Core Viewpoint - The emergence of fintech tools has provided individuals with lower credit scores or limited credit history better access to credit, but these tools face scrutiny from regulatory bodies and some lawmakers who claim they may lead consumers to predatory lending options [1][5]. Group 1: Fintech Tools and Comparison Shopping - Fintech tools, including comparison-shopping platforms like Credit Karma, NerdWallet, WalletHub, and LendingTree, enhance the chances of loan or credit card approval for consumers [2]. - Credit agencies, such as Experian, offer options like "no-ding decline," allowing consumers to apply without affecting their credit score unless approved [4]. Group 2: Regulatory Scrutiny and Consumer Protection - Some lawmakers, including Sen. Dick Durbin and Sen. Elizabeth Warren, argue that fintech platforms use deceptive practices to direct consumers toward predatory lending [5]. - The Consumer Financial Protection Bureau (CFPB) has attempted to regulate these practices, despite fintech platforms disclosing how advertiser compensation may influence product offerings [5]. Group 3: Research Findings on Consumer Access - Research from the Southwest Public Policy Institute (SPPI) indicates that comparison-shopping tools empower consumers to make informed choices, suggesting that government intervention could hinder access to credit for those in need [6]. - The SPPI report highlights the inefficiencies of government tools compared to sophisticated fintech systems, emphasizing the need for a dynamic marketplace that allows consumer choice [10][13]. Group 4: Case Study and User Experience - The SPPI report includes a case study of its founder, Patrick Brenner, who struggled to obtain credit through traditional means but successfully secured a credit card offer through Credit Karma, illustrating the effectiveness of these tools [8]. - The CFPB's tool for searching credit cards lacks the user-friendly features of comparison-shopping tools, requiring consumers to apply directly to banks without guidance on approval chances [9].

Company Performance - NerdWallet, Inc. reported break-even quarterly earnings per share, surpassing the Zacks Consensus Estimate of a loss of $0.10, and compared to earnings of $0.01 per share a year ago, representing an earnings surprise of 100% [1] - The company posted revenues of $209.2 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 10.04%, and compared to year-ago revenues of $161.9 million [2] - Over the last four quarters, NerdWallet has surpassed consensus revenue estimates four times, but has only exceeded consensus EPS estimates once [2] Stock Performance - NerdWallet shares have declined approximately 36.2% since the beginning of the year, while the S&P 500 has decreased by 3.9% [3] - The current consensus EPS estimate for the upcoming quarter is $0.04 on revenues of $177.86 million, and for the current fiscal year, it is $0.31 on revenues of $749.91 million [7] Industry Outlook - The Financial - Miscellaneous Services industry, to which NerdWallet belongs, is currently ranked in the top 36% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that industry performance can significantly impact stock performance [5][8]

Financial Data and Key Metrics Changes - In Q1 2025, NerdWallet reported revenue of $209 million, representing a 29% year-over-year increase, and achieved $9 million in non-GAAP operating income [6][14] - The company generated GAAP operating income of $700,000 and reported $58 million in adjusted free cash flow over the last four quarters, ending Q1 with $92 million in cash [17] Business Line Data and Key Metrics Changes - Credit card revenue declined 24% year-over-year to $38 million, while loans revenue grew 12% year-over-year to $24 million, driven by personal loans returning to growth and contributions from Nextdoor Lending [14][15] - SMB products revenue decreased 5% year-over-year to $29 million due to tight underwriting and trade policy uncertainty [15] - Insurance revenue surged 246% year-over-year to $74 million, reflecting strong market performance [15] - Emerging verticals generated $44 million in revenue, growing 15% year-over-year, primarily from banking [16] Market Data and Key Metrics Changes - The insurance market is expected to normalize growth rates in the second half of the year after a significant increase in Q1 [15][41] - The U.S. financial services digital ad spend market is projected to grow at a 16% CAGR over five years, while NerdWallet's market is expected to grow at a 25% CAGR [9] Company Strategy and Development Direction - The company is focused on enhancing its core business through vertical integration and improving user experiences, particularly in mortgage brokering and personal loans [10][11] - NerdWallet aims to build deeper relationships with consumers and small businesses, emphasizing quality over quantity in user engagement [8][58] - The company plans to continue investing in brand marketing while reducing overall brand expenses in the latter half of the year [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating potential economic uncertainties, including tariffs and inflation, while maintaining a focus on operational efficiency [7][18] - The company anticipates a return to growth in early 2026, contingent on the stability of the search landscape and improvements in user engagement [8][59] Other Important Information - The company retired its official Monthly Unique Users (MUU) disclosure, focusing instead on the quality of user relationships [8][58] - Management highlighted the importance of adapting to AI-driven search dynamics and the potential for improved user acquisition through enhanced experiences [60][61] Q&A Session Summary Question: Insights on AI enhanced search modules and traffic stability - Management noted that AI overviews and search ranking improvements contributed to recent traffic stability after previous declines [24][25] Question: Progress on integrating Nextdoor Lending and future vertical integration opportunities - Integration is progressing well, enhancing consumer relationships and unit economics, with future opportunities in complex decision-making areas like insurance and financial advising [27][32] Question: Outlook for the insurance vertical and growth expectations - Insurance revenue growth is expected to normalize, with premiums anticipated to grow faster than GDP, and a focus on expanding in auto and home insurance [41][43] Question: Performance marketing leverage as the insurance category matures - Management indicated that while performance marketing is a focus, significant impacts from maturing categories are not expected [48] Question: Progress in personal loans and travel rewards verticals - Personal loans are seeing success through improved funnel strategies, while travel rewards are being developed through content and audience building efforts [52][54]

[Part I: Financial Information](index=6&type=section&id=PART%20I%20Financial%20Information) The company's unaudited Q1 2025 financial statements and management's corresponding analysis are presented [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q1 2025 financial statements show increased assets and liabilities but decreased year-over-year net income [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $475.0 million and total liabilities rose to $103.4 million as of March 31, 2025 Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $92.2 | $66.3 | | Accounts receivable—net | $120.3 | $102.2 | | Total current assets | $241.9 | $196.7 | | Total Assets | $475.0 | $437.6 | | **Liabilities & Equity** | | | | Total current liabilities | $90.4 | $60.1 | | Total liabilities | $103.4 | $73.4 | | Total stockholders' equity | $371.6 | $364.2 | | Total Liabilities and Stockholders' Equity | $475.0 | $437.6 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 revenue grew to $209.2 million, but higher expenses reduced net income to $0.2 million Q1 2025 vs. Q1 2024 Statement of Operations (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $209.2 | $161.9 | | Total costs and expenses | $208.5 | $158.2 | | Income From Operations | $0.7 | $3.7 | | Net Income | $0.2 | $1.1 | | Diluted EPS | $0.00 | $0.01 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations increased to $26.7 million, resulting in a period-end cash balance of $92.2 million Q1 2025 vs. Q1 2024 Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $26.7 | $22.7 | | Net cash used in investing activities | $(4.6) | $(13.5) | | Net cash provided by financing activities | $3.8 | $1.3 | | **Net increase in cash and cash equivalents** | **$25.9** | **$10.5** | | **Cash and Cash Equivalents, End of period** | **$92.2** | **$110.9** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Disclosures highlight significant Insurance revenue growth, stock compensation details, and income tax positions Revenue by Product Category (in millions) | Product Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Insurance | $74.0 | $21.4 | | Credit cards | $38.0 | $50.0 | | SMB products | $28.9 | $30.4 | | Loans | $24.0 | $21.4 | | Emerging verticals | $44.3 | $38.7 | | **Total revenue** | **$209.2** | **$161.9** | - The company maintains a share repurchase program with a remaining authorization of **$25.0 million** as of March 31, 2025, with no shares repurchased in Q1 2025 or Q1 2024[35](index=35&type=chunk)[36](index=36&type=chunk) - Total stock-based compensation expense was **$6.7 million** in Q1 2025, down from $8.7 million in Q1 2024[43](index=43&type=chunk) - The company continues to maintain a **valuation allowance** on its California deferred tax assets as of March 31, 2025[45](index=45&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue grew 29% YoY to $209.2 million, but higher marketing costs reduced operating income and Adjusted EBITDA [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Q1 2025 revenue growth was driven by Insurance, but offset by lower Credit cards revenue and higher operating costs Revenue by Product Category - YoY Change (in millions) | Category | Q1 2025 | Q1 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Insurance | $74.0 | $21.4 | $52.6 | 246% | | Credit cards | $38.0 | $50.0 | $(12.0) | (24%) | | SMB products | $28.9 | $30.4 | $(1.5) | (5%) | | Loans | $24.0 | $21.4 | $2.6 | 12% | | Emerging verticals | $44.3 | $38.7 | $5.6 | 15% | | **Total revenue** | **$209.2** | **$161.9** | **$47.3** | **29%** | - Sales and marketing expenses increased by **$51.8 million (48%) YoY**, driven by a $43.0 million increase in performance marketing and a $10.4 million increase in brand marketing[77](index=77&type=chunk) - Research and development expenses decreased by **$3.9 million (19%) YoY** due to lower personnel-related costs[75](index=75&type=chunk) [Non-GAAP Financial Measures](index=26&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP operating income and Adjusted EBITDA decreased to $9.3 million and $21.1 million, respectively, in Q1 2025 Reconciliation of GAAP to Non-GAAP Measures (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Income from operations (GAAP) | $0.7 | $3.7 | | **Non-GAAP operating income** | **$9.3** | **$10.6** | | Net income (GAAP) | $0.2 | $1.1 | | **Adjusted EBITDA** | **$21.1** | **$25.5** | | Adjusted EBITDA margin | 10% | 16% | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $92.2 million in cash and access to a $125.0 million credit facility - Cash and cash equivalents were **$92.2 million** as of March 31, 2025[90](index=90&type=chunk) - The company has a **$125.0 million** senior secured revolving credit facility, with no outstanding balance as of March 31, 2025[95](index=95&type=chunk) - A subsidiary maintains a **$15.0 million** warehouse line of credit for mortgage funding, with **$6.8 million outstanding** as of March 31, 2025[96](index=96&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk exposures related to interest and currency rates remain materially unchanged from year-end 2024 - There were **no material changes** from the market risk disclosures in the Annual Report on Form 10-K for the year ended December 31, 2024[106](index=106&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in Q1 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2025[107](index=107&type=chunk) - There were **no material changes** in the company's internal control over financial reporting during the quarter[108](index=108&type=chunk) [Part II: Other Information](index=31&type=section&id=PART%20II%20Other%20Information) Key disclosures on legal matters, risk factors, securities sales, and other corporate information are provided [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently party to any litigation expected to have a material adverse effect - The company is not presently a party to any litigation expected to have a **material adverse effect** on its business[109](index=109&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) Investors are referred to the risk factors detailed in the company's 2024 Annual Report on Form 10-K - Investors are directed to consider the risk factors set forth in the **Annual Report on Form 10-K** for the year ended December 31, 2024[110](index=110&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales or company purchases of equity securities occurred during the first quarter of 2025 - There were **no unregistered sales** of equity securities or purchases of equity securities by the issuer in Q1 2025[111](index=111&type=chunk)[112](index=112&type=chunk) [Other Information](index=31&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement in Q1 2025 - No directors or officers adopted, modified, or terminated a **Rule 10b5-1 trading plan** during the three months ended March 31, 2025[115](index=115&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data - Exhibits filed include the Form of 2025 Executive Bonus Program, **CEO/CFO certifications** (Sections 302 and 906), and Inline XBRL documents[119](index=119&type=chunk)

Financial Data and Key Metrics Changes - In Q1 2025, NerdWallet reported revenue of $209 million, representing a 29% year-over-year increase, and achieved $9 million in non-GAAP operating income [5][13] - The company generated GAAP operating income of $700,000 and ended the quarter with $92 million in cash on hand [16][19] Business Line Data and Key Metrics Changes - Credit cards revenue declined 24% year-over-year to $38 million, while loans revenue grew 12% year-over-year to $24 million, driven by personal loans and mortgages [13][14] - Insurance revenue surged 246% year-over-year to $74 million, reflecting strong market performance [14] - SMB products revenue decreased 5% year-over-year to $29 million due to tight underwriting and trade policy uncertainty [14] Market Data and Key Metrics Changes - The insurance market is expected to normalize growth rates in the second half of the year after a significant increase in Q1 [14][40] - The overall financial services digital ad spend market is projected to grow at a 16% CAGR, while NerdWallet's market is expected to grow at a 25% CAGR over five years [8] Company Strategy and Development Direction - The company is focusing on vertical integration to enhance consumer experiences and improve monetization, particularly through the integration of Nextdoor Lending [10][26] - NerdWallet aims to improve operational efficiency while investing in growth opportunities, particularly in travel rewards and personalized user experiences [9][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating potential economic uncertainties, including tariffs and inflation, while maintaining a focus on long-term growth [6][17] - The company anticipates a return to growth in early 2026, contingent on the stability of the search landscape and improvements in user engagement [7][56] Other Important Information - The company has retired its official Monthly Unique Users (MUU) disclosure, focusing instead on the quality of user relationships [7] - NerdWallet plans to provide quarterly revenue and non-GAAP profit guidance, with an updated full-year 2025 non-GAAP operating income target of $55 million to $66 million [19] Q&A Session Summary Question: Insights on AI enhanced search modules and traffic stability - Management noted that AI overviews and search ranking improvements have contributed to recent traffic stability, following a challenging period [21][23] Question: Progress on integrating Nextdoor Lending and future vertical integration opportunities - The integration is progressing well, enhancing consumer relationships and unit economics, with future opportunities in complex decision-making areas like insurance and financial advising [25][30] Question: Brand campaign effectiveness and ROI - Management indicated that brand advertising remains a key asset, with ongoing improvements in brand health metrics despite previous declines [32][34] Question: Future growth in the insurance vertical - Insurance revenue growth is expected to normalize, with auto insurance currently dominating the segment, and opportunities in home insurance being explored [39][40] Question: Performance marketing leverage as the insurance category matures - While performance marketing may improve as the category matures, management does not expect a material impact from this change [44][45] Question: Outlook for personal loans and travel rewards - Personal loans are showing signs of growth due to improved funnel personalization, while travel rewards are being developed through content and audience building efforts [48][50]

