Nerdy Inc. Q1 FY2025 earnings call

• Continued execution on product innovation and operational improvements to drive return to growth and profitability. - ARPM increased to $335, a 14% year-over-year improvement as of March 31, 2025, with monthly recurring Learning Membership revenue inflecting positively. - Implemented tutor incentives driving higher utilization of tutoring sessions, with positive leading indicators in learner-expert relationships. - Gross margins lower year-over-year due to timing difference between tutor incentives and price increases, but expect sequential quarterly improvements. - Delivered new products rapidly, with AI embedded in learning experience, including AI-powered tutoring and lesson plan generators. - Reduced headcount by about 16% since December 31, 2024, leveraging AI for productivity improvements.

Learning Membership subscription revenue was $37.9 million, representing 80% of total company revenue. The Institutional business delivered revenue of $9.4 million, representing 19% of total company revenue during the first quarter.

• Second quarter revenue expected to be positively impacted by new customer acquisition, higher ARPM, and price increases. - Full-year revenue range increased at the low-end to $191.5 million to $200 million. - Reaffirmed adjusted EBITDA guidance for the full year. - Expect sequential quarterly improvements in consolidated revenue growth rates and gross margin, aiming for adjusted EBITDA and operating cash flow positive in Q4 2025.

Q: Jason Tilchen asked about steps taken for Varsity Tutors for Schools and bookings pipeline trend.

A: Chuck Cohn mentioned strong quarter, progress on Live + AI roadmap, positive interest from school districts, and $4 million bookings in the quarter.

Q: Yi Fu Lee asked about macro impact and AI product monetization.

A: Chuck Cohn stated macro not impacting Nerdy as interactions with customers are normal, and AI summary is a key product with positive feedback.

Q: Brianna Diaz asked about gross margin timing gap and future AI investments.

A: Jason Pello explained temporary timing difference between tutor investments and price increases, expecting sequential gross margin improvements; Chuck Cohn discussed AI for Human Interaction and platform improvements.

Q: Gregory Gibas asked about monthly recurring revenue inflection and upside in the quarter.

A: Chuck Cohn said MRR flipped positive in March due to improved onboarding, higher frequency customers, and matching algorithm/tutor incentives; Jason Pello discussed path to profitability with product innovation, price increases, and headcount reduction.