Filed pursuant to Rule 424(b)(3)
Registration Statement No. 333-258734
Prospectus Supplement No. 3
(To Prospectus dated August 20, 2021)

MARKETWISE, INC.
PROSPECTUSCOVER1A.JPG
This prospectus supplement updates, amends and supplements the prospectus dated August 20, 2021 (the “Prospectus”), which forms a part of our Registration Statement on Form S-1 (Registration No. 333-258734). Capitalized terms used in this prospectus supplement and not otherwise defined herein have the meanings specified in the Prospectus.
This prospectus supplement is being filed to update, amend, and supplement the information included in the Prospectus with the information contained in our Quarterly Report on Form 10-Q filed with the SEC on November 12, 2021, which is set forth below.
This prospectus supplement is not complete without the Prospectus. This prospectus supplement should be read in conjunction with the Prospectus, which is to be delivered with this prospectus supplement, and is qualified by reference thereto, except to the extent that the information in this prospectus supplement updates or supersedes the information contained in the Prospectus. Please keep this prospectus supplement with your Prospectus for future reference.
Our shares of Class A common stock are listed on The Nasdaq Global Market (the “Nasdaq”) under the symbol “MKTW.” On November 11, 2021, the closing sale price of our Class A common stock was $7.40 per share. Our public warrants are listed on the Nasdaq under the symbol “MKTWW.” On November 11, 2021, the closing sale price of our public warrants was $1.19 per warrant.
Investing in shares of our Class A common stock or warrants involves risks that are described in the “Risk Factors” section beginning on page 12 of the Prospectus.
Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the Prospectus or determined if the Prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is November 12, 2021
 
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to         
Commission File Number: 001-39405
MarketWise, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 87-1767914
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
1125 N. Charles Street Baltimore, Maryland
21201
(Address of principal executive offices) (Zip Code)
(Address of principal executive offices, including zip code)
888 261-2693
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A common stock, $0.0001 par value per share MKTW The Nasdaq Stock Market LLC
Warrants to purchase Class A common stock MKTWW The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                ☑ Yes    ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                                ☑ Yes    ☐ No
Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer    ☐     Accelerated filer            ☐
Non-accelerated filer    ☑     Smaller reporting company    ☑     Emerging growth company    ☑
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 12 (a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No
As of November 10, 2021, there were 25,152,469 shares of the registrant’s Class A common stock and 291,092,303 shares of the registrant’s Class B common stock, each with a par value of $0.0001 per share, outstanding.
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TABLE OF CONTENTS


Page
PART I.
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
PART 1—FINANCIAL INFORMATION
Item 1. Financial Statements.

3

MARKETWISE, INC.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share, unit, per share, and per unit data)

September 30, 2021 December 31, 2020
Assets
Current assets:
Cash and cash equivalents $ 137,588  $ 114,422 
Accounts receivable 6,817  12,398 
Prepaid expenses 12,926  8,530 
Related party receivables 503  874 
Related party notes receivable, current 295  — 
Restricted cash 500  505 
Deferred contract acquisition costs 74,470  42,019 
Other current assets 2,652  1,889 
Total current assets 235,751  180,637 
Property and equipment, net 1,195  1,417 
Operating lease right-of-use assets 11,360  12,337 
Intangible assets, net 9,096  5,278 
Goodwill 23,338  18,101 
Deferred contract acquisition costs, noncurrent 114,816  65,217 
Related party notes receivable, noncurrent 861  1,148 
Deferred tax assets 6,971  — 
Other assets 41  678 
Total assets $ 403,429  $ 284,813 
Liabilities and stockholders’ deficit / members’ deficit
Current liabilities:
Trade and other payables $ 4,349  $ 11,969 
Related party payables, net 1,238  2,515 
Accrued expenses 63,317  32,134 
Deferred revenue and other contract liabilities 338,186  278,267 
Derivative liabilities 547  — 
Operating lease liabilities 1,252  1,077 
Other current liabilities 25,327  19,576 
Total current liabilities 434,216  345,538 
Class B Units - related party —  593,235 
Deferred revenue and other contract liabilities, noncurrent 366,676  254,481 
Derivative liabilities, noncurrent 2,205  4,343 
Derivative warrant liabilities 35,069  — 
Operating lease liabilities, noncurrent 7,190  7,826 
Total liabilities 845,356  1,205,423 
Commitments and Contingencies —  — 
Stockholders’ deficit / members’ deficit:
Common stock - Class A, par value of $0.0001 per share, 950,000,000 shares authorized; 25,152,469 shares issued and outstanding at September 30, 2021
— 
Common stock - Class B, par value of $0.0001 per share, 300,000,000 shares authorized; 291,092,303 shares issued and outstanding at September 30, 2021
29  — 
4

MARKETWISE, INC.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share, unit, per share, and per unit data)
Preferred stock - par value of $0.0001 per share, 100,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2021
—  — 
Additional paid-in capital 96,344  — 
Class A members’ units, 0 and 547,466 units issued and outstanding at September 30, 2021 and December 31, 2020, respectively
—  (914,728)
Accumulated other comprehensive loss (49) (17)
Accumulated deficit (154,687) — 
Total stockholders’ deficit / members’ deficit attributable to MarketWise, Inc. (58,361) (914,745)
Noncontrolling interest (383,566) (5,865)
Total stockholders’ deficit / members’ deficit (441,927) (920,610)
Total liabilities, noncontrolling interest, and stockholders’ deficit / members’ deficit $ 403,429  $ 284,813 
The accompanying notes are an integral part of these consolidated financial statements.
5

MARKETWISE, INC.
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net revenue $ 140,422  $ 97,118  $ 401,647  $ 254,857 
Related party revenue 245  1,041  864  2,479 
Total net revenue 140,667  98,159  402,511  257,336 
Operating expenses:
Cost of revenue (1) (2)
62,024  26,749  221,662  68,907 
Sales and marketing (1) (2)
82,558  56,914  231,269  146,487 
General and administrative (1) (2)
356,286  79,885  928,376  200,836 
Research and development (2)
2,137  1,255  5,842  3,472 
Depreciation and amortization 629  639  2,076  1,912 
Related party expense 10,097  34  10,144  66 
Total operating expenses 513,731  165,476  1,399,369  421,680 
Loss from operations (373,064) (67,317) (996,858) (164,344)
Other income (expense), net 9,859  (993) 10,162  (1,856)
Interest income, net 17  17  489 
Loss before income taxes (363,200) (68,293) (986,679) (165,711)
Income tax expense 3,085  —  3,085  — 
Net loss (366,285) (68,293) (989,764) (165,711)
Net income (loss) attributable to noncontrolling interests 33,248  (694) 32,117  (1,566)
Net loss attributable to MarketWise, Inc. $ (399,533) $ (67,599) $ (1,021,881) $ (164,145)
Earnings per share - for the period from July 22, 2021 through September 30, 2021:
Net income per Class A common share - basic and diluted $ 0.39 
Weighted average shares outstanding, basic and diluted 24,963 
As a result of the Transactions, the capital structure has changed and earnings per share information is only presented for the period after the date of the Transactions. See Note 10.
(1) Included within cost of revenue, sales and marketing, and general and administrative expenses are stock-based compensation expenses as follows (see Note 9):
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Vested Class B units and change in fair value of Class B liability awards $ 292,580  $ 66,210  $ 934,993  $ 127,264 
Profits distributions to Class B unitholders 117,342  7,241  123,449  45,311 
Total Class B stock-based compensation expense 409,922  73,451  1,058,442  172,575 
2021 Incentive Award Plan stock-based compensation expense 2,643  —  2,643  — 
Total stock-based compensation expense $ 412,565  $ 73,451  $ 1,061,085  $ 172,575 
(2) Cost of revenue, sales and marketing, general and administrative, and research and development expenses are exclusive of depreciation and amortization shown as a separate line item
The accompanying notes are an integral part of these consolidated financial statements.
6

MARKETWISE, INC.
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)
(In thousands)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net loss $ (366,285) $ (68,293) $ (989,764) $ (165,711)
Other comprehensive loss:
Cumulative translation adjustment (40) (57) (141) (30)
Total comprehensive loss $ (366,325) $ (68,350) $ (989,905) $ (165,741)
The accompanying notes are an integral part of these consolidated financial statements.
7

