FALSE2021FY0001805651

Included within cost of revenue, sales and marketing, and general and administrative expenses are stock-based compensation expenses as follows (see Note 11):
									Year Ended December 31,
																					2021						2020						2019
Cost of revenue																					$	171,804					$	102,736					$	5,025
Sales and marketing																					48,098						10,567						—
General and administrative																					843,449						440,297						15,414
Total stock-based compensation expense																					$	1,063,351					$	553,600					$	20,439

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 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☑			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to         

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)

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based on the closing price of the registrant’s shares of Class A common stock as reported by The Nasdaq Global Market on June 30, 2021 was approximately $411.9 million.

						Page
PART I.
Item 1.			Business			6
Item 1A.			Risk Factors			14
Item 1B.			Unresolved Staff Comments			42
Item 2.			Properties			42
Item 3.			Legal Proceedings			42
Item 4.			Mine Safety Disclosures			42
PART II.
Item 5.			Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			43
Item 7.			Management's Discussion and Analysis of Financial Condition and Results of Operations			45
Item 7A.			Quantitative and Qualitative Disclosures About Market Risk			68
Item 8.			Financial Statements			69
Item 9.			Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			112
Item 9A.			Controls and Procedures			113
Item 9B.			Other Information			114
Item 9C.			Disclosure Regarding Foreign Jurisdictions that Prevent Inspections			114
PART III.
Item 10.			Directors, Executive Officers and Corporate Governance			115
Item 11.			Executive Compensation			122
Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			128
Item 13.			Certain Relationships and Related Transactions, and Director Independence			131
Item 14.			Principal Accountant Fees and Services			142
PART IV.
Item 15.			Exhibits			144
Item 16.			Form 10-K Summary			144
Signatures						146

•Our business depends on our ability to attract new subscribers and to persuade existing subscribers to renew their subscription agreements with us and to purchase additional products and services from us. If we are unable to attract new subscribers, or continue to engage existing subscribers, our revenue and operating results may be adversely affected.

•If we fail to adequately market our products and services, or to monitor and manage our use of social media platforms as marketing tools, it could have a material adverse effect on our business, results of operations, and financial condition.

•Failure to maintain and protect our reputation for trustworthiness and independence may harm our business. In addition, in the event the reputation of any of our current or former directors, officers, key contributors, editors, or staff were harmed for any reason, our business, results of operations, and financial condition could suffer.

•If we fail to effectively manage our growth, our business, results of operations, and financial condition could be harmed.

•Our future success depends on attracting, developing, and retaining capable management, editors, and other key personnel.

•Our success depends on our ability to respond to and adapt to changes in technology and consumer behavior.

•If we are unable to successfully integrate acquisitions, identify and integrate future acquisitions, or dispose of assets and businesses, our results of operations could be adversely affected.

•Because we recognize revenue from subscriptions for our services over the term of the subscription, downturns or upturns in new business may not be immediately reflected in our operating results.

•Our business, products, and facilities are at risk of a number of material disruptive events that our operational risk management and business continuity programs may not be adequate to address.

•Disruptions to our third-party technology providers and management systems could harm our business and lead to loss of subscribers.

•We are subject to payment processing risk.

•Failure to comply with laws and regulations or other regulatory action or investigations, including with respect to the federal and state securities laws, could adversely affect our business.

•We could face liability for the information and data we collect and distribute or the reports and other documents produced by our software products.

•Any failure of our internal security measures or breach of our privacy protections could cause us to lose subscribers and subject us to liability.

•We are subject to laws, regulations, and industry standards related to data privacy, data protection, and information security, including industry requirements such as the Payment Card Industry Data Security Standard. Our actual or perceived failure to comply with such obligations could harm our business.

•Changes in our provision for income taxes or adverse outcomes resulting from examination of our income or other tax returns or changes in tax legislation could adversely affect our business, financial condition, and results of operations.

•MarketWise, Inc.’s sole material asset is its interest in MarketWise, LLC, and, accordingly, it will depend on distributions from MarketWise, LLC to pay its taxes and expenses, including payments under the Tax Receivable Agreement. MarketWise, LLC’s ability to make such distributions may be subject to various limitations and restrictions.

•The Tax Receivable Agreement requires MarketWise, Inc. to make cash payments to the members of the MarketWise, LLC, other than MarketWise, Inc. (the “MarketWise Members”) in respect of certain tax benefits to which MarketWise, Inc. may become entitled, and no such payments will be made to any holders of our Class A common stock unless such holders are also MarketWise Members. The payments MarketWise, Inc. will be required to make under the Tax Receivable Agreement may be substantial.

•The MarketWise Members have significant influence over us, including control over decisions that require the approval of MarketWise, Inc. stockholders.

•The MarketWise Members have the right to have their MarketWise Units redeemed or exchanged into shares of Class A common stock, which, if exercised, will dilute your economic interest in MarketWise, Inc.

•A significant portion of the total outstanding shares of our Class A common stock (or shares of our Class A common stock that may be issued in the future pursuant to the exchange or redemption of MarketWise Units) are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our securities to drop significantly, even if our business is doing well.

•Under certain circumstances, the Sponsor and certain members of our management team will be entitled to the Sponsor Earnout Shares and the Management Member Earnout Shares, as applicable, which will increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

•We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future that may cause us to fail to meet our reporting obligations or result in material misstatements of its financial statements. If we fail to remediate any material weaknesses or if we fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report financial results could be adversely affected.

•our ability to attract new subscribers and to persuade existing subscribers to renew their subscription agreements with us and to purchase additional products and services from us;

•our ability to adequately market our products and services, and to develop additional products and product offerings;

•our ability to manage our growth effectively, including through acquisitions;

•failure to maintain and protect our reputation for trustworthiness and independence;

•our ability to attract, develop, and retain capable management, editors, and other key personnel;

•our ability to grow market share in our existing markets or any new markets we may enter;

•adverse or weakened conditions in the financial sector, global financial markets, and global economy;

•our ability to respond to and adapt to changes in technology and consumer behavior;

•failure to successfully identify and integrate acquisitions, or dispose of assets and businesses;

•our public securities’ potential liquidity and trading;

•the impact of the regulatory environment and complexities with compliance related to such environment;

•the impact of the COVID-19 pandemic;

•our future capital needs;

•our ability to maintain an effective system of internal control over financial reporting, and to address and remediate existing material weaknesses in our internal control over financial reporting;

•our ability to maintain and protect our intellectual property; and

•other factors detailed under the section of this report entitled “Risk Factors.”

Rise of the self-directed investor. Years ago, and even today, retail investors sought advice from traditional investment managers. But over the past two decades, retail investors have increasingly taken control of their own portfolios. There are several reasons for this trend. In the aftermath of the 2008 financial crisis, investor skepticism increased toward large financial institutions and advisors. Meanwhile, the development of online trading and the proliferation of financial information on the Internet has made it easier for investors to take control of their finances and self-direct their investments. Online brokerage platforms have slashed the cost to manage a personal trading account, so investors can now make trades for free or at a fraction of the historical cost.

Demographic shifts are increasing demand for our products. Approximately 17% of the U.S. population are individuals over the age of 65. And that cohort is growing rapidly, with roughly 10,000 Americans retiring every day. Many of these people have significant retirement accounts on which they rely.

Financial markets are becoming more complex. The historical approach toward managing a personal portfolio with a mix of blue-chip stocks, corporate bonds, and cash has become antiquated. The rapid growth of investment opportunities—including products such as exchange-traded funds (“ETFs”), cryptocurrencies, options strategies, and distressed corporate debt—has given self-directed investors today many different and sophisticated ways to invest their money. And those choices continue to specialize and multiply.

