Shareholder letter
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PLAN EXAM - SEP 24 12 UNITS 66 TOPICS ha 33 on the dapts as you go - every session , lesson and rep is sequenced to from 27 to 33 before test day . You're 83 % through Week 1. Keep the live . nerdy Q2 2026 Shareholder Letter The Learning Experience YOUR STUDY PLAN PROJECTED 33 63 % of week SCORE JOURNEY 27-33 + Foundation On track Sessions 4h 5m 14h35m Study time 5/156 Plan Rems Goal 33 AP READINESS GRADES 11-12 2 WEEKS 4 SESSIONS Jump Start to AP Calculus : get limits down cold . AP Calculus starts with limits - and without them , the rest of the course feels like quicksand . Build a rock - solid foundation before the school year even begins . Starts Mon , Aug 3 4:00 PM CT - 75m 2x per week AP VETERAN INSTRUCTOR Marcus 4.8 NEXT CLASS IN 02 04 39 26 DAYS MIN SEC August section 5 of 14 seats left View full plan Customize plan Share progress Week 1 of 26 Foundation 5,192 students on this path + 4 - day streak PROGRESS OVERVIEW Organic Chem action Mechani SKILLS MEANDOWN and song CONCEPT MASTERY YOUR ORGANIC CHEM SUMMARY Keep Growing Skills Overview Track your strengths key organic chemistry topics mechanisms and synthes ep by step Learn from an AP veteran . Organic Chem Predict the major product . NaOEt TOP TOPICS EIOH , A ( A ) Reaction Mechanisms Functional Groups ( B ) O Stereochemistry Spectroscopy ( D ) A Which mechanism best explains the product formation ? ( A ) S ( 8 ) S2 ( C ) E1 14 42 88 ( D ) E2 topics concepts skills TOPIC PROGRESS Re & Mecha Amatic Compound ///// RECENT ACTIVITY Canele Nucleoph ben Con 14/20 14/14 12 15/20 Deping Develing E2 diminuton 4.8.9 years teaching AP Calculus Marcus Bell 4.8✶ 80 % + of students earn 4s & 5s 9 years AP Calculus AB / BC M.S. Mathematics Marcus has taught AP Calculus for nine years - and spent most of them decoding exactly where students stumble in the first six weeks . His answer : master limits before day one . His sessions blend graphical intuition , algebraic rigor , and real AP - style questions , delivered with the calm , structured pacing that makes hard math feel inevitable rather than intimidating . RANK # 1 ● Profile ready จก RANK # 3 University ● Profile ready Harvard University Cambridge , MA PRIVA ADMIT RATE 4 %
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In this release A Note to Our Shareholders Second Quarter Financial Highlights Second Quarter 2026 Key Results Third Quarter and Full Year 2026 Outlook Financial Discussion Condensed Consolidated Financial Statements Non-GAAP Reconciliations Key Operating Metrics Key Performance Metrics and Non-GAAP Financial Measures Forward-Looking Statements
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Q2 2026 EARNINGS RELEASE 03 Dear Shareholders, Q2 demonstrated continued improvement in Nerdy's operating performance and made clearer what the company is becoming: a focused Consumer learning company built around one connected system for learning, tutoring, and progress. Total revenue was $43.3 million, with Consumer generating $36.5 million, or 84% of total revenue. Gross margin expanded 320 basis points to 64.7%. Net loss improved to $6.9 million from $12.0 million. Our non GAAP adjusted EBITDA loss narrowed 68% to $0.9 million from $2.7 million, ahead of the midpoint of our guidance range. Alongside that progress, we have made two decisions that have narrowed the Company's focus to its highest return opportunity. We decided to wind down Varsity Tutors for Schools ("VT4S") and exit First Tutors, a small, legacy tutoring property in the United Kingdom. This decision concentrates our people, capital, and product development on the part of Nerdy where we have the strongest brand, the deepest operating experience, and the greatest opportunity to build a differentiated learning experience for consumers. We believe the market opportunity is significantly larger and the potential returns on our investments are substantially higher and we've been encouraged by the progress in our consumer product and business. Concentrating Nerdy on Consumer Consumer revenue was $36.5 million in Q2. Average Revenue per Member per Month ("ARPM") was $366, up 5% year over year. Learning Memberships were 29.1 thousand at June 30, down 5% year over year, with the rate of decline moderating for the fourth consecutive quarter. Returning the member base to durable growth remains an important objective this back-to-school season. The rate of decline has continued to narrow while ARPM, gross margin, and operating efficiency have improved. We expect the stronger product experience described below to support retention and acquisition as we move through the back-to-school season and into 2027. We are reducing our full-year revenue outlook to $168 million to $175 million from $180 million to $190 million. The reduction reflects the removal of expected Varsity Tutors for Schools and First Tutors revenue. Q3 is seasonally our lowest revenue quarter, with the back-to-school cohort beginning to convert into revenue late in Q3 and continuing into Q4. That seasonality, together with the institutional wind-down, is reflected in our Q3 non-GAAP adjusted EBITDA guidance of negative $9 million to negative $6 million, excluding exit costs. Our revised full-year non-GAAP adjusted EBITDA outlook is negative $4 million to approximately breakeven, excluding exit costs. NERDY INC. • NYSE: NRDY Q2 2026
