Marketwise, Inc. Q4 FY2021 Earnings Call

Greetings and welcome to the MarketWise Fourth Quarter and Full Year 2021 Earnings Results Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jonathan Shanfield, Head of Investor Relations at MarketWise. Thank you. Please go ahead.

Thank you. Good morning, and thank you all for joining us on today’s conference call to discuss MarketWise’s full year and fourth quarter 2021 financial results. On the call today, we have Mark Arnold, our Chief Executive Officer and Dale Lynch, Chief Financial Officer. During the course of today’s call, we may make forward-looking statements, including, but not limited to, statements regarding our guidance and future financial performance, market demand, growth prospects, business strategies and plans and our ability to attract and retain customers. These forward-looking statements are based on management’s current views and assumptions and should not be relied upon as of any subsequent date, and we disclaim any obligation to update forward-looking statements. Actual results may vary materially from today’s statements. Information concerning our risks, uncertainties and other factors that could cause results to differ from these forward-looking statements are contained in the company’s SEC filings, earnings press release and the supplemental information posted on the Investors section of the company’s website. Our discussion today will include certain non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, but not as a substitute for or in isolation from GAAP measures. Reconciliation to non-GAAP measures can be found in our earnings press release and SEC filings. I’ll now turn the call over to Mark.

Thanks, John. Good morning, everybody. Welcome to our fourth quarter 2021 earnings call. Without a doubt, this is a landmark year for MarketWise. It was both transformational for our company and highly profitable for our shareholders. Our team delivered record results, and I’m excited to share them with you now. Here are the highlights. Compared to 2020, we grew revenues by 51%, increased billings by 33% and improved our adjusted cash flow from operations by 47%. We also grew our paid subscriber base 13% to almost 1 million subscribers. More importantly, we positioned our business for future success as we now have 12 customer-facing brands, more than 175 products covering a full spectrum of investment themes. And our team is almost 800 employees strong, including almost 100 investment research professionals. I would be proud of these results in any normal year, but the fact that we achieved these results in the same year that we took the company public and navigated a once-in-a-century pandemic, makes me especially proud. From a financial perspective, 2021 proved to be a record-breaking year for MarketWise. Billings for the full year 2021 finished at an all-time high of $730 million, an increase of 33% over 2020. GAAP revenues climbed to $549 million, 51% higher than the prior year, and adjusted cash flow from operations rose to $197 million, up from $134 million in the prior year for an increase of 47%. We continue to engage and attract self-directed investors to our research products and software solutions while developing long-term relationships with our growing subscriber community. On a year-over-year basis, we grew our paid subscribers to 972,000, an increase of 13% from the prior year. Combined with our free subscriber base of almost 14 million, our total subscribers grew by 4.3 million people or 41% to almost 15 million in total. Here are some other notable milestones we achieved last year. First, we experienced tremendous subscriber growth as we capitalized on high levels of customer engagement, moderately priced digital advertising and highly effective product offerings, producing record-breaking growth in our subscriber base and financial results. We continue to develop new products and add investment research professionals to our company, and we also purchased Chaikin Analytics. We successfully integrated that business into our own, providing investors with an additional software tool for analyzing businesses and enhancing their investing activities. The Chaikin Analytics integration is a representative example of the power of adding a new technology product and marketing it to our existing subscriber base. We added more than $26 million in new billings with the new Chaikin brand in 2021 and are hoping for more going forward. We completed our go-public transaction with Ascendant and became listed on the NASDAQ in mid-July. This too was an extraordinary achievement by our team. We entered into a $150 million revolving credit facility with a syndicate of five banks, the first such facility in our history. We also established a $35 million share repurchase program and began executing market purchases during the fourth quarter. We continue to believe that our current share price does not at all reflect the intrinsic value of our company, and we intend to continue purchasing shares when returns realized from those purchases are accretive to our investors as we believe they are now. During the quarter and for all of 2021, we repurchased just over 500,000 shares of our common stock at a total value of approximately $3.3 million, which is slightly less than 10% of our total buyback program. With this list of accomplishments, you can see why I would call 2021 a transformative year for our company. You may have noticed in today’s earnings release, we announced that we are not providing forward-looking financial guidance. We introduced financial research, and we understand better than most that investor sentiment can change quickly, and that financial markets can be volatile. We also know that rapid shifts in investor sentiment can impact our business performance in the near term. While those short-term fluctuations can and do occur, we have a long-term perspective and make decisions based on what we think will benefit our owners over time. Our goal is to attract investors who share our view, investors who are looking for growth and profitability over the long term. Our communications have been consistent with this message as we consciously seek to avoid the pitfalls of managing for short-term gains or unrealistic expectations rather than working towards long-term growth and importantly, profitability. For those reasons, we are not going to provide detailed forward-looking guidance. We believe that the financial markets have become too focused on the short term, and the earnings guidance is a major driver of this trend. Companies frequently hold back on spending, hiring and research and development to meet quarterly earnings forecasts. In this vein, we believe providing earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability. If investors take a multiyear view, we believe they will be very satisfied with the financial results, cash flows and returns of the company here at MarketWise. However, as we report each quarter, expect us to provide a full analysis of operations, periodic updates to current market trends impacting our business and other relevant information such as consumer engagement and general investment interest and activity. As we look forward to this year, a number of significant opportunities to grow our business stand in front of us by expanding our product offerings, by adding investment research professionals, developing new distribution channels and deploying more technology and data science throughout our business. Regarding technology, we’re looking for ways to marry our research content with technology products like we did with Chaikin Analytics. We believe this is a highly accretive way to expand revenues, create better customer retention, and we continue to look for more technology acquisitions to expand these efforts. In addition, we continue to work on the development of our pan-MarketWise information content and fulfillment platform and look to roll this out over the course of 2022. Our almost 15 million total subscriber community relies on MarketWise to deliver high-quality and actionable tools and research for navigating the investing world, and we continue to develop and expand the breadth and depth of our products and brands. We believe and have proven that over our long history of profitable growth, this disciplined approach to operating our business produces exceptional results like the results you saw in 2021. And with that, I’ll turn it over to Dale.

