Q4 2021 MarketWise Inc Earnings Call

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Ladies and gentlemen, thank you for your patience and please remain on the line. Today's MarketWise conference will be beginning shortly. Again, we do thank you for your patience and ask that you please remain on the line or connected via the webcast. The MarketWise conference will be beginning within the next

Ladies and gentlemen, thank you for your patience and please remain on the line today's market wife's conference we'll be beginning shortly again, we do thank you for your patience and ask that you. Please remain on the line are connected via the webcast. The market Wise conference, we'll be beginning within the next few minutes.

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Greetings and welcome to the MarketWise 4th Quarter and Full Year 2021 Earnings Results Conference Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation.

Greetings and welcome to the market wise fourth quarter and full year 2021 earnings results Conference call. At this time all participants are on a listen only mode. A question and answer session will follow the formal presentation. If you would like to ask a question you May press star one on your telephone keypad.

If you would like to ask a question, you may press star 1 on your telephone key.

If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Jonathan Sheffield head of Investor Relations at market Wise. Thank you. Please go ahead.

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 Mark wise, its full year and fourth quarter 2021 financial results.

Jonathan Shanfield: Thank you, good morning, and thank you all for joining us on today's conference call to discuss Mark Weiser's full year and fourth quarter 2021 financial results.

Jonathan Shanfield: On the call today, we have Mark Arnold, our Chief Executive Officer, and Dale Lynch, Chief Financial Officer.

On the call today, we have Mark Arnold, our Chief Executive Officer, and Dale Lynch Chief Financial Officer.

Jonathan Shanfield: 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.

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.

Jonathan Shanfield: 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.

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.

Jonathan Shanfield: Factual results may vary materially from today's statements. Information concerning our risks and certainties 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 supplemental information posted on the investor section of the company's website.

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 supplemental information posted on the investors section of the company's website.

Jonathan Shanfield: 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.

Our discussions 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 reconciliations to non-GAAP measures can be found in our earnings press release and SEC filings.

Turning to turn the call over to Mark.

Jonathan Shanfield: Thanks, Sean. Good morning, everybody. Welcome to our fourth quarter 2021 earnings call. And without a doubt, this was a landmark year for MarketWise. It was both transformational for our company and highly profitable for our shareholders.

Thanks, John Good morning, everybody welcome to our fourth quarter, 2020 one earnings call.

And without a doubt which was a landmark year for market wise. It was both transformational for our company and highly profitable for our shareholders.

Jonathan Shanfield: Our team delivered record results and I'm excited to share them with you now.

Our team delivered record results and I'm excited to share them with you now.

Jonathan Shanfield: Here are the highlights. Compared to 2020, we grew revenues by 51%, increased billings by 33%.

Here are the highlights compared to 2020, we grew revenues by 51% increased billings by 33%.

Jonathan Shanfield: and improved our adjusted cash flow from operations by 47%. We also grew our paid subscriber base 13%.

And improved our adjusted cash flow from operations by 47%.

Also grew our paid subscriber base, 13%, so almost 1 million subscribers.

Jonathan Shanfield: 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.

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 now almost 800 employees strong, including almost 100 investment research professionals.

Jonathan Shanfield: And our team is now almost 800 employees strong, including almost 100 investment research.

Jonathan Shanfield: Now 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.

I would be proud of these results in any normal year okay.

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.

Jonathan Shanfield: from a financial perspective, 2021 proved to be a record-breaking year for MarketWise.

From a financial perspective, 2021 proved to be a record breaking year for market wise.

Jonathan Shanfield: Billings for the full year 2021 finished at an all-time high, $730 million, an increase of 33% over 2020. Gap revenues climbed to $520 million.

Billings for the full year of 2021 finished at an all time high of $730 million, an increase of 33% over 2020 GAAP.

GAAP revenues climbed at $549 million.

Jonathan Shanfield: or 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%.

Or 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 also 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.

Jonathan Shanfield: We also continue to engage and attract self-directed investors through our research products and software solutions while developing long-term relationships with our

Jonathan Shanfield: On a year-over-year basis, we grew our paid subscribers to 972,000, an increase of 13% from the prior year.

On a year over year basis, we grew our paying subscribers to 972000, an increase of 13% from the prior year.

Jonathan Shanfield: 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 miles.

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.

Jonathan Shanfield: First, as we began the year, we experienced tremendous subscriber growth as we capitalized on high levels of customer engagement, moderately priced digital advertising, and highly effective product offerings, which combined to produce record-breaking growth in our subscriber base and financial resources.

First as we began the year, we experienced tremendous subscriber growth as we capitalized on high levels of customer engagement moderately priced digital advertising and highly effective product offerings, which combined to produce record breaking growth in our subscriber base financial results.

Jonathan Shanfield: We continue to develop new products and add investment research professionals to our company, and we also purchased shaken analytics.

We continue to develop new products and add investment research professionals to our company and we also purchased shaken analytics.

Jonathan Shanfield: And then we successfully integrated that business into our own, providing investors with an additional software tool for analyzing businesses and enhancing their investing equity.

And then we successfully integrated that business into our own.

Riding investors with an additional software tool for analyzing businesses and enhancing their investing activities.

The chicken analytics integration into our business as a representative example of the power of adding a new technology product and marketing it to our existing subscriber base.

Jonathan Shanfield: The Chicken Analytics integration into our business is a representative example of the power of adding a new technology product and marketing it to our existing subscriber base.

Jonathan Shanfield: We added more than $26 million in new billings with the new Chaikin brand in 2021 and are hoping for more going forward.

We added more than $26 million of new billings with the new chicken brand in 2021 and are hoping for more going forward.

Jonathan Shanfield: During the spring and summer, 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.

During the spring and summer we completed our go public transaction with Ascendant and became listed on the NASDAQ in mid July with two is an extraordinary achievement by our team.

Jonathan Shanfield: We also continue to recruit and expand expertise, capabilities to facilitate, support, and grow our public company operations in areas such as finance, accounting, compliance, and reporting.

We also continue to recruit and expand expertise and capabilities to facilitate support and grow our public company operations in areas, such as finance accounting compliance and reporting.

Jonathan Shanfield: There was a tremendous amount of work done over the past few years to get us ready to operate as a public company, and that too is a big milestone for us.

There was a tremendous amount of work done over the past few years to get us ready to operate as a public company and that too is a big milestone for us.

Jonathan Shanfield: Early in the fourth quarter, we entered into a $150 million revolving credit facility with a syndicate of five banks, the first such facility.

Early in the fourth quarter, we entered into $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.

Jonathan Shanfield: We also established a $35 million share repurchase program and began executing market purchases during the fourth quarter.

Jonathan Shanfield: 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.

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 half a million shares of our common stock at a total value of approximately $3 $3 million.

Jonathan Shanfield: During the quarter, and for all of 2021, we repurchased just over half a million shares of our common stock at a total value of approximately $3.3 million, which is slightly less than 10% of our total.

It's just slightly less than 10% of our total buyback program.

But this list of accomplishments you can see why I would call. It 2021, a transformative year for our company.

Jonathan Shanfield: But this list of accomplishments, you can see why I would call 2021 a transformative year for our company.

Yeah.

Jonathan Shanfield: You may have noticed in today's earnings release, we announced that we are not providing forward-looking financial guidance, as some companies do.

You may have noticed in today's earnings release, we announced that we are not providing forward looking financial guidance with some companies do.

We introduced financial research as you know and we know better than most that investor sentiment can change quickly and financial markets can be volatile.

Jonathan Shanfield: We produce financial research, as you know, and we know better than most that investor sentiment can change quickly and that financial markets can be volatile.

Jonathan Shanfield: We also know that rapid shifts in investor sentiment can impact our business performance in the near term.

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.

Jonathan Shanfield: 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.

We know many investors are up like mine and our goal is to attract investors who share our view investors, who are looking for growth and profitability over the long term.

Jonathan Shanfield: We know many investors are of like mind, and 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.

Jonathan Shanfield: Our communications have been consistent with this message as we consciously seek to avoid the pitfalls of managing for short term.

Jonathan Shanfield: or unrealistic expectations, rather than working toward long-term growth and importantly, profitability. For those reasons, we're not going to provide detailed answers.

For those reasons, we're not going to provide detailed forward looking guidance.

I would also add that we believe that the financial markets have begun to focus on the short term and then earnings guidance is a major driver of this trend and contributes to a shift away from long term thinking we've written a lot about this in our content over the years.

Jonathan Shanfield: I would also add that we believe that the financial markets have become too focused on the short term, and that earnings guidance is a major driver of this trend and contributes to a shift away from long-term thinking. We've written a lot about this.

Jonathan Shanfield: Companies frequently hold back on spending, hiring and research and development to meet quarterly earnings for.

Companies frequently hold back on spending hiring in 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.

Jonathan Shanfield: In this vein, we believe providing earnings guidance often leans to an unhealthy focus on short-term profits at the expense of long-term strategy, growth, and sustainability.

Jonathan Shanfield: If investors take a multi-year view, we believe they will be very satisfied with the financial results, cash flows, and returns of the company here at Markzware.

As 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 market wise.

Jonathan Shanfield: 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.

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.

In 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 doing a couple of different things by expanding our product offerings by adding investment research professionals, developing new distribution channels and deploying more technology and data science throughout our business.

Jonathan Shanfield: As we look forward to this year, a number of significant opportunities to grow our business.

Jonathan Shanfield: stand in front of us by doing a couple of different things, by expanding our product offerings, by adding investment research professionals, developing new distribution channels, and deploying more technology and data science throughout our business.

Jonathan Shanfield: Regarding technology, we're increasingly looking for ways to marry our research content with technology products like we did with shake and analytics.

Regarding technology, we're increasingly looking for ways to marry our research content with technology products like we did with chicken analytics we.

Jonathan Shanfield: We believe this is a highly creative way to expand revenues, create better customer retention, and we continue to look for more technology acquisitions in order to expand these.

We believe this is a highly accretive way to expand revenues create better customer retention and we continue to look for more technology acquisitions in order to expand these efforts.

Jonathan Shanfield: In addition, we continue to work on the development of our PAM market-wise information, content, and fulfillment platform and look to roll this out over the course of 2022.

In addition, we continue to work on the development of our paying market wise information content and fulfillment platform and look to roll this out over the course of 2022.

Regarding data science, we're excited about the work already underway with our partners from a send it as.

