Nerdy Inc. (NRDY)

CIK: 0001819404. SIC: 8200 Services-Educational Services. Latest 10-K as of: 2026-02-26.

SIC breadcrumb: Services > SIC Major Group 82 > SIC 8200 Services-Educational Services

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1819404. Latest filing source: 0001819404-26-000015.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001819404.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-07. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001819404.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001819404-26-000051.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-07. Report date: 2026-03-31.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity, and capital resources of Nerdy Inc. and its consolidated subsidiaries. This discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included herein and our audited consolidated financial statements and notes thereto found in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), filed with the United States Securities and Exchange Commission (the “SEC”) on February 26, 2026. In addition, the following discussion and analysis of Nerdy Inc.’s financial condition and results of operations also contains forward-looking statements that involve risks, uncertainties, and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those set forth in the sections entitled “Item 1A. Risk Factors” in Part I of the 2025 Annual Report and “Item 1A. Risk Factors” in Part II of this report, as well as under the section “Cautionary Note On Forward-Looking Statements” below. Unless otherwise stated or the context otherwise indicates, all references in the succeeding paragraphs to “Nerdy,” “the Company,” “us,” “our” or “we” mean Nerdy Inc. and its consolidated subsidiaries.

OVERVIEW

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 offerings include Varsity Tutors for Schools, a product suite that leverages 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.

KEY OPERATING METRICS

We monitor the following key operating metrics, among others, to evaluate the performance of our business.

“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 March 31, 2026 was lower when compared to March 31, 2025, it was higher than it was in any quarter after March 31, 2025 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.

Active Members in thousands

March 31,

2026

December 31,

2025

September 30,

2025

June 30,

2025

March 31,

2025

December 31,

2024

Active Members

36.9 

33.2 

34.3 

30.6 

40.5 

37.5 

YoY change

(9)%

(11)%

(14)%

(14)%

(12)%

(8)%

“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 March 31, 2026 was higher when compared to March 31, 2025, primarily driven by price increases enacted in February 2025.

ARPM in ones

March 31,

2026

December 31,

2025

September 30,

2025

June 30,

2025

March 31,

2025

December 31,

2024

ARPM

$

374 

$

364 

$

374 

$

348 

$

335 

$

302 

YoY change

12%

21%

24%

24%

14%

(2)%

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“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 months ended March 31, 2026 decreased when compared to the prior year period. This decrease was primarily due to lower Consumer Active Experts as a result of our Expert incentives, which has promoted 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 March 31, 2026 is sufficient to meet our near-term growth objectives.

Three Months Ended

March 31,

Change

Active Experts in thousands

2026

2025

%

Active Experts

8.3 

10.8 

(23)%

RESULTS OF OPERATIONS

Three Months Ended

March 31,

dollars in thousands

2026

%

2025

%

Revenue

$

48,735 

100 

%

$

47,595 

100 

%

Cost of revenue

16,461 

34 

%

19,984 

42 

%

Gross Profit

32,274 

66 

%

27,611 

58 

%

Sales and marketing expenses

14,157 

29 

%

15,785 

33 

%

General and administrative expenses

23,915 

49 

%

28,411 

60 

%

Other operating expenses

— 

— 

%

— 

— 

%

Operating Loss

(5,798)

(12)

%

(16,585)

(35)

%

Interest expense

660 

1 

%

— 

— 

%

Interest income

(368)

— 

%

(462)

(1)

%

Other expense

16 

— 

%

— 

— 

%

Loss before Income Taxes

(6,106)

(13)

%

(16,123)

(34)

%

Income tax expense

22 

— 

%

28 

— 

%

Net Loss

(6,128)

(13)

%

(16,151)

(34)

%

Revenue

Revenue for the three months ended March 31, 2026 increased when compared to the prior year period due to higher Consumer revenue, partially offset by lower Institutional revenue. The increase in Consumer revenue was driven by higher ARPM, which was primarily a result of price increases enacted in February 2025.

The following table presents our revenue by business category for the periods presented.

