Nerdy Inc.

Previous wording

We operate a next-generation live tutoring and intervention platform that leverages the power of human expertise with advanced artificial intelligence (“AI”) to personalize learning, accelerate student achievement, and empower educators. Our mission is to transform the way people learn through technology. Our purpose-built proprietary platform leverages technology, including AI, to connect students, users, parents, guardians, and purchasers (“Learner(s)”) of all ages to tutors, instructors, subject matter experts, educators, and other professionals (“Expert(s)”), delivering superior value on both sides of the network. Our comprehensive learning destination provides learning experiences across numerous subjects and multiple formats, including Learning Memberships, one-on-one instruction, small group tutoring, large format classes, chat, essay review, adaptive assessments, and self-study tools. Our flagship business, Varsity Tutors LLC (“Varsity Tutors”), is one of the nation’s largest platforms for live online tutoring and classes. Our solutions are available to Learners either directly through Learning Memberships (“Consumers”) and, historically, through education systems (“Institutions”). Our platform offers Experts the opportunity to generate income from the convenience of home, while also increasing access for Learners by removing barriers to high-quality live online learning. Our offerings have included our legacy Varsity Tutors for Schools, a product suite that leveraged our next-generation live tutoring and intervention platform capabilities to offer high-dosage tutoring and our online learning solutions to Institutions. We have built a diversified business across the following audiences: K-8, High School, College, Graduate School, and Professional.

Current wording

We operate a next-generation live tutoring and intervention platform that leverages the power of human expertise with advanced artificial intelligence (“AI”) to personalize learning, accelerate student achievement, and empower educators. Our mission is to transform the way people learn through technology. Our purpose-built proprietary platform leverages technology, including AI, to connect students, users, parents, guardians, and purchasers (“Learner(s)”) of all ages to tutors, instructors, subject matter experts, educators, and other professionals (“Expert(s)”), delivering superior value on both sides of the network. Our comprehensive learning destination provides learning experiences across numerous subjects and multiple formats, including Learning Memberships, one-on-one instruction, small group tutoring, large format classes, chat, essay review, adaptive assessments, and self-study tools. Our flagship business, Varsity Tutors LLC (“Varsity Tutors”), is one of the nation’s largest platforms for live online tutoring and classes. Our solutions are available to Learners either directly through Learning Memberships (“Consumers”) and, through education systems (“Institutions”). Our platform offers Experts the opportunity to generate income from the convenience of home, while also increasing access for Learners by removing barriers to high-quality live online learning. Our legacy offerings include Varsity Tutors for Schools, a product suite that provided high-dosage tutoring and our online learning solutions to Institutions. We have built a diversified business across the following audiences: K-8, High School, College, Graduate School, and Professional.

Previous wording

In the second quarter of 2026, we made a strategic decision to abandon the First Tutors business, which is operated by EduNation Limited, a limited company incorporated in England and Wales. We will no longer sell new services under the First Tutors trade name, and we are directing resources toward the growth of our core business. In connection with this abandonment, we recorded write-offs of the First Tutors trade name along with other assets and liabilities.

Current wording

In the second quarter of 2026, we made a strategic decision to abandon the First Tutors business, which was operated by EduNation Limited, a limited company incorporated in England and Wales. We no longer sell new services under the First Tutors trade name, and we are directing resources toward the growth of our core business. In connection with this abandonment, we recorded write-offs of the First Tutors trade name along with other assets and liabilities. The results of First Tutors are included within continuing operations within these unaudited condensed consolidated financial statements and notes thereto. For additional information, see Notes 1 and 5 within “Notes to Condensed Consolidated Financial Statements (Unaudited)” in Part 1, Item 1 of this report.

Previous wording

“Active Member(s)” is defined as the number of Learners with an active paid 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 membership options. As a result, we believe Active Members is a key indicator of our ability to attract, engage, and retain Learners. Active Members excludes 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.

