Nerdy (NYSE: NRDY) cuts losses, exits school business and faces NYSE risk
Rhea-AI Filing Summary
Nerdy Inc. reported second‑quarter 2026 revenue of $43.2 million, down modestly year over year, while improving profitability. Gross profit was $28.0 million with a 65% gross margin, up from 62%, as cost of revenue fell on lower Expert costs and reduced amortization of internal‑use software.
Operating loss narrowed to $6.5 million from $12.3 million, and net loss to $6.9 million from $12.0 million, driven by double‑digit declines in sales and marketing and general and administrative expenses, including lower stock‑based compensation. For the first half, operating cash outflow improved to $6.5 million from $13.5 million.
Cash and cash equivalents were $38.4 million at June 30, 2026, alongside $20.0 million outstanding under a Term Loan bearing 10.75% interest and subject to liquidity and contribution‑margin covenants, with which the company reports compliance. Active Members declined 5% year over year to 29.1 thousand, but ARPM increased 5% to $366. Strategically, Nerdy abandoned its First Tutors business and, after quarter‑end, committed to wind down Varsity Tutors for Schools, expecting $2–4 million of exit costs and lower Institutional revenue. The company also discloses NYSE non‑compliance with the $1.00 minimum bid price and is pursuing a reverse stock split to regain compliance.
Positive
- Net loss roughly halved year over year to $6.9 million in Q2 and $13.0 million for the first half, as operating expenses fell about 14% and gross margin improved to 65%, signaling materially better unit economics and cash burn.
- Operating cash outflow improved to $6.5 million in the first half of 2026 from $13.5 million a year earlier, reflecting higher gross profit and lower sales, marketing, and general and administrative spending.
Negative
- Strategic exits will cut Institutional revenue: the company abandoned its First Tutors business and plans to wind down Varsity Tutors for Schools, expecting $2–4 million of exit‑related costs and future revenue reduction from that business line.
- NYSE listing is at risk after the stock traded below the $1.00 minimum bid; even with a proposed reverse stock split there is no assurance of regaining or maintaining continued listing, and liquidity could decline.
- Business remains loss‑making and leveraged, with a Q2 net loss of $6.9 million and $20.0 million outstanding under a 10.75% Term Loan subject to liquidity and performance covenants, keeping financial flexibility constrained.
Filing Explained
A $118,238 thousand tax agreement liability remains unrecognized, while the proposed reverse split is still awaiting stockholder approval.
This Form 10-Q says the board is submitting a proposed reverse stock split to stockholders for approval; the split has not occurred, and its principal structural effect would be share consolidation rather than an issuance of new common stock.
A reverse stock split reduces the number of outstanding shares and proportionally raises the per-share price; the filing says the proposed split would not reduce authorized preferred shares, leaving the board authority to issue proportionally more preferred stock without another stockholder vote.
As of June 30, 2026, the term loan had
The company has not recognized a
A specific financing milestone is December 31, 2026: the remaining
Key Figures
Q2 2026 Revenue: $43,231 thousand
Q2 2026 Gross Margin: 65%
Q2 2026 Net Loss: $6,856 thousand
+5 more
8 metrics
Q2 2026 Revenue
$43,231 thousand
Three months ended June 30, 2026
Q2 2026 Gross Margin
65%
Gross profit of $27,984 thousand on $43,231 thousand revenue
Q2 2026 Net Loss
$6,856 thousand
Net loss for the three months ended June 30, 2026
Cash and Cash Equivalents
$38,424 thousand
Balance at June 30, 2026
Term Loan Outstanding
$20,000 thousand
Outstanding borrowings under the Term Loan at June 30, 2026 at 10.75% interest
Operating Cash Flow H1 2026
$(6,525) thousand
Net cash used in operating activities for six months ended June 30, 2026
Active Members
29.1 thousand
Active Members as of June 30, 2026, down 5% year over year
ARPM
$366
Average Revenue per Member per Month as of June 30, 2026, up 5% year over year
Key Terms
Active Members, Average Revenue per Member per Month, Tax Receivable Agreement, noncontrolling interests, +2 more
6 terms
Active Members financial
"“Active Member(s)” is defined as the number of Learners with an active paid Learning Membership"
Average Revenue per Member per Month financial
"“Average Revenue per Member per Month” (“ARPM”) is defined as the average Consumer Learning Membership"
Tax Receivable Agreement financial
"Nerdy Inc. has a tax receivable agreement with certain Legacy Nerdy Holders (the “TRA Holder(s)”) (the “Tax Receivable Agreement”)."
