Nerdy accelerates revenue growth, beating
third quarter revenue and non-GAAP adjusted EBITDA
guidance.
Nerdy introduces new District Assigned and
Parent Assigned offerings, fully transitioning the Institutional
business to access-based subscription products and enabling schools
to purchase Learning Memberships for students.
Nerdy Inc. (NYSE: NRDY) today announced financial results for
the third quarter ended September 30, 2023.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20231107355525/en/
(Graphic: Business Wire)
“In the third quarter, our strong first half of the year
continued and we delivered revenue and profitability ahead of our
expectations. Both our Consumer and Institutional businesses saw
strong demand in the quarter as the school year ramped, which
combined with the operating leverage that we are receiving from our
new ‘always on’ recurring revenue models and investments in AI, to
also drive bottom line outperformance. Adjusted EBITDA increased by
2,300 basis points year-over-year. The pace of innovation remained
high, with continued enhancements to Learning Memberships and the
launch of two Varsity Tutors for Schools subscription products. The
first, District Assigned, enables school administrators to
centrally oversee high-dosage tutoring programs with flexible
assignment and allocation tools built in. The second, Parent
Assigned, allows K12 school districts to purchase Learning
Memberships on behalf of their students, solves an important
problem for many schools, and enables parents to have control and
ownership of their child’s learning,” 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 Q3 Shareholder
Letter on the Quarterly Results Page.
Financial and Operating Highlights
- Revenue Growth Accelerates – In the third quarter, Nerdy
delivered revenue of $40.3 million, above the top end of our
guidance range of $38-40 million, and represented an increase of
27% from $31.8 million during the same period in 2022. Revenue
growth was driven by the completion of our evolution towards
‘always on’ recurring revenue products, strong adoption of Learning
Memberships during the back-to-school season; and lifetime value
expansion in our Consumer business coupled with the continued
scaling of our Institutional business.
- Membership Evolution Complete – 100% of Consumer
customers are purchasing Learning Memberships. Revenue recognized
in the third quarter from Learning Memberships was $33.2 million or
96% of Consumer and 82% of total Company recognized revenue in the
third quarter, a substantial increase from one year ago, when
Learning Membership subscriptions accounted for 20% of Consumer and
18% of total Company recognized revenue, respectively. Active
Members of 39.5K as of September 30, 2023 increased 8.5K or 27%
during the quarter, yielding a $164.0 million annualized run rate,
more than 3X the level a year ago.
- Institutional Business Continues to Scale – In the third
quarter, Varsity Tutors for Schools executed 80 contracts, yielding
$10.6 million of bookings, an increase of 89% year-over-year.
Institutional revenue of $5.6 million increased 133% year-over-year
and represented 14% of total revenue in the third quarter.
- Record Quarterly Gross Margin – Gross profit of $29.2
million in the third quarter increased 33% year-over-year. Gross
margin of 72.4% for the three months ended September 30, 2023, was
a quarterly record and 340 bps higher than gross margin of 69.0%
during the comparable period in 2022. Gross profit and gross margin
increases 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 Substantial Operating
Leverage – Net loss was $20.6 million in the third quarter
versus a net loss of $32.3 million during the same period in 2022.
Excluding non-cash stock compensation expenses, restructuring and
transaction related costs, a provision for legal settlement, and
mark-to-market derivative adjustments, non-GAAP adjusted net loss
was $9.1 million for the third quarter of 2023 compared to a
non-GAAP adjusted net loss of $15.6 million in the third quarter of
2022. We reported a non-GAAP adjusted EBITDA loss of $8.2 million,
at the top end of our guidance range of a non-GAAP adjusted EBITDA
loss of $8.0 million to $10.0 million. This compares to a non-GAAP
adjusted EBITDA loss of $14.0 million in the same period one year
ago. Non-GAAP Adjusted EBITDA and non-GAAP Adjusted EBITDA margin
improvement of over 2,300 bps year-over-year was driven by higher
revenues, gross margin expansion, sales and marketing efficiency
gains, and continued variable labor productivity improvements
stemming from automation efforts and our business model changes
that streamline operations.
- Operating Cash Flow and Liquidity – Negative operating
cash flow of $4.8 million in the third quarter of 2023 compared to
negative operating cash flow of $13.3 million last year, an
improvement of $8.5 million that reflects the substantial
improvements from our evolution to Learning Memberships. With no
debt and $84.0 million of cash on our balance sheet, we believe we
have ample liquidity to fund the business and pursue growth
initiatives.
- Full Year Revenue and Non-GAAP Adjusted EBITDA Guidance
– For the fourth quarter and full year, we expect year-over-year
revenue growth will be driven by the continued growth of recurring
revenue streams in our Consumer business, the corresponding
increase in the number of Learning Membership subscribers, and
higher Institutional revenues.
- Revenue Guidance: For the fourth
quarter of 2023, we expect revenue in a range of $54-56 million,
representing 32% growth at the midpoint vs. our Q4 2022 revenue of
$41.8 million. For the full year, we expect revenue in a range of
$192-194 million; representing 19% growth at the midpoint vs. our
2022 revenue of $162.7 million. Fourth quarter and full year
revenue guidance reflect higher revenues from Learning Memberships
and Varsity Tutors for Schools when K12 schools and universities
are in session. Our continued momentum provides us with confidence
that we will deliver accelerating sequential year-over-year revenue
growth each quarter throughout 2023.
- Non-GAAP Adjusted EBITDA Guidance:
For the fourth quarter of 2023, we expect non-GAAP adjusted EBITDA
to be break-even. For the full year, we expect a non-GAAP adjusted
EBITDA loss of approximately $6 million, a substantial improvement
from the non-GAAP adjusted EBITDA loss of $35.7 million in 2022.
Fourth quarter and full year non-GAAP adjusted EBITDA guidance
reflects the continuing benefits from our recurring revenue
products which focus on long-term relationships with higher value
customers, an improving gross margin profile, and operating
leverage stemming from the completion of our evolution to recurring
revenue business models, partially offset by increased investments
in marketing, engineering and product talent to drive continued
product innovation, and Varsity Tutors for Schools go-to market
strategy.
Webcast and Earnings Conference Call
Nerdy’s management will host a conference call and webcast
today, November 7, 2023 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 867265. 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 November 14,
2023 by dialing 1-866-813-9403 from the U.S. or 44-204-525-0658
from all other locations, and entering the Access Code: 931089.
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 3,000+ subjects and multiple formats—including
Learning Memberships, one-on-one instruction, small group classes,
large format group classes, and adaptive self-study. 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 transition to the Learning Membership model;
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 28, 2023, as well as
other filings that we may make from time to time with the SEC.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107355525/en/
Jason Pello Investor Relations investors@nerdy.com
Nerdy (NYSE:NRDY)
Historical Stock Chart
Von Apr 2024 bis Mai 2024
Nerdy (NYSE:NRDY)
Historical Stock Chart
Von Mai 2023 bis Mai 2024