MARKETWISE, INC.
Condensed Consolidated Statement of Stockholders’ Deficit / Members’ Deficit (Unaudited)
(In thousands, except share, unit, per share, and per unit data)
Class A Members’ units Common Stock - Class A Common Stock - Class B Preferred Stock Additional paid-in capital Accumulated deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Deficit / Members’ Deficit Attributable to MarketWise, Inc. Noncontrolling Interest Total Stockholders’ Deficit / Members’ Deficit
Shares Amount Shares Amount Shares Amount Shares Amount
Balance at January 1, 2020 605,352  $ (262,293) —  $ —  —  $ —  —  $ —  $ —  $ —  $ (3) $ (262,296) $ (5,768) $ (268,064)
Class A units transferred to Class B (57,886) —  —  —  —  —  —  —  —  —  —  —  —  — 
Foreign currency translation adjustments —  —  —  —  —  —  —  —  —  —  27  27  —  27 
Acquisition of noncontrolling interest - TradeSmith —  (12,295) —  —  —  —  —  —  —  —  —  (12,295) 3,131  (9,164)
Distributions —  (66,145) —  —  —  —  —  —  —  —  —  (66,145) (423) (66,568)
Net loss —  (96,546) —  —  —  —  —  —  —  —  —  (96,546) (872) (97,418)
Balance at June 30, 2020 547,466  (437,279) —  —  —  —  —  —  —  —  24  (437,255) (3,932) (441,187)
Foreign currency translation adjustments —  —  —  —  —  —  —  —  —  —  (57) (57) —  (57)
Distributions —  (11,819) —  —  —  —  —  —  —  —  —  (11,819) (87) (11,906)
Net loss —  (67,599) —  —  —  —  —  —  —  —  —  (67,599) (694) (68,293)
Balance at September 30, 2020 547,466  $ (516,697) —  $ —  —  $ —  —  $ —  $ —  $ —  $ (33) $ (516,730) $ (4,713) $ (521,443)
Balance at January 1, 2021 547,466  $ (914,728) —  $ —  —  $ —  —  $ —  $ —  $ —  $ (17) $ (914,745) $ (5,865) $ (920,610)
Class A units transferred to Class B (18,947) —  —  —  —  —  —  —  —  —  —  — 
Acquisition of Chaikin —  —  —  —  —  —  —  —  —  —  —  —  810  810 
Foreign currency translation adjustments —  —  —  —  —  —  —  —  —  —  (101) (101) (101)
Distributions —  (15,098) —  —  —  —  —  —  —  —  —  (15,098) (831) (15,929)
Net loss —  (622,348) —  —  —  —  —  —  —  —  —  (622,348) (1,131) (623,479)
Balance at June 30, 2021 528,519  (1,552,174) —  —  —  —  —  —  —  —  (118) (1,552,292) (7,017) (1,559,309)
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MARKETWISE, INC.
Condensed Consolidated Statement of Stockholders’ Deficit / Members’ Deficit (Unaudited)
(In thousands, except share, unit, per share, and per unit data)
Class A Members’ units Common Stock - Class A Common Stock - Class B Preferred Stock Additional paid-in capital Accumulated deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Deficit / Members’ Deficit Attributable to MarketWise, Inc. Noncontrolling Interest Total Stockholders’ Deficit / Members’ Deficit
Shares Amount Shares Amount Shares Amount Shares Amount
Activity prior to the Transactions:
Distributions related to the recapitalization —  (120,353) —  —  —  —  —  —  —  —  —  (120,353) —  (120,353)
Net (loss) income, July 1, 2021 through July 21, 2021 —  (409,213) —  —  —  —  —  —  —  —  —  (409,213) 81  (409,132)
Effects of the Transactions:
Net proceeds —  —  —  —  —  —  —  —  113,291  —  —  113,291  —  113,291 
Reclassification of Class B Units from liability to equity on July 21, 2021 (date of the Transactions) —  —  —  —  —  —  —  —  1,528,228  —  —  1,528,228  —  1,528,228 
Reverse capitalization on July 21, 2021 (528,519) 2,081,740  —  —  —  —  —  —  —  (164,367) —  1,917,373  (1,917,373) — 
Issuance of Common Stock - Class A and Class B —  —  24,952,096  291,092,303  29  —  —  (31) —  —  —  —  — 
Establishment of derivative warrant liabilities —  —  —  —  —  —  —  —  (45,021) —  —  (45,021) —  (45,021)
Establishment of deferred taxes —  —  —  —  —  —  —  —  10,056  —  —  10,056  —  10,056 
Establishment of noncontrolling interest —  —  —  —  —  —  —  —  (1,511,911) —  109  (1,511,802) 1,511,802  — 
Activity subsequent to the Transactions:
Equity-based compensation —  —  200,373  —  —  —  —  —  1,732  —  —  1,732  —  1,732 
Distributions —  —  —  —  —  —  —  —  —  —  —  —  (4,226) (4,226)
Foreign currency translation adjustments —  —  —  —  —  —  —  —  —  —  (40) (40) —  (40)
Net income, July 22, 2021 through September 30, 2021 (see note below) —  —  —  —  —  —  —  —  —  9,680  —  9,680  33,167  42,847 
Balance at September 30, 2021 —  $ —  25,152,469  $ 291,092,303  $ 29  —  $ —  $ 96,344  $ (154,687) $ (49) $ (58,361) $ (383,566) $ (441,927)
9

MARKETWISE, INC.
Condensed Consolidated Statement of Stockholders’ Deficit / Members’ Deficit (Unaudited)
(In thousands, except share, unit, per share, and per unit data)

Note: The Transactions occurred on July 21, 2021. As a result, net income (loss) for the three months ended September 30, 2021 was attributed to the pre-Transaction period from July 1, 2021 through July 21, 2021 and to the post-Transaction period from July 22, 2021 through September 30, 2021. During the pre-Transaction period, net income (loss) was attributable to consolidated MarketWise, LLC and its respective noncontrolling interests. During the post-Transaction period, net income was attributable to consolidated MarketWise, Inc. and its respective noncontrolling interests. Following the Transactions, MarketWise, Inc.’s ownership percentage in MarketWise, LLC’s controlling and noncontrolling interests was 7.9% and 92.1%, respectively. For the post-Transaction period, net income attributable to controlling interests included a $9.9 million gain on derivative warrant liabilities and a $3.1 million tax provision, both of which are 100% attributable to the controlling interest.
Controlling interests Noncontrolling interests Total
Net income (loss) of MarketWise, LLC attributed to the pre-Transaction period from July 1, 2021 through July 21, 2021 $ (409,213) $ 81  $ (409,132)
Net income of MarketWise, Inc. attributed to the post-Transaction period from July 22, 2021 through September 30, 2021 9,680  33,167  42,847 
Total net income (loss) for the three months ended September 30, 2021 $ (399,533) $ 33,248  $ (366,285)
The accompanying notes are an integral part of these consolidated financial statements.
10

MARKETWISE, INC.
Condensed Consolidated Statement of Cash Flows (Unaudited)
(In thousands)
Nine Months Ended September 30,
2021 2020
Cash flows from operating activities:
Net loss $ (989,764) $ (165,711)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 2,076  1,912 
Stock-based compensation 208,646  13,398 
Change in fair value of derivative liabilities – Class B Units 728,079  113,866 
Change in fair value of derivative liabilities – other (11,543) 1,874 
Deferred taxes 3,085  — 
Unrealized losses on foreign currency (62) 13 
Noncash lease expense 1,375  2,106 
Gain on sale of cryptocurrencies (105) — 
Changes in operating assets and liabilities:
Accounts receivable 5,581  (456)
Related party receivables and payables, net (906) (5,010)
Prepaid expenses (4,396) (2,552)
Other current assets and other assets 26  (838)
Cryptocurrency intangible assets 109  31 
Deferred contract acquisition costs (82,050) (37,185)
Trade and other payables (7,667) (960)
Accrued expenses 31,005  17,950 
Deferred revenue 170,239  128,036 
Operating lease liabilities (859) (1,865)
Other current and long-term liabilities 5,751  8,375 
Net cash provided by operating activities 58,620  72,984 
Cash flows from investing activities:
Cash paid for Chaikin acquisition, net of cash acquired (7,139) — 
Acquisition of non-controlling interests, including transaction costs —  (9,164)
Purchases of property and equipment (73) (229)
Purchases of intangible assets (890) (195)
Capitalized software development costs (100) — 
Net cash used in investing activities (8,202) (9,588)
Cash flows from financing activities:
Principal payments on long-term debt – related party —  (5,390)
Net proceeds from the Transactions 113,291  — 
Issuance of related party notes receivable (8) (1,437)
Proceeds from related party notes receivable —  5,446 
Distributions to members (135,451) (77,964)
Distributions to noncontrolling interests (5,057) (510)
Net cash used in financing activities (27,225) (79,855)
Effect of exchange rate changes on cash (32) (32)
Net increase in cash, cash equivalents and restricted cash 23,161  (16,491)
Cash, cash equivalents and restricted cash — beginning of period 114,927  172,084 
Cash, cash equivalents and restricted cash — end of period $ 138,088  $ 155,593 
The accompanying notes are an integral part of these consolidated financial statements.
11

MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)

1.Organization
Description of Business and Basis of Presentation
MarketWise Inc, and its predecessor for accounting purposes, MarketWise, LLC (formerly Beacon Street Group, LLC) are collectively referred to herein as “MarketWise,” “the Company,” “we,” “us,” or “our”. The Company provides independent investment research for investors around the world. We believe we are a leading content and technology multi-brand platform for self-directed investors. We offer a comprehensive portfolio of high-quality, independent investment research, as well as several software and analytical tools, on a subscription basis.
While our headquarters are in Baltimore, Maryland, we operate multiple subsidiaries in the United States. We also have operations in China and Singapore.
Reverse Recapitalization with Ascendant Digital Acquisition Corp.
On July 21, 2021, as contemplated by the Business Combination Agreement, dated as of March 1, 2021, by and among Ascendant Digital Acquisition Corp. (“ADAC”), MarketWise, LLC, all of the members of MarketWise, LLC (the “MarketWise Members”), and Shareholder Representative Services LLC, (as amended, the “Transaction Agreement”), ADAC was domesticated and continues as a Delaware corporation, changing its name to “MarketWise, Inc.”
As a result of, and upon the effective time thereof, among other things, (1) each of the then issued and outstanding Class A ordinary shares, par value $0.0001 per share, of ADAC (the “ADAC Class A ordinary shares”) automatically converted, on a one-for-one basis, into a share of Class A common stock, par value $0.0001 per share, of MarketWise, Inc. (the “Class A common stock”); (2) each of the then issued and outstanding redeemable warrants of ADAC automatically converted into a redeemable warrant to acquire one share of Class A common stock (the “warrants”); and (3) each of the then issued and outstanding units of ADAC that had not been previously separated into the underlying ADAC Class A ordinary shares and underlying warrants upon the request of the holder thereof were cancelled and entitled the holder thereof to one share of Class A common stock and one-half of one warrant. No fractional warrants were issued upon such separation.
On July 21, 2021, as contemplated by the Transaction Agreement, MarketWise, Inc. and MarketWise, LLC consummated the business combination contemplated by the Transaction Agreement whereby (i) MarketWise, LLC restructured its capitalization, appointed MarketWise, Inc. as its managing member, and issued to MarketWise, Inc. 28,003,096 common units of MarketWise, LLC (the “MarketWise Units”), and 30,979,993 warrants to purchase MarketWise Units and (ii) MarketWise, Inc. issued 291,092,303 shares of Class B common stock, par value $0.0001 per share, of MarketWise, Inc. (the “Class B common stock” and, together with the Class A common stock, the “common stock”) to the MarketWise Members.
As previously announced, on March 1, 2021, concurrently with the execution of the Transaction Agreement, ADAC entered into subscription agreements (the “Subscription Agreements”) with certain investors (collectively, the “PIPE Investors”) who subscribed for 15,000,000 shares of Class A common stock at $10.00 per share for an aggregate commitment amount of $150,000 (the “PIPE Investment” and, together with the other transactions described above and all transactions contemplated by or pursuant to the Transaction Agreement, the “Transactions”). The PIPE Investment was consummated on July 21, 2021 substantially concurrently with the closing of the other Transactions.
Immediately after giving effect to the Transactions, there were 28,003,096 shares of Class A common stock (including 3,051,000 Sponsor Earn Out Shares (as defined and discussed in our Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on July 28, 2021) the “Original Report”), 291,092,303 shares of Class B common stock, and 30,979,993 warrants outstanding (including 10,280,000 Private Placement Warrants (as defined in the Original Report)). Upon the consummation of the Transactions, ADAC’s ordinary shares, warrants, and units ceased trading on The New York Stock Exchange, and MarketWise, Inc.’s Class A common stock and warrants began trading on the Nasdaq under the symbols “MKTW” and “MKTW W,” respectively.
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
Immediately after giving effect to the Transactions, (1) ADAC’s public shareholders owned approximately 0.1% of the outstanding MarketWise, Inc. common stock, (2) the MarketWise Members owned approximately 91.2% of the outstanding MarketWise, Inc. common stock, (3) Ascendant Sponsor LP, a Cayman Islands exempted limited partnership and related parties (the “Sponsor”) collectively owned approximately 3.2% of the outstanding MarketWise, Inc. common stock (including 3,051,000 Sponsor Earn Out Shares), and (4) the PIPE Investors owned approximately 4.7% of the outstanding MarketWise, Inc. common stock.
The Transaction was accounted for as a reverse recapitalization in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Under the guidance in Accounting Standards Codifications (“ASC”) Topic 805, MarketWise, LLC is treated as the “acquirer” for financial reporting purposes. As such, MarketWise, LLC is deemed the accounting predecessor of the combined business and MarketWise, Inc. the successor registrant for SEC purposes, meaning that MarketWise, LLC’s financial statements for previous periods will be disclosed in the registrant’s future periodic reports filed with the SEC. The reverse recapitalization was treated as the equivalent of MarketWise, LLC issuing stock for the net assets of ADAC, accompanied by a recapitalization.
As part of the recapitalization Transactions, we recorded net cash proceeds from the Transactions of $113.3 million in equity. This cash amount includes: (1) the reclassification of ADAC’s Trust Account of $414.3 million to cash and cash equivalents that became available at the time of the Transactions; (2) proceeds of $150.0 million from the issuance and sale of MarketWise Class A common stock in the PIPE investment; (3) payment of $48.8 million in non-recurring transaction costs; (4) settlement of $14.5 million in deferred underwriters’ discount; and (5) the payment of $387.7 million to redeeming shareholders of ADAC. We also recorded (1) $45.0 million in equity related to the establishment of the initial value of the warrants; and (2) $10.1 million in equity related to the establishment of the initial value of deferred taxes.

