Ladies and gentlemen, thank you for standing by. And welcome to the MarketWise Third Quarter 2021 Earnings Call. During today’s presentation, all parties will be in a listen only mode [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to hand the conference over to Jonathan Shanfield, Head of Investor Relations at MarketWise. Please go ahead.

Thank you, and good morning. Thanks for joining us on today's conference call to discuss MarketWise’s third quarter 2021 financial results. On the call today, we have Mark Arnold, our Chief Executive Officer; and Dale Lynch, our 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 demands, 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 will 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 the company's SEC filings, earnings press release and supplemental information posted on the Investor section on the company's Web site. 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 an isolation from GAAP measures. Reconciliations to non-GAAP measures can be found in our earnings press release and SEC filings. I will now turn the call over to Mark.

Thanks Jon. Good morning, everybody. Welcome to our third quarter 2021 earnings conference call. As you all know, we successfully closed our transactions with Ascendant and began trading publicly in late July. We're pleased to have completed the transactions and the transition to operating as a public company. There was a lot of hard work by our team and all of our advisors to get through our current state and we have a lot to be proud of. And with that said, we're excited about the opportunities that we see in front of us as a newly public company. We're going to discuss the highlights of our third quarter results and some of the trends we're seeing in our marketplace. But first I would like to touch on a couple of recent developments. As you saw in our press release yesterday and over the past two weeks, we have made a number of significant announcements. First, a couple of weeks ago, we announced that we successfully entered into a credit facility with a syndicate of five banks that will provide a revolving line of credit for up to $150 million. This is a significant milestone for MarketWise as it is the first committed credit facility in our history. Now we did not draw any funding at closing and we do not have any immediate plans to borrow but this facility will provide important backup liquidity for the company, as well as capacity for acquisition financing. One thing I'd like to note, while the headline number of $150 million provides meaningful capacity to the company, it is still small relative to our adjusted cash flows from operations, representing less than one turn of leverage. And while we may use this debt facility as part of our acquisition strategy, one thing you…

Thanks Mark. This has been an extremely busy quarter for MarketWise we’ve achieved single milestone events as Mark mentioned. Before I get into a discussion of our third quarter results, I first want to recap two of those items that Mark mentioned in the comments. First, on October 29th, we closed on $150 million revolving credit facility with a syndicate of five banks with HSBC Bank and Bank of Montreal Capital Markets as a joint lead arrangers and joint book runners. The rest of the syndicates included Silicon Valley Bank, Wells Fargo Bank and PNC Bank. We're thrilled to be working with these five bank partners and again, as Mark mentioned, I want to thank them for joining our team. This facility provides for an additional $65 million accordion feature. It has a three year term and borrowings of to spread the LIBOR will range at 150 or 225 basis points. There's also an unused commitment fee of 25 to 35 basis points. We did not make any borrowings on a facility at closing but it does provide us some important financial flexibility serving as a backup source of liquidity and additionally providing capacity to execute on our M&A transactions. As Mark mentioned and just emphasized we plan to pursue conservative approach to leverage. Second, as we announced yesterday, our Board of Directors has approved a share repurchase program of up to $35 million of our Class A common stock over a two year period. As a [new] public company, we've seen a lot of volatility in our shares since our public listing and frankly, we believe the true value of the stock seems disconnected from these current valuation metrics. Mark did a very good job summarizing that we intend to repurchase shares when the purchase price is highly accretive…