Financial research content is fragmented and price points vary. The landscape of financial research providers is fragmented, with hundreds of publications, platforms, and tools for investment research directed at distinct segments of the investing community.

Deepen our relationship with our existing subscribers. In addition to our paid customers, an additional 13.7 million Free Subscribers have access to our extensive library of free and educational content. As our subscribers learn and gain confidence as investors, they understand the need to deploy diverse investment strategies for different market conditions and they explore our broad and diverse product offerings. They gain an understanding of the high quality of research that we strive to provide, and they tend to purchase additional research and software products.

Launch new products and target new markets. Over our greater than 20-year history, we have developed a breadth of products and services that are designed to educate, empower, and entertain our subscribers and provide them with actionable investment ideas.

Selectively pursue strategic growth. Over the past ten years, we have developed several joint ventures and executed strategic acquisitions to accelerate our growth, as well as increase the value of our offerings to our subscribers.

•free online financial news aggregators or customer content platforms, like Yahoo! Finance and Seeking Alpha;

•traditional financial news publishers, like the Wall Street Journal, Investor’s Business Daily, and Barron’s;

•consumer-focused online subscription businesses, such as The Motley Fool;

•institutional financial software providers, such as Bloomberg, FactSet, and S&P Global; and

•online investing tools, such as Atom Finance and Stocktwits.

We rely on a combination of trademark and copyright to protect our intellectual property. We have registered certain of our trademarks and service marks in the United States with the U.S. Patent and Trademark Office and in Canada and China, and have registered copyrights on certain publications. In addition, we have registered our domain names, including marketwise.com, with MarkMonitor. We believe the names and marks associated with our brands are of significant value and are important to our business. Accordingly, as a general policy, we monitor the use of our marks and vigorously oppose any unauthorized use of the marks. We do not hold any patents.

On July 21, 2021, we consummated the transactions contemplated by that Business Combination Agreement, dated as of March 1, 2021, by and among Ascendant Digital Acquisition Corp., (“ADAC”), MarketWise, LLC, and the MarketWise Members, (as amended, the “Transaction Agreement”), which provided for: (1) the domestication of ADAC as a Delaware corporation; (2) ADAC’s capital contribution to MarketWise, LLC in exchange for certain units and warrants in MarketWise, LLC; and (3) the issuance of shares of Class B common stock, par value $0.0001 per share, of MarketWise, Inc. to the MarketWise Members (the “Class B common stock” and, together with the Class A common stock, the “common stock”) (the transactions described above and all transactions contemplated by or pursuant to the Transaction Agreement collectively, the “Transactions”). Upon the closing of the Transactions, ADAC changed its name to “MarketWise, Inc.” and became the sole manager of MarketWise, LLC. MarketWise, Inc.’s only direct assets consist of MarketWise Units and warrants of MarketWise, LLC, and substantially all of the assets and the business of MarketWise, Inc. are held by MarketWise, LLC and its subsidiaries. Upon the consummation of the Transactions, ADAC’s Class A 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. See also Note 1, Organization — Reverse Recapitalization with Ascendant Digital Acquisition Corp., to our audited consolidated financial statements included in this report.

Our website address is www.marketwise.com. The information contained on, or that can be accessed through, our website is deemed not to be incorporated in this Annual Report on Form 10-K or to be part of this Annual Report on Form 10-K or any other report filed with the SEC. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as any amendments to those reports, are available free of charge through our website as soon as reasonably practicable after we file them with, or furnish them to, the SEC. The SEC maintains a website at www.sec.gov that contains reports, proxy statements, and other information regarding SEC registrants, including MarketWise, Inc.

•free online financial news aggregators and content providers, like Yahoo! Finance and Seeking Alpha;

•traditional financial news publishers, like The Wall Street Journal, Investor’s Business Daily, and Barron’s;

•consumer-focused online subscription businesses, such as The Motley Fool; and

•institutional financial software providers, such as Bloomberg, FactSet, and S&P Global.

Our ability to compete successfully depends on many factors, including the quality, originality, timeliness, insightfulness, and trustworthiness of our content and that of our competitors, the popularity and performance of our contributors, the success of our recommendations and research, our ability to introduce products and services that keep pace with new investing trends, our ability to adopt and deploy new technologies for running our business, the ease of use of services developed by us or our competitors, and the effectiveness of our sales and marketing efforts. Future competitive pressure may result in price reductions, lower sales volumes, reduced margins, or loss of market share, any of which could materially adversely affect our business, results of operations, and financial condition. Accordingly, we cannot guarantee that we will be able to compete effectively with our current or future competitors or that this competition will not significantly harm our business.

•underperformance relative to our expectations and the price paid for the acquisition;

•unanticipated demands on our management and operational resources;

•failure to improve scalability;

•difficulty in integrating personnel, operations, and systems;

•retention of customers of the combined businesses;

•inability to maintain relationships with key customers, suppliers, and partners of an acquired business;

•assumption of contingent liabilities; and

•acquisition-related earnings charges.

•extreme volatility in financial and other capital markets;

•Our inability to manage our business effectively due to key employees becoming ill, working from home inefficiently, and being unable to travel to our offices;

•the requirement that our management team shift its focus to mitigating risks related to COVID-19 and away from day-to-day operations and initiatives;

•the inability of existing and prospective subscribers to purchase or renew paid subscriptions;

•disruptions to our marketing campaigns;

•fewer opportunities for analysts to attend conferences, symposia, and other research activities;

•disruptions in our ability to conduct product development;

•potential postponement or cancellation of previously planned initiatives or strategic transactions; and

•system interruptions that slow our websites or make our websites unavailable as our third-party software and service providers experience increased usage.

Various aspects of our business and services are subject to federal, state, and local regulation, as well as regulation outside the United States. We rely upon the “publisher’s exclusion” from the definition of “investment adviser” under Section 202(a)(11)(D) of the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and corresponding state securities laws for our investment newsletter business. In order to maintain our qualification for this exclusion, our newsletter publications must be: (1) of a general and impersonal nature, in that the advice provided is not adapted to any specific portfolio or any client’s particular needs; (2) “bona fide” or genuine, in that it contains disinterested commentary and analysis as opposed to promotional material; and (3) of general and regular circulation, in that it is not timed to specific market activity or to events affecting, or having the ability to affect, the securities industry. The United States Supreme Court in Lowe v. Securities and Exchange Commission, 472 U.S. 181 (1985), held that a publisher of advice concerning securities, even where that advice consisted of specific recommendations to buy, sell, or hold particular securities, is entitled to rely on the publisher’s exclusion where the publisher does not offer individualized advice tailored to any specific portfolio or to any client’s particular needs. As long as communications between the publisher and its subscribers remain entirely impersonal and do not develop into the kind of fiduciary relationships that are characteristic of investment adviser-client relationships, the Lowe court held that such products and publications presumptively fall within the exclusion and thus the publisher is not subject to registration under the Advisers Act.

Our business requires that we securely collect, process, store, transmit, and dispose of confidential information relating to our operations, subscribers, employees, and other third parties. In particular, Paid Subscribers are required to furnish certain information (including name, mailing address, phone number, email address, and credit card information) (collectively “personal information”), which we use to administer our services. We also require Free Subscribers (as defined below) to provide us with some personal information during the membership registration process. Additionally, we rely on security and authentication technology licensed from third parties to perform real-time credit card authorization and verification, and at times rely on third parties, including technology consulting firms, to help protect our infrastructure from security threats. We strive to invest in systems, processes, controls, and other security measures to guard against the risk of improper access to or release of such information.

