Dallas, Tx -- March 23, 2026 -- MarketWise (NASDAQGM: MKTW): Stonegate Capital Partners Initiates Coverage on MarketWise (NASDAQGM: MKTW). MarketWise exited FY25 with a stronger operating profile, as improving demand and execution helped offset the lagged impact of weaker prior-period billings on reported revenue. FY25 billings increased to $271.2M (+13.4% y/y) and CFFO improved to $46.0M from $(22.2)M in FY24, while revenue declined to $328.1M (-19.7% y/y) and net income fell to $64.0M (-31.2% y/y). Management identified 4Q24 as the inflection point after 12 quarters of decline, with momentum accelerating through FY25. In 4Q25, billings rose to $78.9M (+42.0% y/y) and CFFO increased to $24.2M from $6.0M in 4Q24, while revenue declined to $83.3M and net income fell to $14.0M. Overall, FY25 showed a clear turnaround in billings and cash flow despite GAAP revenue pressure.
Momentum - We believe FY25 shows that MarketWise’s customer base is smaller, but materially stronger. Paid subscribers ended FY25 at 374K (- 26.1% y/y) as lower-value legacy and entry-level cohorts continued to roll off, though counts stabilized in 2H25. More importantly, FY25 net revenue retention improved to 91% from 53% in FY24, returning to pre-COVID levels and indicating the remaining base is stickier and spending more over time. That is also evident in mix, with roughly 65% of subscribers above $500 of lifetime spend and 36% above $2,500, up from 24% in 2023.
The momentum is showing up in billings and monetization. FY25 billings rose to $271.2M (+13.4% y/y) and 4Q25 billings increased to $78.9M (+42.0% y/y, +23.8% q/q), while ARPU climbed to $670 (+70.1% y/y). Membership subscribers also increased to 47% of the paid list from 40% at year-end 2024, reinforcing the shift toward higher-value products and better revenue quality. Because billings typically lead GAAP revenue by 12 to 24 months, we view the recovery in billings as an important sign that the underlying business has improved even if reported revenue is still shaped by older cohorts.
Capital Allocation - MarketWise ended FY25 with a strong, debt-free balance sheet and $70.1M of cash. For FY25 MKTW posted CFFO of $46.0M, paid $15.7M of dividends, and completed $3.4M of buybacks. The Board also raised the regular dividend by 25%, declared a $0.25 regular dividend and $0.20 special dividend. The Company also retains a $50M buyback authorization. We view the balance sheet as supportive of dividends, buybacks, organic growth, and selective M&A.
Guidance - Management’s FY26 outlook calls for billings of approximately $300M (+~10% y/y), CFFO of approximately $50M (+~9% y/y), and dividends of $1.80 per Class A share. We view that outlook as supportive of the turnaround, even as GAAP revenue continues to lag due to ratable revenue recognition. Management also expects partnership tax distributions to decline to approximately $35M from $49.8M in FY25, with a 1H26 weighting.
Valuation – We rely on a P/E comp analysis, a dividend discount model and a DCF model to guide our valuation. When taken together using a simple average, our valuation range for MKTW is $22.32 to $26.86, with a midpoint of $24.54. Further details on our valuation methods are found on the valuation page of this report.
Stonegate Capital Partners is a leading capital markets advisory firm providing investor relations, equity research, and institutional investor outreach services for public companies. Our affiliate, Stonegate Capital Markets (member FINRA) provides a full spectrum of investment banking services for public and private companies.
