Executive Summary

Q2 revenue was $45.3M, in line with guidance ($45–$48M) but down 11% YoY on lower Institutional revenue and the non-recurring $3.0M state-funded program in Q2’24; Consumer Learning Membership revenue returned to YoY growth (+4%) and ARPM rose 24% to $348 .
Gross margin expanded sequentially by 350 bps vs Q1 to 61.5% on price increases and mix shift, though below prior-year 65.7%; non-GAAP adjusted EBITDA loss was $2.7M, beating guidance (−$3M to −$6M) on higher gross margin and lower marketing/G&A .
Guidance: Q3 revenue $37–$40M; FY25 revenue $191–$197M; Q3 adjusted EBITDA loss −$11M to −$13M; FY25 adjusted EBITDA loss −$13M to −$17M; YE cash $30–$35M. FY revenue and EBITDA ranges were narrowed/lowered vs prior guide; company continues to expect non-GAAP adjusted EBITDA profitability in Q4’25 .
Call catalysts: acceleration in Learning Membership growth, Institutional bookings up 21% YoY, and roll-out of real-time “Nerdy” app and 30+ new AI tools for schools—management emphasized these as drivers of retention, ARPM, and margin gains, reinforcing the path to profitability in Q4 .

What Went Well and What Went Wrong

What Went Well

Consumer Learning Membership revenue inflected to growth (+4% YoY to $37.8M), ARPM increased 24% to $348, and management expects sequential Consumer revenue growth through 2025 driven by higher-frequency plans and price increases .
Sequential gross margin expansion (+350 bps QoQ to 61.5%) and adjusted EBITDA outperforming guidance (−$2.7M vs −$3M to −$6M) on mix/pricing improvements and cost efficiencies; headcount reduced ~16% earlier in the year enabling leverage .
Institutional momentum: 50 contracts, $4.9M bookings (+21% YoY), and strong interest in Live+AI platform; case study showed 5–26% gains across literacy/reading metrics in HDT programs, reinforcing efficacy and potential for adoption .

“Q2 proved that our Live+AI strategy is a growth engine… putting us firmly on track for profitability in Q4.” — Chuck Cohn, CEO .

What Went Wrong

Consolidated revenue declined 11% YoY (to $45.3M) due to lower Institutional revenue and non-recurring state-funded Consumer program; gross margin declined YoY to 61.5% from 65.7% on Expert incentives implemented in Q4’24 .
Active Members fell to 30.6k as of 6/30/25 (seasonal effects and lower retention in older cohorts of lower-frequency plans), down from 40.5k at Q1-end and 35.5k a year ago .
FY25 guidance tightened: revenue range lowered to $191–$197M (prior $191.5–$200M) and adjusted EBITDA loss range to −$13M to −$17M (prior −$8M to −$18M); YE cash guide cut to $30–$35M (prior $35–$40M) reflecting near-term funding caution in Institutional .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$47.990	$47.595	$45.263
Gross Margin %	66.6%	58.0%	61.5%
GAAP Net Loss ($USD Millions)	$(15.771)	$(16.151)	$(12.001)
Adjusted EBITDA (Loss) ($USD Millions, non-GAAP)	$(5.493)	$(6.364)	$(2.758)
Loss per Share (Basic & Diluted, $)	$(0.09)	$(0.09)	$(0.07)
Cash & Equivalents ($USD Millions)	$52.541	$44.922	$36.722

Segment revenue breakdown:

Segment Revenue ($USD Millions)	Q4 2024	Q1 2025	Q2 2025
Consumer	$40.993	$38.013	$37.824
Institutional	$6.826	$9.380	$7.308
Other	$0.171	$0.202	$0.131
Total	$47.990	$47.595	$45.263

KPIs:

KPI	Q4 2024	Q1 2025	Q2 2025
Active Members (thousands)	37.5	40.5	30.6
ARPM ($)	$302	$335	$348
Active Experts (thousands)	10.7	10.8	9.7
ARR Learning Membership Revenue ($USD Millions)	—	$162.6	$127.6

Estimate comparison: Wall Street consensus (S&P Global) for Q2’25 was unavailable; results assessed vs company guidance. Revenue was in-range ($45.3M vs $45–$48M), and adjusted EBITDA loss beat (−$2.7M vs −$3M to −$6M) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q3 2025	N/A	$37–$40	New
Revenue ($M)	FY 2025	$191.5–$200	$191–$197	Lowered/narrowed
Adjusted EBITDA ($M, non-GAAP)	Q3 2025	N/A	−$11 to −$13	New
Adjusted EBITDA ($M, non-GAAP)	FY 2025	−$8 to −$18	−$13 to −$17	Lowered/narrowed
YE Cash ($M)	FY 2025	$35–$40	$30–$35	Lowered
Gross Margin (%)	H2/FY 2025 trajectory	Sequential improvements throughout 2025	Sequential improvements; parity YoY by Q4 (qualitative)	Maintained; clarified
Consumer ARPM ($)	Q3–Q4 2025	>$370 FY-end (prior narrative)	~$380 by end of Q3 and Q4	Raised (call commentary)
Active Members (k)	Q3–FY 2025	N/A	~38k (Q3), ~40k (FY-end)	New (call commentary)