Under the MarketWise Operating Agreement, MarketWise, LLC will, from time to time, make distributions in cash to its equityholders (including MarketWise, Inc.) pro rata, in amounts at least sufficient to cover the taxes on

•actual or anticipated fluctuations in our annual or quarterly financial condition and operating results;

•actual or anticipated changes in our growth rate relative to our competitors;

•failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public;

•speculation in the press or investment community about our business or industry;

•issuance of new or updated research or reports by securities analysts, or the failure of securities analysts to provide adequate coverage of our Class A common stock in the future;

•fluctuations in the valuation of companies perceived by investors to be comparable to us;

•Class A common stock or warrant price and volume fluctuations attributable to inconsistent trading volume levels of our Class A common stock or warrants;

•additions or departures of key personnel;

•disputes or other developments related to proprietary rights;

•additional or unexpected changes or proposed changes in laws or regulations or differing interpretations thereof affecting our business or enforcement of these laws and regulations, or announcements relating to these matters;

•announcement or expectation of additional equity or debt financing efforts;

•equity sales by us, the MarketWise Members, our insiders, or our other stockholders;

•general economic and market conditions, including any impacts associated with the COVID-19 pandemic; and

•other factors described in this “Risk Factors” section and elsewhere in this report.

•a classified board of directors with staggered, three-year terms;

•the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock, and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

•prohibition on cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

•the limitation of the liability of, and the indemnification of, our directors and officers;

•the ability of our board of directors to amend the Bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt; and

•advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.

The following table sets forth the information with respect to purchases made by or on behalf of the Company of its common stock during the three months ended December 31, 2021.

Period			Total Number of Shares Purchased (1)						Average Price Paid per Share						Total Number of Shares Purchased as Part of a Publicly Announced Plan						Maximum Dollar Value of Shares that May Yet to be Purchased Under the Plan (in thousands)
October 1 to October 31, 2021			—						N/A						—						$	35,000
November 1 to November 30, 2021			—						N/A						—						$	35,000
December 1 to December 31, 2021			500,270						$	6.67					500,270						$	31,665
Total			500,270												500,270

MarketWise started in 1999 with the simple idea that, if we could publish intelligent, independent, insightful, and in-depth investment research and treat the subscriber the way we would want to be treated, then subscribers would renew their subscriptions and stay with us. Over the years, we have expanded our business into a comprehensive suite of investment research products and solutions. We now produce a diversified product portfolio from a variety of financial research companies such as Stansberry Research, Palm Beach Research, Casey Research, InvestorPlace, and Empire Financial Research. Our entire investment research product portfolio is 100% digital and channel agnostic, and we offer all of our research across a variety of platforms, including desktop, laptop, and mobile devices, including tablets and mobile phones.

(In thousands)						Year Ended December 31,
						2021						2020						2019
Net cash provided by operating activities						$	63,632					$	55,875					$	54,201
Total net revenue						549,183						364,179						272,223
Net cash provided by operating activities margin						11.6		%				15.3		%				19.9		%
Adjusted CFFO						$	197,081					$	134,273					$	69,032
Billings						729,893						548,835						310,060
Adjusted CFFO Margin						27.0		%				24.5		%				22.3		%

Cash flow from operations increased by $7.8 million, or 13.9%, from $55.9 million for the year ended December 31, 2020 to $63.6 million for the year ended December 31, 2021, primarily due to net loss of $953.9 million adjusted for non-cash charges of $927.8 million and net changes in our operating assets and liabilities of $89.8 million.

Adjusted CFFO increased by $62.8 million, or 46.8%, from $134.3 million for the year ended December 31, 2020 to $197.1 million for the year ended December 31, 2021, primarily driven by an increase of $181.1 million in Billings at an Adjusted CFFO Margin of 27.0%. The difference between Adjusted CFFO and CFFO is primarily stock-based compensation associated with distributions to the original Class B unitholders. For further information on stock-based compensation, see Note 11, Stock-Based Compensation to our audited consolidated financial statements.

Net revenue increased by $185.0 million, or 50.8%, from $364.2 million for the year ended December 31, 2020 to $549.2 million for the year ended December 31, 2021. The increase in net revenue was primarily driven by a $129.9 million increase in term subscription revenue and a $57.7 million increase in lifetime subscription revenue, partially offset by a $2.6 million decrease in non-subscription revenue.

Net revenue increased by $92.0 million, or 33.8%, from $272.2 million for the year ended December 31, 2019 to $364.2 million for the year ended December 31, 2020. The increase in net revenue was primarily driven by a $59.7 million increase in term subscription revenue and a $35.9 million increase in lifetime subscription revenue, partially offset by a $3.7 million decrease in non-subscription revenue.

These impacts include the net cash proceeds from the Transactions of $113.6 million. This cash amount includes: (a) the reclassification of ADAC’s Trust Account of $414.6 million to cash and cash equivalents that became available at the time of the Transactions; (b) proceeds of $150.0 million from the issuance and sale of MarketWise Class A common stock in the PIPE investment; (c) payment of $48.8 million in non-recurring transaction costs; (d) settlement of $14.5 million in deferred underwriters’ discount; and (e) the payment of $387.7 million to redeeming shareholders of ADAC. See also Note 1, Organization — Reverse Recapitalization with Ascendant Digital Acquisition Corp., to our audited consolidated financial statements.

Growing our subscriber base with compelling unit economics. We are highly focused on continuing to acquire new subscribers to support our long-term growth. Our marketing spend is a large driver of new subscriber growth. At the heart of our marketing strategy is our compelling unit economics that combine long-term subscriber relationships, highly scalable content delivery, cost-effective customer acquisition, and high-margin conversions.

Our Paid Subscribers as of December 31, 2021 generated average customer lifetime Billings of approximately $2,600, resulting in a LTV/CAC ratio of approximately 4x. On average, it takes us approximately seven to ten months for a Paid Subscriber’s cumulative net revenue to exceed the total cost of acquiring that subscriber (which includes fixed costs, such as marketing salaries). For more information on our LTV/CAC ratio and the components of this ratio, see “—Definitions of Metrics.”

We adjust our marketing spend to drive efficient and profitable customer acquisition. We can adjust our marketing spend in near real-time, and we monitor costs per acquisition relative to the cart value of the initial subscription. We seek and typically achieve 90-day payback periods to cover this variable component of the direct marketing spend.

As of December 31, 2021, our paid subscriber base was 972 thousand, up 115 thousand, or 13.4% as compared to 857 thousand at December 31, 2020. Growth in our base is provided by both direct-to-paid acquisition and free-to-paid conversions. Direct-to-paid acquisition has traditionally accounted for approximately two-thirds of our annual Paid Subscriber acquisition, and is largely driven by display ads and targeted email campaigns.

Our free subscription products also serve as a significant source of new Paid Subscribers, accounting for approximately one-third of our annual Paid Subscriber acquisition. Our free-to-paid conversion rate reflects the rate at which Free Subscribers purchase paid subscription products. Our annual free-to-paid conversion rate was approximately 1% to 2% between 2019 and 2021. Over that same three year period, our cumulative free-to-paid conversion rate was 5%.

We have invested, and expect to continue to invest, heavily in sales and marketing efforts to drive customer acquisition.

