NRDY

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 5:00 p.m. ET Founder, Chairman and Chief Executive Officer - Charles Cohn Chief Financial Officer - Atul Bagga Associate General Counsel - T.J. Lynn Operator: Good afternoon. Thank you for attending Nerdy Inc.'s Quarter 2 2026 Earnings Call. My name is Matthew, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to your host, T.J. Lynn, Associate General Counsel of Nerdy. You may proceed. T. Lynn: Good afternoon, and thank you for joining us for Nerdy's Second Quarter 2026 Earnings Call. With me are Chuck Cohn, Founder, Chairman and Chief Executive Officer of Nerdy; and Atul Bagga, Chief Financial Officer. Before I turn the call over to Chuck, I'll remind everyone that this discussion will contain forward-looking statements, including, but not limited to, expectations with respect to Nerdy's future financial and operating results, strategy, opportunities, plans and outlook. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Any forward-looking statements are made as of today's date, and Nerdy does not undertake or accept any obligation to publicly release any updates or revisions to any forward-looking statements to reflect any change in expectations or any change in events, conditions or circumstances on which any such statement is based. Please refer to the disclaimers in today's shareholder letter announcing Nerdy's second quarter results and the company's filings with the SEC for a discussion of the risks. Not all of the financial measures that we will discuss today are prepared in accordance with GAAP. Please refer to today's shareholder letter for a reconciliation of these non-GAAP measures. With that, let me turn the call over to Chuck. Charles Cohn: Thanks, TJ, and thank you to everyone for joining today's call. Q2 demonstrated continued improvement in Nerdy's operating performance. It also made clear what the company is becoming, a focused consumer learning company built around one connected system for learning, tutoring and progress. Total revenue was $43.3 million with consumer generating $36.5 million or 84% of total revenue. Gross margin expanded 320 basis points to 64.7%. Net loss improved to $6.9 million from $12 million a year ago. Our non-GAAP adjusted EBITDA loss narrowed 68% to $900,000 from $2.7 million a year ago, ahead of the midpoint of our guidance range. Alongside that progress, we have made 2 decisions that have narrowed the company's focus to its highest return opportunity. We decided to wind down Varsity Tutors for Schools and exit First Tutors, a small legacy tutoring property in the United Kingdom. This decision concentrates our people, capital and product development on the part of Nerdy where we have the strongest brand, the deepest operating experience and the greatest opportunity to build a differentiated learning experience for consumers. We believe the market opportunity is significantly larger and the potential returns on our investments are substantially higher, but we've been encouraged by the progress in our consumer product and business. Let's move into the second quarter results and our outlook. Consumer revenue was $36.5 million in Q2. ARPM was $366, up 5% year-over-year. Learning memberships were 29.1 thousand at June 30, down 5% year-over-year with the rate of decline moderating for the fourth consecutive quarter. Returning the member base to durable growth remains an important back-to-school objective. The rate of decline has continued to narrow and at the same time, ARPM gross margin and operating efficiency have all improved. We expect a stronger product experience that I'll describe later to support retention and acquisition as we move through the back-to-school season and into 2027. We're reducing our full year revenue outlook to $168 million to $175 million from $180 million to $190 million. The reduction is driven by the businesses we decided to exit. Q3 is seasonally our lowest revenue quarter, which includes summer with students out of school, and our business ramps up seasonally very quickly as school starts in late Q3 and into Q4. That seasonality, together with the institutional wind down is reflected in our Q3 non-GAAP adjusted EBITDA guidance of negative $9 million to negative $6 million, excluding exit costs. Our revised full year non-GAAP adjusted EBITDA outlook is negative $4 million to approximately breakeven, excluding exit costs. Before we move into product, I want to talk for a second about how Nerdy is leveraging a smaller team that's leveraging AI to build more. Total headcount at the end of Q2 was down 34% year-over-year. Our engineering organization was 30% smaller than it was a year ago, but it delivered substantially more product output. We incurred $2 million of AI-related expenses during the quarter, which is up sharply from the prior year, and we're actively moderating and getting more intelligence around that spend. We used variable AI expense to accelerate that work without adding the permanent headcount that a traditional production model would have required. This is one of the most tangible ways AI is changing Nerdy. It allows for a smaller organization to build faster, operate with fewer fixed costs and direct more resources towards the customer experience. The result is not one isolated product release. Since the beginning of 2026, we've launched or rebuilt almost every piece of the digital learning experience surrounding our live tutoring product and our complementary non-tutoring products. This will be a significant step up in the breadth and quality of our offerings for our customers. Let me walk through some selected consumer product enhancements and why we think it changes the customer experience for the positive. Our library now includes more than 15,000 lessons covering each skill within 220 discrete subjects. The lessons are available in 2 formats. The first is a dynamic textbook style format for self-study purposes. The second is a presentation style format for tutors to use in live tutoring sessions so that we have prepared structured lessons available for almost every subject. We believe this can up-level the experience across millions of tutoring sessions each year. We extended adaptive diagnostics, quizzes, full-length practice tests, flash cards and the lessons I mentioned to those 200-plus subjects, and we're weaving them together into what we're calling a Study Plan. A Study Plan is a software-based way to track and plan activities over time in pursuit of a goal and can serve as the common system to help drive daily active usage and provide value before, during and after tutoring sessions in pursuit of that long-term goal. The importance of the work is not on the volume of the content alone. Every lesson, diagnostic, question, quiz, worksheet and activity is organized against the shared academic taxonomy in that subject. The structure allows a diagnostic to identify a skill gap and the study plan to recommend the appropriate next activity and the tutor to use that same information when deciding what a learner should do next. The Study Plan brings together 4 elements that our product previously handled discretely; the learner's goal, the time available to reach it, the skills already mastered and the combination of lessons, practice, diagnostics and live tutoring that most likely produce progress. The same plan is visible to the student, the tutor and is available both within the student experience, the tutor experience and the live learning platform itself where tutoring occurs. It's now a core part of the learning membership experience and in August, will be extended to 100% of tutoring relationships. Historically, the tutoring session was often perceived by the customer as the product. And customer interactions could sometimes be quiet in between tutoring sessions. We're building a platform in which the Study Plan highlights all the different ways to learn a subject in between and during the live tutoring sessions and where it can serve as the daily active drumbeat to engagement. Our historical experience from 10-plus million hours of live tutoring and many more practice activities is driving personalization and our approach to how we're sequencing learning. And that combination of AI and human expertise is an example of what we mean when we talk about AI for HI. So that's the product. Let's talk about how it translates into growth. That same product infrastructure can support a more efficient acquisition and activation model. Historically, the vast majority of our customers converted via a telesales-assistant consultative sales process. Under the new model, learners can register online, better see and experience the platform and purchase the learning membership via self-service checkout funnel. We believe this modern approach creates a substantially lower cost, more scalable customer acquisition model while improving the customer experience. In closing, we're entering this back-to-school season as a more focused, lean company with higher-quality products and a more efficient operating model, which we believe positions us well for the year ahead. With that, I'll turn the call over to Atul to discuss the financials in more detail. Atul? Atul Bagga: Thanks, Chuck, and good afternoon, everyone. In the second quarter, revenue and non-GAAP adjusted EBITDA were both within our guidance ranges, and we continue to make progress on our cost structure, with free cash flow improving 24% year-over-year. As I said last quarter, my mandate is to get Nerdy to free cash flow positive while investing with discipline in the areas that drive member growth. And this quarter's result, together with the actions Chuck just outlined, move us further in that direction. Revenue in the quarter was $43.3 million, within our guidance range of $42 million to $44 million and down 4% year-over-year, driven by both consumer and institutional revenue. Consumer revenue was $36.5 million, representing 84% of total company's revenue. Average revenue per month or ARPM was $366, up 5% year-over-year. As a reminder, we began lapping the price increases enacted in Feb 2025 during this quarter, which moderated ARPM growth as expected. As of June 30, active members were 29.1 thousand, a decrease of 5% year-over-year. This rate