Three Months Ended

March 31,

Change

dollars in thousands

2026

%

2025

%

$

%

Consumer

$

39,284 

80 

%

$

38,013 

80 

%

$

1,271 

3 

%

Institutional

9,294 

19 

%

9,380 

19 

%

(86)

(1)

%

Other

157 

1 

%

202 

1 

%

(45)

(22)

%

Revenue

$

48,735 

100 

%

$

47,595 

100 

%

$

1,140 

2 

%

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Cost of Revenue and Gross Profit

The following table sets forth our cost of revenue and gross profit for the periods presented.

Three Months Ended

March 31,

Change

dollars in thousands

2026

2025

$

%

Revenue

$

48,735

$

47,595

$

1,140

2%

Cost of revenue

16,461

19,984

3,523

18%

Gross Profit

$

32,274

$

27,611

$

4,663

17%

% Margin

66 

%

58 

%

Cost of revenue for the three months ended March 31, 2026 decreased when compared to the prior year period primarily due to lower Expert costs of $2,376 thousand. Gross margin and gross profit for the three months ended March 31, 2026 increased when compared to the prior year period, primarily due to the benefit of price increases enacted in February 2025.

Operating Expenses

The following table sets forth our operating expenses for the periods presented.

Three Months Ended

March 31,

Change

dollars in thousands

2026

2025

$

%

Sales and marketing expenses

$

14,157 

$

15,785 

$

(1,628)

(10)%

General and administrative expenses

23,915 

28,411 

(4,496)

(16)%

Total operating expenses

$

38,072 

$

44,196 

$

(6,124)

(14)%

Sales and Marketing

Sales and marketing expenses for the three months ended March 31, 2026 included non-cash stock-based compensation of $296 thousand. Sales and marketing expenses for the three months ended March 31, 2025 included non-cash stock-based compensation and restructuring costs of $344 thousand and $193 thousand, respectively. Excluding these impacts, sales and marketing expenses decreased $1,387 thousand, or 9%. This decrease was driven by AI-enabled productivity gains and reduced investment in our Institutional business.

General and Administrative

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 $9,175 thousand and $10,734 thousand for the three months ended March 31, 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.

General and administrative expenses for the three months ended March 31, 2026 included non-cash stock based compensation of $5,682 thousand. General and administrative expenses for the three months ended March 31, 2025 included non-cash stock based compensation and restructuring costs of $7,244 thousand and $455 thousand, respectively. Excluding these impacts, general and administrative expenses decreased $2,479 thousand, or 12%. We are applying AI systematically across the tech stack helping drive durable cost reductions and improved unit economics.

Interest Expense

Interest expense for the three months ended March 31, 2026 was $660 thousand, which was driven by our outstanding borrowings under our term loan that was originated in November 2025.

Interest Income

Interest income for the three months ended March 31, 2026 was $368 thousand, compared to interest income of $462 thousand in the same period in 2025, This decrease driven by lower interest income on our cash balances during the current period.

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Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

As of March 31, 2026 and December 31, 2025, we had cash and cash equivalents totaling $44,698 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 ava

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-02-26. Report date: 2025-12-31.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity, and capital resources of Nerdy Inc. The following discussion should be read in conjunction with the financial statements under Part II, Item 8 of this report, “Cautionary Note On Forward-Looking Statements” on page 1 of this report, and “Risk Factors” in Part I, Item 1A of this report. This section of this report generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 are not included in this report, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Nerdy Inc.’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 27, 2025.

OVERVIEW

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 offerings include Varsity Tutors for Schools, a product suite that leverages 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.

Seasonality of our Business

We have experienced in the past, and expect to continue to experience seasonal fluctuations in our revenue and earnings due to Learner and Institutional spending and consumption habits, and the timing of the academic year. Historically, we experience lower than normal revenue during the summer when schools and universities are typically out of session in the United States (the “U.S.”) and when people travel for vacations and holidays. Due to seasonality, comparisons of our historical quarterly results of operations on a sequential basis may not provide meaningful insight into our overall financial performance.