Thanks Dale. So before we take your questions, I want to thank everybody in the MarketWise organization, all of our employees, our partners and our affiliates, they worked so hard over many years to get us to this point. And one last thought before we move to question. When I look at what we accomplished this past quarter and what I see is putting into place many of the fundamental pieces that we need for our next leg of growth and execution of our strategic plan going forward. That started with the closing of our go-public transaction in July. The closing of the transaction gives us the public company platform to grow going forward. And in my eyes, being public should help us attract more readers, attract more talent and provide currency for our M&A strategy. Closing on the transaction also afforded us the opportunity to adopt an incentive compensation plan for employees. We adopted that plan and made meaningful awards to more than 150 of our colleagues. We were not able to have an equity plan of this scope as a partnership previously. We hadn't ever taken in venture capital or private equity money. So this was a key step for us, because it accomplished two things. First, it expanded the number of people working at the company who have an equity interest in our business and a vested financial stake in our results, from roughly a dozen or so people to now over 150 of our most talented and senior folks. Second, it puts those recipients shoulder-to-shoulder with our public shareholders and directly aligns their economic interests with the economic interest of our investors. Incentivizing our senior leaders to drive results that are good for our investing public is a basic but important step forward for our business, and one that I think is crucial to our future performance. And as we indicated, we also closed on the credit facility. Adding this facility will give us much more flexibility from an operating capital perspective and it's something that we've never had in place in our 20 year history despite all our growth and profitability. With the public company float, cash on the balance sheet and a debt facility in place, we are now very well positioned to execute on our organic and our inorganic growth priorities going forward. We have the key pieces in place now that will complement our strategic plans going forward. And finally, we also adopted the buyback plan to expand our ability to make capital allocation decisions that are accretive to our owners. With these important fundamentals now in place, I feel like we have all the tools we need, tools that we did not have in our arsenal previously, to take advantage of the opportunities in front of us. And with that said, I'll turn the call over now to the operator so that we can take some questions.

Thank you [Operator Instructions]. Our first question comes from the line of Devin Ryan with JMP Securities.

First question, just want to dig in a little bit on the environment and kind of the travel and leisure boom. Obviously, there's a couple aspects of that, that you guys highlighted. There's one, the impact on advertising and marketing and pushing rates higher, but then two, just people taking vacations and traveling for first time since pandemic, which makes sense. And it's good to hear that people are now kind of spending more time online and you're seeing it in the landing page data and some of the other data you shared. I'm curious how the marketing and advertising market is around travel and leisure today, are you seeing them pull back kind of where that pendulum is? And then also, as we think about maybe not the fourth quarter but looking into the next year, if you do have maybe still little bit higher rates of advertising and marketing, but people are engaging more. I mean, you're still generating very good returns on investment. I know it's not where it was in the first half of this year. But would you maybe lean in more just because ultimately your growth is important and you're still, again, getting very good long term returns on that investment?

Devin, the second half and what you just said there is spot on exactly. I mean, we have not seen significant reductions in the volume of advertising from the travel and leisure crew. I mean, it made a tilt off here a little bit but nominally that wasn't the change. What we are seeing instead -- and that's sort of enumerator effect in our costs, that's just the ad cost. The other component is conversion rates, engagement and conversion rates. And that's what we're alluding to, that's where we're seeing the improvement. In October, we did mention that the stats for engagement were noticeably better in October, both in terms of like landing page visits. We also said that conversion rates were higher kind of across the board free to paid -- and direct pay, free to paid and then within our distinct subscribers, you also saw improved conversion rates in October. So we're starting to see that and that has continued basically through the November month to date. So to your point, first quarter of 2021 was sort of one of those anomalous quarters where everything was incredible. Costs are low, conversions were high, engagement was full. We can be very successful and produce very good returns even with these higher elevated display ad costs, as long as we can get back to some normal level of customer engagement. We're pretty good at connecting directly with customers and we think our marketing copy is good. We think our content is very good. And with those two ingredients, the only third ingredient we really need is [surmise] back on screens, people paying attention to these sorts of things and we are starting to see that, and that's very encouraging.

And then I guess a follow-up here on the buyback, great I think to see that and just shows how you guys were thinking about the sock and also just evolving the capital deployment strategy. As we think about the $35 million, how does that factor into the bigger picture view at the firm around excess capital? And appreciate you're generating a lot of excess capital in the business model. But I guess maybe the question is more how you guys are thinking about your excess capital position. And then just now that you're public and I know having dialogs around new opportunities. How incremental investments evolving or the pipeline of even inorganic, any more color you can share around kind of just developments that have happened kind of post being a public company would be helpful?

