Marketwise, Inc.: Form 10-Q for the period ended Jun 30, 2026

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. We offer a comprehensive portfolio of high-quality, independent investment research, as well as several software and analytical tools, on a subscription basis.

MarketWise started in 1999 with the simple idea that, if we could publish intelligent, independent, insightful, and in-depth investment research and treat the subscriber the way we would want to be treated, then subscribers would renew their subscriptions and stay with us. Over the years, we have expanded our business into a comprehensive suite of investment research products and solutions. We now produce a diversified product portfolio from a variety of financial research brands such as Stansberry Research, Chaikin Analytics, Altimetry, TradeSmith, InvestorPlace, and Brownstone Research. Our entire investment research product portfolio is 100% digital and channel agnostic, and we offer all of our research across a variety of platforms, including desktop, laptop, and mobile devices, including tablets and mobile phones.

Today, we benefit from the confluence of a leading editorial team, a diverse portfolio of content and brands, and a comprehensive suite of investor-centric tools that appeal to a broad subscriber base.

Second Quarter 2026 Highlights (1)

• Total net revenue was $75.8 million in the second quarter 2026(2)
• Total Billings were $91.2 million in the second quarter 2026, a year-over-year increase of 57%
• Net loss was $2.6 million in the second quarter 2026
• Cash from Operating Activities (“CFFO”) was $22.4 million in the second quarter 2026, an increase of $4.6 million compared to the second quarter 2025. On a year to date basis, CFFO improved by $0.8 million compared to first half of 2025.
• Cash and cash equivalents were $32.9 million as of June 30, 2026, and no debt outstanding

(1) The second quarter 2026 and 2025 results reported herein are unaudited.

(2) 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 is 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 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)

35

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. Our marketing spend is a large driver of new subscriber growth. At the heart of our marketing strategy is our compelling unit economics that 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 June 30, 2026, our Paid Subscriber base was 400 thousand, an increase of 6 thousand, or 1.5%, from 394 thousand at June 30, 2025. The increase in Paid Subscribers is a result of an increased investment in customer acquisition and direct marketing in the first half 2026 of which we expect to decline in the second half of 2026 as we reduce these investments and focus on monetization of our existing subscriber base.

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% 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, accounting for approximately 52% of our annual Paid Subscriber acquisition.

Retaining and expanding relationships with existing subscribers. We believe that we have a significant opportunity to expand our relationships with our large base of Active Free and Paid Subscribers. Thanks to the quality of our products, we believe our customers will continue their relationship with us and extend and increase their subscriptions over time. As we deepen our engagement with our subscribers, our customers tend to purchase more and higher-value products. Our ARPU (as defined below) as of June 30, 2026 was $822, which increased by $347, or 73.3% from $474 as of June 30, 2025. For more information on ARPU, 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 June 30, 2026, 60% of our Paid Subscribers were high-value subscribers and 28% 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 from all prior period cohorts in the current period, divided by all Billings from 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. Monthly subscriber count churn rate is defined by the annual subscriber count churn 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 >$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 who may calculate similarly titled metrics in a different way.

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 a better investor. Since 2023, approximately 52% of our new Paid Subscribers come from free to paid conversions.

Active Free Subscribers decreased by 0.2 million, or 6.1%, to 2.1 million as of June 30, 2026 as compared to 2.3 million as of June 30, 2025. The year over year decrease in Active Free Subscribers is a result of fewer free subscribers in total and a reduced number of free products available as we rationalize our offerings.

Active Free Subscribers increased by 0.1 million, or 7.9% to 2.1 million as of June 30, 2026 as compared to 2.0 million as of March 31, 2026. The sequential increase was the result of increased success with targeted email sends during the quarter.

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 6 thousand, or 1.5%, to 400 thousand as of June 30, 2026 as compared to 394 thousand at June 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 increased by 19 thousand, or 4.8%, to 400 thousand as of June 30, 2026 as compared to 381 thousand as of March 31, 2026. The increase was a result of increased new subscriber acquisition driven by a continuation of opportunistic investment that continued throughout the second quarter 2026. There were many successful campaigns in the quarter while churn remained at low levels relative to recent history.

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 second 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 $347, or 73.3%, to $822 as of June 30, 2026 as compared to $474 as of June 30, 2025. The year-over-year increase was driven by a 35% increase in trailing four-quarter Billings, while trailing four-quarter average Paid Subscribers decreased by 22%. 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 June 30, 2025.