A contract in which a company agrees to pay a specified party (often former owners after a spinoff or IPO) a share of future tax savings the company realizes. Think of it like agreeing to share a future tax refund with someone who helped create the conditions for that refund. For investors it matters because those payments reduce the cash the company can use for dividends, buybacks, or reinvestment, and therefore affect valuation and returns.
noncontrolling interests financial
"a portion of the consolidated net earnings (loss) of Nerdy LLC... are allocated to the noncontrolling interests"
The portion of a subsidiary’s equity and profits that belongs to outside owners rather than the parent company; when a parent reports consolidated results it includes the whole subsidiary but shows the noncontrolling slice separately. Think of a company’s subsidiary as a pie where the parent owns most slices but some are held by other investors — noncontrolling interests tell you how much of the pie and its future earnings don’t belong to the parent, which affects how much profit and net assets are truly attributable to the parent’s shareholders.
Term Loan financial
"two tranches of term loans in an aggregate principal amount of $50,000 (the “Term Loan”), subject to certain terms"
A term loan is a type of loan that is borrowed for a set period of time, with a fixed schedule for repaying the money, usually in regular payments. It matters to investors because it represents a company's borrowing costs and financial stability; reliable repayment of these loans can indicate strong financial health, while difficulties may signal potential risks.
reverse stock split financial
"We cannot assure you that a proposed reverse stock split, if effected, will increase the trading price"
A reverse stock split reduces a company's number of outstanding shares while raising the price per share proportionally, so the total value of each investor's holding is unchanged; a 1-for-10 split turns 100 shares worth $1 each into 10 shares worth $10 each. Companies often do this to regain compliance with an exchange's minimum price rule or to attract investors who avoid very low-priced stocks.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Nerdy (NRDY) perform financially in Q2 2026?
Nerdy generated $43.2 million in Q2 2026 revenue, slightly below 2025, but improved gross margin to 65%. Net loss narrowed to $6.9 million from $12.0 million, as sales, marketing, and general and administrative expenses declined double digits.
What were Nerdy (NRDY)’s key operating metrics like Active Members and ARPM?
Active Members were 29.1 thousand at June 30, 2026, down 5% year over year, while Average Revenue per Member per Month (ARPM) rose to $366, up 5%. Management attributes higher ARPM primarily to price increases implemented in February 2025.
How strong is Nerdy (NRDY)’s liquidity and what debt does it carry?
Nerdy held $38.4 million of cash and cash equivalents at June 30, 2026 and had $20.0 million outstanding under a Term Loan at 10.75%. First‑half operating cash outflow improved to $6.5 million, and the company reports compliance with loan covenants.
What strategic business changes did Nerdy (NRDY) make around Q2 2026?
Nerdy abandoned its First Tutors business in Q2 2026 and, on July 31, 2026, committed to wind down Varsity Tutors for Schools. The company expects $2–4 million of exit‑related costs and future Institutional revenue to be affected.
Why is Nerdy (NRDY) considering a reverse stock split?
Nerdy received an NYSE non‑compliance notice after its average closing price stayed below $1.00. A proposed reverse stock split is intended to raise the share price above the minimum bid, though the company cautions it may not achieve the desired trading price or liquidity.
How are Nerdy (NRDY)’s Consumer and Institutional revenues trending?
In Q2 2026, Consumer revenue was $36.5 million, down 4%, as lower Active Members offset higher ARPM, while Institutional revenue declined 8% to $6.8 million. For the first half, Consumer revenue was roughly flat, but Institutional revenue fell 4% year over year.
