Nerdy delivers revenue of $55.1 million in
the fourth quarter, an increase of 32% year-over-year, capping the
year by delivering accelerating sequential revenue growth each
quarter in 2023
Nerdy beats fourth quarter non-GAAP adjusted
EBITDA guidance, and delivers substantial Adjusted EBITDA margin
improvements of approximately 2,100 bps in 2023
Nerdy Inc. (NYSE: NRDY) today announced financial results for
the fourth quarter and year ended December 31, 2023.
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the full release here:
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Nerdy Q4 2023 Financial Highlights
(Graphic: Business Wire)
“In the fourth quarter, we completed the evolution to
access-based subscription products in our Consumer and
Institutional businesses, while delivering accelerating revenue
growth each quarter throughout the year that culminated in 32%
year-over-year growth in the fourth quarter, and 19% year-over-year
growth for the full year. Our business model changes delivered
substantial operating leverage, achieving adjusted EBITDA
profitability in the fourth quarter of $3.0 million, and full-year
adjusted EBITDA improvements of $33.2 million and approximately
2,100 bps year-over-year,” said Chuck Cohn, Founder, Chairman and
Chief Executive Officer of Nerdy Inc. “We've made great progress
evolving and enhancing our Consumer and Institutional business
models and products to position Nerdy for accelerating revenue
growth and adjusted EBITDA profitability for the full-year in 2024.
We look forward to continuing to push the pace of innovation,
including with the introduction of freemium models for both
Consumer and Institutional, and continuing to elevate and enhance
our ability to meet the needs of Learners in any subject, anywhere,
and at any time.”
Please visit the Nerdy investor relations website
https://www.nerdy.com/investors to view the Nerdy Q4 Shareholder
Letter on the Quarterly Results Page.
Financial and Operating Highlights
- Revenue Growth Accelerates Each Quarter in 2023 – In the
fourth quarter, Nerdy delivered revenue of $55.1 million, an
increase of 32% year-over-year from $41.8 million during the same
period in 2022, delivering accelerating sequential revenue growth
each quarter in 2023. Revenue growth was driven by the completion
of our evolution to ‘Always On’ recurring revenue products, strong
adoption of Learning Memberships and lifetime value expansion in
our Consumer business coupled with the continued scaling of our
Institutional business.
- Membership Evolution Complete – Nearly 100% of Consumer
revenues were from Learning Memberships. Revenue recognized in the
fourth quarter from Learning Memberships grew to $43.5 million
(sequentially up 32% from Q3 2023) and represented 79% of total
Company revenue. Active Members of 40.7K as of December 31, 2023
were up 101% year-over-year.
- Institutional Business Delivers Substantial Growth – In
the fourth quarter, Institutional revenue of $11.3 million
increased 160% year-over-year and represented 21% of total revenue.
Varsity Tutors for Schools executed 42 contracts, yielding $10.3
million of bookings, the third consecutive quarter with more than
$10.0 million of bookings.
- Record Quarterly Gross Profit – Gross profit of $39.2
million in the fourth quarter increased 33% year-over-year. Gross
margin of 71.3% for the three months ended December 31, 2023, was
75 bps higher than gross margin of 70.5% during the comparable
period in 2022. Gross profit and gross margin increases were
primarily driven by growth in our Consumer business as a result of
the strong adoption of Learning Memberships, which has led to
lifetime value expansion, and higher gross margin.
- Business Model Changes Deliver Operating Leverage – Net
loss was $9.2 million in the fourth quarter versus a net loss of
$15.1 million during the same period in 2022. Excluding non-cash
stock compensation expenses, restructuring costs, and
mark-to-market derivative adjustments, non-GAAP adjusted net
earnings were $2.2 million for the fourth quarter of 2023 compared
to a non-GAAP adjusted net loss of $(6.8) million in the fourth
quarter of 2022. We reported non-GAAP adjusted EBITDA of $3.0
million, above our guidance of breakeven non-GAAP adjusted EBITDA.
This compares to a non-GAAP adjusted EBITDA loss of $5.5 million in
the same period one year ago. Fourth quarter non-GAAP adjusted
EBITDA and non-GAAP adjusted EBITDA margin improvements of
approximately 1,900 bps year-over-year were driven by higher
revenues, sales and marketing efficiency gains, continued variable
labor productivity improvements stemming from automation and AI
enabled efficiency efforts, and our business model changes that
streamline operations.
- Operating Cash Flow and Liquidity – Negative operating
cash flow of $5.0 million in the fourth quarter of 2023 compared to
negative operating cash flow of $14.5 million last year, an
improvement of $9.5 million that reflects the substantial
improvements from our evolution to Learning Memberships and the
substantial growth in our Institutional business, partially offset
by seasonal changes in working capital. With no debt and $74.8
million of cash on our balance sheet, we believe we have ample
liquidity to fund the business and pursue growth initiatives.
