who have subscribed to one of our free investment publications via a valid email address and who have received and/or consumed our content during the quarter, excluding any Paid Subscribers who also have free subscriptions. Free subscriptions are often daily publications that include some commentary about the stock market, investing ideas, or other specialized topics. Included within our free publications are advertisements and editorial support for our current marketing campaigns. While subscribed to our publications, Active Free Subscribers learn about our editors and analysts, get to know our products and services, and learn more about ways we can help them be better investors. Since 2023, free-to-paid conversions have accounted for approximately 42% to 52% of our new paid subscribers.
Active Free Subscribers decreased by 0.1 million, or 2.5%, to 2.0 million as of September 30, 2026 as compared to 2.1 million as of September 30, 2025.
Active Free Subscribers decreased by 0.1 million, or 4.6%, to 2.0 million as of September 30, 2026 as compared to 2.1 million as of June 30, 2026.
Paid Subscribers. We define Paid Subscribers as the total number of unique subscribers with at least one paid subscription at the end of the period. We view the number of Paid Subscribers at the end of a given period as a key indicator of the attractiveness of our products and services, as well as the efficacy of our marketing in converting Free Subscribers to Paid Subscribers and generating direct-to-paid acquisitions. We grow our Paid Subscriber base through marketing directly to prospective and existing subscribers across a variety of media, channels, and platforms.
Total Paid Subscribers increased by 10 thousand, or 2.8%, to 389 thousand as of September 30, 2026 as compared to 379 thousand at September 30, 2025, primarily related to meaningfully increased opportunistic investment in customer acquisition that began in late first quarter 2026 and continued throughout second quarter 2026.
Total Paid Subscribers decreased by 11 thousand, or 2.7%, to 389 thousand as of September 30, 2026 as compared to 400 thousand as of June 30, 2026. The decrease was a result of lower new subscriber acquisition, as we scaled back marketing investment in the third quarter 2026 to focus on monetization of existing subscribers, consistent with the plan we described in the second quarter 2026. Our plan for the fourth quarter is to continue to keep marketing investment at current levels and continue our focus on monetization. As such, we could see additional declines in our Paid Subscribers as we continue to balance growth and margin.
Subscriber count churn has ranged from approximately 2.4% to 3.7% per month between 2023 and 2025. Almost all of the subscribers who churned in third quarter 2026 did so having owned only one entry level publication. This is evidenced by the fact that their ARPU approximately matched the subscription price of our entry level publications. We believe our net revenue retention rate, which improved from 53% in 2024 to 91% in 2025, is a more meaningful gauge of subscriber satisfaction.
Average Revenue Per User ("ARPU"). We calculate ARPU as the trailing four quarters of net Billings divided by the average number of quarterly total Paid Subscribers over that period. We believe ARPU is a key indicator of how successful we are in attracting subscribers to higher value content. We believe that our high ARPU is indicative of the trust we build with our subscribers and of the value they see in our products and services.
ARPU increased by $294, or 51.9%, to $860 as of September 30, 2026 as compared to $566 as of September 30, 2025. The year-over-year increase was driven by a 34% increase in trailing four-quarter Billings, while trailing four-quarter average Paid Subscribers decreased by 12%. The Billings increase was seen across our product categories with the highest level of growth on a percentage basis coming from our software offerings. The decrease in trailing four-quarter Paid Subscribers was driven by the winding down of our Legacy Research business during 2024. At the time of shutdown, paid Legacy Research subscribers were given replacement subscriptions to other affiliates within MarketWise for at least the duration of their original subscription. The last significant batch of these replacement subscriptions expired in the second quarter 2025 and as such, those subscribers are still impacting the trailing four-quarter Paid Subscribers ending September 30, 2025.
ARPU increased by $38, or 4.6%, to $860 as of September 30, 2026 as compared to $822 as of June 30, 2026. The sequential increase was driven by a 5.4% increase in trailing four-quarter Billings, while trailing four-quarter average Paid Subscribers increased by 1%. Our ARPU remains high relative to other subscription businesses, and we attribute this to the quality of our content and effective sales and marketing efforts regarding higher value content, bundled subscriptions and membership subscriptions.
Billings. Billings represent amounts invoiced to customers. We measure and monitor our Billings because they provide insight into trends in cash generation from our marketing campaigns. We generally bill our subscribers at the time of sale and receive full cash payment up front, and defer and recognize a portion of the related revenue ratably over time for term and membership subscriptions. For certain subscriptions, we may invoice our Paid Subscribers at the beginning of the term, in annual or monthly installments, and, from time to time, in multi-year installments. Only amounts invoiced to a Paid Subscriber in a given period are included in Billings. While we believe that Billings provides valuable insight into the cash that will be generated from sales of our subscriptions, this metric may vary from period to period for a number of reasons and, therefore, Billings have a number of limitations as a quarter-over-quarter or year-over-year comparative measure. These reasons include, but are not limited to, the following: (i) a variety of contractual terms could result in some periods having a higher proportion of annual or membership subscriptions than other periods; (ii) fluctuations in payment terms may affect the Billings recognized in a particular period; and (iii) the timing of large campaigns may vary significantly from period to period.
