Nerdy Q2 Earnings Call Highlights

Nerdy Q2 Earnings Call Highlights

Nerdy NYSE: NRDY reported second-quarter results that showed improved margins and a narrower loss, while the online learning company announced plans to wind down its Varsity Tutors for Schools business and exit First Tutors, a smaller U.K. tutoring operation. Founder, Chairman and Chief Executive Officer Chuck Cohn said the decisions are intended to concentrate the company’s capital, product development and management attention on its consumer learning business. Consumer revenue totaled $36.5 million in the quarter, representing 84% of Nerdy’s total revenue of $43.3 million.

“Q2 demonstrated continued improvement in Nerdy’s operating performance,” Cohn said, describing the company as a more focused consumer learning business centered on connected tools for learning, tutoring and progress tracking.

Second-Quarter Financial Results Total revenue was down 4% year over year to $43.3 million, within the company’s guidance range of $42 million to $44 million. Consumer average revenue per month, or ARPM, rose 5% from a year earlier to $366. Learning Memberships stood at 29,100 as of June 30, down 5% year over year. However, the company said the rate of membership decline moderated for the fourth consecutive quarter. Chief Financial Officer Atul Bagga said Nerdy expects active member growth to turn positive by the end of 2026, supported by retention initiatives and a more efficient customer-acquisition approach. Gross margin expanded 320 basis points year over year to 64.7%. Net loss improved to $6.9 million, compared with a $12 million loss a year earlier. Non-GAAP adjusted EBITDA loss narrowed 68% to $900,000 from $2.7 million in the prior-year quarter. Free cash flow was negative $6.3 million, improving from negative $8.2 million a year earlier. Cash and cash equivalents totaled $38.4 million at quarter-end. Bagga attributed the gross-margin improvement to lower amortization of capitalized internal-use software following abandonment charges in the fourth quarter of 2025, as well as lower expert costs. Sales and marketing expense declined 15% year over year to $11.5 million, while general and administrative expense fell 14% to $22.9 million.

Exits Narrow Focus to Consumer Business Nerdy said it will shut down Varsity Tutors for Schools, or VT4S, and leave First Tutors. Cohn said VT4S accounted for a low-single-digit percentage of the overall business but carried complexity amid a school funding environment that has been challenged for several years. The company expects the exits to reduce its annual fixed-cost run rate by approximately $11 million. It anticipates incurring roughly $2 million to $4 million in exit-related costs, mostly during the third quarter. Bagga said the school-focused business was profitable, but management sees a larger opportunity and higher pote...