Jonathan Shanfield: Regarding data science, we're excited about the work already underway with our partners from Ascendant as we look to employ a higher level of data science throughout our

As we look to employ a higher level of data science throughout our business.

Jonathan Shanfield: We believe that this has the potential to increase conversion rates, improve subscriber retention, and perhaps expand our distribution channel.

We believe that this has the potential to increase conversion rates improve subscriber retention and perhaps expand our distribution channels.

Jonathan Shanfield: We continue to strive to be the trusted source of financial information and a leading financial wellness platform for self-directed investors.

We continue to strive to be the trusted source of financial information and a leading financial wellness platform for self directed investors.

Jonathan Shanfield: Our almost 15 million total subscriber community relies on MarketWide to deliver high quality

Our almost 15 million total subscriber community relies on market wide 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 brands to fulfill that goal.

Jonathan Shanfield: 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 to fulfill that goal.

For over 20 years now we have been very focused on growth with profitability.

Jonathan Shanfield: For over 20 years now, we have been very focused on growth with profitability.

Jonathan Shanfield: And we manage our marketing metrics and financial results to achieve a high return on investment as any good investor would.

And we manage our marketing metrics and financial results to achieve a high return on investment as any good investor would.

Jonathan Shanfield: We believe and have proven that over our long history of profitable growth is disciplined approach to operating our business produces exceptional results like the results you saw in 2021 and with that.

We believe and have proven that over a long history of profitable growth. This disciplined approach to operating our business produces exceptional results liked the results you saw in 2021.

And with that I'll turn it over to Bill.

Speaker Change: Thanks, Mark, and good morning. As Mark just discussed, this has been an extremely busy and successful year for MarketWise.

Thanks, Mark and good morning, as Mark just discussed this has been an extremely busy and successful year for market wise.

With our company delivering record results will also navigating a challenging operating environment.

Speaker Change: with our company delivering record results while also navigating a challenging operating environment.

Speaker Change: 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 saw some lower engagement statistics through the holiday season. We'll talk more about that in a minute.

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 saw some lower engagement statistics through the holiday season.

Talk more about that in a moment.

Speaker Change: During the fourth quarter, our measures of customer engagement indicated some improvement from those of the prior two quarters, which we have previously indicated we believe are related to reopening of the travel and leisure economy and less emphasis on investing activity.

During the fourth quarter, our measures of customer engagement indicated some improvement from those of the prior two quarters, which we've previously indicated we believe are related to the reopening of the travel and leisure economy and less emphasis on investing activities.

Speaker Change: 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 as subscribers purchased more content.

Indications such as landing page visits to our web site, including for our front end market marketing campaigns Rep early in the fourth quarter and moderated somewhat.

As we got into the holiday season towards the end of the year order for him conversions were also subscribers towards purchase more content.

Speaker Change: This is consistent with the market trading data that we tracked, which indicated an approximate 10% increase in equity trading volumes in the fourth quarter.

This is consistent with the market trading data that we track, which indicated an approximate 10% increase in equity trading volumes in the fourth quarter.

In total fourth quarter customer engagement was down from the prior year's levels, but up from the third quarter levels.

Speaker Change: In total, fourth quarter customer engagement was down from the prior year's levels, but up from the third quarter level.

For fourth quarter revenue was $146 $7 million compared to $106 $8 million in fourth quarter 2020.

Speaker Change: The fourth quarter revenue was $146.7 million, compared to $106.8 million in fourth quarter 2020.

For 37, 3% increase.

Speaker Change: The increase in revenue is driven by a $25.7 million increase in term subscription revenue and a $15.3 million increase in lifetime subscription revenue.

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 four 4% to $151 4 million in fourth quarter of 2021, as compared to 158 million and $58 4 million excuse me in the year ago quarter.

Speaker Change: Billings decreased by $7 million, or 4.4%, to $151.4 million in Q4 2021 as compared to $158.4 million in the year-ago quarter.

Speaker Change: We believe this decrease in billings was due to a modest decrease in customer engagement.

We believe this decrease in billings was due to a modest decrease in customer engagement.

Speaker Change: is indicated by a 10% decline in landing page visits in fourth quarter 21 as compared to the year ago quarter.

As indicated by a 10% decline in landing page visits in fourth quarter, 'twenty, one as compared to the year ago quarter.

Speaker Change: combined with the decisions to reschedule a number of our new campaigns into 2022 for various business reasons.

Combined with the decisions to reschedule a number of our new campaign into 2022 for various business reasons. This is not an unusual occurrence as the timing of campaigns is often adjusted in our business.

Speaker Change: This is not an unusual occurrence as the timing of campaigns is often adjusted in our business.

We did however, see an increase in customer engagement in fourth quarter 'twenty, one as 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 nine 6% as compared to the third quarter.

Speaker Change: We did, however, see an increase in customer engagement in fourth quarter 21 as compared to the third quarter.

Speaker Change: as indicated by a sequential 13% increase in landing pages.

Speaker Change: Billings also increased sequentially by 13.3 million or 9.6% as compared to the third quarter.

Speaker Change: in both fourth quarter 21 and fourth quarter 2020.

In both fourth quarter 'twenty, one in fourth quarter 2020.

Speaker Change: Approximately 30% of our billings came from lifetime subscriptions.

Approximately 30% of our billings came from lifetime subscriptions.

Speaker Change: 61% from term subscriptions and 2% from other billing.

61% from term subscriptions and 2% from other billings.

As Mark mentioned, we acquired taken analytics in January 2021 for the fourth quarter. This acquisition contributed $3 $2 million in revenue and $7 $1 million and new organic billings by selling their products to our existing subscriber base.

Speaker Change: As Mark mentioned, we acquired Chaykin 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.

Speaker Change: Our cost of revenue is $17.6 million this quarter compared to $85.7 million for the year-ago quarter.

Cost of revenue was $17 6 million this quarter compared to $85 7 million for the year ago quarter.

The current quarter included <unk> 5 million of stock based compensation from our new incentive stock comp plan.

Speaker Change: The current quarter included $0.5 million of stock-based compensation from our new Incentive Stop Comp Plan.

Speaker Change: compared to $70.8 million in the year-ago quarter, which is related to our original Class B stock-based compensation.

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 comp from cost of sales sales margins as a percent of revenue would have been 88% this quarter.

Speaker Change: If you were to exclude stock-based comp 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 average.

As compared to 86% in the year ago quarter and generally in line with our historical averages.

Speaker Change: As we look at comparisons to prior periods, I should remind everyone that from the time of the combination with Ascendant in July and through the end of 2021, there was no stock-based compensation attributable to our original Class B units recognized.

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.

Speaker Change: Prior to the transaction, these units were treated as derivative liabilities rather than equity liabilities.

Prior to the transaction. These units are treated as derivative liabilities rather than equity.

Speaker Change: As such, they had to be remeasured each quarter, and the change in fair value was included in stock-based compensation.

As such they had to be re measured each quarter and the change in fair value was included in stock based compensation.

Speaker Change: Also, any distributions of profits paid to Class B unit holders were treated as stock-based comp expense.

Also any distributions of profits paid to class B unit holders were treated as stock based comp expense.

Since the transaction and going forward as those original class b units converted to common units or straight common equity.

Speaker Change: since the transaction and going forward as those original Class B units converted to common units for straight common equity.

Speaker Change: we expect to incur significantly lower stock-based comp at a level that would be consistent with a traditional stock-based compensation plan for our employees.

We expect to incur significantly lower stock based comp at a level that would be consistent with a traditional stock based compensation plan for our employees.

Speaker Change: fourth quarter 2021, and as a result of our new 2021 incentive award plan, our total stock-based compensation was $2.3 million.

For fourth quarter 2021.

As a result of our new 2021 incentive award plan, our total stock based compensation was $2 $3 million.

Yeah.

Speaker Change: 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.

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 were stock based compensation of <unk> 6 million this quarter as compared to $7 4 million in the year ago quarter.

Speaker Change: included in these amounts for stock-based compensation of $0.6 million this quarter as compared to $7.4 million in the year-ago quarter.

Speaker Change: Now, excluding these stock-based comp expense numbers, sales and marketing expense increase

Now excluding the stock based comp expense numbers.

<unk> marketing expense increased by $4 $7 million.

Speaker Change: by $4.7 million, primarily driven by an increase in headcount as well as an increase in direct marketing expenses.

I'm really driven by an increase in head count 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.

Speaker Change: 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 were stock based comp of 1.2 million this quarter as compared to $302 8 million in the year ago quarter.

Speaker Change: Included in these amounts were stock-based comp of 1.2 million this quarter as compared to 302.8 million in the year-ago quarter.

Speaker Change: Excluding stock-based comp, our G&A cost increased about $7.7 million year-over-year, primarily driven by a $3.1 million increase in headcount and cash incentive comp, and $1.4 million in travel costs, primarily related to our annual comp.

Excluding stock based comp our G&A cost increased about $7 $7 million year over year, primarily driven by $3 $1 million increase in headcount and cash incentive comp 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 2020.

Speaker Change: So, for earnings, net income in the fourth quarter of 2021 was $35.9 million compared to a $375.4 million net loss in fourth quarter 2020.

We recognized stock based compensation expenses related to the new incentive award plan of $2.3 million in fourth quarter 2021.

Speaker Change: We recognize stock-based compensation expenses related to the new incentive award plan of $2.3 million in fourth quarter 2021.

Speaker Change: stock-based compensation expenses related to the original Class B units of $381 million in fourth quarter 2020.

And stock based compensation expenses related to the original class B units of $381 million to fourth quarter 2020.

Speaker Change: Excluding the stock-based compensation numbers, the increase in net income this quarter was primarily due to the $40 million increase in net revenue.

Excluding stock based compensation numbers the increase in net income this quarter was primarily due to the $40 million increase in net revenues.

Speaker Change: Now, significantly, we continue to focus on cash flows, and therefore our non-GAAP measures adjust the cash flow from operation.

Now significantly we continue to focus on cash flows and therefore, our non-GAAP measures adjusted cash flow from operations.

To be clear this metric only adjust for stock based comp expense associated with our old classic profits distributions historically as well as any unusual or nonrecurring items.

Speaker Change: To be clear, this metric only adjusts for stock-based comp expense associated with our old Class B profits distributions historically, as well as any unusual or non-recurring items.

Speaker Change: But from the time of the transaction and going forward, this metric will only adjust for any unusual or non-recurring items.

From the time of the transaction and going forward. This metric will only adjust for any unusual or nonrecurring items.

