Nerdy reports $48M Q4 revenue and expands AI initiatives amid institutional slowdown

Nerdy has announced financial results for the fourth quarter of 2024, reporting revenue of $48.0 million, surpassing the company’s guidance range of $44 million to $47 million.

Despite this, revenue declined 13% year-over-year from $55.1 million in Q4 2023, primarily due to lower institutional revenue and a decline in consumer active members.

The company posted a net loss of $15.7 million for the quarter, compared to a net loss of $9.2 million in the prior-year period. On a non-GAAP basis, adjusted EBITDA loss was $5.5 million, exceeding the company’s guidance range of negative $7.0 million to negative $10.0 million.

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a measure of a company’s profitability that excludes certain costs, allowing for a clearer picture of operating performance. Adjusted EBITDA goes a step further by removing non-cash expenses, such as stock-based compensation, to better reflect a company’s core financial health.

Consumer learning memberships drive revenue

Revenue from Nerdy’s Learning Memberships business reached $39.2 million in the fourth quarter, accounting for 82% of total revenue. Learning Memberships provide students with ongoing access to tutoring services, rather than one-time payments for individual sessions. Active memberships stood at 37,500 as of December 31, 2024.

Institutional revenue, which comes from partnerships with schools and other organizations, totaled $6.8 million, representing 14% of total revenue. During the quarter, Nerdy’s Varsity Tutors for Schools business executed 91 contracts, generating $4.6 million in bookings.

Bookings represent the total value of contracts signed during a period, even if the revenue from those contracts is recognized over time. This metric helps gauge future revenue potential.

The company also expanded access to the Varsity Tutors platform to an additional 600,000 students, bringing the total to 5 million students across more than 1,100 school districts.

"Our strategy to introduce school districts to the platform and ultimately convert them to our fee-based offerings produced 43% of paid contracts and 36% of total bookings value in the fourth quarter," the company stated in its earnings release.

Gross margin for Q4 2024 was 66.6%, down from 71.3% in the same period a year ago. The decline was attributed to lower average revenue per member (ARPM), increased utilization of tutoring sessions, and new expert incentives designed to improve engagement and retention.

AI initiatives and platform enhancements

Nerdy continues to integrate artificial intelligence into its offerings, including new AI-powered products designed to improve marketplace efficiency and customer experience. The company stated that its advancements in AI will play a key role in its growth strategy for 2025.

"Throughout 2024, Nerdy made substantial progress against our key objectives, including unifying our platforms and enhancing our marketplace technology, which has set the stage for our next phase of growth," said Chuck Cohn, Founder, Chairman, and CEO of Nerdy Inc. "We’ve recently launched several AI-powered products on our platform, and as we move into 2025, we’re excited to accelerate our focus on AI innovation."

For the first quarter of 2025, Nerdy expects revenue between $45 million and $47 million, with a non-GAAP adjusted EBITDA loss projected between $6 million and $8 million.

Full-year 2025 revenue is forecasted in the range of $190 million to $200 million, with adjusted EBITDA expected between negative $8 million and negative $18 million. The company also projects an end-of-year cash balance between $35 million and $40 million, maintaining a debt-free position.