What are the main risks Nerdy (NRDY) highlights in this quarter?
Key risks include continuing net losses, dependence on liquidity and its Term Loan covenants, execution risks around winding down Varsity Tutors for Schools, potential Tax Receivable Agreement obligations, regulatory and legal matters, and uncertainty around maintaining NYSE listing.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________
FORM 10-Q
_________________________________________
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from _______ to _______
Commission File Number: 1-39595
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
| (Address of Principal Executive Offices) (Zip Code) | |||||||||||
(314 ) 412-1227
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
Indicate the numbers of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Class A common stock, par value $0.0001 per share - 127,879,473 shares of common stock as of July 31, 2026
Class B common stock, par value $0.0001 per share - 63,730,417 shares of common stock as of July 31, 2026
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NERDY INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
| Page | ||||||||
PART I | FINANCIAL INFORMATION | |||||||
Item 1. | Financial Statements (Unaudited). | 1 | ||||||
Condensed Consolidated Statements of Operations (Unaudited). | 1 | |||||||
Condensed Consolidated Statements of Comprehensive Loss (Unaudited). | 2 | |||||||
Condensed Consolidated Balance Sheets (Unaudited). | 3 | |||||||
Condensed Consolidated Statements of Cash Flows (Unaudited). | 4 | |||||||
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited). | 5 | |||||||
Notes to Condensed Consolidated Financial Statements (Unaudited). | 6 | |||||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations. | 13 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 19 | ||||||
Item 4. | Controls and Procedures. | 19 | ||||||
PART II | OTHER INFORMATION | |||||||
Item 1. | Legal Proceedings. | 20 | ||||||
Item 1A. | Risk Factors. | 20 | ||||||
Item 5. | Other Information. | 21 | ||||||
Item 6. | Exhibits. | 22 | ||||||
SIGNATURES | 23 | |||||||
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PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED).
NERDY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||
| Sales and marketing expenses | |||||||||||||||||||||||
| General and administrative expenses | |||||||||||||||||||||||
| Operating Loss | ( | ( | ( | ( | |||||||||||||||||||
Interest expense | |||||||||||||||||||||||
Interest income | ( | ( | ( | ( | |||||||||||||||||||
| Other (income) expense, net | ( | ||||||||||||||||||||||
| Loss before Income Taxes | ( | ( | ( | ( | |||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net Loss | ( | ( | ( | ( | |||||||||||||||||||
| Net loss attributable to noncontrolling interests | ( | ( | ( | ( | |||||||||||||||||||
| Net Loss Attributable to Class A Common Stockholders | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Loss per share of Class A Common Stock: | |||||||||||||||||||||||
Basic and Diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Weighted-Average Shares of Class A Common Stock Outstanding: | |||||||||||||||||||||||
Basic and Diluted | |||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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NERDY INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)
(in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net Loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||
| Reclassification to net loss (see Note 1) | ( | ( | |||||||||||||||||||||
| Total Comprehensive Loss | ( | ( | ( | ( | |||||||||||||||||||
| Comprehensive loss attributable to noncontrolling interests | ( | ( | ( | ( | |||||||||||||||||||
| Total Comprehensive Loss Attributable to Class A Common Stockholders | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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NERDY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands)
| June 30, 2026 | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Other current assets | |||||||||||
| Total Current Assets | |||||||||||
| Fixed assets, net | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Total Assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Deferred revenue | |||||||||||
| Other current liabilities | |||||||||||
| Total Current Liabilities | |||||||||||
| Long-term debt | |||||||||||
| Other liabilities | |||||||||||
| Total Liabilities | |||||||||||
| Stockholders’ Equity | |||||||||||
| Class A common stock | |||||||||||
| Class B common stock | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
Accumulated other comprehensive income | |||||||||||
| Total Stockholders’ Equity Excluding Noncontrolling Interests | |||||||||||
| Noncontrolling interests | |||||||||||
| Total Stockholders’ Equity | |||||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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NERDY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash Flows From Operating Activities | |||||||||||
| Net Loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Non-cash stock-based compensation expense | |||||||||||
| Depreciation & amortization | |||||||||||
| Amortization of intangibles | |||||||||||
