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 businesses, though partially offset by lower ARPM in Consumer.

• Transitioned all institutional customers to a unified consumer experience, enhancing engagement and retention.

• Varsity Tutors for Schools platform expanded to 1.1 million new students, totaling 3.3 million students, with a target of 10 million by year-end.

• Shifted product focus to premium learning memberships, resulting in higher ARPM, improved retention, and faster activation.

• Net loss attributable to Class A stockholders was $9.09 million for Q2 2024, compared to $3.30 million in Q2 2023, reflecting higher operating expenses and a decrease in gross margin.

Financial highlights

• Q2 revenue: $51 million (+4% YoY); Learning Memberships revenue: $36.4 million (+2% YoY, 72% of total); Institutional revenue: $11.1 million (+33% YoY, 21% of total).

• Gross profit: $33.5 million (-2% YoY); gross margin: 65.7% (down from 69.8% YoY) due to higher institutional costs.

• Non-GAAP adjusted EBITDA loss: $2.1 million (top end of guidance), compared to $1.3 million profit YoY.

• Net loss widened to $14.4 million from $5.6 million YoY; adjusted net loss was $3.1 million versus adjusted net earnings of $0.4 million last year.

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

• Expect ARPM to exceed $300 by end of Q3 and Q4, driven by premium membership focus.

• Management anticipates a return to durable and profitable growth as the year concludes.

• Cash on hand is considered sufficient to meet working capital, sales, marketing, and capital expenditure needs for the next twelve months.