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Nerdy (NRDY)
NYSE:NRDY
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Nerdy
(NYSE:NRDY)
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Rating:46Neutral
Price Target:
$0.92
▼(-2.02% Downside)
Action:ReiteratedDate:03/03/26
The score is held down primarily by weak financial performance (persistent losses, negative cash flow, and higher leverage), with technicals also indicating a weak trend. The most meaningful positive is the earnings-call outlook, highlighting a credible path toward breakeven adjusted EBITDA and improving margins in 2026, partially offset by institutional funding headwinds.
Positive Factors
Completed AI-native platform with strong customer feedback
A completed AI-native rebuild with high satisfaction provides durable product differentiation: it can raise session utilization, improve retention, and enable automation-driven efficiencies. These effects support stronger unit economics and sustainable monetization over quarters.
High software-level gross margins
Sustained gross margins near mid-60s indicate strong unit economics for an online tutoring marketplace. This margin buffer allows the company to invest in acquisition, product and automation while still having potential to reach operating profitability as fixed costs are optimized.
Clear guidance and path to breakeven adjusted EBITDA
Management-provided guidance targeting breakeven adjusted EBITDA and substantial margin improvement signals a credible operational plan. Combined with ARPAM gains and projected year-end cash, this shows a structured path to self-sustaining operations if execution continues.
Negative Factors
Persistent negative operating and free cash flow
Chronic negative operating and free cash flow means the business has not historically self-funded growth, increasing reliance on external capital. This pattern raises refinancing and execution risk and constrains long-term reinvestment unless sustained cash improvement occurs.
Step-up in leverage; debt roughly equals equity
A marked rise in leverage reduces financial flexibility and increases fixed obligations, which can strain cash during growth hiccups. With prior operating losses, higher debt elevates downside risk and limits the company's ability to fund strategic initiatives without raising cost of capital.
Low active member penetration relative to market
A small active base versus a large TAM means scale benefits are unproven and growth must accelerate to justify fixed costs. Low penetration increases sensitivity to acquisition costs, churn, and institutional funding variability, making durable revenue scale an ongoing execution challenge.
Nerdy (NRDY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$176.09M
Dividend YieldN/A
Average Volume (3M)745.37K
Price to Earnings (P/E)―
Beta (1Y)1.74
Revenue Growth-9.86%
EPS Growth0.87%
CountryUS
Employees600
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)>-0.01
Shares Outstanding122,938,630
10 Day Avg. Volume720,554
30 Day Avg. Volume745,374
Financial Highlights & Ratios
PEG Ratio0.24
Price to Book (P/B)6.61
Price to Sales (P/S)0.70
P/FCF Ratio-5.19
Enterprise Value/Market Cap0.49
Enterprise Value/Revenue0.49
Enterprise Value/Gross Profit0.84
Enterprise Value/Ebitda-1.57
Forecast
1Y Price Target
$2.50Price Target Upside165.96% Upside
Rating ConsensusHold
Number of Analyst Covering3
EPS Forecast (FY)>-0.01
Revenue Forecast (FY)$182.54M
Nerdy Business Overview & Revenue Model
Company DescriptionNerdy, Inc. operates platform for live online learning. The company's purpose-built proprietary platform leverages technology, including AI, to connect learners of various ages to experts, delivering value on both sides of the network. Its learning destination provides learning experiences across various subjects and multiple formats, including one-on-one instruction, small group classes, large format group classes, and adaptive self-study. The company's flagship business, Varsity Tutors, operates platforms for live online tutoring and classes. Its solutions are available directly to learners, as well as through schools and other institutions. The company was founded in 2007 and is headquartered in Saint Louis, Missouri.
How the Company Makes MoneyNerdy makes money through a multi-faceted revenue model centered around its online learning platform, Varsity Tutors. The company generates revenue primarily from direct-to-consumer sales, where students or their parents pay for tutoring sessions, classes, and courses. These services are offered on a subscription basis or as one-time purchases. Additionally, Nerdy partners with educational institutions and businesses to provide tailored learning solutions and professional development programs, creating additional revenue streams. Other significant factors contributing to Nerdy's earnings include the scalability of its platform, which allows it to reach a broad audience, and strategic partnerships that expand its market presence and enhance its offerings.