So we've gone through some changes recently. Historically, we have generally aspired to keep at least $100 million of cash on the balance sheet. And frankly, we've always been like I think pretty much well in excess of that. We've been $240 million of cash on our balance sheet. But generally I would say that our target has been $100 million, and that's mostly just for rainy day for M&A but basically, it's primarily as a contingency and as backup. As Mark mentioned, we've been profitable every year of our existence. But generally speaking, I would still target cash around $100 million. We have a backup line of credit now, which helps tremendously. So if you look at that liquidity, you've got essentially -- we’ve got $130 million of cash and $150 million of incremental capacity, you've got $289 million of total capacity. And if you look at our earnings rate through the course of the year, we've been there in something between $12 million to $17 million a month. So we're going to build cash pretty quickly given that we're retaining earnings and not paying them out in form of dividends. So we will see a cash build on the balance sheet. We do have very active interest in M&A and that was one of the primary motivations for going public. So you should think of the most likely use of funds for the cash on the balance sheet will ultimately be rebuilding a chest to be active in the M&A markets. We intend to retain earnings for now and build that war chest for acquisitions. So I think right around 100 I would still target as the minimum. But frankly, you're going to see the cash kind of from where it is now, it should just continue to grow 3 times.

And then just on that point on acquisitions, just to kind of follow the logic here. I know you can’t be probably explicit. But just how the dialogs are going and the pipelines developing just as you again are building cash and I would think of little bit more visibility here as a public company?

Mark, do you want to chime in?

Yes, I’ll jump in. Appreciate the question Devin. I can't of course comment on specific targets or ongoing discussions that we're having. What I will reiterate is something I said before, which is the number of inbound inquiries that we've had have increased dramatically and the size and scale of those inquiries has gone up as we had not only planned for but hoped. And so I think we're very, very well positioned now, as I mentioned a minute ago, with more tools in our tool kit from a capital perspective, public company float, a debt facility, growing cash on the balance sheet and ability to buyback shares when we think it's highly accretive to do so. To me, those are the capital allocation tools that good management teams need in order to treat the shareholders well and manage the business going forward, and still allow themselves currency for M&A activity. And so now I feel like we've got all the things we need to embark upon that bigger broader M&A strategy that I've alluded to throughout the year. And so that's why I think when I look back on our third quarter, I think it was tremendously productive from our standpoint, because now we're, I think, prepped and ready to go to execute on our strategy going forward. So I can't split comment on specific targets but I'm very excited about what we have going on in our M&A activity. And I've got the team and the tools now to execute on that strategy going forward. And that was a key milestone for us to get to after the closing. And we've done that in the first quarter that we’ve been public.

And to the extent that we have the public presence now, we're getting more inbound phone calls about other firms that either are interested in potentially selling themselves or part of themselves to us or partnering with us in some form or fashion. So I think just, you've always said that in the past too, but it's very good point to emphasize, the visibility is helping a lot too in that channel.

Our next question comes from the line of Alex Kramm with UBS.

Starting with the commentary about October or maybe even November, that you've given a lot of good color there. I think, I heard you say that subscribers increased. I don't know, if that was on a gross basis. So maybe to put you on the spot, on a net basis, have you been adding subscribers so far this quarter?

So what we said was the growth we alluded to, we gave you two comparisons. One was year-over-year, so grew about -- rounded off about 23% year-over-year in paid subs. On a sequential basis, we declined a net 30,000, we went from 994 to roughly 964 and change rounds up to 965. So we declined about 30,000 sequentially. And the driver of that was really related to much more of the reduction in gross debt, and that's what we've been alluding to since second quarter and now in third quarter. Again, in mid-May of last year, took hold and sort of enforcing June and remained pretty much in force for July and August. September was marginally better. October is noticeably better. But it really was -- that net reduction in paid subs was essentially almost entirely due to the slowdown in gross new subscriber adds.

So in October, you have added paid subscribers on a net basis versus the end of the third year?

We haven't disclosed that specific number. What we're telling is we've had a significant uptick in gross adds in October.

So unless churn has changed, you should have added on a net basis, if I hear you correct…

Correct. Yes, that's a logical -- that's a good -- that's a logical [assumption]…

And then maybe another quick one, going back to the third quarter. I mean, obviously, as you just said, again, the paid subscriber number declined. The good thing I would say is that if you look at your, I guess, high value and ultra high value clients that those going up quarter-over-quarter. So good to see that. I will say that the growth rate slowed. So you did add but it's slowed. So just curious with all the talk about being more focused on upselling, et cetera, I would have liked to see a little bit of an increase there. But is that just a function of the same environment even hitting the upsells…

Yes, the engagement dynamic is the key here. When the engagement was less, you saw that kind of effect across the board. I mean the engagement impact free to pay conversions, direct to pay conversion, high value conversion, ultra high value conversion, people simply were away from their devices. And so with that, that kind of -- that vents all of our conversion curves down in the second quarter. But what we're trying to tell you now is that a month and a couple of weeks doesn't a quarter may but having said that the month and a couple of weeks that we've seen in October and the first part of November here, we have seen a reversal of that and improvement in all those metrics.

