Nerdy Q1 Earnings Call Highlights

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Nerdy (NYSE:NRDY) reported first-quarter 2026 revenue above its guidance range and posted its second consecutive quarter of positive non-GAAP adjusted EBITDA, as executives pointed to improving margins, AI-driven cost efficiencies and early traction from a new learner platform.

Founder, Chairman and Chief Executive Officer Chuck Cohn said revenue was $48.7 million, above the company’s $46 million to $48 million guidance range and up 2% from a year earlier. Non-GAAP adjusted EBITDA was positive $1 million, ahead of the company’s guidance for approximately breakeven and an improvement of $7.3 million compared with the first quarter of 2025.

Cohn said adjusted EBITDA margin expanded by more than 1,500 basis points year over year, marking Nerdy’s third consecutive quarter of sequential margin improvement. Gross margin reached 66.2%, up more than 800 basis points from the prior year. The company ended the quarter with $44.7 million in cash.

“Three things stood out in the Q1,” Cohn said. “First, the product velocity that we said an AI native code base would unlock is now visible in shipped product. Second, our cost structure is structurally, not cyclically, better, and AI is the reason, and third, the rate of decline in active members on a year-over-year basis narrowed for the third consecutive quarter.”

New Learner Platform Drives Product Rollout

Cohn said the company’s new learner experience, internally called V3, became the universal customer experience for Nerdy’s consumer business in March. Newly acquired customers are now onboarded directly to V3, and the company has begun migrating existing customers.

According to Cohn, roughly 6,000 new customers joined directly on V3 in the back half of the quarter, while approximately 10,000 existing customers have moved from the prior experience. He said feedback has been “broadly positive,” with customers saying the platform “looks and feels like a whole different company or product.”

The V3 experience includes Maya, an AI concierge built into the platform. Cohn said Maya answers questions, suggests next steps, helps students find diagnostics and resolves issues such as scheduling tutoring sessions without requiring a phone call or customer support ticket. He said Maya has context from each student’s learning plan, past tutoring sessions, product interactions, diagnostics and practice engagement.

Nerdy also launched a native mobile app in the App Store during the quarter, with Cohn saying it is approaching full feature parity with the web platform. Other additions included a Tutor Gallery that allows families to browse tutor profiles and book sessions, six math and English language arts games, and more than 350 on-demand courses converted from live classes.

Consumer Revenue Rises as Active Member Decline Narrows

Chief Financial Officer Atul Bagga said Learning Membership revenue was $38.9 million, up 3% year over year and representing 80% of total revenue. Consumer revenue growth was driven by higher average revenue per month, or ARPM, which rose 12% to $374. Bagga said that increase was primarily driven by price increases enacted in February 2025.

Active members totaled 36,900 as of March 31, down 9% from a year earlier. Bagga said the rate of decline has narrowed sequentially for three consecutive quarters, and the company expects to return to positive active member growth by the end of 2026.

Cohn said customer churn has improved meaningfully year over year as users enter the new platform and find additional ways to use the service. He said the cohorts onboarded directly onto V3 are showing early signals consistent with the company’s thesis that retention is its “highest growth lever.”

During the question-and-answer session, JPMorgan analyst Bryan Smilek asked about confidence in a return to active member growth and the timeline for migrating the member base to V3. Cohn said Nerdy expects to move “100% of the existing customers” onto the current experience over the rest of the quarter. He added that the company has seen a relationship between customers using new products, higher engagement and early signs of improved retention, though he described the signals as promising but early.

Institutional Revenue Slips, Bookings Decline

Institutional revenue was $9.3 million, down 1% year over year and representing 19% of total revenue. Bagga said first-quarter institutional revenue was mostly supported by prior-period bookings. Varsity Tutors for Schools bookings were $1.1 million in the quarter, compared with $4 million in the first quarter of 2025.

Cohn said the new Varsity Tutors for Schools platform is built on the same V3 foundation and integrates AI-enabled tutoring, an AI counseling layer and an expanded K-12 content library. He said the offering enters the back-to-school 2026 selling season as “meaningfully stronger” than the version the company took to market a year ago.

Nerdy is also preparing product releases in college and career readiness, daily math and reading practice, and language learning. Cohn said an AI counselor is targeted for a back-to-school 2026 release in two flagship high schools in a top 10 U.S. school district. He also said Nerdy plans to launch more than 4,600 K-8 math skills aligned to academic taxonomies, with reading parity coming soon.

AI Cited as Driver of Cost Reductions

Bagga said sales and marketing expenses declined 10% year over year to $14.2 million, driven by AI-enabled productivity gains and reduced investment in the institutional business. General and administrative expenses fell 16% to $23.9 million, including product development costs of $9.2 million versus $10.7 million a year earlier.

Cohn said AI is central to how Nerdy operates, including software development, back-office workflows, inbound and outbound calls, and customer service interactions. “AI is how we operate. It’s not what we sell,” he said, adding that the company’s core offering remains the relationship between a learner and an expert supported by technology.

In response to Northland Securities analyst Greg Gibas, Bagga said Nerdy’s headcount is down about 20% year over year while revenue is roughly flat. He said the company expects to continue leaning on AI to improve productivity.

Nerdy Reaffirms Full-Year Outlook

For the second quarter of 2026, Nerdy expects revenue of $42 million to $44 million and non-GAAP adjusted EBITDA between negative $2 million and breakeven. Bagga said the second-quarter outlook reflects two factors: lower first-quarter Varsity Tutors for Schools bookings affecting institutional revenue and the company beginning to lap the February 2025 price increases, which will moderate ARPM growth.

For full-year 2026, Nerdy reaffirmed revenue guidance of $180 million to $190 million and non-GAAP adjusted EBITDA of approximately breakeven. The company expects to end the year with $40 million to $45 million in cash, including $20 million currently drawn on its term loan.

Bagga said Nerdy’s full-year outlook assumes a more stable institutional funding environment in the second half of the year, reception of the new Varsity Tutors for Schools platform and continued improvements in consumer retention. He said the company’s work ahead is focused on active member growth and institutional bookings recovery.

About Nerdy (NYSE:NRDY)

Nerdy, Inc (NYSE:NRDY) is an American education technology company that operates a live online learning marketplace. Through its flagship Varsity Tutors platform, the company connects students, professionals and lifelong learners with a network of thousands of educators for personalized one-on-one tutoring, group classes and test preparation. The platform leverages proprietary matching algorithms to pair learners with instructors based on subject expertise, learning style and scheduling preferences.

Founded in 2007 by entrepreneur Chuck Cohn, Nerdy began as Varsity Tutors in Washington, DC, before establishing its headquarters in St.

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