Nerdy, Inc.

Good afternoon. Thank you for attending the nerdy second quarter 2022 results conference call. My name is Matt and I will be the moderator for today's call. All lines will be muted during the presentation portion of the call for an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Molly Sort, head of investor relations. Molly, please go ahead.

Good afternoon, and thank you for joining us for NERDI's second 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 uncertainty 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 change in events, conditions, or circumstances on which any such statement is based. Please refer to the disclaimers in today's shareholder letter announcing NERDI's second 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 shareholder letter for reconciliations of these non-GAAP measures. With that, let me turn the call over to Chuck. Chuck?

Thanks, Molly, and thank you to everyone who has joined us today. We're happy to be back in front of you discussing our second quarter results as we head into the back-to-school season for the 2022-2023 school year. We continue to experience strong demand for our product offerings. In the second quarter, NERI delivered revenue of $42.2 million above our guidance range of $37 to $40 million and up 29% as compared to the second quarter of 2021. We also experienced continued strength in our marketplace dynamics with active learners up 36%, online sessions up 35%, and the number of active experts on our platform up 42% compared to the second quarter of last year. Our results reflect healthy marketplace dynamics and continued momentum in both our consumer and institutional businesses as we head into back to school. The combination of our new always-on offerings, including our recently announced all-inclusive learning membership, our ever-growing data set, and our AI-enabled platform allow us to create deeper and longer-lasting learner and expert relationships, and we believe set us up for strong growth and superior unit-level economics heading into 2023 and beyond. On the consumer side, as learners focus on achieving academic excellence in high grades and professionals seek opportunities for incremental growth and upskilling, we are continuing to see strong demand for our offerings. Notably, While travel and leisure activities were heightened this summer, causing consumption to decline seasonally as the school year ended, we are not observing any discernible macroeconomic pressures impacting demand. In fact, as we shared in our shareholder letter, our recent cohort's lifetime value, or LTV, continued to expand higher than previous periods. This summer, we have been ramping up our focus on learning memberships and the product offering has been well received by consumers. Our learning memberships are a first of its kind, all-inclusive offering, giving students access to a comprehensive array of learning resources that include one-on-one tutoring, unlimited live group classes from our catalog of approximately 250 live class options offered each week, celebrity-taught live and on-demand lessons, adaptive assessments, and self-study modules our learning memberships are for learners of all ages from kindergarten to college and adult learners learning memberships are comprehensive in nature and ensure students have personalized and ongoing support regardless of what they are learning how they want to learn it or when they need to learn it our all-inclusive offerings encourage learners to spend more time on the platform as well as go above and beyond their initial learning goals. And as learners spend more time on the platform, engaging in multiple modalities, the learning experience is enhanced, leading to a deeper and longer-lasting relationship with us. While it remains early in our transition to learning memberships, we continue to see encouraging data suggesting that our learning memberships are bringing value to customers via our all-inclusive and always-on platforms. While we continue to test and learn in relation to both pricing, frequency, and access tiers, to date the most popular membership selected is the 12-month contract, and our average monthly revenue per contract is in excess of $300 per month. We're observing higher customer satisfaction among our membership customers, higher customer retention as measured by tutoring usage over time, and higher multimodality engagement as measured by enrollment in live classes. These high levels of engagement are particularly exciting to us as customers that continue to show up and engage with multiple formats have historically had much higher lifetime values. With our package model, our learners who engaged in four or more modalities had bookings that were more than twice as high as those who engaged only in one-on-one tutoring. Driving multimodality engagement is one of the key ways we've extended lifetime value over the last couple of years. We're going to encourage that type of learning behavior with learning memberships and remove the friction historically associated with getting help across learning modalities. The engagement levels we're seeing also indicate that learning membership customers continue to use us over longer periods of time. And we know that when students meet consistently with an expert, they see better educational outcomes and have higher satisfaction rates. We attribute our early success to a number of factors, including first, the enhanced value learning memberships offer with all of the resources learners need to succeed in their educational objectives on a single platform. And second, the lower upfront cost to the consumer aligns with how consumers budget on a monthly basis. Our learning memberships go beyond tutoring and includes an extensive catalog of additional learning resources that customers would normally have to purchase from multiple disparate companies. And importantly, the lower upfront investment under this model is making our platform and offerings more accessible to learners and growing our total addressable market. Taken together, the signals we are seeing from learning memberships are promising and it provided us with confidence to lean further into the model this back-to-school season, making it the product that the majority of customers on our platform are offered. As we expand our learning memberships, we're also expanding the content available to learners on the platform. A great example of this is our July acquisition of CodeVerse that we're announcing today. CodeVerse is a tool that helps kids learn to code, by creating interactive and shareable video games through guided projects and missions. With the coding market being the fastest growing area of enrichment within the K-12 audience, adding CodeVerse to our portfolio will allow us to deliver even more incremental value for our K-12 members and institutional partners. We intend to integrate CodeVerse into our all-inclusive learning membership later this year and make it available to our institutional customers next year. The acquisition, which utilized only a small amount of cash consideration, represents an affordable and efficient way for us to expand our product capabilities, enhancing the value of our learning memberships. It's also indicative of the sort of resources we'll seek to add to learning memberships over time to continue to enhance the value we provide as part of the offering. Switching to the institutional side of the business, We've been hard at work finalizing two new products for this back to school season. Varsity Tutors On Demand and Teacher Assigned, which complement our high dosage tutoring solution and are resonating in conversations with schools. These products are oriented around more comprehensive strategic relationships with schools and lend themselves to long term partnerships. The new On Demand and Teacher Assigned products are unique. in that they can be rolled out to the entire student population, helping students to get help in real time and providing teachers with the supplemental learning support tools they need. When these new product offerings are combined with our existing high-dosage tutoring product, we believe NERDI is meeting a market need by offering access to always-on educational resources for students and by helping to better support teachers by allowing them to have a bigger impact on more students. During the second quarter, we adjusted the institutional sales team's focus towards larger school district opportunities where there is an interest in a more holistic and longer-lasting partnership. This included the creation of teacher-assigned and on-demand and a shift in our sales organization being focused on bundled solutions and multi-year needs. With this new focus, we expect the institutional sales cycles to remain lumpy. However, we are encouraged by our sales pipeline heading into the fall, the interest we're seeing in our new on-demand teacher-assigned products, and the large opportunity we see ahead for Varsity Tutors for Schools. From the inception of Varsity Tutors for Schools in August of last year through July 31st of this year, we have already contracted with over 180 unique clients as they seek to support their students and teachers with supplemental learning resources. And we believe we're just at the beginning stages of creating long-term relationships with schools. We believe education is on the precipice of the sea change. It will become increasingly normal for learners to select and engage with one primary partner to support their many supplementary learning objectives. NERDI's always-on product offerings align with this trend and position NERDI to win the trust and confidence of both consumers and institutions and to be the preferred solution for their supplemental learning needs. I want to thank our team for all of their efforts this summer and during this pre-back-to-school season. They have executed at a high level to deliver innovative new products, enhance the value we offer our customers, and help evolve our business model to one that defaults to recurring and always on. With that, I'll turn the call over to Jason to discuss the financials in more detail. Jason?