Good morning, and thank you for joining us on today's conference call to discuss MarketWise's Third quarter 2022 financial results. On the call today, we have Mark Arnold, our Chief Executive Officer; and James McGinness, our acting Chief Financial Officer.

During the course of today's call, we may make forward-looking statements, including, but not limited to, statements regarding our guidance and future financial performance, market demand, growth prospects, business strategies and plans, and our ability to attract and retain customers. These forward-looking statements are based on management's current views and assumptions and should not be relied upon as of any subsequent date, and we disclaim any obligation to update any forward-looking statements.

Actual results may vary materially from today's statements. Information concerning our risks, uncertainties and other factors that could cause results to differ from these forward-looking statements are contained in our company's SEC filings, earnings press release, and supplemental information posted on the Investors section of the company's website.

Our discussion today will include certain non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, or in isolation from GAAP measures.

Reconciliations to non-GAAP measures can be found in our earnings press release and SEC filings. Now I'll turn the call over to Mark.

Thanks, John, and good morning, everybody. Welcome to our third-quarter 2022 earnings call.

Before I get into our results, I want to comment on some of the forces impacting our business. The dynamics that we saw in the first half of this year with respect to the financial markets and macroeconomic conditions continued in the third quarter.

Investor engagement continued to be subdued, given the heightened level of market volatility and macroeconomic uncertainty. The Federal Reserve's aggressive efforts to combat inflation, including yesterday's rate increase, as many, believing that we are already in or soon will be in a recession.

As a result, and as you might expect, investors remain cautious and continue to sit on the sidelines until there is more clarity on the direction of the financial markets. Our subscribers, both new and existing, are no different.

They continue to evaluate market trends and the impact of monetary policy while delaying purchases of investment research before fully stepping back into the market. We have seen similar behavior patterns by retail investors and the industry force and metrics that we monitor.

Industry trading platforms have recently reported declines in the number of daily average trades to levels last seen in late 2020. We believe investors are increasingly hesitant to consider incremental investing due to concerns about the volatile economy and the impact of inflation.

This hesitancy continued to impact our business in the third quarter, similar to what we experienced in the first half of the year. As we discussed on our last earnings call, we have seen downturns over our long history and are confident that as the economy begins to settle, inflation comes under control, and market volatility subsides, the investors will reengage like they have in prior cycles.

We expect that they will resume purchases of investment research as their appetite for risk and investing returns. During the 2008, 2009 financial crisis, it took some time for individual investors to fully reengage in market activities.

Importantly, we managed our business through that period by developing new content that address the particular financial environment, managed our marketing spend and costs appropriately, and ultimately experienced significant organic growth when individual investors reentered the market. We expect this cycle to be similar.

During the summer, as investors resumed pre-COVID travel and leisure routines, subscribers were hesitant to spend on new subscriptions. As our customer acquisition costs remained high, we focused on streamlining our marketing spend and reducing overhead.

I'll give you more detail on that in a moment, but first, let me provide some high-level financial results. For the third quarter, we generated $119.9 million in revenues measured on a GAAP basis, a decline of 14.7% as compared to the year-ago quarter.

Billings declined 23.9% year-over-year to $105.1 million, and our adjusted cash flow from operations was $13.1 million, down from $34.7 million in the third quarter of last year. Our quarter's results continue to reflect lower consumer engagement and fewer new subscribers as compared to the prior year as a result of continued market volatility and reduced direct marketing spend during the quarter.

With respect to our cost reduction initiative during the second quarter, as our billings declined, we saw an opportunity to reduce our cost structure to defend our margins. We started that process in the second quarter, and those efforts continue through the third quarter.

We originally targeted approximately $37 million in cash savings, which was a 15% reduction in our budgeted overhead. And as of the end of the third quarter, I'm happy to report that we are on schedule.

We targeted 2 areas of cost savings, overhead and direct marketing. In the quarter, we achieved an almost $8 million reduction in the run rate of overhead expenses, or $31 million annualized, as compared to the first quarter of 2022.

In addition to reducing our overhead spend, we also reduced our direct marketing spend by $18 million in the quarter, or approximately $6 million per month. And while we have realized these savings on a cash basis, a portion of these savings are not immediately reflected in our GAAP results but will be recognized over time.

In total, we realized $26 million in cash savings versus our target. Additionally, we identified another $6 million in budgeted overhead expenses that will not be incurred in the second half of this year.

This keeps us right in line with our cost savings initiatives outlined in last quarter's earnings release. As a result of these actions, we have had significant improvement in our margins.

Specifically, in the first half of this year, we collected $254 million in billings and recognized $28 million in adjusted CFFO, resulting in an adjusted CFFO margin of 11%. In the third quarter, by contrast, even though billings declined to $105 million, we recognized $13 million in adjusted CFFO for an adjusted CFFO margin of 12.5%.

This margin improvement is a direct result of our cost-cutting initiative, and we expect this trend to continue through the remainder of the year. We believe that given the current market environment and until marketing costs improve, this is a prudent way to manage our business by focusing on efficiencies, maintaining our margins, and protecting our cash flow.

I would also remind everyone that our direct marketing spend is variable, and we have a high degree of discretion and are able to react to changes in advertising costs. So while we have reduced direct marketing expense in the current quarter, we may increase our marketing spend going forward when it makes sense in order to drive new subscriber acquisition and revenue growth.

While our revenues, billings, and adjusted cash flow from operations were impacted by lower consumer engagement and fewer new subscribers as compared to the prior year, we have reduced our cost structure based on our over 20-year experience and are managing the business to protect margins based on the current environment. Our goal is to grow the business, maintain and improve our profitability, generate strong cash flow and continue to execute on our strategic objectives.

Along those lines, let me take a few minutes to provide a brief update on some of the strategic initiatives that we have underway as I have in the past. First, our editors and analysts continue to adjust to the current market environment and are working hard to produce content and recommendations for our subscribers.

During the third quarter, we launched 5 new publications, which reflect our analysts' best ideas for addressing the current investing environment. Those products cover themes that include healthcare investing, options trading strategies, and energy.