of decline has continued to narrow sequentially for the last 4 consecutive quarters. And by the end of 2026, we expect to return to a positive active member growth resulting from the ongoing initiatives to improve retention and a more efficient customer acquisition. Gross margin was 64.7%, an expansion of 320 basis points compared to Q2 of 2025, driven by lower amortization of capitalized internal use software following the abandonment charges in Q4 2025, along with lower expert costs. Moving to operating expenses. Sales and marketing expenses were $11.5 million, a decrease of 15% year-over-year, driven by AI-enabled productivity gains and reduced investment in our institutional business. General and administrative expenses were $22.9 million, down 14% year-over-year. G&A included product development costs of $9.7 million compared to $10.7 million in the same period last year, mostly from the lower headcount cost, offset by higher AI spend during the quarter. Second quarter 2026 AI spend was $2 million, up from $0.7 million in Q1 and $0.4 million in the same quarter last year. Increase in AI spend is driven by our push to have every team leverage AI and AI adoption within Nerdy has moved quickly. Essentially, all of our team members now use AI tools on a daily basis to solve problems that used to require additional headcount or external software solutions. The return is visible in our results. Product velocity is highest in the company's history. Headcount is down 34% year-over-year and productivity improved across every function, benefits that flow directly into the G&A improvement I just described. We expect AI usage to continue to increase, while efficiency gains in how we deploy AI are expected to keep our AI spend at or below current level. In the second quarter, non-GAAP adjusted EBITDA was a loss of $0.9 million, within our guidance range of negative $2 million to breakeven. To put that in context, a year ago this quarter, we posted a non-GAAP adjusted EBITDA loss of $2.7 million. That's an improvement of $1.8 million or 68% year-over-year. Adjusted EBITDA performance related to our guidance was driven by lower marketing spend, reduced variable staffing costs and G&A controls, partially offset by higher AI spend. Moving to liquidity and capital resources. We ended the quarter with $38.4 million in cash and cash equivalents. Free cash flow was negative $6.3 million compared to negative $8.2 million in the same period in 2025 or an improvement of 24% despite lower revenue. Turning to our business outlook. Before I get to the numbers, let me set some context. As Chuck mentioned, we have made 2 strategic decisions, both aimed at sharpening our focus on the core business and directing our capital and management attention to where they earn the highest long-term return. First, we exited First Tutors, a small tutoring business in the United Kingdom. Second, we are shutting down Varsity Tutors for Schools or VT4S. Together, these decisions simplify the company and direct our capital towards our highest return assets. We expect to incur approximately $2 million to $4 million in exit-related costs, mostly in Q3. With the VT4S exit, we are lowering our annual fixed cost run rate by approximately $11 million. Excluding this exit, our full year outlook is largely unchanged from previously announced revenue, non-GAAP adjusted EBITDA and cash guidance. revenue guidance. For the third quarter of 2026, we expect revenue in the range of $32 million to $35 million. For the full year of 2026, we expect revenue in the range of $168 million to $175 million compared to our prior range of $180 million to $190 million. Turning to adjusted EBITDA guidance. For the third quarter of 2026, we expect non-GAAP adjusted EBITDA in the range of negative $9 million to negative $6 million, excluding the exit costs. For the full year of 2026, we expect non-GAAP adjusted EBITDA in the range of negative $4 million to approximately breakeven compared to our prior outlook of approximately breakeven. As a reminder, the third quarter is seasonally our lowest revenue quarter with back-to-school cohorts converting into revenue late in third quarter and into the fourth. Now to the cash impact of the exit. We now expect to end the year with approximately $30 million to $32 million in cash and cash equivalent, inclusive of $20 million drawn on our term loan compared to our prior expectation of $40 million to $45 million. The change is due to timing of VT4S collections and expected cost of wind down. VT4S contracts are generally annual in nature, paid in advance and recognized as revenue over the following 12 months. Exiting this business ahead of the peak booking period reduces the cash collections and year-end cash balance assumptions that were embedded in our prior outlook. To be clear, the year-end cash balance change is not a reflection of the change economics of the consumer business, rather the working capital cycle of the business we are exiting. Based on our current operating plan, we expect existing liquidity to fund the company through free cash flow breakeven. To close, revenue and non-GAAP adjusted EBITDA guidance, a 68% improvement in non-GAAP adjusted EBITDA loss and a free cash flow improvement 24% year-over-year. My mandate has not changed. Get Nerdy to free cash flow positive while investing with discipline in the areas that drive member growth. A simpler business, a leaner cost structure and capital behind the best opportunities is how we get there. With that, I will turn it over to the operator for Q&A. Operator? Operator: [Operator Instructions] Your first question comes from the line of Greg Gibas with Northland Securities. Gregory Gibas: Maybe I wanted to start with if you could elaborate on kind of the factors, if you could discuss those that went into your decision to wind down Varsity Tutors for Schools and perhaps what the net impact on cost or profitability once it's complete, you expect to see? Charles Cohn: Sure. Thanks, Greg, and good question. So we continue to get more and more excited about the consumer product and the progress we make there and our ability to thread together all these different modalities of learning that allow for us to extend beyond tutoring and for us to have much deeper, much more holistic relationships with orders that span subjects, that span product modalities, that span semesters. And we're excited about the momentum that we see, the engagements and then our ability to continue to improve the product. And there's an opportunity to pull forward that product road map and go faster. And at the same time, we're investing in Varsity Tutors for Schools, which is a low single-digit percentage of the overall business. There's complexity associated with it. The school funding environment has been challenged for several years. And as we kind of looked at the relative opportunity, we're just way more excited about consumer. We think we get way higher ROI on each dollar of capital invested. And we think we can pull forward our consumer road map, and it also helps with the path to permanent profitability and as part of the kind of focus that we've said we're putting there. And so that was the key sort of element behind the decision. And frankly, we're excited about our ability to get after consumer and the progress we're already seeing. Atul Bagga: So on profitability, that business is profitable. And we've talked about cost out. The full year annualized impact of the cost out is about $11 million. And this is a fixed cost that we have taken out. We have also talked about the reduction in revenue that's coming as a result of VT4S and First Tutors exit. So you can extrapolate and you can see the profitability of the business. But I would say the bigger issue here, again, is going back to what Chuck mentioned, it's about getting our focus behind where we think the biggest opportunities are and where we see the more leverage in our efforts and our resources. Gregory Gibas: Got it. That's helpful. As it relates to guidance, maybe specifically within the consumer business, what has changed with respect to your expectations there? And maybe what you most attribute the moderating decline in Learning Memberships to? Atul Bagga: So Learning Membership is very much coming in as per our operating plan. We have not seen any material changes compared to our original plan. The change in our guidance is purely on the basis of the exits that we talked about from First Tutors and from VT4S businesses. Charles Cohn: And we certainly don't endeavor to moderate the decline. The goal here is to significantly accelerate growth, which we are excited about the product's ability to fundamentally change how people interact with the different modalities and then the extent to which we completely rebuilt and expanded upon all the available content across hundreds of different subjects. So there's an opportunity to really change the trajectory of the consumer relationship. That's not implied in our guide, but it's something that we're working hard to effectuate with the product. Operator: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Nerdy, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nerdy wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $400,209!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,375,393!* That performance is why people listen. 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Nerdy (NRDY) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Nerdy Inc.? Here are five stocks we like better. Q2 performance improved: Revenue fell 4% year over year to $43.3 million, but gross margin expanded to 64.7%, net loss narrowed to $6.9 million, and adjusted EBITDA loss improved to $900,000. Nerdy is refocusing on consumer learning: The company will wind down Varsity Tutors for Schools and exit First Tutors, expecting to cut annual fixed costs by about $11 million. The exits reduced 2026 revenue guidance to $168 million–$175 million, while management maintained that the consumer business outlook is unchanged. Product and efficiency investments continue: Nerdy is expanding AI-enabled learning tools, including a Study Plan and a self-service checkout funnel, while reducing headcount. Management expects year-end cash of approximately $30 million–$32 million and believes existing liquidity can fund operations through free-cash-flow breakeven. Duolingo Speaking Volumes: Forms Bullish Chart Ahead of Earnings Nerdy (NYSE:NRDY) reported second-quarter results that showed improved margins and a narrower loss, while the online learning company announced plans to wind down its Varsity Tutors for Schools business and exit First Tutors, a smaller U.K. tutoring operation. Founder, Chairman and Chief Executive Officer Chuck Cohn said the decisions are intended to concentrate the company’s capital, product development and management attention on its consumer learning business. Consumer revenue totaled $36.5 million in the quarter, representing 84% of Nerdy’s total revenue of $43.3 million. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling “Q2 demonstrated continued improvement in Nerdy’s operating performance,” Cohn said, describing the company as a more focused consumer learning business centered on connected tools for learning, tutoring and progress tracking. Total revenue was down 4% year over year to $43.3 million, within the company’s guidance range of $42 million to $44 million. Consumer average revenue per month, or ARPM, rose 5% from a year earlier to $366. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Learning Memberships stood at 29,100 as of June 30, down 5% year over year. However, the company said the rate of membership decline moderated for the fourth consecutive quarter. Chief Financial Officer Atul Bagga said Nerdy expects active member growth to turn positive by the end of 2026, supported by retention initiatives and a more efficient customer-acquisition approach. Gross margin expanded 320 basis points year over year to 64.7%. Net loss improved to $6.9 million, compared with a $12 million loss a year earlier. Non-GAAP adjusted EBITDA loss narrowed 68% to $900,000 from $2.7 million in the prior-year quarter. Free cash flow was negative $6.3 million, improving from negative $8.2 million a year earlier. Cash and cash equivalents totaled $38.4 million at quarter-end. Bagga attributed the gross-margin improvement to lower amortization of capitalized internal-use software following abandonment charges in the fourth quarter of 2025, as well as lower expert costs. Sales and marketing expense declined 15% year over year to $11.5 million, while general and administrative expense fell 14% to $22.9 million. → No Hangover: Revisiting Microsoft One Week After Earnings Nerdy said it will shut down Varsity Tutors for Schools, or VT4S, and leave First Tutors. Cohn said VT4S accounted for a low-single-digit percentage of the overall business but carried complexity amid a school funding environment that has been challenged for several years. The company expects the exits to reduce its annual fixed-cost run rate by approximately $11 million. It anticipates incurring roughly $2 million to $4 million in exit-related costs, mostly during the third quarter. Bagga said the school-focused business was profitable, but management sees a larger opportunity and higher potential return on investment in consumer learning products. The exits also are intended to support Nerdy’s path toward sustained profitability and free-cash-flow breakeven. The company reduced its 2026 revenue guidance to a range of $168 million to $175 million, from a prior outlook of $180 million to $190 million. Management said the lower forecast reflects the businesses being exited rather than a change in expectations for the consumer business. For the third quarter, Nerdy expects revenue of $32 million to $35 million and a non-GAAP adjusted EBITDA loss of $9 million to $6 million, excluding exit costs. The company described the third quarter as its seasonally lowest-revenue period, with back-to-school cohorts converting into revenue late in the quarter and into the fourth quarter. For the full year, Nerdy now expects non-GAAP adjusted EBITDA between a loss of $4 million and approximately break-even, excluding exit costs. Its prior outlook called for approximately break-even adjusted EBITDA. Nerdy said it is using artificial intelligence tools to accelerate product development while reducing fixed headcount. Total headcount was down 34% year over year at the end of the second quarter, and the engineering organization was 30% smaller than a year earlier, according to Cohn. AI-related expense totaled $2 million in the quarter, compared with $700,000 in the first quarter and $400,000 in the year-earlier period. Bagga said nearly all employees use AI tools daily, and the company expects AI usage to rise while efficiency improvements keep AI spending at or below current levels. Cohn said Nerdy has launched or rebuilt nearly every part of its digital learning experience surrounding live tutoring since the beginning of 2026. Its content library now includes more than 15,000 lessons spanning 220 subjects, alongside diagnostics, quizzes, practice tests, flashcards and other learning materials. The company is integrating those resources into a “Study Plan” designed to combine a learner’s goals, available time, mastered skills and recommended activities, including live tutoring. The plan is visible to students and tutors, and Nerdy expects to extend it to all tutoring relationships in August. Nerdy is also moving toward a self-service customer-acquisition model. Historically, most customers converted through a telesales-assisted process, but Cohn said learners can now register online, experience the platform and purchase Learning Memberships through a self-service checkout funnel. Management believes the approach can lower acquisition costs and improve scalability. Nerdy now expects to finish 2026 with approximately $30 million to $32 million in cash and cash equivalents, including $20 million drawn on its term loan. Its previous year-end cash expectation was $40 million to $45 million. Bagga said the change primarily reflects the timing of VT4S collections and expected wind-down costs. Because VT4S contracts are generally annual, prepaid arrangements, exiting before the peak booking period reduces expected cash collections. He said the lower year-end cash outlook does not reflect changed economics in the consumer business. Based on its current operating plan, Nerdy said its existing liquidity is expected to fund the company through free-cash-flow breakeven. Nerdy, Inc (NYSE:NRDY) is an American education technology company that operates a live online learning marketplace. Through its flagship Varsity Tutors platform, the company connects students, professionals and lifelong learners with a network of thousands of educators for personalized one-on-one tutoring, group classes and test preparation. The platform leverages proprietary matching algorithms to pair learners with instructors based on subject expertise, learning style and scheduling preferences. Founded in 2007 by entrepreneur Chuck Cohn, Nerdy began as Varsity Tutors in Washington, DC, before establishing its headquarters in St. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Nerdy Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management decided to wind down Varsity Tutors for Schools and exit First Tutors (UK) to concentrate capital and talent on the high-return consumer segment. The company is transitioning from a tutoring-centric model to a 'connected system for learning' that integrates live tutoring with self-study tools and adaptive diagnostics. A new 'Study Plan' feature serves as the central software framework to drive daily active usage and provide value between live tutoring sessions. Headcount was reduced by 34% year-over-year, yet product output increased due to the aggressive integration of AI across all internal functions. The consumer acquisition model is shifting from a high-touch telesales process to a lower-cost, self-service digital checkout funnel. Gross margin expansion of 320 basis points was primarily driven by lower software amortization and optimized expert costs. Management attributes the moderating decline in Learning Memberships to improved product experience and retention efforts ahead of the back-to-school season. Full-year revenue guidance was lowered to $168 million to $175 million, exclusively reflecting the strategic exit from the institutional and UK businesses. The company expects to return to positive active member growth by the end of 2026, supported by new product launches and efficient acquisition. Exiting the institutional business is expected to reduce the annual fixed cost run rate by approximately $11 million. Year-end cash expectations were adjusted to $30 million to $32 million due to the loss of upfront cash collections from the institutional business's working capital cycle. Management anticipates that current liquidity is sufficient to fund the company through to free cash flow breakeven. The company expects to incur $2 million to $4 million in exit-related costs, primarily in the third quarter of 2026. AI-related expenses rose to $2 million in Q2, up from $0.4 million a year ago, as the company substituted permanent headcount with variable AI spend. The wind-down of Varsity Tutors for Schools was prompted by a challenging school funding environment and the higher ROI potential of the consumer market. Seasonality remains a factor, with Q3 expected to be the lowest revenue quarter due to the summer break before ramping up in late Q3 and Q4. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management explained the decision was driven by the desire to pull forward the consumer product roadmap and exit a complex, low-growth funding environment. The institutional business was described as a low single-digit percentage of total revenue, and its exit removes $11 million in fixed costs. The move is intended to accelerate the path to permanent profitability by focusing on the highest ROI opportunities. Management clarified that the consumer business performance remains aligned with the original operating plan; the guidance cut is purely due to business exits. The goal is to move beyond 'moderating declines' to significant growth by leveraging expanded content across 200-plus subjects. The product strategy aims to change the trajectory of consumer relationships by increasing engagement through non-tutoring modalities.

