Stonegate Capital Partners has initiated coverage on MarketWise (NASDAQGM: MKTW), noting that the company exited fiscal year 2025 with a stronger operating profile. According to the announcement, improving demand and execution helped offset the lagged impact of weaker prior-period billings on reported revenue. FY25 billings increased to $271.2 million, representing a 13.4% year-over-year growth, while cash flow from operations (CFFO) improved to $46.0 million from a negative $22.2 million in FY24. However, revenue declined to $328.1 million (down 19.7% year-over-year) and net income fell to $64.0 million (down 31.2% year-over-year).
Management identified the fourth quarter of fiscal 2024 as the inflection point after 12 quarters of decline, with momentum accelerating through FY25. In the fourth quarter of FY25, billings rose to $78.9 million, a 42.0% increase year-over-year, and CFFO increased to $24.2 million from $6.0 million in the same period the prior year. Revenue in Q4 FY25 declined to $83.3 million, and net income fell to $14.0 million. Overall, FY25 showed a clear turnaround in billings and cash flow despite GAAP revenue pressure.
Key takeaways from the coverage initiation include that the underlying turnaround is real despite lagged GAAP revenue. FY25 billings rose 13.4% to $271.2 million and CFFO improved to $46.0 million from negative $22.2 million, while Q4 FY25 billings jumped 42.0% year-over-year to $78.9 million, demonstrating operating momentum even as reported revenue continued to reflect older cohorts. Customer quality improved meaningfully: paid subscribers fell 26.1% year-over-year to 374,000, but net revenue retention rebounded to 91% from 53%, average revenue per user (ARPU) rose 70.1% to $670, and 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, paid $15.7 million in dividends, repurchased $3.4 million of stock, raised the regular dividend by 25%, and guided to approximately $300 million in billings and $50 million in CFFO for FY26.
For more details, see the full announcement here.
