NERDWALLET INC

Previous wording

We collect, review and analyze operating and financial data of our business to assess our ongoing performance and compare our results to prior period results. In addition to revenue, net income (loss) and other results under generally accepted accounting principles (GAAP), the following sets forth the key operating metric and non-GAAP financial measures we use to evaluate our business.

Current wording

We collect, review and analyze operating and financial data of our business to assess our ongoing performance and compare our results to prior period results. In addition to revenue, net income (loss) and other results under generally accepted accounting principles (GAAP), the following sets forth the non-GAAP financial measures we use to evaluate our business.

Previous wording

Adjusted EBITDA: We define adjusted EBITDA as net income (loss) from continuing operations adjusted to exclude depreciation and amortization, interest income (expense), net, and provision (benefit) for income taxes, and further exclude (1) impairment of right-of-use asset, (2) losses (gains) on disposals of assets, (3) change in fair value of contingent consideration related to earnouts, (4) deferred compensation related to earnouts, (5) stock-based compensation, (6) acquisition-related costs, and (7) restructuring charges.

Current wording

Adjusted EBITDA: We define adjusted EBITDA as net income (loss) from continuing operations adjusted to exclude depreciation and amortization, interest income (expense), net, other gains (losses), net, and provision (benefit) for income taxes, and further exclude (1) impairment of right-of-use asset, (2) losses (gains) on disposals of assets, (3) change in fair value of contingent consideration related to earnouts, (4) deferred compensation related to earnouts, (5) stock-based compensation, (6) acquisition-related costs, and (7) restructuring charges.

Previous wording

•Non-GAAP operating income (loss) and adjusted EBITDA exclude acquisition-related costs, including acquisition-related retention compensation under compensatory retention agreements with certain key employees, acquisition-related transaction expenses, contingent consideration fair value adjustments related to earnouts, and deferred compensation related to earnouts;

Current wording

•Non-GAAP operating income (loss) and adjusted EBITDA exclude certain acquisition-related costs, including acquisition-related retention compensation under compensatory retention agreements with certain key employees, acquisition-related transaction expenses, contingent consideration fair value adjustments related to earnouts, and deferred compensation related to earnouts;

Previous wording

•Non-GAAP operating income (loss) and adjusted EBITDA exclude restructuring charges primarily consisting of severance payments, employee benefits, and related expenses for impacted employees associated with our Restructuring Plan;

Current wording

•Non-GAAP operating income (loss) and adjusted EBITDA exclude restructuring charges primarily consisting of severance payments, stock-based compensation, employee benefits, and related expenses for impacted employees, as well as contract termination costs, associated with our Restructuring Plan;

Previous wording

Revenue increased $38.5 million, or 25%, and $38.1 million, or 8%, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively, reflecting growth in emerging verticals and SMB products revenue, partially offset by lower credit cards and loans revenue.

Current wording

Revenue increased $47.3 million, or 29%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily reflecting growth in Insurance products and Emerging verticals revenues, partially offset by lower Credit cards revenue.

Previous wording

Credit cards revenue consists of revenue from consumer credit cards. Credit cards revenue decreased $8.7 million, or 16%, and $25.1 million, or 15%, for the three and nine months ended September 30, 2024, respectively, primarily due to pressures in organic search traffic and reduced marketing spending by our financial services partners amidst a cautious underwriting environment.

Current wording

Credit cards revenue consists of revenue from consumer credit cards. Credit cards revenue decreased $12.0 million, or 24%, for the three months ended March 31, 2025, primarily due to continued pressures in organic search traffic.

Previous 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 $3.1 million, or 12%, and $10.7 million, or 14%, for the three and nine months ended September 30, 2024, respectively, primarily driven by revenue growth in products such as business credit cards, banking and loan renewals, as we continue to scale our product offerings, partially offset by decreases in business loan originations.

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 decreased $1.5 million, or 5%, for the three months ended March 31, 2025, primarily due to a decrease in business loan originations.

Previous wording

Loans revenue includes revenue from personal loans, mortgages, student loans and auto loans. Loans revenue decreased $9.1 million, or 28%, and $11.1 million, or 14%, for the three and nine months ended September 30, 2024, respectively, primarily due to decreases of 49% and 26% in personal loans revenue as we continue to work through a high interest rate environment.