Nerdy delivers second quarter results in line with guidance, improving non-GAAP adjusted EBITDA margin by approximately 400 basis points year-over-year and narrowing the year-over-year decline in Active Members for a fourth consecutive quarter. ST. LOUIS, August 06, 2026--(BUSINESS WIRE)--Nerdy Inc. (NYSE: NRDY) today announced financial results for the second quarter ended June 30, 2026. "Our second quarter results reflect the continued execution of our strategy," said Chuck Cohn, Founder, Chairman and CEO of Nerdy. "We've connected tutoring, content, and progress tracking into a single Study Plan experience, and early signals as we head into back-to-school season are encouraging. We remain committed to returning to Active Member growth and sustained profitability by the end of 2026." Please visit the Nerdy investor relations website https://www.nerdy.com/investors to view the Nerdy Q2 Shareholder Letter on the Quarterly Results Page. Second Quarter Financial Highlights: Revenue In Line with Expectations – Revenue of $43.3 million was in line with our guidance range of $42 million to $44 million, and represented a decrease of 4% year-over-year from $45.3 million during the same period in 2025. Consistent with expectations, revenue decreased when compared to the prior year period due to lower Consumer and Institutional revenue. The decrease in Consumer revenue was primarily driven by a lower Active Member count, partially offset by higher ARPM. As we began to lap the price increases enacted in February 2025, the rate of ARPM growth moderated year-over-year. Consumer Revenue – Consumer revenue recognized in the second quarter was $36.5 million and represented 84% of total Company revenue. As of June 30, 2026, ARPM was $366, a 5% increase year-over-year. As of June 30, 2026, there were 29.1 thousand Active Members, a 5% decrease year-over-year. This rate of decline has narrowed sequentially for four consecutive quarters, and we expect to return to positive growth by the end of 2026. Gross Margin – Gross margin was 64.7% for the three months ended June 30, 2026, compared to a gross margin of 61.5% during the comparable period in 2025. The increase in gross margin was primarily driven by lower amortization of capitalized internal-use software as a result of a charge for the abandonment of capitalized internal-use software that occurred in Q4 2025, coupled with lower Expert costs when compared to the prior year period. Adjusted EBITDA Loss Improves Compared to Last Year; also In Line with Expectations – Net loss was $6.9 million in the second quarter versus a net loss of $12.0 million during the same period in 2025. Excluding non-cash stock compensation expenses and restructuring costs, which were treated as an adjustment for non-GAAP measures, non-GAAP adjusted net loss was $2.1 million for the second quarter of 2026 compared to a non-GAAP adjusted net loss of $4.5 million in the second quarter of 2025. We reported a non-GAAP adjusted EBITDA loss of $0.9 million for the second quarter of 2026, in line with our guidance of negative $2 million to breakeven. This compares to a non-GAAP adjusted EBITDA loss of $2.7 million in the same period one year ago. Non-GAAP adjusted EBITDA performance relative to guidance was driven by lower marketing spend, reduced variable staffing costs, and strong G&A cost control. These impacts were partially offset by higher AI costs. Non-GAAP adjusted EBITDA performance relative to the prior year period was driven by reduced variable staffing costs, efficiency improvements, and strong cost control. These impacts were also partially offset by higher AI costs. Liquidity and Capital Resources – As of June 30, 2026, the Company’s principal sources of liquidity were cash and cash equivalents of $38.4 million. With our cash on hand and the funding available under our term loan, we believe we have ample liquidity to fund operations and growth initiatives, as we execute toward free cash flow positive. Third Quarter and Full Year 2026 Outlook: We have made two decisions, both aimed at sharpening our focus on the core business. First, we exited First Tutors, a small tutoring business in the United Kingdom. It is immaterial to our results, and the decision is about focus rather than economics. Second, we are shutting down Varsity Tutors for Schools ("VT4S") to concentrate on Consumer — our core business, where the opportunity is significantly larger and where our resources and management bandwidth earn better returns. Together, these decisions simplify the Company and put our capital behind our highest-return assets. We expect that focus to show up in execution. We expect to incur approximately $2 million to $4 million of exit-related costs, primarily in Q3. The decision does have a near-term impact on our outlook, most notably on cash, and the guidance we are establishing today reflects that. Excluding the exit, our full year outlook is largely unchanged from our previously announced revenue, non-GAAP adjusted EBITDA and cash guidance. Revenue Guidance: For the third quarter of 2026, we expect revenue in the range of $32-$35 million. For the full year of 2026, we expect revenue in the range of $168 million to $175 million, compared to our prior range of $180 to $190 million. Non-GAAP Adjusted EBITDA Guidance: For the third quarter of 2026, we expect non-GAAP adjusted EBITDA in the range of negative $9 million to negative $6 million, excluding exit costs. For the full year of 2026, we expect non-GAAP adjusted EBITDA in the range of negative $4 million to approximately breakeven, excluding exit costs. Liquidity and Capital Resources: We now expect to end the year with approximately $30 to $32 million of cash, inclusive of the $20 million drawn on our term loan, compared to our prior expectation of $40 to $45 million. The change is primarily due to the timing of VT4S collections and the expected costs of the wind-down. VT4S contracts were generally paid in advance and recognized as revenue over the following twelve months. Exiting ahead of its peak booking period reduces the cash collections and year-end cash balance assumptions embedded in our prior outlook. To be clear, the year-end cash balance change is not a reflection on changed economics of the Consumer business, rather the working capital cycle of the business we are exiting. Based on our current operating plan, we expect existing liquidity to fund the company through free-cash-flow breakeven. Webcast and Earnings Conference Call Nerdy’s management will host a conference call to discuss its financial results on Thursday, August 6, 2026 at 5:00 p.m. Eastern Time. Interested parties in the U.S. may listen to the call by dialing 1-833-461-5787. International callers can dial 1-585-542-9983. The Access Code is 511635729. A live webcast of the call will also be available on Nerdy’s investor relations website at https://www.nerdy.com/investors. About Nerdy Inc. Nerdy (NYSE: NRDY) operates a next-generation live tutoring and intervention platform that leverages the power of human expertise with advanced artificial intelligence ("AI") to personalize learning, accelerate student achievement, and empower educators. Our mission is to transform the way people learn through technology. The Company’s purpose-built proprietary platform leverages technology, including AI, to connect learners of all ages to experts, delivering superior value on both sides of the network. Nerdy’s comprehensive learning destination provides learning experiences across thousands of subjects and multiple formats—including Learning Memberships, one-on-one instruction, small group tutoring, large format classes, and adaptive assessments. Nerdy’s flagship business, Varsity Tutors, is one of the nation’s largest platforms for live online tutoring and classes. Learn more about Nerdy at https://www.nerdy.com. 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 revenue and active member growth; enhancing the Learning Membership experience; AI-enabled productivity and operating leverage; the sufficiency of our cash to fund future operations; and our anticipated quarterly and full year 2026 outlook; as well as statements that include the words "expect," "plan," "believe," "project," "will" and "may," and similar statements of a future or forward-looking nature. 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 offerings continue to evolve, which makes it difficult to predict our future financial and operating results; our level of indebtedness, which could adversely affect our financial condition; our operating activities may be restricted as a result of covenants related to our term loan and failure to comply with these covenants could have a material adverse effect on us; our history of net losses and negative operating cash flows, which could require us to need other sources of liquidity; risks associated with our ability to acquire and retain customers, operate, and scale up our Consumer business; risks associated with the implementation of our plan to wind down Varsity Tutors for Schools, including the timing and amount of expected exit costs, our ability to realize anticipated benefits, and the impact on our business and results of operations; 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 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 SEC, including our Annual Report on Form 10-K filed on February 26, 2026, and our Quarterly Report on Form 10-Q filed on August 6, 2026, as well as other filings that we may make from time to time with the SEC. View source version on businesswire.com: https://www.businesswire.com/news/home/20260806247933/en/ Contacts Investor [email protected]

Interested in Nerdy Inc.? Here are five stocks we like better. Nerdy beat first-quarter expectations, with revenue of $48.7 million above guidance and adjusted EBITDA turning positive at $1 million. The company also reported its third straight quarter of margin improvement and said gross margin rose to 66.2%. The new V3 learner platform is gaining traction, with direct onboarding for new customers and migration of existing users underway. Management said the AI-powered experience, including the Maya concierge, is improving engagement and could help drive better retention. AI is reducing costs while institutional sales remain weak, as sales, marketing and G&A expenses fell year over year. However, institutional revenue declined and bookings dropped sharply, even as Nerdy reaffirmed its full-year 2026 revenue and breakeven EBITDA outlook. Duolingo Speaking Volumes: Forms Bullish Chart Ahead of Earnings Nerdy (NYSE:NRDY) reported first-quarter 2026 revenue above its guidance range and posted its second consecutive quarter of positive non-GAAP adjusted EBITDA, as executives pointed to improving margins, AI-driven cost efficiencies and early traction from a new learner platform. Founder, Chairman and Chief Executive Officer Chuck Cohn said revenue was $48.7 million, above the company’s $46 million to $48 million guidance range and up 2% from a year earlier. Non-GAAP adjusted EBITDA was positive $1 million, ahead of the company’s guidance for approximately breakeven and an improvement of $7.3 million compared with the first quarter of 2025. → Rocket Lab Just Hit a New All-Time High—Time to Buy or Let It Breathe? Cohn said adjusted EBITDA margin expanded by more than 1,500 basis points year over year, marking Nerdy’s third consecutive quarter of sequential margin improvement. Gross margin reached 66.2%, up more than 800 basis points from the prior year. The company ended the quarter with $44.7 million in cash. “Three things stood out in the Q1,” Cohn said. “First, the