We also continue to streamline our product offerings where it makes sense. As always, our analysts cover a broad variety of investing strategies, which helps ensure that we have content that resonates with subscribers.

We have seen significant changes in investing sentiment over the past year in both the United States and abroad, and our editorial teams are adapting to that environment. Second, our efforts to further incorporate data science and artificial intelligence and our operations continued through the third quarter.

The work we are doing in data science is progressing nicely as we continue to work through the initial stages of what we believe will lead to substantial long-term benefits for market-wise. Currently, we are focused on customer and transactional data, improving our conversion rates, increasing our direct mail conversions, and working to decrease the rate of customer chargebacks.

This process starts with a deep dive in the data collection analysis and modeling in an effort to generate insights into how we can improve these metrics. We are confident these short-term goals can be realized in the next 12 months, with further gains to come over time.

While we are making progress in this area, I should mention that this is a long-term effort, and the quantitative results may take time to develop. Ultimately, we believe greater integration of data science will significantly improve our overall free-to-paid conversion rates, help to lower our subscriber churn, and improve our ARPU.

The third area of focus is the integration of our technology products with our research brands to further enhance our product offerings. Last year, we were successful bringing shaking analytics onto our platform while generating over $27 million in billings.

In the second quarter, we experienced similar success with our Altimetry brand and marketing its products to our audience. And in fact, our most recent marketing campaign for Altimetry was the most successful in terms of billings over the past 2 years, and that occurred in the third quarter.

As you may recall, Altimetry is one of our research brands that combines its proprietary method of deconstructing GAAP financial statements and reassembling those financials in a way to assess the company's true value. Their process of deconstructing GAAP financials into a uniform accounting standard provides insight into a company's valuation potential so that retail investors can better identify public companies that are both undervalued and poised for growth.

During the third quarter, we moved forward to further align another of our technology brands, Trade Smith, with our investor place business. Crazemoth began as a simple way to track portfolios using trailing stops and has evolved into a powerful suite of risk management and portfolio analysis tools.

This suite of tools features volatility-based buy-and-sell alerts, stock screener tools, a robust rating system, and a very successful options trading tool, all of which further empower the self-directed investor. We look forward to driving incremental revenue and growth through these offerings going forward.

Because we believe that offering technology products, along with our content brands leads to significant ARPU improvement as well as better subscriber retention. As we go forward, we plan to continue to offer quantitative tools and products with our investment research, both in our existing brands as well as in our M&A efforts.

Lastly, our Pan market-wise technology platform is another strategic initiative that continues to be an area of focus. And we have made significant progress over the past few quarters to develop this platform to accommodate our multiple brands and allow consumers to explore all of our investment content in one location.

We recently moved in this quarter, Q3, the market-wise platform from its beta test environment to a live destination at marketwise.com. I would encourage all of you to go and explore the site.

The marketwise.com site allows us to deliver products and integrate marketing amongst our brands, which should lead to lower our overall cost of digital marketing going forward. In addition to making progress on our strategic initiatives, we also took a meaningful step to improve our capital structure in the third quarter.

We initiated a tender offer to exchange all outstanding warrants for shares of Class A common stock. At the time of the offer, there were approximately 31 million warrants outstanding, consisting of approximately 21 million public warrants and 10 million private warrants.

The exchange was completed on September 30, and as of the end of the third quarter, there were no remaining warrants for market-wise shares outstanding. We believe the warrant exchange offers several benefits for our capital structure.

Through the exchange, we issued approximately 6 million Class A common shares, which increased our public shares by approximately 26%. This increase in shares added to our public float and our trading liquidity.

While increasing our public share float, the exchange was minimally dilutive to our total shareholder base. The transaction was approximately 1.9% dilutive to our total share count.

Finally, eliminating the warrants simplifies our capital structure, which should make it easier for us to execute future corporate financing activities, including a potential secondary capital offering, acquisitions, and other strategic initiatives, without continuing to bear the overhang of our prior SPAC transactional capital structure. On the M&A front, we executed a small acquisition of a publishing group and folded it into our existing Winans media entity.

This group is made up of an experienced team who published products focused on tech, early-stage private investing, and data-driven investing based on market indicators. This is a relatively small organization as measured by revenues, subscribers, and editorial staff.

However, we're very excited about the talented people that have joined our team. We look forward to growing their existing business as we have done in the past with other acquisitions.

Before I turn the call over to Jimmy, I'd like to take a moment to thank Dale Lynch for his efforts while he was a part of market-wise. As we disclosed at the end of August, Dale resigned from his position as CFO.

He was an instrumental part of our team during this time, and he helped us to establish a strong finance and accounting team, initiate best-in-class processes and install financial systems and controls that allow us to make the transition to the public markets. Dale has been a friend and an adviser.

He will be missed, and we wish him well. But in the interim, we promoted James McGinnis, our Corporate Controller, to the position of acting CFO.

And I have full faith that Jimmy and the team are in a great position to execute on our initiatives going forward. We have already begun the process of looking for a permanent CFO and have been actively engaged in this effort.

And although it may take some time to find the right fit, I am confident in the process and our team. Now let me turn the call over to Jimmy to discuss the financial results of the quarter.

Thanks, Mark, and good morning, everyone. As Mark described, the market factors that impacted our business in the first half of the year continue to persist throughout the third quarter.

High inflation, fear of a blooming recession, and the Fed's policy of aggressively increasing interest rates continue to impact equity markets as they remained in bare territory during the quarter. Not surprisingly, we continue to see retail and self-directed investors hesitate to engage in purchasing new investment research as market volatility remains elevated.

Let me provide an update on consumer engagement and conversion rates before turning to the financial review. During the quarter, we continued to see lower engagement related to these market influences and our decision to slow down our direct marketing spend.

As we discussed in last quarter's call, we identified cost savings from both existing overhead and direct marketing. This quarter, we reduced direct marketing significantly as we work to preserve cash flow margins.