While Net Revenue and Billings are both related to sales of our products, there are key differences in how those sales are recognized. From a Net Revenue perspective, substantially all of the amounts invoiced to customers are originally reported as deferred revenue on our Balance Sheet and are subsequently recognized as Net Revenue over a period up to 5 years; whereas Billings, as defined above, represent amounts invoiced to
customers in each period, and provide more insight from a cash generation perspective. As a result, there will continue to be a timing difference between Billings and Net Revenue.
We break down our Billings into three sub-categories: New Marketing Billings, Net Renewal Billings, and Other Billings.
New Marketing Billings are Billings from all new subscription sales. New Marketing Billings increased by $14.6 million, or 29.9%, to $63.3 million for third quarter 2026 as compared to $48.7 million for third quarter 2025. The increase was driven by sales of our higher priced publications.
New Marketing Billings decreased by $10.3 million, or 14.0% to $63.3 million for third quarter 2026 as compared to $73.6 million in second quarter 2026. The decrease was primarily driven by sales of our entry level publications which are driven by direct marketing spend. This spend was reduced in the third quarter 2026 as we shifted our focus to monetization of existing subscribers.
Net Renewal Billings are Billings from renewals and maintenance fee payments. Net Renewal Billings increased by $2.1 million, or 14.6%, to $16.2 million for third quarter 2026 as compared to $14.1 million for third quarter 2025. The increase was primarily driven by renewals of our higher priced publications.
Net Renewal Billings decreased by $0.2 million, or 1.0%, to $16.2 million for third quarter 2026 as compared to $16.4 million for second quarter 2026.
Other Billings are Billings from revenue share, advertising and conferences. Other Billings increased by $0.4 million, or 46.6% to $1.2 million for third quarter 2026 as compared to $0.8 million for third quarter 2025. The increase was mostly due to a shift in timing of our conference to the third quarter 2026 whereas it took place in fourth quarter in 2025.
Other Billings increased by $0.1 million or 6.3% to $1.2 million for third quarter 2026 as compared to $1.1 million for second quarter 2026, as conference billings offset lower revenue share from external parties.
Total Billings increased by $17.0 million, or 26.8%, to $80.7 million for the third quarter 2026 as compared to $63.7 million for third quarter 2025. The increase in Billings was the result of the reasons cited above.
Total Billings decreased by $10.5 million, or 11.5%, to $80.7 million for the third quarter 2026 as compared to $91.2 million for second quarter 2026. The sequential decline in Billings was predominantly the result of the planned reduction of direct marketing spend in the quarter resulting in fewer new subscribers and the billings associated with those subscriber acquisitions.
Components of MarketWise's Results of Operations
Net Revenue
We generate net revenue primarily from services provided in delivering term and membership subscription-based financial research, publications, and SaaS offerings to individual subscribers through our online platforms, and from advertising arrangements, print products, and events. We also recognize net revenue through revenue share agreements where we earn a commission for successful sales that other parties generate from our customer list.
Related Party Revenue
Related party revenue consists of commissions earned under revenue share agreements with related parties.
Employee Compensation Costs
Employee compensation costs, or payroll and payroll-related costs, include salaries, bonuses, benefits, and stock-based compensation for employees classified within cost of revenue, sales and marketing, and general and administrative, and also includes sales commissions for sales and marketing employees. Stock-based compensation includes amounts related to our 2021 Incentive Award Plan, our ESPP, and profits interests.
Cost of Revenue
Cost of revenue consists primarily of employee compensation costs associated with producing and publishing our content, hosting fees, customer service, credit card processing fees, product costs, and allocated overhead. Cost of revenue is exclusive of depreciation and amortization, which is shown as a separate line item.
Sales and Marketing
Sales and marketing expenses consist primarily of employee compensation costs, amortization of deferred contract acquisition costs, agency costs, advertising campaigns, and branding initiatives. Sales and marketing expenses are exclusive of depreciation and amortization shown as a separate line item.
General and Administrative
General and administrative expenses consist primarily of employee compensation costs associated with our finance, legal, information technology, human resources, executive, and administrative personnel, legal fees, corporate insurance, office expenses, professional fees, and travel and entertainment costs.
Research and Development
Research and development expenses consist primarily of employee compensation costs, technical services, software expenses, and hosting expenses associated with maintaining and enhancing the functionality of our platforms, including our software and analytical tools. Research and development expenses are exclusive of depreciation and amortization shown as a separate line item.
Depreciation and Amortization
Depreciation and amortization expenses consist of amortization of trade names, customer relationship intangibles, and software development costs, as well as depreciation on other property and equipment such as leasehold improvements, furniture and fixtures, and computer equipment.
Impairment Losses
Impairment losses relate to impairment of property and equipment, net.