product velocity that we said an AI native code base would unlock is now visible in shipped product. Second, our cost structure is structurally, not cyclically, better, and AI is the reason, and third, the rate of decline in active members on a year-over-year basis narrowed for the third consecutive quarter.” → MercadoLibre Boldly Invests in Growth: Discount Deepens Cohn said the company’s new learner experience, internally called V3, became the universal customer experience for Nerdy’s consumer business in March. Newly acquired customers are now onboarded directly to V3, and the company has begun migrating existing customers. According to Cohn, roughly 6,000 new customers joined directly on V3 in the back half of the quarter, while approximately 10,000 existing customers have moved from the prior experience. He said feedback has been “broadly positive,” with customers saying the platform “looks and feels like a whole different company or product.” → MP Materials Is Quietly Building a Rare Earth Powerhouse The V3 experience includes Maya, an AI concierge built into the platform. Cohn said Maya answers questions, suggests next steps, helps students find diagnostics and resolves issues such as scheduling tutoring sessions without requiring a phone call or customer support ticket. He said Maya has context from each student’s learning plan, past tutoring sessions, product interactions, diagnostics and practice engagement. Nerdy also launched a native mobile app in the App Store during the quarter, with Cohn saying it is approaching full feature parity with the web platform. Other additions included a Tutor Gallery that allows families to browse tutor profiles and book sessions, six math and English language arts games, and more than 350 on-demand courses converted from live classes. Chief Financial Officer Atul Bagga said Learning Membership revenue was $38.9 million, up 3% year over year and representing 80% of total revenue. Consumer revenue growth was driven by higher average revenue per month, or ARPM, which rose 12% to $374. Bagga said that increase was primarily driven by price increases enacted in February 2025. Active members totaled 36,900 as of March 31, down 9% from a year earlier. Bagga said the rate of decline has narrowed sequentially for three consecutive quarters, and the company expects to return to positive active member growth by the end of 2026. Cohn said customer churn has improved meaningfully year over year as users enter the new platform and find additional ways to use the service. He said the cohorts onboarded directly onto V3 are showing early signals consistent with the company’s thesis that retention is its “highest growth lever.” During the question-and-answer session, JPMorgan analyst Bryan Smilek asked about confidence in a return to active member growth and the timeline for migrating the member base to V3. Cohn said Nerdy expects to move “100% of the existing customers” onto the current experience over the rest of the quarter. He added that the company has seen a relationship between customers using new products, higher engagement and early signs of improved retention, though he described the signals as promising but early. Institutional revenue was $9.3 million, down 1% year over year and representing 19% of total revenue. Bagga said first-quarter institutional revenue was mostly supported by prior-period bookings. Varsity Tutors for Schools bookings were $1.1 million in the quarter, compared with $4 million in the first quarter of 2025. Cohn said the new Varsity Tutors for Schools platform is built on the same V3 foundation and integrates AI-enabled tutoring, an AI counseling layer and an expanded K-12 content library. He said the offering enters the back-to-school 2026 selling season as “meaningfully stronger” than the version the company took to market a year ago. Nerdy is also preparing product releases in college and career readiness, daily math and reading practice, and language learning. Cohn said an AI counselor is targeted for a back-to-school 2026 release in two flagship high schools in a top 10 U.S. school district. He also said Nerdy plans to launch more than 4,600 K-8 math skills aligned to academic taxonomies, with reading parity coming soon. Bagga said sales and marketing expenses declined 10% year over year to $14.2 million, driven by AI-enabled productivity gains and reduced investment in the institutional business. General and administrative expenses fell 16% to $23.9 million, including product development costs of $9.2 million versus $10.7 million a year earlier. Cohn said AI is central to how Nerdy operates, including software development, back-office workflows, inbound and outbound calls, and customer service interactions. “AI is how we operate. It’s not what we sell,” he said, adding that the company’s core offering remains the relationship between a learner and an expert supported by technology. In response to Northland Securities analyst Greg Gibas, Bagga said Nerdy’s headcount is down about 20% year over year while revenue is roughly flat. He said the company expects to continue leaning on AI to improve productivity. For the second quarter of 2026, Nerdy expects revenue of $42 million to $44 million and non-GAAP adjusted EBITDA between negative $2 million and breakeven. Bagga said the second-quarter outlook reflects two factors: lower first-quarter Varsity Tutors for Schools bookings affecting institutional revenue and the company beginning to lap the February 2025 price increases, which will moderate ARPM growth. For full-year 2026, Nerdy reaffirmed revenue guidance of $180 million to $190 million and non-GAAP adjusted EBITDA of approximately breakeven. The company expects to end the year with $40 million to $45 million in cash, including $20 million currently drawn on its term loan. Bagga said Nerdy’s full-year outlook assumes a more stable institutional funding environment in the second half of the year, reception of the new Varsity Tutors for Schools platform and continued improvements in consumer retention. He said the company’s work ahead is focused on active member growth and institutional bookings recovery. Nerdy, Inc (NYSE:NRDY) is an American education technology company that operates a live online learning marketplace. Through its flagship Varsity Tutors platform, the company connects students, professionals and lifelong learners with a network of thousands of educators for personalized one-on-one tutoring, group classes and test preparation. The platform leverages proprietary matching algorithms to pair learners with instructors based on subject expertise, learning style and scheduling preferences. Founded in 2007 by entrepreneur Chuck Cohn, Nerdy began as Varsity Tutors in Washington, DC, before establishing its headquarters in St. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Nerdy Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.

A week ago, Nerdy Inc. (NYSE:NRDY) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. Revenues and losses per share were both better than expected, with revenues of US$49m leading estimates by 3.0%. Statutory losses were smaller than the analystsexpected, coming in at US$0.03 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. Taking into account the latest results, Nerdy's three analysts currently expect revenues in 2026 to be US$182.3m, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 24% to US$0.20. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$183.0m and losses of US$0.20 per share in 2026. View our latest analysis for Nerdy As a result there was no major change to the consensus price target of US$2.08, implying that the business is trading roughly in line with expectations despite ongoing losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Nerdy analyst has a price target of US$3.00 per share, while the most pessimistic values it at US$1.25. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business. Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Nerdy's revenue growth is expected to slow, with the forecast 1.6% annualised growth rate until the end of 2026 being well below the historical 7.4% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.6% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Nerdy. The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Nerdy's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$2.08, with the latest estimates not enough to have an impact on their price targets. With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Nerdy going out to 2027, and you can see them free on our platform here.. It is also worth noting that we have found 2 warning signs for Nerdy that you need to take into consideration. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Image source: The Motley Fool. Thursday, May 7, 2026 at 5 p.m. ET Chief Executive Officer — Charles Cohn Chief Financial Officer — Atul Bagga Charles Cohn: Thanks, TJ, and thank you to everyone for joining today's call. In the first quarter of 2026, we beat the top end of our revenue guidance and delivered our second consecutive quarter of positive non-GAAP adjusted EBITDA. We also translated the AI native foundation we finished building at the end of 2025 into shipped learner-facing products at a cadence we have never matched in the company's history. Revenue was $48.7 million, above the top end of our $46 million to $48 million guidance range and 2% up year-over-year. Non-GAAP adjusted EBITDA was positive $1.0 million, ahead of our guidance of approximately breakeven and improved by $7.3 million compared to Q1 2025. Adjusted EBITDA margin expanded more than 1,500 basis points year-over-year, our third consecutive quarter of sequential margin improvement. That represents roughly $30 million of annualized operating leverage on a flat-top line. Gross margin reached 66.2%, an expansion of more than 800 basis points year-over-year. We ended the quarter with $44.7 million of cash on the balance sheet. Three things stood out in the first quarter. First, the product velocity that we said an AI-native code base would unlock is now visible in shipped products with a meaningful slate of additional learner-facing releases reaching customers in the weeks ahead. Second, our cost structure is structurally not cyclically better, and AI is the reason. And third, the rate of decline in active members on a year-over-year basis narrowed for the third consecutive quarter, and we expect to return to positive growth by the end of 2026. When we finished replatforming on an AI native code base as we wrapped up 2025, we said the point of that work was not about the architecture itself. It was about the speed and quality of the products that we could ship on top of it. Q1 was the first full quarter operating in that new mode, and the cadence has fundamentally changed. The most visible expression of that shift is our new Learner Experience internally referred to as V3, which became the universal customer experience and surface for our consumer business in March. Every newly acquired customer is now onboarded directly to this new V3 experience, and we have begun migrating existing customers as well. Roughly 6,000 new customers came in directly on V3 in the back half of the quarter and approximately 10,000 existing customers have moved over from the prior experience, and we are seeing strong early signal and optimizing rapidly in response to user behavior and customer feedback, which is broadly positive with a constant point of feedback being it looks and feels like a whole different company or product. The same platform will imminently power our institutional offering, which