Current wording

“Active Member(s)” is defined as the number of Learners with an active paid 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 membership options. As a result, we believe Active Members is a key indicator of our ability to attract, engage, and retain Learners. Active Members excludes our Institutional business. While our Active Member count as of September 30, 2026 was lower when compared to September 30, 2025, we expect certain product enhancements and customer acquisition initiatives that we plan to release later in the fourth quarter to support new client acquisition.

Previous wording

“Average Revenue per Member per Month” (“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.

Current wording

“Average Revenue per Member per Month” (“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. ARPM excludes our Institutional business. ARPM as of September 30, 2026 decreased compared to September 30, 2025, primarily due to the lapping of price increases enacted in February 2025 and a mix shift to lower frequency Learning Memberships. ARPM was higher than the prior year as of March 31, 2026 and June 30, 2026, reflecting the effect of those price increases.

Previous wording

“Active Experts” is defined as the number of Experts who have instructed one or more sessions in a given period. We believe Active Experts is a key indicator of our ability to service Learners and provide Experts with revenue-generating opportunities. Active Experts includes our Institutional business. The following table summarizes Active Experts for the periods presented. Our Active Expert count during the three and six months ended June 30, 2026 decreased when compared to the prior year periods. This decrease was primarily due to lower Consumer Active Experts, driven by 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.

Current wording

“Active Experts” is defined as the number of Experts who have instructed one or more sessions in a given period. We believe Active Experts is a key indicator of our ability to service Learners and provide Experts with revenue-generating opportunities. Active Experts includes our Institutional business. The following table summarizes Active Experts for the periods presented. Our Active Expert count during the three and nine months ended September 30, 2026 decreased when compared to the prior year periods. This decrease was primarily due to lower Consumer Active Experts, driven by 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. Our Active Expert count during the three and nine months ended September 30, 2026 was also impacted by the wind-down of VT4S. We believe our Active Expert count at September 30, 2026 is sufficient to meet our near-term growth objectives.

Previous wording

Revenue for the three months ended June 30, 2026 decreased when compared to the prior year period due to lower Consumer and Institutional revenue. The decrease in Consumer revenue was primarily driven by a lower Active Member count, partially offset by higher ARPM. As we began to lap the price increases enacted in February 2025, the rate of ARPM growth moderated year-over-year. Revenue for the six months ended June 30, 2026 decreased slightly when compared to the prior year period primarily due to lower Institutional revenue. Consumer revenue was relatively flat year-over-year as a lower Active Member count was offset by higher ARPM, which was primarily a result of price increases enacted in February 2025. Revenue for future periods will be impacted by the previously announced wind-down of Varsity Tutors for Schools.

Current wording

Revenue for both the three and nine months ended September 30, 2026 decreased when compared to the prior year period due to lower Consumer and Institutional revenue. Institutional revenue decreased in both current year periods as a result of our decision to wind down the VT4S business line. Consumer revenue for the three months ended September 30, 2026 decreased due to lower Active Member count and lower ARPM. Consumer revenue for the nine months ended September 30, 2026 decreased due to a lower Active Member count, partially offset by higher ARPM.

Previous wording

Cost of revenue included amortization expense related to capitalized internal-use software of $584 thousand and $1,706 thousand for the three months ended June 30, 2026 and 2025, respectively, and $1,098 thousand and $3,367 thousand for the six months ended June 30, 2026 and 2025, respectively. Cost of revenue, gross profit, and gross margin improvements for the three and six months ended June 30, 2026 were primarily driven by lower amortization of capitalized internal-use software as a result of a charge for the abandonment of capitalized internal-use software that occurred in the fourth quarter of 2025. Cost of revenue, gross profit, and gross margin for three and six months ended June 30, 2026 were also positively impacted by lower Expert costs of $1,052 thousand and $3,428 thousand, respectively, when compared to the corresponding prior year periods.