As a result, we anticipate our engagement metrics to be somewhat lower due to these reductions. In third quarter 2022, our landing feature visits were approximately $27 million, down 15% from both the first and second quarter 2022 levels.

However, our landing page-to-paid subscriber conversion rates were exactly the same as in the first half of the year. Similar to the prior quarters, this decline had an impact on both billings and new subscriber acquisitions this quarter.

As we have said, our subscribers have slowed the pace of their buying behavior as a result of the macroeconomic conditions. So it is taking longer for our customer to move through their subscriber journey with us than in the past.

However, as we have said over the past few quarters, our high-value and ultra-high-value subscribers continue to purchase additional subscriptions, which has led to an all-time high in active cumulative spend by all subscribers. We believe this is another indication of customer satisfaction and that these subscribers find value in our products and remain with us for the long term.

Turning to the financials. GAAP revenue was $119.9 million this quarter compared to $140.7 million for the third quarter of 2021, a decrease of $20.7 million or 14.7%.

The decrease in revenue was driven by a $16.9 million decrease in term subscription revenue. We recognized $72.9 million in deferred revenue this quarter.

Billings were $105.1 million compared to $13.1 million for the year-ago quarter, a decline of $33 million. We believe the decrease is due in large part to reduced engagement of new and existing subscribers.

The challenges that emerged in the first half of 2022 continued into the third quarter, which we believe further contributed to prospective and existing subscribers delaying their purchases. Sequentially, our $105.1 million in the third quarter billings declined $12.4 million or 11% from second quarter 2022.

This decline was driven by: one, a decrease in entry-level subscriptions and close proportion to lower direct marketing spend during the quarter as a result of our cost reduction initiatives; and two, lower conversion rates as compared to the prior quarter. Approximately 33% of our billings came from membership subscriptions, 66% from term subscriptions, and 1% from other billings in the third quarter of 2022.

This compares to 45% of our billings from membership subscriptions, 54% from term subscriptions, and 1% from other billings in the third quarter of 2021. As we disclosed last quarter, we are actively working to reduce expenses and began work on a cost-reduction initiative targeting $74 million in total expense savings.

We anticipated reducing overhead by an annualized amount equal to approximately $37 million or 15% of budgeted overhead. Through the third quarter, we achieved almost $8 million or approximately $31 million of annualized overhead reductions as compared to the run rate in first quarter 2022.

In addition, we identified and expect to recognize $6 million in savings related to 2022 eliminated budgeted overhead spend, bringing our total annualized overhead savings to $37 million. Additionally, we targeted an approximate $37 million reduction to direct marketing expenditures in the second half of the year as compared to the first half of 2022.

This equates to an approximately $6 million reduction to monthly direct marketing expenditures as compared to the average monthly spend in the first half of the year. During third quarter 2022, we reduced our total direct marketing spend by $18 million or approximately $6 million per month, in line with our target.

We continue to look to reduce our direct marketing spend when it proves to be less efficient. However, I should remind everyone that this reduction is dependent on market factors.

If marketing costs improve, we may decide not to cut marketing expense to this degree and instead focus on subscriber acquisition. In summary, through the third quarter of 2022, we are on track to achieve the cost reductions contemplated in our initiatives announced last quarter.

Cost of revenue was $14.5 million this quarter compared to $62 million for the year-ago quarter, a decline of $47.5 million. This decline was driven primarily by a decrease of $45.6 million in stock-based compensation expense related to holders of Class B units, a $0.8 million decrease in credit card fees, and $0.7 million decrease in outsourced customer service expense.

The current quarter stock-based compensation included $0.4 million of expense related to both our current incentive stock award plan and our employee stock purchase plan as compared to $45.6 million in Class B compensation expense in the year-ago quarter. As a reminder, from the time of the combination with Ascend in July and through the end of third quarter 2022, there was no longer any stock-based compensation attributable to our original Class B units recognized.

Prior to the transaction, these units were treated as derivative liabilities rather than equity and therefore, had to be remeasured each quarter with the change in fair value included in stock-based compensation. Also, any distributions of profits paid to Class B unitholders were treated as stock-based compensation expense.

Since the transaction and going forward, as those original Class B units converted to common units or straight common equity, we have and continue to expect to recognize significantly lower stock-based compensation at a level that is consistent with traditional stock-based compensation plans. For third quarter 2022, our total stock-based compensation expense was $2.2 million.

Sales and marketing costs were $51.6 million this quarter compared to $82.6 million in the year-ago quarter, a decrease of $30.9 million. This was driven primarily by $31.5 million decrease in stock-based compensation expense and a $5.1 million decrease in direct marketing expense related to our cost reduction initiative, partially offset by a $6.1 million increase in the amortization of deferred contract acquisition costs.

General and administrative costs this quarter were $29 million as compared to $356.3 million in the year-ago quarter, a decline of $327.3 million. The decline was primarily driven by a $332.8 million decrease in Class B stock-based compensation expense and a $1.8 million decrease in incentive compensation.

This was partially offset by a $6.6 million increase in professional fees, of which $2.1 million was related to the warrant exchange transaction completed in the quarter. Included in these amounts were stock-based compensation expense of $1.2 million this quarter as compared to $333.6 million in the year-ago quarter.

Net income in third quarter 2022 was $16.5 million compared to $366.3 million net loss in third quarter 2021. We recognized stock-based compensation expense of $2.2 million in the third quarter of 2022 and stock-based compensation expenses related to the Class B units of $409.9 million in the third quarter of 2021.

Adjusted CFFO was $13.1 million in the third quarter of 2022 compared to $34.7 million in the year-ago quarter, with the decline primarily due to the decrease in billings. Adjusted CFFO margin was 12.5% in the third quarter 2022 as compared to 25.2% last year.

However, adjusted CFFO margin improved from 11% for the first half of 2022 to 12.5% this quarter as a direct result of our cost-cutting initiative, and we expect this trend to continue through the remainder of the year. Adjusted CFFO this quarter was impacted by the decrease of $18 million in direct marketing spend associated with our cost reduction initiatives and net changes in working capital, excluding changes in deferred revenue and changes in deferred contract acquisition costs, which decreased cash by $6 million, largely due to a decrease in accrued expenses this quarter.