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Q2 2026 EARNINGS RELEASE 04 A Smaller Team Building More Total headcount at the end of Q2 was down 34% year over year. Our engineering organization was 30% smaller than it was a year ago and delivered substantially more product output. We incurred $2.0 million of Alrelated expenses during the quarter, which is up sharply from the prior year, which we're actively moderating and getting more intelligent around. We used variable Al expense to accelerate that work without adding the permanent headcount that a traditional production model would have required. This is one of the most tangible ways Al is changing Nerdy. It allows a smaller organization to build faster, operate with fewer fixed costs, and direct more resources toward the customer experience. The result is not one isolated product release. Since the beginning of 2026, we have launched or rebuilt almost every piece of the digital learning experience surrounding our live tutoring product and our complimentary non tutoring products. This will be a significant step up in breadth and quality of our offerings for our customers. From Tutoring Sessions to a Continuous Learning Plan Our library now includes more than 15,000 lessons covering each skill within 220 discrete subjects. The lessons are available in 2 formats. The first is a dynamic textbook-style format for self-study purposes. The second is a presentation-style format for tutors to use in live tutoring sessions so that we have prepared, structured lessons for almost every subject. We believe this can up-level the experience across millions of tutoring sessions each year. We extended adaptive diagnostics, quizzes, full-length practice tests, flashcards and the lessons I mentioned to those 200+ subjects and we're weaving them together into what we're calling a Study Plan. A study plan is a software-based way to track and plan activities over time in pursuit of a goal and can serve as the common system to help drive daily active usage and provide value before, during, and after tutoring sessions in pursuit of that long-term goal. The importance of this work is not the volume of content alone. Every lesson, diagnostic question, quiz, worksheet, and activity is organized against a shared academic taxonomy. That structure allows a diagnostic to identify a skill gap, the Study Plan to recommend the appropriate next activity, and a tutor to use the same information when deciding what the Learner should do next. The Study Plan brings together four elements that our product previously handled discretely: the Learner's goal, the time available to reach it, the skills already mastered, and the combination of lessons, practice, diagnostics, and live tutoring most likely to produce progress. The same plan is visible to the student, the tutor, and within the Live Learning Platform during a tutoring session. It is now a core part of the Learning Membership experience and in August will be extended to 100% of tutoring relationships. NERDY INC.• NYSE: NRDY Q2 2026
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Second Quarter 2026 Key Results $43.3M 29.1K $366 406 bps $127.9M $38.4M
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Q2 2026 EARNINGS RELEASE 08 Third Quarter and Full Year 2026 Outlook As discussed, we have made two decisions. both aimed at sharpening our focus on the core business. First. we exited First Tutors. a small tutoring business in the United Kingdom. It is immaterial to our results. and the decision is about focus rather than economics. Second, we are shutting down Varsity Tutors for Schools to concentrate on Consumer- our core business, where the opportunity is significantly larger and where our resources and management bandwidth earn better returns. Together, these decisions simplify the Company and put our capital behind our highest-return assets. We expect that focus to show up in execution. We expect to incur approximately $2 million to $4 million of exit-related costs, primarily in Q3. With the Varsity Tutors for Schools exit, we are lowering our annual fixed cost run-rate by approximately $11 million. The decision does have a near-term impact on our outlook, most notably on cash. and the guidance we are establishing today reflects that. Excluding the exit, our full year outlook is largely unchanged from our previously announced revenue, non-GAAP adjusted EBITDA and cash guidance. Revenue Guidance • For the third quarter of 2026, we expect revenue in the range of $32 million to $35 million. • For the full year of 2026, we expect revenue in the range of $168 million to $175 million, compared to our prior range of $180 to $190 million. Adjusted EBITDA Guidance • For the third quarter of 2026, we expect non-GAAP adjusted EBITDA in the range of negative $9 million to negative $6 million, excluding exit costs. • For the full year of 2026, we expect non-GAAP adjusted EBITDA in the range of negative $4 million to approximately breakeven, excluding exit costs. As a reminder, the third quarter is seasonally our lowest revenue quarter, with our back-to-school cohort converting to revenue late in the third quarter and into the fourth. We now expect to end the year with approximately $30 to $32 million of cash, inclusive of the $20 million drawn on our term loan, compared to our prior expectation of $40 to $45 million. The change is primarily due to the timing of VT4S collections and the expected costs of the wind-down. VT4S contracts were generally paid in advance and recognized as revenue over the following twelve months. Exiting ahead of its peak booking period reduces the cash collections and year-end cash balance assumptions embedded in our prior outlook. To be clear, the year-end cash balance change is not a reflection on changed economics of the Consumer business. rather the working capital cycle of the business we are exiting. Based on our current operating plan, we expect existing liquidity to fund the company through free-cash-flow breakeven. NERDY INC.• NYSE: NRDY Q2 2026