Current wording

Loans revenue includes revenue from personal loans, mortgages, student loans and auto loans. Loans revenue increased $2.6 million, or 12%, for the three months ended March 31, 2025, primarily due to increases of 23% in mortgage loans revenue as we incorporate our acquisition of Next Door Lending LLC (NDL) in October 2024, and 8% in personal loans revenue.

Previous wording

Emerging verticals revenue includes revenue from other product sources, including banking, insurance, investing and international. Emerging verticals revenue increased $53.2 million, or 129%, and $63.6 million, or 43%, for the three and nine months ended September 30, 2024, respectively, primarily driven by strong increases of 916% and 222% in insurance products revenue as carriers expanded budgets, partially offset by decreases of 26% and 20% in banking revenue as consumer demand for banking products continued to moderate.

Current wording

Emerging verticals revenue includes revenue from other product sources, including banking, investing and international. Emerging verticals revenue increased $5.6 million, or 15%, for the three months ended March 31, 2025, primarily driven by a 22% increase in banking revenue due to higher demand for banking products.

Previous wording

Cost of revenue increased $4.4 million, or 33%, and $6.6 million, or 17%, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively, primarily due to increases of $1.7 million and $4.4 million in amortization expense related to capitalized software development costs and $3.0 million and $3.3 million primarily related to third-party service charges, partially offset by decreases of $0.5 million and $1.5 million in amortization expense related to intangible assets.

Current wording

Cost of revenue increased $4.0 million, or 28%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to increases of $3.0 million primarily related to third-party service charges and $0.8 million in amortization expense related to capitalized software development costs.

Previous wording

Research and development expenses increased $2.3 million, or 11%, and $6.2 million, or 10%, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively, primarily attributable to a $5.6 million restructuring charge as well as increases of $0.7 million and $1.3 million in software and technology costs related to our platform, respectively. These increases for the three months ended September 30, 2024 were partially offset by a $3.3 million decrease 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 decreased $3.9 million, or 19%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily attributable to a $4.1 million decrease in personnel-related costs for our engineering, data and product management personnel and contractors.

Previous wording

For the three and nine months ended September 30, 2024, our total sales and marketing expense was comprised of approximately 9% and 17% for brand marketing, respectively, and 72% and 60% for performance marketing, respectively, with the remainder for organic and other marketing expenses. For the three and nine months ended September 30, 2023, our total sales and marketing expense was comprised of approximately 19% and 24% for brand marketing, respectively, and 53% and 49% 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.

Current wording

We are able to adjust our marketing spend to reflect changes in external factors and consumer behavior.

Previous wording

Other income, net increased $0.5 million or 86%, and $1.6 million, or 83%, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively, primarily attributable to higher interest income reflecting higher interest rates and, for the nine months ended September 30, 2024, higher average cash balances.

Current wording

Other income, net decreased $0.5 million, or 55%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily attributable to lower interest income reflecting lower average cash balances and interest rates.

Previous wording

Beginning with the three months ended June 30, 2023, our tax provision for interim periods was determined using a discrete effective tax rate method, as allowed by ASC Topic 740-270, Income Taxes, Interim Reporting. Our tax provision for interim periods was previously determined using an estimated annual effective tax rate which was adjusted for discrete items occurring during the periods presented. We determined that since small changes in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate for the three months ended September 30, 2024.

Current wording

The Company’s tax provision for the three months ended March 31, 2025 was determined using an estimated annual effective tax rate which was adjusted for discrete items occurring during the period. The Company’s tax provision for the three months ended March 31, 2024 was determined using a discrete effective tax rate method, as allowed by ASC Topic 740-270, Income Taxes, Interim Reporting, as the Company had determined that small changes in estimated “ordinary” income would have resulted in significant changes in the estimated annual effective tax rate.

Previous wording

We had income tax provisions of $7.7 million and $12.5 million for the three and nine months ended September 30, 2024, respectively, and $5.2 million and $10.5 million for the three and nine months ended September 30, 2023, respectively. Our effective tax rate was 99.2% and 290.7% for the three and nine months ended September 30, 2024, and 110.9% and 1,080.6% for the three and nine months ended September 30, 2023. Our effective tax rate for the three and nine months ended September 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 nine months ended September 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.

