Revenue of $152.8 million, Up 7%
Year-Over-Year
FINANCIAL HIGHLIGHTS
- Revenue of $152.8 million
- GAAP net loss of $0.5 million and $0.01 loss per diluted
share
- Adjusted EBITDA of $26.7 million
NerdWallet, Inc. (Nasdaq: NRDS), a platform that provides
financial guidance to consumers and small and mid-sized businesses
(SMBs), today reported financial results for its third quarter
ended September 30, 2023.
“In Q3, we achieved growth in revenue as well as our reach, with
monthly unique users up 22% year-over-year and record traffic to
travel content and personal loans,” said Tim Chen, Co-Founder and
CEO of NerdWallet. “This is a testament to our trusted brand and
growing audience, and sets us up to drive meaningful operating
leverage when the macro environment recovers.”
“We’re pleased to announce Q3 revenue of $153 million, up 7%
year-over-year and above the high end of our guidance,” said Lauren
StClair, CFO of NerdWallet. “We saw stabilizing performance in some
of our more challenged verticals, such as Credit Cards, as well as
positive momentum in our Loans verticals. Our growing consumer mind
share gives us confidence that as macro economic conditions
recover, our ability to meet consumer needs will compound our value
over time.”
THIRD QUARTER 2023 HIGHLIGHTS
- Credit cards revenue of $54.0 million decreased 6%
year-over-year, primarily due to reduced marketing spending by our
financial services partners amidst a combination of increasingly
cautious underwriting and heightened balance sheet conservatism
following the regional banking crisis. Matches increased
year-over-year as we grew our audience and continued to deliver
quality referrals.
- Loans revenue of $32.9 million was up 16% year-over-year,
primarily due to growth in personal loans, partially offset by a
decrease in mortgages reflecting higher interest rates and
continuing macroeconomic headwinds.
- Other verticals revenue of $65.9 million was up 16%
year-over-year, driven by strong growth in banking and SMB
products, partially offset by a decrease in insurance
products.
- We had 24 million average Monthly Unique Users (MUUs), which
was up 22% year-over-year. We saw strong engagement in areas such
as travel products, banking and investing.
SUMMARY FINANCIAL RESULTS
Quarter Ended
%
Change
Quarter Ended
%
Change
Sep 30,
Sep 30,
Jun 30,
(in millions, except per share
amounts)
2023
2022
YoY
2023
QoQ
Revenue
$
152.8
$
142.6
7
%
$
143.3
7
%
Credit cards(1)
54.0
57.4
(6
%)
51.2
5
%
Loans(2)
32.9
28.4
16
%
23.1
43
%
Other verticals(3)
65.9
56.8
16
%
69.0
(5
%)
Income (loss) from operations
$
4.0
$
(8.8
)
NM
$
(4.2
)
NM
Net income (loss)
$
(0.5
)
$
0.7
NM
$
(10.7
)
(95
%)
Net income (loss) per share
Basic
$
(0.01
)
$
0.01
NM
$
(0.14
)
(93
%)
Diluted
$
(0.01
)
$
0.01
NM
$
(0.14
)
(93
%)
Non-GAAP financial measures(4)
Adjusted EBITDA
$
26.7
$
14.5
84
%
$
20.7
29
%
Non-GAAP operating income
(loss)
$
9.5
$
(3.4
)
NM
$
0.5
NM
Cash and cash equivalents
$
86.6
$
138.4
(37
%)
$
67.1
29
%
Average monthly unique users(5)
24
19
22
%
22
8
%
______________
(1)
Credit cards revenue consists of revenue
from consumer credit cards.
(2)
Loans revenue includes revenue from
personal loans, mortgages, student loans and auto loans.
(3)
Other verticals revenue includes revenue
from other product sources, including SMB products, banking,
insurance, investing and NerdWallet UK.
(4)
Adjusted EBITDA and non-GAAP operating
income (loss) are non-GAAP measures. See “Non-GAAP Financial
Measures” for more information.
(5)
We define a Monthly Unique User as a
unique user with at least one session in a given month as
determined by unique device identifiers.
QUARTERLY CONFERENCE CALL
A conference call to discuss NerdWallet’s third quarter 2023
financial results will be webcast live today, October 26, 2023 at
1:30 PM Pacific Time (PT). The live webcast is open to the public
and will be available on NerdWallet’s investor relations website at
https://investors.nerdwallet.com. Following completion of the call,
a recorded replay of the webcast will be available on NerdWallet’s
investor relations website.
SHAREHOLDER LETTER
A shareholder letter providing additional information and
analysis can be found at NerdWallet’s investor relations website at
https://investors.nerdwallet.com.