we expect to expand the market opportunity in institutional beyond the more limited K-12 high-dosage tutoring market that business primarily targeted. Inside V3, the centerpiece for the learner is Maya, our AI concierge. Maya is the always-on guide built into the experience. She answers inbound questions, surfaces the right next step, helps the student find a diagnostic and resolves day-to-day issues like scheduling a tutoring session and she does so all without a phone call or a customer support ticket. She's available 24 hours a day with full context of each student's actual learning plan and past interactions, including past tutoring sessions, product interactions, diagnostics and practice-related engagement and the results of those and more. She now handles a meaningful share of in-product customer interactions. For a student or parent, Maya turns our platform into a relationship that feels alive, responsive and easy. Around Maya, V3 brings together the rest of the family experience. Our native mobile app launched in the App Store in Q1 and is approaching full feature parity with web with releases that shipping to mobile within 48 hours of going live. The Tutor Gallery lets families browse tutor profiles, watch introductory videos and book with guaranteed availability through Book Now. We also launched Games, a set of six math and ELA titles initially built to drive daily engagement and learning. We also launched On-Demand Courses, converting our top Live Classes into self-paced courses with supporting materials. We are launching with more than 350 of these courses that collectively span thousands of hours of live instruction. These updates shipped together as part of V3. They give families more ways to engage with our platform between live sessions, creating additional retention opportunities. And we're seeing the early signal in the numbers. Active members ended the quarter at 36,900, down 9% year-over-year, but the rate of decline has narrowed for 3 consecutive quarters and customer churn has improved meaningfully year-over-year as customers enter or experience our new platform and ways to get value out of the relationship with us. ARPM was $374, up 12% and Learning Membership revenue grew 3% to $38.9 million, 80% of total revenue. As to headline, the cohorts onboarded directly on the V3 are showing early indications that are directionally consistent with our thesis. While early, what we will say is the cohort signal is consistent across the metrics that matter and that retention is the highest growth lever we have given how small changes in extending the customer life cycle can have a meaningful impact on long-term revenue and profitability. At today's customer acquisition cost, every additional month of average tenure flows almost entirely through to contribution profit. We expect to provide a full read on our progress on our Q2 call in August. Our upcoming product releases have received strong early feedback. What has shipped to V3 today is the foundation, not the full picture. Three product areas in particular, are moving from internal development into the hands of customers in the weeks ahead with strong early feedback on all three. The first is college and career readiness. We were approached by the leadership from a top-10 U.S. school district about a need we're uniquely qualified to solve. This led to our always-on AI counselor now targeted for back-to-school 2026 release in 2 flagship high schools in that district. Early indications show other districts have similar needs. The counselor is highly interactive and guides students through post-secondary decisions. It has real-time integration with school systems, maintains persistent memory across years and is multimodal across mobile, desktop, voice, SMS and inbound and outbound calling. For consumer learners, it extends Varsity Tutors as well as tutoring specifically into a multiyear goal-setting process previously outside our reach. The second upcoming Q2 planned product release is related to daily math and reading content and practice. We're launching more than 4,600 K-8 math skills aligned to academic taxonomies achieving parity with several of the leading supplemental practice platforms with reading parity coming soon. These additions expand the lesson library, including tens of thousands of lessons all created year-to-date mapped to K-12 and college taxonomies and standards. The content integrates into V3 as structured daily practice alongside tutoring or self-study. Progress is visible to learners and parents. And for tutors, it helps ensure all tutors have prepared professional relevant content for their tutoring sessions across the millions of tutoring sessions per year on the platform. AI orchestrates and personalizes the learning experience that spans all of these product modalities on the platform in service of the learners' goals and preferences. Early feedback on sequencing and quality is strong, and we anticipate similar learner reception when we roll it out more broadly. And the third upcoming product is related to language learning, which is already a popular area for one-to-one tutoring on the platform. We're bringing to market an AI-enabled learning experience that will launch for both consumer and institutional customers, and we look forward to sharing more in the near future. I also wanted to touch upon our continuous efforts to utilize AI internally to improve product velocity and improve productivity. AI is at the center of how we're operating and expect our teams to operate. Not only is all of our software development done almost exclusively with AI, we are using it to do everything from automate our back-office workflows to handle inbound and outbound calls and help with customer service interactions on the platform and much, much more. Fixed headcount is lower year-over-year even as we enhance our existing products and build numerous new ones. These changes drove more than 1,500 basis points of adjusted EBITDA margin expansion in the quarter on roughly flat revenue. The improvements are structural with software and automation replacing manual processes. With both fixed and variable costs now lower, higher retention means new revenue flows through at a higher contribution margin rate to adjusted EBITDA. AI is how we operate. It's not what we sell. And what we sell remains that relationship between a learner and an expert that's now supported by the best technology available, and it's informed by more than 10 million tutoring sessions. Moving on to Varsity Tutors for Schools. The new Varsity Tutors for Schools platform built on the same V3 platform foundation and integrating AI-enabled tutoring and AI counseling layer and our expanded K-12 content library on the Live+AI engine that powers our Consumer business enters the back-to-school 2026 selling season as a meaningfully stronger offering than what we took to market a year ago. And now looking ahead to the rest of the year, the product velocity we have discussed, our V3 platform, Maya our AI concierge for learners, having modern mobile apps with full feature parity to web and the upcoming product releases in college and career readiness, daily math and reading practice and language learning have shipped or will be shipping before the end of the second quarter, and our customer base is only beginning to experience these enhanced features. As more of our active customers move on to the new platform and our first full V3 new customer cohorts mature, the leading indicators we are watching today should translate into inflecting active member growth later this year. A year ago, we were rebuilding the foundation. Today, we're building on it and the benefits of this increased product velocity will build throughout the year as we enhance more customer-facing services and allow for us to drive long-term growth and profitability. With that, I'll hand the call over to Atul to discuss the financials in more detail. Atul? Atul Bagga: Thanks, Chuck. Before I walk through the numbers, I'd like to take a couple of moments to share what drew me to this role. Nerdy operates in one of the most underpenetrated markets in education technology. There are over 50 million K-12 and college students in the U.S. alone, and the tutoring market remains mostly fragmented and offline. Our active member base of about 37,000 represents a fraction of what this market can support, and that gap is the opportunity. What convinced me that Nerdy can close this gap, it's genuinely AI-first culture, product velocity and a team that moves fast. And these are not just talking points. They translate directly into margin expansion and operating leverage you'll see in the results. My mandate as the CFO is clear: get Nerdy to free cash flow positive while investing with discipline in the areas that drive member growth. That is the financial thread running through everything we are doing in 2026. Now let me walk you through our first quarter results. We beat the top end of our revenue guidance range. Revenue was $48.7 million, ahead of our guidance range of $46 million to $48 million and up 2% year-over-year, driven by higher consumer revenue and partially offset by lower institutional revenue. Within consumer revenue, Learning Membership revenue was $38.9 million, up 3% year-over-year and represented 80% of total company's revenue. Consumer revenue growth was driven by higher Average Revenue per Month or ARPM of $374, which was up 12% year-over-year, primarily driven by price increases enacted in Feb 2025. As of March 31, active members were 36,900, a decrease of 9% year-over-year. This rate of decline has narrowed sequentially for the 3 consecutive quarters, and we expect to return to positive active member growth by the end of 2026. Our institutional revenue was $9.3 million, a decrease of 1% year-over-year and represented 19% of total company's revenue during the first quarter. As a reminder, the institutional revenue in the first quarter was mostly supported by the prior period bookings. During Q1, Varsity Tutors for Schools bookings were $1.1 million versus $4 million in Q1 of 2025. Gross margin was 66.2%, an expansion of 820 basis points compared to a gross margin of 58.0% during Q1 2025. The increase in gross margin was primarily due to the benefit of price increases enacted in Feb 2025. Moving to operating expenses. Sales and marketing expenses were $14.2 million, a decrease of 10% year-over-year, driven by AI-enabled productivity gains and reduced investment in our institutional business. General and administrative expenses for the quarter were $23.9 million, down 16% year-over-year. G&A costs included product development costs of $9.2 million compared to $10.7 million in the same period last year. The cost reductions are primarily driven by our focus on applying AI systematically across the tech stack, which is resulting in durable efficiency gains and better unit economics. In the first quarter, non-GAAP adjusted EBITDA was positive $1 million and ahead of our guidance of breakeven. To put that in context, a year ago this quarter, we posted a non-GAAP adjusted EBITDA loss of $6.4 million. That's an improvement of more than $7 million just in a year. Non-GAAP adjusted EBITDA margin improved by more than 1,500 basis points year-over-year, our third consecutive quarter of year-over-year margin improvement. Non-GAAP adjusted EBITDA outperformance was driven by gross profit outperformance, efficiency improvement and strong cost control across every P&L item. Moving to liquidity and capital resources. We ended the quarter with $44.7 million in cash and cash equivalents. Free