Related Party Expense
Related party expenses primarily consist of Board of Director compensation and expenses for certain corporate functions performed by a related party.
Other Income, Net
Other income, net primarily consists of the net gains or losses on our embedded derivative instruments and gain on sale of business unit.
Interest Income, Net
Interest income, net primarily consists of interest income from our money market accounts.
Net Income Attributable to Noncontrolling Interests
As of September 30, 2026, MarketWise, Inc.'s controlling interest in MarketWise, LLC was 17.6% and the noncontrolling interest was 82.4%. For the three and nine months ended September 30, 2026, net income attributable to controlling interests included a $1.0 million tax provision and a $0.9 million tax provision, respectively, which are 100% attributable to the controlling interest.
As of September 30, 2025, MarketWise, Inc.'s controlling interest in MarketWise, LLC was 15.3% and the noncontrolling interest was 84.7%. For the three and nine months ended September 30, 2025, net income attributable
to controlling interests included a $1.1 million tax provision and a $2.7 million tax provision, respectively, which are 100% attributable to the controlling interest.
Results of Operations
The following table sets forth our results of operations for the periods presented:
| (In thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Net revenue | $ | 79,847 | $ | 80,835 | $ | 231,514 | $ | 243,158 | ||||||||||||||||||
| Related party revenue | 243 | 436 | 1,413 | 1,570 | ||||||||||||||||||||||
| Total net revenue | 80,090 | 81,271 | 232,927 | 244,728 | ||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
|
Cost of revenue(1)
|
10,784 | 10,599 | 33,043 | 33,484 | ||||||||||||||||||||||
|
Sales and marketing(1)
|
32,860 | 31,146 | 115,370 | 96,850 | ||||||||||||||||||||||
|
General and administrative(1)
|
17,492 | 18,781 | 64,352 | 55,853 | ||||||||||||||||||||||
|
Research and development(1)
|
2,423 | 2,141 | 7,469 | 6,628 | ||||||||||||||||||||||
| Depreciation and amortization | 535 | 651 | 1,618 | 1,682 | ||||||||||||||||||||||
| Impairment of property and equipment, net | - | - | - | 380 | ||||||||||||||||||||||
| Related party expense | 111 | 133 | 542 | 440 | ||||||||||||||||||||||
| Total operating expenses | 64,205 | 63,451 | 222,394 | 195,317 | ||||||||||||||||||||||
| Income from operations | 15,885 | 17,820 | 10,533 | 49,411 | ||||||||||||||||||||||
| Other (expense) income, net | (88) | 478 | 1,188 | 979 | ||||||||||||||||||||||
| Interest income, net | 241 | 685 | 1,041 | 2,395 | ||||||||||||||||||||||
| Income before income taxes | 16,038 | 18,983 | 12,762 | 52,785 | ||||||||||||||||||||||
| Income tax expense | 979 | 1,068 | 885 | 2,719 | ||||||||||||||||||||||
| Net income | 15,059 | 17,915 | 11,877 | 50,066 | ||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 13,514 | 16,410 | 11,534 | 46,374 | ||||||||||||||||||||||
| Net income attributable to MarketWise, Inc. | $ | 1,545 | $ | 1,505 | $ | 343 | $ | 3,692 | ||||||||||||||||||
(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 following table sets forth our consolidated statements of operations data expressed as a percentage of total net revenue for the periods indicated:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Total Net revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
|
Cost of revenue(1)
|
13.5 | % | 13.0 | % | 14.2 | % | 13.7 | % | ||||||||||||||||||
|
Sales and marketing(1)
|
41.0 | % | 38.3 | % | 49.5 | % | 39.6 | % | ||||||||||||||||||
|
General and administrative(1)
|
21.8 | % | 23.1 | % | 27.6 | % | 22.8 | % | ||||||||||||||||||
|
Research and development(1)
|
3.0 | % | 2.6 | % | 3.2 | % | 2.7 | % | ||||||||||||||||||
| Depreciation and amortization | 0.7 | % | 0.8 | % | 0.7 | % | 0.7 | % | ||||||||||||||||||
| Impairment of property and equipment, net | - | % | - | % | - | % | 0.2 | % | ||||||||||||||||||
| Related party expense | 0.1 | % | 0.2 | % | 0.2 | % | 0.2 | % | ||||||||||||||||||
| Total operating expenses | 80.2 | % | 78.1 | % | 95.5 | % | 79.8 | % | ||||||||||||||||||
| Income from operations | 19.8 | % | 21.9 | % | 4.5 | % | 20.2 | % | ||||||||||||||||||
| Other (expense) income, net | (0.1) | % | 0.6 | % | 0.5 | % | 0.4 | % | ||||||||||||||||||
| Interest income, net | 0.3 | % | 0.8 | % | 0.4 | % | 1.0 | % | ||||||||||||||||||
| Income before income taxes | 20.0 | % | 23.4 | % | 5.5 | % | 21.6 | % | ||||||||||||||||||
| Income tax expense | 1.2 | % | 1.3 | % | 0.4 | % | 1.1 | % | ||||||||||||||||||
| Net income | 18.8 | % | 22.0 | % | 5.1 | % | 20.5 | % | ||||||||||||||||||
| Net income attributable to noncontrolling interests | 16.9 | % | 20.2 | % | 5.0 | % | 18.9 | % | ||||||||||||||||||
| Net income attributable to MarketWise, Inc. | 1.9 | % | 1.9 | % | 0.1 | % | 1.5 | % | ||||||||||||||||||
(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.