Speaker Change: Adjusted CFFO was $5 million in fourth quarter 2021 compared to $16 million in the year-ago quarter, with a decline primarily due to a decrease in billings as well as a modest increase in market share.

Adjusted <unk> was $5 million in fourth quarter, 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.

Speaker Change: Adjusted CFFO margin was 3.3% in fourth quarter 2021 as compared to 10.1% in fourth quarter 2020.

Adjusted <unk> margin was three 3% in fourth quarter 2021, as compared to 10, 1% in the fourth quarter of 2020.

Speaker Change: For all of 2021, our year-to-date total adjusted CFFO was $197.1 million, as compared to $134.3 million for all of 2020, a 47% increase.

For all of 2021, our year to date total adjusted <unk> was $197 $1 million as compared to $134 $3 million for all of 2020 or 47% increase.

Speaker Change: Adjusted CFFO margin for the year was 27% compared to 24.5% last year.

Just to see if a margin for the year was 27% compared to 24, 5% last year.

Speaker Change: Turning to a few KPIs, our paid subscriber base grew from 857,000 at the end of 2020.

Now turning to a few kpis our paid subscriber base grew from 857000 at the end of 2020.

Speaker Change: to 972,000 this quarter, which represents a 13.4% increase year over year.

To 972000, this quarter, which represents a 13, 4% increase year over year.

You saw our free subscribers increased from $9 5 million a year ago to $13 7 million at the end of 2021 43, 8% increase.

Speaker Change: We saw our free subscribers increase from nine and a half million a year ago to 13.7 million at the end of 2021, 43.8% increase.

Turning to Rfps or <unk> declined slightly to $742 from $759 last year 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.

Speaker Change: Turning to ARPUs, ARPUs declined slightly to $742 from $759 last year.

Speaker Change: 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

Speaker Change: and the trailing four-quarter average paid subscribers in 2021.

And the trailing four quarter average paid subscribers in 2021 with.

Speaker Change: would slightly outpace the increase in trailing four quarter billings of 33% for the year.

Which slightly outpaced the increase in trailing four quarter billings up 33% for the year.

Speaker Change: The increase in trailing four-quarter average paid subs in 2021 was largely due to the rapid increase in our subscriber base in the first quarter of the year.

The increase in trailing four quarter average paid subs in 2021 was largely due to the rapid increase in our subscriber base in the first quarter of the year.

Speaker Change: Most of our new subscribers join us on an entry level publication, which are generally at lower price points, and that's our initial.

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 ARPA.

Speaker Change: We've 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.

We've 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 our pool.

Speaker Change: As of year-end, we have 19% and 32%, respectively, more high-value and ultra-high-value subscribers than we did a year ago.

As of year end, we have 19% and 32% respectively more high value and ultra high value subscribers than we did a year ago.

Essentially paid subs increased by 7000 to 972000 in fourth quarter.

Speaker Change: Eventually, paid subs increased by 7,000 to 972,000 in fourth quarter. As discussed in our last earnings call, we began to see increased customer engagement in October and early November as subscribers began to emerge from the travel and leisure boom that seemed to affect the summer months.

As discussed on our last earnings call. We began to see increased customer engagement October and early November as subscribers began to emerge from the travel and leisure boom that seem to affect the summer months.

Speaker Change: As we got further into the quarter, however, we saw a decline in engagement around the holiday seasons, perhaps due to a similar travel and leisure effect that we saw throughout the summer. Overall, for fourth quarter, engagement as measured by landing page visits was up 13% sequentially, as I mentioned.

As we got further into the quarter. However, we saw a decline in engagement around the holiday seasons, perhaps due to a similar travel and leisure effect that we saw throughout the summer.

Overall for fourth quarter engagement as measured by landing page visits was up 13% sequentially as I mentioned.

As Mark mentioned earlier, we're not providing 2022 financial guidance.

Speaker Change: As Mark mentioned earlier, we're not providing 2022 financial guidance.

Speaker Change: 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 believe providing guidance is contrary to our operating philosophy of balancing long term growth and profitability, but always with an eye towards profitability.

Speaker Change: We will, however, continue to provide quarterly and annual financial results, obviously, as we've done, and with a full analysis of operations, updates to current market trends impacting our business, and any other relevant information that we believe will be helpful and insightful to investors.

We will however continue to provide quarterly and annual financial results, obviously, as we've done and with a full analysis of operations updates the current market trends impacting our business and any other relevant information that we believe will be helpful and insightful to investors.

As we've discussed many times, our operating model is based on flexibility and adaptation to current market environments.

Speaker Change: As we've discussed many times, our operating model is based on flexibility and adaptation to current market environments.

Speaker Change: This basic tenet allows us to be nimble with our subscriber campaigns and marketing spend. Being more aggressive when costs are low and engagement is high and pulling back on marketing spend in times that are less favorable.

This basic tenant allows us to be nimble with our subscriber campaign marketing spend.

Being more aggressive when costs are low and engagement is high and pulling back on marketing spend in times that are less favorable.

Speaker Change: We do this with the goal of preserving profitability and maintaining our return on marketing investment.

We do this with the goal of preserving profitability and maintaining our return on marketing investment.

Speaker Change: We believe issuing short-term guidance can provide the wrong incentive for managing these dynamics.

We believe issuing short term guidance can provide the wrong incentive for managed he's managing these dynamics.

Speaker Change: potentially inducing behavior to quote, achieve guidance or make our numbers, as opposed to actually doing it.

Centrally inducing behavior to quote achieved guidance or make our numbers.

As opposed to actually do what's right for the business for the long term.

Speaker Change: While we're not providing 2022 guidance, some general thoughts are still important. First quarter 2021 was a record across all metrics, and our business is not.

While we're not providing 2022 guidance. Some general thoughts are still important first quarter 2021 was a record across all metrics and our business is not linear quarter to quarter as you've seen.

Speaker Change: Therefore, we do not expect to show year-over-year growth versus first quarter 2021.

Therefore, we do not expect to show year over year growth versus the first quarter 2021.

Speaker Change: 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 training.

As you saw in 2021, similar to most direct to consumer businesses and perhaps due to post COVID-19 influences. Our business was impacted by unusual amounts of lower customer engagement around the summer months and December holidays.

Customers resumed travel and leisure.

Speaker Change: And this serves as a case in point of why we want to maintain our freedom to operate our business truly for the long term, and in a market where investment themes are in flux, and there has been volatility in customer engagement and unit costs.

And this serves as a case in point of why we want to maintain our freedom to operate our business truly for the long term.

And in a market where investment themes are in flux and there has been volatility in customer engagement and unit costs.

Speaker Change: Therefore, it's especially important to reserve this latitude and stay true to our long-term philosophy. I would like to reemphasize a point that Mark made earlier.

Therefore, it's especially important to reserve this attitude and stay true to our long term philosophy.

I would like to reemphasize the point that Mark made earlier.

We would like to attract long term fundamental investors seek.

Speaker Change: to seek the proven combination of growth and profit that we've generated for more than 20 years. If investors.

Proven combination of growth and profit that we generated for more than 20 years.

If investors take that multi year view.

Speaker Change: we believe they will be very satisfied with the financial results, cash flows, and returns of our company.

We believe they will be very satisfied with the financial results cash flows and returns of our company.

Speaker Change: Furthermore, while we're not providing guidance, we believe that providing investors a view as to any potential tax distributions that we may have to make in 2022 will be helpful in making assessments as to fundamental cash flows generated and retained by our business.

Furthermore, while we're not providing guidance, we believe that providing investors a view as to any potential tax distributions that we may have to make in 2022 will be helpful. In making assessments as to fundamental cash flows generated in retained by our business.

Speaker Change: Therefore, we are providing an estimate as to what those potential distributions may be for tax liabilities in 2022.

Therefore, we are providing an estimate as to what those potential distributions may be for tax liabilities in 2022.

Speaker Change: which we estimate to be between zero and $10 million.

Which we estimate to be between zero and $10 million.

Before I wrap I want to touch on our share repurchase program that we announced last quarter.

Speaker Change: Before I wrap, I wanted to touch on our share repurchase program that we announced last quarter. As Mark mentioned, we repurchased about $500,000.

As Mark mentioned, we repurchased about 500000 shares.

Speaker Change: for about $3.3 million, leaving us with about 31.7 remaining on our program at the end of the year.

We're about $3 $3 million, leaving us with about 31.7 remaining on our program at the end of the year.

Speaker Change: We continue to be active in the market as we see the value of our shares to be well, well below that of any fundamental valuation of the company. And through the end of February , we've purchased an aggregate total of 1.6 million shares at a total value of approximately $9.7 million.

We continue to be active in the market as we see the buyer of our shares to be well well below that of any fundamental valuation of the company and through the end of February we purchased an aggregate total of one 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. He took the company public amidst volatile markets delivered all time record financial results and position the company for drafting future organic and inorganic growth opportunities and with that I'll turn it back to you Mark.

Speaker Change: In closing, I'd like to reiterate that 2021 was indeed a landmark year for the company.

Speaker Change: We took the company public amidst volatile markets, delivered all time record financial results, and positioned the company for attractive future organic and inorganic growth opportunities. And with that, I'll turn it back to you, Mark.

Thank you Dale.

When I reflect on all of our accomplishments last year I'm very proud of what we've done and I'm confident that we'll put together a strong foundation from which to execute our strategic plan and drive the next stage of our company's growth.

Mark: When I reflect on all our accomplishments last year, I'm very proud of what we've done and I'm confident that we'll put together a strong foundation from which to execute our strategic plan and drive the next stage of our company's growth.

Mark: And as we've moved into this year, I'm very excited about our plans for organic opportunities for growth this year, and we, as you know, have had a very acquisitive history. As we enter this year, we see a number of attractive potential opportunities on this front.

And as we've moved into this year I'm very excited about our plans for organic opportunities for growth this year.

We as you know have had a very acquisitive history as we enter this year, we see a number of attractive potential opportunities on this front.

Mark: Our new status as a public company is certainly facilitating more of these introductions and conversations.

Our new status as a public company is certainly facilitating more of these introductions and conversations.

Mark: Having said that, expect us to be disciplined on valuation multiples and not lose sight of our strategic objective.

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 one quick moment to thank everybody in the market Wise organization all of our employees our partners and affiliates who worked so hard over this past year to getting to this place.

Mark: Before we take your questions, I want to take one quick moment to thank everybody in the MarketWise organization, all our employees, our partners, and affiliates who have worked so hard over this past year to get us to this place.