cash flow was negative $3 million compared to negative $7.6 million in the same period in 2025. Free cash flow improvement was driven by non-GAAP adjusted EBITDA improvement as previously discussed and partially offset by higher working capital and by interest payment of $0.5 million on our term loan. With our cash on hand and the funding available under our term loan, we believe we have ample liquidity to fund operations and growth initiatives as we execute towards free cash flow positive. Turning to our business outlook. Today, we are introducing second quarter guidance and reaffirming full year 2026 guidance. Before sharing guidance, I want to flag 2 dynamics that shaped the Q2 revenue and EBITDA outlook. First, the decline in Q1 Varsity Tutors for Schools bookings will negatively impact Q2 institutional revenue given the lag between bookings and revenue recognition. Second, beginning in Q2, we start lapping the price increases implemented in Feb 2025, which will moderate ARPM year-over-year growth for our consumer business. We expect to see continued benefits from improving client retention to our consumer business, although that momentum builds through the year. The full year outlook assumes a more stable institutional funding environment in the second half of the year, reception of new Varsity Tutors for Schools platform and continued improvements in Consumer retention. Revenue guidance. For the second quarter of 2026, we expect revenue in the range of $42 million to $44 million. For the full year of 2026, we expect revenue in the range of $180 million to $190 million. Turning to adjusted EBITDA guidance. For the second quarter of 2026, we expect non-GAAP adjusted EBITDA to be negative $2 million to breakeven. For the full year of 2026, we expect non-GAAP adjusted EBITDA to be approximately breakeven. We expect to end the year with $40 million to $45 million in cash, inclusive of $20 million currently drawn on our term loan. To close, this quarter's result, a revenue beat, 820 basis point improvement in gross margin and non-GAAP adjusted EBITDA that improved from a loss of $6.4 million to a positive $1 million in 1 year, reflect on the progress across every line of the P&L. The work ahead is on active member growth and institutional bookings recovery. We know what we need to do, and we are executing against it. With that, I'll turn it over to the operator for Q&A. Operator? Operator: We will now begin the Q&A session. [Operator Instructions] Your first question comes from the line of Bryan Smilek with JPMorgan. Bryan Smilek: Good to see the product velocity in V3 starting to drive improved learner trends. As we go through the back half here, Chuck, can you just talk about the underlying confidence in achieving return to active member growth, just the overall durability of these new cohorts that are seeing the improved retention and engagement. And I guess, conversely as well, you mentioned, I believe, right, 6,000 new active members on V3 and then 10,000 or so of the existing members migrating there. Can you just help us walk through the timeline of migrating your overall entire member base towards V3 and when you would start to realize returns on that shift? Charles Cohn: Thanks, Bryan. Good question. So yes, we made a ton of progress on new product development in the quarter, and we're able to take the sort of base platform that we had built that we consider to be a brand-new version of the old platform, but with full parity, feature parity and AI native code base, which then allowed us to build and ship quickly. And we were able to really, I think, enhance it just over the course of the last 90 days or so in a pretty material way. So what we have seen is as we first introduced new customer cohorts to that experience, and we're able to work through the best way to onboard them to an experience that, frankly, is much more rich, much more robust and in many ways, looks like a whole new company and really optimize that onboarding experience to get them into many different non-tutoring products than we've had before, we saw sequential improvements in retention of those cohorts as they onboarded and started gaining confidence in accelerating that path to a broader rollout. And over the course of the rest of the quarter, we would expect to have -- get to 100% of the existing customers on the current experience. And broadly, what we've seen is that the new customers who come in that are then benefiting from an enhanced product suite, much deeper content and there are several more big enhancements planned over the course of the next couple of months. We have seen a pretty tight relationship between getting them into those new products and driving engagement and then that pulling through to early signs on customer retention. So, the signals are quite promising, but it's early. Atul Bagga: Bryan, this is Atul. Just adding on to that, we are seeing some very good traction with the new customers who are onboarding on -- you asked about when do we realize the benefit of this in financials. What we see with the retention, the improvement of retention is going to drive higher lifetime value of the customer, and that is going to be seen over the lifetime. So, you see that continue to build the momentum on financial improvements from retention, it will come over time. Operator: Your next question comes from the line of Greg Gibas with Northland Securities. Gregory Gibas: I wanted to follow up there. If you could add a little bit more color on the trends you saw with churn versus maybe new or additions of new cohorts within active members. That would be helpful. It sounds like you're seeing some improvements in the churn side of things, and I wanted to get a sense of how those trended within the quarter. Charles Cohn: Thanks, Greg. Good question. So, I think the consumer business has sort of shaped up collectively consistent with expectations. We're obviously still early in the year but feel good about our ability to drive growth in that business through enhancing the product and then kind of pulling it up funnel and making a lot of the product enhancements we have more visible, which we think is pretty compelling. And sort of the initial traction there is positive. Early in the year, but thus far, tracking pretty consistent with expectations. The retention benefits that we're seeing on the new platform are still early and applied to a relatively small percentage of the total business. And the recent weeks, trends and the initial sort of launch has gone well. But as it relates to deviating from expectations early in the year, I don't think we've seen that at all. So, it's been a pretty good start to the year, and the product velocity is exceeding expectations. Gregory Gibas: Got it. Great. That's good to hear. And if I could, as it relates to just the full-year guidance, would you be willing to maybe go into a little bit more depth in terms of the trends on a quarterly basis with ARPM and then active members? Atul Bagga: Yes. So we can talk about it. On active member, this is going to be a big focus for us. As you've seen, our trend on active member has been improving consistently in the last few quarters. And we do expect that to get better as we see higher retention and higher retention also translates into higher LTV, which means that improves our ability to acquire new customers more effectively. So that's one. Second, on the cost structure side, we have made some substantial improvements. So if you look at Q1 '25 to Q1 '26, we have delivered 1,500 basis points of margin expansion, 820 basis points coming from gross margin. We've improved efficiency of all our variable expenses: sales, marketing operations. And on the fixed headcount, we are seeing higher productivity. Just to give you a little context, our headcount is down about 20% year-over-year, while the revenue is roughly flat. So, we -- that momentum we expect to continue to build. We will continue to see more opportunities to lean on AI and improve our productivity. In terms of the rest of the business, Q2 and Q3, as you know, is seasonally weaker quarter for us. So, we do expect some drop in Q2 and Q3 and Q4, again, that picks up. Operator: [Operator Instructions] There are no further questions at this time. And that concludes today's call. Thank you for attending. You may now disconnect. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved 1,500 basis points of adjusted EBITDA margin expansion on flat revenue, driven by a structural shift from manual processes to AI-automated workflows. Completed the transition to an AI-native code base, enabling a product release cadence that management describes as the fastest in company history. Launched 'V3', a universal learner experience featuring 'Maya', an AI concierge that handles a meaningful share of in-product interactions without human intervention. Reduced fixed headcount by approximately 20% year-over-year while increasing product output, demonstrating that AI is fundamentally lowering the company's cost floor. Narrowed the rate of active member decline for the third consecutive quarter, with early V3 cohorts showing improved retention and engagement signals. Expanded gross margins by over 800 basis points, primarily attributed to the full-period benefit of price increases enacted in early 2025. Expects to return to positive year-over-year active member growth by the end of 2026 as V3 cohorts mature and retention benefits scale. Anticipates a return to free cash flow positive status by investing with discipline in high-LTV member growth areas. Planned releases include an AI-enabled language learning experience and a college/career readiness counselor for high school districts targeted for the back-to-school 2026 season. Full-year guidance assumes a more stable institutional funding environment in the second half of 2026 and successful reception of the new Varsity Tutors for Schools platform. Management expects ARPM growth to moderate starting in Q2 as the company laps the significant price increases implemented in February 2025. Institutional bookings declined to $1.1 million from $4 million year-over-year, which will create a revenue headwind in Q2 due to recognition lags. The transition to V3 is ongoing, with approximately 10,000 existing customers migrated so far; full migration is expected to conclude by the end of the year. Liquidity remains stable with $44.7 million in cash, though the company currently has $20 million drawn on its term loan. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that new customer cohorts on V3 show sequential improvements in retention as they engage with a more robust, non-tutoring product suite. The company expects to have 100% of existing customers on the new experience by the end of the year. Financial benefits from improved retention will build over time as higher lifetime value (LTV) improves the efficiency of new customer acquisition. Consumer business performance is tracking consistent with internal expectations despite being early in the year. Retention benefits are currently applied to a relatively small percentage of the total business but show promising early signals. Management is focused on pulling product enhancements 'up funnel' to make them more visible to prospective customers. Active member trends are expected to improve as higher retention allows for more effective marketing spend. Q2 and Q3 are expected to be seasonally weaker for revenue and EBITDA before picking up in Q4. Efficiency gains are viewed as durable, with the company continuing to lean on AI to maintain a lower headcount even as revenue scales.

