Nerdy, Inc.

Good afternoon. Thank you for attending Nerdy's Q1 2026 earnings call. My name is Angela and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity to ask question and answer at the end. I would now like to pass the conference over to your host, TJ Lin, Associate General Counsel of Nerdy. You may proceed.

Good afternoon, and thank you for joining us for NERDI's first quarter 2026 earnings call. With me are Chuck Cohn, founder, chairman, and chief executive officer of NERDI, and Atul Baga, 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 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 first quarter results and the company's filings with the SEC for 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.

Thanks, TJ, and thank you to everyone for joining today's call. In the first quarter of 2026, we beat the top end of our revenue guidance and delivered our second consecutive quarter of positive non-GAAP adjusted EBITDA. We also translated the AI Native Foundation we finished building at the end of 2025 into shipped, learner-facing product at a cadence we have never matched in the company's history. Revenue was $48.7 million, above the top end of our $46 to $48 million guidance range and 2% up year over year. Non-GAAP adjusted EBITDA was positive $1 million ahead of our guidance of approximately breakeven and improved by $7.3 million compared to Q1 2025. Adjusted EBITDA margin expanded more than 1,500 basis points year over year, our third consecutive quarter of sequential margin improvement. That represents roughly $30 million of annualized operating leverage on a flat top line. Gross margin reached 66.2% and expansion of more than 800 basis points year over year. We ended the quarter with $44.7 million of cash on the balance sheet. Three things stood out in the first quarter. First, the product velocity that we said an AI-native codebase would unlock is now visible in shipped product with a meaningful slate of additional burner-facing releases reaching customers in the weeks ahead. Second, our cost structure is structurally, not cyclically better, and AI is the reason. And third, the rate of decline in active members on a year-over-year basis narrowed for the third consecutive quarter, and we expect to return to positive growth by the end of 2026. When we finished replatforming on an AI-native code base as we wrapped up 2025, we said the point of that work was not about the architecture itself. It was about the speed and quality of the products that we could ship on top of it. Q1 was the first full quarter operating in that new mode, and the cadence has fundamentally changed. The most visible expression of that shift is our new learner experience, internally referred to as V3, which became the universal customer experience and surface for our consumer business in March. Every newly acquired customer is now onboarded directly to this new V3 experience, and we have begun migrating existing customers as well. Roughly 6,000 new customers came in directly on v3 in the back half of the quarter, and approximately 10,000 existing customers have moved over from the prior experience, and we are seeing strong early signal and optimizing rapidly in response to user behavior and customer feedback, which is broadly positive, with a constant point of feedback being it looks and feels like a whole different company or product. same platform will imminently power our institutional offering which we expect to expand the market opportunity and institutional beyond the more limited k-12 high dosage tutoring market that business primarily targeted inside v3 the centerpiece for the learner is maya our ai concierge maya is the always-on guide built into the experience she answers inbound questions surfaces the right next step helps the student find a diagnostic, and resolves day-to-day issues like scheduling a tutoring session. And she does so all without a phone call or a customer support ticket. She's available 24 hours a day with full context of each student's actual learning plan and past interactions, including past tutoring sessions, product interactions, diagnostics, and practice-related engagement, and the results of those, and more. She now handles a meaningful share of in-product customer interactions. For student or parent, Maya turns a platform into a relationship that feels alive, responsive, and easy. Around Maya, V3 brings together the rest of the family experience. Our native mobile app launched in the app store in Q1 is approaching full feature parity with web, with releases now shipping to mobile within 48 hours of going live. The tutor gallery lets families browse tutor profiles, watch introductory videos, and book with guaranteed availability through Book Now. We also launched GAINS, a set of six math and ELA titles initially built to drive daily engagement and learning. We also launched on-demand courses converting our top live classes into self-paced courses with supporting materials. We are launching with more than 350 of these courses that collectively span thousands of hours of live instruction. These updates ship together as part of V3. They give families more ways to engage with our platform between live sessions, creating additional retention opportunities. And we're seeing the early signal in the numbers. Active members ended the quarter at 36.9,000, down 9% year-over-year. But the rate of decline has narrowed for three consecutive quarters, and customer churn has improved meaningfully year-over-year as customers enter or experience our new platform and ways to get value out of the relationship with us. ARPA was $374, up 12%, and learning membership revenue grew 3% to $38.9 million, 80% of total