NerdWallet (NASDAQ:NRDS) reported third-quarter revenue of $240 million, up 11% from a year earlier but below its guidance range, as a $17 million decline in auto insurance revenue offset growth in several lending and deposit products.
CEO Tim Chen said the company’s relatively narrow network of auto insurance carriers limited its ability to monetize traffic as more insurers became competitive in acquiring customers. NerdWallet does not expect to resolve the issue in the fourth quarter.
“We were overly optimistic on partnership timelines,” Chen said, adding that the company is working to expand its relationships with insurance carriers and third-party agents.
Consumer Growth Offset by Insurance Decline
Third-quarter revenue fell short of NerdWallet’s forecast range of $244 million to $260 million. Consumer revenue rose 12% to $215 million, driven by student loans, personal loans and deposit accounts, CFO John Lee said.
Personal loan revenue benefited from an expanded marketplace serving more borrowers, while deposit account growth reflected increased partner budgets. Those gains were partially offset by the decline in auto insurance revenue.
Small and midsize business revenue rose 6% to $25 million, supported by loan originations and renewals. Lee said organic search traffic continued to pressure other products in that segment.
GAAP operating income was $19 million. Non-GAAP operating income was $30 million, at the low end of guidance, representing a 13% margin. Adjusted EBITDA was $40 million, with a 17% margin.
Beginning in the third quarter, NerdWallet changed its definition of non-GAAP operating income to exclude certain accelerated stock-based compensation. Lee said the change resulted in a $3.9 million add-back in the quarter related to a previous acquisition.
Insurance Partnerships Remain a Priority
Chen said NerdWallet has direct relationships with a few of the top 10 auto insurance carriers. One had been particularly competitive in acquiring customers during 2024 and 2025, but other major carriers have become more aggressive this year, he said.
Building direct carrier relationships can take quarters, even after a company establishes sufficient volume or a market reputation, Chen said. He added that NerdWallet has the volume and is holding discussions, but the timing of new partnerships remains difficult to predict.
“We don’t expect to resolve the problem in Q4,” Chen said.
Search and AI Strategy
Chen said organic search traffic has declined rapidly over the past three and a half years, though the pace of declines has stabilized somewhat in recent months. Educational content has been severely affected as Google places AI summaries in search results, he said, while product marketplaces have been more insulated because they involve inventory, pricing and eligibility information.
Lee described NerdWallet’s business as comprising its declining SEO-led content operation, a growing paid marketing marketplace, vertical integration investments and longer-term AI-related projects. The AI projects are not contributing to revenue today but are affecting operating expenses, he said.
Chen said the company is using AI-assisted development to improve software for its in-house agents and is exploring how licensed agents could support consumers shopping through AI assistants. He cautioned that the potential size of AI-driven traffic is difficult to predict and could vary by product category.
In auto insurance, participation by major carriers could depend on concerns including customer churn and the cost of providing quotes, Chen said.
Outlook and Capital Returns
NerdWallet forecast fourth-quarter revenue of $191 million to $203 million and non-GAAP operating income of $9 million to $15 million. For the full year, it expects non-GAAP operating income of $85 million to $91 million.
The full-year outlook includes a $15 million to $20 million negative impact from investments in vertically integrated brokering and advisory businesses, consistent with the prior quarter’s outlook. Lee said NerdWallet plans to increase spending on longer-payback vertical integration and AI projects in 2027, which will weigh on non-GAAP operating income in the near term.
Although planning for 2027 is ongoing, Lee said the company expects full-year revenue growth, while growth in the first quarter will be challenging because of the comparison with the prior year.
NerdWallet generated $129 million in adjusted free cash flow over the trailing 12 months, up 51% year over year. It repurchased approximately $11 million of Class A common stock during the third quarter and had about $57 million remaining under its repurchase authorization as of September 30.
About NerdWallet (NASDAQ:NRDS)
NerdWallet, Inc is a personal finance company that operates a digital platform designed to help consumers make informed financial decisions. Its website and mobile tools provide educational content, personalized recommendations and comparison services across a range of financial products.
The company covers categories including credit cards, banking, personal and student loans, mortgages, insurance, investing and small-business finance. NerdWallet generates revenue primarily through partnerships with financial institutions and other providers when users engage with or apply for recommended products.
Founded in 2009 by Tim Chen and Jacob Gibson, NerdWallet is headquartered in San Francisco and serves consumers primarily in the United States.
