Nerdy, Inc. (NYSE:NRDY) Q1 2023 Earnings Conference Call May 9, 2023 5:00 PM ET Company Participants TJ Lynn - Associate General Counsel Chuck Cohn - Founder, Chairman and Chief Executive Officer Jason Pello - Chief Financial Office Conference Call Participants Ryan MacDonald - Needham & Company Bryan Smilek - JPMorgan Brett Knoblauch - Cantor Fitzgerald Eric Sheridan - Goldman Sachs Operator Good afternoon. Thank you for attending the Nerdy First Quarter 2023 Earnings Call. My name is Elisa, and I will b ...

Part I: Financial Information [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Nerdy Inc.'s unaudited condensed consolidated financial statements for Q1 2023, including operations, balance sheets, cash flows, and equity [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) Q1 2023 revenue grew 4.8% to **$49.2 million**, with operating loss narrowing to **$11.4 million** from reduced marketing Consolidated Statements of Operations Highlights (in thousands) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | **Revenue** | $49,180 | $46,925 | | **Gross Profit** | $33,890 | $32,773 | | **Operating Loss** | $(11,370) | $(20,682) | | **Net Loss Attributable to Class A Common Stockholders** | $(18,931) | $(16,845) | | **Loss per share (Basic and Diluted)** | $(0.21) | $(0.21) | - A significant contributor to the reduced operating loss was the decrease in Sales and Marketing expenses from **$22.9 million** in Q1 2022 to **$15.6 million** in Q1 2023[8](index=8&type=chunk) - The company recorded an unrealized loss on derivatives of **$21.7 million** in Q1 2023, nearly double the **$11.0 million** loss from Q1 2022, which significantly impacted the loss before income taxes[8](index=8&type=chunk) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) As of March 31, 2023, total assets were **$131.6 million**, cash **$96.5 million**, and liabilities **$71.2 million** from revaluation Balance Sheet Highlights (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $96,520 | $90,715 | | **Total Assets** | $131,557 | $132,692 | | **Deferred revenue** | $22,254 | $25,539 | | **Total Liabilities** | $71,153 | $51,642 | | **Total Stockholders' Equity** | $60,404 | $81,050 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Q1 2023 generated **$6.8 million** in positive operating cash flow, a significant improvement from prior year Cash Flow Summary (in thousands) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | **Net Cash Provided By (Used In) Operating Activities** | $6,794 | $(931) | | **Net Cash Used In Investing Activities** | $(982) | $(1,264) | | **Net Cash Used In Financing Activities** | $0 | $(816) | | **Net Increase (Decrease) in Cash** | $5,805 | $(3,016) | - The positive operating cash flow was primarily driven by a net loss of **$32.3 million**, adjusted for non-cash items such as a **$21.7 million** unrealized loss on derivatives and **$11.0 million** in stock-based compensation[15](index=15&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Notes detail revenue breakdown, Institutional growth, derivative liabilities, and non-recognition of **$110.6 million** TRA liability Revenue by Business Category (in thousands) | Category | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | **Consumer** | $40,335 | $38,918 | | **Institutional** | $8,540 | $6,475 | | **Other** | $305 | $1,532 | | **Total Revenue** | $49,180 | $46,925 | - The fair value of derivative liabilities (non-employee Warrants and Earnouts) increased significantly from **$12.1 million** at year-end 2022 to **$33.7 million** as of March 31, 2023, leading to a **$21.7 million** unrealized loss[59](index=59&type=chunk)[60](index=60&type=chunk) - The company has not recognized a liability of **$110.6 million** under its Tax Receivable Agreement, concluding it was not probable that payments would be made based on estimates of future taxable income[67](index=67&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Learning Membership transition, 5% YoY revenue growth to **$49.2 million**, 1700 basis point sales and marketing efficiency, and **$6.8 million** positive cash flow - The company is making substantial progress in its transition from a 'Package' model to 'Learning Memberships' in its Consumer business, which is driving recurring revenue and lifetime value expansion[74](index=74&type=chunk)[80](index=80&type=chunk) - As of March 31, 2023, the company had **32,900** Active Members in its Learning Membership program[76](index=76&type=chunk) - Sales and marketing expenses as a percentage of revenue improved by approximately **1700 basis points** year-over-year, decreasing from **47%** to **30%** (excluding stock-based compensation)[87](index=87&type=chunk) - The company achieved positive cash flow from operations of **$6.8 million** for the quarter, a significant improvement from a **$0.9 million** use of cash in the prior year period[101](index=101&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk stems from warrant and earnout contracts, with a 10% adverse change in public warrant price increasing liabilities by **$1.3 million** - The company is exposed to market price sensitivity from its outstanding warrant and earnout contracts issued to non-employees[119](index=119&type=chunk) - As of March 31, 2023, a hypothetical **10%** adverse change in the price of public warrants would increase the fair value of warrant liabilities by about **$1.3 million** A similar **10%** adverse change in the fair value of earnouts would increase their liability by about **$2.1 million**[119](index=119&type=chunk) [Item 4. Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2023, with no significant changes to internal control - The CEO and CFO concluded that as of March 31, 2023, the company's disclosure controls and procedures were effective[121](index=121&type=chunk) - No significant changes were made to the company's internal control over financial reporting during the quarter ended March 31, 2023[123](index=123&type=chunk) Part II: Other Information [Item 1. Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) No material legal proceedings are reported for the three months ended March 31, 2023 - There are no environmental or other legal proceedings to disclose that are expected to result in monetary sanctions of **$1 million** or more[125](index=125&type=chunk) [Item 1A. Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the 2022 Annual Report on Form 10-K are reported - There have been no material changes to the risk factors previously disclosed in the 2022 Annual Report on Form 10-K[126](index=126&type=chunk) [Item 6. Exhibits](index=24&type=section&id=Item%206.%20Exhibits) Exhibits filed with Form 10-Q include corporate governance documents, a consulting agreement, and CEO/CFO certifications - The exhibits filed include certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002[128](index=128&type=chunk)

Nerdy, Inc. (NYSE:NRDY) Q4 2022 Earnings Conference Call February 28, 2023 5:00 PM ET Company Participants Chuck Cohn - Founder, Chairman and Chief Executive Officer Jason Pello - Chief Financial Office Conference Call Participants Doug Anmuth - JPMorgan Matthew Shea - Needham Eric Sheridan - Goldman Sachs Brett Knoblauch - Cantor Fitzgerald Maria Ripps - Canaccord Mario Lu - Barclays Operator Good afternoon and welcome to Nerdy Inc. Q4 Earnings Call Annually. All lines have been placed on mute to prevent a ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________ FORM 10-K _________________________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 1-39595 _________________________________________ NERDY INC. (Exact na ...

Nerdy Inc. (NYSE:NRDY) Q3 2022 Earnings Conference Call November 14, 2022 5:00 PM ET Company Participants Molly Sorg ??? Head-Investor Relations Chuck Cohn ??? Founder, Chairman and Chief Executive Officer Jason Pello ??? Chief Financial Office Conference Call Participants Eric Sheridan ??? Goldman Sachs Ryan MacDonald ??? Needham Aaron Kessler ??? Raymond James Maria Ripps ??? Canaccord Doug Anmuth ??? JPMorgan Brett Knoblauch ??? Fitzgerald Andrew Boone ??? JMP Mario Lu ??? Barclays Greg Gibas ??? Northla ...

