ST. LOUIS — Feb. 28, 2023 — Nerdy Inc. (NYSE: NRDY) today announced financial results for the fourth quarter ended December 31, 2022.

“Last May we unveiled our plan to evolve our products and revenue model toward long-term recurring ‘always-on’ relationships with our customers. I am pleased to share that we made substantial progress in the fourth quarter and our shift to an ‘always on’ business model is ahead of plan,” said Chuck Cohn, Founder, Chairman and Chief Executive Officer of Nerdy Inc.

“Learning Membership adoption continues to exceed our expectations, demonstrating higher conversion, engagement and customer retention than our former Package model, which in turn has led to meaningfully higher customer lifetime value. We’re also seeing strong interest in our new Institutional products, further validating the shift we made in our go-to-market strategies, and providing us with increased confidence in achieving adjusted EBITDA profitability by the end of 2023.”

Please visit the Nerdy investor relations website https://www.nerdy.com/investors to view the Nerdy Q4 Shareholder Letter on the Quarterly Results Page.

Financial Highlights

• • Revenue Outperforms Guidance – In the fourth quarter, Nerdy delivered revenue of $41.8 million, above the top end of our guidance range of $39-41 million. Due to strong customer response, Learning Memberships was the primary option presented to new Consumer customers during the fourth quarter. Revenue for the year ended December 31, 2022 was $162.7 million, an increase of 16% from $140.7 million during the same period in 2021. Revenue growth was driven by continued strength in our Consumer business, including Learning Memberships, and growth in our Institutional business.
  • Learning Memberships Exceeding Expectations – Revenue recognized in the fourth quarter from Learning Memberships grew to $20.8 million or 50% of total revenue, up from 18% of total company revenue recognized in the third quarter, as we rapidly evolved our focus toward higher lifetime value recurring relationships with Learners. Learning Membership revenue grew to an annualized run rate of $87 million as of December 31, 2022, an increase from $50 million as of September 30, 2022.
  • Institutional Momentum – In the fourth quarter, Varsity Tutors for Schools executed over 70 contracts, yielding a record $11.3 million of bookings. Institutional revenue of $4.4 million represented 10% of total revenue in the fourth quarter reflecting normal school seasonality. Our focus on larger school districts and our ‘always on’ bundled solutions yielded our first Teacher Assigned partnership, an important milestone as we transition toward recurring revenue products with Institutional customers.
  • Path to Profitability – Net loss was $(15.1) million in the fourth quarter versus net earnings of $33.1 million in the fourth quarter of 2021. Excluding non-cash stock compensation expenses, mark-to-market derivative adjustments, restructuring costs, transaction-related costs, and non-recurring one-time items, adjusted net loss was $(6.8) million for the fourth quarter of 2022 versus $(7.1) million in the fourth quarter of 2021. Nerdy reported a non-GAAP adjusted EBITDA loss of $(5.5) million in the fourth quarter of 2022, beating our guidance range of $(6.0) to $(8.0) million. This compares to a non-GAAP adjusted EBITDA loss of $(5.5) million in the same period one year ago. Adjusted EBITDA outperformance versus guidance was driven by higher revenues, higher gross margin, marketing efficiency gains, workforce reduction actions stemming from our business model changes, and diligent cost oversight.
  • First Quarter and Full Year 2023 Outlook – For the full year, we expect growth will be driven by the continued evolution towards recurring revenue streams, the corresponding build in the number of Learning Membership subscribers, and higher Institutional revenues. Given our recent momentum, we have increased visibility into and confidence in achieving adjusted EBITDA profitability by the end of 2023 as previously communicated.
    • Revenue Guidance: For the first quarter of 2023, we expect revenue in a range of $45-47 million. For the full year 2023, we expect revenue of $190-200 million; representing 20% growth at the midpoint vs. our 2022 revenue of $162.7 million. Full year revenue guidance reflects our decision to shift 100% of the Consumer business to Learning Memberships by the end of 2023, including the remaining Test Prep and Professional audiences. Revenue guidance also reflects normal summer seasonality, including anticipated lower levels of new customer acquisition, consumption, and retention during the summer months when K12 schools and universities are out of session.
    • Adjusted EBITDA Guidance: For the first quarter of 2023, we expect a Non-GAAP adjusted EBITDA loss in a range of $3 million to breakeven. For the full year 2023, we expect a Non-GAAP adjusted EBITDA loss in the range of $10 million to breakeven. Our adjusted EBITDA guidance for both the first quarter and full year reflects the continuing benefits from our recurring revenue products which focus on long-term relationships with higher value customers, an improving gross margin profile, and operating efficiencies stemming from our continued shift to recurring revenue business models. Full year adjusted EBITDA guidance reflects the impact of normal summer seasonality and higher variable costs in the third quarter as we ramp into the back-to-school selling season.

Webcast and Earnings Conference Call

Nerdy’s management will host a conference call and webcast today, February 28, 2023 at 5:00 p.m. Eastern Time. Interested parties in the U.S. may listen to the call by dialing 1-844-200-6205. International callers can dial 1-929-526-1599. The Access Code is 609907. A live webcast of the call will also be available on Nerdy’s investor relations website at https://www.nerdy.com/investors. A replay of the webcast will be available on Nerdy’s website for one year following the event and a telephonic replay of the call will be available until March 7, 2023 by dialing 1-866-813-9403 from the U.S. or 44-204-525-0658 from all other locations, and entering the Access Code 627099.

About Nerdy Inc.

Nerdy (NYSE: NRDY) is a leading platform for live online learning, with a mission 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 3,000+ subjects and multiple formats—including Learning Memberships, one-on-one instruction, small group classes, large format group classes, and adaptive self-study. 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.