ARPU increased by $83, or 11.4%, to $822 as of June 30, 2026 as compared to $738 as of March 31, 2026. The sequential increase was driven by a 11.7% increase in trailing four-quarter Billings, while trailing four-quarter average Paid Subscribers were flat. Our ARPUs remain 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 it provides 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 has 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, represents amounts invoiced to customers in each period, and provides more insight from a cash generation perspective. As a result, there will be a perpetual disconnect 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 $32.0 million, or 77.0%, to $73.6 million for second quarter 2026 as compared to $41.6 million for second quarter 2025. The increase was driven by sales across all of our categories, with the largest percentage increases coming from our entry level traditional newsletters followed by software related content and higher value traditional newsletters.

New Marketing Billings increased by $12.7 million, or 21.0% to $73.6 million for second quarter 2026 as compared to $60.9 million in first quarter 2026. The increase was primarily driven by sales of our higher value traditional newsletters in the second quarter 2026.

Net Renewal Billings are Billings from renewals and maintenance fee payments. Net Renewal Billings increased by $1.0 million, or 6.3%, to $16.4 million for second quarter 2026 as compared to $15.4 million for second quarter 2025. The increase was primarily driven by renewals of our higher value traditional newsletters.

Net Renewal Billings decreased by $2.6 million, or 13.9%, to $16.4 million for second quarter 2026 as compared to $19.0 million for first quarter 2026. The decrease was driven by a far smaller base of subscriptions available for renewal in second quarter 2026 vs first quarter 2026 due to timing of campaigns in the previous year.

Other Billings are Billings from revenue share, advertising and conferences. Other Billings decreased by $0.1 million, or 2.2% to $1.1 million for second quarter 2026 as compared to $1.2 million for second quarter 2025.

Other Billings decreased by $0.4 million or 22.4% to $1.1 million for second quarter 2026 as compared to $1.5 million for first quarter 2026 as a result of decreasing revenue share activity with external parties.

Total Billings increased by $33.0 million, or 56.7%, to $91.2 million for the second quarter 2026 as compared to $58.2 million for second quarter 2025. The increase was primarily driven by new marketing sales across all categories.

Total Billings increased by $9.8 million, or 12.0%, to $91.2 million for second quarter 2026 as compared to $81.4 million for first quarter 2026. The increase was primarily driven by new marketing sales of higher value traditional newsletters and to a lesser extent, new marketing sales of entry level traditional newsletters. a

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.

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 intangible assets.

Related Party Expense

Related party expenses primarily consist of Board of Director compensation, revenue share expenses and expenses for certain corporate functions performed by a related party for certain historic periods.

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 June 30, 2026, MarketWise, Inc.’s controlling interest in MarketWise, LLC was 17.0% and the noncontrolling interest was 83.0%. For the three months ended June 30, 2026, net income attributable to controlling interests included a $0.2 million tax benefit, and for six months ended June 30, 2026, net income attributable to controlling interests included a $0.1 million tax benefit both of which were 100% attributable to the controlling interest.

As of June 30, 2025, MarketWise, Inc.’s controlling interest in MarketWise, LLC was 14.8% and the noncontrolling interest was 85.2%. For the three and six months ended June 30, 2025, net income attributable to controlling interests included a $0.6 million tax provision and a $1.7 million tax provision, respectively, which is 100% attributable to the controlling interest.

Results of Operations

The following table sets forth our results of operations for the periods presented:

(In thousands)

(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 net revenue for the periods indicated:

(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 Three Months Ended June 30, 2026 and Three Months Ended June 30, 2025

Net Revenue

(In thousands)

The decrease in net revenue was primarily driven by a decrease of $2.1 million in membership subscription revenue, $1.9 million in term subscription revenue, and $0.2 million in non-subscription revenue.

Membership subscription and term subscription revenue decreased during the three months ended June 30, 2026, primarily due to the wind down of Legacy Research and 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 is partially offset by an increase in Billings. Importantly, while Billings for the second quarter of 2026 increased 56.7% year over year, and represented the strongest quarterly Billings total since 2023, only a portion is recognized as 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 decreased during the three months ended June 30, 2026, primarily due to decrease in income related to revenue share agreements.

Operating Expenses

(In thousands)

Cost of Revenue

Cost of revenue increased $0.2 million primarily driven by a $1.0 million increase in credit card fees. This increase in Cost of revenue was partially offset by a $0.4 million decrease in stock-based compensation expense, and $0.3 million in salaries, taxes and benefits and outside labor.