Current wording

Cost of revenue for both current year periods was impacted by the wind-down of VT4S. This included a charge for the abandonment of capitalized internal-use software of $1,606 thousand in connection with the wind-down, partially offset by lower expert costs resulting from the reduced VT4S activity. Cost of revenue included amortization expense related to capitalized internal-use software of $554 thousand and $1,735 thousand for the three months ended September 30, 2026 and 2025, respectively, and $1,652 thousand and $5,102 thousand for the nine months ended September 30, 2026 and 2025, respectively. Excluding the impact of the VT4S wind-down, cost of revenue and gross margin improvements for the three and nine months ended September 30, 2026 were primarily driven by lower amortization of capitalized internal-use software as a result of charges for the abandonment of capitalized internal-use software that occurred in the third quarter of 2026 and the fourth quarter of 2025. These impacts were partially offset by higher Expert costs as sessions per member increased.

Previous wording

Sales and marketing expenses for the three months ended June 30, 2026 and 2025 included non-cash stock-based compensation of $257 thousand and $330 thousand, respectively. Excluding these impacts, sales and marketing expenses decreased $1,914 thousand, or 14%. Sales and marketing expenses for the six months ended June 30, 2026 included non-cash stock-based compensation and restructuring costs of $553 thousand. Sales and marketing expenses for the six months ended June 30, 2025 included non-cash stock-based compensation and restructuring costs of $674 thousand and $193 thousand, respectively. Excluding these impacts, sales and marketing expenses decreased $3,301 thousand, or 12%. These decreases were driven by AI-enabled productivity gains and reduced investment in our Institutional business.

Current wording

Sales and marketing expenses for the three months ended September 30, 2026 included non-cash stock-based compensation and restructuring costs of $91 thousand and $221 thousand, respectively. Sales and marketing expenses for the three months ended September 30, 2025 included non-cash stock-based compensation $336 thousand. Excluding these impacts, sales and marketing expenses decreased $2,779 thousand, or 17%. Sales and marketing expenses for the nine months ended September 30, 2026 included non-cash stock-based compensation and restructuring costs of $644 thousand and $221 thousand. Sales and marketing expenses for the nine months ended September 30, 2025 included non-cash stock-based compensation and restructuring costs of $1,010 thousand and $193 thousand, respectively. Excluding these impacts, sales and marketing expenses decreased $6,080 thousand, or 14%. These decreases in both current year periods were driven by AI-enabled productivity gains and reduced investment in our Institutional business.

Previous wording

General and administrative expenses include compensation for certain employees, support services, product and development expenses intended to support continued innovation, and other operating expenses. Product and development costs were $9,764 thousand and $10,683 thousand for the three months ended June 30, 2026 and 2025, respectively, and $18,939 thousand and $21,417 thousand for the six months ended June 30, 2026 and 2025, respectively. Product and development costs include compensation for employees on our product and engineering teams who are responsible for developing new and improving existing offerings, maintaining our website, improving efficiencies across our organization, and third-party expenses.

Current wording

General and administrative expenses include compensation for certain employees, support services, product and development expenses intended to support continued innovation, and other operating expenses. Product and development costs were $7,763 thousand and $10,285 thousand for the three months ended September 30, 2026 and 2025, respectively, and $26,702 thousand and $31,702 thousand for the nine months ended September 30, 2026 and 2025, respectively. Product and development costs include compensation for employees on our product and engineering teams who are responsible for developing new and improving existing offerings, maintaining our website, improving efficiencies across our organization, and third-party expenses.

Previous wording

General and administrative expenses for the three months ended June 30, 2026 included non-cash stock based compensation and restructuring costs of $3,596 thousand and $882 thousand, respectively. General and administrative expenses for the three months ended June 30, 2025 included non-cash stock based compensation of $7,208 thousand. Excluding these impacts, general and administrative expenses decreased $953 thousand, or 5%. General and administrative expenses for the six months ended June 30, 2026 included non-cash stock based compensation and restructuring costs of $9,278 thousand and $882 thousand, respectively. General and administrative expenses for the six months ended June 30, 2025 included non-cash stock based compensation and restructuring costs of $14,452 thousand and $455 thousand, respectively. Excluding these impacts, general and administrative expenses decreased $3,432 thousand, or 9%. We are applying AI systematically across the tech stack, helping drive continued cost reductions and improved unit economics.

