Marketwise (MKTW) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01Our business depends on our ability to attract new subscribers and persuade them to renew their subscriptions and purchase additional products and services from us. If we are unable to attract new subscribers or fail to engage existing subscribers, our revenue and operating results may suffer
2. 02If 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 harm our business’s operations and financial condition
3. 03Inefficient or ineffective promotion of our content could prevent us from maintain and growing our subscriber base, which would harm our business, results of operations, and financial condition
4. 04In addition, failing to instill in our employees the expectation of independence and integrity may devalue our reputation over time
5. 05If we fail to effectively manage our growth, our business, results of operations, and financial condition could be harmed
6. 06We must effectively integrate, develop, and motivate new employees, and we must maintain the beneficial aspects of our corporate culture. Otherwise, our business performance could suffer
7. 07Our future success depends on attracting, developing, and retaining capable management, editors, and other key personnel
8. 08Future competition may result in price reductions, lower sales volumes, reduced margins, or loss of market share, any of which could damage our business, results of operations, and financial condition
9. 09Adverse or weakened conditions in the financial sector, global financial markets, and global economy may impact our results
10. 10Our success depends on our ability to respond to and adapt to changes in technology and consumer behavior
11. 11If 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
12. 12Financing an acquisition could result in dilution from issuing equity securities, reduce our financial flexibility because of reductions in our cash balance, or result in a weaker balance sheet from incurring additional debt
13. 13Because 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
14. 14Our 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
15. 15Most of our products and services depend on our electronic delivery systems and the Internet. Our ability to deliver information using the Internet may be impaired by infrastructure failures, disruptions, or outages in our systems or those of our third-party service providers or Internet providers
16. 16Disruptions to our third-party technology providers and management systems could harm our business and lead to loss of subscribers
17. 17We may require additional capital to support business growth, and such capital might not be available on acceptable terms, if at all
18. 18We are subject to payment processing risk

Risks Related to Legal and Regulatory Matters

1. 19Failure to comply with federal and state securities laws and regulations, or other regulatory action or investigations, could harm our business
2. 20If we change our business practices in such a way as to not satisfy the publisher’s exclusion, or otherwise fails to comply with the regulatory requirements concerning this exclusion, we may face civil and/or criminal penalties as an unregistered investment adviser or other results that could damage our business
3. 21We could face liability for the information and data we collect and distribute or the reports and other documents produced by our software products
4. 22action against us if they rely on published information that contains an error, or a company may claim that we have made a defamatory statement about it or its employees
5. 23We may not adequately protect or enforce our own intellectual property and may incur costs to defend against, or face liability for, intellectual property infringement claims (or related claims) of others
6. 24We 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
7. 25As we continue to expand into other foreign countries and jurisdictions, we may also be subject to additional laws and regulations that may affect how we conduct business
8. 26Adverse litigation judgments or settlements resulting from legal proceedings relating to our business operations could materially adversely affect our business, results of operations, and financial condition
9. 27Our use of artificial intelligence technologies may not be successful and may present business, compliance, and reputational risks
10. 28Our failure to comply with the anti-corruption, trade compliance, and economic sanctions laws and regulations of the United States and applicable international jurisdictions could materially adversely affect our reputation and results of operations
11. 29Changes in our income tax payments or adverse outcomes resulting from examination of our income or other tax returns or changes in legislation could hurt our business, financial condition, and results of operations

Risks Related to Our Organizational Structure

1. 30In certain cases, future payments under the Tax Receivable Agreement to the MarketWise Members may be accelerated or significantly exceed the actual benefits MarketWise, Inc. realizes in respect of the tax attributes subject to the Tax Receivable Agreement
2. 31MarketWise, Inc. will not be reimbursed for any payments made to the MarketWise Members under the Tax Receivable Agreement in the event that any tax benefits are disallowed
3. 32If MarketWise, Inc. were deemed to be an investment company under the Investment Company Act of 1940, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business

Risks Related to Ownership of Our Class A common stock

1. 33Nasdaq's delisting determination. However, there can be no assurance that, if we do appeal the delisting determination by Nasdaq, that such appeal would be successful
2. 34Purchases of shares of our common stock by us pursuant to our stock repurchase program may affect the value of our common stock, and there can be no assurance that our stock repurchase program will enhance stockholder value
3. 35We qualify as an “emerging growth company” and a smaller reporting company, and the reduced disclosure requirements applicable to emerging growth companies and smaller growth companies may make its securities less attractive to investors
4. 36The dual class structure of our common stock may adversely affect the trading price or liquidity of our Class A common stock
5. 37The MarketWise Members have significant influence over us, including control over decisions that require the approval of MarketWise, Inc. stockholders
6. 38The MarketWise Members have the right to have their LLC Units redeemed or exchanged into shares of Class A common stock, which, if exercised, will dilute your economic interest in MarketWise, Inc
7. 39Under 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
8. 40We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect our securityholders, which could depress the price of our securities
9. 41The requirements of being a public company require significant resources and management attention and affect our ability to attract and retain executive management and qualified members to our Board
10. 42If we are unable to satisfy its obligations as a public company, we could be subject to delisting of our Class A common stock, fines, sanctions, and other regulatory actions and potentially civil litigation
11. 43The market price and trading volume of our securities has been volatile, and could decline significantly, and you could lose all or part of your investment
12. 44If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price and trading volume of our securities could decline
13. 45We may be subject to securities class action, which may harm our business and operating results
14. 46Continued payment of dividends on our Class A common stock are subject to the continued discretion of our Board and, consequently, shareholders’ ability to achieve a return on their investment could become limited to appreciation in the price of our common stock
15. 47Investments in equity securities are subject to loss in value
16. 48Delaware law and our Charter and Bylaws contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
17. 49The provisions of our Charter requiring exclusive forum in the Court of Chancery of the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers