☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q _________________________________________ (Mark One) OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☐ For the transition period from _______ to _______ Commission File Number: 1-39595 NERDY INC. (Exact name of registrant as specifi ...

Exhibit 99.1 During the first quarter, we implemented tutor incentives that are driving higher utilization of tutoring sessions across both our Consumer and Institutional businesses. Following the adoption of the new Expert incentives, we are already seeing several positive leading indicators in the Learner-Expert relationship including: faster time to the first session, more sessions in the first 30 days, more sessions per active tutor, lower tutor replacement rates, and higher retention – all of which sho ...

Company Performance - Nerdy Inc. (NRDY) has returned 1.2% year-to-date, outperforming the average loss of 5.3% in the Consumer Discretionary sector [4] - The Zacks Consensus Estimate for NRDY's full-year earnings has increased by 0.4% over the past quarter, indicating improved analyst sentiment and earnings outlook [3] Industry Comparison - Nerdy Inc. belongs to the Schools industry, which includes 17 companies and is currently ranked 68 in the Zacks Industry Rank; this industry has seen an average loss of 3% this year, showing that NRDY is performing better [5] - In contrast, PIGEON CORP (PGENY), another stock in the Consumer Discretionary sector, has a year-to-date return of 48.4% and belongs to the Consumer Products - Discretionary industry, which is ranked 216 and has declined by 9.8% this year [4][6] Sector Ranking - The Consumer Discretionary group, which includes Nerdy Inc., is currently ranked 14 within the Zacks Sector Rank, which evaluates the strength of 16 individual sector groups [2] - The Zacks Rank system, which Nerdy Inc. currently holds at 2 (Buy), emphasizes earnings estimates and revisions, suggesting potential for outperformance in the near term [3]

Group 1 - Nerdy Inc. has shown a year-to-date performance of approximately 1.2%, outperforming the average return of -1.5% for the Consumer Discretionary sector [4] - The company currently holds a Zacks Rank of 2 (Buy), indicating a positive outlook based on earnings estimates and revisions [3] - Over the past 90 days, the Zacks Consensus Estimate for Nerdy Inc.'s full-year earnings has increased by 12%, reflecting stronger analyst sentiment [3] Group 2 - Nerdy Inc. is part of the Schools industry, which consists of 18 companies and is currently ranked 28 in the Zacks Industry Rank [5] - The average return for the Schools industry so far this year is 2.7%, suggesting that Nerdy Inc. is slightly underperforming its industry [5] - In comparison, Ralph Lauren, another Consumer Discretionary stock, has a year-to-date return of 2.2% and also holds a Zacks Rank of 2 (Buy) [4][6]

Core Insights - Nerdy (NYSE: NRDY) experienced a significant late-year stock rally, achieving triple-digit growth, but is now facing challenges as the market stabilizes and lacks strong driving forces [1] - The emergence of technologies like Generative AI and the ongoing effects of the post-pandemic environment are creating new hurdles for the EdTech sector [1] Company Analysis - Nerdy is categorized as a pure-play in the EdTech industry, which is currently experiencing a slowdown after an initial surge [1] - The stock's impressive performance has been overshadowed by the decline of the Musk-Trump rally, indicating a shift in market sentiment [1] Industry Trends - The EdTech industry is grappling with the integration of advanced technologies such as Generative AI, which may disrupt traditional educational models [1] - The post-pandemic landscape continues to influence market dynamics, presenting both challenges and opportunities for companies within the sector [1]

Group 1 - J.P. Morgan analyst Bryan M. Smilek reiterated an Underweight rating on Nerdy Inc shares despite the company exceeding expectations in its fourth-quarter results [1] - Nerdy reported a 26% year-over-year improvement in engagement and better retention in the fourth quarter, driven by AI-driven optimizations [2] - The company raised its subscription product Average Revenue Per Member (ARPM) by 15-20%, with February ARPM tracking over $400, which is expected to foster consumer revenue growth in 2025 [2] Group 2 - On the institutional side, Nerdy adjusted its investments to align with a more stable sales cycle following uncertainties related to ESSER and N-T funding [3] - The company secured 91 paid contracts resulting in $4.6 million in bookings, extending platform access to over 5 million students across approximately 1,100 school districts [4] - Nerdy plans to integrate AI across its VTS offerings, expecting product upgrades and streamlined operations to drive institutional revenue growth in the second half of the year [5] Group 3 - The analyst expressed optimism about improved trends across consumer, institutional, and adjusted EBITDA, although visibility remains uncertain [5] - Key growth initiatives like Learning Memberships and VTS show potential for scaling and profitability, but challenges and execution risks persist [5] - Stronger execution and scalability across active members and VTS, along with positive adjusted EBITDA and free cash flow generation, could materialize in 2025 [6]

Core Insights - Nerdy reported a loss per share of $0.09, better than the consensus estimate of a loss of $0.14 per share [2] - Sales reached $48 million, exceeding the company's guidance of $44 million to $47 million and Wall Street's estimate of $45 million [2] - However, sales declined by 13% year-over-year, and gross margin fell to 66.6% from 71.3% in the previous year [3] - The net loss widened to $15.7 million compared to a loss of $9.2 million in the same quarter last year [3] - Active members decreased by about 8%, from 40,700 to 37,500 [4] Future Outlook - For the upcoming quarter, Nerdy expects sales between $45 million to $47 million, indicating a 14% decline from the previous year [5] - Adjusted EBITDA is projected to be a loss of $7 million, a significant drop from a positive EBITDA of $24,000 in the first quarter of 2024 [6]

Financial Data and Key Metrics Changes - In Q4 2024, Nerdy reported revenue of $48 million, which was above the guidance range of $44 million to $47 million, but represented a 13% decrease year-over-year from $55.1 million in Q4 2023 [29] - Gross profit for Q4 was $31.9 million, a 19% decline year-over-year, with a gross margin of 66.6% compared to 71.3% in the same period of 2023 [33] - Non-GAAP adjusted EBITDA loss was $5.5 million, better than the guidance of negative $7 million to negative $10 million, but compared to a positive adjusted EBITDA of $3 million in Q4 2023 [38][40] Business Line Data and Key Metrics Changes - Consumer Learning Membership subscription revenue was $39.2 million, accounting for 82% of total revenue, with active members at 37,500 and an average revenue per member (ARPM) of $302 [30] - The institutional business generated $6.8 million in revenue, representing 14% of total revenue, with 91 contracts executed yielding $4.6 million in bookings [31] - The strategy to introduce school districts to the platform resulted in 43% of paid contracts and 36% of total bookings value coming from school district partners in Q4 [25] Market Data and Key Metrics Changes - Consumer engagement rose 26% year-over-year in Q4, with improvements in onboarding and tutor matching leading to higher retention rates [23] - The company enabled access to the Varsity Tutors platform for an additional 600,000 students, bringing the total to 5 million students across over 1,100 school districts [31] Company Strategy and Development Direction - The company unified its consumer and institutional offerings, improved marketplace technology, and enhanced subscription offerings, focusing on AI-driven innovations to optimize the learning experience [9][10] - Plans for 2025 include further AI product enhancements, such as Tutor Copilot and advanced predictive analytics, aimed at improving engagement and operational efficiency [15][18] - The company aims to shift focus towards paid access to the Varsity Tutors platform, leveraging AI-led product enhancements to drive growth [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Q4 performance, highlighting improvements in marketplace infrastructure and product innovations that are expected to drive retention and growth [49] - The outlook for 2025 includes expectations for a return to growth in consumer revenues, driven by product innovation and operational improvements [41] - Institutional revenue is anticipated to be flat in the first half of 2025 due to lower bookings in 2024, with growth expected to resume in the back-to-school period [88] Other Important Information - The company has zero debt and cash and cash equivalents of $52.5 million, providing ample liquidity for growth initiatives [40] - The company implemented new expert incentives to drive engagement and retention, which have already shown positive results [34] Q&A Session Summary Question: Can you help us bridge the assumptions on the active learning numbers and ARPM for Q1? - Management expressed confidence in Q4 performance and noted that tutor incentives have significantly improved engagement and retention, which they believe will positively impact Q1 [50][51] Question: What drove the pricing decision for new customers in Q1? - A 20% price increase was implemented due to added value from product enhancements and tutor incentives, which management believes are justified [53] Question: Are you starting to see returns from the localization of the sales force? - Management indicated that product enhancements and a focus on AI capabilities are expected to drive growth, despite a cautious approach to the sales force due to funding uncertainties [74] Question: How much of a benefit have you contemplated from AI tools within your fiscal 2025 outlook? - Management is optimistic about the potential of AI tools to enhance customer activation and process automation, which they believe will be self-funding over the year [80][81] Question: What factors do you think will drive growth expectations? - Management highlighted retention improvements, higher ARPM, and enhanced product offerings as key drivers for returning to growth [86]