Comparison of the Three Months Ended September 30, 2026 and the Three Months Ended September 30, 2025
Total Net Revenue
| (In thousands) | Three Months Ended September 30, | $ Change | % Change | ||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Total net revenue | $ | 80,090 | $ | 81,271 | $ | (1,181) | (1.5) | % | |||||||||||||||
The decrease in total net revenue was primarily driven by a decrease of $1.7 million in membership subscription revenue, partially offset by a $0.5 million increase in term subscription revenue.
Membership subscription revenue decreased during the three months ended September 30, 2026, primarily due to a decrease in Billings in prior periods causing reduced revenue recognition in the 2026 period since revenue is deferred and recognized over the subscription term. This was partially offset by higher term subscription revenue, which reflected increased Billings in 2026. Importantly, while Billings for the third quarter of 2026 increased 26.8% year-over-year, only a portion is recognized as Total Net Revenue in the current period, with the majority of the Billings recorded as Deferred Revenue to be recognized over future periods.
Operating Expenses
| (In thousands) | Three Months Ended September 30, | $ Change | % Change | ||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Cost of revenue | $ | 10,784 | $ | 10,599 | $ | 185 | 1.7 | % | |||||||||||||||
| Sales and marketing | 32,860 | 31,146 | 1,714 | 5.5 | % | ||||||||||||||||||
| General and administrative | 17,492 | 18,781 | (1,289) | (6.9) | % | ||||||||||||||||||
| Research and development | 2,423 | 2,141 | 282 | 13.2 | % | ||||||||||||||||||
| Depreciation and amortization | 535 | 651 | (116) | (17.8) | % | ||||||||||||||||||
| Related party expenses | 111 | 133 | (22) | (16.5) | % | ||||||||||||||||||
| Total operating expenses | $ | 64,205 | $ | 63,451 | $ | 754 | 1.2 | % | |||||||||||||||
Cost of Revenue
Cost of revenue increased $0.2 million, primarily due to a $0.5 million increase in credit card fees, partially offset by a $0.2 million decrease in stock-based compensation expense.
Sales and Marketing
Sales and marketing expenses increased $1.7 million, primarily due to a $2.0 million increase in direct marketing expense and a $1.2 million increase in salaries, taxes and benefits due to increased headcount. This increase in Sales and marketing expense was partially offset by a $1.6 million decrease in amortization of deferred contract acquisition costs. The increase in direct marketing expense was primarily driven by higher conference expenses related to the annual Stansberry Conference, which was held in September 2026 versus in October 2025.
General and Administrative
General and administrative expense decreased $1.3 million, primarily due to a net decrease of $2.0 million in professional services driven by a one-time $3.0 million legal fee reimbursement, $1.4 million decrease in stock-based compensation expense, and $1.0 million decrease in outside labor. These decreases in general and administrative expense were partially offset by an increase of $1.3 million in software expense, $0.9 million in incentive compensation, and $0.7 million in salaries, taxes and benefits.
Research and Development
Research and development expense increased $0.3 million, primarily due to higher spending on maintenance and enhancements, including increased external technical support.
Comparison of the Nine Months Ended September 30, 2026 and the Nine Months Ended September 30, 2025
Total Net Revenue
| (In thousands) | Nine Months Ended September 30, | $ Change | % Change | ||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Total net revenue | $ | 232,927 | $ | 244,728 | $ | (11,801) | (4.8) | % | |||||||||||||||
The decrease in total net revenue was primarily driven by an $8.4 million decrease in term subscription revenue and a $4.0 million decrease in membership subscription revenue, partially offset by a $0.6 million increase in non-subscription revenue.
Membership subscription and term subscription revenue decreased during the nine months ended September 30, 2026, primarily due to a decrease in Billings in prior periods causing reduced revenue recognition in the 2026 period
since revenue is deferred and recognized over the subscription term. Importantly, while Billings for the nine months ended September 30, 2026 increased 31.7% year-over-year, only a portion is recognized as Total Net Revenue in the current period, with the majority of the Billings recorded as Deferred Revenue to be recognized over future periods,
Non-subscription revenue increased $0.6 million during the nine months ended September 30, 2026, primarily due to income related to external revenue share agreements.
