Earnings call transcript: Nerdy posts Q3 2026 loss, shares jump on margin gains

Nerdy Inc. reported a 10% drop in third-quarter revenue to $33.2 million, but managed to narrow its adjusted loss and improve margins, resulting in a surge in its stock price. The company's shares closed the regular session at $6.98, up 12.04%, and continued to trade at $6.96 after hours, marking a 7.57% increase from the previous close.

The reduction in active members to 31.8 thousand, a 7% decline year over year, contributed to a dip in consumer revenue, which fell 7% to $30.7 million. Institutional revenue also shrank by 34% to $2.5 million, primarily due to the phase-out of Varsity Tutors for Schools. However, Nerdy demonstrated strong operating discipline, with sales and marketing costs falling 17% to $13.8 million and general and administrative expenses dropping 29% to $18.4 million.

The company attributed its better performance to AI tools and a reduced workforce. While revenue fell short of the $39.73 million forecast by $6.53 million, management noted that earnings per share were not available for comparison. Despite the revenue shortfall, the quarter's performance on costs and margins proved satisfactory.

Nerdy expects revenue of $37 million to $39 million and adjusted EBITDA near break-even for the next quarter. The company plans to introduce a redesigned student experience, new self-service e-commerce flow, and AI-powered tools in the fourth quarter.