SHARE REPURCHASE PLAN
Following the Company’s utilization of the share repurchase
authorization announced by the Company on May 2, 2023, the Company
is announcing that its Board of Directors has approved a new share
repurchase authorization of $30 million to purchase the Company’s
Class A common stock. Subject to market conditions and other
factors, the new repurchase plan is intended to make opportunistic
repurchases of NerdWallet’s Class A common stock to reduce its
outstanding share count. Repurchases under the new plan may be made
in the open market, in privately negotiated transactions or
otherwise in accordance with applicable securities laws and other
restrictions. The amount and timing of repurchases will be
determined at management’s discretion and depend on a variety of
factors, including business, economic and market conditions,
regulatory requirements, prevailing stock prices and other
considerations. The new share repurchase plan has no time limit and
may be modified, suspended or terminated at any time, and does not
obligate the Company to acquire any specific number of shares. The
Company expects to fund repurchases with existing cash and cash
equivalents.
ABOUT NERDWALLET
NerdWallet (Nasdaq: NRDS) is on a mission to provide clarity for
all of life’s financial decisions. As a personal finance website
and app, NerdWallet provides consumers with trustworthy and
knowledgeable financial information so they can make smart money
moves. From finding the best credit card to buying a house,
NerdWallet is there to help consumers make financial decisions with
confidence. Consumers have free access to our expert content and
comparison shopping marketplaces, plus a data-driven app, which
helps them stay on top of their finances and save time and money,
giving them the freedom to do more. NerdWallet is available for
consumers in the U.S., United Kingdom, Canada and Australia.
“NerdWallet” is a trademark of NerdWallet, Inc. All rights
reserved. Other names and trademarks used herein may be trademarks
of their respective owners.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
Unaudited
Three Months Ended
September 30,
% Change
Nine Months Ended
September 30,
% Change
(in millions, except per share
amounts)
2023
2022
2023
2022
Revenue
$
152.8
$
142.6
7
%
$
465.7
$
396.9
17
%
Costs and Expenses:
Cost of revenue
13.3
11.7
13
%
40.2
27.6
46
%
Research and development
20.7
20.7
0
%
60.2
58.2
3
%
Sales and marketing
100.6
103.2
(2
%)
321.1
288.1
11
%
General and administrative
14.2
15.4
(9
%)
45.2
43.8
3
%
Change in fair value of contingent
consideration related to earnouts
—
0.4
(100
%)
—
6.1
(100
%)
Total costs and expenses
148.8
151.4
(2
%)
466.7
423.8
10
%
Income (Loss) From Operations
4.0
(8.8
)
NM
(1.0
)
(26.9
)
(96
%)
Other income (expense), net:
Interest income
0.9
0.5
75
%
2.7
0.6
354
%
Interest expense
(0.2
)
(0.9
)
(77
%)
(0.6
)
(1.3
)
(54
%)
Other losses, net
—
—
NM
(0.1
)
—
226
%
Total other income (expense), net
0.7
(0.4
)
NM
2.0
(0.7
)
NM
Income (loss) before income taxes
4.7
(9.2
)
NM
1.0
(27.6
)
NM
Income tax provision (benefit)
5.2
(9.9
)
NM
10.5
(8.5
)
NM
Net Income (Loss)
$
(0.5
)
$
0.7
NM
$
(9.5
)
$
(19.1
)
(50
%)
Net Income (Loss) Per Share
Attributable to Common Stockholders
Basic
$
(0.01
)
$
0.01
NM
$
(0.12
)
$
(0.28
)
(57
%)
Diluted
$
(0.01
)
$
0.01
NM
$
(0.12
)
$
(0.28
)
(57
%)
Weighted-Average Shares Used in
Computing Net Income (Loss) Per Share Attributable to Common
Stockholders
Basic
77.5
73.4
76.7
69.2
Diluted
77.5
75.0
76.7
69.2
CONDENSED CONSOLIDATED BALANCE
SHEETS
Unaudited
(in millions)
September 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
86.6
$
83.9
Accounts receivable—net
84.4
87.0
Prepaid expenses and other current
assets
23.8
18.3
Total current assets
194.8
189.2
Property, equipment and software—net
52.8
49.1
Goodwill
111.3
111.2
Intangible assets—net
50.5
64.1
Right-of-use assets
9.2
11.3
Other assets
2.2
0.8
Total Assets
$
420.8
$
425.7
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
13.1
$
3.6
Accrued expenses and other current
liabilities
31.9
37.9
Contingent consideration—current
—
30.9
Total current liabilities
45.0
72.4
Other liabilities—noncurrent
11.6
11.6
Total liabilities
56.6
84.0
Commitments and contingencies
Stockholders’ equity
364.2
341.7
Total Liabilities and Stockholders’
Equity
$
420.8
$
425.7
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
Unaudited