Mark: This was a truly remarkable year, and there's a lot to be proud of as we look forward to the future. And most of all, I wanna thank our subscribers.

This was a truly remarkable year and theres a lot to be proud of as we look forward to the future.

And most of all I want to thank our subscribers our relationship with them.

Mark: we believe is our biggest asset and none of this would be possible without them. I'd now like to turn the call over to

We believe 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.

Ladies and gentlemen, the floor is now open for questions. If you would like to ask a question. Please press star one on your telephone keypad at this time.

Speaker Change: Ladies and gentlemen, the floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at the.

Speaker Change: The confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from

Formation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your.

Question from the queue for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star 1 to register.

Once again Thats Star one to register questions at this time.

Speaker Change: Our first question today is coming from Kyle Peterson of Needham and Company. Please go ahead.

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

Speaker Change: Hey, good morning. This is actually Sam Salvasan for Kyle today. Thanks for taking the questions. To kick things off, I was wondering if you guys could provide some commentary around what you're seeing across some of the core KPIs like billing, 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 .

Hey, Good morning. This is actually Sam Zalviso on for Kyle today, Thanks for taking the questions to kick things off I was wondering if you guys can provide some commentary around what you're seeing across some of the debt.

Core kpis like billings subscribers traffic year to date.

Especially given the.

The market volatility in recent weeks with some of this geo political uncertainty going on over in Eastern Europe .

Thanks.

So are you talking post these 31 is that what you're saying.

Sam Salvasan: So are you talking post D31, is that what you're saying?

Yes, it's just you know.

Speaker Change: Yes, just, you know, over the past few months.

Over the past few months.

Speaker Change: Yeah, so look, I mean, I think that, like, if you step back and from the trees and try to gaze at the forest, what we told you was that summer months are tough for all DTC companies.

Yeah. So look I mean, I think the like if you step back and from the trees and try to gauge forest. What we told you was that summer months are tough for all DTC companies.

Speaker Change: in many regards, engagement was doubt, right? What's interesting is, and we're seeing this in spades, very interesting dynamic.

In many regards engagement was down right. What's interesting is and we're seeing this in states very interesting dynamic.

Speaker Change: 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.

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.

Speaker Change: So the driving force here is not so much eroding conversion rate, it is the volatility that we've seen in engagement. That's point one that's really important to keep in mind.

So that's the driving force here is not so much erodes.

Eroding conversion rate it is the the the volatility that we've seen engagement that that's 0.1, that's really important to keep in mind okay.

Speaker Change: Engagement steadily fell Q2 and then fell further still in Q3.

Engagement steadily fell Q2, and then fell further still in Q3.

Speaker Change: And then in Q4, you know, the first half of Q4 was up relatively 20%, I guess, versus the prior five months.

And then in Q4, you know the first half of Q4 was up relatively 20% I guess versus the prior five months.

Tailed off a bit a bit into December and December look more kind of like.

Speaker Change: tailed off a bit a bit into December and December looked more kind of like quite as bad as late.

That is quite as bad as late summer right.

Now if you look post.

Speaker Change: Now, if you look post-December, I mean, just generically, you can look at trading volumes, and this is an interesting proxy, the data that we look at is all public.

Post December I mean, just generically.

You can look trading volumes and this is an interesting proxy to stop the data that we look at it's all public.

Speaker Change: We look at average daily trades for a given metric, and the average daily equity trades that we saw in January were maybe 13% from the fourth quarter average, and then in February they were down again, mid-single-digit percentages. So you're seeing some volatility in trading volumes.

We look at the average daily trades for given metric and the average daily equity trades that we saw in January where you know maybe 13% from the fourth quarter average and then in February they were down again, you know mid single digit percentages, so you're you're.

You're seeing some volatility and trading volumes.

You know and I would I would I.

Speaker Change: You know, and I would look at that as a reasonable proxy for what may or may not be happening with our landing page visits. I mean, that's a decent thing to look at to say, you know, what might be happening with our engagement. I really can't give you our engagement statistics.

I would look at that as a reasonable proxy for what may or may not be happening with our landing page visits I mean, that's that's a decent thing to look at to say you know what what might be happening with our engagement.

Give you our engagement statistics.

Speaker Change: Post these 31, but I'll tell you that that trading volume, you know, metric is a decent proxy for that. So a little bit better in January , perhaps a little bit worse in February .

Post these 31.

But I'll tell you that the that trading volume metric is a decent proxy for that so a little bit better in January perhaps a little bit worse in February .

Speaker Change: Um, but yeah, engagement seems to be, you know, it's still bumping around, right? So that's hard to put your finger on. And as Mark said, look, a hundred year pandemic, we are seeing the shake out of this across the world, right?

But yeah engagement seems to be you know, it's still bumping around right. So that's hard to put your finger on it.

As Mark said look 100 year pandemic, we are seeing the shake out of this across the world right.

Speaker Change: And then on top of that, you've got inflation, you've got oil prices, you've got geopolitical conflict. So there's just a lot of.

And then on top of that you've got inflation, you've got oil prices, you've got geopolitical conflicts.

Theres just a lot of things that are in flux and.

Speaker Change: And, you know, I think long term we all have to have the view that, you know, we've seen some things in the past, including the financial crisis, that we've navigated quite well.

I think long term, we all have to have had the view that you know we've seen some things in the past, including the financial crisis that we've navigated quite well.

Speaker Change: And in the end, you know, our ability to flex, adapt.

In Indiana.

Our ability to flex adapt move on and and succeed for the long term has been what's made this business model so resilient so.

Speaker Change: on and succeed for the long term has been what's made this business model so resilient. So lots of things that we're working on, but we continue to expect there's going to be volatility engagement for at least the next couple of months as we kind of get through what may or may not be happening in Europe .

Lots of things that we're working on but but we continue to expect theres going to be volatility engagement.

For for at least the next several months as we kind of get through what may or may not be happening in Europe .

Speaker Change: and if we can get some stabilization in energy prices. But from a research perspective, expect that all of our investment professionals are nimbly adjusting to what's going on in the markets right now, and writing content that will be relevant for investors.

And if we can get some stabilization in energy prices, but from a research perspective expect that all of our investment professionals are our nimbly adjusting to what's going on in the markets right now underwriting content that will be relevant for investors.

Speaker Change: and try to protect them in volatile times and help give them investment ideas that aren't normally your standard sort of melt up easy peasy investment ideas, right?

They try to protect them in volatile times and help give them investment ideas that aren't normally your standard sort of melt up.

Easy Peasy investment ideas right. So.

Hopefully that answered yet.

Speaker Change: Hopefully that answers your question. Yeah. Yeah, that's right. I would just add that, you know, what's key from our perspective is that we've got a full suite of products that cover a full spectrum of investment strategy.

Yeah, that's right I would just add that you know whats key from our perspective.

<unk> got a full suite of products that cover a full spectrum of investment strategies.

Speaker Change: So while the markets may ebb and flow over time, and they do.

So while the markets may ebb and flow overtime and they do.

Speaker Change: 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. That's what's key from our standpoint.

What's key for US is that we have.

Broad variety of products that cover investment themes applicable to other times that we're in.

What the key from our standpoint.

Got it thanks for that commentary that's super helpful.

Speaker Change: And then just a quick follow-up on capital allocation, and thanks for the update on the buyback there, too. You know, 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? Yeah. That's a good question.

And then just a quick follow up on capital allocation and thanks for the update on the buyback there too.

As we as we head into 2022, how are you guys thinking about balancing free cash flow use between the buyback organic investments and content writers and M&A.

Yeah, that's a great question.

Yeah go ahead deal I'll go first.

I'm, just gonna talk to that.

Speaker Change: I was just going to talk to the corporate financing part of that, which is, look, the buyback is highly accretive and makes wild sense to continue doing that.

For Finance Department that.

Which is look the buyback is highly accretive.

Makes.

Wild sense to continue doing that.

Speaker Change: So that's point one, expect us to continue doing that. Our stock is, we're trading at three times revenue, I think, something in that.

So that's 0.1 expect us to continue doing that.

I suck as what we're trading at three.

Three times revenue I think.

Something in that in that order may be less now.

Speaker Change: So expect us to do that. We'll always look for what is the best use of our cash from a corporate finance perspective. We do wanna continue to build some cash. We wanna be active on the M&A front and that's probably a good segue to you, Mark.

So expect us to do that we will always look for what is the best use of our cash from a corporate finance perspective, we do want to continue to build some cash wanna be active on the M&A front and that's probably a good segue to you Mark.

Yeah I.

Mark: Yeah, I, I love this question because we think about it a lot. Capital allocation is one of the most important things we can do.

I Love. This question, because we think about it a lot.

Capital allocation is one of the most important things we can do.

Mark: And to that end, we think of our business kind of like partners do, a long-term partnership.

And to that end, we think of our business kind of like partners do a long term partnership.

Mark: And because of that, and you're getting a flavor for that in our decision not to do guidance, we have the long-term.

And because of that.

And youre getting a flavor for that in our and our decision not to their guidance. We have the long term view in mind.

Mark: And so when our management team makes decisions about capital allocation, what we usually choose to do is what we believe are in the best interest of our owners over a period of years, not necessarily months.

So when our management team makes decisions about capital allocation what.

What we usually choose to do is what we believe are in the best interest of our owners over a period of years not necessarily months.

So we frequently every day and make decisions that might limit our growth and profitability in the short term, but that we believe are best for the long term interests of our shareholders.

Mark: So we frequently every day make decisions that might limit our growth and profitability in the short term, but that we believe are best for the long term interests of our shareholders.

Mark: And candidly, we want to attract like-minded shareholders, folks that don't measure their investment time horizon in days or months, but more years.

And candidly, we want to attract like minded shareholders folks that don't measure their investment time horizon and days or months, but more years.

Mark: And so that when we think about a capital allocation, we're very well aware. And because we think like long term partners, we know we are in business.

And so that when we think about our capital allocation, we're very well aware of them because we think like long term partners. We know we're in business to ultimately provide a return.

Mark: to ultimately provide a return.

Mark: to our investors and our owners in return for their faith and trust in us as capital allocators.

To our investors and our owners and in.

In return for their faith and trust in Us as capital Allocators.

Mark: We've got a 20 year track record of doing that with both growth and profitability, but we don't think about short term.

Got a 20 year track record of doing that with both growth and profitability.

But we don't think about short term fluctuations.

