Nerdy Announces Second Quarter 2024 Financial Results
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“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
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Financial and Operating Highlights
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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 endedJune 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 ofJune 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.
- Revenue Guidance: For the third quarter of 2024, we expect revenue in a range of
Webcast and Earnings Conference Call
Nerdy’s management will host a conference call to discuss its financial results on
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
About
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
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Investor Relations
investors@nerdy.com
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