2.Summary of Significant Accounting Policies
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of MarketWise and its wholly owned subsidiaries. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All intercompany balances and transactions have been eliminated in consolidation.
The accompanying statements of operations include expenses for certain functions historically performed by a related party, including general corporate services, such as legal, accounting, treasury, information technology, human resources and administration. These expenses are based primarily on direct usage when identifiable, direct capital expenditures or other relevant allocations during the respective periods. We believe the assumptions underlying the accompanying consolidated financial statements, including the assumptions regarding these expenses from this related party, are reasonable. Actual results may differ from these expenses, assumptions and estimates. The amounts recorded in the accompanying consolidated financial statements are not necessarily indicative of the actual amount of such indirect expenses that would have been recorded had we been a separate independent entity.
Unaudited Interim Financial Information
The accompanying unaudited consolidated financial statements and the related footnote disclosures have been prepared by us in accordance with GAAP for interim financial reporting and as required by Rule 10-01 of Regulation S-X. Accordingly, the unaudited consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements. The year-end December 31, 2020 consolidated balance sheet data included herein was derived from audited financial statements but does not include all disclosures required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly our financial position as of September 30, 2021, the results of operations, comprehensive income (loss), stockholders’ deficit / members’ deficit, and cash flows for the three and nine months ended September 30, 2021 and 2020. The results of operations for the three and nine months ended September 30, 2021
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
and 2020 are not necessarily indicative of the results to be expected for the full year. The information contained herein should be read in conjunction with the audited financial statements for the year ended December 31, 2020 filed with the SEC. Management considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made in the accompanying financial statements include, but are not limited to, the fair value of common units, derivatives, warrants, valuation of assets acquired and liabilities assumed in business combinations, useful lives of intangible assets with definite lives, benefit period of deferred contract acquisition costs, determination of standalone selling prices, estimated life of lifetime customers, recoverability of goodwill and long-lived assets, valuation allowances on deferred tax assets, the incremental borrowing rates to calculate lease liabilities and right-of-use (“ROU”) assets and certain accruals. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors and adjust those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.
Emerging Growth Company
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our unaudited condensed financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Segment Information
Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by our chief operating decision-maker (“CODM”) in deciding how to allocate resources and assess performance. Our Chief Executive Officer serves as the CODM.
Based on the financial information presented to and reviewed by our CODM in assessing our performance and for the purposes of allocating resources, we have determined our operating subsidiaries represent individual operating segments with similar economic characteristics that meet the criteria for aggregation into a single reporting segment for financial statement purposes. Accordingly, we have a single reportable segment.
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
Long-lived assets outside the United States were immaterial as of September 30, 2021 and December 31, 2020.
Derivative Financial Instruments
From time to time, we utilize instruments which may contain embedded derivative instruments as part of our overall strategy to compensate and retain key employees and independent contractors (see Derivative Financial Instruments note below for additional information). Our derivative instruments are recorded at fair value on the consolidated balance sheets. Our derivative instruments have not been designated as hedges; therefore, both realized and unrealized gains and losses are recognized in earnings. For the purposes of cash flow presentation, realized and unrealized gains or losses are included within cash flows from operating activities. Upfront cash payments received upon the issuance of derivative instruments are included within cash flows from financing activities within the consolidated statements of cash flows.
Stock-Based Compensation
Stock-based compensation expenses are included in cost of revenue, sales and marketing, and general and administrative expenses in a manner consistent with the employee’s salary and benefits in the consolidated statements of operations.
2021 Incentive Award Plan
On July 21, 2021, the MarketWise, Inc. 2021 Incentive Award Plan (the “2021 Incentive Award Plan”) became effective. MarketWise has reserved a total of 32,045,000 shares of MarketWise Class A common stock for issuance pursuant to the 2021 Incentive Award Plan and the maximum number of shares that may be issued pursuant to the exercise of incentive stock options granted under the 2021 Incentive Award Plan is 32,045,000, in each case, subject to certain adjustments set forth therein. See also Note 9, Stock-Based Compensation.
The 2021 Incentive Award Plan provides for the grant of stock options, including incentive stock options, or ISOs, and nonqualified stock options, or NSOs; restricted stock; restricted stock units, or RSUs; stock appreciation rights, or SARs; and other stock or cash-based awards.
Equity-based compensation with service conditions made to employees is measured based on the grant date fair value of the awards and recognized as compensation expense over the period during which the recipient is required to perform services in exchange for the award (the requisite service period). We have elected to use a straight-line attribution method for recognizing compensation costs relating to awards that have service conditions only. Forfeitures are recorded as they occur.
Class B Units
As more fully described above, we completed our Transactions in July 2021, and all Class B Units fully vested as of the transaction date, and the original operating agreement was terminated and replaced by a new operating agreement consistent with the Company’s Up-C structure. This new operating agreement does not contain the put and call options that existed under the previous operating agreement, and the Common Units are treated as common equity under the new operating agreement and do not generate stock-based compensation expense.
Prior to the Transactions, under the old operating agreement, and as part of our compensation and retention strategy, we granted incentive compensation units (“Class B Units”) to certain key employees, which are profit interests for United States federal income tax purposes. The Class B Units were accounted for as a substantive class of equity and allowed the recipient to realize value only to the extent that the value of the award appreciated.
The Class B Units contained service-based vesting conditions and had different vesting terms depending upon the employee which ranged from vesting immediately to eight years; vesting was accelerated upon the completion of the Transactions. Compensation cost was recognized on a straight-line basis over the requisite service period until vesting for the entire award, but at least equaled the number of vested units determined by the underlying vesting schedule. Forfeitures were accounted for in the period in which they occur.
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
The Class B Units were subject to a put and call option whereby we could elect to redeem or be required to redeem these units at a value determined by a predefined formula based on a multiplier of our net income as defined by management. Employees may not exercise the put option until 25 months have elapsed from the issuance date. Since the redemption price is not representative of fair value, the employees are not considered to be subject to the risks and rewards of share ownership, and the Class B Units were classified as liabilities in the accompanying consolidated balance sheet. Prior to the completion of the Transactions, the liability for Class B units was remeasured to fair value at the end of each reporting period.
Since Class B Units were classified as liabilities, all cash distributions made to the unitholders of the Class B Units pursuant to our operating agreement were considered to be stock-based compensation expenses. Upon consummation of the Transactions, the old operating agreement was terminated and a new operating agreement was adopted. This new operating agreement does not contain the put and call options that existed under the previous operating agreement, and the Common Units are treated as common equity under the new operating agreement and do not generate stock-based compensation expense.
Fair Value Measurement
Assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. GAAP establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active;
Level 3— Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying amount of our financial instruments, including accounts receivable, trade and other payables, accrued expenses and related party receivables and payables, approximate their respective fair values because of their short maturities. The fair value of stock-based compensation liabilities for Class B Units, the derivatives liabilities associated with our deferred compensation arrangements, and the derivative warrant liabilities were determined using unobservable Level 3 inputs. We have not elected the fair value option for any financial assets and liabilities for which such an election would have been permitted.
Warrant Liability
Warrants are accounted for as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. As of September 30, 2021, all of our warrants are classified as liabilities.
Income Taxes
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
Prior to the Transactions, we were a pass-through entity for income tax purposes. Subsequent to the Transactions, the portion of earnings allocable to MarketWise, Inc. is subject to corporate level tax rates at the federal, state and local levels. Therefore, the amount of income taxes recorded prior to the Transaction are not representative of the expenses expected in the future.
The computation of the effective tax rate and provision at each interim period requires the use of certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income that is subject to tax, permanent differences between our GAAP earnings and taxable income, and the likelihood of recovering deferred tax assets existing as of the balance sheet date. The estimates used to compute the provision for income taxes may change throughout the year as new events occur, additional information is obtained or as tax laws and regulations change. Accordingly, the effective tax rate for future interim periods may vary materially.
We account for income taxes pursuant to the asset and liability method which requires us to recognize current tax liabilities or receivables for the amount of taxes we estimate are payable or refundable for the current year, deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts and their respective tax bases of assets and liabilities and the expected benefits of net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted. A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible.
The benefit of tax positions taken or expected to be taken in our income tax returns is recognized in the financial statements if such positions are more likely than not of being sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized (or amount of net operating loss carryover or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents a potential future obligation to the taxing authority for a tax position that was not recognized. Interest costs and related penalties related to unrecognized tax benefits are required to be calculated, if applicable and are recognized as general and administrative expenses.
Tax Receivable Agreement Obligation
In connection with the Transactions, concurrently with the Closing, we have entered into Tax Receivable Agreements (“TRA”) with owners of MarketWise, LLC prior to the Transactions (the “TRA Parties”). The TRAs generally provide for the payment by us to the TRA Parties of 85% of the cash tax benefits, if any, that we are deemed to realize as a result of tax basis adjustments as a result of sales and exchanges of units of MarketWise, LLC in connection with, or following the Transactions, and certain distributions with respect to units. These tax basis adjustments generated over time may increase (for tax purposes) the depreciation and amortization deductions available to us and, therefore, may reduce the amount of U.S. federal, state and local tax that we would otherwise be required to pay in the future, although the IRS may challenge all or part of the validity of that tax basis, and a court could sustain such challenge. The tax basis adjustments upon sales or exchanges of units for shares of Class A Common Stock and certain distributions with respect to Class A LLC Units may also decrease gains (or increase losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets. Actual tax benefits realized by us may differ from tax benefits calculated under the Tax Receivable Agreements as a result of the use of certain assumptions in the TRAs, including the use of an assumed weighted average state and local income tax rate to calculate tax benefits. The payments that we may make under the TRAs are expected to be substantial.
We account for the effects of these increases in tax basis and associated payments under the TRAs if and when exchanges occur as follows:
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
a.recognizes a contingent liability for the TRA obligation when it is deemed probable and estimable, with a corresponding adjustment to additional paid-in-capital, based on the estimate of the aggregate amount that MarketWise, Inc. will pay;
b.records an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange;
c.to the extent we estimate that we will not realize the full benefit represented by the deferred tax asset, based on an analysis that will consider, among other things, our expectation of future earnings, we reduce the deferred tax asset with a valuation allowance; and,
d.The effects of changes in any of the estimates and subsequent changes in the enacted tax rates after the initial recognition will be included in our net income.
As of September 30, 2021, there has been no exchange of MarketWise, LLC units and therefore no TRA liability has been recognized.
Earnout Shares
Pursuant to the Transaction Agreement, at the closing of the Transactions, we placed 3,051,000 shares of MarketWise, Inc. Class A Common Stock into escrow to be released to the Sponsor if certain conditions are met. In addition, certain management members of the Company will be allocated from time to time up to 2,000,000 shares of Class A Common Stock in aggregate, with shares to be placed in escrow upon allocation, and released at any time during a four-year period following closing of the Transaction, if certain conditions are met. The sponsor and management earnout shares will be released as follows: 1) 50% when the volume weighted average price (the “VWAP) of Class A Common Stock is greater than or equal to $12.00 for a period of at 20 trading days within a consecutive 30-trading-day period, or based on the per share equity value in a transaction in which our shareholders sell their shares; and 2) 50% when the volume weighted average price (the “VWAP) of Class A Common Stock is greater than or equal to $14.00 for a period of at 20 trading days within a consecutive 30-trading-day period, or based on the per share equity value in a transaction in which our shareholders sell their shares.
The sponsor and management earnout shares are classified as equity transactions at initial issuance and at settlement when the release conditions are met. Until the shares are issued and released, the earnout shares are not included in shares outstanding. The earnout shares are not considered stock-based compensation. As of the transaction date, the sponsor and management earnout shares had a fair value of $26.0 million.
Noncontrolling Interest
Noncontrolling interest represents the Company’s noncontrolling interest in consolidated subsidiaries which are not attributable, directly or indirectly, to the controlling Class A Common Stock ownership of the Company.
The Transactions occurred on July 21, 2021. As a result, net income (loss) for the three months ended September 30, 2021 was attributed to the pre-Transaction period from July 1, 2021 through July 21, 2021 and to the post-Transaction period from July 22, 2021 through September 30, 2021. During the pre-Transaction period, net income (loss) was attributable to consolidated MarketWise, LLC and its respective noncontrolling interests. During the post-Transaction period, net income was attributable to consolidated MarketWise, Inc. and its respective noncontrolling interests. Following the Transactions, MarketWise, Inc.’s ownership percentage in MarketWise, LLC’s controlling and noncontrolling interests was 7.9% and 92.1%, respectively. For the post-Transaction period, net income attributable to controlling interests included a $9.9 million gain on derivative warrant liabilities and a $3.1 million tax provision, both of which are 100% attributable to the controlling interest.
Earnings Per Share
Basic net income per share is based on the weighted average number of shares of Class A Common Stock issued and outstanding after the closing of the Transactions. Diluted net income per share is based on the weighted average number of shares of Class A Common Stock issued and outstanding and the effect of all dilutive common
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
stock equivalents and potentially dilutive share based compensation awards outstanding during the period after the closing of the Transactions.

