NerdWallet, Inc.

Good day and thank you for standing by. Welcome to the NerdWallet Inc. Q4 2024 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 11 on your telephone. You will then hear an automated message advising 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, Caitlin McNamee, Investor Relations. Please go ahead.

Thank you, operator. Welcome to the NerdWallet Q4 2024 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. Should you be aware that these statements should not be considered, 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. Tim?

Thanks, Caitlin. At NerdWallet, we closed 2024 strong. In Q4, we exceeded our expectations, growing revenue 37% year-over-year to $184 million and delivering $17 million in non-GAAP operating income. We attribute our performance to our ability to deliver on continued consumer and partner demand in insurance, which grew over 800% year-over-year. We also saw 5% year-over-year growth in banking products despite declining savings accounts rates, as our funnel improvements drove outsized impact versus our expectations. These wins in insurance and banking more than offset softness in other parts of our business. As 10-year rates rose throughout the quarter, we saw headwinds across both consumer and SMB lending. While we grew our mortgage business 4% year-over-year separate from our acquisition of next-door lending, the nearly 80 basis point increase in 30-year mortgage rates since the beginning of Q4 has tempered our growth expectations for this area of our business. At the same time, our personal loans business ended the year down 51% year-over-year as we focused our efforts on insurance. However, as we shifted resources exiting the year to capture increased partner and consumer demand, early results suggest a return to year-over-year growth in Q1. With lending remaining tight, we also saw revenue decline year-over-year in SMB, but we expect to see recovery when the broader lending environment improves. The end of the year is a natural time to reflect on what we have learned and where we go next. In previous letters, I have written to you about NerdWallet's work to build direct, engaged relationships with consumers and SMBs in our trusted financial ecosystem. We are prioritizing driving more engaged users, not more users, and our internal operational focus is aligned with this goal. As we embark on a new year, we are evolving how we talk about our business and performance to better reflect our focus and opportunities. Specifically, we are transitioning away from our monthly unique user disclosure. While this metric was useful for sizing our opportunity as solely a digital marketplace business, it does not reflect our transition over the past two years towards focusing on higher quality relationships rather than a higher quantity of relationships. Using our acquisition of Nextdoor Lending to illustrate the opportunity, we believe it will be more valuable to convert even a small percentage of our existing mortgage traffic into brokering relationship than to triple our education-oriented mortgage traffic. While we are confident that we could meaningfully grow MUUs year-over-year, this would require reprioritizing our operational focus and would be far less impactful long-term than our vertical integration and re-engagement initiatives. Our strategic focus on driving engaged users will also start to influence our thinking about customer acquisition costs. While our core marketplace business will continue to optimize for end-quarter profitability, recent progress in our higher lifetime value-driving growth pillars, vertical integration and registrations, and data-driven re-engagement may reorient how we consider and disclose the balance between end-quarter profitability and new customer acquisition costs for those initiatives. With that said, in Q4, we delivered 19 million MUUs, down 20% year-over-year. This is consistent with the expectations we shared last quarter when we anticipated continued headwinds in organic traffic growth to non-monetizing pages. We expect eventual stabilization and a return to growth by early 2026, but in the near term, we foresee getting a few points worse in Q1. I feel confident that we are well positioned to drive significant progress toward our vision in 2025. We've already started with our latest brand activation, debuting a new national campaign at the Super Bowl on February 9th and introducing millions of new consumers to NerdWallet. We also made important strides over the course of 2024 to build direct engaged relationships with consumers and SMBs, providing us with a solid foundation on which to build this year through additional investments. Our land and expand efforts increase the breadth and depth of our guidance, extending NerdWallet's reach to new categories geographies, and platforms. In 2024, Land and Expand initiatives saw us firmly establish our presence in Medicare, which in Q4 more than doubled revenue year over year. This year, we also launched our first comparison shopping marketplaces in Australia and grew the organic reach of our social and podcast platforms to 14 million views and downloads. Of particular note this quarter, we strengthened our Smart Money podcast and social audiences by providing consumers with helpful guidance on both timely topics like the election and evergreen topics like budgeting. Of particular note, in Q4, we saw over 200% year-over-year growth in organic video views on Instagram and TikTok following a decision earlier in the year to invest more in this content. Vertical integration is a key hypothesis for driving engaged users. These experiences pair NerdWallet's trusted brand and distribution advantage with best-in-class experiences that tend to establish direct relationships with consumers and SMBs, whom we can then re-engage in the future with timely, personalized offers. In 2024, we continued to relentlessly improve our concierge and SMB, using machine learning to route customers to the appropriate experience for their needs. leveraging AI to improve the team's efficiency, and refining our re-engagement strategy to drive our renewal business. Vertical integration in Q4 centered primarily on our acquisition of next-door lending and executing our integration strategy. This has included integrating next-door lending into our digital marketplaces that allow users to match with mortgage providers. In addition, in January, we built NerdWallet Mortgage Experts, a NerdWallet-branded experience that enables shoppers to conduct with next-door lending as an option for users who want a do-it-for-me experience to find the right mortgage for them. I am really excited about what NerdWallet Mortgage Experts offers our consumers, comparing 60 mortgage lenders on their behalf, and I challenge anyone to find a better rate or better service in such a complicated transaction. Similar to vertical integration, registrations and data-driven engagement work is geared toward building experiences that encourage consumers and SMBs to register with NerdWallet and connect their data, enabling us to surface personalized guidance and drive future revenue through re-engagement. In early 2024, we launched NerdWallet Plus, a subscription membership product, which rewards consumers for smart money moves and provides access to unique deals and rates. Subsequently, we have developed engaging features like a treasury bills account and our insurance assistant, which analyzes users' existing policies and automatically shops for better options if available. At the same time, we continued investing in PaaS to register users, growing our cumulative registered user base to 25 million in 2024. Before I hand it over to Lauren, I want to thank her again for our partnership over the past four years. As we announced in October, Lauren will be stepping down in March to pursue other opportunities, and I'm excited to share that she will be succeeded by John Lee, John joins NerdWallet from Divi Homes, where he served as their chief financial officer and chief operating officer. Earlier in his career, John held private equity roles at Blackstone and TPG. I believe his expertise and leadership will help us take the next step in our growth journey as we increasingly pursue vertical integration and other re-engagement strategies to build engaged relationships with more users. In the meantime, though, thank you again to Lauren, and I will pass it over to her for a discussion of our financial performance in Q4.