Mark: when we make those decisions. What we're trying to do is make sure that the decisions we make are accretive to our owners for the long term. So I don't know if that's

When we make those decisions what we're trying to do is make sure. The conclusions we make are accretive to our owners for the long term.

So I don't know if that's specific enough where you stand but.

Mark: That's how we think about it. That is why we put the buyback program in place.

That's how we think about it that is why we put the buyback program in place.

Mark: And over time, we will keep that long-term interest of our owners in the front of our mind, like we always have.

And over time, we will keep that long term interest of our owners.

Front of our mind like we always have.

Speaker Change: Yep. Awesome. That's super helpful. Thanks, guys.

Yep Awesome, that's super helpful. Thanks, guys.

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

Speaker Change: 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?

Great.

Mark and Dave how are you guys.

Hey, Devon Devon.

Devin Ryan: First question here, just on subscriber growth over the past year, so you nearly doubled subscribers and appreciate the comments that people come in kind of at a lower end subscription and then over time, they will often kind of increase to a higher value subscription of the firm.

First question here.

Just on subscriber growth.

Over the past year, so nearly doubled.

<unk> and I appreciate the comments that you know people come in and kind of at a lower end subscription and that over time.

They will often kind of increase to a.

A higher value subscription of the firm.

Devin Ryan: I guess, how should we think about kind of this cohort, just given the step function that you saw really over the last two years, are you starting to see conversion from kind of people that came in in early 2020, or what's the timeframe of that, and what are you guys doing to drive these subscribers from a lower value to a higher value?

How should we think about kind of this cohort just given the step function that you you saw really over the last few years.

Are you are you starting to see conversion from kind of people that came in in early 2020 or what's the timeframe of that and what are you guys doing to drive.

The subscribers from a call it a lower value to a higher value.

Yeah.

Speaker Change: Look, it all comes back to what I said five minutes ago, Devin, around content, right? You have to have content that resonates, that's relevant, that helps protect your customers and or make them money, right? I mean, there's defensive ideas and offensive ideas and with the markets in the state that they are, our investment professionals have to be very nimble. That is job one, right? Absolutely, so we have to have content that resonates.

Well it all comes back to what you.

No I said five minutes ago, Devon around content right you have to have content that resonates that's relevant that helps protect your customers and or make them money right. I mean, there's defeat defense of ideas and offensive ideas and with the markets in the state that they are our investment professionals have to be very nimble that is job one right absolutely.

So we had some content that resonate.

Speaker Change: So know that we're doing that. Having said that, when things are changing so rapidly, right, you have to give some acknowledgement. If it takes time to develop and write and research and produce and record and launch.

So no that know that we're doing that having said that when things are changing so rapidly right you have to give some acknowledgment of it takes time to develop and writing research and produce and record and launch.

Speaker Change: a new investment idea. That might take a couple of weeks or it might take a couple of months depending on the nature of it.

Our new investment ideas that might take you know a couple of weeks, where it might take a couple of months depending on the nature of it so.

Speaker Change: So with that volatility, there's going to be some adjustment and new things, but you have to have the content first and foremost, as far as like the.

So with that volatility is going to be some adjustment and new things, but you have to have the constant first and foremost as far as like the.

You know cohorts and so forth, we don't necessarily get into cohorts, but I get the thematic gist of your question, which is you know you're saying look we have these subscribers that came in in 'twenty 'twenty was at Gogo year. The first you know the first quarter. This year was obscene. It was incredible right. Then you saw a slowdown and a modest recovery in the fourth quarter.

Speaker Change: You know, cohorts and so forth, we don't necessarily get into cohorts, but I get the thematic, just your question, which is.

Speaker Change: you know, you're saying, look, we have these subscribers that came in in 2020 was a go-go year. The first, you know, the first quarter this year was obscene. It was incredible, right? And then you saw us blown out in a modest recovery in the fourth quarter.

Speaker Change: What you'll see is that if you were to see cohort data, it's not a cast in stone sort of thing. In other words, you may have a cohort in particular that starts in 2020 or 2021, let's say 2021.

What you'll see is that if you look if you were to see cohort data right.

It's not a it's not a cast in stone sort of thing in other words, you can have a cohort in particular it starts in 2020 or 2021, let's say 2021 and.

Speaker Change: And its revenue build might have a flatter slope to it initially. And you say, well, this is going to be a bad cohort. This was cohort Q2 of 21, Q3 of 21.

And its revenue build might have a flatter flatter slope to it initially and you say well this is going to be a bad cohort. This was cohort Q2 of 'twenty, one Q3 of 'twenty one.

Speaker Change: It's a bad cohort. That's not true. If you look at our data over time, you'll see that there's a lot of flexing. You'll see inflection points in those cumulative conversion lines.

At the back cohort that's not true.

If you look at our data over time, you'll see that there's a lot of flexing youll see inflection points and knows Curt there's converged accumulative conversion lines.

Speaker Change: those LTV lines and it's driven by a number of things, content, market environment, engagement, all those sorts of things. So.

And those LTV lines, and it's driven by a number of things content market environment engagement, all those sorts of things so.

Speaker Change: I wouldn't get overly wrapped around the axle around the fact that, well, second and third quarter weren't great cohorts for us. That's why we reduced the spend, so we managed the cost. Longer term, we know we're going to get those folks to engage, and significant enough of them financially to continue to purchase product from us, that we'll get back into line with our 20-year history. We've seen that time and time again.

I wouldn't get overly wrapped around the axle around the fact that well second and third quarter weren't great cohorts for us that's why we reduced the spend so we manage the cost longer term, we know we're going to get those folks to engage in and.

Significant enough enough of them financially to continue to purchase product from us that will get back into line with our 20 year history, we've seen that time and time again so.

I would look to the long term metrics and if you look at our slide deck and in our in our K that we filed today.

Speaker Change: I would look to the long-term metrics, and if you look at our slide deck in our K that we filed today, and you look at some of those, we give you those charts with the cumulative conversion, and you can see those numbers. If you divide those numbers by three, you'll get to the annual conversion rate.

And you look at some of those we gave you those charged with accumulative conversion.

You can see those numbers be divide those numbers by three you'll get to the annual conversion rates.

If you were to take all of our cohorts guys by definition and average them and you get those numbers and yeah, there's a distribution.

Speaker Change: If you were to take all our cohorts, guys, by definition and average them, you get those numbers and yeah, there's a distribution.

Speaker Change: But we have 20 years of data. So anyway, it all comes back to content, being smart on the cost side out front to not blow your economics out of the water, and then continuing to write good content over a long period of time. Yeah, okay.

But we have 20 years of data so.

Anyway. It all comes back to content being smart on the cost side upfront not blow your economics out of the water and then continuing to write good content over a long period of time.

Yeah, Okay terrific. Thanks for the color and a quick follow up here just a lot of conversation on M&A opportunities and I know that's an area. That's been a focus for the company and I'm sure. The conversations are occurring when we look at just the market dynamics clearly there's been kind of a revaluation.

Speaker Change: And a quick follow up here, just a lot of conversation on M&A opportunities, and I know.

Speaker Change: That's an area that's been a focus for the company and I'm sure the conversations are occurring. When we look at just the market dynamics, you clearly there's been kind of a revaluation across the board in the public markets. And so I appreciate.

Across the board in the public markets and so I appreciate your comments about market wise stock and we agree or are you seeing any change in expectations in the private markets in terms of whether it's Conor.

Speaker Change: comments about market-wide stock, and we agree, are you seeing any change in expectations in the private markets in terms of whether it's content sellers or technology, and is the bid-ask spread really wide right now, or are expectations maybe shifting given the recent market pullback?

Content sellers or technology.

Is the bid ask spread really wide right now or are expectations, maybe shifting given the recent market pullback.

Yeah. That's a good that's a good question Devin I'm glad you brought that up and you're right as valuations have sort of.

Speaker Change: Yeah, that's a good, that's a good question, Devin. I'm glad you brought that up. And you're right, as valuations have sort of peaked and come down off those peaks. We've noticed too. And that's, that's definitely an environment that we are more excited about because from our view.

Peaked and come down off of those peaks.

We've noticed too.

And that's that's definitely an environment that we are more excited about because from our view.

Speaker Change: We've seen a lot of properties, but there were a lot of really high valuation expectations in the conversations we've been having, and especially so in private context where you can't see what your equity is worth every day like you can with us.

We've seen a lot of properties, but there were a lot of really high valuation expectations and the conversations we've been having and especially so in private context, where you can't see what your equity is worth every day like you can with us.

Speaker Change: And so we've seen that and I think that's a more attractive.

And so we've seen that and I think that's more attractive.

Speaker Change: environment for us. We've had a number of discussions recently that we're excited about and that evaluation

For Us we've had a number of discussions recently that we're excited about and that valuation.

A dynamic is one that.

Speaker Change: a dynamic is one that is helpful. Now, of course, we can't comment on specifics. And of course, each party we talk to has a different view on that. Some people are a little more stubborn and slow to react to the to the trade market environment. But certainly, we've seen that dynamic.

That's helpful now.

Course, we can't comment on specifics and of course each party. We talk to has a different view on that some people are little more stubborn and slow to react to it through the tree market environment. So.

But certainly we've seen that dynamic play out.

Speaker Change: Okay, good to hear. I'll leave it there, but really appreciate it, guys.

Okay good to hear.

Leave it there, but really appreciate it guys.

Yeah. Thank you.

Speaker Change: Thank you. The next question is coming from Yigal Arunian of Wedbush Securities. Please go ahead.

Thank you. The next question is coming from Yigal <unk> of Wedbush Securities. Please go ahead.

Speaker Change: Hey, this is Chad on for your goal. So the past few quarters, you've discussed higher CPMs in the marketing environment and not pushing on profitable spend. Can you maybe update us on the current environment on how you're approaching marketing spend? And then maybe thinking about the rest of the year, because, you know, 2020 and 2021 experience

Hey, this is Chad on for Yigal, So the past few quarters, you've discussed higher CPM and the marketing environment and not pushing unprofitable spend.

Maybe update us on the current environment and how youre approaching marketing spend and then maybe thinking about the rest of the year because 2020 in 2021 and experienced strong tailwind and then some headwinds.

Speaker Change: strong tailwinds and then some headwinds from COVID and a strong stock market. How should we maybe think about a more normalized environment for business?

From Covid and a strong stock market, how should we maybe think about a more normalized environment for the business.

Yeah.

