Nerdy Inc. (NYSE:NRDY) is a leading provider of live online learning solutions, operating a platform that connects students, users, parents, and guardians ("Learners") with tutors, instructors, subject matter experts, educators, and other professionals ("Experts"). The company has demonstrated strong financial performance, reporting annual revenue of $193,399,000 and a net loss of $40,174,000 in 2023. Despite the net loss, Nerdy's focus on scaling its subscription-based offerings has positioned the company for continued growth and profitability.

Financials

In the first quarter of 2024, Nerdy reported revenue of $53,727,000, representing a 9% year-over-year increase. This growth was driven by strong performance in both the company's Consumer and Institutional business segments. Consumer learning membership subscription revenue increased 34% year-over-year to $39,900,000, accounting for 74% of total revenue. The company's Active Members, a key metric, grew 40% year-over-year to 46,100 as of March 31, 2024, exceeding the company's guidance target of 45,500.

Nerdy's Institutional business also delivered impressive results, with revenue increasing 39% year-over-year to $11,900,000 in the first quarter. The company's Varsity Tutors for Schools platform now provides access to 2.2 million students across over 475 school districts, up from 1.0 million students in the prior year period. This expansion of the Institutional business has been a key focus for Nerdy, as it aims to become the preferred online tutoring and live learning platform for school districts across the United States.

Business Overview

The company's focus on scaling its subscription-based offerings, both in the Consumer and Institutional segments, has been a driving force behind its financial performance. Nerdy's transition to a learning membership model in its Consumer business has led to more attractive unit-level economics, broader customer appeal, longer-duration and higher lifetime value customer relationships, higher gross margins, and a more scalable and efficient operating model.

In the first quarter, Nerdy's gross profit increased 8% year-over-year to $36,515,000, with a gross margin of 68%. The company's investments in product development and its platform-oriented approach to growth have allowed it to launch and continuously improve its suite of subscription products, including Learning Memberships for Consumers and its District, Teacher, and Parent Assigned offerings for Institutional customers.

Nerdy's focus on convergence, or the unification of its Consumer and Institutional offerings, is expected to drive further efficiencies and innovation. By building a single platform that can be leveraged across both business segments, the company aims to simplify its operations, increase the pace of execution, and improve engagement with its products, ultimately driving higher growth and profitability.

Liquidity

The company's liquidity position remains strong, with $77,000,000 in cash and no debt as of March 31, 2024. This provides Nerdy with the financial flexibility to fund its growth initiatives and pursue strategic opportunities.

Outlook

Looking ahead, Nerdy has provided guidance for the second quarter of 2024, expecting revenue in the range of $50,000,000 to $52,000,000. For the full year, the company is reaffirming its previously provided guidance for revenue in the range of $232,000,000 to $246,000,000, representing 24% growth at the midpoint compared to 2023 revenue of $193,399,000. The company also expects to deliver positive operating cash flow in 2024.

Conclusion

Nerdy's focus on scaling its subscription-based offerings, expanding its Institutional business, and unifying its Consumer and Institutional platforms has positioned the company for continued growth and profitability. The company's strong liquidity, innovative product offerings, and growing customer base suggest that Nerdy is well-equipped to capitalize on the increasing demand for online learning solutions.