3.Revenue Recognition
Disaggregation of revenues
The following table depicts the disaggregation of revenue according to customer type and is consistent with how we evaluate our financial performance. We believe this depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
Three Months Ended September 30, 2021
Subscriptions Advertising Revenue Share (Related Party) Revenue Share (Third-party) Total
Timing of transfer:
Transferred over time $ 139,831  $ —  $ —  $ —  $ 139,831 
Transferred at a point in time —  423  245  168  836 
Total $ 139,831  $ 423  $ 245  $ 168  $ 140,667 
Three Months Ended September 30, 2020
Subscriptions Advertising Revenue Share (Related Party) Revenue Share (Third-party) Total
Timing of transfer:
Transferred over time $ 95,763  $ —  $ —  $ —  $ 95,763 
Transferred at a point in time —  437  1,041  918  2,396 
Total $ 95,763  $ 437  $ 1,041  $ 918  $ 98,159 
Nine Months Ended September 30, 2021
Subscriptions Advertising Revenue Share (Related Party) Revenue Share (Third-party) Total
Timing of transfer:
Transferred over time $ 398,362  $ —  $ —  $ —  $ 398,362 
Transferred at a point in time —  1,968  864  1,317  4,149 
Total $ 398,362  $ 1,968  $ 864  $ 1,317  $ 402,511 
Nine Months Ended September 30, 2020
Subscriptions Advertising Revenue Share (Related Party) Revenue Share (Third-party) Total
Timing of transfer:
Transferred over time $ 251,685  $ —  $ —  $ —  $ 251,685 
Transferred at a point in time —  1,443  2,479  1,729  5,651 
Total $ 251,685  $ 1,443  $ 2,479  $ 1,729  $ 257,336 
Revenue recognition by subscription type was as follows:
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Lifetime subscriptions $ 50,862  $ 35,005  $ 140,893  $ 97,093 
Term subscriptions 88,970  60,759  257,470  154,593 
Non-subscription revenue 835  2,395  4,148  5,650 
Total $ 140,667  $ 98,159  $ 402,511  $ 257,336 
Revenue for the Lifetime and Term subscription types are determined based on the terms of the subscription agreements. Non-subscription revenue consists of revenue from advertising and other revenue.
Net revenue by principal geographic areas was as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
United States $ 139,998  $ 97,369  $ 400,871  $ 255,142 
International 669  790  1,640  2,194 
Total $ 140,667  $ 98,159  $ 402,511  $ 257,336 
Revenue by location is determined by the billing entity for the customer.
Contract Balances
The timing of revenue recognition, billings, cash collections and refunds affects the recognition of accounts receivable, contract assets and deferred revenue. Our current deferred revenue balance in the consolidated balance sheets includes an obligation for refunds for contracts where the provision for refund has not lapsed. Accounts receivable, deferred revenue and obligation for refunds are as follows:
As of
September 30, 2021 December 31, 2020
Contract balances
Accounts receivable $ 6,817  $ 12,398 
Obligations for refunds $ 5,403  $ 3,448 
Deferred revenue – current $ 332,783  $ 274,819 
Deferred revenue – non-current $ 366,676  $ 254,481 
We recognized $63,960 and $43,107 of revenue during the three months ended September 30, 2021 and 2020, and $240,638 and $156,084 during the nine months ended September 30, 2021 and 2020, respectively, that was included within the beginning contract liability balance of the respective periods. The Company has collected all amounts included in deferred revenue other than $6,817 and $12,398 as of September 30, 2021 and December 31, 2020, respectively, related to the timing of cash settlement with credit card processors.
Assets Recognized from Costs to Obtain a Contract with a Customer
The following table presents the opening and closing balances of our capitalized costs associated with contracts with customers:
Balance at January 1, 2021 $ 107,236 
Royalties and sales commissions – additions 55,502 
Revenue share and cost per acquisition fees – additions 77,437 
Amortization of capitalized costs (50,889)
Balance at September 30, 2021 $ 189,286 
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
We did not recognize any impairment on capitalized costs associated with contracts with customers for the three and nine months ended September 30, 2021 and 2020.
Remaining Performance Obligations
As of September 30, 2021, the Company had $704,862 of remaining performance obligations presented as deferred revenue in the consolidated balance sheets. We expect to recognize approximately 47% of that amount as revenues over the next twelve months, with the remainder recognized thereafter.

4.Acquisitions
Chaikin
On January 21, 2021, we acquired 90% ownership of Chaikin Holdings LLC (“Chaikin”) a provider of analytical tools and software for investors, for cash of $7,139, net of cash acquired. We acquired Chaikin to expand our product offerings and our customer base. The Chaikin acquisition was accounted for using the acquisition method of accounting for business combinations. The purchase price allocation is preliminary pending completion of valuations of certain acquired assets and liabilities. The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date:
Cash $ 151 
Other current assets 152 
Customer relationships 3,664 
Tradenames 657 
Software 247 
Goodwill 5,237 
Other noncurrent assets 443 
Total assets acquired 10,551 
Liabilities assumed (2,451)
Net assets acquired $ 8,100 
Cash consideration $ 7,290 
Noncontrolling interest 810 
Total consideration $ 8,100 
The excess purchase consideration over the fair values of assets acquired and liabilities assumed was recorded as goodwill. The goodwill arising from the acquisition is largely attributable to synergies which we expect to achieve from cross-marketing and providing complementary products to our existing and acquired customers, and is expected to be fully deductible for tax purposes. The acquired intangible assets of Chaikin are amortized over their estimated useful lives. Accordingly, the trade name will be amortized over 8.5 years and customer relationships will be amortized over 6 years. Amortization for the acquired intangible assets was $115 and $477 for the three and nine months ended September 30, 2021, respectively.
TradeSmith
On January 5, 2020, we acquired the noncontrolling interest of 25% in an affiliate, TradeSmith, to obtain 100% ownership for $9,164, including transaction costs. We incurred transaction costs of $164 during the nine months ended September 30, 2021 and elected to record these costs as a reduction in equity.

