NerdWallet(NRDS) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents NerdWallet's unaudited condensed consolidated financial statements and detailed notes Item 1. Financial Statements This section provides NerdWallet's unaudited condensed consolidated financial statements and comprehensive notes Condensed Consolidated Balance Sheets This section details the company's financial position, including assets, liabilities, and stockholders' equity | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :----------------------------- | :-------------------------- | :----------------------------- | | Cash and cash equivalents | $105.3 | $66.3 | | Total current assets | $238.7 | $196.7 | | Total Assets | $476.0 | $437.6 | | Total current liabilities | $69.3 | $60.1 | | Total liabilities | $86.0 | $73.4 | | Total stockholders' equity | $390.0 | $364.2 | - Total assets increased by $38.4 million, and total stockholders' equity increased by $25.8 million from December 31, 2024, to June 30, 2025[16] Condensed Consolidated Statements of Operations This section outlines the company's financial performance, including revenue, expenses, and net income or loss | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $186.9 | $150.6 | $396.1 | $312.5 | | Income (Loss) From Operations | $10.7 | $(9.6) | $11.4 | $(5.9) | | Net Income (Loss) | $8.2 | $(9.4) | $8.4 | $(8.3) | | Basic EPS | $0.11 | $(0.12) | $0.11 | $(0.11) | | Diluted EPS | $0.11 | $(0.12) | $0.11 | $(0.11) | - The company reported a significant turnaround from net losses in Q2 2024 and YTD 2024 to net income in Q2 2025 and YTD 2025, driven by increased revenue and improved operational efficiency[17] Condensed Consolidated Statements of Comprehensive Income This section reports the company's total comprehensive income or loss, including net income and other items | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income (Loss) | $8.2 | $(9.4) | $8.4 | $(8.3) | | Other Comprehensive Income (Change in foreign currency translation) | $0.2 | $0.1 | $0.4 | $0.0 | | Comprehensive Income (Loss) | $8.4 | $(9.3) | $8.8 | $(8.3) | - Comprehensive income for the three and six months ended June 30, 2025, turned positive, reflecting the net income and a positive impact from foreign currency translation[18] Condensed Consolidated Statements of Stockholders' Equity This section details changes in the company's equity accounts, including capital contributions and net income | Metric (in millions) | Balance as of Dec 31, 2024 | Balance as of June 30, 2025 | | :------------------- | :------------------------- | :-------------------------- | | Additional Paid-in Capital | $530.9 | $547.9 | | Accumulated Other Comprehensive Income (Loss) | $(0.2) | $0.2 | | Accumulated Deficit | $(166.5) | $(158.1) | | Total Stockholders' Equity | $364.2 | $390.0 | - Stockholders' equity increased from $364.2 million at December 31, 2024, to $390.0 million at June 30, 2025, primarily due to net income and stock-based compensation[20] Condensed Consolidated Statements of Cash Flows This section summarizes cash flows from operating, investing, and financing activities over specific periods | Metric (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $44.2 | $32.9 | | Net cash used in investing activities | $(14.0) | $(19.2) | | Net cash provided by (used in) financing activities | $8.9 | $(0.4) | | Net increase in cash and cash equivalents | $39.0 | $13.4 | | Cash and Cash Equivalents, End of period | $105.3 | $113.8 | - Net cash provided by operating activities increased by $11.3 million year-over-year, driven by a shift from net loss to net income. Investing activities saw a decrease in cash used, partly due to lower capitalized software development costs and the absence of a prior year investment purchase, despite a $5.0 million business acquisition[24][111][112] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the financial statements 1. The Company and Basis of Presentation This note describes NerdWallet's business, operational segment, and the basis for financial statement preparation - NerdWallet, Inc. provides consumer-driven advice on personal finance through its platform, connecting individuals and SMBs with financial product providers. The company operates as a single segment[26][29] - On June 13, 2025, the Company acquired a privately-held financial services company for $5.0 million in cash, recording $3.0 million in goodwill. The acquisition's contribution to revenue and operating income was not material for the period[33][34] - In April 2025, an operating lease for office space in Arizona was amended, resulting in a $4.0 million right-of-use asset and corresponding operating lease liabilities[35] 2. Revenue This note disaggregates revenue by product category and explains significant changes in revenue streams | Product Category (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Insurance | $54.7 | $29.5 | $128.7 | $50.9 | | Credit cards | $34.8 | $46.1 | $72.8 | $96.1 | | SMB products | $25.0 | $26.1 | $53.9 | $56.5 | | Loans | $27.5 | $21.7 | $51.5 | $43.1 | | Emerging verticals | $44.9 | $27.2 | $89.2 | $65.9 | | Total revenue | $186.9 | $150.6 | $396.1 | $312.5 | - Total revenue increased by 24% for the three months and 27% for the six months ended June 30, 2025, primarily driven by strong growth in Insurance (86% and 153% respectively) and Emerging verticals (64% and 35% respectively). Credit cards revenue decreased by 25% and 24% due to organic search traffic pressures[37][77][78][79][82] 3. Fair Value Measurements This note provides information on assets and liabilities