Thanks, Mark, and good morning. As Mark just discussed, this has been an extremely busy and successful year for MarketWise, with our company delivering record results while navigating a challenging operating environment. In the fourth quarter, we grew revenues, billings and subscribers sequentially, and we saw improved engagement statistics through October and November, but later in the quarter, we observed some lower engagement statistics through the holiday season. We’ll talk more about that in a moment. During the fourth quarter, our measures of customer engagement indicated some improvement from those of the previous two quarters, which we believe are related to the reopening of the travel and leisure economy and less emphasis on investing activities. Indications such as landing page visits to our website, including for our front-end marketing campaigns were up early in the fourth quarter and moderated somewhat as we got into the holiday season towards the end of the year. Order form conversions were also up, meaning subscribers purchased more content. This is consistent with the market trading data that we track, which indicates an approximate 10% increase in equity trading volumes in the fourth quarter. For the fourth quarter, revenue was $146.7 million compared to $106.8 million in the fourth quarter of 2020, a 37.3% increase. The increase in revenue was driven by a $25.7 million increase in term subscription revenue and a $15.3 million increase in lifetime subscription revenue. Billings decreased by $7 million or 4.4% to $151.4 million in the fourth quarter of 2021 as compared to $158.4 million in the year-ago quarter. We believe this decrease in billings was due to a modest decrease in customer engagement indicated by a 10% decline in landing page visits in the fourth quarter ‘21 compared to the year-ago quarter, combined with the decision to reschedule a number of our new campaigns into 2022 for various business reasons. However, we saw an increase in customer engagement in the fourth quarter of ‘21 compared to the third quarter, as indicated by a sequential 13% increase in landing page visits, and billings also increased sequentially by $13.3 million or 9.6% as compared to the third quarter. In both the fourth quarter of ‘21 and the fourth quarter of 2020, approximately 30% of our billings came from lifetime subscriptions, 61% from term subscriptions and 2% from other billings. As Mark mentioned, we acquired Chaikin Analytics in January of 2021. For the fourth quarter, this acquisition contributed $3.2 million in revenue and $7.1 million in new organic billings by selling their products to our existing subscriber base. Now turning to the financial statements, our cost of revenue was $17.6 million this quarter compared to $85.7 million for the year-ago quarter. The current quarter included $0.5 million of stock-based compensation from our new incentive stock compensation plan as compared to $70.8 million in the year-ago quarter, which was related to our original Class B stock-based compensation. If you were to exclude stock-based compensation from cost of sales, sales margins as a percent of revenue would have been 88% this quarter as compared to 86% in the year-ago quarter, and generally in line with our historical averages. As we look at comparisons to prior periods, I should remind everyone that from the time of the combination with Ascendant in July through the end of 2021, there was no stock-based compensation attributable to our original Class B units recognized. Prior to the transaction, these units were treated as derivative liabilities rather than equity. Therefore, they had to be remeasured each quarter, and the change in fair value was included in stock-based compensation. Also, any distributions of profits paid to Class B unitholders were treated as stock-based compensation expense. Since the transaction and going forward, we expect significantly lower stock-based compensation at a level that would be consistent with the traditional stock-based compensation plan for our employees. For the fourth quarter of 2021, as a result of our new 2021 incentive award plan, our total stock-based compensation was $2.3 million. Sales and marketing costs were $65.7 million this quarter compared to $67.8 million in last year’s quarter, a decrease of $2.1 million. Included in these amounts was stock-based compensation of $0.6 million this quarter as compared to $7.4 million in the year-ago quarter. Excluding the stock-based compensation expense