Financial Data and Key Metrics Changes - In Q4 2024, the company reported revenue of $48 million, which was a 13% decrease year-over-year from $55.1 million in Q4 2023, but above the guidance range of $44 million to $47 million [29][30] - The gross profit for Q4 was $31.9 million, representing a 19% decline year-over-year, with a gross margin of 66.6% compared to 71.3% in the same period last year [33][34] - The non-GAAP adjusted EBITDA loss was $5.5 million, better than the guidance of negative $7 million to negative $10 million, but compared to a positive adjusted EBITDA of $3 million in Q4 2023 [38][39] Business Line Data and Key Metrics Changes - Consumer Learning Membership subscription revenue was $39.2 million, accounting for 82% of total revenue, with active members at 37,500 and an average revenue per member (ARPM) of $302, leading to an annualized run rate of approximately $136 million [30][31] - The institutional business generated $6.8 million in revenue, representing 14% of total revenue, with 91 contracts executed yielding $4.6 million in bookings [31][32] Market Data and Key Metrics Changes - The company enabled access to the Varsity Tutors platform for an additional 600,000 students, bringing the total to 5 million students across over 1,100 school districts by year-end [31][72] - In Q4, 43% of paid contracts and 36% of total bookings value came from school district partners who initially partnered with Varsity Tutors for Schools [25][65] Company Strategy and Development Direction - The company unified its consumer and institutional offerings and improved marketplace technology, focusing on AI-driven innovations to enhance the learning experience [9][10] - The strategy includes introducing AI-powered products to improve learner and expert support, such as an AI session playback tool and Tutor Copilot, aimed at increasing engagement and retention [11][57] - The company plans to shift focus towards paid access to the Varsity Tutors platform for new customers, leveraging significant AI-led product enhancements in 2025 [66][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Q4 performance and the underlying marketplace infrastructure, which supports higher retention and engagement [90][92] - The company anticipates a return to growth in consumer revenues in 2025, driven by product innovation and operational improvements [41][82] - The outlook for institutional revenue remains cautious due to lower 2024 bookings and government funding uncertainties, but management sees significant opportunities in the institutional space [32][83] Other Important Information - The company has zero debt and cash and cash equivalents of $52.5 million, providing ample liquidity to pursue growth initiatives [40][81] - The company expects to be adjusted EBITDA and cash flow positive in Q4 2025, ending the year with cash in the range of $35 million to $40 million [44][86] Q&A Session Summary Question: Can you help us bridge the assumptions on the active learning numbers and ARPM for Q1? - Management feels confident about Q4 performance and the underlying foundation, which supports higher retention and engagement, leading to a positive outlook for Q1 [90][92] Question: What drove the pricing decision for new customers in Q1? - The company increased prices by approximately 20% due to added value from product enhancements and tutor incentives, which are expected to improve retention and customer experience [95][96] Question: How is the new AI products impacting retention in the consumer business? - AI products improve match quality and enhance the customer experience, leading to higher retention rates and better engagement [101][102] Question: Can you explain the gross margin and higher utilization dynamic in Q4? - Higher utilization positively impacts retention but affects gross margins in the short term; however, management expects sequential improvements in gross margin as new pricing takes effect [109][110]