Retaining and expanding relationships with existing subscribers. We believe that we have a significant opportunity to expand our relationships with our large base of Free and Paid Subscribers. Thanks to the quality of our products, we believe our customers will continue their relationship with us and extend and increase their subscriptions over time. As we deepen our engagement with our subscribers, our customers tend to purchase more and higher-value products. Our ARPU as of December 31, 2021 was $742, which decreased 2.2% from $759 as of December 31, 2020. Our ARPU grew at a CAGR of 16% over the three-year period ended December 31, 2021, growing from $478 as of December 31, 2018 to $742 as of December 31, 2021.

Conversion rates are important to our business because they are an indicator of how engaged and how well we are connecting with our subscribers. The time it takes our customers to move from our free products to our lower-priced paid subscriptions and eventually to high-end products and lifetime “bundled” offerings impacts our growth in net revenue, Billings, and ARPU.

Our cumulative high-value conversion rate reflects the rate at which Paid Subscribers that have purchased less than $600 of our products over their lifetime convert into subscribers that have purchased more than $600. We believe our cumulative high-value conversion rate reflects our ability to retain existing subscribers through renewals and our ability to expand our relationship with them when those subscribers purchase higher-value subscriptions. Our cumulative ultra high-value conversion rate reflects the rate at which high value Paid Subscribers that have purchased more than $600 of our products over their lifetime convert into subscribers that have purchased more than $5,000. We believe our ultra high-value conversion rate reflects our ability to successfully build lifetime relationships with our subscribers, often across multiple products and brands. As of December 31, 2021, our cumulative high-value conversion rate and cumulative ultra high-value conversion rate were 39% and 35%, respectively.

Annual free-to-paid conversion rate: We calculate our free-to-paid conversion rate as the number of Free Subscribers who purchased a subscription during the period divided by the average number of Free Subscribers during the period. We believe our free-to-paid conversion rate is an indicator of the type of Free Subscribers that we are signing up and the quality of our content and marketing efforts. Investors should consider free-to-paid conversion rate as one of the factors in evaluating our ability to maintain a robust pipeline for new customer acquisition.

Cumulative free-to-paid conversion rate: We calculate our cumulative free-to-paid conversion rate as the number of Free Subscribers who purchased a subscription during the trailing three-year period divided by the average number of Free Subscribers during the trailing three-year period.

Cumulative high-value conversion rates: Our cumulative high-value conversion rate reflects the number of Paid Subscribers who have purchased >$600 in aggregate over their lifetime as of a particular point in time divided by the total number of Paid Subscribers as of that same point in time.

Cumulative ultra high-value conversion rate: Our cumulative ultra high-value conversion rate reflects the number of Paid Subscribers who have purchased >$5,000 in aggregate over their lifetime as of a particular point in time divided by the number of high-value subscribers as of that same point in time. We believe our cumulative ultra high-value conversion rate reflects our ability to successfully build lifetime relationships with our subscribers, often across multiple products and brands. Investors should consider cumulative ultra high-value conversion rate as a factor in evaluating our ability to retain and expand our relationship with our subscribers.

LTV/CAC ratio: We calculate LTV/CAC ratio as LTV divided by CAC. We use LTV/CAC ratio because it is a standard metric for subscription-based businesses, and we believe that an LTV/CAC ratio above 3x is considered to be indicative of strong profitability and marketing efficiency. We believe that an increasing LTV per subscriber reflects our existing subscribers recognizing our value proposition, which will expand their relationship with us across our platform over time, either through a combination of additional product purchases or by joining our lifetime offerings. Investors should consider this metric when evaluating our ability to achieve a return on our marketing investment. Lifetime value (“LTV”) represents the average margin on average customer lifetime billings (that is, the estimated cumulative spend across a customer’s lifetime). Customer acquisition cost (“CAC”) is defined as direct marketing spend, plus external revenue share expense, plus retention and renewal expenses, plus copywriting and marketing salaries, plus telesales salaries and commissions, plus customer service commissions.

Net revenue retention: Net revenue retention is defined as Billings from all prior period cohorts in the current period, divided by all Billings from the prior period. We believe that a high net revenue retention rate is a measure of customer retention and an indicator of the engagement of our subscribers with our products. Investors should consider net revenue retention as an ongoing measure when evaluating our subscribers’ interest in continuing to subscribe to our products and spending more with us over time.

						Year Ended December 31,
						2021						2020						2019
Free Subscribers						13,699,910						9,529,622						5,027,461
Paid Subscribers						971,534						856,826						526,018
ARPU						$	742					$	759					$	599
Billings (in thousands)						$	729,893					$	548,835					310,060

Free Subscribers. Free Subscribers are defined as unique subscribers who have subscribed to one of our free investment publications via a valid email address and continue to remain directly opted in, excluding any Paid Subscribers who also have free subscriptions. Free subscriptions are often daily publications that include some commentary about the stock market, investing ideas, or other specialized topics. Included within our free publications are advertisements and editorial support for our current marketing campaigns. While subscribed to our publications, Free Subscribers learn about our editors and analysts, get to know our products and services, and learn more about ways we can help them be a better investor.

Free Subscribers increased by 4.2 million, or 43.8%, to 13.7 million at December 31, 2021 as compared to 9.5 million at December 31, 2020, as our significant lead-generation efforts that began in earnest during late 2018 and intensified during 2019 and 2020 with the expansion across multiple brands, continued during 2021.

Free Subscribers increased by 4.5 million, or 89.6%, to 9.5 million as of December 31, 2020 as compared to 5.0 million as of December 31, 2019. This growth was driven by our continued lead generation efforts and the expansion of our product set.

Paid Subscribers. We define Paid Subscribers as the total number of unique subscribers with at least one paid subscription at the end of the period. We view the number of Paid Subscribers at the end of a given period as a key indicator of the attractiveness of our products and services, as well as the efficacy of our marketing in converting Free Subscribers to Paid Subscribers and generating direct-to-paid Paid Subscribers. We grow our Paid Subscriber base through performance marketing directly to prospective and existing subscribers across a variety of media, channels, and platforms.

Total Paid Subscribers increased by 115 thousand, or 13.4%, to 972 thousand as of December 31, 2021 as compared to 857 thousand at December 31, 2020, driven by successful marketing efforts and rich content which drove free-to-paid conversions as well as direct-to-paid acquisition. Per-unit subscriber acquisition costs were favorable at the beginning of the year which, when combined with our compelling content, led to unprecedented new subscriber acquisition in first quarter 2021. The travel and leisure boom, where Americans made up for the inability to travel during the pandemic, began in mid-second quarter 2021 and continued through the end of third quarter. During this time, the travel and hospitality industries significantly increased their usage of digital mediums to market their products. With per-unit subscriber acquisition costs rising during this time, we reduced our marketing spend on new customer acquisition, and continued to emphasize marketing higher value content to our existing subscriber base. Costs finally began to improve toward the end of the year and we accelerated our spend to acquire new subscribers. We will continue to focus on our break-even metrics and adjust our direct marketing spend accordingly, as we have done for the past twenty plus years.

Total Paid Subscribers increased by 331 thousand, or 62.9%, to 857 thousand as of December 31, 2020 as compared to 526 thousand as of December 31, 2019. As was the case in 2021, successful marketing efforts and rich content drove the increase in subscribers aided in part by a more favorable cost environment as it related to media costs.