measured at fair value, categorized by valuation inputs | Asset (in millions) | June 30, 2025 (Total Carrying Value) | December 31, 2024 (Total Carrying Value) | | :------------------ | :----------------------------------- | :--------------------------------------- | | Cash and cash equivalents—money market funds | $55.0 | $36.8 | | Certificate of deposit | $2.2 | $2.2 | | Mortgage loans held for sale | $11.6 | $2.6 | | Total | $68.8 | $41.6 | - The total carrying value of assets measured at fair value increased from $41.6 million to $68.8 million, primarily due to an increase in money market funds and mortgage loans held for sale[39] 4. Significant Condensed Consolidated Balance Sheet Components This note details key balance sheet components, including capitalized software and short-term borrowings - Capitalized software development costs, net, decreased from $40.5 million at December 31, 2024, to $32.7 million at June 30, 2025. The company capitalized $9.8 million in software development costs during the six months ended June 30, 2025, and recorded $17.7 million in amortization expense[40] - Short-term borrowings under a warehouse line of credit increased from $2.5 million at December 31, 2024, to $11.3 million at June 30, 2025[41] 5. Commitments and Contingencies This note discloses the company's contractual commitments and potential liabilities from legal matters - There were no other material changes to the Company's financial commitments and arrangements as of June 30, 2025, compared to the prior annual report[42] - Management is not aware of any legal matters expected to have a material effect on the Company's financial position, results of operations, or cash flows, and no material potential loss has been accrued[43] 6. Stockholders' Equity This note details changes in stockholders' equity, including share repurchases and stock-based compensation - The Company did not repurchase any Class A common stock during the six months ended June 30, 2025, but paid $0.3 million in excise taxes related to previous repurchases. The remaining share repurchase authorization is $25.0 million[45][104] - The number of shares reserved for issuance under the 2021 Equity Incentive Plan automatically increased by 3.7 million shares effective January 1, 2025[47] | Metric (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Total stock-based compensation | $14.9 | $19.0 | 7. Income Taxes This note explains the company's effective tax rates, deferred tax assets, and recent tax legislation impact - The effective tax rate for the three and six months ended June 30, 2025, was 28.9% and 34.5% respectively, differing from the U.S. federal statutory rate primarily due to discrete items related to stock-based compensation and uncertain tax positions, partially offset by R&D credits[56][91] - A valuation allowance release for U.S. federal and most state deferred tax assets occurred in Q4 2024 due to improved profitability, though a valuation allowance remains on California deferred tax assets[56][92] - The recently enacted 'One Big Beautiful Bill Act' on July 4, 2025, includes provisions for immediate expensing of domestic R&D and certain capital expenditures. The Company is currently evaluating its impact[57][93] 8. Net Income (Loss) Per Basic and Diluted Share This note presents the calculation of basic and diluted earnings per share, reflecting company profitability | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to common stockholders (in millions) | $8.2 | $(9.4) | $8.4 | $(8.3) | | Basic EPS | $0.11 | $(0.12) | $0.11 | $(0.11) | | Diluted EPS | $0.11 | $(0.12) | $0.11 | $(0.11) | | Weighted-average shares of common stock—basic (in millions) | 74.8 | 77.9 | 74.5 | 77.5 | | Weighted-average shares of common stock—diluted (in millions) | 76.6 | 77.9 | 76.3 | 77.5 | - Basic and diluted EPS turned positive to $0.11 for both the three and six months ended June 30, 2025, compared to losses of $(0.12) and $(0.11) in the prior year periods, reflecting the return to profitability[59] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses NerdWallet's business, non-GAAP measures, operational results, liquidity, and capital resources Overview This section introduces NerdWallet's business model, platform offerings, and geographic presence - NerdWallet provides trustworthy financial guidance to consumers and small and mid-sized businesses (SMBs) through its platform, offering expert content, comparison shopping marketplaces, and a data-driven app in the U.S., UK, Canada, and Australia[61][63] Non-GAAP Financial Measures This section defines and explains the company's use of non-GAAP financial measures for performance assessment - The company uses non-GAAP operating income (loss) and adjusted EBITDA to assess performance, prepare budgets, and evaluate business strategies, excluding non-cash items and amounts not driven by core operating results[65][68][69] - Non-GAAP operating income (loss) excludes depreciation and amortization, impairment, asset disposals, contingent consideration changes, deferred compensation, acquisition-related costs, and restructuring charges, while deducting capitalized internally developed software costs[66] - Adjusted EBITDA further excludes interest income/expense, other gains/losses, and income taxes, in addition to the exclusions for non-GAAP operating income (loss), and also excludes stock-based compensation[67] Results of Operations This section analyzes the company's financial performance, including revenue, expenses, and profitability trends | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $186.9 | $150.6 | $396.1 | $312.5 | | Total costs and expenses | $176.2 | $160.2 | $384.7 | $318.4 | | Income (loss) from operations | $10.7 | $(9.6) | $11.4 | $(5.9) | | Net income (loss) | $8.2 | $(9.4) | $8.4 | $(8.3) | - Revenue increased by 24% and 27% for the three and six months ended June 30, 2025, respectively, primarily due to growth in Insurance and Emerging verticals, partially offset by a decline in Credit cards revenue[77] - Income from operations improved significantly to $10.7 million (Q2 2025) and $11.4 million (YTD 2025) from losses in the prior year, driven by revenue growth and decreased R&D and G&A expenses, despite increased sales and marketing[75] Non-GAAP Financial Measures Reconciliation This section reconciles GAAP to non-GAAP financial measures, providing a clearer view of operational performance | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Non-GAAP operating income (loss) | $20.7 | $(2.7) | $30.0 | $7.9 | | Non-GAAP operating income (loss) margin | 11% | (2%) | 8% | 3% | | Adjusted EBITDA | $33.6 | $14.3 | $54.7 | $39.8 | | Adjusted EBITDA margin | 18% | 10% | 14% | 13% | - Non-GAAP operating income significantly improved to $20.7 million (Q2 2025) and $30.0 million (YTD 2025) from losses/lower income in the prior year, reflecting improved operational performance[97] - Adjusted EBITDA increased by 135% for the three months and 37% for the six months ended June 30, 2025, primarily due to the shift from net losses to net income and decreased stock-based compensation[98] Liquidity and Capital Resources This section discusses the company's cash position, credit facilities, and ability to meet obligations - Cash and cash equivalents increased to $105.3 million as of June 30, 2025, from $66.3 million at December 31, 2024, primarily from cash generated by operations[100] - The company has a $125.0 million senior secured revolving credit facility with $123.9 million available as of June 30, 2025, and a $15.0 million warehouse line of credit for mortgage loans, with $11.3 million outstanding[105][106] - Management believes current cash, future cash flow from operations, and access to credit facilities will be sufficient to meet liquidity needs for the next twelve months and beyond[107] Critical Accounting Policies and Estimates This section highlights accounting policies and estimates requiring significant management judgment - There have been no material changes in the Company's critical accounting policies during the six months ended June 30, 2025[115] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section addresses the company's market risk exposure from interest rates and foreign currency, with no material changes - The Company's primary market risk exposure is due to fluctuations in interest rates and foreign currency exchange rates[116] - There were no material changes to market risk disclosures during the six months ended June 30, 2025, compared to the Annual Report on Form 10-K for the year ended December 31, 2024[117] Item 4. Controls and Procedures This section confirms effective disclosure controls and reports no material changes in internal control - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[118] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[119] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and other disclosures Item 1. Legal Proceedings This section states the company is involved in legal proceedings but anticipates no material adverse financial effect - The Company is not currently a party to any litigation that is expected to have a material adverse effect on its business, operating results, cash flows, or financial condition[121] Item 1A. Risk Factors This section highlights risks for investment advisory businesses, including regulatory scrutiny, fiduciary liability, and operational challenges - The Company's investment advisory businesses are subject to extensive regulation, with key risks including regulatory scrutiny, fiduciary liability, dependence on third-party vendors, operational resilience challenges, and evolving regulatory standards[123][128] - Failure to comply with applicable laws and regulations could materially affect the company's reputation, revenues, results of operations, and financial condition[124] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales or purchases of equity securities by the issuer during the period - There were no unregistered sales of equity securities or purchases of equity securities by the issuer during the period[125][126] Item 3. Defaults Upon Senior Securities This section states there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities during the reporting period[127] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to NerdWallet, Inc[129] Item 5. Other Information This section details changes in Rule 10b5-1 trading arrangements for directors and executive officers - Jennifer Ceran, a Board member, adopted a Rule 10b5-1 trading plan for up to 40,000 shares, expiring May 27, 2026[130] - Nicholas Tatum, Chief Accounting Officer, adopted a Rule 10b5-1 trading plan for up to 11,983 shares, expiring July 10, 2026[131] - Samuel Yount, Chief Business Officer, terminated several Rule 10b5-1 trading plans associated with various trusts and entities on June 10, 2025[131][132][133] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including credit agreements and certifications - Exhibits include a Limited Consent, Waiver and Third Amendment to Credit Agreement, certifications from the Principal Executive Officer and Principal Financial Officer, and various Inline XBRL Taxonomy Extension Documents[137]