Nerdy, Inc.

Good afternoon. My name is Hannah and I will be your conference operator today. At this time, I would like to welcome everyone to the Nerdy First Quarter 2022 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star followed by two. Thank you. Molly Sorg, Head of Investor Relations, you may begin your conference.

Good afternoon, and thank you for joining us for NERDI's first quarter 2022 earnings call. With me are Chuck Cohn, Founder, Chairman, and Chief Executive Officer of NERDI, and Jason Pello, Chief Financial Officer. Before I turn the call over to Chuck, I'll remind everyone that this discussion will contain forward-looking statements including but not limited to expectations with respect to NERDI's future financial and operating results, strategy, opportunities, plans, and outlook. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Any forward-looking statements are made as of today's date, and NERDI does not undertake or accept any obligation to publicly release any updates or revisions to any forward-looking statements to reflect any change in expectations or any changes in events, conditions, or circumstances on which any such statement is based. Please refer to the disclaimers in today's press release announcing NERDI's first quarter results and the company's filings with the SEC for a discussion of the risks. Not all of the financial measures that we will discuss today are prepared in accordance with GAAP. Please refer to today's press release for reconciliations of these non-GAAP measures. With that, let me turn the call over to Chuck.

Thanks, Molly, and thank you to everyone who has joined us today. We're happy to be back in front of you to discuss our strong start to 2022, in addition to some of our more recent business developments. Let's get started with a few of our highlights. In the first quarter, Nerdy once again achieved new all-time demand records with revenues of $46.9 million, up 36% over the prior period, and bookings increased of $48.5 million, up 30% versus the first quarter of 2021. We also experienced continued strength in our marketplace dynamics, with active learners up 56%, online sessions up 57%, and the number of active experts on our platform up 37% compared to the first quarter of last year. On the consumer side, the education trends we highlighted in February, including the increased adoption and normalization of online learning, the GPA war, and heightened ownership for learning outcomes, supported strong first quarter engagement. Demand during the first quarter across academic tutoring bookings remained strong, with high school academics growing at 30%, college academics growing at 20%, and K-5 academics growing at 47% versus the same period a year ago. Our professional development business continued to experience strong demand with bookings growing 57% in the quarter versus the prior period. This booking strength was partially offset by test prep, including the Veritas prep business we discontinued in the fourth quarter. Test prep for exams like SAT, ACT, GRE, and other similar exams now represent less than 7% of consumer bookings in the quarter. That demand has shifted towards academic tutoring and is driving a focus on long-term relationships to maximize grades and GPA, which we believe is a significant and long-term tailwind. We believe these education trends are leading to consumer interest in supplemental learning solutions that support a more consistent use pattern over extended periods of time, defaulting to recurring, always-on relationships. As a result, in the first quarter, we launched a monthly membership offering to complement our current package model. The membership model orients customer relationships towards consistent weekly use over extended periods of time. And we believe the membership model will grow our total addressable market and increase the number of customers that utilize our offerings. From a learner perspective, early learner engagement and consumption data suggests membership customers experience a significant increase in the percentage of clients that are actively meeting and consuming on a recurring basis. We believe the higher levels of tutoring session consistency will lead to improved learning outcomes and enhanced satisfaction among learners. The membership model also simplifies our sales process, which is already translating to early sales conversion improvements compared to our one-on-one package offering. And the membership pricing structure can also improve the predictability of our revenues going forward, with early data suggesting it can further enhance customer lifetime value. Based on the exciting early results, we plan to expand the membership program to further increase our customer reach in the coming months. We'll continue to provide updates on this exciting initiative in future quarters as the initiative progresses. Switching to the institutional side of the business, Varsity Tutors for Schools is resonating with schools, and we are continuing to observe strong demand trends in this category. Schools are increasingly leveraging online learning platforms to augment and supplement traditional schooling. We've been building on the foundation we laid last fall, adding school district partnerships, shortening implementation timelines, enhancing our existing product offering, and investing in the development of several new products for the upcoming back-to-school period. Specifically, we are introducing two new offerings aimed at enabling school districts to provide always-on learning solutions to further support teachers and students in addition to our existing high-dosage tutoring product. The first of these new products is Varsity Tutors on Demand. which is a district-wide solution that provides universal support to all students with access to 24-7, on-demand, self-directed learning tools, primarily via chat-based tutoring. The solution will offer asynchronous essay editing and writing assistance, as well as access to online courses in core and enrichment subjects. Importantly, Varsity Tutors On Demand offers school districts a more affordable entry point to third-party supplemental learning. We are currently offering this product with several school districts and expect to broadly sell on demand in the coming school year. The second of our new products is teacher-led tutoring, which is a district-wide solution that provides teachers with the opportunity to schedule face-to-face online tutoring with a consistent expert in our live learning platform for any student that needs personalized intervention. This solution will also be available to the entire student population of a school. Once again, increasing access and providing teachers with a supplemental support they need. Both of these new relationships will be structured in a per student per year contract model, and we believe the introduction of these new products will make our institutional offering even more competitive as they will allow for us to serve a broader set of school districts that have new and different needs. We plan to continue to enhance our existing offerings and build new solutions with the ultimate aim of delivering increased value to our school district partners and supporting our teachers. In conclusion, as I hope you can tell, we are very excited about the opportunity we see ahead for our business. We believe education is shifting to an always-on model where learners of all ages and institutions are seeking long-term, recurring relationships to support their learning needs. Our product offerings are continuing to evolve in support of these long-term customer trends, and we are maintaining our focus on offering solutions that improve quality, decrease cost, and improve convenience. Before I turn the call over to Jason, I wanted to touch on today's updated guidance. Like most companies, we also experienced a decrease in consumer bookings growth rates in March and April, in line with the broader global macroeconomic background. Our updated guidance reflects this recent macroeconomic volatility, as well as the decision to more broadly offer a membership offering that delays revenue recognition of those customers by several months. We believe many of the offerings we mentioned today will help streamline the operations of the business and allow us to improve operational efficiency, and we continue to expect we will achieve profitability in 2023. We look forward to executing on the new initiatives I discussed and to continuing to update you on our progress in the coming quarters. With that, I'll turn the call over to Jason to discuss the financials in more detail.