Speaker Change: Yeah, so, um, Chad, you know, that's, um.

Chad that's.

At some level we'd like.

Speaker Change: At some level, we'd like to know the answer to that question, too.

So that question too.

What we saw at the end of the year fourth quarter. If you will you know we don't again, we don't disclose that but anecdotally. What we can say is we told you definitively in Q2 unit cost went up.

Speaker Change: What we saw at the end of the year, fourth quarter, if you will, we don't disclose, but anecdotally, what we can say is we told you definitively in Q2, unit costs went up. In Q3, they remained elevated. In Q4, they came down. They came down mid-low teens percentages. That was good. They're still pretty elevated to what they were, say, in 2020, but we can have good quarters in

Q3.

They remained elevated in Q4 that came out it came down you know mid low teens percentages that was good.

They're still pretty elevated to what they were saying 2020.

But we can have good quarters and generate really good earnings.

Speaker Change: Um, we, we can live with escalating cash through time.

We can live with escalating CAC through time, so that isn't.

Speaker Change: That isn't really the limiter for us. What we need to do is produce good investment ideas, make sure that we're not blowing out a particular campaign whose unit costs aren't resonating. It's not working, right? We have to manage that on a campaign-by-campaign basis. And our marketers are very good at that. So we have to manage our costs, make sure that we have investment ideas that are gonna resonate in today's markets.

That isn't really the limiter for us what we need to do is produce good investment ideas make sure that we're not blowing out a particular campaign, whose unit costs arent resonating. It's not working right you have to manage that on a campaign by 10 basis campaign basis, and our marketers are very good at that so we have to manage our costs and make sure that we have invested.

Ideas are going to resonate in today's markets and that May change from three months to three months segments throughout the course of the year.

Speaker Change: And that may change from three month to three month segments throughout the course of the year.

Speaker Change: We are planning for CAT to remain elevated. Our model is not going to be dependent on CAT falling 20 or 30 percent. Our model can accommodate to that. We can make that up with conversion rates, good ideas, and some level pricing.

We are planning for cat to remain elevated like our model is not going to be dependent on CAC falling 20 or 30%.

Our model can accommodate you know to that.

We can make that up with with conversion rates good ideas and at some level pricing right.

Speaker Change: But the key is good content and being very disciplined on a campaign-by-campaign basis about not blowing out your costs. The break-evens on those cohorts in the second and third quarter will take a little bit longer. But the good news is you spent way less money in those cohorts, so they're underweighted on a weighted average dollar basis. Coming into the first quarter, we'll have to see how things shake out. As I mentioned a few minutes ago, there's still volatility on engagement, up one month, down the next, and we'll see how that continues.

But the key is good content and being very disciplined on a campaign by campaign basis with a button blowing out your costs or the break evens on those cohorts in the second and third quarter will take a little bit longer.

But the good news is you spent way less money in this cohort so they're under weighted on a weighted average dollar basis coming into the first quarter.

See how things shake out.

I mentioned a few minutes ago, there is still volatility on engagement up one month down the next.

And we'll see how that continues to play but.

Speaker Change: Yeah, I mean, some uncertains, but you know, it's up to each. The good news is we have a very decentralized platform with each of these marketers able to manage their campaigns as they know how to best, you know, we're not telling them how to do it. We don't know how to do it. They do right. So we have a hundred investment professionals and a couple hundred marketers working on this.

Yeah, I mean, some uncertainty, but it's up to each the good news is we have a very decentralized platform with each of these marketers able to manage their campaigns as they know how to best we're not telling them how to do it we don't know how to do it. They do it right. So we have 100 investment professionals and set a couple of hundred marketers working on this.

Speaker Change: And in the end, I think at the end of the year, we will have balanced costs with revenue and maintain a good revenue profit profile with the revenues that we produce.

And and.

And in the end I think at the end of the year, we will have a balanced cost with revenue and maintain the good revenue per our profit profile with the revenues that we produce.

Yeah, that's right and I would just add to that just goes back to stand capital allocation question.

Speaker Change: Yeah, that's right. And I would just add to that. This goes back to Stan's capital allocation question.

Speaker Change: To us, that marketing spend is also part of the capital allocation decision that we make as managers.

To us that marketing spend is also part of the capital allocation decision that we make as managers and so we do what we think you all would do if you own the business which is.

Speaker Change: And so we do what we think you all would do if you owned the business, which is.

Speaker Change: When it becomes cheap or cheaper to acquire subscribers, we do it more. And when it becomes really expensive to acquire subscribers, we do it less and back off, always with the mind of growth, but also profitability.

When it becomes.

Cheap or cheaper to acquire subscribers, we do it more and when it becomes really expensive.

To acquire subscribers, we do it less back off always look in mind.

Growth, but also profitability.

Speaker Change: So to us, that's just another capital allocation decision that we make using our market expense instead of necessarily our balance sheet.

To us that's just another capital allocation decision that we make using our marketing spend instead of necessarily our balance sheet.

Okay. Thank you.

Speaker Change: Thank you. Our next question is coming from Jason Helstein of Oppenheimer. Please go ahead.

Thank you. Our next question is coming from Jason <unk> of Oppenheimer. Please go ahead.

Jason Helstein: Hey guys, let me follow up on the marketing question, then I've got another one. So, I mean, look, this was the worst, at least from the way, you know, numbers on a page, this was the worst marketing efficiency quarter, I think in like seven or eight quarters. So, you know, if we're just thinking about all of 22 and we're thinking about sales and marketing as a percent of billing, I mean, do you think you guys can kind of bring that ratio in line with where you were in 2021, or should we just assume that?

Hey, guys, let me follow up on the marketing question and then I've got another one so I mean look this was the worst at least from the way numbers on the page. This is the worst marketing efficiency quarter, I think in like seven or eight quarters or so.

If we're just thinking about all of 'twenty, two and we're thinking about sales and marketing as a percent of billings. I mean do you think you guys can kind of bring that ratio in line with where you were in 2021 or should we just assume that.

Jason Helstein: you know, this is going to be kind of a de-leverage year for sales and marketing as a percent of buildings.

This is going to be kind of a deleveraging year for sales and marketing as a percent of buildings.

Then a follow up.

Oh, I'm, sorry, I'm not sure I'm tracking that can you repeat the first part of that question again.

Speaker Change: Hey, Jason, can you, I'm sorry, I'm not sure I'm tracking that. Can you repeat the first part of that question again?

Jason Helstein: Yeah, so if you look at sales and marketing, excluding X, stock-based comps.

Yeah. So if you look at sales and marketing excluding ex stock based comp as a percent of your billings right. It was 43% in the quarter, which I think was the probably the highest ratio in like eight quarters or something like that right.

Jason Helstein: as a percent of your billings, right? It was 43% in the quarter, which I think was probably the highest ratio in like eight quarters or something like that, right? Just reflecting lower.

Reflecting lower.

Jason Helstein: you know, efficiency in period, right? And obviously, one quarter, you know, doesn't give the answer or agree with that. You know, you're running a business over time, but understand that you're not giving us.

<unk> seen in period, right and obviously one quarter.

It doesn't give you answer I agree with that.

You're running a business over time, but.

Understanding that youre, not giving us guidance.

Jason Helstein: you know, for EBITDA or other things for 2022, can you at least let us know how you're thinking about sales and marketing efficiency for all of 22? You know, do you expect sales and marketing to...

For EBITDA or other things for 2022 can you at least let us know, how you're thinking about sales and marketing efficiency for all of 'twenty two.

Do you expect sales and marketing.

Tim you know choosing to show you now comparable ratio to 21.

Jason Helstein: to show, you know, comparable ratio to 21, you know, improving leverage or de-leverage?

Improving leverage or deleverage.

So I have a couple.

Oh go ahead, though.

Simple concepts and that are important to your kind of linked in two things Jason that aren't directly related okay.

Jason Helstein: of concepts on that that are important. You're kind of linking two things, Jason, that aren't directly related, okay?

Jason Helstein: meaning that the marketing spend that we have isn't necessarily tied to billings. I mean, the way to look at its efficiency is to look at the number of new subscribers that we acquired in the quarter, okay? And keep in mind, when we acquire them, it's probably a $100 revenue event for each of these new guys, right? So it's not going to drive billings a whole lot.

And that the marketing spend that we had isn't necessarily tied to billings I mean, the way that the way to look at it sufficiency look at the number of new subscribers that we acquired in the quarter, Okay. The billing and keep in mind when we acquire them. It's probably 100 dollar revenue that for each of these new guys right. So it's not going to drive billings a whole lot.

Jason Helstein: The billing needle begins to move in the subsequent three, six, nine, 12 months after that as they buy their second, third, and fourth publications from us. So, there'll be a lag. There's a time lag for it, right?

Needle begins to move in the subsequent 369 12 months after that if they buy their second third and fourth publications from us So there'll be a lag there's a time lag for it right if.

Jason Helstein: If you look at the efficiency, the actual results in the fourth quarter were the best results since the first quarter by a wide margin in terms of our unit cost.

If you look at the the efficiency the actual results in the fourth quarter, where the best results since the first quarter by a wide margin in terms of our unit costs.

Jason Helstein: You know, we produce 20% more gross ads.

We.

Produced 40% more gross ads.

Jason Helstein: in the fourth quarter than we did the third quarter. That's a huge, more than 40%. That's a huge step up. And the unit costs were down 13% sequentially from Q3 to Q4. So efficiency-wise, I think that's the way I would think about it is to kind of, you know, estimate our churn, and we've told you our churn is around between 1.8 to 2.2 or 2.3%, you know, historically.

In the fourth quarter than we did the third quarter and that's a huge more than 40%. That's a huge step up and the unit costs were down 13% sequentially from Q3 to Q4. So so efficiency wise I think that's the way I would think about it is to kind of estimate or churn and we've told you our churns around between one eight to 2.2 or two 3%.

Stork Lee.

Jason Helstein: And for the past three years, we've also told you we're kind of the high end of that range so you can get pretty close on what our growth ads were. That's the way that we think about efficiency, not at the percent of billings, the billings is going to be driven by the back end conversions when they buy that next publication at $1,000.

The past three years. We've also told you we're kind of at the high end of that range. So you can get pretty close on what our gross adds were that's the way we think about efficiency not as a percent of billings. The billings is going to be driven by the backend conversions when they buy that next pub.

A case in at $1000.

Speaker Change: But as far as your broader question around returning to 2020, thank you. Thank you.

But as far as your broader question around returning to 2020.