Nine Months Ended
September 30,
(in millions)
2023
2022
Operating Activities:
Net loss
$
(9.5
)
$
(19.1
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
36.0
25.6
Stock-based compensation
29.3
25.3
Change in fair value of contingent
consideration related to earnouts
—
6.1
Deferred taxes
(0.4
)
(12.5
)
Non-cash lease costs
2.1
2.0
Other, net
1.2
0.9
Changes in operating assets and
liabilities:
Accounts receivable
1.6
(18.7
)
Prepaid expenses and other assets
(6.2
)
(2.0
)
Accounts payable
7.6
(4.0
)
Accrued expenses and other current
liabilities
(5.9
)
15.9
Payment of contingent consideration
(14.0
)
(11.5
)
Operating lease liabilities
(2.3
)
(1.7
)
Other liabilities
3.0
(1.4
)
Net cash provided by operating
activities
42.5
4.9
Investing Activities:
Capitalized software development costs
(19.6
)
(20.5
)
Purchase of property and equipment
(0.5
)
(4.3
)
Business combination, net of cash
acquired
—
(69.5
)
Net cash used in investing activities
(20.1
)
(94.3
)
Financing Activities:
Payment of contingent consideration
(16.9
)
(19.0
)
Proceeds from line of credit
7.5
70.0
Payments on line of credit
(7.5
)
—
Payment of debt issuance costs
(1.1
)
—
Proceeds from exercise of stock
options
9.1
6.2
Issuance of Class A common stock under
Employee Stock Purchase Plan
1.9
3.2
Repurchase of Class A common stock
(12.1
)
—
Tax payments related to net-share
settlements on restricted stock units
(0.7
)
(0.1
)
Net cash provided by (used in) financing
activities
(19.8
)
60.3
Effect of exchange rate changes on cash
and cash equivalents
0.1
(0.3
)
Net increase (decrease) in cash and
cash equivalents
2.7
(29.4
)
Cash and Cash Equivalents:
Beginning of period
83.9
167.8
End of period
$
86.6
$
138.4
NON-GAAP FINANCIAL MEASURES
We use Adjusted EBITDA and non-GAAP operating income (loss) in
conjunction with GAAP measures as part of our overall assessment of
our performance, including the preparation of our annual operating
budget and quarterly forecasts, to evaluate the effectiveness of
our business strategies, and to communicate with our Board of
Directors concerning our financial performance.
Adjusted EBITDA: We define Adjusted EBITDA as net income
(loss) from continuing operations adjusted to exclude depreciation
and amortization, interest income (expense), net, provision
(benefit) for income taxes, and further exclude (1) losses (gains)
on disposals of assets, (2) change in fair value of contingent
consideration related to earnouts, (3) deferred compensation
related to earnouts, (4) stock-based compensation, and (5)
acquisition-related costs.
Non-GAAP operating income (loss): We define non-GAAP
operating income (loss) as income (loss) from operations adjusted
to exclude depreciation and amortization, and further exclude (1)
losses (gains) on disposals of assets, (2) change in fair value of
contingent consideration related to earnouts, (3) deferred
compensation related to earnouts, and (4) acquisition-related
costs. We also reduce income (loss) from operations for capitalized
internally developed software costs.
The above items are excluded from our Adjusted EBITDA and
non-GAAP operating income (loss) measures because these items are
non-cash in nature, or because the amount is not driven by core
operating results and renders comparisons with prior periods less
meaningful. We deduct capitalized internally developed software
costs in our non-GAAP operating income (loss) measure to reflect
the cash impact of personnel costs incurred within the time
period.
We believe that Adjusted EBITDA and non-GAAP operating income
(loss) provide useful information to investors and others in
understanding and evaluating our operating results and in comparing
operating results across periods. Moreover, Adjusted EBITDA and
non-GAAP operating income (loss) are key measurements used by our
management internally to make operating decisions, including those
related to analyzing operating expenses, evaluating performance,
and performing strategic planning and annual budgeting. However,
the use of these non-GAAP measures have certain limitations because
they do not reflect all items of income and expense that affect our
operations. Adjusted EBITDA and non-GAAP operating income (loss)
have limitations as financial measures, should be considered as
supplemental in nature, and are not meant as substitutes for the
related financial information prepared in accordance with GAAP.