numbers, sales and marketing expense increased by $4.7 million, primarily driven by an increase in headcount as well as an increase in direct marketing expenses. General and administrative costs this quarter were $31.8 million as compared to $325.7 million in the year-ago quarter. Included in these amounts was stock-based compensation of $1.2 million this quarter as compared to $302.8 million in the year-ago quarter. Excluding stock-based compensation, our G&A costs increased by about $7.7 million year-over-year, primarily driven by a $3.1 million increase in headcount and cash incentive compensation and $1.4 million in travel costs primarily related to our annual conference. So for earnings, net income in the fourth quarter of 2021 was $35.9 million compared to a $375.4 million net loss in the fourth quarter of 2020. We recognized stock-based compensation expenses related to the new incentive award plan of $2.3 million in fourth quarter 2021, and stock-based compensation expenses related to the original Class B units of $381 million in fourth quarter 2020. Excluding the stock-based compensation numbers, the increase in net income this quarter was primarily due to the $40 million increase in net revenues. We continue to focus on cash flows, and therefore, our non-GAAP measure as adjusted cash flow from operations. This metric only adjusts for stock-based compensation expense associated with our old Class B profit distribution historically, as well as any unusual or non-recurring items. From the time of the transaction and going forward, this metric will only adjust for any unusual or non-recurring items. Adjusted CFFO was $5 million in the fourth quarter of 2021 compared to $16 million in the year-ago quarter, with the decline primarily due to a decrease in billings as well as a modest increase in marketing. Adjusted CFFO margin was 3.3% in the fourth quarter of 2021 compared to 10.1% in the fourth quarter of 2020. For all of 2021, our year-to-date total adjusted CFFO was $197.1 million compared to $134.3 million for all of 2020, a 47% increase. Adjusted CFFO margin for the year was 27% compared to 24.5% last year. Our paid subscriber base grew from 857,000 at the end of 2020 to 972,000 this quarter, representing a 13.4% increase year-over-year. We saw our free subscribers increase from 9.5 million a year ago to 13.7 million at the end of 2021, a 43.8% increase. Turning to ARPUs, ARPUs declined slightly to $742 from $759 last year, which is to be expected as we grew our subscriber base significantly during the year. The modest year-over-year decrease was driven by a 36% increase in the trailing four-quarter average paid subscribers in 2021, which slightly outpaced the increase in trailing four-quarter billings of 33% for the year. The increase in trailing four-quarter average paid subscribers in 2021 was largely due to the rapid increase in our subscriber base in the first quarter of the year. Most of our new subscribers join us on an entry-level publication, which are generally at lower price points and thus are initially dilutive to ARPU. We have shown that over time, these subscribers will continue to invest in our platform by purchasing higher-end subscriptions, which then tends to drive increases in ARPU. As of year-end, we have 19% and 32%, respectively, more high-value and ultra-high-value subscribers than we did a year ago. Sequentially, paid subscribers increased by 7,000 to 972,000 in the fourth quarter. Overall, for the fourth quarter, engagement as measured by landing page visits was up 13% sequentially. As Mark mentioned earlier, we are not providing 2022 financial guidance. We believe providing guidance is contrary to our operating philosophy of balancing long-term growth and profitability, but always with an eye towards profitability. We will continue to provide quarterly and annual financial results, obviously, as we’ve done. And with a full analysis of operations and updates to current market trends impacting our business and any other relevant information that we believe will be helpful and insightful to investors. Our operating model is based on flexibility and adaptation to current market environments. This basic tenet allows us to be nimble with our subscriber campaigns and marketing spend, being more aggressive when costs are low, engagement is high and pulling back on marketing spend in times that are less favorable. We do this with the goal of preserving profitability and maintaining our return on marketing investment.