Revenue Performance - Revenue for Q1 2025 was $209.2 million, representing a 29% increase year-over-year[1] - Insurance revenue reached $74.0 million, up 246% year-over-year, driven by strong growth in auto insurance products[6] - Credit card revenue decreased by 24% year-over-year to $38.0 million, primarily due to ongoing challenges in organic search traffic[6] - SMB products revenue was $28.9 million, down 5% year-over-year, mainly due to a decline in business loan originations[6] - Loans revenue increased by 12% year-over-year to $24.0 million, supported by growth in mortgage loans from the acquisition of Next Door Lending[6] Income and Profitability - Non-GAAP operating income was $9.3 million, a decrease of 12% compared to the previous year[7] - Adjusted EBITDA for the quarter was $21.1 million, down 17% year-over-year[7] - GAAP net income was $0.2 million, an 86% decrease from the previous year[5] - The adjusted EBITDA margin for Q1 2025 was 10%, down from 16% in Q1 2024[26] Cash Flow and Financial Position - Cash and cash equivalents at the end of the quarter were $92.2 million, down 17% from the previous quarter[7] - Adjusted free cash flow for the twelve months ended March 31, 2025, was $57.6 million, compared to $48.5 million for the twelve months ended December 31, 2024[28] - The company reported net cash provided by operating activities of $75.8 million for the twelve months ended March 31, 2025, an increase from $71.8 million for the twelve months ended December 31, 2024[28] Future Outlook - The company expects revenue for Q2 2025 to be in the range of $192-$200 million, representing a 30% year-over-year increase at the midpoint[32] - The forecasted GAAP operating income for the full year 2025 is projected to be between $25-$38 million, with non-GAAP operating income expected to range from $55-$66 million[29] - The company plans to increase its investment in strategic opportunities and stock repurchases, supported by its adjusted free cash flow[23] Strategic Focus and Challenges - The company remains focused on long-term growth through operational efficiency and investments in vertical integration and user engagement[3] - The company anticipates challenges in maintaining user engagement and expanding its market presence due to competitive pressures and macroeconomic factors[37] - The company is unable to provide a quantitative reconciliation of forecasted GAAP net income to forecasted adjusted EBITDA due to uncertainties in certain reconciling items[30]

Core Viewpoint - NerdWallet (NASDAQ: NRDS) was previously rated as a "Buy" due to its founder-led structure and growth in monthly unique users (MUUs) [1] Company Summary - The company is experiencing growth in its monthly unique users, indicating a positive trend in user engagement and potential revenue generation [1]

