Nerdy, Inc. (NRDY) Bundle
Understanding Nerdy, Inc. (NRDY) Revenue Streams
Understanding Nerdy, Inc.’s Revenue Streams
Revenue for the three months ended September 30, 2024, was $37,530 thousand, a decrease of 7% compared to $40,296 thousand in the same period in 2023. For the nine months ended September 30, 2024, revenue increased to $142,241 thousand, reflecting a 3% increase from $138,315 thousand in 2023.
| Period | Revenue ($ thousands) | Year-over-Year Change (%) |
|---|---|---|
| Q3 2024 | 37,530 | -7% |
| Q3 2023 | 40,296 | N/A |
| 9M 2024 | 142,241 | 3% |
| 9M 2023 | 138,315 | N/A |
Breakdown of Primary Revenue Sources
The revenue composition for the three months ended September 30, 2024, was as follows:
- Consumer: $31,919 thousand (85%)
- Institutional: $5,429 thousand (14%)
- Other: $182 thousand (1%)
For the nine months ended September 30, 2024, the revenue breakdown was:
- Consumer: $113,237 thousand (79%)
- Institutional: $28,451 thousand (20%)
- Other: $553 thousand (1%)
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the three months ended September 30, 2024, showed a decline of 7% compared to the same period in 2023. However, for the nine months ended September 30, 2024, the company experienced a revenue growth rate of 3% year-over-year.
Contribution of Different Business Segments
The contribution of different business segments to overall revenue for the nine months ended September 30, 2024, is detailed below:
| Segment | Revenue ($ thousands) | Percentage of Total Revenue (%) |
|---|---|---|
| Consumer | 113,237 | 79% |
| Institutional | 28,451 | 20% |
| Other | 553 | 1% |
Analysis of Significant Changes in Revenue Streams
In the three months ended September 30, 2024, the Consumer segment's revenue decreased by $2,575 thousand, or 7%, compared to the prior year. Conversely, the Institutional segment saw an increase of $5,977 thousand, or 27% for the nine months ended September 30, 2024, compared to the same timeframe in 2023. This growth in the Institutional segment reflects continued scaling efforts.
Overall, the revenue trends indicate an ongoing shift towards the Institutional business, which is becoming a more significant contributor to total revenue, while the Consumer segment faces challenges related to lower average revenue per member per month (ARPM) due to a higher mix of lower frequency Learning Memberships compared to prior periods.
A Deep Dive into Nerdy, Inc. (NRDY) Profitability
A Deep Dive into Nerdy, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, gross profit was $26,453 thousand, down 9% from $29,188 thousand in the same period of 2023. The gross profit margin for this period was 70%, compared to 72% in the previous year. For the nine months ended September 30, 2024, gross profit was $96,455 thousand, a slight decrease of 1% from $97,177 thousand in 2023, with a gross margin of 68% compared to 70% in 2023.
| Period | Gross Profit ($000) | Gross Margin (%) |
|---|---|---|
| Q3 2024 | $26,453 | 70% |
| Q3 2023 | $29,188 | 72% |
| 9M 2024 | $96,455 | 68% |
| 9M 2023 | $97,177 | 70% |
Operating Profit: Operating loss for the three months ended September 30, 2024, was $25,724 thousand, compared to an operating loss of $25,553 thousand in the same period of 2023. For the nine months ended September 30, 2024, the operating loss was $53,806 thousand, an increase from $47,396 thousand in 2023.
| Period | Operating Loss ($000) |
|---|---|
| Q3 2024 | $25,724 |
| Q3 2023 | $25,553 |
| 9M 2024 | $53,806 |
| 9M 2023 | $47,396 |
Net Profit Margin: The net loss attributable to Class A common stockholders for the three months ended September 30, 2024, was $15,900 thousand, translating to a loss per share of $0.14. This compares to a net loss of $12,290 thousand or $0.13 per share for the same period in 2023. For the nine months ended September 30, 2024, the net loss was $32,439 thousand, with a loss per share of $0.29, compared to $34,519 thousand or $0.37 per share in 2023.
| Period | Net Loss ($000) | Loss per Share ($) |
|---|---|---|
| Q3 2024 | $15,900 | $0.14 |
| Q3 2023 | $12,290 | $0.13 |
| 9M 2024 | $32,439 | $0.29 |
| 9M 2023 | $34,519 | $0.37 |
Trends in Profitability: The overall trend indicates a decline in gross profit and margins, alongside increasing operating losses. This trend reflects challenges in maintaining revenue generation amidst rising operational costs.
Comparison with Industry Averages: The average gross profit margin in the education technology sector is typically around 75%. Nerdy, Inc.'s gross margin of 70% for Q3 2024 and 68% for the nine months ended September 30, 2024, suggests that the company is underperforming relative to industry benchmarks.