Abandonment of Capitalized Internal-Use Software

In the fourth quarter of 2025, management made a strategic decision to abandon certain components of our previously capitalized internal-use software including our legacy Live Learning Platform, our legacy Learner user experience, our legacy Expert user experience, and our legacy landing pages. These components and functions were rebuilt on entirely new, AI-native codebases, preserving essential business logic and data while migrating to modern, decoupled systems. We believe this modernization of our software platform onto entirely new, AI-native codebases will allow for not only the immediate improvement of the experiences we can offer to Learners, but also allow for more efficient product innovation in the future. In connection with this abandonment, we recorded a write-off of a portion of our previously capitalized internal-use software, which was included in “Cost of revenue” in the Consolidated Statement of Operations for the year ended December 31, 2025. For additional information on the abandonment charge, see Note 8 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report.

KEY FINANCIAL AND OPERATING METRICS

We monitor the following key operating metrics, among others, to evaluate the performance of our business.

“Active Member(s)” is defined as the number of Learners with an active paid Learning Membership as of the dates 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 exclude our Institutional business. Our Active Member count as of December 31, 2025 was lower when compared to December 31, 2024 primarily due to operational challenges that we are actively addressing through the appointment of a new Chief Operating Officer in 2025 to drive enhanced operational execution

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and systematic process improvements. We also rolled out new Learner and Expert platform user experiences in the fourth quarter that we believe will re-accelerate growth.

Active Members in thousands

December 31,

2025

September 30,

2025

June 30,

2025

March 31,

2025

December 31,

2024

September 30,

2024

Active Members

33.2 

34.3 

30.6 

40.5 

37.5 

39.7 

YoY change

(11)%

(14)%

(14)%

(12)%

(8)%

1%

“Average Revenue per Member per Month” (“ARPM”) is defined as the average Consumer Learning Membership subscription revenue per member per month as of the dates 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 December 31, 2025 was higher when compared to December 31, 2024 due to the mix shift to higher frequency Learning Memberships coupled with price increases for new Consumer customers enacted during the first quarter of 2025. The impact of these changes was further bolstered by higher retention in newer cohorts due primarily to improvements in the user experience and new Expert incentives.

ARPM in ones

December 31,

2025

September 30,

2025

June 30,

2025

March 31,

2025

December 31,

2024

September 30,

2024

ARPM

$

364 

$

374 

$

348 

$

335 

$

302 

$

302 

YoY change

21%

24%

24%

14%

(2)%

(13)%

“Active Experts” is defined as the number of Experts who have instructed one or more sessions in a given period. Active Experts also includes our Institutional business, but excludes First Tutors UK. The following table summarizes Active Experts for the periods presented. Our Active Expert count during the year ended December 31, 2025 decreased when compared to the prior year period. This decrease was primarily due to lower Consumer Active Experts as a result of our Expert incentives, which has promoted 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, coupled with lower utilization of tutoring sessions in our Institutional business as a result of lower bookings. We believe our Active Expert count at December 31, 2025 is sufficient to meet our near-term growth objectives.

Year Ended

December 31,

Change

Active Experts in thousands

2025

2024

%

Active Experts

15.8 

20.2 

(22)%

RESULTS OF OPERATIONS

Year Ended December 31,

dollars in thousands

2025

%

2024

%

Revenue

$

178,988 

100 

%

$

190,231 

100 

%

Cost of revenue

75,208 

42 

%

61,837 

33 

%

Gross Profit

103,780 

58 

%

128,394 

67 

%

Sales and marketing expenses

60,123 

34 

%

71,623 

37 

%

General and administrative expenses

105,521 

59 

%

126,879 

67 

%

Operating Loss

(61,864)

(35)

%

(70,108)

(37)

%

Interest income, net

(1,073)

(1)

%

(3,104)

(2)

%

Other (income) expense, net

(2)

— 

%

23 

— 

%

Loss before Income Taxes

(60,789)

(34)

%

(67,027)

(35)

%

Income tax expense

159 

— 

%

115 

— 

%

Net Loss

(60,948)

(34)

%

(67,142)

(35)

%

Revenue

Revenue for the year ended December 31, 2025 decreased when compared to the prior year period primarily due to lower Institutional revenue and a specific state-funded program ($7,437 thousand for the year ended December 31, 2024) within Consumer revenue that did not recur in 2025. Also within Consumer Revenue, Learning Membership revenue increased 2% year-over-year. The current year period was positively impacted by higher ARPM in our Consumer business as a result of a mix

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shift to higher frequency Learning Memberships and price increases for new Consumer customers enacted during the first quarter of 2025, coupled with higher retention in newer cohorts due primarily to improvements in the user experience and investments in Expert pay and incentives.

