Earnings

Nerdy Delays Self-Service Launch, Sees Smaller Q4 Member Base

The Tip Desk · November 12, 2026 · 3 min read

Third-quarter revenue was $33.2 million, within guidance, as non-GAAP adjusted EBITDA loss narrowed to $5.7 million.

Nerdy Inc. (NRDY), the online tutoring company, reported third-quarter revenue of $33.2 million, within a $32.0 million to $35.0 million guidance range and down 10% from $37.0 million a year earlier.

The year-over-year decline reflected the planned wind-down of Varsity Tutors for Schools and lower Consumer revenue from fewer Active Members and lower ARPM. Consumer revenue was $30.7 million, or 93% of the total. Institutional revenue was $2.45 million.

Several product enhancements and customer-acquisition initiatives, including a self-service registration and checkout experience, ran more than three months behind the original plan, the company said, weighing on third-quarter acquisition. Those capabilities arrived later than planned, limiting their contribution during the back-to-school window. Nerdy acquired fewer new learning membership customers than anticipated and entered the fourth quarter with a smaller recurring revenue base.

As of September 30, Active Members totaled 31.8 thousand, down 7% from a year earlier. ARPM was $366. Retention continued to improve year-over-year, the company said, but new client acquisition was lower.

Non-GAAP adjusted EBITDA loss was $5.7 million, better than a guidance range of negative $9.0 million to negative $6.0 million and a $4.5 million improvement from a $10.2 million loss in the third quarter of 2025. GAAP net loss was $12.8 million, compared with $18.7 million a year earlier. Performance relative to guidance was driven by lower sales staffing costs, lower AI costs, and disciplined G&A management, the company said.

GAAP gross margin was 59.7%. Excluding a $1.6 million charge for abandonment of capitalized internal-use software, non-GAAP gross margin was 64.5%, up about 160 basis points from 62.9% in the third quarter of 2025. The company said the improvement was primarily driven by lower amortization of capitalized internal-use software, partially offset by higher Expert costs as sessions per member increased.

Total headcount was down 44% at the end of the third quarter versus a year earlier. Excluding the VT4S exit, Consumer sales, support, engineering, and product teams were leaner by more than 300 people. By September, the annualized AI spending rate was approximately 60% below its June-July peak, the company said, due to improved model selection and other tactics.

GAAP sales and marketing expenses were $13.8 million. GAAP general and administrative expenses were $18.4 million.

Operating cash flow was negative $4.6 million, compared with negative $2.4 million a year earlier. Non-GAAP free cash flow was negative $5.9 million. The company said the year-over-year change was driven by the absence of about $5.1 million of prepaid VT4S bookings collected in the prior-year quarter and $1.2 million of exit-related payments; excluding those items, free cash flow improved by approximately $4.5 million.

On September 28, Nerdy borrowed the remaining $10.0 million of the first term-loan tranche, bringing total borrowings to $30.0 million. Cash and cash equivalents were $42.5 million as of September 30. The company said it believes cash on hand provides ample liquidity to fund operations and growth initiatives as it executes toward positive free cash flow.

For the fourth quarter of 2026, Nerdy expects revenue of $37 million to $39 million and non-GAAP adjusted EBITDA to be approximately breakeven. The outlook reflects lower new client acquisition in the third quarter, which carries into a smaller Active Member base and lower Consumer revenue. The company said some of the delayed features are now live and the remainder will ship later in the quarter, and that as they roll out it expects the year-over-year gap in new client acquisition to narrow through the fourth quarter. It expects to end the year with $35.0 million to $37.0 million of cash, inclusive of the $30.0 million drawn on the term loan.

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