These limitations include the following:
- Adjusted EBITDA does not reflect interest income (expense) and
other gains (losses), net, which include unrealized and realized
gains and losses on foreign currency exchange, as well as certain
nonrecurring gains (losses);
- Adjusted EBITDA and non-GAAP operating income (loss) exclude
certain recurring, non-cash charges, such as amortization of
software, depreciation of property and equipment, amortization of
intangible assets, and (losses) gains on disposals of assets.
Although these are non-cash charges, the assets being depreciated
and amortized may have to be replaced in the future, and Adjusted
EBITDA and non-GAAP operating income (loss) do not reflect all cash
requirements for such replacements or for new capital expenditure
requirements;
- Adjusted EBITDA excludes stock-based compensation, including
for acquisition-related inducement awards, which has been, and will
continue to be for the foreseeable future, a significant recurring
expense in our business and an important part of our compensation
strategy; and
- Adjusted EBITDA and non-GAAP operating income (loss) exclude
acquisition-related costs, including acquisition-related retention
compensation under compensatory retention agreements with certain
key employees, acquisition-related transaction expenses, contingent
consideration fair value adjustments related to earnouts, and
deferred compensation related to earnouts.
In addition, Adjusted EBITDA and non-GAAP operating income
(loss) as we define them may not be comparable to similarly titled
measures used by other companies. Because of these limitations, you
should consider Adjusted EBITDA and non-GAAP operating income
(loss) alongside other financial performance measures, including
net income (loss), income (loss) from operations, and our other
GAAP results.
We compensate for these limitations by reconciling Adjusted
EBITDA to net income (loss), and non-GAAP operating income (loss)
to income (loss) from operations, the most comparable respective
GAAP financial measures, as follows:
Three Months Ended
September 30,
% Change
Nine Months Ended
September 30,
% Change
(in millions)
2023
2022
2023
2022
Net income (loss)
$
(0.5
)
$
0.7
NM
$
(9.5
)
$
(19.1
)
(50
%)
Depreciation and amortization
12.1
10.8
11
%
36.0
25.6
40
%
Stock-based compensation
9.4
9.1
3
%
29.3
25.3
16
%
Acquisition-related retention
1.2
1.4
(11
%)
4.0
1.4
189
%
Deferred compensation related to
earnouts
—
0.4
(100
%)
—
1.2
(100
%)
Change in fair value of contingent
consideration related to earnouts
—
0.4
(100
%)
—
6.1
(100
%)
Acquisition-related expenses
—
1.2
(96
%)
—
3.4
(99
%)
Interest (income) expense, net
(0.7
)
0.4
NM
(2.1
)
0.7
NM
Other losses, net
—
—
NM
0.1
—
226
%
Income tax provision (benefit)
5.2
(9.9
)
NM
10.5
(8.5
)
NM
Adjusted EBITDA
$
26.7
$
14.5
84
%
$
68.3
$
36.1
89
%
Stock-based compensation
(9.4
)
(9.1
)
3
%
(29.3
)
(25.3
)
16
%
Capitalized internally developed software
costs
(7.8
)
(8.8
)
(11
%)
(25.2
)
(25.5
)
(1
%)
Non-GAAP operating income
(loss)
$
9.5
$
(3.4
)
NM
$
13.8
$
(14.7
)
NM
Net income (loss) margin
0
%
0
%
(2
%)
(5
%)
Adjusted EBITDA margin1
18
%
10
%
15
%
9
%
Income (loss) from operations
$
4.0
$
(8.8
)
NM
$
(1.0
)
$
(26.9
)
(96
%)
Depreciation and amortization
12.1
10.8
11
%
36.0
25.6
40
%
Acquisition-related retention
1.2
1.4
(11
%)
4.0
1.4
189
%
Deferred compensation related to
earnouts
—
0.4
(100
%)
—
1.2
(100
%)
Change in fair value of contingent
consideration related to earnouts
—
0.4
(100
%)
—
6.1
(100
%)
Acquisition-related expenses
—
1.2
(96
%)
—
3.4
(99
%)
Capitalized internally developed software
costs
(7.8
)
(8.8
)
(11
%)
(25.2
)
(25.5
)
(1
%)
Non-GAAP operating income
(loss)
$
9.5
$
(3.4
)
NM
$
13.8
$
(14.7
)
NM
Operating income (loss) margin
3
%
(6
%)
0
%
(7
%)
Non-GAAP operating income (loss)
margin2
6
%
(2
%)
3
%
(4
%)
______________
(1)
Represents Adjusted EBITDA as a percentage
of revenue.
(2)
Represents non-GAAP operating income
(loss) as a percentage of revenue.