And then just lastly, and this maybe too far forward looking. But clearly, I think last quarter you took away the fiscal year '22 forecasts or guidance rather, clearly, you're already telling us subscribers are going to be lower at the year end. And then obviously things could improve next year. But I guess how are you thinking more broadly about fiscal year '22? If the subscriber growth is a little bit slower, to what degree do you think you still have an ability to make billings or then maybe most importantly, since you said, do the right thing for shareholders, deliver on the operating cash flow line, all else equal? If you're not seeing a lot improvement, is my point.

So look, we're going to come out with our 2022 guidance in the fourth quarter cycle, I think we mentioned that previously on another call, and that's still the plan. So stay tuned for that. We'll have a lot more specific, say then. Your questions just broadly around the outlook for the future. What we're seeing is some normalization right in the environment here so far in the fourth quarter. Mark and I both look at these trends. We both think that we're going to finish the year strong here. We're going to hit our new adjusted forecast, which I think we're adjusted down by a percent in terms of billings and something like 10% in terms of subs. Now that reduction in sub forecasts that kind of flows through to the future. Now having said that, you're building off of smaller base. But as things begin to normalize, as we are seeing them, we would expect things to get back to a more normal rate of conversion, free to paid, direct to paid and then ultimately, as your existing subscribers high value and also high value conversion rates. When you look for the past two years, 2020 was a good year, second half of '19 was a good year, first quarter for 2021 was an insane quarter. You're not going to have conversion rates like you did in the first quarter of '21. You should never model those. I mean, that was an incredible quarter. But what we are seeing are conversion rates that are in line with the averages that we really saw in the second half of 2019 and throughout much 2020, and those are very good years. So as long as we get back to adding net paid subs and we can continue that engagement and…

Our next question comes from the line of Kyle Peterson with Needham and Co.

Just want to touch on churn and what you guys saw in the third quarter. I think in the second quarter, you guys mentioned kind of it was toward the high end of what you guys historically see. Did that continue in the third quarter? Just trying to get an estimate on what you guys are seeing in terms of gross adds in both CAC and 3Q.

Yes, I mean, we said that. I mean, we saw -- 2Q and 3Q are pretty similar in terms of the churn rate we alluded to at the higher end of that range, that's in our function stage and on our slide deck, and we saw the same thing in the third quarter, no substantial change in that metric at all. This is really all related to the gross adds [signing] more than any change in churn dynamic.

And then I guess just one quick follow up. I know the ‘21 forecast is coming down a little bit from kind of where it's the last quarter, but it's still above what you guys originally had when you announced the deal back in March. So maybe if you could just walk us through some of the things that have changed, because it seems like if you compare things from March, things are better and maybe just kind of travel and leisure boom is just kind of weighing on kind of short term. So like how should we think about some of the other progress that's been made you know across the rest of the business?

Well, I think Mark can chime in here too. But obviously, you know we're continuing to push all the things that we've been talking to you and other investors about, which are strategic priorities for the firm. We want to develop an MarkeWise technology platform to integrate all of our brands, where all our brands could ultimately be fulfilled, market the products, build an aggregation of traffic, create some energy with that traffic and we think better reduce our cost of acquisition ultimately through time by doing that, build some brand awareness and we think build some more stickiness. We have a lot of technology oriented products that if we think we have one aggregate platform, those technology products -- there's greater uptake. Those technology products we have tend to add a lot of stickiness to our customer base. They just need more exposure. So we're certainly focused on that. Mark's talked a lot about M&A. We're obviously always looking to recruit new analysts, new writers and editors and content and products that will continue at pace. So I think those business initiatives that Mark's talked about for a long time are all in force financially, again, as far as outlook. We've always said, look, give us till our fourth quarter cycle to firm up what our guidance content will be and then what the specifics will be, and we tend do that. So stay tuned on that front. We don't necessarily need a dramatic decline and display ad costs as long as we have decent engagement and that's what we're seeing right now. The display ad costs are kind of the same, maybe down little bit. But our CPAs are down because engagement is higher and our conversion rates are improved as we started to see some of these engagement metrics improve. With that improvement engagement metric should getting some better conversion rates and that helps. So that helps reduce the CPA even though the display ad costs are still elevated.

