NERDWALLET INC

Previous wording

We define a Monthly Unique User (MUU) as a unique user with at least one session in a given month as determined by a unique device identifier. We measure MUUs during a time period longer than one month by averaging the MUUs of each month within that period. We track MUUs to frame the number of users who may transact with our financial services partners on our platform during a given period. We had 29 million average MUUs for the three months ended March 31, 2024, which was up 25% compared to the three months ended March 31, 2023. We saw strong engagement in areas such as investing, travel products, taxes and insurance. While we expect MUUs to grow over time, the metric may fluctuate from period to period based on economic conditions, trends in consumer behavior and our strategic marketing decisions.

Current wording

We define a Monthly Unique User (MUU) as a unique user with at least one session in a given month as determined by a unique device identifier. We measure MUUs during a time period longer than one month by averaging the MUUs of each month within that period. We track MUUs to frame the number of users who may transact with our financial services partners on our platform during a given period. We had 23 million and 26 million average MUUs for the three and six months ended June 30, 2024, which was up 7% and 16% compared to the three and six months ended June 30, 2023, respectively. We saw strong engagement in areas such as travel products, investing and insurance. While we expect MUUs to grow over time, the metric may fluctuate from period to period based on economic conditions, trends in consumer behavior and our strategic marketing decisions.

Previous wording

Revenue decreased $7.7 million, or 5% for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to lower credit cards revenue, partially offset by growth in SMB products revenue.

Current wording

Revenue increased $7.3 million, or 5%, for the three months ended June 30, 2024, and decreased $0.4 million, for the six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, respectively, reflecting the net impact of lower credit cards and loans revenue, offset by growth in emerging verticals and SMB products revenue.

Previous wording

Credit cards revenue decreased $11.3 million, or 19%, for the three months ended March 31, 2024, primarily due to reduced marketing spending by our financial services partners amidst a combination of continued cautious underwriting and heightened balance sheet conservatism following the 2023 regional banking crisis.

Current wording

Credit cards revenue consists of revenue from consumer credit cards. Credit cards revenue decreased $5.1 million, or 10%, and $16.4 million, or 15%, for the three and six months ended June 30, 2024, respectively, primarily due to reduced marketing spending by our financial services partners amidst a combination of continued cautious underwriting and heightened balance sheet conservatism.

Previous wording

SMB products revenue increased $5.2 million, or 21%, for the three months ended March 31, 2024, primarily driven by revenue growth in products such as business credit cards and banking as we continue to scale our product offerings.

Current wording

SMB products revenue includes revenue from loans, credit cards and other financial products and services intended for small and mid-sized businesses. SMB products revenue increased $2.4 million, or 10%, and $7.6 million, or 16%, for the three and six months ended June 30, 2024, respectively, primarily driven by revenue growth in products such as business credit cards and loan renewals, as we continue to scale our product offerings, partially offset by decreases in business loan originations.

Previous wording

Emerging verticals revenue decreased $1.0 million, or 2%, for the three months ended March 31, 2024, primarily due to a 9% decrease in banking revenue as consumer demand for banking products begins to moderate, partially offset by increases of 30% in investing revenue and 5% in insurance products revenue.

Current wording

Emerging verticals revenue includes revenue from other product sources, including banking, insurance, investing and international. Emerging verticals revenue increased $11.4 million, or 25%, and $10.4 million, or 10%, for the three and six months ended June 30, 2024, respectively, primarily due to increases of 196% and 67% in insurance products revenue as carriers expanded budgets, partially offset by decreases of 26% and 17% in banking revenue as consumer demand for banking products continued to moderate.

Previous wording

Cost of revenue increased $0.4 million, or 3%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to a $1.3 million increase in amortization expense related to capitalized software development costs, partially offset by decreases of $0.5 million in amortization expense related to intangible assets and $0.5 million primarily related to third-party service charges.

Current wording

Cost of revenue increased $1.8 million, or 14%, and $2.2 million, or 8%, for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, respectively, primarily due to increases of $1.3 million and $2.6 million in amortization expense related to capitalized software development costs and $0.8 million and $0.3 million primarily related to third-party service charges, partially offset by decreases of $0.5 million and $1.0 million in amortization expense related to intangible assets.