Subscriber count churn has ranged from approximately 1.8% to 2.3% per month over the past three years. Given the rapid growth in subscribers in 2020 and earlier in 2021, subscriber count churn increased to the

After periods of rapid subscriber growth such as what we experienced in late 2020 and in the first part of 2021, it is not unusual to see an increase in churn as some of the less engaged, new Paid Subscribers churn off. Consistent with this, almost all of the subscribers who churned in the year did so having owned only one entry level publication. This is evidenced by the fact that their ARPU approximately matched the subscription price of our entry level publications. We believe our net revenue retention rate, which has averaged over 90% from 2019 to 2021, is a more meaningful gauge of subscriber satisfaction.

Average Revenue Per User. We calculate ARPU as the trailing four quarters of net Billings divided by the average number of quarterly total Paid Subscribers over that period. We believe ARPU is a key indicator of how successful we are in attracting subscribers to higher-value content. We believe that increasing ARPU is indicative of the trust we build with our subscribers and of the value they see in our products and services.

ARPU decreased by $17, or 2.2%, to $742 as of December 31, 2021 as compared to $759 as of December 31, 2020. The modest year-over-year decrease was driven by a 36% increase in trailing four quarter Paid Subscribers in 2021, which slightly outpaced the increase in trailing four quarter Billings of 33% in 2021. The increase in trailing four quarter average Paid Subscribers in 2021 was largely attributable to the rapid increase in our subscribers base in the first half of 2021. Most of our new subscribers join us on entry level publications, which are generally at lower price points, and thus are initially dilutive to ARPU. We have shown that over time, subscribers have continued to invest in our platform, which have tended to drive increases in ARPU. As of December 31, 2021, we have 19% and 32% more high value and ultra-high value subscribers than we did a year ago.

ARPU increased by $160, or 26.7%, to $759 as of December 31, 2020 as compared to $599 as of December 31, 2019. The year-over-year increase was driven by a 77% increase in trailing four quarters Billings which accompanied a 40% increase in trailing four quarters Paid Subscribers.

We attribute our high ARPUs in each of these periods to the quality of our content and more effective sales and marketing efforts regarding higher value content, bundled subscriptions and lifetime subscriptions. These subscriptions have compelling economics that allow us to recoup our initial marketing spend made to acquire these subscribers. Specifically, our payback period was estimated at 0.9 years for 2021, and was 0.6 and 0.8 years for 2020 and 2019, respectively. We have experienced a stable payback period in the range of 0.6 to 0.9 years reliably over the past three years, despite the increases in customer acquisition costs that the digital subscription industry has experienced in recent years. The payback period reached the low side of the historical range in 2020 as a result of expanded conversion rates and, to a far lesser degree, decreasing costs for media spend as demand dropped as a result of the pandemic. We have seen the costs for media spend revert back to higher rates as we progressed through 2021 and expect our payback for 2021 to be at the higher end of the historical range.

Billings. Billings represents amounts invoiced to customers. We measure and monitor our Billings because it provides insight into trends in cash generation from our marketing campaigns. We generally bill our subscribers at the time of sale and receive full cash payment up front, and defer and recognize a portion of the related revenue ratably over time for term and lifetime subscriptions. For certain subscriptions, we may invoice our Paid Subscribers at the beginning of the term, in annual or monthly installments, and, from time to time, in multi-year installments. Only amounts invoiced to a Paid Subscriber in a given period are included in Billings. While we believe that Billings provides valuable insight into the cash that will be generated from sales of our subscriptions, this metric may vary from period to period for a number of reasons and, therefore, Billings has a number of limitations as a quarter-over-quarter or year-over-year comparative measure. These reasons include, but are not limited to, the following: (i) a variety of contractual terms could result in some periods having a higher proportion of annual or lifetime subscriptions than other periods; (ii) fluctuations in payment terms may affect the Billings recognized in a particular period; and (iii) the timing of large campaigns may vary significantly from period to period.

Billings increased by $181.1 million, or 33.0%, to $729.9 million in 2021 as compared to $548.8 million in 2020. We believe this increase is due in large part to strong lifetime, high-value, and ultra high-value subscription sales, combined with strong new Paid Subscriber performance, as we continued to focus on adding new Paid Subscribers, and those Paid Subscribers having purchased higher-value subscriptions over time. Approximately 42% of our Billings this year came from lifetime subscriptions, 57% from term subscriptions, and 1% from other Billings as compared to 36% from lifetime subscriptions, 63% from term subscriptions, and 2% from other Billings in 2020. Chaikin Analytics, acquired in January 2021, generated $26.6 million in organic new Billings in 2021 by selling their products to our existing subscriber base.

Billings increased by $238.8 million, or 77.0%, to $548.8 million in 2020 as compared to $310.1 million in 2019. Again, this was driven by strong lifetime, high-value, and ultra high-value subscription sales as well as the success of significant marketing efforts, particularly in second half of 2020.

On July 21, 2021, the MarketWise, Inc. 2021 Incentive Award Plan (the “2021 Incentive Award Plan”) became effective. We 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. On September 27, 2021, we granted certain employees restricted stock units (“RSUs”) and stock appreciation rights (“SARs”) under our 2021 Incentive Award Plan. During year ended December 31, 2021, stock-based compensation expense related to the 2021 Incentive Award Plan was $4.9 million. See also Note 11, Stock-Based Compensation to our consolidated financial statements included elsewhere in this Form 10-K.

(In thousands)						Year Ended December 31, 2021
						2021						2020						2019
Cost of revenue						$	171,804					$	102,736					$	5,025
Sales and marketing						48,098						10,567						—
General and administrative						843,449						440,297						15,414
Total stock based-compensation expense						$	1,063,351					$	553,600					$	20,439

•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 (loss) was attributable to consolidated MarketWise, Inc. and its respective noncontrolling interests. Immediately following the Transactions, MarketWise, Inc.’s controlling interest in MarketWise, LLC was 7.9% and its noncontrolling interest was 92.1%. For the post-Transaction period, net income attributable to controlling interests included a $15.7 million gain on warrant liabilities and a $2.4 million tax provision, both of which are 100% attributable to the controlling interest.

(In thousands)						Year Ended December 31, 2021
						2021						2020						2019
Net revenue						$	547,899					$	360,793					$	265,398
Related party revenue						1,284						3,386						6,825
Total net revenue						549,183						364,179						272,223
Operating expenses:
Cost of revenue(1)(2)						239,251						154,605						42,553
Sales and marketing(1)(2)						296,934						214,257						106,094
General and administrative(1)(2)						960,183						526,561						91,669
Research and development(1)(2)						7,487						4,770						3,672
Depreciation and amortization						2,676						2,553						2,334
Related party expense						10,245						122						331
Total operating expenses						1,516,776						902,868						246,653
(Loss) income from operations						(967,593)						(538,689)						25,570
Other income (expense), net						16,178						(2,879)						865
Interest (expense) income, net						(110)						477						1,558
(Loss) income before income taxes						(951,525)						(541,091)						27,993
Income tax expense						2,358						—						—
Net (loss) income						(953,883)						(541,091)						27,993
Net income (loss) attributable to noncontrolling interests						59,426						(2,718)						36
Net (loss) income attributable to MarketWise, Inc.						$	(1,013,309)					$	(538,373)					$	27,957

(In thousands)						Year Ended December 31, 2021
						2021						2020						2019
Cost of revenue						$	171,804					$	102,736					$	5,025
Sales and marketing						48,098						10,567						—
General and administrative						843,449						440,297						15,414
Total stock based-compensation expense						$	1,063,351					$	553,600					$	20,439

(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.