The following table presents our revenue by category of Learners for the periods presented.

Year Ended December 31,

Change

dollars in thousands

2025

%

2024

%

$

%

Consumer

$

150,736 

84 

%

$

154,230 

81 

%

(3,494)

(2)

%

Institutional

27,607 

15 

%

35,277 

18 

%

(7,670)

(22)

%

Other

645 

1 

%

724 

1 

%

(79)

(11)

%

Revenue

$

178,988 

100 

%

$

190,231 

100 

%

$

(11,243)

(6)

%

Cost of Revenue and Gross Profit

The following table sets forth our cost of revenue and gross profit for the periods presented.

Year Ended

December 31,

Change

dollars in thousands

2025

2024

$

%

Revenue

$

178,988

$

190,231

$

(11,243)

(6)

%

Cost of revenue

75,208

61,837

13,371 

22 

%

Gross Profit

$

103,780

$

128,394

$

(24,614)

(19)

%

% Margin

58 

%

67 

%

Cost of revenue for the year ended December 31, 2025 was impacted by a charge for the abandonment of capitalized internal-use software, net of accumulated amortization, of $7,757 thousand related to our replacement of certain components of our platform with AI-native codebases, as discussed above. Excluding this impact, cost of revenue increased $5,614 thousand due to higher Expert costs of $5,243 thousand, primarily driven by investments in Expert pay and incentives. We believe these investments drive Expert satisfaction and engagement with our platform (and Learners) by allowing certain Experts to receive additional income for each sequential recurring session with the same student. Following the adoption of the new incentives, we continue to see faster time to the first session, more sessions in the first 30 days, lower tutor replacement rates, and higher retention.

Gross margin for the year ended December 31, 2025 was negatively impacted by the previously discussed charge related to the abandonment of capitalized internal-use software. Excluding this impact, gross margin decreased primarily due to investments in Expert pay and incentives. For the third consecutive quarter, gross margin improved sequentially quarter-over-quarter as gross margin, excluding the impact of the abandonment charge, of 67% for the fourth quarter of 2025 increased approximately 380 basis points when compared to the third quarter of 2025. The continued expansion was primarily a result of a mix shift to higher frequency Learning Memberships coupled with price increases for new Consumer customers enacted during the first quarter of 2025 and better optimization of tutoring incentives. We expect gross margin improvement to continue into 2026 as the mix of our Consumer revenue continues to shift into higher frequency and higher priced Learning Memberships, and as we are able to better optimize tutoring incentives.

The following table sets forth our operating expenses for the periods shown:

Year Ended

December 31,

Change

dollars in thousands

2025

2024

$

%

Sales and marketing expenses

$

60,123 

$

71,623 

$

(11,500)

(16)

%

General and administrative expenses

105,521 

126,879 

(21,358)

(17)

%

Total operating expenses

$

165,644 

$

198,502 

$

(32,858)

(17)

%

Sales and Marketing

Sales and marketing expenses for the year ended December 31, 2025 included non-cash stock-based compensation and restructuring costs of $1,321 thousand and $193 thousand, respectively. Sales and marketing expenses for the year ended

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December 31, 2024 included non-cash stock-based compensation of $2,345 thousand. Excluding these impacts in both periods, sales and marketing expenses decreased $10,669 thousand, or 15%.

This decrease in sales and marketing expenses was driven by Consumer marketing efficiency gains coupled with the moderation of our investment in the Institutional business given school district funding uncertainties in 2025.

General and Administrative

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 $41,338 thousand and $43,928 thousand for the years ended December 31, 2025 and 2024, respectively, a decrease of $2,590 thousand. Product and development costs include compensation for employees on our product, engineering, and design teams who are responsible for developing new and improving existing offerings, maintaining our website, improving efficiencies across our organization, and third-party expenses.

General and administrative expenses for the year ended December 31, 2025 included non-cash stock-based compensation and restructuring costs of $26,486 thousand and $455 thousand, respectively. General and administrative expenses for the year ended December 31, 2024 included non-cash stock-based compensation of $38,744 thousand. Excluding these impacts in both periods, general and administrative expenses decreased $9,555 thousand, or 11%.