Nerdy Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call presented a clear progression from restructuring to recovery: management delivered sequential improvement in growth, positive non-GAAP adjusted EBITDA, substantial ARPAM increases, and completion of an AI-native platform with strong early customer feedback. These operational and margin improvements were balanced against institutional funding headwinds, an abandonment charge tied to the replatform, and the need to grow a relatively small active member base. Management provided constructive 2026 guidance (revenue range and target breakeven adjusted EBITDA) and affirmed adequate near-term liquidity, suggesting momentum headed into the year.Q4-2025 Updates
Positive Updates
Return to Revenue Growth and Beat Guidance
Q4 revenue of $49.1M, up 2% year-over-year (from $48.0M) and above guidance ($45M–$47M). This marks the first quarter since 2024 with simultaneous consumer and institutional growth and the third consecutive quarter of sequential improvement in year-over-year growth rates.
Positive Adjusted EBITDA and Large Year-over-Year Improvement
Q4 non-GAAP adjusted EBITDA of positive $1.3M beat guidance (-$2M to breakeven) and improved by $6.8M versus Q4 2024 (prior-year loss of $5.5M). Non-GAAP adjusted EBITDA margin expanded by more than 1,400 basis points year-over-year.
Strong Consumer Monetization and ARPAM Growth
Consumer learning membership revenue of $41.6M (85% of total revenue) increased 6% year-over-year. Average revenue per active member (ARPAM) reached $364 at year-end, a 21% increase year-over-year, driven by a shift to higher-frequency memberships and price increases for new customers.
Gross Margin Expansion and Operational Efficiency
Non-GAAP adjusted gross margin (excluding one-time abandonment charge) was 66.8% in Q4 and improved sequentially for the third consecutive quarter. Management cites gross margin expansion from mix shift to higher-frequency memberships, tutor incentive optimization, and automation-driven efficiencies (headcount down ~22% year-over-year).
Completed AI-Native Platform Rebuild with Positive Customer Feedback
Rollout of new learner and expert experiences completed in Q4 on an AI-native code base. Customer survey of 277 active customers: 85% rated the new platform better or the same and overall customer satisfaction was 82%. 'Moments of learning' feature received >95% positive feedback and drove higher session utilization and improved retention.
Clear 2026 Guidance and Liquidity Position
Company provided Q1 2026 revenue guidance of $46M–$48M and full-year 2026 revenue guidance of $180M–$190M. Q1 and full-year 2026 non-GAAP adjusted EBITDA expected to be approximately breakeven (targeting >1,000 basis point improvement vs 2025). Cash and cash equivalents of $47.9M as of 12/31/2025; expect year-end 2026 cash of $40M–$45M (inclusive of $20M term loan).
Negative Updates
Institutional Bookings and Funding Headwinds
Institutional bookings in Q4 were $4.1M from 56 contracts, down 11% year-over-year. Institutional revenue ($7.2M, 14% of total) and bookings continue to be affected by federal and state funding delays and related program start-date impacts, creating near-term uncertainty for the institutional business.
One-Time Abandonment Charge Related to Replatforming
Management recorded a charge for the abandonment of previously capitalized internal-use software as part of the replatforming to the new AI-native code base. While positioned as strategic, this was a one-time cost that affected gross margin reporting and reflects prior investment write-offs.
Nonrecurring State-Funded Revenue in Prior Year
Q4 2024 included a specific state-funded consumer revenue program of $2M that did not recur in Q4 2025, partially offsetting year-over-year consumer revenue comparisons and highlighting some volatility in public-funded revenue streams.
Limited Active Member Penetration and Ongoing Growth Task
Active members ended the year at 33,200 (company serves fewer than 40,000 active members vs. an estimated $20B U.S. tutoring market). Despite improved monetization, member penetration remains low relative to the market opportunity, meaning growth acceleration is still required to capture meaningful share.
