Nerdy (US:NRDY)2025-11-06 23:00Financial Data and Key Metrics Changes - Third quarter revenue was $37 million, a decrease of 1% year-over-year from $37.5 million in Q3 2024, but within the guidance range of $37-$40 million [16][17] - Non-GAAP adjusted EBITDA loss was $10.2 million, an improvement from a loss of $14 million in the prior year period, indicating a 960 basis point improvement in adjusted EBITDA margin year-over-year [22][23] - Active member count as of September 30 was lower than the previous year, primarily due to operational challenges [18] Business Line Data and Key Metrics Changes - Learning Membership revenue was $33 million, representing 89% of total company revenue, with a 5% year-over-year increase in consumer revenue [17][18] - Institutional revenue was $3.7 million, accounting for 10% of total revenue, impacted by federal and state funding delays [18][19] - The new flagship Live Learning Platform achieved a 50% reduction in audio-video error rates and nearly 40% cost savings per session [9][39] Market Data and Key Metrics Changes - The institutional business saw a 20% year-over-year decrease in quarterly bookings, totaling $6.8 million, due to funding delays affecting high-dosage tutoring contracts [19] - The company anticipates sequential quarterly revenue growth in both consumer and institutional businesses in Q4 2025 [24][25] Company Strategy and Development Direction - The company is undergoing a significant replatforming to enhance product development speed and efficiency, aiming for nearly 100% of traffic on new AI-written code bases by the end of November [8][33] - A new end-to-end Varsity Tutors for Schools experience is set to launch, aligning better with school operations and enhancing product sellability [15][19] - The focus on AI integration aims to improve user experience and operational efficiency, with expectations of substantial retention improvements [12][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges faced during the back-to-school season due to product launch delays but expressed confidence in returning to growth [4][17] - The company expects to achieve a non-GAAP adjusted EBITDA loss in the range of $2 million to break even for Q4 2025, with full-year losses projected between $19-$21 million [26][27] - Management emphasized the importance of AI in enhancing tutoring experiences and operational efficiencies, which are expected to drive future growth [12][22] Other Important Information - The company appointed a new COO and added 13 senior operational leaders to strengthen execution and improve operational efficiencies [14][15] - The company has entered into a loan agreement for up to $50 million to enhance financial flexibility while avoiding equity dilution [23][24] Q&A Session Summary Question: Impact of new management structure on execution speed - Management expressed excitement about the new COO's experience and the centralization of control, which is expected to enhance operational improvements and product velocity [28][29] Question: Confidence in overcoming product delays - Management highlighted the launch of new experiences and improvements in underlying metrics, indicating positive trends as the school year progresses [32][34] Question: Insights on funding delays affecting institutional business - Management noted that delays in federal and state funding are impacting bookings and program launches but remains confident in the long-term potential of the institutional market [35][36] Question: Expected ROI from the new Live Learning Platform - Management indicated that improved reliability and reduced operational costs from the new platform will enhance customer retention and overall experience [39][40] Question: Plans to increase active member metrics - Management emphasized the focus on product velocity and operational improvements to drive higher engagement and retention among active members [42][43]