Our paid subscriber base declined from $965,000 at the end of third quarter 2021 to $894,000 this quarter, a 7.4% decline driven by a decrease in overall consumer engagement. We saw our free subscriber base continued to increase from $12.8 million a year ago to $15.4 million at the end of third quarter of 2022, a 20.4% increase.

ARPU declined to $556 this quarter from $772 last year, driven by a 31% decrease in average trailing 4-quarter billings combined with a 4% decrease in average trailing 4-quarter paid subscribers. We believe the billings decline is primarily due to the volatile economy that has persisted since first quarter 2022, leaving subscribers and potential subscribers hesitant to purchase or upgrade as they assess the latest economic data and the impact of the Federal Reserve's recent and future interest rate decisions.

As Mark mentioned, we initiated a tender offer to exchange all outstanding warrants for shares of Class A common stock. At the time of the offer, there were approximately 31 million warrants outstanding, consisting of approximately 21 million public warrants and 10 million private warrants.

Through the exchange, we issued approximately 6 million Class A common shares, which increased our public shares outstanding by approximately 26%. This increase in shares outstanding increased our public float and trading liquidity.

The exchange was completed on September 30, and as of the end of the third quarter, there were no remaining warrants for market-wide shares outstanding. Before I turn it back to Mark, I want to reiterate that we continue to work on our cost reduction initiative and look to realize further reductions to overhead expense and direct marketing.

We believe these are both necessary and prudent steps as we look to navigate the current macro environment. In the end, after focusing on improving our overall cost structure and efficiencies, we will be in a better position to execute on opportunities for growth and expansion as markets begin to stabilize.

Thanks very much, Jimmy. As I reflect on this past quarter, I want to share that from my perspective, I'm very pleased with the developments that have taken place.

As I look at the business, I see the impact of some of the tough decisions that we made in the summer taking hold, and I can see that in meaningful profit margin improvements. The actions we have taken and the results we have seen are consistent with our management philosophy, which I have shared with you all in the past.

That is, we manage the company with a long term in mind, always with an eye towards profitability.This past quarter, we took meaningful strides towards meeting a number of our strategic goals, including at marketwise.com and in the area of data science. And while the winers transaction may not have a meaningful impact on our revenues or profits in the short term, I expect it will have a very meaningful impact on the growth of our business in the longer term.

I also think that the steps we took to simplify our capital structure this quarter will help us improve the liquidity of our public float as we go forward. I will now turn it over to the operator for your questions.

I wanted to get started on the expense side. One of the things I look at, and I hope you look at this as well is obviously your kind of cash cost, which is really just billings in the quarter minus cash flow from operation adjusted cash flow.

That number, that cash cost actually moved up quarter-over-quarter from 2Q to 3Q from like 91% to 92%. Now maybe there's some one-time items in there, so maybe you can talk about that.

But I would have expected your cash cost to actually come down given all the steps that you've taken. So wondering if we're missing something there and then also the related question, of course, is how should we be thinking about cash cost into the fourth quarter, given continued steps that you talked about?

That's a good question, Alex. Yes, as we mentioned, we have taken a lot of steps here through -- beginning in Q2 and into Q3 to cut our costs in 2 broad areas: direct marketing and overhead.

And as I mentioned in the call, I'm pleased with the developments there. We've seen meaningful improvements in our numbers.

But let me give you over to Jimmy McGinnis, who can give you a little more detail on the flux that you might see between the numbers you were describing between billings and adjusted CFFO. _

Yes. Alex.

Yes, just to get into that, I think it's a great question. We certainly look at that as well, and it's understandable to look at the numbers that way.

But as you alluded to, there are some one-time items in the Q1 and Q2 cash flow that is coming into play in your calculation. And the big item is a significant accounts receivable and the timing of when we collected that caused a significant cash outflow during Q1 and a significant cash inflow during Q2, which explains the jump from $1 million of cash from operations to almost $26 million, $27 million of cash from operations in Q2.

So when you're comparing Q2 -- Q3 to Q2, it certainly looks very skewed, and the margins are very skewed in that regard. So when you look at the CFFO and the margins over the first 6 months of the year, however, the CFFO margin is 11% compared to 12.5% in Q3.

And so when you look at it that way and strip out the significant working capital adjustments, you can see that our margins actually have improved during the third quarter, and that's as a result of our cost reduction initiatives, our reduced marketing spend and some of the spend in our overhead. And then to your second question as far as Q4 and Mark can obviously jump in here as well.

On the overhead side, we still have some more to do, but we're still going to push forward with those cost reductions. And as we've said in the prior quarters, with respect to direct marketing, we're going to play in the market with that one.

And so we promised the -- or we've communicated these savings for planned savings for the second half of the year. We were right on target on the direct marketing.

But with Q4, if things turn around and consumer engagement starts coming up, then we will increase our direct marketing spend and try to take advantage of that market and subscriber growth.

That's right, Jamie. As we included in our filings and then also here a few minutes ago in our script, we talked to you all about a plan for cost reductions at the end of Q2.

We are executing and are directly in line with that plan through Q3. So we're very pleased from that standpoint and has seen meaningful margin improvement relative to what we saw in the first half of the year, and we expect that trend to continue in Q4.

Speaking of Q4, one more, I guess, quickly. You now mentioned the whole, if things improve and maybe we'll ramp up marketing spend again, the question is, have you actually started that already, given that it's 1 month in the quarter.

But then more importantly, are you seeing something that makes you wonder about that trend? I mean, for example, are you getting more opportunities to advertise cheaper, i.e., is the macroeconomic environment making it easier for you to get, I guess, ad space.

Again, I'm not really in that space, but it seems like things are slowing down elsewhere, maybe some of your broader competitors that have ramped up spending in the last year coming out of COVID have maybe received a little bit. So just wondering if you're seeing better opportunities, and that's why you're at least contemplating getting a little bit more aggressive here?

