Nerdy (NRDY) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was $47.6M, exceeding guidance but down 11% year-over-year due to fewer Learning Memberships and lower institutional revenue, partially offset by higher ARPM and price increases.

• Net loss widened to $16.2M from $12.0M year-over-year, reflecting lower revenue, gross margin, and a $2M legal settlement payment.

• Product innovation, especially AI-driven features like Live + AI, AI Session Summaries, and Tutor Copilot, is driving higher engagement, retention, and customer satisfaction.

• Active Members fell 12% year-over-year to 40.5K, while ARPM rose 14% to $335 due to higher frequency memberships and price increases.

• Active Experts decreased 12% to 10.8K, attributed to incentives promoting higher utilization among top Experts.

Financial highlights

• Gross profit: $27.6M (down 24% year-over-year); gross margin: 58% (down from 68% last year) due to higher Expert costs and incentives.

• Non-GAAP adjusted EBITDA loss: $6.4M (top end of guidance), compared to positive $24K last year.

• Net loss margin: (34%) vs. (22%) year-over-year; basic and diluted loss per share: $(0.09) vs. $(0.07) year-over-year.

• Cash and cash equivalents: $44.9M at quarter-end, down from $52.5M at year-end 2024; no debt.

• Cash used in operating activities was $6.4M, compared to $4.4M provided in the prior year period.

Outlook and guidance

• Q2 2025 revenue guidance: $45M–$48M; full-year revenue guidance raised to $191.5M–$200M.

• Q2 adjusted EBITDA guidance: -$3M to -$6M; full-year adjusted EBITDA guidance reaffirmed at -$8M to -$18M.

• Expect sequential improvements in revenue growth and gross margin, with positive adjusted EBITDA and operating cash flow in Q4 2025.

• ARPM projected to reach $370 by year-end, with gross margins for new customers already in the mid to high 70% range.

• Expected year-end cash: $35M–$40M, with no debt.