						Year Ended December 31, 2021
						2021						2020						2019
Net revenue						100.0		%				100.0		%				100.0		%
Operating expenses:
Cost of revenue(1)						43.6		%				42.5		%				15.6		%
Sales and marketing(1)						54.1		%				58.8		%				39.0		%
General and administrative(1)						174.8		%				144.6		%				33.7		%
Research and development(1)						1.4		%				1.3		%				1.3		%
Depreciation and amortization						0.5		%				0.7		%				0.9		%
Related party expense						1.9		%				—		%				0.1		%
Total operating expenses						276.2		%				247.9		%				90.6		%
(Loss) income from operations						(176.2)		%				(147.9)		%				9.4		%
Other income (expense), net						2.9		%				(0.8)		%				0.3		%
Interest (expense) income, net						0.0		%				0.1		%				0.6		%
(Loss) income before income taxes						(173.3)		%				(148.6)		%				10.3		%
Income tax expense						0.4		%				—		%				—		%
Deferred income tax expense						—		%				—		%				—		%
Net (loss) income						(173.7)		%				(148.6)		%				10.3		%
Net income (loss) attributable to noncontrolling interests						10.8		%				(0.7)		%				—		%
Net (loss) income attributable to MarketWise, Inc.						(184.5)		%				(147.8)		%				10.3		%

(1)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.

(In thousands)			Year Ended December 31,												$ Change						% Change
			2021						2020
Net revenue			$	549,183					$	364,179					$	185,004					50.8		%

Net revenue increased by $185.0 million, or 50.8%, from $364.2 million for the year ended December 31, 2020 to $549.2 million for the year ended December 31, 2021. The increase in net revenue was primarily driven by a $129.9 million increase in term subscription revenue and a $57.7 million increase in lifetime subscription revenue, partially offset by a $2.6 million decrease in non-subscription revenue. Revenue from Chaikin Analytics, the business we acquired in January 2021, was $7.5 million for the year ended December 31, 2021.

(In thousands)			Year Ended December 31,												$ Change						% Change
			2021						2020
Operating expenses:
Cost of revenue			$	239,251					$	154,605					$	84,646					54.7		%
Sales and marketing			296,934						214,257						82,677						38.6		%
General and administrative			960,183						526,561						433,622						82.3		%
Research and development			7,487						4,770						2,717						57.0		%
Depreciation and amortization			2,676						2,553						123						4.8		%
Related party expenses			10,245						122						10,123						8297.5		%
Total operating expenses			$	1,516,776					$	902,868					$	613,908					68.0		%

Cost of Revenue

Cost of revenue increased by $84.6 million, or 54.7%, from $154.6 million for the year ended December 31, 2020 to $239.3 million for the year ended December 31, 2021, primarily driven by a $67.8 million increase in stock-based compensation expense related to holders of Class B units, a $6.2 million increase in payroll and payroll-related costs due to higher headcount, a $4.9 million increase in credit card fees due to higher sales volume, and a $1.3 million increase in stock-based compensation expense related to newly issued awards under the 2021 Incentive Award Plan.

Approximately $8.0 million of the increase in Class B stock-based compensation expense was due to higher distributions, and $59.8 million of the increase was related to the change in fair value of the Class B units and the accelerated vesting of the Class B units, both of which were related to the Transactions.

Sales and Marketing

Sales and marketing expense increased by $82.7 million, or 38.6%, from $214.3 million for the year ended December 31, 2020 to $296.9 million for the year ended December 31, 2021, primarily driven by a $41.3 million increase in amortization of deferred contract acquisition costs, a $35.9 million increase in Class B stock-based compensation expense, a $7.2 million increase in payroll and payroll-related costs driven by increased headcount, and a $1.7 million increase in stock based compensation expense related to newly issued awards under the 2021 Inventive Award Plans. This was partially offset by a $4.5 million decrease in marketing and lead-generation expenses as we have reduced our marketing costs due to higher per unit advertising cost resulting from higher post-COVID demand for display advertising that emerged in the second quarter of the year.

Approximately $1.0 million of the increase in Class B stock-based compensation expense was due to higher distributions, and $34.8 million of the increase was related to the change in fair value and the accelerated vesting of the Class B units, all of which were related to the Transactions.

General and Administrative

General and administrative expense increased by $433.6 million, or 82.3%, from $526.6 million for the year ended December 31, 2020 to $960.2 million for the year ended December 31, 2021, primarily driven by a $401.2 million increase in Class B stock-based compensation expense, a $7.1 million increase in incentive compensation and profits interests expenses, a $7.6 million increase in payroll and payroll-related costs due to increased headcount to support operations, a $4.7 million increase in software expenses, a $3.2 million increase in accounting, legal and consulting fees related to public company readiness efforts, a $2.0 million increase in stock-based compensation expense related to newly issued awards under the 2021 Incentive Award Plan, and a $1.2 million increase in donations.

Approximately $36.0 million of the increase in Class B stock-based compensation expense was due to higher distributions, and $365.2 million of the increase was related to the change in fair value and the accelerated vesting of the Class B units, all of which were related to the Transactions.

Related Party Expense

Related party expense increased by $10.1 million from $0.1 million for the year ended December 31, 2020 to $10.2 million for the year ended December 31, 2021, driven by a discretionary, one-time, non-employee bonus payment of $10.0 million to the Company’s founder, who is a Class B common stockholder, in July 2021.

(In thousands)			Year Ended December 31,												$ Change						% Change
			2020						2019
Net revenue			$	364,179					$	272,223					$	91,956					33.8		%

Net revenue increased by $92.0 million, or 33.8%, from $272.2 million for the year ended December 31, 2019 to $364.2 million for the year ended December 31, 2020. The increase in net revenue was primarily driven by a $59.7 million increase in term subscription revenue and a $35.9 million increase in lifetime subscription revenue, partially offset by a $3.7 million decrease in non-subscription revenue.

(In thousands)			Year Ended December 31,												$ Change						% Change
			2020						2019
Operating expenses:
Cost of revenue			$	154,605					$	42,553					$	112,052					263.3		%
Sales and marketing			214,257						106,094						108,163						102.0		%
General and administrative			526,561						91,669						434,892						474.4		%
Research and development			4,770						3,672						1,098						29.9		%
Depreciation and amortization			2,553						2,334						219						9.4		%
Related party expenses			122						331						(209)						(63.1)		%
Total operating expenses			$	902,868					$	246,653					$	656,215					266.0		%

Cost of Revenue

Cost of revenue increased by $112.1 million, or 263.3%, from $42.6 million for the year ended December 31, 2019 to $154.6 million for the year ended December 31, 2020, primarily driven by an increase of $97.7 million in stock-based compensation expense related to holders of Class B Units, $5.9 million in credit card fees due to higher sales volume, an increase of $3.9 million in payroll and payroll-related costs due to higher headcount, and an increase of $2.5 million in freelance editorial expense primarily related to certain new brands launched during 2019 and 2020.

Approximately $97.0 million of the increase in stock-based compensation expense was due to the increase in fair value as a result of a higher probability assigned to the market approach due to the signing of a letter of intent with ADAC during December 2020. The remaining increase in stock-based compensation expense was due to higher Class B Unit distributions of $11.8 million, partially offset by a $1.5 million decrease attributable to less vesting of Class B Units.