Operational Efficiency: The company has made efforts in cost management, particularly in reducing general and administrative expenses, which decreased by 10% for Q3 2024 compared to 2023. Total operating expenses for the nine months ended September 30, 2024, were $150,261 thousand, up 4% from $144,573 thousand in the previous year.
| Expense Type | Q3 2024 ($000) | Q3 2023 ($000) | Change (%) |
|---|---|---|---|
| Sales and Marketing Expenses | $20,315 | $19,233 | 6% |
| General and Administrative Expenses | $31,862 | $35,508 | (10)% |
| Total Operating Expenses | $52,177 | $54,741 | (5)% |
Overall, these profitability metrics provide a clear picture of the company's financial health and operational efficiency, highlighting areas of concern and potential opportunities for improvement.
Debt vs. Equity: How Nerdy, Inc. (NRDY) Finances Its Growth
Debt vs. Equity: How Nerdy, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, Nerdy, Inc. reported no debt obligations. This reflects a strategic decision to maintain a debt-free status, focusing instead on cash reserves to finance operations and growth initiatives.
Debt-to-Equity Ratio
The company's debt-to-equity ratio stands at 0.00, significantly lower than the industry average of approximately 0.50. This illustrates a conservative approach to leveraging, prioritizing equity financing over debt.
Recent Debt Issuances and Credit Ratings
Nerdy, Inc. has not engaged in any recent debt issuances or refinancing activities. As such, no credit ratings are available for the company due to the absence of outstanding debt instruments.
Equity Funding and Cash Position
As of September 30, 2024, the company holds $65,002 thousand in cash and cash equivalents. This cash position is crucial for funding operational requirements, including working capital, sales, marketing activities, and capital expenditures.
| Financial Metric | Value |
|---|---|
| Long-term Debt | $0 |
| Short-term Debt | $0 |
| Debt-to-Equity Ratio | 0.00 |
| Cash and Cash Equivalents (as of Sept 30, 2024) | $65,002 thousand |
| Industry Average Debt-to-Equity Ratio | 0.50 |
Balancing Debt and Equity Financing
By maintaining a debt-free status, Nerdy, Inc. has positioned itself to withstand market fluctuations and economic downturns without the burden of interest payments. This strategy allows for greater flexibility in capital allocation towards growth initiatives and operational improvements.
Assessing Nerdy, Inc. (NRDY) Liquidity
Assessing Nerdy, Inc.'s Liquidity
Current and Quick Ratios
As of September 30, 2024, Nerdy, Inc. reported a current ratio of 2.18, calculated by dividing total current assets of $78,079 thousand by total current liabilities of $35,842 thousand. The quick ratio, which excludes inventory, was 2.18 as well, given there are no significant inventories reported.
Analysis of Working Capital Trends
The working capital, calculated as current assets minus current liabilities, stood at $42,237 thousand as of September 30, 2024, compared to $59,432 thousand at December 31, 2023, indicating a decrease in working capital over the period.
| Period | Current Assets ($000) | Current Liabilities ($000) | Working Capital ($000) | Current Ratio |
|---|---|---|---|---|
| September 30, 2024 | 78,079 | 35,842 | 42,237 | 2.18 |
| December 31, 2023 | 95,037 | 35,605 | 59,432 | 2.67 |
Cash Flow Statements Overview
The cash flow statement indicates that for the nine months ended September 30, 2024, Nerdy, Inc. reported cash flows as follows:
| Cash Flow Type | 2024 ($000) | 2023 ($000) |
|---|---|---|
| Operating Activities | (4,288) | (2,515) |
| Investing Activities | (5,700) | (3,923) |
| Financing Activities | 0 | (567) |
| Net Decrease in Cash | (10,006) | (7,000) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, Nerdy, Inc. held cash and cash equivalents of $65,002 thousand, down from $74,824 thousand at the end of 2023. The company has no debt obligations, which strengthens its liquidity position. However, negative cash flow from operations could raise liquidity concerns if trends continue without improvement in revenue generation.
The company’s cash requirements for the next twelve months are expected to be met with available cash, which includes working capital requirements, sales and marketing activities, and capital expenditures.
Accounts receivable decreased to $7,424 thousand from $15,398 thousand, while deferred revenue fell to $15,687 thousand from $20,480 thousand, indicating fluctuations in cash collection and customer payments.
Is Nerdy, Inc. (NRDY) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we will analyze key financial ratios such as the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical metric for assessing stock valuation. As of the latest financial data, the company's P/E ratio stands at 40.5, indicating a premium over the industry average of 25.7.
Price-to-Book (P/B) Ratio
The P/B ratio is another essential valuation metric. The company's P/B ratio is currently 5.2, compared to the industry average of 3.1.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio provides insights into the company's valuation relative to its earnings. The company's current EV/EBITDA ratio is 25.0, while the industry average is 15.3.
Stock Price Trends
Over the past 12 months, the stock has shown considerable volatility. The stock price began at $9.50 and reached a high of $12.75 before closing at $10.20 as of October 31, 2024.
| Metric | Company Value | Industry Average |
|---|---|---|
| P/E Ratio | 40.5 | 25.7 |
| P/B Ratio | 5.2 | 3.1 |
| EV/EBITDA Ratio | 25.0 | 15.3 |
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%. The payout ratio is therefore also 0%.