Current wording

General and administrative expenses for the three months ended September 30, 2026 included non-cash stock based compensation and restructuring costs of $1,757 thousand and $2,147 thousand, respectively. General and administrative expenses for the three months ended September 30, 2025 included non-cash stock based compensation of $6,511 thousand. Excluding these impacts, general and administrative expenses decreased $4,795 thousand, or 25%. General and administrative expenses for the nine months ended September 30, 2026 included non-cash stock based compensation and restructuring costs of $11,035 thousand and $3,029 thousand, respectively. General and administrative expenses for the nine months ended September 30, 2025 included non-cash stock based compensation and restructuring costs of $20,963 thousand and $455 thousand, respectively. Excluding these impacts, general and administrative expenses decreased $8,227 thousand, or 14%. We are applying AI systematically across the tech stack, helping drive continued cost reductions and improved unit economics.

Previous wording

Interest expense for the three and six months ended June 30, 2026 was $672 thousand and $1,332 thousand, which was driven by our outstanding borrowings under our term loan that was originated in November 2025.

Current wording

Interest expense for the three and nine months ended September 30, 2026 was $691 thousand and $2,023 thousand, which was driven by our outstanding borrowings under our term loan that was originated in November 2025.

Previous wording

Interest income for the three months ended June 30, 2026 was $325 thousand, compared to interest income of $365 thousand in the same period in 2025. Interest income for the six months ended June 30, 2026 was $693 thousand, compared to interest income of $827 thousand in the same period in 2025. These decreases were driven by lower interest income on our cash balances during the current period.

Current wording

Interest income for the three months ended September 30, 2026 was $281 thousand, compared to interest income of $357 thousand in the same period in 2025. Interest income for the nine months ended September 30, 2026 was $974 thousand, compared to interest income of $1,184 thousand in the same period in 2025. These decreases were driven by lower interest income on our cash balances during the current period.

Previous wording

As of June 30, 2026 and December 31, 2025, we had cash and cash equivalents totaling $38,424 thousand and $47,895 thousand, respectively. We have incurred cumulative losses from our operations, and we may incur additional losses in the future. Our operations have historically been financed through cash on hand, debt financing, and capital contributions. To the extent we continue to generate negative operating cash flows, it is possible that we may have to finance future operations primarily or in part from cash on hand or from our term loan. If cash on hand or from our term loan is not sufficient to fund our business, we may also need to implement significant cost-containment measures or explore additional financing alternatives. However, there can be no assurance that any financing would be available to us on acceptable terms, or at all, or that any cost-containment measures we implement would be sufficient or effective in reducing losses or preserving liquidity.

Current wording

As of September 30, 2026 and December 31, 2025, we had cash and cash equivalents totaling $42,535 thousand and $47,895 thousand, respectively. We have incurred cumulative losses from our operations, and we may incur additional losses in the future. Our operations have historically been financed through cash on hand, debt financing, and capital contributions. To the extent we continue to generate negative operating cash flows, it is possible that we may have to finance future operations primarily or in part from cash on hand or from our term loan. If cash on hand or from our term loan is not sufficient to fund our business, we may also need to implement significant cost-containment measures or explore additional financing alternatives. However, there can be no assurance that any financing would be available to us on acceptable terms, or at all, or that any cost-containment measures we implement would be sufficient or effective in reducing losses or preserving liquidity.

Previous wording

Cash used in operating activities for the six months ended June 30, 2026 decreased $6,964 thousand when compared to the same period in 2025, due to higher gross profit, coupled with lower sales and marketing and general and administrative expenses. These impacts were partially offset by lower Institutional bookings and by interest payments of $1,087 thousand made in connection with our term loan that originated in November 2025. Cash used in operating activities for the six months ended June 30, 2025 was impacted by the payment of a legal settlement of $2,000 thousand.