AI-enabled productivity improvements, coupled with new software-driven processes and system implementations, headcount reductions, and other cost reduction efforts, have enabled us to generate operating efficiencies and remove significant costs from the business. Recent advances in our application of AI across our entire tech stack provide us with the opportunity to move faster and drive further levels of productivity and operating leverage, while improving both the customer experience and operational consistency as we scale our business.

Interest Income, net

Interest income was $1,073 thousand for the year ended December 31, 2025, compared to $3,104 thousand for the year ended December 31, 2024. This decrease was driven by lower interest income on our cash balances during the year ended December 31, 2025 and by interest expense related to our outstanding borrowings under our term loan that was originated in November 2025.

Income Tax Expense

Our effective income tax rate was (0.26)% and (0.17)% for the years ended December 31, 2025 and 2024, respectively. Income tax expense recorded during the years ended December 31, 2025 and 2024 represents amounts owed to state authorities.

The following table presents a reconciliation of income tax expense and the effective income tax rate for the period presented, reported under ASC Topic 740 after the adoption of Accounting Standards Update (“ASU”) 2023-09.

Year Ended December 31, 2025

dollars in thousands

Amount

%

U.S. Federal Statutory Tax Rate (21%)

$

(12,766)

21.00 

%

State income taxes, net of federal tax effect

159 

(0.26)

%

Changes in valuation allowances

8,217 

(13.52)

%

Other, net

Income tax benefit attributable to the NCI

4,416 

(7.26)

%

Other

133 

(0.22)

%

Income tax expense and effective income tax rate

$

159 

(0.26)

%

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The following table presents a reconciliation of income tax expense with amounts computed at the federal statutory tax rate for the period presented, reported under ASC Topic 740 prior to the adoption of ASU 2023-09.

dollars in thousands

Year Ended December 31, 2024

Computed tax (21%)

$

(14,076)

Partnership outside basis adjustments

47 

Income tax benefit attributable to NCI

6,180 

Income tax credit

(630)

Change in valuation allowance charged to expense

11,019 

State income tax benefit, net of effect on federal tax

(2,699)

Other, net

274 

Income tax expense

$

115 

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

As of December 31, 2025 and 2024, we had cash and cash equivalents totaling $47,895 thousand and $52,541 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 primarily through cash on hand 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 (as defined below). 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 additional 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.

On November 3, 2025 (the “Closing Date”), we and certain of our subsidiaries entered into a Loan and Security Agreement (“Loan Agreement”) with Hercules Capital, Inc. (“Hercules”) and the lenders party thereto, pursuant to which the lenders made available up to two tranches of term loans in an aggregate principal amount of $50,000 thousand (the “Term Loan”), subject to certain terms and conditions, with the first tranche of up to $30,000 thousand available for borrowing in multiple draws of at least $2,500 thousand and the second tranche of up to $20,000 thousand available for borrowing in multiple draws of at least $2,500 thousand.

On the Closing Date, we borrowed $20,000 thousand under the Term Loan. These proceeds may be used for working capital and other general corporate purposes as permitted by the Term Loan. The remaining $10,000 thousand under the first tranche of Term Loan is available to be drawn until December 31, 2026. After the first tranche is drawn in full or after December 31, 2026, the second Term Loan tranche may be made available, subject to the approval of the lenders. Our ability to access the maximum borrowing capacity under the Term Loan will require our future TTM Contribution Margin (as defined in the Loan Agreement) to exceed historical levels.

Cash Requirements

Our cash requirements within the next twelve months include working capital requirements, sales and marketing activities, and capital expenditures. We believe our cash on hand will be sufficient to satisfy these future requirements.

Our cash requirements under our contractual obligations and commitments consist primarily of:

•Debt, Interest, and Other Debt-Related Obligations. See Note 12 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report for information on our debt and the timing of future principal, interest, and other payments related to our Term Loan; and

•Leases. See Note 13 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report for information on our lease obligations and the amount and timing of future payments.