Current wording

We had income tax provisions of $1.1 million and $3.7 million for the three months ended March 31, 2025 and 2024, respectively. Our effective tax rate was 87.2% and 76.2% for the three months ended March 31, 2025 and 2024, respectively. Our effective tax rate for the three months ended March 31, 2025 differs from the U.S. federal statutory income tax rate of 21% primarily due to discrete items related to stock-based compensation and uncertain tax positions. Our effective tax rate for the three months ended March 31, 2024 differed from the U.S. federal statutory income tax rate of 21% primarily due to the valuation allowance previously maintained against our net U.S. deferred tax assets and state taxes, partially offset by research and development credits.

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 September 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 twelve 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. federal and majority state deferred tax assets are realizable, resulting in a valuation allowance release for federal and states, other than California, during the three months ended December 31, 2024. We continue to maintain a valuation allowance on our California deferred tax assets, which consist primarily of tax credits, as of March 31, 2025. 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.

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 (loss) for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 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 income (loss) from operations and net income (loss) for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Previous wording

Our principal sources of liquidity to meet our business requirements and plans, both in the short-term (i.e., the next twelve months from September 30, 2024) and long-term (i.e., beyond the next twelve months), have historically been cash generated from operations and, more recently, sales of our common stock, and borrowings under our credit facilities. Our primary liquidity needs are related to the funding of general business requirements, including working capital requirements, research and development, and capital expenditures, as well as other liquidity requirements including, but not limited to, business combinations.

Current wording

Our principal sources of liquidity to meet our business requirements and plans, both in the short-term (i.e., the next twelve months from March 31, 2025) and long-term (i.e., beyond the next twelve months), have historically been cash generated from operations. Our primary liquidity needs are related to the funding of general business requirements, including working capital requirements, research and development, and capital expenditures, as well as other liquidity requirements including, but not limited to, business combinations.

Previous wording

As of September 30, 2024 and December 31, 2023, we had cash and cash equivalents of $71.7 million and $100.4 million, respectively.

Current wording

As of March 31, 2025 and December 31, 2024, we had cash and cash equivalents of $92.2 million and $66.3 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 and advertising, which do not qualify for recognition on our condensed consolidated balance sheets but which we consider non-cancellable. As of September 30, 2024, amounts to be spent under non-cancellable purchase obligations were $3.2 million in the remainder of 2024, and approximately $17 million in 2025 and $9 million in 2026.

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 and advertising, 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, 2025, 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, 2024.

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 such share repurchase authorization, we announced on October 26, 2023 and September 9, 2024 that our Board of Directors approved additional share repurchase authorizations under which we may repurchase up to an additional $30 million and $50 million, respectively, of our Class A common stock (collectively, the Repurchase Program). Subject to market conditions and other factors, the Repurchase Program is intended to make opportunistic repurchases of our Class A common stock to reduce our outstanding share count. Under the Repurchase Program, 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 Program does not have fixed expiration dates and does not obligate us to acquire any specific number of shares. The timing and terms of any repurchases 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 Programs are retired. We expect to fund repurchases with existing cash and cash equivalents. We repurchased 5.8 million shares of Class A common stock for $72.2 million, including costs associated with the repurchases, during the nine months ended September 30, 2024.

Current wording

Share Repurchase Program: We maintain a plan, authorized by our Board of Directors in May 2023 with subsequent additional share repurchase authorizations as approved by our Board of Directors, under which we may repurchase shares of our Class A common stock (collectively, the Repurchase Program). Subject to market conditions and other factors, the Repurchase Program is intended to make opportunistic repurchases of our Class A common stock to reduce our outstanding share count. Under the Repurchase Program, 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 Program does not have fixed expiration dates and does not obligate us to acquire any specific number of shares. The timing and terms of any repurchases 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 Programs 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, 2025.