FINANCIAL OUTLOOK
We are providing guidance for the fourth quarter of 2023:
- Revenue is expected in the range of $136 - $140 million, (3%)
year-over-year at the midpoint
- Adjusted EBITDA is expected in the range of $30 - $33
million
We also provide guidance for full year 2023:
- We expect a 2023 annual Adjusted EBITDA margin of approximately
16.5%, a year-over-year increase of approximately four percentage
points.
- GAAP operating income margin of approximately 1%
- Non-GAAP operating income margin of approximately 4.5%
NerdWallet has not provided a quantitative reconciliation of
forecasted GAAP net income (loss) to forecasted Adjusted EBITDA
within this communication because the Company is unable, without
making unreasonable efforts, to calculate certain reconciling items
with confidence. These items include, but are not limited to,
income taxes which are directly impacted by unpredictable
fluctuations in the market price of the Company’s capital stock.
These items, which could materially affect the computation of
forward-looking GAAP net income (loss), are inherently uncertain
and depend on various factors, many of which are outside of
NerdWallet’s control.
A reconciliation of forecasted operating income margin to
forecasted non-GAAP operating income margin is as follows:
Forecasted Full Year
2023
Operating income margin1
1
%
Impact on margin of:
Depreciation and amortization
8
%
Acquisition-related retention
1
%
Capitalized internally developed software
costs
(5.5
%)
Non-GAAP operating income
margin2
4.5
%
______________
(1)
Represents forecasted operating income as
a percentage of forecasted revenue.
(2)
Represents forecasted non-GAAP operating
income as a percentage of forecasted revenue.
For more information regarding the non-GAAP financial measures
discussed in this communication, please see “Non-GAAP Financial
Measures” above.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements about us
and our industry that involve substantial risks and uncertainties.
All statements other than statements of historical facts contained
in this press release are forward-looking statements, including,
but not limited to, the statements in the section titled “Financial
Outlook.” In some cases, you can identify forward-looking
statements because they contain words such as “anticipate,”
“believe,” “contemplate,” “continue,” “could,” “estimate,”
“expect,” “intend,” “may,” “plan,” “potential,” “predict,”
“project,” “should,” “target,” “will” or “would” or the negative of
these words or other similar terms or expressions. These
forward-looking statements include, but are not limited to,
statements concerning the following:
- the effect of macroeconomic developments, including but not
limited to, inflation, rising interest rates, tightening credit
markets and general macroeconomic uncertainty on our business
results of operations, financial condition and stock price;
- our expectations regarding our future financial and operating
performance, including total revenue, cost of revenue, Adjusted
EBITDA, non-GAAP operating income (loss) and MUUs;
- our ability to grow traffic and engagement on our
platform;
- our expected returns on marketing investments and brand
campaigns;
- our expectations about consumer demand for the products on our
platform;
- our ability to convert users into Registered Users and improve
repeat user rates;
- our ability to convert consumers into matches with financial
services partners;
- our ability to grow within existing and new verticals;
- our ability to expand geographically;
- our ability to maintain and expand our relationships with our
existing financial services partners and to identify new financial
services partners;
- our ability to build efficient and scalable technical
capabilities to deliver personalized guidance and nudge users;
- our ability to maintain and enhance our brand awareness and
consumer trust;
- our ability to generate high quality, engaging consumer
resources;
- our ability to adapt to the evolving financial interests of
consumers;
- our ability to compete with existing and new competitors in
existing and new market verticals;
- our ability to maintain the security and availability of our
platform;
- our ability to maintain, protect and enhance our intellectual
property;
- our ability to identify, attract and retain highly skilled,
diverse personnel;
- our ability to stay in compliance with laws and regulations
that currently apply or become applicable to our business;
- the sufficiency of our cash, cash equivalents, and investments
to meet our liquidity needs;
- our ability to effectively manage our growth and expand our
infrastructure and maintain our corporate culture;
- our ability to successfully identify, manage, and integrate any
existing and potential acquisitions;
- our ability to achieve expected synergies, accretive value and
other benefits from completed acquisitions; and
- our share repurchase plan, including expectations regarding the
amount, timing and manner of repurchases made under the plan.
You should not rely on forward-looking statements as predictions
or guarantees of future events. We have based the forward-looking
statements contained in this press release primarily on our current
expectations and projections about future events and trends that we
believe may affect our business, financial condition and operating
results. These forward-looking statements are subject to risks,
uncertainties and other factors that may cause actual results or
outcomes to be materially different from any future results
expressed or implied by these forward-looking statements, including
those factors described in filings we make with the SEC from time
to time.
The forward-looking statements made in this press release speak
only as of the date hereof. We undertake no obligation to update
any forward-looking statements made in this press release to
reflect events or circumstances after the date of this press
release or to reflect new information or the occurrence of
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