Previous wording

Research and development expenses increased $1.2 million, or 6%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily attributable to a $1.4 million increase in personnel-related costs for our engineering, data, and product management personnel and contractors to support our continued growth and key platform capabilities.

Current wording

Research and development expenses increased $2.7 million, or 13%, and $3.9 million, or 10%, for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, respectively, primarily attributable to increases of $2.1 million and $3.5 million in personnel-related costs for our engineering, data, and product management personnel and contractors to support our continued growth and key platform capabilities, and $0.7 million and $0.6 million in software and technology costs related to our platform.

Previous wording

For the three months ended March 31, 2024, our total sales and marketing expense was comprised of approximately 25% for brand marketing, and 51% for performance marketing, with the remainder for organic and other marketing expenses. For the three months ended March 31, 2023, our total sales and marketing expense was comprised of approximately 32% for brand marketing, and 46% for performance marketing, with the remainder for organic and other marketing expenses. We are able to adjust our marketing spend to reflect changes in external factors and consumer behavior.

Current wording

For the three and six months ended June 30, 2024, our total sales and marketing expense was comprised of approximately 18% and 21% for brand marketing, respectively, and 56% and 53% for performance marketing, respectively, with the remainder for organic and other marketing expenses. For the three and six months ended June 30, 2023, our total sales and marketing expense was comprised of approximately 21% and 27% for brand marketing, respectively, and 50% and 48% for performance marketing, respectively, with the remainder for organic and other marketing expenses. We are able to adjust our marketing spend to reflect changes in external factors and consumer behavior.

Previous wording

Sales and marketing expenses decreased $13.8 million, or 11%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, attributable to decreases of $11.6 million in brand marketing expenses, $1.2 million in performance marketing expenses and $1.0 million in organic and other marketing expenses primarily due to lower personnel-related costs.

Current wording

Sales and marketing expenses increased $7.3 million, or 7%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, as a $10.1 million increase in performance marketing expenses was partially offset by decreases of $1.7 million in brand marketing expenses and $1.1 million in organic and other marketing expenses primarily due to lower personnel-related costs. Sales and marketing expenses decreased $6.5 million, or 3%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, as decreases of $13.3 million in brand marketing expenses and $2.1 million in organic and other marketing expenses primarily due to lower personnel-related costs, were partially offset by an $8.9 million increase in performance marketing expenses.

Previous wording

Other income, net increased $0.4 million or 56% for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily attributable to higher interest income reflecting higher interest rates and average cash balances.

Current wording

Other income, net increased $0.7 million or 112%, and $1.1 million, or 82%, for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, respectively, primarily attributable to higher interest income reflecting higher interest rates and average cash balances.

Previous wording

We had an income tax provision of $3.7 million for the three months ended March 31, 2024, as compared to an income tax benefit of $1.8 million for the three months ended March 31, 2023. Our effective tax rate was 76.2% for the three months ended March 31, 2024, and 1,600.2% for the three months ended March 31, 2023. Our effective tax rate for the three months ended March 31, 2024 differs from the U.S. federal statutory income tax rate of 21% primarily due to the valuation allowance maintained against our net U.S. deferred tax assets and state taxes, partially offset by research and development credits. Our effective tax rate for the three months ended March 31, 2023 differs from the U.S. federal statutory income tax rate of 21% primarily due to excess tax benefits related to stock based compensation, partially offset by higher capitalization of research and development expenses under tax regulations effective in 2022 and a full valuation allowance recorded against our net U.S. deferred tax assets.

Current wording

We had income tax provisions of $1.1 million and $4.8 million for the three and six months ended June 30, 2024, respectively, and $7.1 million and $5.3 million for the three and six months ended June 30, 2023, respectively. Our effective tax rate was (13.7%) and (138.6%) for the three and six months ended June 30, 2024, and (200.4%) and (144.0%) for the three and six months ended June 30, 2023. Our effective tax rate for the three and six months ended June 30, 2024 differs from the U.S. federal statutory income tax rate of 21% primarily due to the valuation allowance maintained against our net U.S. deferred tax assets and state taxes, partially offset by research and development credits. Our effective tax rate for the three and six months ended June 30, 2023 differs from the U.S. federal statutory income tax rate of 21% primarily due to capitalization of research and development expenses under tax regulations effective in 2022, a full valuation allowance recorded against our net U.S. deferred tax assets, and excess tax benefits related to stock-based compensation.

