NerdWallet, Inc.

Good day and thank you for standing by. Welcome to the NerdWallet third quarter 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'll need to press star 1 1 on your touchtone telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Caitlin McNamee, Investor Relations.

Thank you, Operator. Welcome to the NerdWallet Q3 2023 earnings call. Joining us today are 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, except where we are unable without reasonable efforts to calculate certain reconciling items with confidence. With that, I will now turn it over to Tim Chen, our co-founder and CEO of NerdWallet. Tim?

Thanks, Caitlin. NerdWallet is rapidly approaching our second anniversary as a public company. And each quarter, I've enjoyed the opportunity to reflect on our progress with the goal of providing you, our shareholders, with the same clarity and confidence our nerds strive to offer our consumers. I am pleased to report our strong audience growth in Q3, with monthly unique users up 22% year over year and record traffic to travel content and personal loans. As we noted last quarter, we are taking share in a large and growing market, independent of macroeconomic factors. Our primary addressable market, which is U.S. financial services digital advertising, is expanding with a 2022 three-year CAGR of approximately 23%. Meanwhile, NerdBot's share in this growing market has also increased with a three-year CAGR of 33%. We've consistently said that over 70% of our traffic comes organically or unpaid to our site. And that remains true today, but we recognize that our investment in sales and marketing has been roughly 70% of revenue in recent periods. So we wanted to walk you through our short and long term decision making on those investments, as well as how they'll scale over time. I'd also point you to our shareholder letter, as well as the historical financial data spreadsheet that we've posted to our IR website today for a double click of sales and marketing expense allocation. Our trailing 12-month sales and marketing comprises roughly 50% expenses that are fixed in nature. The remaining half is performance marketing, which is variable in nature. Given there is little cost associated with serving an incremental organic visitor, there should be meaningful margin leverage as organic traffic scales. Conversely, paid visitors have lower incremental margins. Out of the 50% of trailing 12-month sales and marketing expenses that we consider relatively fixed in nature, over 20 points are brand marketing, over 20 points are people-related costs, with the remainder primarily in amortization of M&A. The headcount, which is within the organic and other portion of our sales and marketing, includes content, sales, and our marketing and business leaders. We consider the brand portion to be fixed in nature as well because there's a natural equilibrium point where spending more on brand does not drive a 12 to 24 month payback that we can measure with an adequate degree of confidence. While this equilibrium point will vary from year to year, you can see that our trailing 12 month brand spend is down roughly 20% versus the prior comparable period. So we are already finding more efficiencies. Performance marketing, where you've seen us growing aggressively over the past year, is a variable cost and at a relatively lower incremental margin. However, we are in-quarter profitable on this spend, so we feel good continuing to take share in this channel and we view it as a means to an end as we look to register a portion of that traffic. With this in mind, we beat our revenue and profitability guidance this quarter, but we continue to see opportunities to more effectively and efficiently serve our growing audience of MUUs as the macro recovers. To that end, our nerds have spent the quarter engaged in developing products and initiatives that further our vision for a trusted financial ecosystem, or a single platform where consumers and SMBs can learn, shop, and make decisions about their finances. More specifically, our nerds have focused their efforts within our three growth pillars, land and expand, vertical integration, and registrations and data-driven engagement. with their progress moving us closer to our vision. Within Land and Expand, we continue to leverage our organic playbook and trusted brand to help more people in more ways. This quarter, our international team continued our expansion into Canada, making meaningful progress with 87% year-over-year MUU growth while onboarding financial partners to pave the way for increased monetization. At the same time, the team has steadily ramped their efforts in Australia, to position NerdWallet as an emerging player in this international market. For our large U.S. audience, we continue to extend our footprint to new financial topics, providing consumers with actionable guidance in our business with new monetization, registration, and cross-sell opportunities. In Q3, we lapped our acquisition of On the Barrelhead, or OTB, one of our most significant examples of vertical integration, or the process by which we pair NerdWallet's reach with best-in-class user experiences. This quarter, our credit cards vertical leveraged OTB's technology to launch a new product, which helps match consumers with personalized, pre-qualified offers for credit cards based on their credit score and preferences. With this product, we are not only able to extend our guidance to sub and near prime consumers, for whom qualification is a key consideration when shopping for credit cards, We are also able to register and collect data from more shoppers, creating opportunities for future engagement and cross-sell offerings. Registration and data-driven engagement will fuel our ecosystem. With our robust and growing audience, we are investing in critical initiatives to register and engage a growing portion of our addressable market. Ultimately, this will enable us to build a strong base of highly engaged users who turn and return to the NerdWallet ecosystem for all of their money questions and financial product needs. In Q3, a diverse range of efforts from optimized registration prompts to NerdWallet app enhancements to newsletter offerings grew our registered user base by 38% year over year. At the same time, we have launched several bolder consumer offerings that allow us to build deeper relationships with our consumers. with the intention of testing a variety of product hypotheses over time. Following on our launch of the Nerd AI chatbot beta in Q2, we've now incorporated registration prompts into our chatbot model to funnel consumers to NerdWallet membership offerings related to their questions. And notably today, we launched NerdUp by NerdWallet, a secured credit card intended to help users build their credit history. While we do not strive to offer our own financial products Our team felt we could design a unique product by leveraging our existing distribution channels to reduce costs. In doing so, we believe we can create a win-win-win for consumers, traditional card issuers, and NerdWallet. For consumers, we can pass on our lower costs with a secured card that requires a low minimum deposit, no annual fees, and no credit check, while also offering cashback rewards, helping consumers build good credit behavior and unlock new credit opportunities. For card issuers, we hope to deliver long-term value by connecting them with newly eligible consumers who now qualify for more traditional products and services. And throughout this process, we will establish meaningful, engaged relationships with Nerdop users within our trusted ecosystem. I am proud of the work we've done this quarter and the many ways in which we are capitalizing on our competitive advantages in brand and reach with product investments that set us up well for the macro recovery. With that, I'll pass it over to Warren.