- First Quarter and Full Year 2024 Outlook – Today, we are
introducing guidance for the first quarter and full year. -
Revenue Guidance: For the first quarter of 2024, we expect
revenue in a range of $51 to 53 million. For the full year, we
expect revenue in a range of $232 to $246 million; representing
accelerating year-over-year growth of 24% at the midpoint vs. our
2023 revenue of $193 million. - Non-GAAP Adjusted EBITDA
Guidance: For the first quarter of 2024, we expect adjusted
EBITDA in a range of negative $3 million to breakeven. For the full
year, we expect adjusted EBITDA in a range of positive $5 to $15
million, an improvement of over 500 basis points in adjusted EBITDA
margin at the midpoint. We also expect to deliver positive
operating cash flow in 2024.
Webcast and Earnings Conference Call
Nerdy’s management will host a conference call and webcast
today, February 27, 2024 at 5:00 p.m. Eastern Time. Interested
parties in the U.S. may listen to the call by dialing
1-833-470-1428. International callers can dial 1-404-975-4839. The
Access Code is 001617. A live webcast of the call will also be
available on Nerdy’s investor relations website at
https://www.nerdy.com/investors. A replay of the webcast will be
available on Nerdy’s website for one year following the event and a
telephonic replay of the call will be available until March 5, 2024
by dialing 1-866-813-9403 from the U.S. or 1-929-458-6194 from all
other locations, and entering the Access Code: 468650.
About Nerdy Inc.
Nerdy (NYSE: NRDY) is a leading platform for live online
learning, with a mission to transform the way people learn through
technology. The Company’s purpose-built proprietary platform
leverages technology, including AI, to connect learners of all ages
to experts, delivering superior value on both sides of the network.
Nerdy’s comprehensive learning destination provides learning
experiences across thousands of subjects and multiple
formats—including Learning Memberships, one-on-one instruction,
small group tutoring, large format classes, and adaptive
assessments. Nerdy’s flagship business, Varsity Tutors, is one of
the nation’s largest platforms for live online tutoring and
classes. Its solutions are available directly to students and
consumers, as well as through schools and other institutions. Learn
more about Nerdy at https://www.nerdy.com.
Forward-looking Statements
The information included herein and in any oral statements made
in connection herewith may include “forward looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements include, but are not limited
to, statements regarding our or our management team’s expectations,
hopes, beliefs, intentions, or strategies regarding the future,
including our expectations with respect to: the guidance with
respect to our financial performance; continued improvements in
sales and marketing leverage; the growth of our Institutional
business; simplifying our operations model while growing our
business; and the sufficiency of our cash to fund future
operations. Additionally, any statements that refer to projections,
forecasts, or other characterizations of future events or
circumstances, including any underlying assumptions, are
forward-looking statements. The words “anticipates,”
“approximately,” “believes,” “contemplates,” “continues,” “could,”
“estimates,” “expects,” “intends,” “may,” “might,” “outlook,”
“plans,” “possible,” “potential,” “predicts,” “projects,” “should,”
“seeks,” “will,” “would,” and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking.
The forward-looking statements made herein relate only to events
as of the date on which the statements are made. We undertake no
obligation to update any forward-looking statements to reflect
events or circumstances after the date of this press release or to
reflect new information or the occurrence of unanticipated events,
except as required by law. We may not actually achieve the plans,
intentions, or expectations disclosed in our forward-looking
statements, and you should not place undue reliance on our
forward-looking statements.
There are a significant number of factors that could cause
actual results to differ materially from statements made herein or
in connection herewith, including but not limited to, our limited
operating history, which makes it difficult to predict our future
financial and operating results; our history of net losses; risks
associated with our ability to acquire and retain customers in our
Consumer business; risks associated with scaling up our
Institutional business, risks associated with our intellectual
property, including claims that we infringe on a third-party’s
intellectual property rights; risks associated with our
classification of some individuals and entities we contract with as
independent contractors; risks associated with the liquidity and
trading of our securities; risks associated with payments that we
may be required to make under the tax receivable agreement;
litigation, regulatory and reputational risks arising from the fact
that many of our Learners are minors; changes in applicable law or
regulation; the possibility of cyber-related incidents and their
related impacts on our business and results of operations; the
possibility that we may be adversely affected by other economic,
business, and/or competitive factors; and risks associated with
managing our rapid growth. Our actual results could differ
materially from those stated or implied in forward-looking
statements due to a number of factors, including but not limited
to, risks detailed in our filings with the SEC, including our
Annual Report on Form 10-K filed on February 27, 2024, as well as
other filings that we may make from time to time with the SEC.
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Investor Relations investors@nerdy.com
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