We believe issuing short-term guidance can provide the wrong incentive for managing these dynamics, potentially inducing behavior to achieve guidance or make our numbers instead of doing what’s right for the business long-term. While we are not providing 2022 guidance, some general thoughts are still important. The first quarter 2021 was a record across all metrics and our business is not linear quarter-to-quarter, as you’ve seen. Therefore, we do not expect to show year-over-year growth versus first quarter 2021. As we saw in 2021, similar to most direct-to-consumer businesses and perhaps due to post-COVID influences, our business was impacted by unusual amounts of lower customer engagement around the summer months and December holidays as customers resumed travel and leisure. This underscores our view that maintaining flexibility is critical and staying true to our long-term philosophy. I would like to re-emphasize the point that Mark made earlier. We would like to attract long-term fundamental investors to seek a proven combination of growth and profit that we’ve generated for more than 20 years. If investors take that multiyear view, we believe they will be very satisfied with the financial results, cash flows and returns of our company. While we are not providing guidance, we believe that providing investors a view as to any potential tax distributions we may have to make in 2022 will help in making assessments as to fundamental cash flows generated and retained by our business. Therefore, we are providing an estimate as to what those potential distributions may be for tax liabilities in 2022, which we estimate to be between zero and $10 million. Before I wrap, I want to discuss our share repurchase program that we announced last quarter. As Mark mentioned, we repurchased about 500,000 shares for about $3.3 million, leaving us with about $31.7 million remaining on our program at the end of the year. We continue to be active in the market as we see the value of our shares to be well below any fundamental valuation of the company. And through the end of February, we purchased a total of 1.6 million shares at a total value of approximately $9.7 million. In closing, I’d like to reiterate that 2021 was indeed a landmark year for the company. We took the company public in volatile markets, delivered all-time record financial results and positioned the company for attractive future organic and inorganic growth opportunities. Thank you, Dale. Reflecting on all of our accomplishments last year, I’m very proud of what we’ve done, and I’m confident that we will put together a strong foundation from which to execute our strategic plan and drive the next stage of our company’s growth. As we’ve moved into this year, I’m very excited about our plans for organic opportunities for growth this year. As you know, we have had a very acquisitive history. We see a number of attractive potential opportunities on this front. Our new status as a public company is facilitating more of these introductions and conversations. Having said that, expect us to be disciplined on valuation multiples and not lose sight of our strategic objectives. Before we take your questions, I want to take a moment to thank everybody in the MarketWise organization, all our employees, partners, and affiliates who worked so hard over this past year to get us here. This is a truly remarkable year, and there is a lot to be proud of as we look forward to the future. Most of all, I want to thank our subscribers; our relationship with them is our biggest asset, and none of this would be possible without them. I’d now like to turn the call over to our operator for questions.