Debt Covenants

The 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 the Company must maintain the greater of (i) $15,000 thousand of Qualified

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Cash (as defined in the Loan Agreement) or (ii) Qualified Cash that results in Remaining Months Liquidity (as defined in the Loan Agreement) of at least 6 months. Additionally, our outstanding borrowings must not exceed certain multiples of our TTM Contribution Margin (as defined in the Loan Agreement). If at any time, our outstanding borrowings exceed the required multiple of the TTM Contribution Margin, we will be required to immediately repay principal until the outstanding borrowings are less than the applicable multiple. As of December 31, 2025, we were in compliance with these covenants, the Term Loan had outstanding borrowings of $20,000 thousand, and we had an available borrowing capacity of $10,000 thousand.

The following table sets forth our cash flows.

Year Ended December 31,

dollars in thousands

2025

2024

Cash used in:

Operating activities

$

(18,846)

$

(15,603)

Investing activities

(5,370)

(6,863)

Financing activities

19,499 

— 

Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash

(61)

(1)

Net Decrease in Cash, Cash Equivalents, and Restricted Cash

$

(4,778)

$

(22,467)

Operating Activities

Cash used in operating activities for the year ended December 31, 2025 increased $3,243 thousand when compared to the same period in 2024, primarily due to lower revenue and gross margin, the payment of a legal settlement of $2,000 thousand, and changes in working capital. These impacts were partially offset by lower sales and marketing and general and administrative expenses.

Investing Activities

Cash used in investing activities was $5,370 thousand and $6,863 thousand for the years ended December 31, 2025 and 2024, respectively. Cash used in investing activities related to capital expenditures primarily for the development of internal-use software and information technology (“IT”) equipment.

Financing Activities

Cash provided by financing activities for the year ended December 31, 2025 was $19,499 thousand. We received proceeds of $20,000 thousand from borrowings under our Term Loan. In connection with entering into the Loan Agreement and the borrowings under our Term Loan, we paid $501 thousand of deferred financing fees. We did not have any financing activities during the year ended December 31, 2024.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of these consolidated financial statements requires us to make judgments, estimates, and assumptions. We make these subjective determinations after considering our historical performance, management’s experience, current economic trends, and events and information from outside sources. Inherent in this process is the possibility that actual results could differ from these estimates and assumptions for any particular period. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are described in Note 2 within the “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report. Our critical accounting policies and estimates are those that have a meaningful impact on the reporting of our financial condition and results of operations.

Revenue Recognition and Deferred Revenue

We recognize revenue from our services as performance obligations are satisfied. Performance obligations are satisfied throughout the term of contracts with Learners and Institutions, who are our customers, when they are provided services. Revenue is recognized in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

We generate revenue by selling tutoring services to Learners and Institutions that are fulfilled by Experts, who deliver instruction on our behalf through our proprietary Live Learning Platform.

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We provide a significant service of integrating instruction services, which are provided by Experts on our behalf through our platform, using our curation and matching technologies and features in order to deliver a combined output to meet our performance obligation to Learners. We are primarily responsible for the services provided and set pricing. We determined that collectively, these factors reflect that we are the principal in transactions with Learners and Institutions.

We do not have any incremental costs to obtain or fulfill a contract that requires capitalization. We elected as a practical expedient, not to disclose additional information about unsatisfied performance obligations for contracts with customers that have an expected duration of one year or less.

Learners

Our revenue from contracts with Learners, which are generally short-term in duration (one year or less), is recognized as performance obligations are satisfied. Contracts with Learners are sold through Learning Memberships, whereby Learners pay a fixed monthly rate over the contract term.

Revenue earned through Learning Memberships is recognized from tutoring as performance obligations are satisfied. Given the customer receives benefit from the completion of each session (as Learners are not obligated to meet with the same Expert for a minimum number of sessions), we concluded each tutoring session is a separate performance obligation. Revenue is recognized and deferred revenue is relieved on the date services are delivered to Learners in an amount that reflects the consideration we are contractually entitled to receive in exchange for those services.

Cash for the purchase of services by Learners is generally collected monthly in advance and recorded to deferred revenue until the services are used by the Learner. We recognize revenue for unredeemed payments for services over the period in which the performance obligation is satisfied (unredeemed payments expire each month for Learning Memberships) with the customer based on historical customer usage patterns. We estimate the amount in which and the period of time over which payments for services are not redeemed using historical usage and redemption patterns. These estimates are reassessed each reporting period.

