MarketWise, Inc.

Q2 2023 GAAP revenue was $103.6 million, down from $128.0 million in Q2 2022, a decline of $24.4 million or 19%. Billings were $96.2 million versus $117.5 million a year ago, down $21.3 million or 18.2%, and down only $1 million sequentially from Q1 2023. Adjusted cash flow from operations was $29.0 million, up from $26.8 million last year, with adjusted CFFO margin of 30.1% versus 22.8% a year ago; first-half 2023 adjusted CFFO margin was 17% versus 11% in first-half 2022. Paid subscribers fell to 750,000 from 898,000 a year ago, while active free subscribers declined to 3.9 million from 4.3 million. The company did not provide formal revenue or EPS guidance, but management said they expect the second half of 2023 to look a lot like the first half, with maybe a slight upside, and that direct marketing spend may rise as subscriber acquisition improves.

Amber Mason framed the quarter as one of stabilization after a prolonged downturn, saying internal metrics had reached a “plateau” and that the company was seeing “green shoots” in engagement, conversion, and July subscriber activity. She emphasized MarketWise’s ability to adapt content and marketing messages, highlighting AI and global macro themes as new areas driving subscriptions. Her tone was cautiously optimistic: no “crystal ball,” but management believes the business is beginning to regain traction while staying disciplined on costs.

Stephen Park focused on the improving financial discipline and cash generation. He noted GAAP operating expenses fell about $9.9 million, or 9.5%, year over year, with sales and marketing down $16.0 million and cost of revenue down $1.6 million, partly offset by higher G&A. He said the company’s adjusted CFFO margin was 30.1% in Q2 and that second-half margins should generally be consistent with the first half, while also acknowledging quarter-to-quarter lumpiness from bonuses, royalties, and commissions. He also pointed to lower paid subscribers, lower ARPU at $490 versus $580 last year, and said he believes ARPU is probably bottomed but unlikely to rebound rapidly.

Analysts pressed on whether paid subscribers may be near a bottom, whether cash flow margins should normalize between Q1 and Q2 levels, what content is working best, and how management is thinking about M&A and ARPU. Management said it is “cautiously optimistic” on subscribers, citing improving churn, a slight increase in acquisition, and better daily orders at lower price points, but stressed it is too early to call a trend. On cash flow, they said Q1 was distorted by annual incentive payouts and that Q2/Q4 are usually stronger than Q1/Q3. On content, they highlighted AI, global macro, and portfolio-management software; on M&A, they said they are active but disciplined and want deals that fit their subscriber demographics and are clearly additive to shareholders.