Nerdy (NRDY) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $37.5 million, down 7% year-over-year, mainly due to lower ARPM in the consumer segment; active members grew 1% to 39.7K and active experts increased 6% to 9.5K.

• Net loss attributable to Class A stockholders was $15.9 million, while overall net loss for Q3 was $25.0 million; non-GAAP adjusted EBITDA loss was $14.0 million, outperforming guidance.

• Enabled Varsity Tutors for Schools platform access for 4.4 million students across nearly 900 districts, with 1.1 million added in Q3.

• Investments in onboarding, digital experience, and unified platform improved retention and engagement in new consumer cohorts.

• Platform access strategy is driving brand awareness and conversion of school districts to paid offerings.

Financial highlights

• Consumer learning memberships generated $31.9 million, 85% of total Q3 revenue; institutional revenue was $5.4 million, 14% of total, down 3% year-over-year.

• Gross profit for Q3 was $26.5 million, with a gross margin of 70.5%, down from 72.4% last year.

• Net loss for Q3 was $25.0 million; non-GAAP adjusted net loss was $15.1 million; non-GAAP adjusted EBITDA loss was $14.0 million.

• Cash and cash equivalents totaled $65 million as of September 30, 2024, with no debt.

• Operating cash flow for Q3 was negative $3.1 million; cash used in operating activities for the nine months was $4.3 million.

Outlook and guidance

• Q4 2024 revenue expected between $44 million and $47 million; full-year 2024 revenue guidance updated to $186 million–$189 million.

• Q4 adjusted EBITDA expected between negative $7 million and negative $10 million; full-year adjusted EBITDA between negative $23 million and negative $26 million.

• Sequential improvement in adjusted EBITDA expected into 2025.

• Management expects gross margin improvements from infrastructure enhancements and continued institutional growth.

• Cash on hand is expected to be sufficient for working capital, sales, marketing, and capital expenditures over the next twelve months.