Operating Expenses
| (In thousands) | Nine Months Ended September 30, | $ Change | % Change | ||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Cost of revenue | $ | 33,043 | $ | 33,484 | $ | (441) | (1.3) | % | |||||||||||||||
| Sales and marketing | 115,370 | 96,850 | 18,520 | 19.1 | % | ||||||||||||||||||
| General and administrative | 64,352 | 55,853 | 8,499 | 15.2 | % | ||||||||||||||||||
| Research and development | 7,469 | 6,628 | 841 | 12.7 | % | ||||||||||||||||||
| Depreciation and amortization | 1,618 | 1,682 | (64) | (3.8) | % | ||||||||||||||||||
| Impairment of property and equipment, net | - | 380 | (380) | (100.0) | % | ||||||||||||||||||
| Related party expenses | 542 | 440 | 102 | 23.2 | % | ||||||||||||||||||
| Total operating expenses | $ | 222,394 | $ | 195,317 | $ | 27,077 | 13.9 | % | |||||||||||||||
Cost of Revenue
Cost of revenue decreased $0.4 million, primarily due to a $1.3 million decrease in stock-based compensation expense, a $0.4 million decrease in salaries, taxes and benefits and outside labor, and a $0.4 million decrease in customer service expense. This decrease in Cost of revenue was partially offset by an increase of $1.7 million in credit card fees, due to higher sales volumes.
Sales and Marketing
Sales and marketing expenses increased $18.5 million, primarily due to a $24.1 million increase in direct marketing expense as the Company increased marketing efforts in the first half of 2026 due to multiple successful product launches. The increase in marketing expenses drove significantly higher customer acquisition in the second quarter which also resulted in an increase in Paid Subscribers following several years of Paid Subscriber declines. From a timing perspective, the majority of Sales and marketing expenses are recognized in the period incurred whereas a majority of Billings resulting from the marketing efforts are recorded as Deferred Revenue. The increase in direct marketing expense was also driven by higher conference expenses related to the annual Stansberry Conference, which was held in September 2026 versus in October 2025. In addition, salaries, taxes and benefits increased $3.4 million due to increased headcount. This increase in Sales and marketing expense was partially offset by an $8.8 million decrease in amortization of deferred contract acquisition costs, reflecting lower customer acquisition spending in the prior year and, consequently, a lower balance of deferred costs available for amortization in the current year.
General and Administrative
General and administrative expense increased $8.5 million, primarily due to a $3.3 million increase in variable compensation, a $2.7 million increase in software expense, a $1.7 million increase in salaries, taxes and benefits, a $1.6 million increase in other gains/(losses) due to a gain on lease termination during the nine months ended September 30, 2025, and a $1.2 million increase in the change in fair value of contingent consideration. This increase in General and administrative expense was partially offset by a $1.8 million decrease in outside labor.
Research and Development
Research and development expense increased $0.8 million, primarily due to higher spending on maintenance and enhancements, including increased external technical support.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we believe that the below non-GAAP financial measures are useful in evaluating operating performance. We use the below non-GAAP financial measures, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. This non-GAAP financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
Management uses these non-GAAP measures internally to evaluate performance and make operating decisions, and we believe they provide a meaningful perspective to investors when used in conjunction with our GAAP results.
These non-GAAP measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of other GAAP financial measures, such as cash flow from operations, operating cash flow margin, and net income. Some of the limitations of using these non-GAAP measures are that these metrics may be calculated differently by other companies in our industry.
| (In thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | |||||||||||||||||||||||||||||||||
| Adjusted CFFO | $ | 7,840 | $ | 2,169 | 261.5% | $ | 28,186 | $ | 21,744 | 29.6% | ||||||||||||||||||||||||||||
| Adjusted CFFO Margin | 9.7 | % | 3.4 | % | 11.1 | % | 11.3 | % | ||||||||||||||||||||||||||||||
| Free Cash Flow | $ | 7,430 | $ | 1,692 | 339.1% | $ | 26,157 | $ | 20,706 | 26.3% | ||||||||||||||||||||||||||||
Adjusted CFFO / Adjusted CFFO Margin
We believe that Adjusted CFFO and Adjusted CFFO Margin are useful indicators that provide information to management and investors about our ability to generate cash, and for internal planning and forecasting purposes.
We expect Adjusted CFFO and Adjusted CFFO Margin to fluctuate in future periods as we invest in our business to execute our growth strategy. These activities, along with any non-recurring items as described above, may result in fluctuations in Adjusted CFFO and Adjusted CFFO Margin in future periods.