Sales and Marketing

Sales and marketing expense increased by $108.2 million, or 102.0%, from $106.1 million for the year ended December 31, 2019 to $214.3 million for the year ended December 31, 2020, primarily driven by an $82.0 million increase in direct marketing and lead-generation expenses, a $12.0 million increase in amortization of deferred contract acquisition costs, an increase of $10.6 million in stock-based compensation expense related to holders of Class B Units, and an increase of $3.8 million in payroll and payroll-related costs due to higher headcount.

Approximately $6.5 million of the increase in stock-based compensation expense was due to the increase in fair value as a result of a higher probability assigned to the market approach due to the signing of a letter of intent with ADAC during December 2020. The remaining increase in stock-based compensation expense was due to higher Class B Unit distributions of $2.8 million, and the vesting of additional Class B Units of $1.2 million.

General and Administrative

General and administrative expense increased by $434.9 million, or 474.4%, from $91.7 million for the year ended December 31, 2019 to $526.6 million for the year ended December 31, 2020, primarily driven by an increase of $424.9 million in stock-based compensation expense related to holders of Class B Units, a $4.0 million increase in accounting, legal, and consulting fees related to public company readiness efforts, an increase of $3.8 million in payroll and payroll-related costs due to increased headcount to support operations, a $3.6 million increase in cloud computing and software fees due to increases in transaction volumes, and a $1.6 million increase in incentive compensation and profit interest expenses, partially offset by a $2.4 million decrease in travel and entertainment expenses primarily attributable to COVID-19 restrictions, and a $1.0 million decrease in sales and value-added taxes.

Approximately $365.5 million of the increase in stock-based compensation expense was due to the increase in fair value as a result of a higher probability assigned to the market approach due to the signing of a letter of intent with ADAC during December 2020. The remaining increase in stock-based compensation expense was due to higher Class B Unit distributions of $48.9 million and the vesting of additional Class B Units of $10.5 million.

(In thousands)						Year Ended December 31,
						2021						2020						2019
Adjusted CFFO						$	197,081					$	134,273					$	69,032
Adjusted CFFO Margin						27.0		%				24.5		%				22.3		%

In addition to our results determined in accordance with GAAP, we disclose the non-GAAP financial measure Adjusted CFFO. We define Adjusted CFFO as cash flow from operations plus profits distributions that were recorded as stock-based compensation expense from the Class B Units, plus or minus any non-recurring items. Profits distributions to Class B unitholders included amounts attributable to the Class B unitholders’ potential tax liability with respect to the Class B Units (i.e., there was no tax withholding, and the full amount of allocable profit was distributed, subject to the terms of the LLC Agreement prior to the Transactions). We define Adjusted CFFO Margin as Adjusted CFFO as a percentage of Billings.

(In thousands)						Year Ended December 31,
						2021						2020						2019
Net cash provided by operating activities						$	63,632					$	55,875					$	54,201
Profits distributions to Class B unitholders included in stock-based compensation expense						123,449						78,398						14,831
Non-recurring expenses						10,000						—						—
Adjusted CFFO						$	197,081					$	134,273					$	69,032

(In thousands)						Year Ended December 31,
						2021						2020						2019
Net cash provided by operating activities						$	63,632					$	55,875					$	54,201
Total net revenue						549,183						364,179						272,223
Net cash provided by operating activities margin						11.6		%				15.3		%				19.9		%
Adjusted CFFO						$	197,081					$	134,273					$	69,032
Billings						729,893						548,835						310,060
Adjusted CFFO Margin						27.0		%				24.5		%				22.3		%

Adjusted CFFO increased by $62.8 million, or 46.8%, from $134,273 for the year ended December 31, 2020 to $197.1 million for the year ended December 31, 2021, primarily driven by an increase of $181.1 million in Billings at an Adjusted CFFO Margin of 27.0%.

Adjusted CFFO increased by $65.2 million, or 94.5%, from $69.0 million for the year ended December 31, 2019 to $134.3 million for the December 31, 2020, primarily driven by an increase of $238.8 million in Billings at an Adjusted CFFO Margin of 24.5%.

As a result of the Transactions, we have incurred and expect that we will incur public company expenses related to our operations, plus payment obligations under the Tax Receivable Agreement, which we expect to be significant. MarketWise, Inc. intends to cause MarketWise, LLC to make distributions to MarketWise, Inc. in an amount sufficient to allow MarketWise, Inc. to pay its tax obligations and operating expenses, including distributions to fund any payments due under the Tax Receivable Agreement.

(In thousands)						Year Ended December 31,
						2021						2020						2019
Net cash provided by operating activities						$	63,632					$	55,875					$	54,201
Net cash (used in) provided by investing activities						(8,311)						(9,649)						12,395
Net cash used in financing activities						(30,678)						(103,369)						(27,341)

Operating Activities

For the year ended December 31, 2021, net cash provided by operating activities was $63.6 million, primarily due to net loss of $953.9 million adjusted for non-cash charges of $927.8 million and a contribution to cash resulting from net changes in our operating assets and liabilities of $89.8 million. The non-cash adjustments primarily related to stock-based compensation expenses of $939.0 million, which was driven by the increase in fair value as a result of a higher probability assigned to the market approach due to the signing of a letter of intent with ADAC during December 2020, and the granting and vesting of certain Class B Units. The changes in operating assets and liabilities were primarily driven by an increase in deferred revenue of $175.6 million due to our overall increase in sales, and an increase in accrued expenses of $14.2 million, partially offset by a net increase in deferred contract acquisition costs of $95.8 million.

For the year ended December 31, 2020, net cash provided by operating activities was $55.9 million, primarily due to net loss of $541.1 million and non-cash charges of $483.4 million, and partially offset by net changes in our operating assets and liabilities of $113.6 million. The non-cash adjustments primarily related to stock-based compensation income of $475.2 million, which was driven by the decrease in fair value of the Class B Units. The changes in operating assets and liabilities were primarily driven by an increase in deferred revenue of $178.8 million due to our overall increase in sales, partially offset by a net increase in deferred contract acquisition costs of $64.9 million.

For the year ended December 31, 2019, net cash provided by operating activities was $54.2 million, primarily due to net income of $28.0 million adjusted for non-cash charges of $10.8 million and net changes in our operating assets and liabilities of $15.4 million. The non-cash adjustments primarily related to stock-based compensation expenses of $5.6 million resulting from the granting and vesting of certain Class B Units. The changes in operating assets and liabilities were primarily driven by an increase in deferred revenue of $36.7 million due to our overall increase in sales, partially offset by an overall net decrease in related-party payables of $13.8 million with lower allocations from our related-party owner, and an increase in accrued expenses of $10.1 million due to higher commission and bonus accruals for the overall growth in sales and headcount.

Investing Activities

For the year ended December 31, 2021, net cash used in investing activities was $8.3 million, primarily driven by the payment of $7.1 million related to the acquisition of Chaikin, and $0.9 million to acquire intangible assets.

For the year ended December 31, 2020, net cash used in investing activities was $9.6 million, primarily driven by the payment of $9.2 million to acquire the noncontrolling interest of TradeSmith, and $0.3 million for property and equipment.

For the year ended December 31, 2019, net cash provided by investing activities was $12.4 million, primarily driven by the return of the $15.0 million in funds held in deposit for a potential acquisition. This was partially offset by the payment of $1.5 million related to the acquisition of Gold Stock Analyst and $0.8 million in capitalized software development costs.

Financing Activities

For the year ended December 31, 2021, net cash used in financing activities was $30.7 million, primarily due to $135.5 million in distributions to members and $5.5 million in distributions to noncontrolling interests, which is offset by a $113.6 million inflow from proceeds from the Transactions.