Previous wording

Based on our ongoing assessment of all available evidence, both positive and negative, including consideration of our historical profitability and the estimated impact of our operating model on future profitability, we concluded that it was more likely than not that our U.S. deferred tax assets in excess of deferred tax liabilities would not be realized and recorded a valuation allowance against these net U.S. deferred tax assets as of March 31, 2024. Our judgment regarding the likelihood of realization of these deferred tax assets could change in future periods, which could result in a material impact to our income tax provision in the period of change. Given our current earnings projections, sufficient positive evidence may become available for us to release all, or a portion, of the valuation allowance within the next nine months. However, the timing and amounts of such valuation allowance releases are subject to change based on the level of profitability achieved in future periods.

Current wording

Based on our ongoing assessment of all available evidence, both positive and negative, including consideration of our historical profitability and the estimated impact of our operating model on future profitability, we concluded that it was more likely than not that our U.S. deferred tax assets in excess of deferred tax liabilities would not be realized and recorded a valuation allowance against these net U.S. deferred tax assets as of June 30, 2024. Our judgment regarding the likelihood of realization of these deferred tax assets could change in future periods, which could result in a material impact to our income tax provision in the period of change. Given our current earnings projections, sufficient positive evidence may become available for us to release all, or a portion, of the valuation allowance within the next six months. However, the timing and amounts of such valuation allowance releases are subject to change based on the level of profitability achieved in future periods.

Previous wording

Non-GAAP operating income (loss) and adjusted EBITDA as we define them may not be comparable to similarly titled measures used by other companies. Because of these limitations, you should consider non-GAAP operating income (loss) and adjusted EBITDA alongside other financial performance measures, including income (loss) from operations, net income (loss) and our other GAAP results.

Current wording

Non-GAAP operating income (loss) and adjusted EBITDA as we define them may not be comparable to similarly titled measures used by other companies. Because of these limitations, you should consider non-GAAP operating income (loss) and adjusted EBITDA alongside other financial performance measures, including loss from operations, net loss and our other GAAP results.

Previous wording

We compensate for these limitations by reconciling non-GAAP operating income (loss) to income (loss) from operations, and adjusted EBITDA to net income (loss), the most comparable GAAP financial measures, as follows:

Current wording

We compensate for these limitations by reconciling non-GAAP operating income (loss) to loss from operations, and adjusted EBITDA to net loss, the most comparable GAAP financial measures, as follows:

Previous wording

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for a discussion of the changes in income (loss) from operations and net income for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for a discussion of the changes in loss from operations and net loss for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023.

Previous wording

As of March 31, 2024 and December 31, 2023, we had cash and cash equivalents of $110.9 million and $100.4 million, respectively.

Current wording

As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents of $113.8 million and $100.4 million, respectively.

Previous wording

More broadly, we also have purchase obligations under contractual arrangements with vendors and service providers, including for certain web-hosting and cloud computing services, which do not qualify for recognition on our condensed consolidated balance sheets but which we consider non-cancellable. During the three months ended March 31, 2024, there have been no material changes in our purchase obligations as disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Liquidity and Capital Resources” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

More broadly, we also have purchase obligations under contractual arrangements with vendors and service providers, including for certain web-hosting and cloud computing services, which do not qualify for recognition on our condensed consolidated balance sheets but which we consider non-cancellable. During the six months ended June 30, 2024, there have been no material changes in our purchase obligations as disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Liquidity and Capital Resources” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

We announced on May 2, 2023 that our Board of Directors authorized a plan under which we may repurchase up to $20 million of our Class A common stock and, following our utilization of that share repurchase authorization, we announced on October 26, 2023 that our Board of Directors approved a share repurchase authorization under which we may repurchase up to an additional $30 million of our Class A common stock (collectively, the Repurchase Plans). Subject to market conditions and other factors, the Repurchase Plans are intended to make opportunistic repurchases of our Class A common stock to reduce our outstanding share count. Under the Repurchase Plans, shares of Class A common stock may be repurchased in the open market through privately negotiated transactions or otherwise, in accordance with applicable securities laws and other restrictions. The Repurchase Plans do not have fixed expiration dates and do not obligate us to acquire any specific number of shares. The timing and terms of any repurchases under the Repurchase Plans are at management’s discretion and depend on a variety of factors, including business, economic and market conditions, regulatory requirements, prevailing stock prices and other considerations. Additionally, we may, from time to time, enter into Rule 10b-5 trading plans to facilitate repurchases. Shares repurchased under the Repurchase Plans are retired. We expect to fund repurchases with existing cash and cash equivalents. We did not repurchase any shares of Class A common stock during the three months ended March 31, 2024.