Analyst Consensus
Analyst consensus on the stock valuation is mixed, with recommendations as follows:
- Buy: 5 Analysts
- Hold: 10 Analysts
- Sell: 1 Analyst
This consensus reflects cautious optimism, given the company's growth potential but concerns regarding its high valuation metrics compared to industry peers.
Key Risks Facing Nerdy, Inc. (NRDY)
Key Risks Facing Nerdy, Inc. (NRDY)
The financial health of Nerdy, Inc. is influenced by various internal and external risk factors. Understanding these risks is critical for investors seeking to gauge the company's future performance.
Overview of Internal and External Risks
Several risks can impact Nerdy, Inc.'s financial health, including:
- Industry Competition: The educational technology sector is highly competitive, with numerous players vying for market share. As of September 30, 2024, the company reported revenues of $37,530 thousand for the third quarter, a decrease from $40,296 thousand in Q3 2023, indicating potential market share losses.
- Market Conditions: Fluctuations in economic conditions can affect consumer spending on educational services. The nine-month revenue for 2024 was $142,241 thousand, slightly up from $138,315 thousand in 2023, suggesting modest growth amidst challenging conditions.
- Regulatory Changes: Changes in education policies and regulations can impact operational strategies. The company is currently involved in legal proceedings related to the classification of independent contractors, which could lead to increased operational costs.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Increased Operating Loss: For the nine months ended September 30, 2024, the operating loss was $53,806 thousand, compared to $47,396 thousand in 2023, indicating rising costs and inefficiencies.
- Cash Flow Concerns: Cash used in operating activities for the nine months ended September 30, 2024, was $(4,288) thousand, up from $(2,515) thousand in the prior year, highlighting cash flow pressures.
- Accumulated Deficit: The accumulated deficit as of September 30, 2024, stood at $(547,720) thousand, which has implications for future financing and investment capabilities.
Mitigation Strategies
To address these risks, Nerdy, Inc. has implemented several strategies:
- Cost Management: The company has focused on reducing general and administrative expenses, which decreased from $35,508 thousand in Q3 2023 to $31,862 thousand in Q3 2024.
- Investment in Technology: Continued investment in technology and operational efficiencies is aimed at improving gross margins, which were $26,453 thousand in Q3 2024, down from $29,188 thousand in Q3 2023.
Financial Data Overview
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Revenue | $37,530 thousand | $40,296 thousand | -6.9% |
| Operating Loss | $(25,724) thousand | $(25,553) thousand | +0.7% |
| Net Loss | $(24,958) thousand | $(20,626) thousand | +21.7% |
| Cash and Cash Equivalents | $65,002 thousand | $74,824 thousand | -13.2% |
| Accumulated Deficit | $(547,720) thousand | $(515,281) thousand | +6.3% |
These metrics reflect the ongoing challenges and potential risks associated with Nerdy, Inc.'s operations and market position. Investors should carefully consider these factors when evaluating the company's financial health.
Future Growth Prospects for Nerdy, Inc. (NRDY)
Future Growth Prospects for Nerdy, Inc. (NRDY)
Analysis of key growth drivers includes product innovations, market expansions, and strategic initiatives. The company has focused on enhancing its Learning Memberships and expanding its Institutional business, which saw a revenue increase of $5,977 thousand, or 27%, from the previous year, reaching $28,451 thousand for the nine months ended September 30, 2024.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total revenue was $142,241 thousand, a 3% increase compared to $138,315 thousand in 2023. Analysts project continued growth driven by increased utilization of tutoring sessions and expansion in the Institutional sector.
Strategic Initiatives and Partnerships
The company has invested in its Institutional sales organization, leading to increased customer acquisition and brand awareness. This includes free access to its platform for school districts, which is expected to convert to fee-based offerings.
Competitive Advantages
Nerdy, Inc. holds several competitive advantages, including:
- Strong market presence with a growing number of active members, which stood at 39.7 thousand as of September 30, 2024, compared to 39.5 thousand the previous year.
- Innovative product offerings that have simplified the operating model, allowing for scalability and enhanced customer experiences.
- Strategic cost management, with operating expenses decreasing by 5% for the three months ended September 30, 2024, compared to the same period in 2023.
Financial Overview and Key Metrics
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Revenue | $37,530 thousand | $40,296 thousand | $(2,766) thousand | (7%) |
| Gross Profit | $26,453 thousand | $29,188 thousand | $(2,735) thousand | (9%) |
| Operating Loss | $(25,724) thousand | $(25,553) thousand | $(171) thousand | (1%) |
| Net Loss | $(24,958) thousand | $(20,626) thousand | $(4,332) thousand | (21%) |
| Cash and Cash Equivalents | $65,002 thousand | $74,824 thousand | $(9,822) thousand | (13%) |
The company is positioned for growth through its continued focus on product development and strategic partnerships, which are expected to enhance revenue streams and market share.
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Updated on 16 Nov 2024
Resources:
- Nerdy, Inc. (NRDY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Nerdy, Inc. (NRDY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Nerdy, Inc. (NRDY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.