Next question comes from the line of Jason Holstein with Oppenheimer.

A few questions. So there's been a ton of articles just about the focus of self-direct investors. I think there was another one this week. I think this week's article talked about younger investors right now. They are kind of issuing away from paying people to manage wealth, because they need the value. So one, I guess the question is, how are you thinking about doing a better job attracting younger readers? Is this part of the M&A strategy? Is there kind of investment to recruit authors who tend to focus more on kind of content that is more appealing to younger and just crypto, or I don't know, NFTs or other things like that? So that's question number one. Question number two. Look, I mean, it's been well publicized that advertising CPMs have gone up. You have all these kind of headwind going on in advertising. So it wouldn't be a surprise that your kind of cost spread would have gone up, obviously, exacerbated. Maybe talk a little more about how you think about kind of playing the kind of ad inflation cycle to your benefit. So I would imagine that CPMs tend to be lower in the first half than the second half. And like in the first half typically better time to be more aggressive on subscriber acquisition, just relative to overall to the extent that you see seasonality kind of in your business. So kind of two questions there. And then just kind of applause the buyback, I think it's smart, there's clearly lot of technical factors that are kind of weighing on your stock right now. And I think where business that generates significant free cash, it's a good idea. And then I have one more follow-up after those two questions. Thanks.

I was going to say, let me kick it off. And thanks for your question, Jason. I appreciate that and appreciate the kudos on the buyback program. We agree, obviously, that we just think it's smart thing to do given the price dynamics we're seeing and our attitude about shareholder returns. As far as focusing on younger investors go, I think we are talking about the same articles. There was one, I think, in the Wall Street Journal recently that was talking about a guy that Goldman Sachs has been recruiting where I think he said he puts 90% of his investible assets in the cryptos. I don't know if that's the one you're referencing or not. But yes, it's a good question. And so, the answer is yes, right? Certainly, M&A and focusing on the younger generation and folks who have investible assets is one of the things we have looked at in our M&A criteria. Also you mentioned the editorial recruiting. We're also doing things along those lines as well. If you look at the average age of our editors, it's not up in the 60s at all. We tend to overtime recruit sort of younger folks who are looking towards the future and thinking about investing trends going forward, a decade or two, but who also have some experience in the space enough to think about how the future is going to develop, and that's certainly something we do too. The other thing that we do that you didn't mentioned is, as always and I think I've mentioned in the past, our marketing groups are always looking for pockets of subscribers in all kinds of different channels, including channels that are more focused upon by younger folks. Having said all that, as I’ve said before, we do not consider ourselves a boomer company or a millennial company. We focus on attracting investors. And to the extent that investors with real assets and real portfolios tend to be younger as this whole market is run on, great, we want those folks. And those folks. And those folks tend to like the guy in your article or in Wall Street journal article, tend to focus on more exciting asset classes, like cryptos, like cannabis, sometimes they're more frequent traders. And so our job is to put products that espouse investing strategies that we think will beat their comparable indices and put those products in front of those groups, whether they're young or old so long as they're investor, willing to spend the time, have the focus and have the portfolio size to deploy, that's when our business is seeing. So yes, we're focused on that younger generation, but not just them. We're also focused on investors that are older in age. Dale, if you want to take the second part?