Institutions

Our revenue from contracts with Institutions, which are generally short-term in duration (one year or less), is recognized from services as performance obligations are satisfied. Contracts with Institutions are generally sold through access-based subscriptions, whereby Institutions pay a fixed rate over the contract term. We have also sold prepaid high-dosage contracts, which consist of payments for services that can be redeemed following the date of first payment or payments after services are completed.

Revenue is recognized from tutoring as performance obligations are satisfied. Given the Institutions receive benefit from the completion of each session (as Institutions are not obligated to meet with the same Expert for a minimum number of sessions), we concluded each tutoring session is a separate performance obligation. Revenue is recognized, and to the extent cash for the purchase of services by Institutions is collected in advance (at one time or in installments), deferred revenue is relieved on the date services are delivered to the Institutions in an amount that reflects the consideration we are contractually entitled to receive in exchange for those services. For Institutions that do not pay in advance, we typically invoice these Institutions on a monthly basis for each session provided, with amounts recorded to accounts receivable, net of any related allowance for credit losses.

Per the terms of our access-based, subscription contracts, purchased services can be redeemed for a set period of time from the date of payment. Per the terms of our prepaid high-dosage contracts, services purchased by Institutions are generally redeemed following the date of the first payment. We recognize revenue for unredeemed payments for services over the period in which the performance obligation is satisfied (unredeemed payments expire after a stated usage period) with the Institution based on historical usage patterns. We estimate the amount in which and the period of time over which payments for services are not redeemed using historical usage and redemption patterns. These estimates are reassessed each reporting period.

Fixed Assets, Net

Expenditures for fixed assets are capitalized and primarily include costs related to software developed or acquired for internal-use and purchases of IT equipment. Maintenance, repairs, and minor renewals are expensed as incurred. Depreciation of fixed assets other than capitalized internal-use software is calculated on a straight-line basis over estimated useful lives of one to seven years and is included in “General and administrative expenses.” When fixed assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the statements of operations.

We capitalize certain costs, including stock-based compensation, associated with software developed or obtained for internal-use and website and application development. We capitalize development stage internal and external costs. These costs are capitalized when management has authorized and committed project funding and it is probable that the project will be

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completed, and the software will be used as intended. Once the software is ready for its intended use, it is placed into service and such costs are amortized on a straight-line basis within “Cost of revenue” in the Consolidated Statements of Operations, generally over a four year estimated useful life of the related asset. Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed as incurred. Costs incurred for enhancements that are expected to result in additional material functionality are capitalized and amortized over the estimated useful life of the upgrades.

We evaluate fixed assets, including capitalized internal-use software, for retirement and abandonment when events or changes in circumstances indicate an asset may no longer be used as intended (for example, technology obsolescence, replacement initiatives, or other decisions to discontinue use). When an asset is permanently abandoned or otherwise disposed of, we cease depreciation, remove the asset’s cost and related accumulated depreciation or amortization from the balance sheet, and record any resulting gain or loss in the statement of operations.

Stock-based Compensation

We recognize the cost of services received in exchange for awards of equity instruments based on the grant-date fair value of equity awards. That cost is recognized straight-line or graded (when applicable) over the period during which the employee is required to provide service in exchange for the award - the requisite service period. Any forfeitures of stock-based compensation are recorded as they occur. The grant date fair value of the restricted stock units was determined based upon the closing price of our Class A Common Stock on the date of grant. The grant date fair value of the stock appreciation rights and stock options was determined using the Black-Scholes Model. The grant date fair value of the Founder’s Award and market-based performance restricted stock units were determined using the Monte Carlo Option Pricing Method.

For additional discussion on stock-based compensation, see Note 16 in “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report.

RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS

See Note 3 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report for a discussion regarding recently issued and adopted accounting standards.

SMALLER REPORTING COMPANY STATUS

As of December 31, 2025, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. An entity is a “smaller reporting company” based upon the following criteria: (i) the market value of our shares of common stock held by non-affiliates is less than $250,000 thousand as of the prior June 30, or (ii) our annual revenues are less than $100,000 thousand during the prior fiscal year and the market value of our shares of common stock held by non-affiliates is less than $700,000 thousand as of the prior June 30. We will remain a smaller reporting until our next determination date in 2026.