Our first question today is coming from Kyle Peterson of Needham & Company. Please go ahead.

Hi, good morning. This is actually Sam Salvas on for Kyle today. Thanks for taking the questions. To take things off, I was wondering if you guys can provide some commentary around what you’re seeing across some of the core KPIs like billings, subscribers, traffic year-to-date, especially given the market volatility in recent weeks with some of this geopolitical uncertainty going on over in Eastern Europe. Thanks.

So are you talking post December 31? Is that what you’re saying?

Yes. Just over the past few months.

If you step back and view the trees from the forest, what we told you was that the summer months were tough for all B2C companies. Engagement was down. What’s interesting is we’re seeing this in states of very interesting dynamics. Engagement has been volatile this year, but our conversion rates have been pretty good. Even when engagement is down, our conversion rates are pretty static and actually improved a little bit in the fourth quarter. So the driving force here is not so much eroding conversion rates; it is the volatility we’ve seen in engagement. That’s point one. That’s really important to keep in mind. Engagement steadily fell in Q2 and then fell further still in Q3. In Q4, the first half was up relatively 20% versus prior 5 months, but tailed off a bit into December. If you look post December, you can look at trading volumes; this is an interesting proxy. The average daily equity trades that we saw in January were maybe down 13% from the fourth quarter average, and in February, they were down again mid-single-digit percentages. So, you’re seeing some volatility in trading volumes, and I would look at that as a reasonable proxy for what may or may not be happening with our landing page visits. I really can’t give you our engagement statistics post December 31, but I’ll tell you that trading volume metric is a decent proxy for that. So a little bit better in January, perhaps a little bit worse in February. But yes, engagement seems to be bumping around. It’s hard to put your finger on. We are seeing the fallout of a 100-year pandemic, and then on top of that, you have inflation, you have oil prices, you have geopolitical conflicts. So there are just a lot of things that are in flux. I think long-term, we need to have the view that we’ve seen some things in the past including the financial crisis that we’ve navigated quite well. Our ability to flex and adapt and succeed for the long-term has made this business model so resilient. So lots of things we’re working on, but we expect there will be volatility in engagement for at least the next several months as we navigate what’s happening in Europe and if we can achieve some stabilization in energy prices. From a research perspective, we expect our investment professionals to nimbly adjust to current market realities to write relevant content to help guide investors in volatile times and provide investment ideas that aren’t just standard, easy strategies.

Yes, that’s right. I would just add that what’s key from our perspective is that we’ve got a full suite of products that cover a full spectrum of investment strategies. While the markets may ebb and flow, what’s key for us is that we have a broad variety of products that cover investment themes applicable to the times that we’re in.

Got it. Thanks for that commentary, that’s super helpful. And then just a quick follow-up on capital allocation. As we head into 2022, how are you guys thinking about balancing free cash flow use between the buyback, organic investments in content and writers, and M&A?

Yes, that’s a great question. Go ahead, Dale. You want to go first?

I was just going to talk through the corporate financing part, which is, look, the buyback is highly accretive and makes wild sense to continue doing that, so expect us to continue doing that. Our stock is trading at 3x revenue, I think, something in that order, maybe less now. We will always look for the best use of our cash from a corporate finance perspective. We do want to continue to build some cash. We want to be active on the M&A front, and that’s probably a good segue to you, Mark.

Yes, I love this question because we think about it a lot. Capital allocation is one of the most important things we can do. We think of our business like partners do a long-term partnership. And because of that, our management team makes decisions about capital allocation based on what we believe are in the best interests of our owners over a period of years, not necessarily months. We frequently make decisions that might limit our growth and profitability in the short term, but that we believe are best for the long-term interest of our shareholders. We want to attract like-minded shareholders, folks that don’t measure their investment time horizon in days or months, but more in years. When we think about capital allocation, we’re very aware that like long-term partners, we know we are in business to ultimately provide a return to our investors in return for their faith and trust as capital allocators. We’ve got a 20-year track record of doing that with growth and profitability, but we don’t think about short-term fluctuations when making those decisions.