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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
5.Goodwill and Intangible Assets, Net
Goodwill
The changes in the carrying amounts of goodwill are as follows:
Balance at January 1, 2021 $ 18,101 
Acquisition of Chaikin 5,237 
Balance at September 30, 2021 $ 23,338 
Intangible assets, net
Intangible assets, net consisted of the following as of the dates indicated:
September 30, 2021
Cost Accumulated Amortization Net Book Value Weighted-Average Remaining Useful Life (in years)
Finite-lived intangible assets:
Customer relationships $ 12,369  $ (7,799) $ 4,570  4.6
Tradenames 3,578  (1,739) $ 1,839  5.5
Capitalized software development costs 2,842  (1,240) 1,602  3.1
Finite-lived intangible assets, net 18,789  (10,778) 8,011 
Indefinite-lived intangible assets:
Cryptocurrencies —  —  — 
Internet domain names 1,085  —  1,085 
Indefinite-lived intangible assets, net 1,085  —  1,085 
Intangible assets, net $ 19,874  $ (10,778) $ 9,096 
December 31, 2020
Cost Accumulated Amortization Net Book Value Weighted-Average Remaining Useful Life (in years)
Finite-lived intangible assets:
Customer relationships $ 8,705  $ (6,675) $ 2,030  2.7
Tradenames 2,921  (1,433) 1,488  4.9
Capitalized software development costs 2,495  (934) 1,561  3.8
Finite-lived intangible assets, net 14,121  (9,042) 5,079 
Indefinite-lived intangible assets:
Cryptocurrencies — 
Internet domain names 195  —  195 
Indefinite-lived intangible assets, net 199  —  199 
Intangible assets, net $ 14,320  $ (9,042) $ 5,278 
We recorded amortization expense related to finite-lived intangible assets of $513 and $529 for the three months ended September 30, 2021 and 2020, and $1,736 and $1,575 for the nine months ended September 30, 2021 and 2020, respectively, within depreciation and amortization in the accompanying consolidated statement of operations. These amounts include amortization of capitalized software development costs of $103 and $104 for the
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
three months ended September 30, 2021 and 2020, and $306 and $311 for the nine months ended September 30, 2021 and 2020, respectively.
We recorded additions to capitalized software development costs of $347 for the nine months ended September 30, 2021. This amount includes acquired software of $247.
As of September 30, 2021, the total expected future amortization expense for finite-lived intangible assets is as follows:
Remainder of 2021 $ 515 
2022 2,116 
2023 1,953 
2024 1,460 
2025 1,005 
Thereafter 962 
Finite-lived intangible assets, net $ 8,011 

6.Fair Value Measurements
The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of the dates indicated:
September 30, 2021
Level 1 Level 2 Level 3 Aggregate Fair Value
Assets:
Money market funds $ 42,800  $ —  $ —  $ 42,800 
Total assets 42,800  —  —  42,800 
Liabilities:
Derivative liabilities, current —  —  547  547 
Derivative liabilities, noncurrent —  —  2,205  2,205 
Derivative warrant liabilities - Public Warrants 23,402  —  —  23,402 
Derivative warrant liabilities - Private Placement Warrants —  —  11,667  11,667 
Total liabilities $ 23,402  $ —  $ 14,419  $ 37,821 
December 31, 2020
Level 1 Level 2 Level 3 Aggregate Fair Value
Assets:
Money market funds $ 25,016  $ —  $ —  $ 25,016 
Total assets 25,016  —  —  25,016 
Liabilities:
Derivative liabilities, noncurrent —  —  4,343  4,343 
Class B Units - related party —  —  593,235  593,235 
Total liabilities $ —  $ —  $ 597,578  $ 597,578 
The level 3 liabilities that related to our Class B Units and certain employee and non-employee contracts with embedded derivatives, see Note 8, Derivative Financial Instruments and Note 9, Stock-Based Compensation.
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
On the date of the Transactions, the fair value of the Public Warrants and the Private Placement Warrants was estimated using a Monte Carlo simulation model. The fair value of the Public Warrants was subsequently measured based on the listed market price of such warrants at the end of the reporting period. The fair value of the Private Placement Warrants was subsequently estimated using a Monte Carlo simulation model at the end of the reporting period. The Company estimates the fair value of the warrants at each reporting period, with changes in fair value recognized in the condensed consolidated statements of operations.
The estimated fair value of the derivative warrant liabilities – Public Warrants is determined using Level 1 inputs. The estimated fair value of the derivative warrant liabilities – Private Placement Warrants is determined using Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life and risk-free interest rate. The Company estimates the volatility of its ordinary shares based on historical volatility of select peer companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term.
The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement dates:
As of
September 30, 2021
Stock price $ 8.26 
Exercise Price $ 11.50 
Expected life of the warrants to convert (years) 4.81
Volatility 27.80  %
Risk-free rate 0.93  %
The following table summarizes the change in fair value of the derivative liabilities during the nine months ended September 30, 2021 and 2020:
Balance at January 1, 2021 $ 597,578 
Incremental Class B Units 206,914 
Establishment of derivative warrant liabilities on July 21, 2021 (date of the Transactions) 45,021 
Change in fair value of derivative instruments (11,543)
Change in fair value of Class B Units 728,079 
Reclassification of Class B Units from liability to equity on July 21, 2021 (date of the Transactions) $ (1,528,228)
Balance at September 30, 2021 $ 37,821 
Balance at January 1, 2020 $ 119,307 
Incremental Class B Units 13,398 
Change in fair value of derivative instruments 1,874 
Change in fair value of Class B Units 113,866 
Balance at September 30, 2020 $ 248,445 
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
The following table summarizes the change in fair value of the Class B Units by income statement line item during the three and nine months ended September 30, 2021 and 2020:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Cost of revenue $ 24,028  $ 12,167  $ 136,417  $ 22,052 
Sales and marketing 2,607  943  10,870  1,965 
General and administrative 102,911  50,960  580,792  89,849 
Total change in fair value of Class B Units $ 129,546  $ 64,070  $ 728,079  $ 113,866 
To derive the fair value of the Class B Units, we estimated the fair value of Class B Units using a valuation technique. For more information regarding the valuation of the Class B Units, see Note 9, Stock-Based Compensation.
As more fully described in Note 1, we completed our Transactions in July 2021, and all Class B Units fully vested as of the transaction date, and the original operating agreement was terminated and replaced by a new operating agreement consistent with the Company’s Up-C structure. This new operating agreement does not contain the put and call options that existed under the previous operating agreement, and the Common Units under the new operating agreement are treated as common equity and do not generate stock-based compensation expense. The Class B Units liability was reclassified to equity as of the transaction date.