Earnings Call Themes & Trends

Topic	Q-2 (Q4 2024)	Q-1 (Q1 2025)	Current (Q2 2025)	Trend
AI/technology initiatives	Introduced Tutor Copilot; AI lesson/practice generators; unification of platforms	Rolled out AI session summaries with video playback; diagnostics; Live+AI positioning	Launching real-time “Nerdy” app (computer vision/audio), Tutor Copilot expansion, 30+ AI tools for schools; agentic practice problems	Accelerating scope and real-time capabilities
Consumer product performance	Consumer Learning Memberships 82% of revenue; ARPM pressure; engagement +26% YoY in Q4	ARPM up 14% to $335; Learning Membership revenue momentum; price increases	Learning Membership revenue +4% YoY; ARPM $348 (+24% YoY); mix shift to higher-frequency plans; retention improvements	Improving unit economics and growth
Gross margin	66.6% (YoY down) on utilization and incentives	58.0% (YoY down); expected sequential improvement	61.5% (+350 bps QoQ); sequential improvements expected each quarter, parity YoY by Q4	Sequential expansion through 2025
Institutional (schools)	Access scaled to ~5.0M students; bookings/value mix	Bookings $4.0M; moderated investment amid funding uncertainties	50 contracts; $4.9M bookings (+21% YoY); success case studies; larger Q3 bookings shaping up	Re-accelerating bookings; product-led adoption
Macro/regulatory	Funding environment cautious; post-ESSER normalization	Funding uncertainties persist; cautious stance	White House “Investing in AI Education” pledge; districts embracing AI broadly	Improving AI adoption tailwinds
Cost/operational leverage	AI-driven efficiency; EBITDA beat vs guide	Headcount −16%; AI-enabled productivity; EBITDA at top end guide	EBITDA beat; continued leverage across P&L; path to Q4 profitability	Increasing operating leverage

Management Commentary

Strategy and momentum: “We reignited Learning Membership revenue growth, beat our EBITDA guidance, and are now rolling out AI-native tools…putting us firmly on track for profitability in Q4.” — Chuck Cohn .
Consumer unit economics: “ARPM…reaching $348…Higher frequency learning memberships…are resonating with customers and leading to…stronger retention dynamics.” — Prepared remarks .
Product innovation: “Nerdy…leverages real-time computer vision and audio…to provide real-time guidance to the tutor…making it easier for all tutors to be highly effective.” — Chuck Cohn .
Cost discipline and leverage: “AI-enabled productivity improvements…headcount reductions and other cost reduction efforts…enabled us to generate operating efficiencies and remove significant costs” — CFO .
Path to profitability: “We believe these results…keep us firmly on the path to profitability on a non-GAAP adjusted EBITDA basis in the fourth quarter.” — Company .

Q&A Highlights

Growth trajectory and KPIs: Management cited the “single most productive period” and improving conversion/retention; CFO expects ARPM to reach ~$380 in Q3 and Q4 and Active Members ~38k in Q3 and ~40k by year-end, supporting sequential revenue acceleration .
Institutional bookings: Q3 shaping up to be the strongest bookings quarter ever; new AI tools not yet fully reflected in bookings—incremental runway ahead .
Margin outperformance: EBITDA beat driven by gross margin expanding beyond expectations and broad efficiency gains; gross margin expected to be at parity YoY by Q4 .
AI adoption tailwinds: District hesitancy has turned into broad interest and expectation to adopt AI; 30+ AI tools launched to streamline educator workflows .

Estimates Context

S&P Global consensus for Q2’25 (revenue, EPS, EBITDA) was unavailable; results were evaluated relative to company guidance. Revenue printed in-range ($45.3M vs $45–$48M) and adjusted EBITDA loss beat guidance (−$2.7M vs −$3M to −$6M), implying potential for upward adjustments to near-term margin expectations despite tightened full-year revenue/EBITDA ranges .
Given lowered FY25 ranges (revenue and EBITDA) and YE cash outlook, Street models may need to recalibrate FY25 top-line and profitability trajectories while factoring in sequential improvement in Consumer ARPM/gross margin and Institutional bookings momentum .

Key Takeaways for Investors

Consumer flywheel is working: higher-frequency memberships and pricing are lifting ARPM and retention, supporting sequential revenue growth through H2’25 and 2026 setup .
Gross margin inflecting: +350 bps QoQ to 61.5% on pricing/mix, with parity YoY targeted by Q4—driving EBITDA leverage and the path to profitability .
Institutional re-acceleration: Bookings +21% YoY; strongest Q3 bookings expected; efficacy case studies and 30+ AI tools should catalyze district adoption .
Cost discipline and AI-enabled leverage: Headcount −16% and process agentification underpin sustained opex efficiency; EBITDA beat despite revenue at low end of range .
Guidance reset: FY25 revenue/EBITDA ranges narrowed/lowered and YE cash guide reduced; near-term focus is execution into back-to-school and Q4 EBITDA profitability .
Trading setup: Near-term catalysts include ARPM ramp, Institutional bookings strength, and real-time AI (Nerdy app) roll-outs; watch Q3 revenue and margin progression vs guide and Q4 EBITDA inflection for multiple support .
Model updates: Without S&P consensus data, anchor models to company guidance and call commentary (ARPM, Active Members, margin trajectory), with sensitivity to Institutional funding environment .

Appendix: Additional Q2 Press Releases

Earnings results press release summarized above .
Pre-announcement release (call details) .

Nerdy Inc. (NRDY)·Q2 2025 Earnings Summary