Yes, that's a good question. And you're right about the dynamic.

We continue to see so far elevated advertising costs, and our customer acquisition costs remain high. And in that environment, what we're going to do is what we've done here recently, which is defend our margins and focus on profitability a little bit more than we had in the first half of the year.

That's what we've seen so far. But your point is valid.

If we see a gap and see ad costs come down, we're going to take advantage of that. And so all we're doing is just trying to signal to you and everybody else that when we see the market dynamic change, we have the ability to pivot and ramp up marketing to take advantage of those dynamics and acquire more subscribers if the costs come down.

All right. Great.

And then just one very quick one. Since we are, as I just said, 1 month, this is a quarter already.

Any metrics that you can share in terms of landing page visits, et cetera, that may be helpful in October so far? So we think about the fourth quarter, I mean, as the market has obviously recovered a decent amount, so just wondering if you're seeing engagement change at all?

Yes, it's a good question. And you're right.

That is one of the metrics we look at to try to gauge both the activity of investors, but also the activity of our subscribers. We've largely seen the same trend that we've seen earlier in the year, and we think that's largely due to the macroeconomic conditions.

And I'm not surprised by it, honestly, as an investor myself, as I look at the market, there is a large divergence in the range of outcomes that we're seeing. And this plays through in our editorial honestly, while earlier in the year, I think a lot of our editorial talent, I can tell you just from talking to him, had a difference of opinion, but we're worried about the direction of the markets.

Now what has happened as months have come and gone, is that inside of our editorial ranks, people have essentially picked side. There is a divergence on which way our experts think that the market is going to go.

So I think it's going to be a prolonged downturn. Others think that it's going to come back and that we're a long way into what is a bull market, which typically lasts between 18 and 24 months.

And so we've got a divergence in our editorial ranks. And I think that makes perfect sense that -- and resonates with what we're seeing in the market.

In other words, we're seeing that investors and subscribers also have a divergence in what they think is going to happen. And that naturally results in a little bit of cautious behavior and hesitancy to not only engage with our content but also spend.

And so we're seeing that play out in our business as the level of activity that we saw, especially in Q1 2021, but really throughout the full year of 2021 has slowed, along with the macroeconomic environment.

I want to come back just on expenses real quick. I appreciate a lot of moving parts, and you gave a lot of detail on the call.

So if I missed something, I apologize. But I'm just really just trying to kind of drill into like the right jumping-off point.

So you're on target on the cost reduction plan. The third quarter was noisy.

I think you mentioned $6.6 million in professional fees in the G&A. Is the right jumping-off point for G&A, once all the initiatives are kind of run through, is that kind of in the low $20 million range?

Or I just want to make sure that from a modeling perspective and that we're clear here, just because I think, again, third quarter was a bit noisy in your kind of in process on the initiatives. I just want to make sure that we're all kind of aligned on that.

Yes. Thanks, Devin.

No, I'm not surprised that so far, out of 2 questions, 2 have asked about costs. It's certainly an area that we've been focused on throughout this year.

And I think, as you know, in the bigger picture, what we saw was -- and I said this before, we're trying to always balance growth with profitability. So for the last few years, we've staffed up our business.

We've added more headcount as our business was sort of moving higher at a very high trajectory. And so when we saw a slowing of the economy and especially when Ukraine got invaded, we saw a chance that, oh, okay, this may be a sustained downturn.

And so starting in Q2 and then through Q3, we looked at how can we better manage the business for cost efficiencies. I know that's stating the obvious a little bit redundant, but I'll try to answer your question specifically here in a second, and I'll turn it over probably to Jimmy to give more color.

But as we did that, we analyzed -- we talked about 2 primary areas, overhead and direct marketing. Of course, there were other categories that we looked at, not just overhead per se or not just salary per se, inside of overhead.

And we've made meaningful strides in Q3 to achieve those cost-cut goals. And we've also said, we manage the business on a cash basis as opposed to a GAAP basis.

And so, as I look at our cash debt, I see a lot of good signs, and that's why I said earlier that I'm pleased with our results, we are returning to the margins I would expect to see. As far as the G&A goes, we've identified some overhead and cost cuts in our business in Q3, but we're not done.

We are continuing to make some decisions and take some actions inside of the business through Q4 that I expect will allow us to get to our total cost target goal of roughly $74 million from that run rate from Q1. And so that's a little bit of the bigger of the picture.

I don't know if Jim wants to add some color to that in terms of the specific G&A number. But we're very happy with the progress we've made.

Certainly something needed to be done and I think you all had asked questions about that at the end of our earnings call in the spring about what are you doing to defend margins and increase cash flow? Well, we've taken those actions, and that's what I'm pleased about now.

Yes. And I'll just add a little bit to that.

Devin, obviously, as you know, we don't provide any guidance. But I think you're hitting on the right point where we do expect, I think, in the future as we're wrapping up some of these key initiatives that we have, one, not just the cost reduction initiative, but we've also completed our implementation of RevPro, our big revenue platform, which we should see some cost savings in there moving forward.

There has been some noise in our G&A costs in the current year. But yes, I think it's probably safe to say that we should see some reduction in G&A costs moving forward.

But to try to put a number on that, I just don't think we can do that. And obviously, as Mark said, we manage our business on a cash basis.

And so there's obviously some GAAP implications on this that we wouldn't try to get into on this call.

The follow-up is maybe a couple of parts, but just thinking about the subscription growth and kind of just I think just the revenue trajectory of the firm. So I appreciate it's a complicated backdrop.

The first part is, Mark, are you seeing any, I guess, signs of impact on business just from inflation itself as people may are getting tighter on how they spend money that, that could be impacting subscriptions? My guess is probably not because of the affluent average customer, but I'm kind of curious there if there's anything to look at.

And then the bigger picture question is just around monetization opportunities. You guys continue to make progress on free group.

And just whether there's other things you guys were thinking about to be able to monetize the momentum you have in the brand and the traction of the enterprise. You have, I think, connectivity with probably 20% of self-directed investors with your free group.