For the year ended December 31, 2020, net cash used in financing activities was $103.4 million, primarily due to $101.8 million in distributions to members, $5.4 million repayment of borrowings under the 2013 Credit Facility, and $0.5 million in distributions to noncontrolling interests.

For the year ended December 31, 2019, net cash used in financing activities was $27.3 million, primarily due to $20.5 million in distributions to members, issuance of notes receivable to related parties of $3.1 million, $1.9 million repayment of borrowings under the 2013 Credit Facility, and $1.8 million in distributions to non-controlling interests.

•our historical and expected operating and financial performance;

•current business conditions;

•our stage of development and business strategy;

•macroeconomic conditions;

•our 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 our equity units.

			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)			70
Consolidated Balance Sheets as of December 31, 2021 and 2020			71
Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019			73
Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2021, 2020 and 2019			74
Consolidated Statements of Stockholders' Deficit/Members' Deficit for the years ended December 31, 2021, 2020 and 2019			75
Consolidated Statement of Cash Flows for the years ended December 31, 2021, 2020 and 2019			78
Notes to the Consolidated Financial Statements			79

			December 31, 2021						December 31, 2020
Assets
Current assets:
Cash and cash equivalents			$	139,078					$	114,422
Accounts receivable			7,805						12,398
Prepaid expenses			13,043						8,530
Related party receivables			496						874
Related party notes receivable, current			298						—
Restricted cash			500						505
Deferred contract acquisition costs			82,685						42,019
Other current assets			2,484						1,889
Total current assets			246,389						180,637
Property and equipment, net			1,188						1,417
Operating lease right-of-use assets			10,901						12,337
Intangible assets, net			8,612						5,278
Goodwill			23,288						18,101
Deferred contract acquisition costs, noncurrent			120,386						65,217
Related party notes receivable, noncurrent			861						1,148
Deferred tax assets			8,964						—
Other assets			965						678
Total assets			$	421,554					$	284,813
Liabilities and stockholders’ deficit / members’ deficit
Current liabilities:
Trade and other payables			$	4,758					$	11,969
Related party payables, net			970						2,515
Accrued expenses			46,453						32,134
Deferred revenue and other contract liabilities			317,133						278,267
Operating lease liabilities			1,274						1,077
Other current liabilities			24,905						19,576
Total current liabilities			395,493						345,538
Class B Units - related party			—						593,235
Deferred revenue and other contract liabilities, noncurrent			393,043						254,481
Derivative liabilities, noncurrent			2,015						4,343
Warrant liabilities			29,332						—
Operating lease liabilities, noncurrent			6,933						7,826
Total liabilities			826,816						1,205,423
Commitments and Contingencies (Note 10)			—						—
Stockholders’ deficit / members’ deficit:
Common stock - Class A, par value of $0.0001 per share, 950,000,000 shares authorized; 24,718,402 shares issued and outstanding at December 31, 2021			2						—
Common stock - Class B, par value of $0.0001 per share, 300,000,000 shares authorized; 291,092,303 shares issued and outstanding at December 31, 2021			29						—
Preferred stock - par value of $0.0001 per share, 100,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2021			—						—

Additional paid-in capital			97,548						—
Class A members’ units, 0 and 547,466 units issued and outstanding at December 31, 2021 and December 31, 2020, respectively			—						(914,728)
Accumulated other comprehensive loss			(9)						(17)
Accumulated deficit			(146,115)						—
Total stockholders’ deficit / members’ deficit attributable to MarketWise, Inc.			(48,545)						(914,745)
Noncontrolling interest			(356,717)						(5,865)
Total stockholders’ deficit / members’ deficit			(405,262)						(920,610)
Total liabilities, noncontrolling interest, and stockholders’ deficit / members’ deficit			$	421,554					$	284,813

			Year Ended December 31,
			2021						2020						2019
Net revenue			$	547,899					$	360,793					$	265,398
Related party revenue			1,284						3,386						6,825
Total net revenue			549,183						364,179						272,223
Operating expenses:
Cost of revenue (1) (2)			239,251						154,605						42,553
Sales and marketing (1) (2)			296,934						214,257						106,094
General and administrative (1) (2)			960,183						526,561						91,669
Research and development (2)			7,487						4,770						3,672
Depreciation and amortization			2,676						2,553						2,334
Related party expense			10,245						122						331
Total operating expenses			1,516,776						902,868						246,653
(Loss) income from operations			(967,593)						(538,689)						25,570
Other income (expense), net			16,178						(2,879)						865
Interest (expense) income, net			(110)						477						1,558
(Loss) income before income taxes			(951,525)						(541,091)						27,993
Income tax expense			2,358						—						—
Net (loss) income			(953,883)						(541,091)						27,993
Net income (loss) attributable to noncontrolling interests			59,426						(2,718)						36
Net (loss) income attributable to MarketWise, Inc.			$	(1,013,309)					$	(538,373)					$	27,957
Earnings per share - for the period from July 22, 2021 through December 31, 2021:
Net income per Class A common share - basic and diluted															$	0.73
Weighted average shares outstanding, basic and diluted															25,035
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 12.
(1) Included within cost of revenue, sales and marketing, and general and administrative expenses are stock-based compensation expenses as follows (see Note 11):
			Year Ended December 31,
			2021						2020						2019
Cost of revenue			$	171,804					$	102,736					$	5,025
Sales and marketing			48,098						10,567						—
General and administrative			843,449						440,297						15,414
Total stock-based compensation expense			$	1,063,351					$	553,600					$	20,439
(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

			Year Ended December 31,
			2021						2020						2019
Net (loss) income			$	(953,883)					$	(541,091)					$	27,993
Other comprehensive loss:
Cumulative translation adjustment			(101)						(14)						(41)
Total comprehensive (loss) income			$	(953,984)					$	(541,105)					$	27,952

			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, 2019			611,547						$	(267,619)					—						$	—					—						$	—					—						$	—					$	—					$	—					$	38					$	(267,581)					$	(5,690)					$	(273,271)
Class A units transferred to Class B			(25,126)						—						—						—						—						—						—						—						—						—						—						—						—						—
Foreign Currency translation adjustments			—						—						—						—						—						—						—						—						—						—						(41)						(41)						—						(41)
Transaction costs for acquisition of noncontrolling interest - Tradesmith			—						—						—						—						—						—						—						—						—						—						—						—						(443)						(443)
Minority interest share exchange - Casey Research			18,931						(2,160)						—						—						—						—						—						—						—						—						—						(2,160)						2,160						—
Distributions			—						(20,471)						—						—						—						—						—						—						—						—						—						(20,471)						(1,831)						(22,302)
Net Income			—						27,957						—						—						—						—						—						—						—						—						—						27,957						36						27,993
Balance at December 31, 2019			605,352						(262,293)						—						—						—						—						—						—						—						—						(3)						(262,296)						(5,768)						(268,064)
Class A units transferred to Class B			(57,886)						—						—						—						—						—						—						—						—						—						—						—						—						—
Foreign currency translation adjustments			—						—						—						—						—						—						—						—						—						—						(14)						(14)						—						(14)
Acquisition of noncontrolling interest - TradeSmith			—						(12,295)						—						—						—						—						—						—						—						—						—						(12,295)						3,131						(9,164)
Distributions			—						(101,767)						—						—						—						—						—						—						—						—						—						(101,767)						(510)						(102,277)