revenue. Beneath the headline, the cohorts onboarded directly onto V3 are showing early indications that are directionally consistent with our thesis. While early, what we will say is the cohort signal is consistent across the metrics that matter, and that retention is the highest growth lever we have given how small changes in extending the customer lifecycle can have a meaningful impact on long-term revenue and profitability. At today's customer acquisition cost, every additional month of average tenure flows almost entirely through to contribution profit. We expect to provide a fuller read on our progress on our Q2 call in August. Our upcoming product releases have received strong early feedback. What has shifted V3 today is the foundation, not the full picture. Three product areas in particular are moving from internal development into the hands of customers in the weeks ahead with strong early feedback on all three. The first is college and career readiness. We were approached by the leadership from a top 10 US school district about a need we're uniquely qualified to solve. This led to our always on AI counselor now targeted for back to school 2026 release in two flagship high schools in that district. Early indications show other districts have similar needs. The counselor is highly interactive and guides students through post-secondary decisions. It has real-time integration with school systems, maintains persistent memory across years, and is multimodal across mobile desktop voice, SMS, and inbound and outbound calling. For consumer learners, it extends varsity tutors as well as tutoring specifically into a multi-year goal-setting process previously outside our reach. The second upcoming Q2 planned product release is related to daily math and reading content and practice. We're launching more than 4,600 K-8 math skills aligned to academic taxonomies, achieving parity with several of the leading supplemental practice platforms, with reading parity coming soon. These additions expand the lesson library, including tens of thousands of lessons, all created year-to-date mapped to K-12 and college taxonomies and standards. The content integrates into V3 as structured daily practice alongside tutoring or self-study. Progress is visible to learners and parents. And for tutors, it helps ensure all tutors have prepared professional relevant content for their tutoring sessions across the millions of tutoring sessions per year on the platform. AI orchestrates and personalizes the learning experience that spans all of these product modalities on the platform in service of the learner's goals and preferences. Early feedback on sequencing and quality is strong, and we anticipate similar learner reception when we roll it out more broadly. And the third upcoming product is related to language learning, which is already a popular area for one-to-one tutoring on the platform. We're bringing to market an AI-enabled learning experience that will launch for both consumer and institutional customers, and we look forward to sharing more in the near future. I also wanted to touch upon our continuous efforts to utilize AI internally to improve product velocity and improve productivity. AI is at the center of how we're operating and expect our teams to operate. Not only is all of our software development done almost exclusively with AI, we are using it to do everything from automate our back office workflows to handle inbound and outbound calls and help with customer service interactions on the platform and much, much more. Fixed headcount is lower year over year, even as we enhance our existing products and build numerous new ones. These changes drove more than 1,500 basis points of adjusted EBITDA margin expansion in the quarter on roughly flat revenue. The improvements are structural, with software and automation replating manual processes. With both fixed and variable costs now lower, higher retention means new revenue flows through at a higher contribution margin rate to adjust the EBITDA. AI is how we operate. It's not what we sell. And what we sell remains that relationship between a learner and an expert that's now supported by the best technology available, and it's informed by more than 10 million tutoring sessions. Moving on to Varsity Tutors for Schools. The new Varsity Tutors for Schools platform, built on the same V3 platform foundation and integrating AI-enabled tutoring and AI counseling layer and our expanded K-12 content library on the Live Plus AI engine that powers our consumer business, enters the back to school 2026 selling season as a meaningfully stronger offering than what we took to market a year ago. And now looking ahead to the rest of the year, the product velocity we have discussed, our V3 platform, Maya, our AI concierge for learners, having modern mobile apps with full feature parity to web, and the upcoming product releases in college and career readiness, daily math and reading practice, and language learning have shipped or will be shipping before the end of the second quarter. And our customer base is only beginning to experience these enhanced features. As more of our active customers move on to the new platform and our first full V3 new customer cohorts mature, the lending indicators we are watching today should translate into inflecting active member growth later this year. A year ago, we were rebuilding the foundation. Today, we're building on it, and the benefits of this increased product velocity will build throughout the year as we enhance more customer-facing services and allow for us to drive long-term growth and profitability. With that, I'll hand the call over to Atul to discuss the financials in more detail.