And so, just trying to think about whether there may be other avenues to really monetize that traction beyond maybe just the traditional subscription model that you're doing today?

Yes, Devin. Thanks.

I appreciate the follow-up question. With respect to your first question, the impact of inflation, in my mind, there are 2 parts to that question.

One is what are we doing around pricing. And we really have not moved prices up much one way or the other throughout our history.

As I've said before, our marketers are constantly price testing in their A-B split tests and marketing campaigns, and that includes the cost of fulfillment around the subscription price. And so we will run tests constantly around that as the markets ebb and flow, and we've settled in pretty well.

So we don't do what some people do, which is like, for instance, I think my Apple Music subscription just went up by 1 recently. We don't do institutional kind of 5%, 3% cost of living adjustment types of price increases.

We do, however, price test that with our audience from time to time. And that testing continues to play out now as it always has.

So there's not a meaningful move around our pricing that we've done at least to date. But as I mentioned earlier, what we are seeing, and your point is right, which is we target folks with higher portfolios, and those are the folks that we find make the most of our fulfillment and our research products over time.

And those folks are somewhat less sensitive to the inflationary impacts that you're seeing play through in the economy. So there's -- we're not seeing price sensitivity there amongst our subscriber group.

However, like I mentioned, what we are seeing is just a level of activity come down. As the markets are a little bit dodgy and volatile right now.

I mean, the Fed raising interest rates another 75 bps and the confusion around the difference between the statement and the press conference afterward leads to that confusion and leads to the divergence of opinions about where things are going to go, are readers who do consume our content, and we like to think are better educated than the average investor out there, they see that, and we write about it. And so they too are both reading our content and watching other content that they consume and trying to figure out where things are going just like we are.

And so that has led to a slowing of the pace of activity inside of our business. So while our better customers are high-value and ultra-high value, continue to be great customers and continuing to engage in content and continue to buy, the pace of all of that has slowed just like you would expect.

So hopefully, that gives you a little bit of color on your first question. On your second question, you're right.

We did continue to add free readers as we would hope. And we continue to add paid readers as well.

It's just the level of pace of the trajectory of those subscriber additions has slowed, and we have cut our direct marketing spend. So we naturally think that the rate at which we add subscribers will come down.

That makes perfect sense. But we also continue to send content that we think that free group is going to engage in.

And I expect if this cycle is anything like the other cycles we've been through in 20 years, that gathering that free reader group and gathering new paid subscribers, even at lower price points, will eventually pay off for our business because as we build up a trust relationship and continue to send that group good content, they will see that the content is valuable and that makes them more likely to step up to the next price point over time. But the key phrase is over time, it makes sense that we would -- that it would take the reader a little bit longer to build up that trust relationship with us given the uncertainty in the market.

And you can see, I don't have a perfect crystal ball into what people are thinking as a reader group, but the feedback we get is roughly consistent with this. I love this content.

It's really good. I'm just not sure I'm ready to pay the higher price points for financial research right now.

I'm just going to wait and see how this plays out. Now whether the catalyst would be midterm elections or a slowing of the pace of Fed rate hikes or something like that?

I don't know. I don't know what that catalyst is going to be, either of those 2 scenarios, I think, would be favorably received by the market as would some kind of truth between Putin and Ukraine.

But I don't know when that's going to happen. And so until that time, what we continue to do is to send good content to the reader group and wait until we can earn that trust relationship with the reader to get them comfortable enough to step up to the higher price points.

Last, you mentioned, and I think you were alluding to, is there anything we can do with the momentum of the brand? And yes is the answer.

That's why I'm excited about the launch of marketwise.com. That's a property that we have never really put much investment into or had in terms of a channel to gain new subscribers.

And so while it's taken some time this year, I'm very happy that we've met that strategic goal of getting that site launched. The next phase of that now, of course, will be to spend some money to acquire readers through that property and then use that property to move folks along in our customer journey to expose them to the breadth and depth of our content across all of our brands, which we've never had before.

So that's a new vector for us. And it also wouldn't surprise me, and probably not you either Devin, that we might do some -- increase our ad-based revenue stream through that property as it develops.

And we haven't done that yet, and I'm not trying to mislead you into saying that in Q4, we're going to see a big bump in ad revenues because we've launched that. That's not what I foresee.

But I do think over time, that will be a new revenue stream for us that will grow.

I guess on average, how long is the lag between macro and market factors versus sort of what you see in the subscriber base? And I guess probably the best comparisons are obviously all weighing the tech bubble.

But if the bear market continues through later next year, when is the inflection then on the engagement levels?

Yes, that's a great question. You hit on the right way to think about it.

Of course, what we're trying to do is tighten that lag as much as possible. But I think a lot of the answer to your question depends on how long these conditions exist, you're seeing 50-year high inflation in a macro environment that's very challenging.

And depending on who you listen to in terms of your financial experts, you see folks prominent bank leaders and folks like Ray Dalio and other folks who are saying that things look pretty grim. And maybe they're right, maybe they're not.

I can't tell you today what that lag is going to be. What I can tell you is just like prior periods, what we try to do is put the right content in front of the reader and develop that value-based relationship that I just described to Devon.

And when that happens, whether it's during bull market times or bear market times, folks will get comfortable with spending more with us, the more familiar they get with our product and the more familiar they get with the results of those products. And so I think the longer these conditions last is not necessarily -- let me take it a different way.

When the market is in flux like it was in the first half of the year, it makes it harder to determine which marketing campaigns and which content is going to resonate with the readers. But when there's clear direction, up or down, then we modify our approach and tailor our content to that reader base given the conditions.

What's been tricky is it's been unclear which way the market is going to go. Is the bull market going to continue to run?

In fact, I was just at one of our reader conferences last week. And I saw a presentation where one of our analysts suggested that we are in the middle of a long secular bull run, and the correction that we're seeing now is just part of what you see in long secular bull runs that may last 10 to 20 years.

And so he was predicting a much, much higher stock market now over the longer term, not necessarily this calendar year, but over the longer term. We have other analysts who are suggesting that we're in for a slog.