PART I FINANCIAL INFORMATION This section presents unaudited financial statements and management's discussion of financial condition and operations [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited).) This section presents Nerdy Inc.'s unaudited condensed consolidated financial statements and notes for Q3 and YTD 2022 [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) Nerdy Inc. reported Q3 2022 revenue of **$31.8 million**, with reduced operating loss and improved net loss per share Consolidated Statements of Operations (in thousands) | | Three Months Ended September 30, | Nine Months Ended September 30, | | :--- | :--- | :--- | | | **2022** | **2021** | **2022** | **2021** | | **Revenue** | $31,752 | $31,298 | $120,863 | $98,649 | | **Gross Profit** | $21,917 | $20,659 | $83,445 | $65,305 | | **Operating Loss** | $(27,687) | $(58,016) | $(70,376) | $(69,889) | | **Net Loss** | $(32,298) | $(57,719) | $(48,768) | $(63,781) | | **Net Loss Attributable to Class A Common Stockholders** | $(18,516) | $(21,275) | $(26,666) | $(21,275) | | **Basic and Diluted Loss per share** | $(0.21) | $(0.27) | $(0.32) | $(0.27) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) As of September 30, 2022, total assets decreased to **$139.6 million**, primarily due to reduced cash and equivalents Consolidated Balance Sheet Highlights (in thousands) | | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $114,200 | $155,450 | | **Total Assets** | $139,619 | $177,145 | | **Total Current Liabilities** | $36,455 | $41,909 | | **Total Liabilities** | $55,702 | $81,340 | | **Total Stockholders' Equity** | $83,917 | $95,805 | - Cash and cash equivalents decreased from **$144.0 million** at the end of 2021 to **$106.4 million** as of **September 30, 2022**[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Net cash used in operating activities increased to **$33.5 million** for the nine months ended September 30, 2022 Cash Flow Summary (in thousands) | | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | **Net Cash Used In Operating Activities** | $(33,470) | $(19,949) | | **Net Cash Used In Investing Activities** | $(4,339) | $(3,769) | | **Net Cash (Used In) Provided By Financing Activities** | $(863) | $201,688 | | **Net (Decrease) Increase in Cash** | $(38,665) | $177,972 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes detail accounting policies, including Reverse Recapitalization, revenue recognition, noncontrolling interests, and lease accounting - The financial statements are prepared following the **Reverse Recapitalization** that occurred on **September 20, 2021**, where Nerdy Inc. became the public holding company for Nerdy LLC[20](index=20&type=chunk)[21](index=21&type=chunk) Revenue by Business Category (in thousands) | | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | **Consumer** | $103,640 (86%) | $92,930 (94%) | | **Institutional** | $14,693 (12%) | $1,340 (1%) | | **Other** | $2,530 (2%) | $4,379 (5%) | | **Total Revenue** | $120,863 (100%) | $98,649 (100%) | - As of **September 30, 2022**, Legacy Nerdy Holders held a **42.6% economic interest** in Nerdy LLC, accounted for as a noncontrolling interest[42](index=42&type=chunk) - The company adopted the new lease accounting standard (ASC 842) on **January 1, 2022**, recognizing right-of-use assets of **$4.2 million** and lease liabilities of **$4.9 million**[41](index=41&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the strategic shift to a 'Learning Membership' model, key operating metrics, revenue, and liquidity [Overview](index=23&type=section&id=OVERVIEW) Nerdy operates a live online learning platform, shifting to a 'Learning Membership' model for recurring customer relationships - The company's mission is to transform learning through its proprietary technology platform that connects learners with experts for live online instruction[113](index=113&type=chunk) - A key strategic initiative is the launch and expansion of Learning Memberships, designed to move from a package model to a recurring, 'always on' relationship with learners, expected to improve customer lifetime value and expert retention[114](index=114&type=chunk)[115](index=115&type=chunk) [Key Financial and Operating Metrics](index=24&type=section&id=KEY%20FINANCIAL%20AND%20OPERATING%20METRICS) Key metrics reflect the strategic shift, with Active Learners growing while Sessions decreased due to the new membership model - The company notes that the decrease in Session growth rates is an expected result of shifting its go-to-market strategy to focus on **higher-value Learning Membership customers**[129](index=129&type=chunk)[131](index=131&type=chunk) Key Operating Metrics | Metric | Q3 2022 | Q3 2021 | % Change | YTD 2022 | YTD 2021 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Active Learners** | 53,214 | 51,572 | 3% | 104,231 | 99,287 | 5% | | **Revenue per Active Learner** | $597 | $607 | (2)% | $1,160 | $994 | 17% | | **Sessions (thousands)** | 371 | 451 | (18)% | 1,378 | 1,396 | (1)% | [Results of Operations](index=26&type=section&id=RESULTS%20OF%20OPERATIONS) Q3 2022 revenue grew 1% to **$31.8 million**, with improved gross margin and reduced operating expenses - Revenue growth was muted in the near-term due to the shift to the **Learning Membership model**, where revenue is recognized linearly over the contract term[141](index=141&type=chunk) - Gross margin improved to **69%** for the three and nine months ended **September 30, 2022**, up from **66%** in the prior year periods[148](index=148&type=chunk) - Sales and marketing expenses for **Q3 2022** decreased by **$2.6 million (14%)** YoY, reflecting moderated marketing spend and increased efficiency[151](index=151&type=chunk) - General and administrative expenses for **Q3 2022** decreased by **$26.5 million (44%)** YoY, primarily due to the absence of **$34.9 million** in stock-based compensation and **$7.2 million** in transaction costs related to the **2021 Reverse Recapitalization**[154](index=154&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of September 30, 2022, Nerdy held **$106.4 million** in cash, with **$33.5 million** used in operations, targeting profitability by 2023 - The company held cash and cash equivalents of **$106.4 million** as of **September 30, 2022**[166](index=166&type=chunk) - Net cash used in operating activities increased to **$33.5 million** for the nine months ended **September 30, 2022**, compared to **$19.9 million** in the prior year[170](index=170&type=chunk) - The company is using proceeds from the **Reverse Recapitalization** to fund operations and investments, and expects to achieve **profitability by the end of 2023**[166](index=166&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company's market risk primarily stems from the fair value sensitivity of its warrant and earnout liabilities - The company is exposed to market risk from changes in the fair value of its **warrant and earnout contracts**. As of **September 30, 2022**, a hypothetical **10% adverse change** in public warrant prices would increase related liabilities by about **$765 thousand**, and a similar change in earnout fair value would increase liabilities by about **$925 thousand**[192](index=192&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded disclosure controls were ineffective as of September 30, 2022, due to material weaknesses, and is implementing a remediation plan - The CEO and CFO concluded that disclosure controls and procedures were **not effective** as of **September 30, 2022**, due to **material weaknesses** in internal control over financial reporting[194](index=194&type=chunk) - **Material weaknesses** identified include an **ineffective control environment**, **insufficient personnel** with appropriate accounting knowledge, and deficiencies in **risk assessment and IT general controls**[197](index=197&type=chunk)[198](index=198&type=chunk) - The company is undergoing a **remediation plan**, which includes hiring key finance and IT personnel, implementing an internal audit function, and designing and implementing a formal suite of **internal controls, policies, and procedures**[201](index=201&type=chunk)[203](index=203&type=chunk) PART II OTHER INFORMATION This section covers legal proceedings, updated risk factors, and a list of exhibits filed with the Form 10-Q [Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings.) The company reports no material legal proceedings to disclose for the three months ended September 30, 2022 - There are **no environmental or other material legal proceedings** to disclose as of and for the three months ended **September 30, 2022**[202](index=202&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors.) This section updates risk factors, specifically highlighting risks associated with the new Learning Membership model's successful launch - A key risk factor is the success of the **new Learning Membership model**. The company warns that if it is not successful in launching and scaling this new business model, it may suffer **losses and adverse operational results**[205](index=205&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits.) This section lists exhibits filed with the Form 10-Q, including corporate governance documents and required CEO/CFO certifications - The exhibits filed with this report include **corporate governance documents** and required **CEO/CFO certifications** under the Sarbanes-Oxley Act[207](index=207&type=chunk)