7.Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consists of the following:
As of
Estimated Useful Lives September 30, 2021 December 31, 2020
Furniture and fixtures 5 years $ 960  $ 960 
Computers, software and equipment 3 years 1,338  1,220 
Leasehold improvements Shorter of estimated useful life or remaining term of lease 1,278  1,278 
3,576  3,458 
Less: Accumulated depreciation and amortization (2,381) (2,041)
Total property and equipment, net $ 1,195  $ 1,417 
Depreciation and amortization expense for property and equipment was $116 and $111 for the three months ended September 30, 2021 and 2020, and $340 and $337 for the nine months ended September 30, 2021 and 2020, respectively.
Accrued Expenses
Accrued expenses consist of the following:
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
As of
September 30, 2021 December 31, 2020
Commission and variable compensation $ 42,661  $ 17,271 
Payroll and benefits 4,505  3,645 
Other accrued expenses 16,151  11,218 
Total accrued expenses $ 63,317  $ 32,134 

8.Derivative Financial Instruments
Prior to the closing of the Transactions, as part of our compensation and employee retention strategy, we entered into contracts with key employees and independent contractors which contain embedded derivatives. These contracts are intended to compensate the employees or independent contractors for services provided and retain their future services. These embedded derivative instruments are issued in the form of phantom interests in Net Income, as defined by our board of directors, that grant the holder value equal to a percentage of Net Income multiplied by a price multiple, or contain an option that granted appreciation rights upon exercise, and which become exercisable upon occurrence of an initial public offering. All derivative instruments are recorded at fair value as derivative liabilities on our consolidated balance sheets.
As of September 30, 2021, there are both Private Placement Warrants and public warrants outstanding; each of which is exercisable for one share of Class A common stock of MarketWise, Inc. Additionally, there are embedded derivative instruments outstanding. The following table presents information on the location and amounts of derivative instruments gains and losses:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Derivatives Not Designated as
Hedging Instruments
Location of Gain (Loss) Recognized in Income Statement
Warrants Other income, net $ 9,952  $ —  $ 9,952  $ — 
Phantom Interests in Net Income Other income, net —  (877) —  (1,874)
Phantom Interests in Net Income General and administrative (250) —  2,138  — 
Option General and administrative 115  —  (547) — 
Total $ 9,817  $ (877) $ 11,543  $ (1,874)
See Fair Value Measurements note for more information regarding the valuation of our derivative instruments.

9.Stock-Based Compensation
During the three and nine months ended September 30, 2021, we recorded stock-based compensation related to our 2021 Incentive Award Plan and our Class B Units. As more fully described in Note 1, we completed our Transactions in July 2021, and all Class B Units fully vested as of the transaction date, and the original operating agreement was terminated and replaced by a new operating agreement consistent with the Company’s Up-C structure. This new operating agreement does not contain the put and call options that existed under the previous
26

MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
operating agreement, and the Common Units are treated as common equity under the new operating agreement and do not generate stock-based compensation expense.
2021 Incentive Award Plan
On September 27, 2021, as a result of Board approval and the successful filing of a registration statement on Form S-8, we granted 500 Class A common stock of MarketWise, Inc. to all employees who were actively employed as of both March 2, 2021 and September 27, 2021. Total shares granted were 309,500 and we issued 200,373 shares after withholding for taxes. All shares immediately vested at the time of grant, resulting in compensation expense of $2,569.
On September 27, 2021, we granted certain employees restricted stock units (“RSUs”) and stock appreciation rights (“SARs”) under our 2021 Incentive Award Plan.
Both RSUs and SARs are time based and vest ratably over four years, as specified in the individual grant notices. The RSUs granted in September 2021 entitle the recipients dividend equivalents which are subject to the same vesting terms and accumulate during the vesting period. Upon vesting, the RSU holder will be issued the Company’s Class A common stock. The SARs will be settled in the Company’s Class A common stock upon exercise. The shares to be issued upon exercise will have a total market value equal to the SAR value calculated as (x) number of shares underlying SAR, multiplied by (y) any excess of the Company’s share value on the date of exercise over the exercise price set in each individual grant notice.
The fair value of RSU is the same as the Company’s share price on the date of grant. The fair value of the SARs was determined using a Black-Scholes model using the following assumptions:
As of
September 30, 2021
Volatility 50.0  %
Stock price $ 8.30 
Strike price $ 8.30 
Expected life of the options to convert (years) 6.25
Risk-free rate 1.20  %
Dividend yield 0.0  %
The activities of the RSUs and SARs are summarized as follows, including granted, exercised and forfeited from September 27, 2021, the date of the initial establishment of the new incentive plan and grants to September 30, 2021.
Fully Vested Shares RSUs SARs
Outstanding at January 1, 2021 —  —  — 
Granted 309,500  2,334,490  1,935,131 
Exercised or vested (309,500) —  — 
Forfeited —  —  — 
Expired —  —  — 
Outstanding at September 30, 2021 —  2,334,490  1,935,131 
The stock compensation expense related to the new RSU and SAR grants was $74 for the three and nine months ending September 30, 2021. The weighted average grant-date fair value of the respective share classes are as follows:
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
As of
September 30, 2021
Fully vested shares $ 8.30 
RSUs $ 8.30 
SARs $ 4.05 
As of September 30, 2021, none of the SARs were exercisable and they have a remaining contractual term of ten years.
Class B Units
We recognized stock-based compensation expenses of $409,922 and $73,451 for the three months ended September 30, 2021 and 2020, and $1,058,442 and $172,575 for the nine months ended September 30, 2021 and 2020, respectively. These amounts include profits distributions to Class B unitholders of $117,342 and $7,241 for the three months ended September 30, 2021 and 2020, and $123,449 and $45,311 for the nine months ended September 30, 2021 and 2020, respectively. The amount of stock-based compensation expense related to the Class B Units included in each of the line items in the accompanying consolidated statement of operations is as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Cost of revenue $ 45,618  $ 13,717  $ 170,536  31,943 
Sales and marketing 31,507  943  46,417  3,168 
General and administrative 332,797  58,791  841,489  137,464 
Total stock based-compensation expense $ 409,922  $ 73,451  $ 1,058,442  $ 172,575 
The following is a rollforward of Class B Units activity for the nine months ended September 30, 2021:
Unvested at January 1, 2021
75,044 
Granted 17,690 
Vested (92,734)
Unvested at September 30, 2021
— 
Immediately prior to the closing of the Transactions, there were 589,465 Class B units of MarketWise, LLC outstanding. All Class B units were converted into 152,822,842 Common Units of MarketWise, LLC and became immediately vested, resulting in an incremental stock-based compensation expense of $292,580.
The weighted-average grant-date fair value of Class B Units granted was $2,195.16 and $178.69 per unit during the nine months ended September 30, 2021 and 2020, respectively.
Because the Class B Units were not publicly traded, we estimated the fair value of its Class B Units in each reporting period. The fair values of Class B Units were estimated by the board of managers based on our equity value. The board of managers considered, among other things, contemporaneous valuations of our equity value prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.
For the three and nine months ended September 30, 2020, the fair value of the Class B Units was estimated using an option pricing model to allocate the equity value of the Company to the Class B Units based on their distribution rights. To derive the fair value of the Class B Unit liability, a two-step valuation approach was used. First the equity value of the Company was estimated. The Company considers asset, market, and income-based approaches. The Company determined that an income-based approach presented the best indication of value. As such, the Company relied upon a discounted cash flow approach using a five-year discrete projection period,
28

MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
discounting expected future cash flows back to that date. This calculated equity value was then allocated to the common units held by various stockholders using an option pricing model.
At the date of the Transactions on July 21, 2021, the $10 market value per share was used.
For the three and six months ended June 30, 2021, the fair value of the Class B Units was estimated using a probability-weighted expected return method. This method considered two scenarios: one based on a market approach according to a proposed acquisition of the Company and allocated through a liquidation waterfall, and the other based on the Company continuing as a private entity according to a discounted cash flow analysis, and allocated using an option pricing model. The results of these two methods were weighted to derive the fair value of the Class B Units as of March 31, 2021 and June 30, 2021.
The discounted cash flow method estimates the equity value of the Company by projecting the Company’s net cash flows into the future and discounting these net cash flows to present value by applying a discount rate. Key inputs for this valuation include the Company’s projected cash flows and discount rate. Changes to these inputs could have a material impact on the accompanying consolidated financial statements.
The option pricing model allocates the equity value to each class of common units by preparing a breakpoint analysis to determine which securities would receive value at each threshold of a hypothetical liquidation. Then applying a Black-Scholes option pricing analysis to determine the incremental value of each respective breakpoint and allocating that value to each participating security based on its pro-rata ownership in the breakpoint. Key inputs for this valuation include the equity value of the Company, risk-free rate, allocation thresholds, and stock volatility.
The Company considered several objective and subjective factors to determine the best estimate of the fair value of the Class B Units, including:
the Company’s historical and expected operating and financial performance;
current business conditions;
indications of value from external investors and their proposed value for the business;
the Company’s stage of development and business strategy;
macroeconomic conditions;
the Company’s weighted average cost of capital;
risk-free rates of return;
the volatility of comparable publicly traded peer companies; and
the lack of an active public market for the Company’s equity units.
See also Note 2, Stock Based Compensation.

