Nerdy Inc. (NYSE: NRDY) today announced financial results for the third quarter ended September 30, 2022.
“Two quarters ago, we unveiled an ambitious plan to evolve our products and revenue model to align with long-term, recurring customer relationships. In the third quarter, our team executed on that vision at a high level during the back-to-school season,” said Chuck Cohn, founder, chairman and chief executive officer of Nerdy Inc. “We are pleased to announce that the The new Learning Memberships business model has exceeded our expectations and confirmed our underlying assumptions of favorable customer engagement and unit-level economics. As of September 30, Learning Memberships has grown to $50 million in annual run-rate revenue. Given our strong results, we remain confident of being profitable through the end of 2023.”
Please visit Nerdy’s Investor Relations website https%3A%2F%2Fwww.nerdy.com%2Finvestors to view the Nerdy+Q3+Shareholder+Letter+on+the+Quarterly+Results+Page.
- Sales in line with forecast – In the third quarter, Nerdy had revenue of $31.8 million, in line with our guidance of $30 million to $33 million. Due to strong customer response during the back-to-school season, we accelerated the rollout of Learning Memberships in Q3, making Learning Memberships the primary option for consumers. Revenue growth was driven by continued strength in our consumer business and the addition of our institutional business.
- Accelerated Learning Membership Rollout Learning membership revenue increased to an annualized run rate of $50.2 million as of September 30, 2022. Learning membership revenue recorded in the third quarter increased to $5.8 million, or 18% of total revenue, compared to 2% of the company’s total revenue recorded in the prior year’s second quarter.
- institutional dynamics – In the third quarter Uni tutors for schools signed 21 new deals raking in $5.6 million in bookings. Average contract value more than doubled in the third quarter, reflecting our transition to larger school districts and our “always on” packaged solutions. Institutional revenue of $2.4 million represented 7% of total revenue in the third quarter, reflecting the normal summer season of school holidays and longer contracting and implementation deadlines as we target greater opportunities for school districts.
- gross profit – Gross profit of $21.9 million for the third quarter increased 6% year over year. The increase in gross profit was due to growth in consumer audiences and growth in our institutional business. Gross margin of 69% for the three months ended September 30, 2022 was approximately 300 basis points higher than gross margin of 66% for the comparable period in 2021.
- Adjusted Non-GAAP EBITDA Loss Nerdy reported non-GAAP Adjusted EBITDA of $(14.0) million for the third quarter of 2022, at the high end of our guidance range of $(14.0) to $(17.0) million.
- liquidity and profitability – With no debt and with $106.4 million in cash on our balance sheet, Nerdy has ample liquidity to fund the business and pursue growth initiatives. We remain confident in our ability to achieve Adjusted EBITDA profitability by the end of 2023 and have increased transparency and confidence in how this will be achieved.
Webcast and Earnings Conference Call
Nerdy management will host a conference call and webcast today, November 14, 2022 at 5:00 p.m. Eastern Time. Interested parties in the US can listen to the call at 1-844-200-6205. International callers can dial 1-929-526-1599. The conference ID is 228320. A live webcast of the conference call will also be available on Nerdy’s Investor Relations website at https%3A%2F%2Fwww.nerdy.com%2Finvestors. A replay of the webcast will be available on Nerdy’s website one year after the event, and a phone replay of the call is available through November 21, 2022 by calling 1-866-813-9403 from the US or 44-204- . 525-0658 from all other locations and enter access code 271293.
About Nerdy Inc.
Nerdy (NYSE: NRDY) is a leading live online learning platform with a mission to transform the way people learn through technology. The company’s purpose-built proprietary platform uses technology, including AI, to connect learners of all ages with experts, delivering outstanding value on both sides of the network. Nerdy’s comprehensive learning objective offers learning experiences in more than 3,000 subjects and multiple formats – including learning memberships, one-to-one classes, small group classes, large group classes, and adaptive self-study. Nerdy’s flagship, Varsity Tutors is one of the nation’s largest live online tutoring and tutoring platforms. Its solutions are available directly to students and consumers, and through schools and other institutions. Learn more about Nerdy at https%3A%2F%2Fwww.nerdy.com%2F.
The information contained herein and any oral statements may contain “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, without limitation, statements about our expectations, hopes, beliefs, intentions or strategies regarding the future or those of our management team, including statements regarding our expectations of the benefits and future financial results of our membership model, statements regarding our financial outlook and future projections, including statements of our expectations to achieve Adjusted EBITDA profitability. In addition, all statements that relate to predictions, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate”, “approximately”, “believe”, “consider”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “could”, “predict”, “Plans,” “possible,” “potential,” “forecast,” “projects,” “should,” “aims,” ”will,” “would,” and similar expressions may identify forward-looking statements, but the absence of those words do not mean that any statement is not forward-looking.
The forward-looking statements made herein speak only 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 achieve the plans, intentions or expectations discussed 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 the statements made herein or in connection therewith, including but not limited to our limited operating history which makes it difficult to predict our future financial and operating results to predict; our history of net losses; risks related to our transition to the Learning Membership model; risks related to our intellectual property, including claims that we infringe the intellectual property rights of others; risks related to our classification of some individuals and organizations with whom we contract as independent contractors; risks related to the liquidity and trading of the Company’s securities; risks related to payments we may be required to make under the tax claim agreement; risks related to the terms of our warrants; litigation, regulatory and reputational risks arising from the fact that many of our learners are minors; our lack of an effective control environment that satisfies our accounting and reporting requirements; changes in applicable laws or regulations; the possibility of cyber-related incidents and the associated impact on our business and results of operations; the possibility that COVID-19 could adversely affect our earnings, financial and cash flows; the possibility that we will 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 expressed or implied by any forward-looking statements due to a number of factors, including, without limitation, risks detailed in our filings with the SEC, including our annual report on Form 10 filed in February- K November 2022 and our Quarterly Report on Form 10-Q filed November 14, 2022 and other filings we may file with the SEC from time to time.
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