Stonegate Capital Partners has initiated coverage on MarketWise (NASDAQGM: MKTW), highlighting the company's improving operating profile and underlying turnaround. Despite a decline in reported revenue for fiscal year 2025, key metrics such as billings and cash flow from operations (CFFO) demonstrated significant momentum, suggesting the company is emerging from a prolonged downturn.
MarketWise exited FY25 with a stronger operating profile, as improving demand and execution helped offset the lagged impact of weaker prior-period billings on reported revenue. FY25 billings increased to $271.2 million, up 13.4% year-over-year, while CFFO improved to $46.0 million from a negative $22.2 million in FY24. Revenue, however, declined to $328.1 million, down 19.7% year-over-year, and net income fell to $64.0 million, a decrease of 31.2%.
Management identified the fourth quarter of fiscal 2024 as the inflection point after 12 consecutive quarters of decline. Momentum accelerated through FY25, with fourth-quarter 2025 billings rising to $78.9 million, a 42.0% year-over-year increase. CFFO for Q4 2025 increased to $24.2 million from $6.0 million in the prior-year period, while revenue declined to $83.3 million and net income fell to $14.0 million.
Customer quality saw meaningful improvement. Paid subscribers fell 26.1% year-over-year to 374,000, but net revenue retention rebounded to 91% from 53%, and average revenue per user (ARPU) rose 70.1% to $670. Higher-spend subscribers became a larger share of the base, pointing to a smaller but stronger customer base.
MarketWise's balance sheet and capital return story remain attractive. The company ended FY25 with $70.1 million in cash and no debt. During the year, it paid $15.7 million in dividends, repurchased $3.4 million of stock, and raised the regular dividend by 25%. Management guided to approximately $300 million in billings and $50 million in CFFO for fiscal year 2026.
For more details, view the full announcement here.