And just add to that. Look, we have a pretty rich portfolio of cryptos, and I would assume the customer set on that skies younger than some of our other asset classes. So lot of our most successful campaigns this year have been crypto based campaigns. So we're certainly seeing that interest. And I think through time, you're going to naturally gravitate and see our customer base, what's the right word, younger up become younger, I guess, the better way to say it, become younger. We're seeing it happen. It's still the law of [littler] numbers. But having said that, like our youngest end of our customer distribution grew 400% last year. So we're seeing that change. And we're always thinking about the channels that we market through and the techniques that we use to market and how we can start to reach through from adjusted channels this younger customer set. We think we have the product set to appeal to young customers. What we're experimenting with is some of the techniques of marketing and the channels through which we market to specifically get more access to younger customers organically and then Mark mentioned too, just the M&A strategy is an obvious thing to think of there too. On the question around seasonality around display ad costs and how we manage it, I mean, this is a really key point. What we've seen in Q2, Q3 is this is not normal for summer for us. You may see some reduced engagement particularly in the month of August. But what happens is July is okay and September is usually pretty good. So August kind of gets lost and round and you don't necessarily see a summer slowdown for us. What we're seeing here is very uniquely related to this massive pandemic…

I have, but I would concur. I don't see season-to-season seasonality or month-to-month seasonality, I've run those metrics a number of times just out of curiosity, if nothing else, and haven't seen any quarter related trend relative to time on the calendar nor season of the year.

And just a quick comment. I think, look, your churn is attractively low. We love if you gave that out quarterly. It kind of worked well for [Peloton] and some others. But I would just ask that perhaps you guys at least update that once a year, perhaps when you report your December quarter.

Our next question comes from the line of Jeff Meuler with Baird.

On paid subs engagement, I understand the environmental factors that are outside of your control. But what are you doing differently to drive increased engagement among the paid subs? And then second part of it, I understand that the engagement is going to impact current period net revenue retention. So I guess what I'm wondering is how much of a leading indicator is it for future paid subs retention and up-selling. You said earlier this is a very unique period, obviously, I get that. But I don't know if there's other historical parallels where you've had a three or six month engagement role and if there's anything to draw from that in terms of producing mix?

So on the last part first. Jeff, if you look historically, I only see one sort of really kind of strong and parallel and that was the period of time post financial crisis. We did see the market crash, it tried to recover, it bounced and stuck in the mud for a period of time. And with that sort of stuck-in-the-mud environment where things weren't moving up, volatility had waned and investor interest in the market wane, we did see a pause in new subscriber adds for, I think, three or four or so quarters post financial crisis. And that's probably the closest parallel that we're seeing to this current dynamic. Now this is totally different causal factor. But the end result is somewhat similar in terms of a pause in new subscriber growth that lasted more than three months. I mean this was almost two full quarters that we saw. So now what we saw after that was as the market eventually did begin to recover and faith in the market began the return, fund inflows, trading volume increase and the stock market began its gradual march higher, we saw significant growth that's following year, billings growth, profit growth, margin expansion, everything, subscriber growth. So that's -- but that's probably the most distinct parallel in our 20 year history to what we're seeing right now. Your question around engagement and like how we handle it. I mean I didn't totally follow the question. I think you're asking what did we do to improve engagement, two things on that…

Yes, so what kind of initiatives do you have in place in this environment, try to control it a little bit more.

Well, look -- and this was a point that Mark would pound, he's like, look, we don't stop trying. Like we're always trying and testing. The question is we're cautious. And what we do is we try new ideas. We're trying new ideas. We're trying new marketing copy. We're adjusting product emphasis, redirecting dollars to a given product that is working in a given environment, even if other products aren't working. And frankly, we did see a shift to more crypto in recent months because crypto was really working. But we can't broadly make engagement just better holistically. Maybe we can through time, I think with the pan MarketWise technology side from where we have a critical mass of aggregation of traffic. I think that better protects us against broader industry downturns in engagement, and that is one of the main reasons Mark and I want to pursue this path. So I think that will help. That's a complicated effort that takes time, and we're working on it but it doesn't happen overnight. But I think that will help be a strategic offset to that going forward. Right now, the way we adjust is we keep testing all the time. New editors or different editors, different product emphasis, different marketing copy, we'll throw some marketing dollars at it to see if it works, if it does, great, we push harder. If it doesn't, we take it and put it toward a different campaign. And we've had a number of campaigns in the last four weeks at crypto that worked really, really well. So it's really ideas and content. We're a portfolio of investment ideas. And so if the engagement is down, it really comes down to conversion rates and our ideas and the successful communication that our marketers have with our customers, and that's really what the push is.

Our next question comes from the line of Ygal Arounian with Wedbush Securities.

I think we've exhausted most of the ad questions, but maybe just one more, kind of like big picture, if -- let's say, let's just play out the scenario that ad rates don't normalize. They continue to stay elevated for a protracted period, maybe even go higher from where we are. What would that mean for your strategy, how would you approach it? Would you have to raise prices to keep that threshold, would you lower the threshold? Just want to think about -- think that scenario through. And then would love to hear an update on terminal, analytics, some of the software tools that felt pretty promising when you guys first went public just share a little update with what's going on there.

So I'll handle the financial part first, Mark, and then you can handle the strategic part there. In terms of how we handle sort of higher or elevated. Look, to be clear, elevating CAC is not a new thing. The degree of elevation and the suddenness of it in the second quarter was striking, that has not been something that we've seen so fast, so quick to such a magnitude. Having said that, CPAs and cap are going up 20% to 25% a year, really from 2015 through 2020 constant, that was the CAGR growth if you look at industry studies. So we can handle elevating CPAs. And we handle that by a couple of methods. One is we're always adjusting the pricing of our campaign products in relation to the cost that it cost to bring in that pace up. We're always looking at LTV to card value -- card value to CPAs rather. I mean the initial price versus the cost per that acquisition. That's a constant metric. It's real time. It's sort of the holy grail that our marketers will look at. So the price component is an important part of that to a degree, and we can handle that. It's also the efficacy of marketing copies. When we're looking at our forecast, though, we're always assuming elevating CAC because that's just the industry trend. And we've been able to maintain our breakeven really from '15 to '20 and into '21 through the first quarter, our sort of holy grails for targets are to pay off our variable CPA in 90 days and to get to full CAC breakeven seven to nine months. Guess what? Even with CAC going up 20% to 25% a year in the period I just mentioned, we maintained all of those breakeven metrics. CPAs within 90 days and full breakeven in seven to nine months. So it's a combination of how to price the product in relation to the cost. And if the conversion rates aren't successful then you pause and you redirect those marketing dollars to a different campaign that can hit its metrics. So it's an idea of being fleet of foot with your capital, being real time testing with your LTV, your card values to CPAs and those sorts of things. So we can manage an escalating CAC. It was just the suddenness of it and the fact that the denominator wasn't working in Q2 and Q3, because the engagement fell very sharply. That really was the differential thing primarily was the engagement was the primary problem.

As far as your other question, you asked about so-called terminal, yes, that pan-MarketWise platform that we've been excited and working on behind the scenes is really meant to be that all-in-one tool content platform across all of the MarketWise brands and properties. But right now, the current state of it is, it's been built out for one of the brands, which has a significant and long standing subscriber base that has been very loyal with really, really high LTVs and are definitely long term subscribers. The early feedback from that group has been really encouraging. And so what we're doing behind the scenes is we're working hard to try to build out what I would call the plumbing to plug in the rest of the brand and elevate that property across all of our properties that we own across MarketWise. And so as Dale alluded to earlier, that doesn't happen overnight, there's a lot of testing that has to happen and a lot of migration of data. And plug-ins, what I would call, plug-ins of technology so that all of that content can flow seamlessly and we're working hard on that. We expect to have something and more to report on that towards the first part of next year, as we continue to work on it through the fourth quarter. But we definitely want that platform. I think it will do some of the things that Dale described, which is give us another platform on which to attract subscribers and show them how good and how high quality our research is, and will also give us an ability to put other content from across all of those brands in front of subscribers to one brand or another. And so we're excited about that. As far as [Indiscernible] goes, we could be more pleased with Mark and how his group has plugged into our ecosystem. If you know Mark at all, you know it's very high energy, very smart and very experienced in the financial markets. I saw him recently and I swear, he acts like a teenager right now. He is so excited with both how things have performed and how our relationship has gone and I too am equally excited, because I think what that [Indiscernible] team has produced in terms of tools and content is fantastically beneficial to our reader base. And I'm excited to put that content in front of more and more of our readers across MarketWise, and we're continuing to do so. And I also think that will be a vehicle by which we can attract new subscribers from outside of our ecosystem and we're seeing that recently as well. So that's going very, very well. I'm happy with it and I think Mark is too.

Our next question comes from the line of Alex Kramm with UBS.