10. Earnings Per Share
On July 21, 2021, we completed the Transactions pursuant to the Transaction Agreement which materially impacted the number of shares outstanding. We analyzed the calculation of earnings per share for periods prior to the Transactions, and determined that it resulted in values that would not be meaningful to the users of the condensed consolidated financial statements, as our capital structure completely changed as a result of the Transactions. Therefore, earnings per share information has not been presented for periods prior to the Transactions.
Weighted average shares outstanding in the table below have not been retroactively restated to give effect to the reverse recapitalization for periods prior to the date of the Transactions. See Note 1 – Description of Organization
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
and Reverse Recapitalization with Ascendant Digital Acquisition Corp. for more information regarding the Transactions.
The following table sets forth the computation of basic and diluted earnings per share for the period from July 22, 2021 through September 30, 2021:
Numerator:
Net income for the period from July 22, 2021 through September 30, 2021 $ 42,847 
Less: Net income attributable to noncontrolling interests for the period from July 22, 2021 through September 30, 2021 33,167 
Net income for the period from July 22, 2021 through September 30, 2021 attributable to common shareholders, basic and dilutive $ 9,680 
Denominator:
Weighted average shares outstanding, basic and diluted (in thousands) $ 24,963 
Net income per share attributable to common shares, basic and diluted $ 0.39 
The Company’s potentially dilutive securities and their impact on the computation of earnings per share is as follows:
Public and Private Placement Warrants: the public and Private Placement Warrants are "out of the money" for the period from July 22, 2021 through September 30, 2021, therefore, net income per share excludes any impact of the 20,699,993 public warrants and 10,280,000 Private Placement Warrants.
Sponsor and MarketWise Management Member Earnout shares: the 3,051,000 Sponsor Earn Out shares held in escrow are excluded from the earnings per share computation since the earnout contingency has not been met. The 2,000,000 MarketWise Management Member Earn Out shares (as defined and discussed in the Original Report) held in escrow are excluded from the earnings per share computation since the earnout contingency has not been met.
Restricted stock units: The earnings per share calculation excludes the impact of RSUs since no units were vested as of September 30, 2021.

11.Income Taxes
We are subject to U.S. federal and state taxes with respect to our allocable share of any taxable income or loss of MarketWise, LLC, as well as any stand-alone income or loss we generate. MarketWise, LLC is treated as a partnership for U.S. income tax purposes and for most applicable state and local income tax purposes and generally does not pay income taxes in most jurisdictions. Instead, MarketWise, LLC’s taxable income or loss is passed through to its members, including us.
The effective income tax rates for the three and nine months ended September 30, 2021 were (0.8)% and (0.3)%, respectively. We did not record any income taxes for the three and nine months ended September 30, 2020 as we were a pass-through entity for tax purposes prior to the closing of the Transactions. Our effective tax rate in 2021 differs from the U.S. federal statutory rate primarily because we generally do not record income taxes for the noncontrolling portion of pre-tax income.
As a result of the reverse capitalization, we recorded a deferred tax asset resulting from the outside basis difference in our interest in MarketWise, LLC, a portion of which related to net assets with tax basis that is ordinary in nature and a portion of which related to the residual outside basis that is capital in nature.
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
The residual outside basis that is capital in nature would only be recognized upon disposition of our interest in MarketWise, LLC, for which there are no foreseeable plans. The residual outside basis difference would also only offset with a capital gain, which is not expected to arise for the Company. Therefore, a valuation allowance in the amount of $28,947 was recorded, as we determined that it was more likely than not that this portion of the deferred tax asset will not be realized.
As part of the reverse capitalization, we are now a taxable corporation, subject to federal and state income taxes. We entered into Tax Receivable Agreements (“TRAs”) with certain shareholders that will represent approximately 85% of the calculated tax savings based on the portion of basis adjustments on future exchanges of MarketWise, LLC units and other carryforward attributes assumed that we anticipate to be able to utilize in future years. There was no exchange of MarketWise, LLC units as part of the Transactions and there has been no exchange since the closing; therefore, we have not recorded a liability under the TRAs as of September 30, 2021.
As of September 30, 2021, we had no unrecognized tax positions and believe there will be no changes to uncertain tax positions within the next 12 months.

12.Related Party Transactions
In July 2021, the Company’s board approved and made a discretionary, one-time, lifetime-award, non-employee bonus payment of $10.0 million to the Company’s founder, who is a Class B common stockholder, which was recorded within related party expense in the condensed consolidated statement of operations.
We have certain revenue share agreements with related parties. Accordingly, we recognized revenue from related parties of $245 and $1,041 for the three months ended September 30, 2021 and 2020, and $864 and $2,479 for the nine months ended September 30, 2021 and 2020, respectively.
We also incurred revenue share expenses paid to related parties of $1,337 and $1,255 which were capitalized as contract origination costs for the three months ended September 30, 2021 and 2020, and $8,921 and $2,884 which were capitalized as contract origination costs for the nine months ended September 30, 2021 and 2020, respectively.
Additionally, a related party provided call center support and other services to the Company for which we recorded an expense within cost of revenue of $347 and $98 for the three months ended September 30, 2021 and 2020, and $960 and $941 for the nine months ended September 30, 2021, respectively.
A related party also provided certain corporate functions to MarketWise and the costs of these services are charged to MarketWise and recorded within related party expense in the accompanying consolidated statement of operations. We held balances of $1,338 and $3,288 as of September 30, 2021 and December 31, 2020 of related party payables related to these services. The balances with our related party are presented net and are included in related party payables, net in the consolidated balance sheet.
We earned fees and provided certain accounting and marketing services to companies owned by certain of MarketWise’s Class B unitholders. As a result, we recognized $93 and $86 in other income, net for the three months ended September 30, 2021 and 2020, and $235 and $280 for the nine months ended September 30, 2021 and 2020, respectively. Related party receivables related to these services were $582 and $689 as of September 30, 2021 and December 31, 2020, respectively.
We lease offices from related parties. Lease payments made to related parties were $383 and $376 for the three months ended September 30, 2021 and 2020, and $1,150 and $1,128 for the nine months ended September 30, 2021 and 2020, respectively, and rent expense of $556 and $556 were recognized in general and administrative expenses for the three months ended September 30, 2021 and 2020, and $1,668 and $1,668 for the nine months ended September 30, 2021 and 2020, related to leases with related parties. At September 30, 2021 and December 31, 2020, ROU assets of $10,738 and $11,957 and lease liabilities of $7,789 and $8,490 are associated with leases with related parties.
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
We incurred costs related to lead generation marketing from a related party vendor which was partially owned by a shareholder through November 2020. We purchased lead generation marketing of $4,292 and $12,336 for the three and nine months ended September 30, 2020, respectively, which was recorded in sales and marketing expenses.
In August 2019 we provided an additional loan to a Class B unitholder and recognized a related party note receivable from the unitholder of $3,000. We recognized $25 in interest income for the nine months ended September 30, 2020. This loan was repaid in June 2020.
In April 2020 we provided a loan to a Class A unitholder and recognized a related party note receivable from the unitholder of $1,155 as of September 30, 2021. We recognized $2 and $2 in interest income for the three months ended September 30, 2021 and 2020, and $7 and $3 for the nine months ended September 30, 2021 and 2020, respectively. The interest rate on the loan is variable and was 0.86% as of September 30, 2021. The loan is due in April 2025, but is required to be repaid within 30 days after we complete an initial public offering, including expiration of any related lockup conditions, which is expected to be met in 2022.

13.Variable Interest Entities
We consolidated a VIE based on our ability to exercise power and being the primary beneficiary of the entity including directing the operations and marketing campaigns and sharing customer lists and publications, as of September 30, 2021 and December 31, 2020. There have been no reconsideration events during these periods. The assets of consolidated variable interest entities may only be used to settle obligations of these entities. In addition, there is no recourse to MarketWise for the consolidated VIE’s liabilities. The following represents financial information for the consolidated VIE included in the consolidated balance sheets:
As of
September 30, 2021 December 31, 2020
Current assets $ 1,048  $ 3,787 
Noncurrent assets 22 
Total assets $ 1,053  $ 3,809 
Current liabilities $ 564  $ 3,265 
Noncurrent liabilities —  — 
Total liabilities $ 564  $ 3,265 
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MARKETWISE, INC.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, except share, unit, per share, and per unit data)
14.Supplemental Cash Flow Information
Supplemental cash flow disclosures are as follows:
Nine Months Ended September 30,
2021 2020