Stonegate Capital Partners has initiated coverage on MarketWise (NASDAQGM: MKTW), highlighting the company's improving operating profile and underlying turnaround. Despite a decline in reported revenue, the company's billings and cash flow from operations have shown significant improvement, signaling a recovery that began in the fourth quarter of 2024.
MarketWise exited fiscal year 2025 with stronger metrics. Billings increased to $271.2 million, up 13.4% year-over-year, while cash flow from operations improved to $46.0 million from a negative $22.2 million in fiscal 2024. However, revenue declined to $328.1 million, a 19.7% decrease, and net income fell to $64.0 million, down 31.2% year-over-year. The company identified the fourth quarter of 2024 as an inflection point after 12 consecutive quarters of decline, with momentum accelerating through fiscal 2025. In the fourth quarter of 2025, billings rose to $78.9 million, a 42.0% increase year-over-year, and cash flow from operations rose to $24.2 million from $6.0 million in the same period of the prior year. Revenue in the quarter declined to $83.3 million, and net income fell to $14.0 million.
The underlying turnaround is real despite the lagged impact on GAAP revenue. The improvement in billings and cash flow reflects stronger demand and better execution. Customer quality also improved meaningfully. Paid subscribers decreased 26.1% year-over-year to 374,000, but net revenue retention rebounded to 91% from 53%, and average revenue per user surged 70.1% to $670. Higher-spend subscribers now represent a larger share of the customer base, indicating a smaller but stronger and more valuable customer base.
MarketWise's balance sheet and capital return story remain attractive. The company ended fiscal 2025 with $70.1 million in cash and no debt. It paid $15.7 million in dividends, repurchased $3.4 million of stock, and raised the regular dividend by 25%. Management guided for approximately $300 million in billings and $50 million in cash flow from operations for fiscal 2026. For more details, refer to the full announcement here.
Stonegate Capital Partners is a capital markets advisory firm providing investor relations and equity research services. Its affiliate, Stonegate Capital Markets, offers investment banking services. This coverage initiation underscores the potential value in MarketWise's turnaround story.