And of course, you can understand the divergence -- and so what we are doing, and we're already starting to see some of this in the business is trying to tailor the content to the readership and to the market conditions in order to build up that trust relationship with them, and we're well on our way as the market started to turn much earlier in the year. So I am expecting our results to improve and us to continue to improve our margin expansion as we have.

But how long this market condition will last? I don't know.

And then I appreciate, obviously, the reduction of direct marketing expenses and protection of the margin. But I guess, has there been any change in the strategy, I guess, around what the back-end campaign and marketing toward current users?

And I guess I'm asking because conversion rates seem to be holding up well there. And I guess, is there any intention to lean into marketing with already-existing subscribers?

Or is that just kind of steady?

Yes, you bet. I mean, of course, that's an area that we concentrate on and always have.

When you think about our marketing efforts, we have 2 main vectors. We're trying to acquire new subscribers, and that would include free subscribers as well as paid subscribers.

And then fulfilling our content and exposing our reader base or paid reader base to additional content, either inside of their operating brands or across our operating brands. And what we do is we typically concentrate on both, but depending on the cost of advertising and our customer acquisition costs, we will accelerate or decelerate our efforts on acquiring new subscribers depending on market conditions.

I think I described that earlier. But to your point, in terms of putting other content in front of our current readers, that is an area we focus on quite a bit very much.

And we are doing so now, as you would expect. But like I described earlier, we are seeing good conversion rates among our better subscribers, meaning the folks that are in the high-value category and our ultra-high-value category are still behaving as our best customers.

They're continuing to spend more with us. And they are continuing to consume the content they like we have seen in the past.

It's just that the level of activity from people moving from the lower price points into the high value or the ultra high value has slowed as the economy has slowed.

Just a couple of quick questions. First on the acquisition here.

I wondered if you could give us any color on the ARPU of credibility. And what sort of timeline you guys think you need at least based on historical acquisitions to get that fully integrated and the billings kind of up to snuff with the rest of the core business?

Yes, good question, Kyle. Thank you, and I'm glad you asked about it.

Of course, as you might expect, we're very proud of our M&A track record and the activity and results that we've generated from that. And we expect nothing less from our recent acquisition through the Wines group.

It's a small team, and we folded them into what was an acquisition vehicle named Wines Media that we had. It employs a relatively small group of financial experts.

They have something like a dozen publications, including several free publications like we often do. And those publications focused primarily in 3 areas: tech, early-stage investing, and data-driven investing based on some market indicators.

And so while the group is relatively small, as measured by revenue subscribers and editorial staff, we're very excited about the acquisition because we got some very, very talented people that we've known for quite some time, and we think that inside of our environment, which I've in the past, described as a flywheel, I think they will do very, very well. And so, like I mentioned towards the tail end of our prepared remarks, I'm very excited about it.

And I think over the longer term, you'll see a meaningful increase in revenues and profitability as a result of that. Now -- to your question, how fast will we see that?

We have great plans, but right now, we are in the midst of integrating that business and those folks inside of our operation. And so that's what we're focused on right now.

I imagine as we roll into the tail part of Q4 and early part of 2023, we will see -- start to see the revenue and profit impacts from that business, but the level and degree to which it will look like our prior acquisitions, it's not clear. We do have some good plans, though, and I don't think that the Wines acquisition will look very much different than our prior acquisition efforts in retrospect.

It's just we've got to give that some time to get those folks integrated into our business and get our marketing and editorial content plan formalize and then execute on it. I imagine you will start to see that here as the months unfold.

And then just a quick follow-up here. Just given where the stock is, I know the buyback has been a little bit of a challenge just given the flow.

But I just wanted to see you guys had any thoughts on potential near-term ways to kind of improve shareholder value or something like a -- whether it's a dividend or something like that given that you guys do have a very clean balance sheet, still produce quite a bit of cash even in a tougher flooding environment. But I just want to see if there was any kind of near-term gestures that you guys might be looking into that would be kind of shareholder-friendly while people are waiting for the market and conditions to kind of stabilize and eventually turn.

Yes, you bet. It's a great question.

And I think a lot about that. I mean to your point, we adopted the buyback program almost a year ago.

And when we adopted it, we were excited about it because by all metrics, we thought that it would be accretive given where the share price was at the time based on our own internal valuations around book value. And so we adopted that and started to engage in that buyback program.

The trouble from our standpoint was that the market started to turn down right at that time. That, of course, impacted us and provided some headwinds.

And also, that's when our already low public float as we continue to engage in those repurchases, accentuated that problem that stemmed out of our original go-public transaction. And so, at this point, we suspended the buyback activity, and there was none in the third quarter of this year.

Now we still have the buyback program in place. We very much believe in being shareholder-friendly and rewarding investors for their investment.

And that includes using the tools in the toolkit, the buyback being one of them. And as you know, our balance sheet is very, very clean.

We have a high degree of cash and no debt. And so both of which we think are strengths in the market-wise column.

But you're right, we do consider what else we can do to be shareholder-friendly given where we are. We are always thinking about our capital allocation strategies and how to provide ROI to the readers -- sorry, the readers to the investors, some of whom are readers.

And the tools and the toolkit from our standpoint include dividends, include acquisitions, which we're doing, we will ultimately lead to long-term growth. We've done some of that since we've been public, and we reported on that.

I'd also say that our M&A pipeline is very busy right now, very, very busy. And probably the busiest I've ever seen it since I've been at the company.

And so that is another way we're looking to deploy capital. But you're right.

We think about paying off debt, which we don't have any we think about buyback programs, we think about dividends, and we think about M&A, but we do not want to just hoard cash forever more. We don't believe in that.

We like to put the money to work, and we are constantly evaluating those choices and alternatives as we go along. So we think we're doing the right thing for the long-term ownership of the business and the long-term investors, which we hope to attract.

Just I want to start just so we can kind of level-set some things. So just to be clear, so if we look at SG&A in the quarter, we take out SBC, we take out $6.6 million of professional fees is 21.4%.