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Q2 2026 EARNINGS RELEASE Key Operating Metrics We monitor the following key operating metrics, among others, to evaluate the performance of our business. Active Members is defined as the number of Learners with a paid active Learning Membership as of the date presented. Variations in the number of Active Members are due to changes in demand for our solutions, seasonality, testing schedules, and the launch of new Learning Membership options. As a result, Active Members is a key indicator of our ability to attract, engage and retain Learners. Active Members exclude our Institutional business. While our Active Member count as of June 30, 2026, was lower when compared to June 30, 2025, the rate of decline has narrowed sequentially for four consecutive quarters and we believe the recent rollout and continued advancement of our new Learner and Expert platform user experiences will result in positive growth by the end of 2026. ARPM is defined as the average Consumer Learning Membership subscription revenue per member per month as of the date presented. Variations in ARPM are primarily due to changes in the mix of Learning Memberships sold and pricing changes. We believe ARPM is a key indicator of the value we provide to our customers. ARPM excludes our Institutional business. ARPM as of June 30, 2026, was higher when compared to June 30, 2025, primarily driven by price increases enacted in February 2025. 17 Active Experts is defined as the number of Experts who have instructed one or more sessions in a given period. Active Experts include our Institutional business. Our Active Expert count during the three and six months ended June 30, 2026, decreased when compared to the prior year period. This decrease was primarily due to lower Consumer Active Experts as a result of our Expert incentives, which has promoted utilization of the highest quality Experts by encouraging them to work with more Learners and develop deeper relationships that allow for increased revenue-generating opportunities. We believe our Active Expert count at June 30, 2026, is sufficient to meet our near-term growth objectives. NERDY INC.• NYSE: NRDY Q2 2026
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Q2 2026 EARNINGS RELEASE 20 Forward-Looking Statements All statements contained herein that do not relate to matters of historical fact should be considered forward looking statements, including, without limitation, statements regarding our strategic priorities, including those related to revenue and active member growth; enhancing the Learning Membership experience; Al enabled productivity and operating leverage; the sufficiency of our cash to fund future operations; and our anticipated quarterly and full year 2026 outlook; as well as statements that include the words "expect," "plan," "believe," "project," "will" and "may," and similar statements of a future or forward-looking nature. The forward-looking statements made herein relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. There are a significant number of factors that could cause actual results to differ materially from statements made herein or in connection herewith, including but not limited to, our offerings continue to evolve, which makes it difficult to predict our future financial and operating results; our level of indebtedness, which could adversely affect our financial condition; our operating activities may be restricted as a result of covenants related to our term loan and failure to comply with these covenants could have a material adverse effect on us; our history of net losses and negative operating cash flows, which could require us to need other sources of liquidity; risks associated with our ability to acquire and retain customers, operate, and scale up our Consumer business; risks associated with the implementation of our plan to wind down Varsity Tutors for Schools, including the timing and amount of expected exit costs, our ability to realize anticipated benefits, and the impact on our business and results of operations; risks associated with our intellectual property, including claims that we infringe on a third-party's intellectual property rights; risks associated with our classification of some individuals and entities we contract with as independent contractors; risks associated with the liquidity and trading of our securities; risks associated with payments that we may be required to make under the tax receivable agreement; litigation, regulatory and reputational risks arising from the fact that many of our Learners are minors; changes in applicable law or regulation; the possibility of cyber-related incidents and their related impacts on our business and results of operations; risks associated with the development and use of artificial intelligence and related regulatory uncertainty; the possibility that we may be adversely affected by other economic, business, and/or competitive factors; and risks associated with managing our growth. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in our filings with the SEC, including our Annual Report on Form 10-K filed on February 26, 2026, and our Quarterly Report on Form 10-Q filed on August 6, 2026, as well as other filings that we may make from time to time with the SEC. NERDY INC. • NYSE: NRDY Q2 2026