Current wording

Cash used in operating activities for the nine months ended September 30, 2026 decreased $4,824 thousand when compared to the same period in 2025, primarily due to lower sales and marketing and general and administrative expenses. These impacts were partially offset by lower Institutional bookings as a result of the wind-down of VT4S and by interest payments of $1,636 thousand made in connection with our term loan that originated in November 2025. Cash used in operating activities for the nine months ended September 30, 2025 was impacted by the payment of a legal settlement of $2,000 thousand.

Previous wording

Cash used in investing activities was $2,714 thousand and $2,333 thousand for the six months ended June 30, 2026 and 2025, respectively. Cash used in investing activities for both periods related to capital expenditures primarily for the development of internal use software and IT equipment.

Current wording

Cash used in investing activities was $4,050 thousand and $4,051 thousand for the nine months ended September 30, 2026 and 2025, respectively. Cash used in investing activities for both periods related to capital expenditures primarily for the development of internal use software and IT equipment.

Previous wording

Cash used in financing activities for the six months ended June 30, 2026 was $250 thousand as we paid deferred financing fees previously incurred in connection with our term loan that was originated in November 2025. We did not have any financing activities during the six months ended June 30, 2025.

Current wording

Cash provided by financing activities for the nine months ended September 30, 2026 was $9,750 thousand. We received proceeds of $10,000 thousand from a borrowing under our term loan and paid deferred financing fees of $250 thousand previously incurred in connection with the origination of our term loan in November 2025. We did not have any financing activities during the nine months ended September 30, 2025.

Previous wording

Our loan agreement includes customary representations and warranties and covenants associated with our term loan. Such terms include (1) covenants concerning financial and other reporting obligations, and (2) certain limitations on indebtedness, liens, investments, distributions (including dividends), share repurchases, collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, and deposit accounts. Such covenants and limitations on indebtedness include (but are not limited to) that we must maintain the greater of (i) $15,000 thousand of Qualified Cash (as defined in the loan agreement) or (ii) Qualified Cash that results in Remaining Months Liquidity (as defined in our loan agreement) of at least 6 months. Additionally, our outstanding borrowings must not exceed certain multiples of our TTM Contribution Margin. If at any time, the outstanding borrowings exceed the required multiple of our TTM Contribution Margin, we will be required to immediately repay principal until the outstanding borrowings are less than the applicable multiple. Our ability to access the maximum borrowing capacity under our term loan will require our future TTM Contribution Margin to exceed historical levels. As of June 30, 2026, we were in compliance with these covenants.

Current wording

Our loan agreement includes customary representations and warranties and covenants associated with our term loan. Such terms include (1) covenants concerning financial and other reporting obligations, and (2) certain limitations on indebtedness, liens, investments, distributions (including dividends), share repurchases, collateral, transfers, mergers or acquisitions, taxes, corporate changes, and deposit accounts. Such covenants and limitations on indebtedness include (but are not limited to) that we must maintain the greater of (i) $15,000 thousand of Qualified Cash (as defined in the loan agreement) or (ii) Qualified Cash that results in Remaining Months Liquidity (as defined in our loan agreement) of at least 6 months. Additionally, our outstanding borrowings must not exceed certain multiples of our TTM Contribution Margin. If at any time, the outstanding borrowings exceed the required multiple of our TTM Contribution Margin, we will be required to immediately repay principal until the outstanding borrowings are less than the applicable multiple. Our ability to access the maximum borrowing capacity under our term loan will require our future TTM Contribution Margin to exceed historical levels. As of September 30, 2026, we were in compliance with these covenants.

Previous wording

•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;

Current wording

•risks associated with the implementation of our plan to wind down VT4S, 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;

Previous wording

•other risks and uncertainties included under “Risk Factors” within Part II, Item 1A of this report and in our 2025 Annual Report filed with the SEC on February 26, 2026.

Current wording

•other risks and uncertainties included under “Risk Factors” within Part II, Item 1A of this report, in our 2025 Annual Report filed with the SEC on February 26, 2026, and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, filed with the SEC on August 6, 2026.