I realized we're over an hour into this call, but just a couple of quick follow-ups and hopefully, this is quick. One on the editorial side, I'm not sure if you disclosed this. But can you actually give us a number in terms of how many editors you've hired or any new products you've launched so we can kind of see what you're doing on that end quarter-over-quarter?

I don't have the specific numbers for you, Alex, in terms of plus/minus. What I would say is someone you might know from Greenberg has joined Empire Financial, he's only just recently joined, but that information is out in the public. He's written a very nice editorial piece on why he made a career change and what prompted it and what motivated him and some of the thoughts he had is through making that decision. We're excited to plug them into Empire Financial and launch products and content around him, using his experience as a long time investor, and as well as his experience as a short seller and bit of a analysts through lots of different properties and lots of different investing seasons. So we're excited about that but it's very early days. I can't give you any indication of what that product set will look like quite yet. We're talking about those things. But he's an exciting addition to what is already a quickly growing franchise in Empire Financial.

Yes, I did actually see that, but thanks for the reminder. And then just one quick one with maybe two quick ones on the capital front for Dale, I guess, can you just remind us what your minimum cash kind of is? Like how do you feel about the cash balance going forward as you obviously are starting to deploy a little bit more potentially. And then just outside of that, on the buybacks, maybe just a little bit more specific and maybe you've answered this already. But you obviously have flexibility in terms of what you're going to do open markets and maybe some private transactions. So I guess the question is, you have a small float and you also have some lockups and you have a stock price that's below that magic $10. So just curious, like in terms of like on the private side, not sure how motivated insiders are. So maybe to be very blunt and specific, I mean, are you basically planning to do open market purchases this quarter and any numbers in mind to help us here?

So look, we're not going to deploy a plan and not use it. So absolutely, we have intentions to -- as soon as we can get the documentations done and get our 10b5-1 plan put in place. Our open window occurs two days after, we're going to file our Q from today's on Veterans Day, we can't file today or we would have -- we're filing tomorrow or Q and then two days after that, our open window begins. And yes, our plan is to get the the 10B-18 10b5-1 plan documented with our underwriter, our broker is going to handle it for this and then get all our parameters set. And there's some brief cooling-off period. But then right after that should be active, right? We have calibrated the plan though. We don't want to -- we want this plan to -- we want it to be well within the 10B-18 rules. We want the plan to be durable long to last a long enough period of time, so we don't consume it in three months. So we've calibrated some of our instructions around the 10b5-1 to make sure it's a durable plan. But yes, if the market is below our price threshold, which obviously won't be a public number, we'll be buying. But look, I mean, do some rough math right now. If you take our $210 million adjusted cash flow from ops number and divide by 316 million shares, that's roughly $0.66 a share. At $7 a share, that's versus like our book value of $10, that's $0.66 a share. I mean, it's like 45% accretive to buy that share back. So that obviously makes wildly good sense to do. And so that's what we're looking at when it's highly accretive to do it, then we will.…

And then on the minimum cash balance, sorry if I missed that. Do you have in your mind?

So we've usually targeted $100 million, and that was prior to having a debt facility. So we might rethink that balance a little bit now that we have a backup source of liquidity that's pretty decent sized. But historically, it's been in and around $100 million. But if you saw some good M&A acquisition opportunities, it could run below that. Right now we're earning $12 million to $17 million a month, it’s been the run rate. So we can replenish that cash pretty quickly. And since we're not distributing dividends profits that cash balance should build pretty quickly. So we're not really worried about a minimum cash balance right now. And if we did a large, large acquisition, you probably see some debt that would go into that in a couple of turns of debt. But the cash build is really a war chest for our M&A strategy. The $35 million that we're using for share buybacks that's a quarter's worth of cash flow this quarter. So that it's not really strategically impactful, it really is cash that can be replenished pretty quickly.

At this time, we have reached the end of the question-and-answer session. And I will now turn the call back over to Mark Arnold for any closing remarks.

Yes. Thanks. I just want to thank everybody for their time, once again. I think I've said what I wanted to, which is, as I look at our quarter performance, we've continued what is going to be a fantastic year. And we now have all the pieces in place that I feel like are necessary and needed to fuel our ability to execute on our strategic plan going forward from both an organic standpoint as well as inorganic. We're very excited about that and excited for the fourth quarter. And with that, I thank you all for your time and look forward to continuing the discussion going forward.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.