Employee and Workforce Management - As of February 13, 2025, the company had approximately 600 full and part-time employees and 400 globally-sourced independent contractors[64] - The company emphasizes the importance of employee retention, growth, and development, offering competitive compensation and training opportunities[66] - In July 2023, the Company implemented workforce reductions to enhance operational efficiency through automation and new revenue relationships[394] - The company completed workforce reductions of approximately 17% of its total workforce in December 2022, primarily affecting variable hourly roles[395] Financial Performance - Revenue for 2024 was $190,231, a decrease of 1% from $193,399 in 2023[311] - Gross profit for 2024 was $128,394, down from $136,447 in 2023, reflecting a gross margin of approximately 67.5%[311] - Operating loss increased to $(70,108) in 2024 compared to $(57,571) in 2023[311] - Net loss for 2024 was $(67,142), slightly improved from $(67,669) in 2023[314] - Total assets decreased to $92,507 in 2024 from $124,744 in 2023, a decline of approximately 26%[316] - Cash and cash equivalents at the end of 2024 were $52,541, down from $74,824 in 2023, representing a decrease of 30%[316] - Total liabilities decreased to $31,394 in 2024 from $39,138 in 2023, a reduction of about 20%[316] - Total comprehensive loss attributable to Class A common stockholders was $(42,597) in 2024, compared to $(40,131) in 2023[314] - The total accumulated deficit increased to $515,281,000 as of December 31, 2023, compared to $475,107,000 at the end of 2022, indicating ongoing financial challenges[321] - The company reported a net loss attributable to Class A common stockholders of $42.585 million for the year ended December 31, 2024, compared to a net loss of $40.174 million in 2023[410] Revenue Recognition and Accounting Policies - The Company recognized revenue from contracts with Learners and Institutions as performance obligations are satisfied, with revenue from Learning Memberships recognized monthly[345][349] - Revenue is recognized for unredeemed payments for services over the period in which the performance obligation is satisfied, based on historical usage patterns[348][351] - The Company has adopted new accounting standards that will expand disclosures related to income taxes but will not materially impact financial statements[382] Regulatory and Compliance Issues - The company is subject to various regulatory and administrative investigations, which could have a material impact on its business and financial condition[67] - The company monitors changes to applicable regulations and designs its policies to comply with existing interpretations[72] Intellectual Property and Trademarks - The company relies on a range of intellectual property protections, including trademarks and copyrights, to safeguard its proprietary rights[74] - The company has an ongoing trademark registration program and has several registered and pending trademarks in the U.S. and foreign jurisdictions[75] Market Presence and Consumer Awareness - The company believes its online learning platform is more efficient, convenient, effective, and affordable compared to offline solutions, which is a significant factor in driving consumer adoption[61] - The company has scaled to millions of users, but many consumers and institutions in the U.S. remain unaware of the online solutions offered[63] - Nerdy Inc. has expanded its offerings to include Varsity Tutors for Schools, enhancing its market presence in institutional education[324] Cash Flow and Liquidity - Net cash used in operating activities was $(15,603) in 2024, compared to $(7,560) in 2023, indicating increased cash outflow[319] - Cash and cash equivalents decreased to $52.541 million in 2024 from $74.824 million in 2023[414] Stock and Equity - The number of Class A common stock shares increased to 106,416 as of December 31, 2023, up from 95,296 shares at the end of 2022, indicating growth in equity financing[321] - The weighted-average shares of Class A common stock for basic and diluted loss per share increased to 111,695 in 2024 from 97,157 in 2023[410] Expenses and Cost Management - Marketing expenses for the years ended December 31, 2024, 2023, and 2022 were $39,593, $43,043, and $45,113 respectively, indicating a decrease of 8.5% from 2023 to 2024[370] - The cost of revenue increased to $61.837 million in 2024 from $56.952 million in 2023, while employee-related expenses rose to $94.937 million from $85.756 million[458] Restructuring and Legal Matters - Total expected restructuring charges amount to $2.32 billion, with cumulative restructuring charges incurred to date also at $2.32 billion[397] - The Company expensed $1,700 million related to a legal settlement in 2023, which is included in general and administrative expenses[438]