Company Guidance
Nerdy guided Q1 2026 revenue of $46–48 million and full‑year 2026 revenue of $180–190 million, with both Q1 and full‑year non‑GAAP adjusted EBITDA expected to be approximately breakeven (management says this represents an improvement of more than 1,000 basis points in full‑year adjusted EBITDA margin versus 2025); they expect gross margin to expand each quarter as tutor incentives are optimized and consumer mix shifts to higher‑frequency memberships, plan to end 2026 with $40–45 million of cash (inclusive of the $20 million funded term loan), and noted the guidance does not yet reflect the full benefit of the new AI‑native platform.Nerdy Financial Statement Overview
Summary
Despite healthy software-level gross margins and a strong revenue rebound in 2025, results are still dominated by deep, persistent losses and consistently negative operating/free cash flow. The 2025 step-up in leverage (debt roughly at parity with equity) raises financial risk while the business is not yet self-funding.Income Statement
Revenue growth has been volatile: strong expansion in 2025 (+63%) followed a small decline in 2024, after moderate growth in 2022–2023. Gross margin remains healthy for software (roughly ~58%–71% over the period), but profitability is the key issue: net margins are consistently deeply negative (about -19% to -24%), and operating profitability remains materially negative with EBITDA margin still around the mid--30% range in 2025. Overall, the model shows solid unit economics at the gross level, but persistent operating losses and limited evidence of sustained margin inflection keep the score restrained.34
Negative
Balance Sheet
Leverage increased sharply in 2025, with debt rising to about the same level as equity (debt-to-equity ~1.0), a meaningful shift from very low leverage in 2021–2024. Equity remains positive in recent years, but returns to shareholders are strongly negative (return on equity is deeply negative in 2023–2025), consistent with ongoing losses. The balance sheet is not distressed on the data provided, but the step-up in leverage alongside continued losses increases financial risk versus prior years.40
Negative
Cash Flow
Cash generation is a persistent weakness: operating cash flow is negative every year shown, and free cash flow is also consistently negative. While operating cash burn improved materially from 2021–2023, it worsened again in 2024–2025, and 2025 free cash flow declined versus 2024. Negative operating cash flow alongside ongoing net losses suggests the business has not yet reached self-funding operations, which raises reliance on external capital over time.27
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 178.99M | 190.23M | 193.40M | 162.66M | 140.66M |
| Gross Profit | 103.78M | 128.39M | 136.45M | 112.93M | 93.96M |
| EBITDA | -53.16M | -62.54M | -50.80M | -84.29M | -87.06M |
| Net Income | -39.92M | -42.59M | -40.17M | -35.40M | -27.32M |
Balance Sheet | |||||
| Total Assets | 76.17M | 92.51M | 124.74M | 132.69M | 177.15M |
| Cash, Cash Equivalents and Short-Term Investments | 47.90M | 52.54M | 74.82M | 90.72M | 143.96M |
| Total Debt | 19.33M | 928.00K | 1.32M | 1.53M | 841.00K |
| Total Liabilities | 47.23M | 31.39M | 39.14M | 51.64M | 81.34M |
| Stockholders Equity | 19.01M | 39.48M | 52.48M | 46.93M | 50.66M |
Cash Flow | |||||
| Free Cash Flow | -24.22M | -22.47M | -14.45M | -53.32M | -44.05M |
| Operating Cash Flow | -18.85M | -15.60M | -7.56M | -48.00M | -38.89M |
| Investing Cash Flow | -5.37M | -6.86M | -6.89M | -5.32M | -5.16M |
| Financing Cash Flow | 19.50M | 0.00 | -1.94M | -1.00M | 159.25M |
Nerdy Technical Analysis
Negative
0.94
Price Trends
1.03
Negative
1.07
Negative
1.29
Negative
Market Momentum
-0.03
Positive
43.84
Neutral
49.29
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NRDY, the sentiment is Negative. The current price of 0.94 is below the 20-day moving average (MA) of 0.98, below the 50-day MA of 1.03, and below the 200-day MA of 1.29, indicating a bearish trend. The MACD of -0.03 indicates Positive momentum. The RSI at 43.84 is Neutral, neither overbought nor oversold. The STOCH value of 49.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NRDY.
Nerdy Risk Analysis
Nerdy disclosed 57 risk factors in its most recent earnings report. Nerdy reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Nerdy Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
66 Neutral | $341.66M | -11.78 | -20.20% | ― | -6.23% | 28.57% | |
64 Neutral | $608.33M | 56.06 | 11.58% | ― | 22.27% | 117.93% | |
64 Neutral | $444.92M | -38.22 | -5.81% | ― | -11.54% | -54.32% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
57 Neutral | $107.19M | 9.08 | 18.24% | ― | 0.59% | ― | |
52 Neutral | $623.01M | -9.13 | -28.65% | ― | 16.40% | 22.80% | |
46 Neutral | $176.09M | -2.85 | -136.51% | ― | -9.86% | 0.87% |
* Technology Sector Average
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.