Previous wording

We, including three of our wholly-owned subsidiaries, maintain a credit agreement (the Credit Agreement) with JPMorgan Chase Bank, National Association, as Administrative Agent, and a syndicate of lenders. The Credit Agreement provides for a $125.0 million senior secured revolving credit facility (the Credit Facility), with the option to increase up to an additional $75.0 million, and is available to be used by us and certain of our domestic subsidiaries for general corporate purposes, including acquisitions. On October 1, 2024, we entered into an amendment to the Credit Agreement which, among other things, permits us to acquire an unrestricted subsidiary and/or to invest up to an aggregate of $15 million in unrestricted subsidiaries in any fiscal year, subject to standard provisions and limitations for unrestricted subsidiaries. The Credit Facility matures on September 26, 2028. We had no outstanding balance on our Credit Agreement as of September 30, 2024 or December 31, 2023. The available amount to borrow under our Credit Agreement was $123.7 million at both September 30, 2024 and December 31, 2023, which was equal to the available amount under the credit agreement of $125.0 million, net of letters of credit of $1.3 million. Our Credit Agreement contains certain customary financial and non-financial covenants. We were in compliance with all covenants as of September 30, 2024 and December 31, 2023.

Current wording

Credit Facility: We, including three of our wholly-owned subsidiaries, maintain a credit agreement (the Credit Agreement) with JPMorgan Chase Bank, National Association, as Administrative Agent, and a syndicate of lenders. The Credit Agreement provides for a $125.0 million senior secured revolving credit facility (the Credit Facility), with the option to increase up to an additional $75.0 million, and is available to be used by us and certain of our domestic subsidiaries for general corporate purposes, including acquisitions. The Credit Facility matures on September 26, 2028. We had no outstanding balance on our Credit Agreement as of March 31, 2025 or December 31, 2024. The available amount to borrow under our Credit Agreement was $123.9 million at both March 31, 2025 and December 31, 2024, which was equal to the available amount under the credit agreement of $125.0 million, net of letters of credit of $1.1 million. Our Credit Agreement contains certain customary financial and non-financial covenants. We were in compliance with all covenants as of March 31, 2025 and December 31, 2024.

Previous wording

Net cash provided by operating activities increased $19.4 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, as decreases of $18.3 million in net cash outflow from changes in operating assets and liabilities and $1.3 million in net loss was partially offset by a $0.2 million decrease in non-cash charges. The decrease in net cash outflow from changes in operating assets and liabilities was primarily due to a $14.0 million payment in the nine months ended September 30, 2023 for contingent consideration in excess of the amounts recorded at the acquisition date, and decreases of $22.7 million in accrued expenses and other current liabilities and $9.7 million in prepaid expenses and other assets, partially offset by a $28.9 million decrease in accounts receivable. The decrease in non-cash charges was primarily due to decreases of $0.9 million in other, net and $0.4 million in non-cash lease costs, partially offset by a $1.0 million increase in depreciation and amortization.

Current wording

Net cash provided by operating activities increased $4.0 million in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, as a $5.8 million increase in net cash inflow from changes in operating assets and liabilities was partially offset by decreases of $0.9 million in both net income and non-cash charges. The increase in net cash inflow from changes in operating assets and liabilities was primarily due to increases of $8.3 million in accrued expenses and other current liabilities and $1.9 million in accounts payable, partially offset by a $4.4 million increase in mortgage loans held-for-sale. The decrease in non-cash charges was primarily due to a $2.0 million decrease in stock-based compensation, partially offset by increases of $0.7 million in depreciation and amortization and $0.5 million in other, net.

Previous wording

Net cash used in investing activities increased $4.3 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to an $8.1 million purchase of an investment in the nine months ended September 30, 2024, partially offset by a $3.7 million decrease in capitalized software development costs.

Current wording

Net cash used in investing activities decreased $8.9 million in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to an $8.1 million purchase of an investment in the three months ended March 31, 2024, as well as a $1.0 million decrease in capitalized software development costs.

Previous wording

Net cash used in financing activities increased $46.5 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to a $57.7 million increase in repurchases of Class A common stock and a $3.9 million decrease from exercises of stock options, partially offset by a $16.9 million payment in the nine months ended September 30, 2023 for contingent consideration recorded at the acquisition date.

Current wording

Net cash provided by financing activities increased $2.5 million in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to a $4.3 million increase in short-term borrowings under a warehouse line of credit, partially offset by a $1.7 million decrease from exercises of stock options.

Previous wording

During the nine months ended September 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.

Current wording

During the three months ended March 31, 2025, 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, 2024.