Was there any severance costs in that as well?

Yes. There was definitely severance costs.

We had about $1.1 million of severance during the third quarter, and that should all be in the G&A bucket.

And then I've got one for Mark. Just can you give us what the basic and then kind of the fully diluted treasury method at $2 shares are today?

So that way, everyone guides a clean share number coming off the call.

Sorry, Jason. This is Mark.

Could you repeat the question?

As of today -- Right? So like adjusting for all of the warrant stuff that happened intra-quarter, just what is the basic share count as of today?

And then was the fully diluted treasury at $2 a number if you have that, too.

Well, the basic -- sorry, Jason, it's Jonathan Shanfield. The basic shares were in the release.

Let me just grab it real quick. Do you have a point -- it should be -- I don't know the exact -- It's in the release -- Yes.

So we had -- our Class A common shares outstanding at September 30 were $288.2 502, and our Class Bs were $2.91092303.

We'll do the treasury work ourselves. So Mark question, so you talked about potentially advertising on marketwise.com.

But just given that a number of your users probably get the new letters electronically. Why not figure a way to ultimately make the free users see ads within the newsletters because you can dynamically insert.

So that's my question. And then just are you tracking kind of click-through rates or just something maybe to think about that talking about kind of tracking click-through rates among 3 users as a proxy for like likelihood to convert?

And then, have you made any further guess, decisions around moving kind of content limits, right? So -- because the big concern is you just -- you keep paying to acquire free users, and they just -- ultimately, some of them could never convert.

So at some point, you just kick off users who won't convert or make them see a good amount of advertising so that they monetize. So just broadly your thoughts on just doing a better job converting or monetizing free users.

Yes. So a couple of questions there.

Thank you, Jason. So you're right.

I had talked about marketwise.com and that being a source of ad revenue for us. We do have add content in other places in our kits, including -- in other words, excluding marketwise.com.

So I don't want to give you their own compression. We just typically reserve that space for internal marketing as opposed to something from the external world, like cars or brokerage accounts or something like that.

We found that historically to be a better use of the space and more economical for us. That said, as we expand the ad revenue relationships that I think we'll see coming out of marketwise.com, it wouldn't surprise me at all if in those conversations, folks start to explore where the boundary is and what our limits are in terms of exposing our audience to external ads in that space.

I can just tell you as an approach, as long as we continue to have better monetization through our internal ads, that's what we will continue to do. So -- but it's -- you're right to raise it as a potential.

That's certainly something we look at when we consider what our audience is looking at and what else we can put in front of them that they might find attractive. In terms of the click-through rates, you're absolutely right about that.

That is something we are looking at, among other things. That's in part why we're putting such an emphasis on data science.

We're trying to do a better job of figuring out what our readers are interested in and when and at what price points. So just to use a simple example, if you had a value investor who is not interested in being risk on for whatever reason, just because that's the risk tolerance.

It would be a misuse of our internal assets to put a bunch of offers of risk on products or risk on research in front of them if, in fact, they are not interested in it. And so trying to close that behavioral gap is in part what's driving our interest in our investment into the data science, and we're making meaningful progress on that.

Now that's not to say that that's going to explode in Q4 and all of a sudden, the marketing efficiencies that we've had will go up in the near period. But it's absolutely an area we care about and are investing into, and that's in part what's driving our data science initiative internally, and that's in part why I said I was pleased with our progress in that regard because we've made meaningful progress over the past 2 fiscal quarters in that area that candidly needed to be accelerated from my perspective.

And so I'm happy with that. that progress there.

And then last, your last question about sort of content limits. I think I touched on earlier, which was we constantly have to evaluate the -- how we put what content in front of our readers given their engagement with our content.

So what I mean by that is, should we spend the bulk of our time giving them the product they fulfilled, should we then take some space in the content and give it to cross-sells or upsells around our products. And similarly, to your first point, should we put external ads in front of those folks and how do we think about balancing those 3 competing interests.

To date, we have largely spent our time and real estate, if you will, putting the fulfillment of the content in front of the reader, which is what they paid for and then exposing them to other products and research products, either in brand or across brands. But like I said before, that's something I'm sure we will evaluate as we go forward, especially now that the market wine.com side is out.

And one last quick one more. Any reason over the long term, meaning several years that marketing doesn't go down to like a low 30s percent of billing kind of, which is where you were in like 2018, 2019?

Yes. I mean -- This -- we talk about this a lot.

I don't think there's any reason why it wouldn't, but what we do, as you know, we don't plan a year in advance, or an ad budget like a bunch of businesses do. We have the ability to pivot quickly.

And what we're always doing is trying to balance profitability with subscriber acquisition. And then we are also, at that same time, trying to balance the speed at which our readers move through our customer journey from free to paid to high-value to ultra high value.

And so that takes time. As I've said from our very original investor calls, it takes time to build up that trust relationship for folks to say, okay, this is great content.

I'm learning. I'm being entertained.

I like the way this person thinks about the markets or thinks about risk or thinks about their investments or does their valuations. Maybe I'll see what else they are publishing.

That takes time. That's not a 1-day or 1-hour decision typically.

And while in the first quarter of 2021, we saw a compression of the length of time it takes from someone to come across our products and then move up that value chain. We've just seen more of a return to a normal pace, which typically is, like I said in the past 18 to 24 months.

And so, given the current economic environment, I'm not surprised to see developing that relationship take a longer time, closer to the higher end of that customer journey length. That makes perfect sense to me.

So I think if the market -- if the macroeconomic conditions can improve, which I imagine through your long-term several years, they will, I imagine that our customers will return to a more traditional, hopefully, on the shorter end of that customer journey time. If that were to happen, there -- the compression that we saw in 2021 or maybe thereafter will return.

And at that point, it becomes easier and cheaper for us to acquire subscribers, and I can see where we may ramp it up or we may ramp it down depending on what that environment is.

Thank you, Doug, very much. I appreciate all the support for everyone listening, and I thank you again for your time and attention.

I hope you all have a great day.