Group 1 - The stock markets are experiencing a skittish mood, prompting a strategy to rotate portfolios into undervalued small-cap rebound stocks [1] - Gary Alexander has extensive experience in covering technology companies and advising seed-round startups, contributing to insights on industry trends [1] Group 2 - The article emphasizes the importance of focusing on small-cap stocks as a potential investment strategy during market downturns [1]

Financial Data and Key Metrics Changes - In Q4 2024, NerdWallet reported revenue of $184 million, a 37% year-over-year increase, and delivered $17 million in non-GAAP operating income [7][24] - Full year revenue reached $688 million, reflecting a 15% increase compared to the previous year [24] - Non-GAAP operating income margin remained similar to Q4 of the prior year despite increased brand investment [36] Business Line Data and Key Metrics Changes - Insurance revenue grew to $72 million in Q4, an increase of 821% year-over-year, driven by strong consumer and partner demand [33] - Banking products saw a 5% year-over-year growth, while credit card revenue declined by 19% year-over-year to $35 million [25][26] - Personal loans revenue decreased by 51% year-over-year, while mortgage revenue grew primarily due to the acquisition of Next Door Lending [9][27] Market Data and Key Metrics Changes - The SMB products segment generated $26 million in Q4, down 7% year-over-year, reflecting pressure from elevated rates and tight underwriting [30] - Emerging verticals, which include banking and investing, delivered $34 million in revenue for Q4, growing 7% year-over-year [34] - The overall lending environment remains cyclically depressed, impacting growth expectations across various segments [24][30] Company Strategy and Development Direction - The company is shifting focus from Monthly Unique Users (MUUs) to driving engaged relationships with consumers and SMBs, emphasizing quality over quantity [11][12] - Vertical Integration and Registrations & Data-Driven Reengagement are identified as key growth pillars for the company [70][72] - The company plans to continue investing in brand awareness, including a national campaign launched during the Super Bowl [15][47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to year-over-year growth in personal loans and expects revenue growth to be maintained throughout 2025 despite tough comparisons [44][46] - The company anticipates a challenging lending environment but remains committed to disciplined spending and strategic investments [48][49] - Management highlighted the importance of adapting to changes in the competitive landscape, particularly with the rise of AI and digital marketing [81][82] Other Important Information - Lauren StClair, the CFO, will be stepping down in March and will be succeeded by John Lee [21][22] - The company has grown its cumulative registered user base to 25 million in 2024 [20] Q&A Session Summary Question: Growth in Insurance Segment - Management noted that the growth in the insurance segment is driven by improved traffic flows and a growing market, with confidence in sustainable demand [56][58] Question: Q1 Margin Guidance - The Q1 guidance indicates a potential loss to breakeven, primarily due to increased brand spending and a larger mix of performance marketing [62][63] Question: Shift in Traffic Strategy - The decision to focus on quality relationships over MUUs was driven by a correlation between MUUs and revenue, leading to a strategic shift in internal goals [68][72] Question: Competitive Market Share - Management emphasized that partners evaluate based on customer lifetime value, and deeper engagement is becoming more valued than just top-of-funnel share [92][93] Question: Personal Loans Performance - Management acknowledged a focus on personal loans has been reestablished, with expectations for improvement in Q1 following a significant decline in Q4 [100] Question: Vertical Integration Opportunities - Management indicated that vertical integration opportunities exist in areas where financial guidance is beneficial, suggesting a broad approach to integration [104] Question: Brand Spend Efficiency - Management is focused on improving brand spend efficiency, particularly in sports marketing, while striving for better returns on investment [106]

Core Viewpoint - NerdWallet, Inc. reported quarterly earnings of $0.01 per share, matching the Zacks Consensus Estimate, and showing improvement from a loss of $0.03 per share a year ago [1] - The company posted revenues of $183.8 million for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 8.70% and up from $133.7 million year-over-year [2] Financial Performance - The company has surpassed consensus revenue estimates four times over the last four quarters [2] - NerdWallet's shares have increased approximately 5.1% since the beginning of the year, outperforming the S&P 500's gain of 4.2% [3] Future Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call [3] - Current consensus EPS estimate for the upcoming quarter is $0.07 on revenues of $189.52 million, and for the current fiscal year, it is $0.36 on revenues of $756.88 million [7] Industry Context - The Financial - Miscellaneous Services industry, to which NerdWallet belongs, is currently ranked in the top 21% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact NerdWallet's stock performance [5][6]