MarketWise, Inc. (NASDAQ:MKTW) Q4 2022 Earnings Call Transcript

Lee Harris: Hey, Alex we, we think that we have already processed through the churn from those largest cohorts. In fact, we, we studied the churn and those cohorts are now behaving exactly like every other cohort before them. And since them, in terms of what percentage of them is still left on our list. So I don’t expect there to be an outsized churn coming from those cohorts, right? We’ll always have some seasonality to our churn because we have certain campaigns that are, say a one year term or a two year term. And when they renew, you could have some surges in churn. But generally speaking, our churn’s been pretty stable. We saw heavy churn in the first quarter of this year, which was the one, the, the one year anniversary of our largest cohort. But since then, we’ve really been right in the average historical range.

Amber Mason: Yes. And Alex, I think that that’s the most important chart in the investor deck. You can see that over time, every new cohort that we bring in, sort of deposits, a layer of sediment in that mountain and that that base of recurring revenues, which we talked a little bit about in the comments, is, is really the core strength of this business.

Lee Harris: Yes. You know this, there’s two parts to this. Hey, it’s two parts to subscribers, right? The new ads and the churn, the churn’s behaving as we believe it should be. It’s the new ads that have kind of lagged and, and we’ve talked about that now for a couple quarters and questions. And so we think that the churn is pretty much in line. We, those giant cohorts that came in, I think we found that there were people who subscribed that weren’t our typical customer and have exited appropriately, I guess. But I think right now we’re kind of thinking that we’re in a, on a steady state on the churn side.

Alex Kramm: Excellent. I’ll jump back into queue. Thank you.

Lee Harris: Thanks Alex.

Operator: Our next question comes from the line of Kyle Peterson with Needham & Company. Please proceed with your questions.

Sam Salvas: Hey, hey guys. This is actually Sam Salvas on for Kyle today. Thanks for taking the questions. Just had a couple quick ones. You guys mentioned last year when you were working on and rolling out some of the newer content. Given this, more recent market environment we’re kind of in today. Can you talk about how this content has been received by your consumers and maybe how it’s performed relevant relative to your expectations?

Amber Mason: So I think that, I’d like to speak to our technology offerings. I talked a little bit about that in our comments that we’ve seen really good results, particularly in Check-in and Altimetry, and we’re really excited to see what comes of the combination of our TradeSmith business with investor place. Those products tend to have lower churns. They’re stickier and folks are responding to those messages. So as far as us rolling out those products last year, I think they were successful. You can see from the engagement that we haven’t quite found the message that we want, using the products that we’ve rolled out, but our publishers spend every day thinking about the quality of the research that they’re producing, whether it’s something that our readers want to consume and how they can better position what they’re doing for the market.

Sam Salvas: Great. That’s helpful. Thanks. And then just a quick one on the prior M&A question. It sounds like you guys are still actively looking and the appetite there is pretty healthy. But given you guys are still currently searching for a permanent CFO, would you guys be open to pulling the trigger on an M&A deal prior to having that CFO role filled, or is that something we should expect to kind of be put on the back burner until then.

Amber Mason: No, we have no problem pulling the trigger without a CFO on hand. Marco Ferri, who’s our Chief Corporate Development Officer is an experienced M&A lawyer, and we’re comfortable with his work and with the valuation work that our FP&A team is doing.

Sam Salvas: Got it. All right, great. Thanks.

Operator: The next question is a follow up question from the line of Alex Kramm. Please proceed with your questions.

Alex Kramm: Yes. Hey. Hello again. I just wanted to squeeze in here. You mentioned that you moved the bonus from the fourth quarter to the first quarter. Can you just give us a sense of how big that was and what led to that decision?

Lee Harris: I think the decision was kind of act like a, every other public, public company, most of, most of whom aligned there bonuses after year end results are formed. So that’s kind of where we ended up moving. I don’t know if we fully provide the, the full bonus number. I think if you looked at the changes in cash flow, quarter-over-quarter from the third to fourth and prior years, you get an indication of some level and that was a very high year is what I would say. Is that correct?

Alex Kramm: Yes.