NerdWallet, Inc.

Good day and thank you for standing by. Welcome to the NerdWallet Q1 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You'll then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Katherine McNamee, head of investor relations.

Please go ahead. Thank you, operator. Welcome to the NerdWallet Q1 2023 earnings call. Joining us today, our co-founder and chief executive officer, Tim Chen, and Chief Financial Officer Lauren St. Clair. Our press release and shareholder letter are available on our Investor Relations website, and a replay of this update will also be available following the conclusion of today's call. We intend to use our Investor Relations website as a means of disclosing certain material information and complying with disclosure obligations under SEC Regulation FD from time to time. As a reminder, today's call is being webcast live and recorded. Before we begin today's remarks and question and answer session, I would like to remind you that certain statements made during this call may relate to future events and expectations, and as such, constitute forward-looking statements. Actual results and performance may differ from those expressed or implied by these forward-looking statements as a result of various risks and uncertainties, including the risk factors discussed in reports filed or to be filed with the SEC. We urge you to consider these risk factors and remind you that we undertake no obligation to update the information provided on this call to reflect subsequent events or circumstances. You should be aware that these statements should not be considered a guarantee of future performance. Furthermore, during this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release. With that, I will now turn it over to Tim Chen, our co-founder and CEO of NerdWallet. Tim?

Thanks, Caitlin. We've started the year off strong here at NerdWallet, despite continued macroeconomic volatility. From uncertainty around student loan forbearance to rising interest rates to first and second order effects from regional bank failures. In Q1, we reported revenue growth at the high end of our guidance range and exceeded our guidance on adjusted EBITDA. Given the current economic climate, I'd like to take a few moments today to reiterate NerdWallet's approach to building our business and creating durable value for consumers and shareholders. Historically, we've taken a long term view. To us, this means prioritizing consumer trust while continuing to diversify and improve our product experiences throughout the credit cycle, even in verticals facing headwinds. This is aligned with our relentless self-improvement value or our shared commitment to continuously raise the bar for ourselves, our consumers, and our shareholders. Over time, this approach has established our brand as a trusted one-stop shop, which in turn has lowered our volatility across the cycle. In this period of heightened uncertainty, we will maintain our long-term orientation. Practically, this means we'll invest both in areas with immediate payback, like banking, and in areas with future payoff, like loans and brand marketing. but we will right-size these investments to stay flexible in a lower visibility macro environment. For instance, we still expect to run brand campaigns with a similar cadence to last year, though we now expect our full-year investment to be less than it was in 2022. The improved profitability will give us more flexibility to be opportunistic. We achieved our Q1 results despite underlying volatility across our verticals. The macro pressures impacting some verticals were offset by growth in others, a testament to our diversification and ability to execute against our strategy. We saw inverse correlation in certain verticals with over 200% year-over-year growth in banking due in part to high consumer and partner demand driven by the rising interest rate environment. We do believe we are currently over-earning in banking given the attractive environment for seeking products like high-yield savings accounts. That being said, we are simultaneously under-earning across loans, so we see these verticals as somewhat offsetting each other. Insurance performed well this quarter, and despite some recent industry slowdown, our product improvements are helping us to take market share. We also started the year strong with growth in credit cards. Though we have seen progressive partner tightening extend to prime consumers, this also coincides with some deceleration of growth in SMB due to credit tightening. While we anticipate cyclical pressures in individual verticals, our diversification and execution position us for lower company level volatility while maintaining strong cycle over cycle growth. As we make disciplined decisions around expenses to improve profitability We will continue to invest efficiently in making progress towards our vision of becoming a trusted financial ecosystem, or a single trusted platform where consumers and SMBs can learn, shop, connect their data, and make decisions about their money. In Q1, we continued to execute our three growth pillars, land and expand, vertical integration, and registrations and data-driven engagement. Not only to meet current consumer demand for financial guidance, but also to serve our long-term vision. Through our land and expand pillar, we leverage our trusted brand to expand into new topics and markets and engage with new audiences. In Q1, we focused on meeting consumers where they are by increasing the breadth and depth of our financial guidance across our verticals and acquisition channels. We developed new tools like our social security calculator and built new partnerships to serve more sub and near prime consumers as well as prime consumers. Additionally, we extended our brand reach on new platforms and social channels to meet consumer demand for trending topics including tax season, investing, and home buying in the current climate. Our vertical integration efforts, in which we matched NerdWild's brand and reach with best-in-class consumer experiences, continued in Q1 as we further integrated On the Barrelhead, or OTB. our loans vertical, where the OTB integration has been primarily focused, has been challenged by tightening underwriting and rising interest rates. In keeping with our long-term orientation, we drove relentless improvements, leveraging learnings and expertise from the OTB team that position our loans business to succeed when the cycle rebounds. Meanwhile, we continue to see opportunities to leverage, land, and expand within our vertical integration efforts. Over the past year, we invested in diversifying our SMB business and expanding our organic playbook to grow our TAPA funnel to enhance our digital concierge service for sustainable long-term growth. Beyond vertical integration, we are building and optimizing consumer experiences that drive registrations and data-driven engagement, both of which are crucial to achieving our vision for a trusted financial ecosystem. This quarter, we saw a 39% year-over-year increase in our registered user base, in part driven by our ongoing efforts to personalize our user experiences. In Q1, we also drove relentless improvements to user retention with investments in our registered user experience, including higher quality nudges, insights, and tools. I am proud of what NerdWallet has accomplished in Q1. We drove better outcomes for consumers and SMBs while delivering solid financial results in a volatile economic climate. We know there's uncertainty ahead, but we will drive relentless improvements and invest efficiently across our business, even in verticals that are currently more challenged, because we believe this will pay off in the long run. With that, I'll hand it over to Lauren St. Clair, NerdWald's CFO, to share more about our financial performance in Q1.