Financial Data and Key Metrics Changes - Nerdy reported revenue of $42.2 million for Q2 2022, exceeding guidance of $37 million to $40 million, and representing a 29% increase compared to Q2 2021 [5][20][28] - Gross profit for the quarter was $28.8 million, a 35% increase year-over-year, with gross margins expanding to 68.2% from 64.9% in the same period last year [22] - Non-GAAP adjusted EBITDA loss was $9.6 million, within the guidance range of $9 million to $12 million, reflecting improvements from revenue outperformance and marketing efficiency gains [24][30] Business Line Data and Key Metrics Changes - Revenue from small class and group offerings increased 114% to $5.5 million, accounting for 13% of total revenue, up from 8% in the same period last year [21] - Varsity Tutors for Schools generated over $4.2 million in revenue, representing 10% of total revenue for the quarter, with 44 new contracts signed [21][29] Market Data and Key Metrics Changes - Active learners increased by 36%, online sessions rose by 35%, and the number of active experts on the platform grew by 42% compared to Q2 2021 [6] - The company observed no discernible macroeconomic pressures impacting demand, despite seasonal declines in consumption due to heightened travel and leisure activities [7][8] Company Strategy and Development Direction - The company is focusing on expanding its Learning Memberships, which provide comprehensive educational resources and are expected to enhance customer engagement and retention [10][13] - New products such as Varsity Tutors On Demand and Teacher Assigned are being developed to strengthen institutional partnerships and meet market needs [16][17] - The acquisition of Codeverse aims to enhance the value of Learning Memberships by integrating coding education into the platform [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the transition to Learning Memberships, anticipating that it will drive higher engagement and lifetime value relationships with learners [27] - The company expects revenue growth to accelerate in Q4 2022, driven by the Learning Membership subscriber base and the ramp-up of Varsity Tutors for Schools [29][30] - Management noted that the second and third quarters of 2022 represent the highest projected cash use quarters due to the transition to a membership model [31] Other Important Information - The company has $121 million in cash on its balance sheet and no debt, providing ample liquidity to fund growth initiatives [31] - Management is focused on balancing growth and profitability, with a measured approach to hiring and marketing spend [25][30] Q&A Session Summary Question: Can you provide insights on the membership model's traction and conversion rates? - Management noted favorable conversion rates for memberships compared to one-to-one tutoring, with membership customers engaging more consistently over time [37][39] Question: Can you elaborate on the J curve and its impact on revenue? - Management explained that the J curve reflects lower revenue recognition in the initial months of the membership model, with expectations for higher revenue recognition thereafter [48] Question: What is the expected contribution of Codeverse to revenue? - Management indicated that Codeverse will be integrated into Learning Memberships, with no immediate financial impact expected during Q2 [52] Question: How is the pipeline for Varsity Tutors for Schools developing? - Management reported a growing pipeline and expressed confidence in the momentum heading into the back-to-school season, with significant funding still available for schools [56][81] Question: How are marketing strategies evolving with the new membership model? - Management highlighted a shift towards long-term relationships with customers, focusing marketing efforts on high-value, recurring support rather than last-minute transactional relationships [62]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q _________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 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 specified ...

nerdy Q1 | 2022 Earnings Release tivebba (J) Varsity Tutors 自 回 7 k അ g do Q Virisc Hyaluronic acid Structural Formula of Hysleronic acid: HA (Hyaluronan) VESTOR ORUCCTS EPS 10 n Maleoular Formula Hyalunanic acid (C2+H21NO1)" & N Nitrogen @ C Carbon o Oxyers 66 My family's experience with Varsity Tutors has been excellent. We have worked with the same tutors in math, science, AP English, and Spanish for over a year. I'm just amazed at their ability to attract and retain such high quality educators in such a ...

Nerdy Inc. (NYSE:NRDY) Q1 2022 Results Conference Call May 16, 2022 5:00 PM ET Company Participants Molly Sorg - Head, IR Chuck Cohn - Founder, Chairman and CEO Jason Pello - CFO Conference Call Participants Ryan MacDonald - Needham Eric Sheridan - Goldman Sachs Maria Ripps - Canaccord Doug Anmuth - JP Morgan Andrew Boone - JMP Securities Aaron Kessler - Raymond James Brett Knoblauch - Cantor Fitzgerald Mario Lu - Barclays Greg Gibas - Northland Securities Operator Good afternoon. My name is Hannah, and I w ...