Sales and Marketing

Sales and marketing expenses increased $11.2 million primarily due to a $12.8 million increase in marketing expense as the Company increased marketing efforts in the quarter due to multiple successful product launches. The increase in marketing expenses drove higher customer acquisition in the 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. Additionally, Sales and marketing expense increased due to 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 $2.6 million decrease in amortization of deferred contract acquisition costs.

General and Administrative

General and administrative expense increased $2.9 million primarily due to an increase of $1.4 million in incentive compensation, $0.8 million in professional services, $0.7 million in software expense, $0.3 million in salaries, taxes and benefits, and $1.1 million in stock-based compensation expense. This increase in general and administrative expense was offset by a $1.4 million decrease in outside labor.

Research and Development

Research and development expense increased $0.6 million primarily due to $0.4 million additional spending for expanded maintenance and enhancement of the Company’s SaaS platform, including increased external technical support. The increase also included $0.2 million of higher spending for freelance editorial and content development services.

Comparison of Six Months Ended June 30, 2026 and Six Months Ended June 30, 2025

Net Revenue

(In thousands)

44

The decrease in net revenue was primarily driven by a $8.9 million decrease in term subscription revenue and a $2.3 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 six months ended June 30, 2026, primarily due to the wind down of Legacy Research and 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 is partially offset by an increase in Billings. Importantly, while Billings for the six months ended June 30, 2026, increased 34.1% year over year, and represented the strongest quarterly Billings total since 2023, only a portion is recognized as 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 during the six months ended June 30, 2026, primarily due to income related to revenue share agreements.

Operating Expenses

(In thousands)

Cost of Revenue

Cost of revenue decreased $0.6 million primarily driven by a $1.1 million decrease in stock-based compensation expense, $0.4 million in salaries, taxes and benefits and outside labor and $0.3 million in customer service expense. This decrease in Cost of revenue was partially offset by an increase of $1.2 million in credit card fees.

Sales and Marketing

Sales and marketing expenses increased $16.8 million primarily due to a $22.1 million increase in marketing expense as the Company meaningfully 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 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. Additionally, Sales and marketing expense increased due to a $2.2 million increase in salaries, taxes and benefits due to increased headcount. This increase in Sales and marketing expense was partially offset by a $7.3 million decrease in amortization of deferred contract acquisition costs.

General and Administrative

General and administrative expense increased $9.8 million primarily due to $2.5 million increase in variable compensation, $2.3 million in professional services, $1.4 million in software expense and $1.0 million in salaries, taxes and benefits. Additionally, the 2025 period’s expense was reduced by one time items including a $1.6 million gain on lease termination and a $1.7 million gain primarily from change in fair value of contingent consideration. These increases were partially offset by a $0.9 million decrease in outside labor.

Research and Development

Research and development expense increased $0.6 million primarily due higher spending related to expanded maintenance and enhancements, including increased external technical support and additional project scope.

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.

These new non-GAAP measures are provided in addition to, and not as a substitute for or superior to, our existing non-GAAP financial measures, which we will continue to present.

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)

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 net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted CFFO for each of the periods presented:

(In thousands)

The following table provides the calculation of net cash provided by operating activities margin as a percentage of total net revenue, the most directly comparable financial measure in accordance with GAAP, and Adjusted CFFO Margin for each of the periods presented:

(In thousands)

CFFO and Adjusted CFFO for the three months ended June 30, 2026 was primarily due to net loss of $2.6 million, adjusted for net non-cash items which increased cash by $3.3 million. This was partially offset by net changes in our operating assets and liabilities which increased cash by $21.8 million, primarily driven by changes in deferred contract 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.

We believe Free Cash Flow is a useful indicator that provides information to management and investors about the cash generated by the business that is available for discretionary purposes, such as dividends and strategic investments.

The following table provides a reconciliation of net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP, to Free Cash Flow for each of the periods presented:

(In thousands)

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 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 Company estimates that the amount of “float” was approximately $97.2 million and $98.2 million as of June 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 six months ended June 30, 2026, respectively, the Company earned interest income of $0.3 million and $0.8 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 June 30, 2026, our principal sources of liquidity were cash and cash equivalents of $32.9 million. Cash and cash equivalents are comprised of bank deposits, money market funds, and certificates of deposit. 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 nonetheless be at the discretion of our Board and 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 during the six months ended June 30, 2026, were as follows:

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. 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 incur payment obligations under the Tax Receivable Agreement in the future. These obligations correspond to future cash tax savings that MarketWise, Inc. derives from tax-related benefits created as MarketWise Members exchange their LLC Units for shares of Class A common stock of MarketWise, Inc. This obligation is equal to 85% of the estimated future tax benefit for MarketWise, Inc. and is recorded as a TRA liability on the condensed consolidated balance sheet. The TRA liability was $3.1 million as of June 30, 2026. During the three and six months ended June 30, 2026, the Company paid $0.0 million and $0.1 million under the TRA, respectively, and expects to pay $0.6 million within the next twelve months. These obligations may be significant in the future. MarketWise, Inc. intends to cause MarketWise, LLC to make distributions to MarketWise, Inc. in an amount sufficient to allow MarketWise, Inc. to pay its tax obligations and operating expenses, including distributions to fund any payments due under the Tax Receivable Agreement. If MarketWise, LLC does not have sufficient cash to fund distributions to MarketWise, Inc. in amounts sufficient to cover MarketWise, Inc.’s obligations under the Tax Receivable Agreement, it may have to borrow funds, which could materially adversely affect its liquidity and financial condition and subject it to various restrictions imposed by any such lenders. To the extent that MarketWise, Inc. is unable to make timely payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid. For additional information regarding the Tax Receivable Agreement, see the section entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Tax Receivable Agreement” in the Annual Report.

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, which for the 2026 tax year the highest federal, state and local tax rate the Company used was 50.6%. In the quarter ended June 30, 2026, MarketWise, LLC made quarterly tax distributions of $33.7 million proportionately to all MarketWise Members, including MarketWise, Inc. These quarterly tax distributions to MarketWise, Inc. exceeded its corporate tax liability and enabled MarketWise, Inc. to declare and pay the aforementioned special dividend with the excess tax distribution proceeds. We expect MarketWise, Inc. will receive quarterly tax distributions in future quarters such that quarterly special dividends are expected to continue, however the amount is uncertain. Beginning in the third quarter 2026, the Company declared a regular dividend in the amount of $0.45 to holders of Class A common stock and will discontinue the use of 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 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 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 six months ended June 30, 2026, we repurchased 18,054 shares totaling $313 in the aggregate, and 21,311 shares totaling $370 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 $380, and the related lease was terminated for a gain of $1,646, 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)

Operating Activities

For the six months ended June 30, 2026, net cash provided by operating activities was $20.3 million, attributable to net loss of $3.2 million adjusted for net non-cash items which increased cash by $6.2 million and net changes in our operating assets and liabilities which increased cash by $17.3 million (primarily driven by net changes in deferred contract costs and deferred revenue). The non-cash items include stock-based compensation expense of $5.1 million, and depreciation and amortization expense of $1.1 million.

For the six months ended June 30, 2025, net cash provided by operating activities was $19.6 million, primarily due to net income of $32.2 million, adjusted for net non-cash items which increased cash by $8.0 million, and partially offset by net changes in our operating assets and liabilities which reduced cash by $20.5 million. The non- cash items include stock-based compensation expense and depreciation and amortization of 5.7 million and 1.0 million, respectively. The changes in operating assets and liabilities were primarily driven by a decrease in deferred revenue, which reduced cash by $33.1 million due to lower Billings, partially offset by a decrease in deferred contract acquisition costs, which increased cash by $16.6 million.

Investing Activities

For the six months ended June 30, 2026, net cash used in investing activities was $1.6 million, primarily for purchases of property and equipment, and capitalized software costs.

For the six months ended June 30, 2025, net cash used in investing activities was $0.6 million, primarily driven by $0.4 million in capitalized software development costs.

Financing Activities

For the six months ended June 30, 2026, net cash used in financing activities was $55.9 million, primarily driven by $33.7 million in tax distribution to noncontrolling interests, $6.7 million in other distribution to noncontrolling interests, $2.3 million in dividends to Class A shareholders and $12.2 million in one-time cash settlement payment.

For the six months ended June 30, 2025, net cash used in financing activities was $47.8 million, primarily due to $33.8 million in tax distributions to noncontrolling interests, $9.1 million in other distribution to noncontrolling interests, $2.8 million in dividends to Class A shareholders, and $1.9 million in repurchases of stock.

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 six months ended June 30, 2026, there were no material changes to these policies.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Operating and Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Operating and Financial Officer concluded that, as of June 30, 2026, our disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Operating and Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

The risks described below could have a material adverse impact on our business, financial condition, or operating results. Although it is not possible to predict or identify all such risks and uncertainties, they may include, but are not limited to, the factors discussed below. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business or results of operations.

There have been no material changes in the risk factors disclosed in Part 1, Item 1A, of our Annual Report.