Yes. Awesome. That’s super helpful. Thanks, guys.

Thank you. The next question is coming from Devin Ryan of JMP Securities. Please go ahead.

Great. Good morning, Mark and Dale. How are you guys?

Hi, Devin.

First question here, just on subscriber growth over the past two years. So you nearly doubled subscribers. I appreciate the comments that people come in kind of at a lower-end subscription. I guess, how should we think about this cohort given the growth you saw over the last two years? Are you starting to see conversions from people that came in early 2020? What’s the time frame of that, and what are you guys doing to drive subscribers from lower to higher-value subscriptions?

It all comes back to what I said earlier about content. You have to have content that resonates, that’s relevant, and helps protect your customers or make them money. So we have to have content that resonates. Now, when things change rapidly, it can take time to develop and write and research and produce new investment ideas. So with that volatility, there will be some adjustment and new themes, but you have to have the content first and foremost. As for cohorts, we don’t get into those as a company, but I get the gist of your question. You may have a cohort that starts in 2020 or 2021, and its revenue build might have a flatter slope to it initially. And you may think it’s a bad cohort, but that’s not necessarily true. If you look at our data over time, you will see that there is a lot of flexing in those conversion lines driven by content and market environment. You will see significant engagement rates with dedicated pricing and a lower weighted average dollar basis.

Yes, okay. Terrific. Thanks for the color, Dale. A quick follow-up here regarding M&A opportunities. Assuming deals where valuations have shifted, what’s the bid-ask spread like right now? Are expectations changing in private markets for content sellers or technology?

That’s a good question, Devin. We’ve noticed that valuations have peaked and come down off those peaks. We’ve seen a lot of properties where high valuation expectations were common, and that dynamic is now shifting. We’re more excited about this environment as we’ve had several discussions recently that we're enthusiastic about; the valuation dynamic is certainly helpful. Of course, each party has a different view on valuation, some of whom may be slow to react to the true market environment. But we’ve definitely seen this dynamic play out.

Thank you. The next question is coming from Ygal Arounian of Wedbush Securities. Please go ahead.

So the past few quarters, you’ve discussed higher CPMs in the marketing environment and not pushing unprofitable spend. Can you maybe update us on the current environment and how you approach marketing spend? Given that 2020 and 2021 experienced strong tailwinds, how should we think about a more normalized environment for business?

Yes. So Chad, that’s at some level, we would like to answer that question, too. What we saw at the end of the last year, the fourth quarter, if you will; we don’t disclose customer acquisition costs. We can say that definitively, Q2 unit costs went up, in Q3 they remained elevated, and in Q4, they came down mid to low teen percentages. That was good, but they still remain elevated compared to what they were in 2020. Good quarters can generate great earnings. We can live with escalating CAC over time. What we need to do is produce good investment ideas and manage our marketing campaign on a line-by-line basis. We cannot blow our costs or drive inefficient spend. So, we are managing our costs and ensuring we are producing strong investment ideas that resonate in today’s market. There is still volatility in engagement, up one month down the next; we're monitoring how that continues.

That’s right. Our marketing spend is part of the capital allocation decision we make as managers. We do what we think you all would do if you owned the business: when it’s cheap to acquire subscribers, we spend more, and when it’s expensive, we pull back, keeping an eye on growth and profit.

Thank you. The next question is coming from Jason Helfstein of Oppenheimer. Please go ahead.

Let me follow up on the marketing question. This was the worst, at least from the numbers on the page, this was the worst marketing efficiency quarter in seven or eight quarters. If we are thinking about 2022 sales and marketing as a percent of billings, can you bring that ratio back in line with where you were in 2021, or should we assume this is going to be a deleveraging year for sales and marketing as a percent of billings?