The following table provides a reconciliation of CFFO, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted CFFO, as well as the calculation of CFFO margin (CFFO as a percentage of total net revenue) and Adjusted CFFO Margin (Adjusted CFFO as a percentage of Billings), for each of the periods presented:
| (In thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % change | 2026 | 2025 | % change | |||||||||||||||||||||||||||||||||
| CFFO | $ | 7,840 | 2,169 | 261.5% | $ | 28,186 | 21,744 | 29.6% | ||||||||||||||||||||||||||||||
| Total net revenue | 80,090 | 81,271 | (1.5)% | 232,927 | 244,728 | (4.8)% | ||||||||||||||||||||||||||||||||
| CFFO Margin | 9.8 | % | 2.7 | % | 12.1 | % | 8.9 | % | ||||||||||||||||||||||||||||||
| CFFO | $ | 7,840 | $ | 2,169 | 261.5% | $ | 28,186 | $ | 21,744 | 29.6% | ||||||||||||||||||||||||||||
|
Nonrecurring expenses (1)
|
- | - | - | - | ||||||||||||||||||||||||||||||||||
| Adjusted CFFO | $ | 7,840 | $ | 2,169 | 261.5% | $ | 28,186 | $ | 21,744 | 29.6% | ||||||||||||||||||||||||||||
| Adjusted CFFO | $ | 7,840 | $ | 2,169 | 261.5% | $ | 28,186 | $ | 21,744 | 29.6% | ||||||||||||||||||||||||||||
| Billings | 80,741 | 63,693 | 26.8% | 253,274 | 192,341 | 31.7% | ||||||||||||||||||||||||||||||||
| Adjusted CFFO Margin | 9.7 | % | 3.4 | % | 11.1 | % | 11.3 | % | ||||||||||||||||||||||||||||||
(1) There were no non-recurring items for the three and nine months ended September 30, 2026 and 2025. Accordingly, Adjusted CFFO equals CFFO.
CFFO and Adjusted CFFO were $7.8 million for the three months ended September 30, 2026, primarily due to net income of $15.1 million, adjusted for net non-cash items which increased cash by $2.4 million. This was partially offset by net changes in our operating assets and liabilities which reduced cash by $9.6 million, primarily driven by changes in deferred contract acquisition costs and deferred revenue.
Based on the nature of our business, CFFO fluctuates from quarter to quarter. Specifically, Q2 and Q4 tend to have higher CFFO while Q1 and Q3 tend to have lower CFFO. The amount of CFFO in any given quarter is impacted by the timing of product launches, marketing campaigns, and discrete working capital items.
Free Cash Flow
We define Free Cash Flow as net cash provided by (used in) operating activities less capital expenditures. We define capital expenditures as purchases of property and equipment plus capitalized software development costs. Acquisitions are not included in capital expenditures.
The following table provides a reconciliation of CFFO, the most directly comparable financial measure calculated in accordance with GAAP, to Free Cash Flow for each of the periods presented:
| (In thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | |||||||||||||||||||||||||||||||||
| CFFO | $ | 7,840 | $ | 2,169 | 261.5% | $ | 28,186 | $ | 21,744 | 29.6 | % | |||||||||||||||||||||||||||
| Capital expenditures | (410) | (477) | (14.0)% | (2,029) | (1,038) | 95.5 | % | |||||||||||||||||||||||||||||||
| Free Cash Flow | $ | 7,430 | $ | 1,692 | 339.1% | $ | 26,157 | $ | 20,706 | 26.3 | % | |||||||||||||||||||||||||||
Liquidity and Capital Resources
General
A substantial portion of our cash on hand is the result of the nature of our subscription business. We receive cash up front from our sales of annual, multi-year, and membership subscriptions. For tax and GAAP purposes, however, this revenue is deferred and recognized over the term of the subscription, or in the case of membership subscriptions, over four years for tax and five years for GAAP. Tax distributions (presented on the Statement of Cash Flows as Tax distributions to noncontrolling interests) are made to MarketWise Members to satisfy their tax obligations when revenue is recognized for tax purposes, not when cash is received. The timing difference between when cash is received and when tax distributions are made results in an accumulation of cash on our balance sheet.
We refer to this accumulation of cash as our "float" which we view as a valuable resource that we may invest or use to expand our operations. The float represents the estimated cumulative timing difference between subscription cash received and tax distributions owed to MarketWise Members, and does not represent cash currently on hand. As of September 30, 2026, cash and cash equivalents were $27.4 million, which is below our float estimate, as a portion of the float has been deployed into operations and investments consistent with our capital allocation strategy. The Company estimates that the amount of "float" was approximately $95.9 million and $98.2 million as of September 30, 2026 and December 31, 2025, respectively. As part of the Company's broader capital allocation strategy, our consolidated cash balance may from time to time decline below our estimate of the long term float requirement.
The Company may invest a portion of this cash in financial instruments to achieve reasonable returns on a risk-adjusted basis. The investment allocation decisions are based in part on the anticipated liquidity requirements of the Company including working capital, estimated tax related distributions, and broader capital allocation objectives.
For the three and nine months ended September 30, 2026, the Company earned interest income of $0.2 million and $1.0 million, respectively, on our cash portfolio which was invested solely in money market funds.
The Company may allocate a portion of our "float" to investments meeting pre-determined guidelines, including U.S.-listed equity securities, with the objective to provide an acceptable rate of return while complying with established risk tolerances and liquidity parameters. The Board is responsible for approving investment decisions. Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company's results of operations. Historically, the Company has only invested in money market funds.
