Nerdy (NYSE:NRDY) reported fourth-quarter 2025 results that management said met three goals set at the start of the year: returning the business to growth, accelerating its shift to an AI-native platform, and reaching positive non-GAAP adjusted EBITDA.
Founder and CEO Chuck Cohn said revenue in the quarter was $49.1 million, up 2% year-over-year and above the company’s guidance range of $45 million to $47 million. He added that the quarter marked the first time since Q1 2024 that both Nerdy’s consumer and institutional businesses grew simultaneously. Non-GAAP adjusted EBITDA was positive $1.3 million, ahead of the company’s guidance range of a $2 million loss to breakeven and improving by $6.8 million from Q4 2024, according to Cohn.
Live+AI strategy and platform rebuild
He cited the U.S. academic tutoring market at approximately $20 billion annually and said Nerdy currently serves fewer than 40,000 active members. Management’s approach, he said, is to scale “high-quality live learning” focused on one-to-one relationships while using AI to improve the tutor and parent experience.
Cohn pointed to product features rolled out last year, including hyper-personalized lesson plans ahead of sessions, real-time tools for tutors during sessions, and outcomes-oriented summaries afterward. He highlighted a feature that allows parents to see “moments of learning,” which he said received more than 95% positive feedback and contributed to higher session utilization and improved retention. Over 2025, Nerdy expanded these capabilities to include multi-session context, engagement metrics, and cohort-level analytics for school districts.
In Q4, Nerdy completed the rollout of new learner and expert experiences. Cohn said a survey of 277 active customers who used both versions showed 85% rated the new platform “better or the same,” resulting in an 82% customer satisfaction score, with feedback citing improved intuitiveness, clearer progress visibility, and easier discovery of learning options.
Consumer growth driven by higher-frequency memberships
Cohn said returning to sustainable growth required a shift toward higher-frequency learning memberships built around a weekly tutoring habit, alongside product improvements. Over 2025, Nerdy intentionally moved to higher-frequency, higher-price memberships to lift average revenue per member (ARPM) and improve retention, he said.
CFO Jason Pello said consumer learning membership revenue in Q4 was $41.6 million, representing 6% year-over-year growth and 85% of total revenue. He noted results were partially offset by a $2 million state-funded consumer revenue program that contributed to Q4 2024 revenue but did not recur in 2025.
Pello said ARPM was $364 as of Dec. 31, up 21% year-over-year, while active members ended the year at 33.2 thousand. He attributed ARPM improvement to the mix shift toward higher-frequency memberships and price increases for new consumer customers implemented in Q1 2025, and said these changes were delivering higher retention in newer cohorts, supported by user experience improvements and investments in expert pay and incentives.
Institutional results and funding delays
Nerdy’s institutional business generated $7.2 million in Q4 revenue, representing 14% of total revenue, Pello said. Varsity Tutors for Schools executed 56 contracts and produced quarterly bookings of $4.1 million, down 11% year-over-year.
Pello said institutional revenues and bookings continued to be affected by federal and state funding delays, which in turn impacted high-dosage tutoring contracting and program start dates.
Margins, cost structure changes, and liquidity
Management tied the swing to positive non-GAAP adjusted EBITDA to revenue growth, gross margin expansion, cost reductions, and operational efficiencies. Cohn said non-GAAP adjusted EBITDA margin expanded by more than 1,400 basis points year-over-year. Pello echoed that non-GAAP adjusted EBITDA improved to a $1.3 million profit from a $5.5 million loss in the prior-year quarter.
Pello said non-GAAP adjusted gross margin, excluding a one-time abandonment charge related to capitalized internal-use software, was 66.8% in Q4, compared with 66.6% in the year-ago quarter, and marked the third consecutive quarter of sequential improvement. He said the company made a strategic decision to abandon certain components of previously capitalized software when it completed the re-platforming and launch of new experiences.
Expense reductions were also highlighted. Pello said GAAP sales and marketing expense fell to $14.2 million from $18.4 million a year ago, driven by consumer marketing efficiency gains and a moderation of investment in the institutional business amid funding uncertainty. GAAP general and administrative expense declined to $24.7 million from $29.9 million, including $9.6 million of product development costs. He said headcount was down about 22% year-over-year as of Dec. 31, aided by AI-enabled productivity improvements and automation across functions such as tutor matching, customer service, and scheduling.
On liquidity, Pello said Nerdy ended the year with $47.9 million in cash and cash equivalents. He said the company believed it had “ample liquidity” with cash on hand and funding available under its term loan.
2026 priorities and guidance
Looking ahead, Cohn outlined three priorities for 2026:
- Enhancing personalized learning across the Live+AI platform, leveraging more than 10 million hours of one-on-one tutoring history and adding new ways for students to get academic assistance beyond tutoring.
- Returning to active member growth through new marketing channels, an improved mobile experience, and a more modern platform designed to improve discoverability and retention.
- Compounding margin and cost improvements, with a full-year target of breakeven non-GAAP adjusted EBITDA.
Pello introduced guidance for 2026, forecasting Q1 revenue of $46 million to $48 million and full-year revenue of $180 million to $190 million. He said the company expects non-GAAP adjusted EBITDA to be approximately breakeven for both Q1 and the full year, driven by expected gross margin expansion, sales and marketing efficiency improvements, AI-enabled productivity, and G&A cost control.
During Q&A, Cohn said the new code base should allow Nerdy to move “much, much faster” in product development, describing the initial release as “parity plus” with reduced friction and pointing to opportunities to deepen engagement through better automated summaries, next steps, and parent communication. He also said top-of-funnel trends for customer acquisition “look healthy,” adding that Nerdy’s ability to make thousands of tracked subjects more compelling and personalized should support conversion and retention.
About Nerdy (NYSE:NRDY)
Nerdy, Inc (NYSE:NRDY) is an American education technology company that operates a live online learning marketplace. Through its flagship Varsity Tutors platform, the company connects students, professionals and lifelong learners with a network of thousands of educators for personalized one-on-one tutoring, group classes and test preparation. The platform leverages proprietary matching algorithms to pair learners with instructors based on subject expertise, learning style and scheduling preferences.
Founded in 2007 by entrepreneur Chuck Cohn, Nerdy began as Varsity Tutors in Washington, DC, before establishing its headquarters in St.
