NerdWallet(NRDS) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported Q3 revenue of $191 million, representing a 25% year-over-year increase, exceeding revenue guidance [22][37] - Non-GAAP operating income was$ 23 million, up $13 million year-over-year, with a non-GAAP operating income margin of approximately 12% [9][32] - GAAP operating income was$ 6.6 million, with a net income of $0.1 million, which included$ 7.8 million in restructuring expenses [34] Business Line Data and Key Metrics Changes - Insurance revenue grew 916% year-over-year, significantly contributing to overall revenue growth [31] - SMB products generated $28 million in revenue, growing 12% year-over-year, driven by renewals despite challenges in SMB loan originations [28] - Credit card revenue declined 16% year-over-year to$ 45 million, attributed to underwriting constraints and organic traffic pressures [7][23] - Loans revenue decreased by 28% year-over-year to $24 million, with personal loans down 49% year-over-year [25] Market Data and Key Metrics Changes - Monthly Unique Users (MUUs) decreased by 7% year-over-year to 22 million, primarily due to challenges in organic traffic [35] - The company anticipates a full quarter of impact from search headwinds in Q4, leading to further MUU deceleration [8][52] - Emerging verticals revenue grew 129% year-over-year, driven by banking, insurance, and investing [30] Company Strategy and Development Direction - The company is focusing on vertical integration, highlighted by the acquisition of Next Door Lending to enhance mortgage services [10][16] - Strategic areas of investment include improving shopping experiences and building deeper consumer relationships [12][17] - The company aims to leverage its brand to enhance user experiences and drive growth in various financial services [19][59] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing headwinds in organic search and a challenging lending environment but expressed confidence in long-term growth prospects [5][37] - The company expects Q4 revenue in the range of$ 164 million to $172 million, indicating a 26% year-over-year growth at the midpoint [37][38] - Management remains optimistic about the insurance vertical's strength continuing into 2025, driven by share gains and market dynamics [56][57] Other Important Information - The company repurchased 5.8 million shares at an average price of$ 12.29 per share during Q3 [45] - Lauren StClair, the CFO, will be leaving the company in March 2025, with plans for an orderly transition [20] Q&A Session Summary Question: Follow-up on organic traffic and initiatives - Management discussed the challenges in organic search visibility and the impact of AI on traffic dynamics, emphasizing ongoing improvements in user experience [48][50][52] Question: Insurance growth sustainability - Management confirmed expectations for continued strength in insurance revenue into Q4 and the first half of 2025, driven by market conditions and share gains [56][57] Question: Performance marketing strategy - Management reiterated a disciplined approach to performance marketing, focusing on profitability and user registration [61][63] Question: Strength in non-auto insurance - Management indicated that while auto insurance remains the primary driver, there are ongoing investments in home and life insurance to diversify offerings [66][67] Question: Trends in banking and lending - Management noted tight underwriting conditions in credit cards and a decline in banking revenue, but expressed optimism about future recovery as market conditions improve [71][72]