Nerdy narrows loss per share to $1.01 as third-quarter revenue falls 10%
Key Facts
Nerdy reported a basic and diluted loss of $1.01 per share in the third quarter ended September 30, 2026, compared with a loss of $1.51 in the same period last year, according to its filing with the U.S. Securities and Exchange Commission. Net loss was $12.8 million, down from $18.7 million a year earlier, while revenue fell 10% to $33.2 million from $37.0 million. The company said quarterly revenue was within its guidance range of $32.0 million to $35.0 million. It also reported an adjusted EBITDA loss of $5.7 million, below the company’s projected loss range of $6.0 million to $9.0 million. The results show narrower losses alongside a year-over-year contraction in revenue.
Nerdy attributed the annual revenue decline to lower enterprise revenue following its decision to exit the VT4S business, and to lower consumer revenue as active members and average revenue per member declined. In August, the company said it would close Varsity Tutors for Schools to focus on its consumer business, estimating exit costs at about $2 million to $4 million, mostly in the third quarter. Consumer revenue was $30.7 million, or 93% of total quarterly revenue. Active members fell 7% year over year to 31.8 thousand as of September 30, while average revenue per member declined 2% to $366. The company said customer retention improved year over year, but new customer acquisition declined.
The company said product improvements and customer acquisition initiatives, including self-service enrollment and payment, were delayed by more than three months from their original schedule, affecting customer acquisition during the quarter. It said the remaining initiatives are scheduled to launch later in the fourth quarter. Commenting on product development efforts, Chief Executive Chuck Cohn said the company launched a redesigned student experience and continued developing self-service commerce capabilities. He added: "Our focus now is on converting these investments into stronger customer acquisition, improved retention and sustainable profitable growth." Nerdy linked the timing of product improvements and customer acquisition initiatives to its fourth-quarter outlook. The delay puts customer acquisition among the factors the company is monitoring as it carries out its plan for the coming period.
Adjusted EBITDA loss improved to $5.7 million from $10.2 million in the third quarter of 2025, and the company said the result was better than its guidance range. It attributed performance relative to guidance to lower sales personnel and AI costs, and management of general and administrative expenses. Non-GAAP gross margin also rose to 64.5%, up 160 basis points from 62.9% a year earlier. Nerdy said the margin improvement was primarily associated with lower amortization of capitalized internally developed software, partly offset by higher expert costs. It added that its annualized AI cost run rate fell about 60% from its June and July peak to September, attributing the decline to stronger governance and model improvements without reducing employees’ use of the tools.
On liquidity, cash and cash equivalents totaled $42.5 million on September 30, 2026. Nerdy had borrowed $10.0 million on September 28, the remaining amount available under the first tranche of its term loan, bringing total borrowings to $30.0 million. Operating cash flow was a deficit of $4.6 million in the third quarter, compared with a deficit of $2.4 million in the corresponding period of 2025. Non-GAAP free cash flow was a deficit of $5.9 million, compared with $4.1 million a year earlier. The company linked collection pressures to the VT4S exit, citing the absence of advance bookings and exit costs. This shows that the reduction in net loss was not accompanied by an annual improvement in cash flows during the quarter.
Nerdy forecast fourth-quarter 2026 revenue of $37.0 million to $39.0 million and said adjusted EBITDA would be near breakeven. It said the timing of product improvements and customer acquisition initiatives affects the outlook. In trading, NRDY closed at $6.23 on November 6, 2026. The company’s filing did not include the stock’s daily trading range in that session. The fourth-quarter outlook remains tied to the timing of product and customer acquisition initiatives that the company said had been delayed from their original schedule.