You know.

We'll have to wait and see right I mean, it's going to be predicated on some of these global events right right now we're tracking at a decent rate.

Speaker Change: We'll have to wait and see, right? I mean, it's gonna be predicated on some of these global events, right? Right now we're tracking at a decent rate.

You know, we're not going to we already told you first quarter 'twenty, one as a record number I don't expect that rate and with the volatility that we were seeing in the market expect there can be ups and downs.

Speaker Change: You know, we're not gonna, we already told you, first quarter 21 is a record number. Don't expect that, right? And with the volatility that we're seeing in the market, expect there to be ups and downs.

Speaker Change: The key for us is more content, continuing to grow organically, hire more folks.

The key for US is more content continuing to grow organically hire more folks.

Speaker Change: Spend wisely, control costs, and manage for profit. The growth will come, and it will come with good ideas, right? We can handle the elevated CAC. Our internal forecasts are not, I'll be crystal clear, are not dependent upon CAC coming down. We continue to forecast escalating CAC year to year to year in our forward-looking five-year model. We always do.

Why is the control costs and manage for profit.

The growth will come and it will come with good ideas right. We can handle the elevated CAC or our internal forecasts are not crystal clear are not dependent upon tax coming down we continue to forecast escalating tac year to year to year in our forward looking five year model, we always do.

Okay, and then just a follow up it sounds like.

Speaker Change: focusing on landing page visits and the change in that is maybe a helpful way to think about the business. And so, um, you gave it out on the third quarter call, you just give it on this call. Can you perhaps put on your website kind of, you know, that historical data and maybe that's something, you know, those of us who are trying to model this.

Focusing on landing page visits and the change in that is maybe helpful way to think about the business and so you gave it out on the third quarter call. You just give it on this call can you perhaps put on your website you kind of that historical data and maybe that's something you know those of US who are trying to model. This.

Speaker Change: perhaps can use to think about and then the other thing is it seems like this business obviously is

Perhaps can use to think about and then the other thing is it seems like this business, obviously is getting back to some kind of normal seasonality and so I mean thinking about the business I mean, you're you're talking a lot quarter to quarter, but shouldn't we all start thinking about the business more on a year over year basis.

Speaker Change: getting back to some kind of normal seasonality. And so, I mean, thinking about the business, I mean, you're talking a lot quarter to quarter, but shouldn't we all start thinking about the business more on a year-over-year basis? In this idea of like, you know, we start kind of normalizing people's behavior and, you know, as a result, you're always gonna have maybe, you know, maybe weaker periods when people are likely to take more vacations, et cetera. You know, it is just starting to go back to thinking about the business on a year-over-year basis.

The idea of like you know, we start kind of normalizing People's behavior, and you know as a result, you're always going to have maybe we you know maybe weaker periods when people are likely to take more vacations et cetera.

It is just starting to go back to thinking about the business on a year over year basis.

Speaker Change: Definitely, that's right. Thinking about the business on an annual basis, and I do feel like, you know, the COVID influence is waning here, I think, unless there's some big, you know, foot yet to drive.

Yes, definitely that's right thinking about the business on an annual basis and I do feel like you.

The COVID-19 influence us.

Waning here I think unless there's some big you know put yet to drop so so I think maybe there's large whipsaw that engagement will gradually fade a bit and maybe theres some seasonal patterns. Although if you look in December as past, we've had some really huge decembers.

Speaker Change: So, I think maybe there's large, what's causing engagement will gradually fade a bit and maybe there's some seasonal patterns. Although, you know, if you look in December's past, we've had some really huge December .

Speaker Change: because we've had good campaigns launched with the right idea, at the right time, at the right price, that resonate.

Because we've had good campaigns launched with the Red idea at the right time at the right price.

So I.

Speaker Change: I mean, there could be some seasonality and for the, for the near term, like, like this year, you know, as COVID continues to shake itself out of the system, I might expect that to continue to be a factor. I traveled this past weekend and every party garage and Reagan airport was filled. I've never seen that before. A, B and C. so, so that travel dynamic might persist a bit here, you know, and this year.

I mean, there could be some seasonality and for the first for the near term like this year.

<unk> continues to shake itself out of the system I might expect that to continue to be a factor I traveled this past weekend and every parking garage in Reagan airport was fulfilled I've never seen that before a b and C. So so that traveled dynamic might persist a bit here you know and in this year.

Speaker Change: But think of the business over a long-term period of time. If you sort of say, well, let's maybe average like what 19, 20, and 21 look like, that's a three-year view, guys. If you take kind of an average view and you say, okay, now let's say we can continue to grow our subscriber base through time. We take some of these other average profiles.

But think of the business over a long term period of time, if you'd sort of say well, let's maybe average like what 19, 2020 . One look like that's a three year view guys. If you take kind of an average view and you say, okay. Now, let's say, we can continue to grow our subscriber base through time, we take some of these other average profiles.

Speaker Change: That's all I would think about the business, if I were you, is a multi-year average view, with some view as to what you think we're going to grow our subs, and with some view as to what you think our poos might be.

You know that's that's how I would think about the business. If I were you is a multi year average view with some view as to what you think we're gonna grow our subs and with some view as to what you think are ARPA as you know it might be.

Speaker Change: And those tend to be lower volatility numbers in terms of the percentage growth rates. Billings can be very volatile as you've seen, right?

And.

Those those tend to be lower volatility numbers in terms of the percentage growth rates billings can be very volatile as you've seen right.

But you're right multiyear view thinking of averages and then you have a long term view on things like carpool and paid sub growth and those sorts of things I think that's right way to look at it.

Speaker Change: But you're right, multi-year view, thinking of averages, and then you have a long-term view on things like ARPUs and paid sub-growth and those sorts of things. I think that's the right way to look at it.

Thanks.

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

Speaker Change: Thank you. Our next question is coming from Jeff Mueller of Baird. Please go ahead.

Jeff Mueller: I was hoping to get some more detail around sort of the things that you're working on with Ascendant to either improve or change your go-to-market and marketing strategy. And I guess, is that more focused on the acquisition, customer acquisition side, or is that really benefiting the upsell to the higher-value subscriptions? Absolutely. Thank you.

Hi, it's keeping polygon project I think taking my questions.

I was hoping to get some more detail around sort of the things that you're working on with ascendant to either improve or change your go to market and marketing strategy and I guess is that more focused on the acquisition customer acquisition side or is that.

Really benefiting the upsell to the higher value subscriptions.

Yeah.

Yeah, I'll take that one.

Jeff Mueller: Yes, the guys at Ascendant have been great so far. I've said that a number of different times throughout the past year. They've been really, really great partners for as long as we've known them. And part of that partnership is

Yes, the Guy Who's got a Senate had been great. So far I've said that a number of different times throughout the past year, they've been a really really great partners for as long as we've known them and part of that partnership is discussions that we've had around how we can prove our data science AI and ml efforts.

Jeff Mueller: Discussions that we've had around how we can prove our data science AI and ml

Jeff Mueller: And so I'm happy to report that.

And so I'm happy to report that.

Jeff Mueller: that progress has been going very well. We are in the early phases of upgrading our skill set around those areas. And to your question, it's all the above.

That progress has been going very well we are in the early phases of upgrading our skill set around those areas and to your question.

It's all the above.

Speaker Change: For sure, we would like to improve the efficiency of our front-end marketing, but also

For sure we would like to improve the efficiency of our front end marketing, but also.

Speaker Change: some of the sales efforts that we had to our current subscribers and what comes out of that. We're doing all that in an effort to experiment and improve on our already efficient business model, but we think it's possible.

Some of the sales efforts that we have to our concept scrubbers and what comes out of that.

We're doing all of that in an effort to experiment and improve on our already efficient business model, but we think it's possible.

Speaker Change: Because the better and better we get to understand the buying behavior of our customer base, and remember, we've got 20 years at this, so we're pretty good at it already. But if we can improve on that, we think that'll result in even more efficiencies to our business model that already has high operating margin, and in our view, high net income margin.

Because the better and better we get to understand the buying behavior of our customer base and remember we've got 20 years. So we're pretty good at it already but if we can improve on that we think that will result in even more efficiencies for them.

Business model that already has high operating margin and in our view high net income margin.

Speaker Change: So we're making nice progress, you know, and we'll continue to do so throughout the year. It's a high priority.

We're making nice progress you know.

And we will continue to do so throughout the year, it's a high priority for them.

Thanks, and on the can market wise terminal platform.

Speaker Change: Thanks. On the pan-market-wise terminal platform, what still needs to be done in order to launch that product fully, and then what's the go-to-market around that? Is that sort of

What still needs to be done in order to launch that product fully and then sort of what's the go to market around that is that sort of.

Built into subscriptions or is that sort of a add on offering.

Speaker Change: built into subscriptions or is that sort of an add-on offering that's incremental?

That's incremental.

Yeah, we've made significant strides since we spoke to you last with the with that Pan market wise product, we whats happens more specifically as we have launched the platform itself, which as I've described in prior calls as we were doing some work behind the scenes I think I colloquially called it.

Speaker Change: Yeah, we've made significant strides since we spoke to you last with that Pan MarketWise product. What's happened more specifically is we have launched the platform itself, which as I've described in prior calls, is we were doing some work behind the scenes. I think I colloquially called it changing

Changing some of the plumbing.

Well, we launched that Reformatted platform and one of our brands in Q1, that's growing nicely so far they're still working out some of the bugs in that re plumbing.

Speaker Change: Well, we launched that reformatted platform in one of our brands, in Q1. That's going nicely so far. They're still working out some of the bugs in that re-plumbing.

And then they're planning on expanding it.

Speaker Change: and then they're planning on expanding it. They've tested the ability to integrate the additional affiliate content into the environment. And the idea is that going forward this year, we will do that.

Testing the ability to integrate additional affiliate content into the environment.

And the idea is that going forward. This year, we will do that and specifically what we're trying to do is lower new subscription new subscriber acquisition costs through this digital channel and platform.

Speaker Change: Specifically, what we're trying to do is lower new subscriber acquisition costs through this digital channel and platform.

Speaker Change: And so our hope is that we'll attract traffic of our own, organically, in ways that we haven't really done much before, because most of what we've done is a direct marketing base, but we think if we had a platform like that, we could decrease our customer acquisition costs even more as people start to understand the quality of the content and the breadth of the content that we've got across that platform. So we're making nice progress, not as fast as I would want, but I do expect by at some point this year, hopefully the sooner the better, we'll have launched that platform.

