Nerdy delivers revenue of $53.7 million in
the first quarter, while also enabling access to the Varsity Tutors
for Schools platform for 1.2 million students; bringing the total
to 2.2 million students
Nerdy reaffirms previously provided full
year 2024 revenue and non-GAAP adjusted EBITDA guidance
Nerdy Inc. (NYSE: NRDY) today announced financial results for
the first quarter ended March 31, 2024.
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the full release here:
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Nerdy Q1 2024 Financial Highlights
(Graphic: Business Wire)
“In the first quarter, the convergence of subscription business
models and access-based products across Consumer and Institutional
is allowing us to simplify our business and focus our efforts and
resulted in revenue and non-GAAP adjusted EBITDA exceeding our
guidance range, as well as positive operating cash flow. We had
meaningful progress on expanding our freemium efforts with more
than 475 school districts and 2.2 million Institutional students
enabled with access to the Varsity Tutor platform as of
quarter-end. Additionally, Institutional Learnings Sessions on the
platform of 772K were up 100% year-over-year, demonstrating product
market fit, as well as our ability to scale operations to meet the
growing needs of our school district partners,” said Chuck Cohn,
Founder, Chairman and Chief Executive Officer of Nerdy Inc.
Please visit the Nerdy investor relations website
https://www.nerdy.com/investors to view the Nerdy Q1 Shareholder
Letter on the Quarterly Results Page.
Financial and Operating Highlights
- Revenue Beats Expectations – In the first quarter, Nerdy
delivered revenue of $53.7 million, an increase of 9%
year-over-year from $49.2 million during the same period in 2023.
Revenue growth in the current year period was driven by the
continued scaling of our Consumer and Institutional businesses,
partially offset by lower ARPM in our Consumer business.
- Memberships Continue to Scale – Revenue recognized in
the first quarter from Learning Memberships was $39.9 million (up
34% from Q1 2023) and represented 74% of total Company revenue.
Active Members of 46.1K as of March 31, 2024 were up 40%
year-over-year.
- Institutional Business Delivers Record Quarterly Revenue
– In the first quarter, Institutional delivered revenue of $11.9
million, an increase of 39% year-over-year, and represented 22% of
total revenue. Varsity Tutors for Schools executed 83 contracts,
yielding $4.4 million of bookings. Bookings numbers reflect the
focus on embedding the Varsity Tutors platform, and hiring and
ramping sales headcount in service of optimizing for the
back-to-school buying period and the longer-term opportunity within
Institutional.
- Strong Quarterly Gross Profit – Gross profit of $36.5
million in the first quarter increased 8% year-over-year. Gross
margin was 68.0% for the three months ended March 31, 2024,
compared to a gross margin of 68.9% during the comparable period in
2023. The increase in gross profit was primarily driven by the
continued scaling of our Consumer and Institutional businesses. The
decrease in gross margin was primarily due to higher utilization of
tutoring sessions across our new access-based products within our
Institutional business in a seasonally high period in the school
year.
- More Efficient Business Model Yields Positive Adjusted
EBITDA – Net loss was $12.0 million in the first quarter versus
a net loss of $32.2 million during the same period in 2023.
Excluding non-cash stock compensation expenses and mark-to-market
derivative adjustments, which were treated as adjustments for
non-GAAP measures, non-GAAP adjusted net loss was ($0.9) million
for the first quarter of 2024 compared to non-GAAP adjusted net
earnings of $0.5 million in the first quarter of 2023. We reported
non-GAAP adjusted EBITDA of positive $24 thousand, slightly above
the top end of our guidance of negative $3.0 million to breakeven
non-GAAP adjusted EBITDA. This compares to non-GAAP adjusted EBITDA
of $1.4 million in the same period one year ago. Non-GAAP adjusted
EBITDA and non-GAAP adjusted EBITDA margin improvements relative to
guidance were primarily driven by higher revenues and continued
operating efficiency gains. Compared to last year, Non-GAAP
adjusted EBITDA and non-GAAP adjusted EBITDA margin were lower
primarily due to investments in the Varsity Tutors for Schools
go-to-market organization, and product development to drive
innovation and support our continued growth.
- Operating Cash Flow and Liquidity – Positive operating
cash flow was $4.4 million in the first quarter of 2024 compared to
positive operating cash flow of $6.8 million in the same period
last year. Higher revenues and operating leverage stemming from the
completion of our evolution to access-based subscription revenue
business models were more than offset by investments in the Varsity
Tutors for Schools go-to-market organization and product
development to drive innovation and support our continued growth.
With no debt and $77.0 million of cash on our balance sheet, we
believe we have ample liquidity to fund the business and pursue
growth initiatives.
- Second Quarter and Full Year 2024 Outlook – Today, we
are introducing guidance for the second quarter of the year, and
reaffirming previously provided full year revenue and adjusted
EBITDA guidance.
- Revenue Guidance: For the second quarter of 2024, we
expect revenue in a range of $50 to $52 million. For the full year,
are reaffirming previously provided guidance for revenue 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 second
quarter of 2024, we expect adjusted EBITDA in a range of negative
$4 million to negative $2 million. For the full year, we are
reaffirming our expectation for adjusted EBITDA in a range of $5 to
$15 million, an improvement of over 500 basis points in non-GAAP
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, May 7, 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
873564. 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 May 14, 2024
by dialing 1-866-813-9403 from the U.S. or 44-204-525-0658 from all
other locations, and entering the Access Code: 253979.
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
All statements contained herein that do not relate to matters of
historical fact should be considered forward-looking statements,
including, without limitation, statements regarding our strategic
priorities, including those related to enhancing the Learning
Membership experience and on our expansion of freemium strategies;
and our anticipated second quarter and full year 2024 outlook; as
well as statements that include the words “expect,” “plan,”
“believe,” “project,” and “may,” and similar statements of a future
or forward-looking nature.
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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