Nerdy delivers revenue of $51.0 million in
the second quarter, while also enabling access to the Varsity
Tutors for Schools platform for 1.1 million students; bringing the
total to 3.3 million students
Nerdy Inc. (NYSE: NRDY) today announced financial results for
the second quarter ended June 30, 2024.
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the full release here:
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Nerdy Q2 2024 Financial Highlights
(Graphic: Business Wire)
“During the second quarter, we continued to scale the winning
product for every Learner, expand the number of Learners we can
impact and lay the foundation to deliver profitable growth. As we
enter the back-to-school selling season, we are focused on ensuring
our marketplace delivers an exceptional learning experience for our
customers. We believe the recent convergence of our Consumer and
Institutional platform, coupled with a focus on our core value
proposition in the Consumer business and the expansion of the
Varsity Tutors for Schools go-to-market teams, will enable our
return to durable and profitable growth as we exit the year,” 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 Q2 Shareholder
Letter on the Quarterly Results Page.
Financial and Operating Highlights
- Revenue In Line with Expectations – In the second
quarter, Nerdy delivered revenue of $51.0 million, in the middle of
our guidance range of $50-52 million, and represented an increase
of 4% year-over-year from $48.8 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.
Additionally, revenue for the three months ended June 30, 2023
included legacy Package revenue of $4.9 million that did not recur
in the current year period due to the completion of the transition
to Learning Memberships in our Consumer business.
- Learning Memberships – Revenue recognized in the second
quarter from Learning Memberships was $36.4 million (up 2% from Q2
2023) and represented 72% of total Company revenue. Active Members
of 35.5K as of June 30, 2024 were up 15% year-over-year.
- Institutional – In the second quarter, Institutional
delivered revenue of $11.1 million, an increase of 33%
year-over-year, and represented 21% of total revenue. Varsity
Tutors for Schools executed 56 contracts, yielding $4.0 million of
bookings. Bookings numbers reflect a focus on increasing access to
Varsity Tutors for School’s platform, and hiring and onboarding
sales personnel in service of and optimizing for the back-to-school
buying period and the longer-term market opportunity within
Institutional.
- Gross Margin – Gross margin was 65.7% for the three
months ended June 30, 2024, compared to a gross margin of 69.8%
during the comparable period in 2023. The decrease in gross margin
was primarily due to higher utilization of tutoring sessions across
our new access-based products, coupled with higher tutor
substitution costs within our Institutional business in a
seasonally high period in the school year.
- Adjusted EBITDA Loss at the Top End of Guidance Range –
Net loss was $14.4 million in the second quarter versus a net loss
of $5.6 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 ($3.1) million for the
second quarter of 2024 compared to non-GAAP adjusted net earnings
of $0.4 million in the second quarter of 2023. We reported a
non-GAAP adjusted EBITDA loss of $2.1 million, at the top end of
our guidance of negative $2.0 million to negative $4.0 million in
non-GAAP adjusted EBITDA. This compares to non-GAAP adjusted EBITDA
of $1.3 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 marketing spend and 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 sales and government
relations organizations, and product development to drive
innovation and support our continued growth.
- Operating Cash Flow and Liquidity – Negative operating
cash flow was $5.6 million in the second quarter of 2024 compared
to negative operating cash flow of $4.5 million in the same period
last year. Operating leverage stemming from our access-based
subscription revenue business models were more than offset by
investments in the Varsity Tutors for Schools sales and government
relations organizations and product development to drive innovation
and support our continued growth. With no debt and $69.8 million of
cash on our balance sheet, we believe we have ample liquidity to
fund the business and pursue growth initiatives.
- Third Quarter and Full Year 2024 Outlook – We are
providing third quarter and updating full year revenue and adjusted
EBITDA guidance.
- Revenue Guidance: For the third quarter of 2024, we
expect revenue in a range of $35 to $38 million. For the full year,
we expect revenue in a range of $196-$204 million.
- Non-GAAP Adjusted EBITDA Guidance: For the third quarter
of 2024, we expect adjusted EBITDA in a range of negative $19
million to negative $17 million. For the full year, we expect
adjusted EBITDA in a range of negative $21 million to negative $19
million. Consistent with prior guidance we expect a return to
durable and profitable growth as we exit the year.
Webcast and Earnings Conference Call
Nerdy’s management will host a conference call to discuss its
financial results on Thursday, August 8, 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 448060.
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 August 15, 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: 460825.
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;
our anticipated return to durable and profitable growth as we exit
the year; and our anticipated third 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,
operate, and scale up our Consumer and Institutional businesses;
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; risks associated with the development
and use of artificial intelligence and related regulatory
uncertainty; 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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