And so our hope is that we'll attract traffic of our own organically in ways that we haven't really done much before because most of what we've done as a direct marketing base, but we think if we had a platform like that we could decrease our customer acquisition costs, even more as people start to understand the quality of the content and the breadth of the content that we've got across that platform.

So, we're making we're making nice progress not as fast as I would want but I do expect by at some point this year hopefully the sooner the better really.

Launch that platform across all of our brands.

Alright. Thanks.

Speaker Change: Thanks.

Speaker Change: Thank you. The next question is coming from Patrick O'Shaughnessy of Raymond James. Please go ahead.

Thank you. The next question is coming from Patrick O'shaughnessy of Raymond James. Please go ahead.

Patrick O'Shaughnessy: Hey, good morning. On your third quarter earnings call, you guys said that MarketWise would come out with 2022 guidance in the fourth quarter cycle and you'd have a lot more specifics to say then. What changed in your thinking over the last three plus months such that providing guidance is no longer appropriate?

Hey, good morning.

Your third quarter earnings call you, guys said that market wise would come out with 2022 guidance and the fourth quarter cycle and you'd have a lot more specifics to say than what changed in your thinking over the last three plus months such that providing guidance is no longer appropriate.

Okay.

Speaker Change: You want to take that mark? You want me to sure, sure, yeah, I'm happy to.

You want to take that Mark do you want me to sure sure Yeah I'm happy to.

Yeah, we have had conversations over the over the whole year are.

Speaker Change: Yeah, we have had conversations over the whole year about what our stance on guidance would be. When we went public via the SPAC, that gave us more latitude to project out into the future. We declined to do so, even though a lot of other SPAC businesses chose to.

About what our stance on guidance would be when we went public via this back that gave us more latitude to project out into the future. We declined to do so even though a lot of other snack businesses chose to.

Speaker Change: paint rosy five-year pictures, that's never really been us. That's not what we've done. And so we were putting out some metrics over the course of last year that we were comfortable with, but ultimately it just came down to a philosophical choice.

Paint Rosie five year pictures.

That's never really been us that's not what we've done and so we were putting out some metrics over the course of last year, we were comfortable with.

But ultimately it just came down to a philosophical choice.

And our experience.

Speaker Change: Business in general, and ours specifically, doesn't move in a straight line. The world's financial markets are ever-shifting, we've seen a lot of that lately, with Russia's invasion of Ukraine, and economies move up and down in cycles.

Business in general and <unk>, specifically he doesn't move in a straight line, but the world financial markets are ever shifting we've seen a lot of that lately.

Russia.

Ukraine and economies move up and down cycles, what we tried to do as managers is make decisions that we think will benefit our owners over time.

Speaker Change: What we try to do as managers is make decisions that we think will benefit our owners over time.

And so that's our philosophy. That's also consistent with the investors that we're trying to attract so as we face the question of philosophical guidance, what we wanted to do was.

Speaker Change: And so that's our philosophy. That's also consistent with the investors that we're trying to attract.

Speaker Change: So as we face the question of philosophical guidance, what we wanted to do is basically take the temptation.

Basically take the temptation out of our hands to make decisions in order to quote unquote make earnings, which we know a lot of people fall prey to.

Speaker Change: to make decisions in order to quote unquote make earnings, which we know a lot of people fall prey to.

Speaker Change: And we wanted to make sure that we have the discipline to keep a long view in mind.

And we wanted to make sure that we have the discipline to keep a long view in mind we.

Speaker Change: We understand that those short-term fluctuations will happen. That's part of business.

We understand that those short term fluctuations will happen.

That's part of business.

Speaker Change: For sure, but we try to maintain the discipline to make sure we're making decisions that are creative to our owners over the long term, measured in years, not months or days, as I said earlier. So it basically just came down to a philosophical choice, Patrick.

For sure, but we try to maintain the discipline to make sure we're making decisions that are accretive to our owners over the long term measured in years not months or days as I said earlier. So it basically just came down to a philosophical choice Patrick.

Yeah, No I appreciate that and I think that there's certainly logic behind that philosophical choice, but that wasn't your philosophy, three plus months ago and so I think there is reason to suspect hey, maybe the philosophy change just because of that 2022 guidance want to look particularly good.

Patrick O'Shaughnessy: Yeah, no, I appreciate that. And I think that there's certainly logic behind that philosophical choice, but that wasn't your philosophy three plus months ago. And so I think there's reason to suspect, hey, maybe the philosophy changed just because that 2022 guidance won't have looked particularly good.

Patrick O'Shaughnessy: So let me add to that, Patrick. So this is Luke Keller. When I interviewed here three years ago, I made a three-hour presentation to the board and it was the investment thesis on the company. And I got peppered with questions around guidance because the talk was to go public.

So let me add to that Patrick So just a little color when I interviewed here three years ago I made a three hour presentation to the board and it was the investment thesis on the company and and I got peppered with questions around guidance because the talk was to go public.

Luke Keller: And you can tell that the angle of the questions, they were philosophically absolutely against providing guidance. And frankly, I've never been at a place that had provided guidance either, so I tended to be aligned with their thoughts.

And there was a and you can tell that the angle of the question for all of you know there they were philosophically absolutely against providing guidance and frankly I've been I've never been at a place and had provided guidance either side tended to be aligned with with their thought process.

As you get into they'd go public process and its back.

Luke Keller: As you get into the go public process and it's back, you know, you have to put forecasts in your S-4. So, you know, we did all these things that the bankers kind of said you need to do this. It's kind of against our DNA. We did it. To be candid, you kind of

You have to put forecast in your S. Four so we did all of these things that that the bankers kind of said you need to do this.

Against our DNA.

We did it.

To be candid, you kind of get sucked into that vortex for a period of time.

And you kind of say okay.

Luke Keller: And you kind of say, OK, but is this the right long term answer for the.

But is this the right long term answer for the company.

Luke Keller: You know, yes, they're in our S4, we've gone public.

Yes, they are in our S. Four we've gone public.

Luke Keller: We had a good year, but philosophically, should we try to right-size and correct and do what we actually feel in our heart is the right thing to do? So there was a lot of conversations. We've been working on this for months with Mark and others, our consultants, bankers, advisors, and we just decided.

We had a good year, but philosophically should we should we try to right size and correct and do what we actually feel in our Hearts is the right thing to do so there was a lot of conversations we've been working on this for months.

With Mark in and others are consultants bankers advisors and.

We just decided to say you know what you can't wait into it. Because then you don't it's really hard to take away. So we're going to we're going to we're going to.

Luke Keller: You can't wait into it because then it's really hard to take away. So we're going to make the plunge now. We're going to stay true to ourselves now. Yeah, I know it's hard. It feels a bit uncomfortable. We get it, it was a big decision. But we think we're making the right decision for the long term.

Make the plunge now we're going to stay true to ourselves now yeah, I know, it's hard it feels a bit uncomfortable we get it you know it was a it was a big decision, but we think we're making the right decision for the long term.

Yeah. So I mean that that that that really is that that's the genesis of this.

Speaker Change: So I just, I mean, that really is, that's the genesis of this.

Speaker Change: in the decision. That's really the background. There's really nothing more to it than that.

A discussion and decision that's really the background to this there's really nothing more to it than that.

Got it and I appreciate that commentary and then so not thinking about 2022 specifically about what about the long term that you guys are trying to plan for and prepare for them.

Speaker Change: Got it. And I appreciate that commentary. And then so not thinking about 2022 specifically, but about the long term that you guys are trying to plan for and prepare for and grow over.

Go over during the go public process, you guys were talking about market wise being a rule of 50 company.

Speaker Change: During the go public process, you guys are talking about market wise being a rule of 50 company combination of revenue growth plus adjusted cash flow from operations margin in the 28 to 33% range. Do you guys still believe that's a reasonably achievable goal over the long term?

You know combination of revenue growth plus adjusted cash flow from operations margin in the 28% to 33% range do you guys still believe that's a reasonably achievable goal over the long term.

Yeah.

Turning the concept is very balanced growth and profit balanced, but with a particular eye towards profitability. We keep trying to emphasize that last part because that is how we've always run the business. So.

Speaker Change: So I think the concept is very valid, growth and profit balance, but with a particular eye toward profitability. We keep trying to emphasize that last part because that is how we've always run the business. But if you take those actual numbers and you say them, then it turns into guidance, right? And we're not going to provide guidance.

But if you take those actual numbers and you say them then it turns into guidance right and where we're not going to provide guidance. So if.

Speaker Change: If you take the philosophy and extend that forward without the numbers, yes, we want to balance growth and profitability with an eye towards profitability.

If you take the philosophy and consistent and extend that forward without the numbers yeah that would be you know, we want to balance growth and profitability with an eye towards profitability.

That part is valid, but but by saying that but saying those other numbers out loud then it turns into guidance immediate and you kind of you.

Speaker Change: That part is valid, but saying those other numbers out loud, then it turns into guidance immediately. It's a little schizophrenic.

Sure.

It's a little schizophrenic.

Okay. Thank you.

Speaker Change: Thank you. At this time, I'd like to turn the floor back over to Mark Arnold for closing comments.

Thank you at this time I would like to turn the floor back over to Mark Arnold for closing comments.

Mark Arnold: Yeah, I, as I've said before, and I'll say again, I'm tremendously proud of our accomplishments.

Yeah.

As I've said before and I'll say it again I'm tremendously proud of our accomplishment accomplishments last year. It was a transformational year in our highly profitable one for us.

Mark Arnold: accomplishments last year. It was a transformational year and a highly profitable one for us, and one that we could not be more proud of.

And one that we are we cannot be more proud of.

Mark Arnold: And so I'm just very grateful to our readers for having been good to us. And we, I think, are good to them. And I want to, once again, express my appreciation to the team here at MarketWise, who did a tremendous lift to get us to this place. And we're very much looking forward to what happens from here, because we see tremendous opportunities in front of us. And with that, I'd like to thank everyone for their participation in today's call and your interest in MarketWise. I hope everybody-

So I'm, just very grateful to our readers for having.

Been good to us and we I think are good for them and I don't want to once again express my appreciation to the team here at market wise.

A tremendous lift to get us to displace are very much looking forward to what happens from here because we see tremendous opportunity in front of us and with that I'd like to thank everyone for their participation on today's call and your interest in Marketwatch and hope everybody has a great day.

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

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

Speaker Change: © transcript Emily Beynon

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