Current wording

We announced on May 2, 2023 that our Board of Directors authorized a plan under which we may repurchase up to $20 million of our Class A common stock and, following our utilization of that share repurchase authorization, we announced on October 26, 2023 that our Board of Directors approved a share repurchase authorization under which we may repurchase up to an additional $30 million of our Class A common stock (collectively, the Repurchase Plans). Subject to market conditions and other factors, the Repurchase Plans are intended to make opportunistic repurchases of our Class A common stock to reduce our outstanding share count. Under the Repurchase Plans, shares of Class A common stock may be repurchased in the open market through privately negotiated transactions or otherwise, in accordance with applicable securities laws and other restrictions. The Repurchase Plans do not have fixed expiration dates and do not obligate us to acquire any specific number of shares. The timing and terms of any repurchases under the Repurchase Plans are at management’s discretion and depend on a variety of factors, including business, economic and market conditions, regulatory requirements, prevailing stock prices and other considerations. Additionally, we may, from time to time, enter into Rule 10b-5 trading plans to facilitate repurchases. Shares repurchased under the Repurchase Plans are retired. We expect to fund repurchases with existing cash and cash equivalents. We repurchased 0.1 million shares of Class A common stock for $1.1 million, including costs associated with the repurchases, during the six months ended June 30, 2024.

Previous wording

Net cash provided by operating activities increased $6.3 million in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, as an $8.0 million decrease in net cash outflow from changes in operating assets and liabilities was partially offset by decreases of $1.1 million in non-cash charges and $0.6 million in net income. The decrease in net cash outflow from changes in operating assets and liabilities was primarily due to decreases of $5.6 million in prepaid expenses and other assets, $4.8 million in accounts payable, and $3.8 million in accrued expenses and other current liabilities, partially offset by an increase of $6.7 million in accounts receivable. The decrease in non-cash charges was primarily due to a $1.2 million decrease in other, net.

Current wording

Net cash provided by operating activities increased $26.5 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, as a $27.6 million decrease in net cash outflow from changes in operating assets and liabilities was partially offset by decreases of $1.8 million in non-cash charges and $0.7 million in net loss. The decrease in net cash outflow from changes in operating assets and liabilities was primarily due to a $14.0 million payment in the six months ended June 30, 2023 for contingent consideration in excess of the amounts recorded at the acquisition date, as well as decreases of $12.9 million in accrued expenses and other current liabilities, $9.9 million in accounts payable, and $3.4 million in prepaid expenses and other assets, partially offset by an increase of $12.0 million in accounts receivable. The decrease in non-cash charges was primarily due to decreases of $0.9 million in stock-based compensation and $0.9 million in other, net.

Previous wording

Net cash used in investing activities increased $5.9 million in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to an $8.1 million purchase of an investment in the three months ended March 31, 2024, partially offset by a $1.9 million decrease in capitalized software development costs.

Current wording

Net cash used in investing activities increased $3.9 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to an $8.1 million purchase of an investment in the six months ended June 30, 2024, partially offset by a $4.1 million decrease in capitalized software development costs.

Previous wording

Net cash provided by financing activities decreased $6.8 million in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to a $6.7 million decrease from exercises of stock options.

Current wording

Net cash used in financing activities decreased $7.6 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to a $16.9 million payment in the six months ended June 30, 2023 for contingent consideration recorded at the acquisition date, partially offset by a $6.7 million decrease from exercises of stock options and $1.9 million from issuance of Class A common stock under our Employee Stock Purchase Plan in the six months ended June 30, 2023.

Previous wording

During the three months ended March 31, 2024, there have been no material changes in our critical accounting policies as disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

During the six months ended June 30, 2024, there have been no material changes in our critical accounting policies as disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2023.