As of September 30, 2026, our principal sources of liquidity were cash and cash equivalents of $27.4 million. Cash and cash equivalents are comprised of bank deposits and money market funds. We have financed our operations primarily through cash received from operations, and our sources of liquidity have enabled us to make continued investments in supporting the growth of our business. We expect that our anticipated operating cash flows, in addition to cash on hand, will enable us to continue to make investments in the future, and to pay dividends. We expect our operating cash flows to further improve as we increase our operational efficiency and experience economies of scale.
We pay quarterly dividends on shares of our Class A common stock and a proportionate amount of distributions on our LLC Units. Our continued declaration and payment of dividends and institution of any other distributions of capital to shareholders will be at the discretion of our Board. That decision will depend on many factors, including our earnings, financial condition and results of operations, capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends, ability to obtain cash or other assets from our subsidiaries, restrictions imposed by applicable law, general business conditions and other factors that our Board may deem relevant. There can be no assurance that we will continue to pay dividends in the future. Therefore, the success of an investment in shares of our Class A common stock may in the future depend only upon any future appreciation in their value. There is no guarantee that shares of our Class A common stock will appreciate or even maintain their value.
The dividends and distributions declared and paid during the nine months ended September 30, 2026, were as follows:
|
Dividends on Class A common stock |
Other distributions on LLC Units |
||||||||||||||||||||||||||||
| Type | Date declared | Date paid | per share | Total | per unit | Total | |||||||||||||||||||||||
| Special | March 3, 2026 | March 31, 2026 | $ | 0.20 | $ | 507.0 | N/A | N/A | |||||||||||||||||||||
| Regular | March 3, 2026 | March 31, 2026 | $ | 0.25 | $ | 634.0 | $ | 0.25 | $ | 3,394.0 | |||||||||||||||||||
| Special | May 5, 2026 | June 25, 2026 | $ | 0.20 | $ | 528.0 | N/A | N/A | |||||||||||||||||||||
| Regular | May 5, 2026 | June 25, 2026 | $ | 0.25 | $ | 660.0 | $ | 0.25 | $ | 3,247.0 | |||||||||||||||||||
| Regular | August 4, 2026 | September 30, 2026 | $ | 0.45 | $ | 1,257.0 | $ | 0.25 | $ | 3,245.0 | |||||||||||||||||||
Our future capital requirements will depend on many factors, including our subscription growth rate, subscription renewal activity, including the timing and the amount of cash received from subscribers, the pace of expansion of sales and marketing activities, the timing and extent of spending to support development efforts, and the introduction of new and enhanced products. We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products, and technologies.
We expect to make payments under the Tax Receivable Agreement in future periods in connection with certain tax benefits realized by MarketWise, Inc. from exchanges of MarketWise, LLC units for shares of MarketWise, Inc.'s Class A common stock. During the three months ended September 30, 2026, the Company made no payments under the TRA, and during the nine months ended September 30, 2026, paid $0.1 million. The Company expects to pay $0.6 million within the next twelve months. As of September 30, 2026, the TRA liability was $3.1 million.
These payments, which are only made if and when the Company has cash tax savings resulting from the TRA, may be significant in future periods and could adversely affect our liquidity. We intend to cause MarketWise, LLC to make distributions to MarketWise, Inc. sufficient to fund its tax obligations, operating expenses, and payments under the TRA. If MarketWise, LLC does not have sufficient cash to make those distributions, MarketWise, Inc. may need to borrow funds, which could adversely affect its liquidity and financial condition. To the extent MarketWise, Inc. is unable to make timely payments under the TRA, the unpaid amounts will be deferred and accrue interest until paid.
For information regarding the Tax Receivable Agreement, including the related liability and payment obligations, see Note 10, Income Taxes, to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q and the section entitled 'Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Tax Receivable Agreement' in our Annual Report on Form 10-K for the year ended December 31, 2025.
Furthermore, to the extent we have taxable income, we will make distributions to the MarketWise Members and to MarketWise, Inc. in amounts sufficient for the recipients to pay taxes due on their share of MarketWise income at prevailing individual income tax rates. For the 2026 tax year, the highest federal, state and local tax rate the Company used was 50.6%. In the nine months ended September 30, 2026, MarketWise, LLC made tax distributions of $37.9 million proportionately to all MarketWise Members. No further tax distribution payments are expected for the remainder of FY 2026.
These quarterly tax distributions to MarketWise, Inc. exceeded its corporate tax liability. The excess funded the portion of our Class A dividend that we previously labeled "special" (see Note 13, Stockholders' Equity). We expect MarketWise, Inc. to continue receiving quarterly tax distributions in future quarters; however, the amount is uncertain. Beginning in the third quarter of 2026, the Company has treated that excess as part of its regular dividend and had declared a regular dividend of $0.45 per share to holders of Class A common stock. The Company will no longer use the term "special dividend." A comparable distribution of $0.25 per unit has also been approved to holders of MarketWise, LLC units.
We expect to continue to calculate and issue regular dividends using a methodology equivalent to historical total dividends, such that we expect no material change to our capital structure.
