• Revenue: $191 million, up 25% year over year.
• Credit Cards Revenue: $45 million, declined 16% year over year.
• Loans Revenue: $24 million, declined 28% year over year.
• SMB Products Revenue: $28 million, grew 12% year over year.
• Emerging Verticals Revenue: $94 million, grew 129% year over year.
• Insurance Revenue Growth: 916% year over year.
• Non-GAAP Operating Income: $22.9 million.
• GAAP Operating Income: $6.6 million.
• Net Income: $0.1 million.
• Adjusted EBITDA: Over $37 million.
• Monthly Unique Users (MUU): 22 million, down 7% year over year.
• Share Repurchase: $5.8 million shares at an average price of $12.29 per share.

• Warning! GuruFocus has detected 1 Warning Sign with NRDS.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Nerdwallet Inc (NASDAQ:NRDS) exceeded its Q3 revenue and non-GAAP operating income outlook despite challenges in organic search and a weak loans market.
• The insurance business has grown sixfold compared to the 2021 peak, driven by improved shopping experiences and increased consumer demand.
• The SMB vertical saw double-digit year-over-year growth, showcasing resilience in a tough macro environment.
• The acquisition of Next Door Lending is expected to contribute 1% to 2% points of growth to Q4 revenue, enhancing Nerdwallet's mortgage offerings.
• Nerdwallet Inc (NASDAQ:NRDS) achieved a 25% year-over-year revenue growth, driven by strong performance in insurance and SMB sectors.

Negative Points

• Credit card revenue declined 16% year over year due to underwriting constraints and pressure in organic traffic.
• Monthly unique users were down 7% year over year in Q3, with further deceleration expected in Q4 due to search headwinds.
• Loans revenue declined 28% year over year, with personal loans down 49% due to high loan rates and tight underwriting standards.
• Banking revenue declined 26% year over year, reflecting decreased consumer interest in savings accounts amid changing interest rates.
• Organic search visibility challenges impacted traffic to non-monetizing learning-oriented content, affecting overall user engagement.

Q & A Highlights

Q: Can you elaborate on the impact of organic traffic challenges and how you plan to mitigate them? A: Tim Chen, CEO, explained that NerdWallet has historically seen fluctuations in organic search visibility, with recent declines in non-commercial, educational content traffic. However, commercial shopping traffic has rebounded. The company is focusing on improving user experience and believes that delivering consumer value will eventually stabilize and grow traffic. They are also investing in building direct relationships with users through registration and data-driven engagement.

Q: What is driving the impressive growth in the insurance vertical, and do you expect it to continue? A: Tim Chen noted that insurance revenue is up significantly due to carriers resetting pricing and consumers re-shopping as premiums rise. NerdWallet has gained market share through product improvements, allowing more profitable paid marketing. The growth is expected to persist, supported by structural increases in premiums and diversification efforts in home and life insurance.

Q: How is performance marketing being managed, and what are the results of new products like Nerd Plus? A: Lauren StClair, CFO, stated that performance marketing is conducted in a disciplined manner, aiming for in-quarter profitability. It is used to drive registrations and engagement. Tim Chen added that new products like Nerd Plus are in early stages but show positive engagement trends, with users engaging more deeply than typical registered users.

Q: Can you provide more details on the strength in the auto insurance sector and its impact on registered user growth? A: Tim Chen highlighted that the strength primarily came from auto insurance, which is the largest market for NerdWallet. The focus on personalization in the insurance shopping experience has driven registrations, allowing the company to build deeper relationships with consumers.

Q: What are the current trends in the credit card and banking segments, and how do they affect NerdWallet's strategy? A: Tim Chen mentioned that while underwriting remains tight, there is a return to normal balance sheet appetite among issuers. Organic search challenges persist in some credit card areas, but there is significant growth potential. In banking, the trajectory is uncertain due to the interest rate cycle, but any non-zero rate environment is expected to encourage consumer comparison shopping.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.