Nerdy (NRDY) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $51 million, up 4% year-over-year, driven by growth in both Consumer and Institutional segments, though partially offset by lower average revenue per member in Consumer.

• Transitioned all institutional customers to a unified consumer platform, enhancing user experience and operational efficiency.

• Active Members reached 35,500 as of June 30, 2024, up 15% year-over-year; Active Experts grew 16% to 11,600.

• Varsity Tutors for Schools expanded access to 3.3 million students across nearly 600 districts, targeting 10 million by year-end.

• Net loss widened to $14.4 million from $5.6 million year-over-year, reflecting higher operating expenses and a decrease in gross margin.

Financial highlights

• Q2 revenue: $51 million, up 4% year-over-year; Learning Memberships contributed $36.4 million, up 2% year-over-year.

• Institutional revenue: $11.1 million, up 33% year-over-year, representing 21% of total revenue.

• Gross profit: $33.5 million, down 2% year-over-year; gross margin declined to 65.7% from 69.8% due to higher institutional costs.

• Adjusted EBITDA loss: $2.1 million, at the top end of guidance; operating loss widened to $15.23 million.

• Cash and cash equivalents: $69.8 million as of June 30, 2024, with no debt obligations.

Outlook and guidance

• Q3 2024 revenue guidance: $35–$38 million; full-year 2024 revenue guidance: $196–$204 million.

• Q3 2024 adjusted EBITDA guidance: -$19 million to -$17 million; full-year: -$21 million to -$19 million.

• Management anticipates a return to durable and profitable growth as the year concludes, driven by premium memberships and institutional sales ramp.

• Expect to end Q3 with ~40,000 active members and year-end with ~43,000, with ARPM above $300.

• Management expects improvements in gross margin in the back-to-school period and beyond, driven by enhancements to marketplace infrastructure.