We believe that our existing cash and cash equivalents and cash flow from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. However, in the event that we require additional financing in the future, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operations, and financial condition.
Share Repurchase Program
On February 28, 2025, the Company announced that the Board authorized a stock repurchase program of up to $50.0 million, which expired in April 2026.
On May 7, 2026, the Company announced that the Board of Directors authorized a new stock repurchase program of up to $50.0 million of Class A common stock.
For each share of Class A common stock the Company repurchases under the share repurchase program, MarketWise, LLC, the Company's direct subsidiary, will redeem one common unit of MarketWise, LLC held by the Company, decreasing the percentage ownership of MarketWise, LLC by the Company and relatively increasing the ownership by the other unit holders of MarketWise, LLC. During the three and nine months ended September 30, 2026, we repurchased 60,651 shares totaling $1.2 million in the aggregate, and 81,962 shares totaling $1.5 million in the aggregate, respectively.
Legacy Reorganization
In October 2024, we completed our reorganization and operational transition plans with respect to substantially all of the Legacy Research brands. The Company dissolved the Legacy Research legal entities during the second quarter 2025. For further background, see Note 4 - Acquisitions and Disposals in our Annual Report on Form 10-K for the year ended December 31, 2024.
In March 2025, Legacy Research agreed to terminate its office lease early. During the three months ended March 31, 2025, the Company recorded an impairment loss on leasehold improvement assets totaling $0.4 million, and the related lease was terminated for a gain of $1.6 million, which is included within general and administrative expense.
Cash Flows
The following table presents a summary of our consolidated cash flows provided by (used in) operating, investing, and financing activities for the periods indicated:
| (In thousands) | Nine Months Ended September 30, | |||||||||||||
| 2026 | 2025 | |||||||||||||
| Net cash provided by operating activities | $ | 28,186 | $ | 21,744 | ||||||||||
| Net cash used in investing activities | (2,029) | (1,038) | ||||||||||||
| Net cash used in financing activities | (68,922) | (68,013) | ||||||||||||
Operating Activities
Operating activities provided $28.2 million of cash in the nine months ended September 30, 2026, compared to $21.7 million in the nine months ended September 30, 2025, an increase of $6.5 million. The increase was primarily driven by a favorable change in deferred revenue, and partially offset by unfavorable changes in net income and in deferred contract acquisition costs.
The favorable change of $69.5 million in deferred revenue reflected increased cash receipts from subscriptions driven by higher direct marketing spend. Revenue from these subscriptions is deferred and recognized over the subscription term.
The unfavorable change of $38.2 million in net income was primarily driven by an $11.8 million decrease in total net revenue and a $27.1 million increase in operating expenses. See "Comparison of the Nine Months Ended September 30, 2026 and the Nine Months Ended September 30, 2025" above.
The unfavorable change of $35.0 million in deferred contract acquisition costs reflected increased direct marketing spend, which led to increases to capitalized contract acquisition costs, the majority of which are long-term.
The remaining change of $10.2 million was driven by changes in non-cash items and changes in our other operating assets and liabilities.
Investing Activities
Investing activities used $2.0 million of cash in the nine months ended September 30, 2026, compared to $1.0 million in the nine months ended September 30, 2025, an increase of $1.0 million. The increase was primarily driven by higher capitalized software development costs.
Financing Activities
Financing activities used $68.9 million of cash in the nine months ended September 30, 2026, compared to $68.0 million in the nine months ended September 30, 2025, an increase of $0.9 million. The change was primarily attributable to a $12.2 million cash outflow related to the cancellation of Class B common stock, which had no comparable activity in the prior-year period, and was partially offset by a $12.1 million decrease in tax distributions to noncontrolling interests.
The $12.2 million cash outflow related to the cancellation of Class B common stock reflected a one-time cash payment made by MarketWise Group to Mr. Arnold on April 22, 2026 (the "Settlement Payment"). See Note 13 to the Condensed Consolidated Financial Statements (Unaudited).
Tax distributions to noncontrolling interests decreased by $12.1 million in the nine months ended September 30, 2026. Tax distribution payments were significantly higher in the prior-year period due to the timing of taxable income arising from Billings in prior years.
Critical Accounting Estimates
Our financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses, and related disclosures. On an ongoing basis, management evaluates its estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
Management believes that, of our significant accounting policies, which are described in Note 2 to our consolidated financial statements for the year ended December 31, 2025 in our Annual Report, the following accounting policies involve a greater degree of judgment and complexity. Accordingly, management believes that "Revenue Recognition" and "Transactions and Valuation of Goodwill and Other Acquired Intangible Assets" are the two policies that are the most critical to aid in fully understanding and evaluating our condensed consolidated financial condition and results of operations. Refer to the 2025 Annual Report on Form 10-K for further discussion of these two policies. During the three and nine months ended September 30, 2026, there were no material changes to these policies.
MarketWise Inc. published this content on November 05, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 05, 2026 at 13:34 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]