Jason, can you repeat the first part of that question again? I’m not tracking.

Yes. If you look at sales and marketing as a percent of your billings, it was 43% in the quarter, which I think was the highest ratio in eight quarters. Can you give us a sense of how you think about the sales and marketing efficiency for all of 2022? Do you expect it to show an improvement or is it going to be a deleveraged year?

You’re linking two things that aren’t directly related. The marketing spend isn’t tied to billings; the efficiency is linked to new subscribers. When we acquire them, it’s probably a $100 revenue event. The billings needle begins to move in subsequent months after they make additional purchases. The actual results in the fourth quarter were the best results since the first quarter by a wide margin, with 20% more adds in the fourth quarter than in the third quarter. Therefore, I think the efficiency reflects a flat performance based on historical conversion rates.

Okay, great. Then just a follow-up, it sounds like focusing on landing page visits and changes in that could be helpful. Can you put historical data on your website for us to use for modeling? And should we be thinking more year-over-year in context of normalizing people's behavior?

Definitely, that’s right. I do feel like the COVID influence is waning. Barring any unforeseen incidents, I expect whipsaws in engagement should fade. There could be some seasonality this year but generally think of the business over a long-term cycle, perhaps reflect upon averages over 2019, 2020, and 2021. Maintain the long-term view and growth expectations for subscribers and ARPUs.

Thank you. Our next question is coming from Jeff Meuler of Baird. Please go ahead.

I was hoping to get more detail around sort of the things you are working on with Ascendant. Is that more focused on the customer acquisition side, or is it more benefiting the up-sell to higher-value subscriptions?

The guys at Ascendant have been great partners. We’re in the early phases of upgrading our data science and AI efforts, which are aimed at improving both front-end marketing efficiency and sales to current subscribers. We are focused on refining our understanding of customer buying behavior to enhance our business model efficiencies.

On the pan-MarketWise terminal platform, what still needs to be done to launch that product fully, and what’s the go-to-market strategy around that?

We’ve made significant strides since we last spoke about the pan-MarketWise product. What’s happened is we’ve launched the platform itself, reformatted it with one of our brands in Q1, and are working to expand it. The idea is we want to attract traffic organically to reduce acquisition costs. So we think that by having this platform, we can engage a wider audience and showcase the breadth of our content.

On your third-quarter earnings call, you said that MarketWise would come out with 2022 guidance in the fourth-quarter cycle, and what changed in your thinking to no longer provide guidance?

When I interviewed here three years ago, it was clear that there was philosophical skepticism towards guidance. As we went public, we felt the need to satisfy certain expectations from the investment community. However, after several conversations, we decided to remain true to our DNA and suppress guidance to prioritize long-term performance over quarterly expectations.

We’ve also emphasized a balance between growth and profitability, continually focused on long-term objectives. Putting numbers associated with that can quickly turn into guidance, which we want to avoid; balancing growth and profitability is our focus moving forward.

That makes sense. Is the long-term outlook of being a Rule of 50 company, which combines revenue growth with adjusted cash flow from operations margin being 28% to 33%, still achievable?

I think the concept is valid; growth and profit balance is important, but without specific numbers tied to the concept, it doesn't translate further into guidance. We are working on balancing growth and profitability with a specific focus on profitability.

At this time, I would like to turn the floor back over to Mark Arnold for closing comments.

As I’ve said before, I’m tremendously proud of our accomplishments last year, which were transformational and highly profitable for us. I’m grateful to our readers for their support, and I want to express my appreciation to the MarketWise team, who worked so hard to achieve this milestone. We are very much looking forward to what lies ahead as we see tremendous opportunities in front of us. I want to once again thank our subscribers, whose relationship with us is our biggest asset; none of this would be possible without them. Thank you for your participation in today’s call, and your interest in MarketWise. I hope everybody has a great day.

Ladies and gentlemen, thank you for your participation. You may disconnect your lines and log off the webcast at this time and enjoy the rest of your day.