Nerdy delivers revenue above guidance and achieves positive non-GAAP Adjusted EBITDA in Q1 2026, beating guidance on both metrics and driving over 1,500 basis points of margin improvement year-over-year. ST. LOUIS, May 07, 2026--(BUSINESS WIRE)--Nerdy Inc. (NYSE: NRDY) today announced financial results for the first quarter ended March 31, 2026. "In the first quarter, we exceeded the top end of our revenue guidance range and delivered positive non-GAAP adjusted EBITDA, both ahead of our guidance. Our non-GAAP adjusted EBITDA margin improved over 1,500 basis points year-over-year, reflecting the operating discipline and efficiency gains we've driven across every line of the P&L," said Chuck Cohn, Founder, Chairman and CEO of Nerdy. "We're building on this momentum in 2026 by improving our Learner and Expert experiences, growing our active member base, and delivering sustainable profitability." Please visit the Nerdy investor relations website https://www.nerdy.com/investors to view the Nerdy Q1 Shareholder Letter on the Quarterly Results Page. First Quarter Financial Highlights: Revenue Beats Top End of Guidance Range – Revenue of $48.7 million, was above our guidance range of $46 to $48 million, and represented an increase of 2% year-over-year from $47.6 million during the same period in 2025. Revenue increased when compared to the prior year period due to higher Consumer revenue, partially offset by lower Institutional revenue. The increase in Consumer revenue was driven by higher ARPM, which was primarily a result of price increases enacted in February 2025. Consumer Learning Memberships – First quarter Learning Membership revenue increased 3% year-over-year. Revenue recognized in the first quarter from Learning Memberships was $38.9 million and represented 80% of total Company revenue. The growth was driven by higher ARPM, which was $374 as of March 31, 2026, a 12% increase year-over-year. As of March 31, 2026, there were 36.9 thousand Active Members, a 9% decrease year-over-year. This rate of decline has narrowed sequentially for three consecutive quarters, and we expect to return to positive growth by the end of 2026. Gross Margin – Gross margin was 66.2% for the three months ended March 31, 2026, compared to a gross margin of 58.0% during the comparable period in 2025. The increase in gross margin was primarily due to the benefit of price increases enacted in February 2025. Nerdy Again Delivers Positive Adjusted EBITDA, Beating Top End of Guidance Range – Net loss was $6.1 million in the first quarter versus a net loss of $16.2 million during the same period in 2025. Excluding non-cash stock compensation expenses and restructuring costs, which were treated as an adjustment for non-GAAP measures, non-GAAP adjusted net loss was $0.2 million for the first quarter of 2026 compared to a non-GAAP adjusted net loss of $7.9 million in the first quarter of 2025. We reported non-GAAP adjusted EBITDA of positive $1.0 million for the first quarter of 2026, beating our guidance of approximately breakeven. This compares to a non-GAAP adjusted EBITDA loss of $6.4 million in the same period one year ago. Non-GAAP adjusted EBITDA outperformance relative to guidance was driven by revenue outperformance. Non-GAAP adjusted EBITDA outperformance relative to the prior year period was driven by efficiency improvements and strong cost control across every P&L line item and gross profit outperformance as non-GAAP adjusted EBITDA margin improved over 1,500 basis points year-over-year. Liquidity and Capital Resources – As of March 31, 2026, the Company’s principal sources of liquidity were cash and cash equivalents of $44.7 million. With our cash on hand and the funding available under our term loan, we believe we have ample liquidity to fund operations and growth initiatives, as we execute toward free cash flow positive. Second Quarter and Full Year 2026 Outlook: Today, we are introducing second quarter guidance and reaffirming full year 2026 guidance. Revenue Guidance: For the second quarter of 2026, we expect revenue in the range of $42-$44 million. For the full year of 2026, we expect revenue in the range of $180-$190 million. Non-GAAP Adjusted EBITDA Guidance: For the second quarter of 2026, we expect non-GAAP adjusted EBITDA to be negative $2 million to breakeven. For the full year of 2026, we expect non-GAAP adjusted EBITDA to be approximately breakeven. Liquidity and Capital Resources: We expect to end the year with $40-45 million of cash, inclusive of the current $20 million funded under the new term loan. Webcast and Earnings Conference Call Nerdy’s management will host a conference call to discuss its financial results on Thursday, May 7, 2026 at 5:00 p.m. Eastern Time. Interested parties in the U.S. may listen to the call by dialing 1-833-461-5787. International callers can dial 1-585-542-9983. The Access Code is 397446705. A live webcast of the call will also be available on Nerdy’s investor relations website at https://www.nerdy.com/investors. About Nerdy Inc. Nerdy (NYSE: NRDY) operates a next-generation live tutoring and intervention platform that leverages the power of human expertise with advanced artificial intelligence ("AI") to personalize learning, accelerate student achievement, and empower educators. Our mission is to transform the way people learn through technology. The Company’s purpose-built proprietary platform leverages technology, including AI, to connect learners of all ages to experts, delivering superior value on both sides of the network. Nerdy’s comprehensive learning destination provides learning experiences across thousands of subjects and multiple formats—including Learning Memberships, one-on-one instruction, small group tutoring, large format classes, and adaptive assessments. Nerdy’s flagship business, Varsity Tutors, is one of the nation’s largest platforms for live online tutoring and classes. Its solutions are available directly to students and consumers, as well as through schools and other institutions. Learn more about Nerdy at https://www.nerdy.com. 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 revenue and active member growth; enhancing the Learning Membership experience; AI-enabled productivity and operating leverage; the growth of our Institutional business; the sufficiency of our cash to fund future operations; and our anticipated quarterly and full year 2026 outlook; as well as statements that include the words "expect," "plan," "believe," "project," "will" and "may," and similar statements of a future or forward-looking nature. 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 offerings continue to evolve, which makes it difficult to predict our future financial and operating results; our level of indebtedness, which could adversely affect our financial condition; our operating activities may be restricted as a result of covenants related to our term loan and failure to comply with these covenants could have a material adverse effect on us; our history of net losses and negative operating cash flows, which could require us to need other sources of liquidity; 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 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 SEC, including our Annual Report on Form 10-K filed on February 26, 2026, as well as other filings that we may make from time to time with the SEC. View source version on businesswire.com: https://www.businesswire.com/news/home/20260507896829/en/ Contacts Investor Relations [email protected]