Amortization of deferred financing fees | |||||||||||
| Loss on abandonment of business | |||||||||||
Other | |||||||||||
| Other changes in operating assets and liabilities: | |||||||||||
| Decrease in accounts receivable, net | |||||||||||
| Decrease in other current assets | |||||||||||
| Decrease in other assets | |||||||||||
Increase in accounts payable | |||||||||||
| Decrease in deferred revenue | ( | ( | |||||||||
| Decrease in other current liabilities | ( | ( | |||||||||
| Decrease in other liabilities | ( | ( | |||||||||
| Net Cash Used in Operating Activities | ( | ( | |||||||||
| Cash Flows From Investing Activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Net Cash Used In Investing Activities | ( | ( | |||||||||
| Cash Flows From Financing Activities | |||||||||||
| Payments of deferred financing fees | ( | ||||||||||
| Net Cash Used In Financing Activities | ( | ||||||||||
| Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash | |||||||||||
| Net Decrease in Cash, Cash Equivalents, and Restricted Cash | ( | ( | |||||||||
| Cash, Cash equivalents, and Restricted Cash, Beginning of Year | |||||||||||
| Cash, Cash Equivalents, and Restricted Cash, End of Period | $ | $ | |||||||||
| Supplemental Cash Flow Information | |||||||||||
| Non-cash stock-based compensation included in capitalized internal use software | $ | $ | |||||||||
| Purchase of fixed assets included in accounts payable | |||||||||||
| Cash paid for interest | |||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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NERDY INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
(in thousands)
| As Of and For The Three Months Ended June 30, | As Of and For The Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Class A Common Stock | |||||||||||||||||||||||
| Beginning | $ | $ | |||||||||||||||||||||
| Activity under stock compensation plans | — | — | — | ||||||||||||||||||||
| End of period | |||||||||||||||||||||||
| Class B Common Stock | |||||||||||||||||||||||
| Beginning and end of period | |||||||||||||||||||||||
| Additional Paid-In Capital | |||||||||||||||||||||||
| Beginning of period | |||||||||||||||||||||||
| Non-cash stock-based compensation | |||||||||||||||||||||||
| Activity under stock compensation plans | — | — | ( | — | |||||||||||||||||||
| Conversion of combined interests into Class A common stock | — | — | — | ||||||||||||||||||||
| Rebalancing of ownership percentage between controlling and the noncontrolling interests | ( | ( | ( | ( | |||||||||||||||||||
| End of period | |||||||||||||||||||||||
| Accumulated Deficit | |||||||||||||||||||||||
| Beginning of period | ( | ( | ( | ( | |||||||||||||||||||
| Net loss | ( | ( | ( | ( | |||||||||||||||||||
| End of period | ( | ( | ( | ( | |||||||||||||||||||
Accumulated Other Comprehensive Income | |||||||||||||||||||||||
| Beginning of period | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||
| Reclassification to net loss | ( | — | ( | — | |||||||||||||||||||
| End of period | |||||||||||||||||||||||
| Total Stockholders’ Equity Excluding Noncontrolling Interests | |||||||||||||||||||||||
| Noncontrolling Interests | |||||||||||||||||||||||
| Beginning of period | |||||||||||||||||||||||
| Net loss | ( | ( | ( | ( | |||||||||||||||||||
| Foreign currency translation adjustments | — | — | |||||||||||||||||||||
| Reclassification to net loss | ( | — | ( | — | |||||||||||||||||||
| Conversion of combined interests into Class A common stock | — | — | ( | — | |||||||||||||||||||
| Rebalancing of ownership percentage between controlling and the noncontrolling interests | |||||||||||||||||||||||
| End of period | |||||||||||||||||||||||
| Total Stockholders’ Equity | $ | $ | |||||||||||||||||||||
| Class A Common Stock - Shares | |||||||||||||||||||||||
| Beginning of period | |||||||||||||||||||||||
| Activity under stock compensation plans | |||||||||||||||||||||||
| Conversion of combined interests into Class A common stock | — | — | — | ||||||||||||||||||||
| End of period | |||||||||||||||||||||||
| Class B Common Stock - Shares | |||||||||||||||||||||||
| Beginning of period | |||||||||||||||||||||||
| Conversion of combined interests into Class A common stock | — | — | ( | — | |||||||||||||||||||
| End of period | |||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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NERDY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share information and where indicated otherwise)
NOTE 1 — BASIS OF PRESENTATION AND BACKGROUND
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), under the rules and regulations of the United States (the “U.S.”) Securities and Exchange Commission (the “SEC”), and on a basis substantially consistent with the audited consolidated financial statements of Nerdy Inc. (herein referred to as “Nerdy,” the “Company,” “us,” “our,” or “we,” and unless otherwise stated or context otherwise indicates, all such references herein mean Nerdy and its consolidated subsidiaries) as of and for the year ended December 31, 2025. These unaudited condensed consolidated financial statements should be read in conjunction with such audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 26, 2026.
These unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments and accruals) that management considers necessary for a fair statement of the Company’s results of operations, comprehensive income (loss), financial condition, cash flows, and stockholders’ equity (deficit) for the interim periods presented. Interim results are not necessarily indicative of the results for any other interim period or for the entire year.
Nerdy Inc., a member of Nerdy LLC (as defined below), has the right to appoint a majority of the managers of Nerdy LLC and therefore controls Nerdy LLC. As a result, the financial results of Nerdy LLC and its wholly-owned subsidiaries are consolidated with and into Nerdy Inc., and a portion of the consolidated net earnings (loss) of Nerdy LLC, which the Legacy Nerdy Holders (as defined below) are entitled to or are required to absorb, are allocated to the noncontrolling interests (the “NCI”).
Background
Nerdy Inc. was formed on September 20, 2021 in connection with a business combination between TPG Pace Tech Opportunities (“TPG Pace”) and Live Learning Technologies LLC (along with its wholly-owned subsidiaries, “Nerdy LLC”). Nerdy LLC is a holding company that is the sole owner of multiple operating companies, including Varsity Tutors LLC (“Varsity Tutors”) and Varsity Tutors for Schools LLC (“Varsity Tutors for Schools”). As a result of the business combination and related transactions, Nerdy LLC merged with a wholly-owned subsidiary of Nerdy Inc., with Nerdy LLC surviving such merger. Nerdy Inc. is a holding company that has no material assets other than its ownership interests in Nerdy LLC and its indirect interests in the subsidiaries of Nerdy LLC, and has no independent means of generating revenue or cash flow.
Nerdy Inc. has the following classes of securities issued and outstanding: (i) Class A common stock, par value $0.0001 per share (the “Class A Common Stock”) and (ii) Class B common stock, par value $0.0001 per share (the “Class B Common Stock”). The shares of Class B Common Stock are owned by the Legacy Nerdy Holders (as defined below), have voting rights only, and have no dividend or economic rights. The Company does not intend to list its Class B Common Stock on any stock exchange. Nerdy LLC has units issued and outstanding (the “OpCo Units”) to its members, the legacy holders of Nerdy LLC equity (the “Legacy Nerdy Holder(s)”) and Nerdy Inc. Nerdy Inc. and Nerdy LLC will at all times maintain a one
Abandonment of First Tutors
In the second quarter of 2026, the Company made a strategic decision to abandon the First Tutors business, which is operated by EduNation Limited, a limited company incorporated in England and Wales. The Company will no longer sell new services under the First Tutors trade name, and it is directing resources toward the growth of its core business. In connection with this abandonment, the Company recorded write-offs of the First Tutors trade name along with other assets and liabilities.
NOTE 2 — RECENTLY ISSUED ACCOUNTING STANDARDS
The Company has considered all new accounting pronouncements and based on current information, has concluded that there are no new pronouncements (other than the ones described below) that had or will have an impact on its results of operations, comprehensive income (loss), financial condition, cash flows, and stockholders’ equity (deficit).
In September 2025, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 removes the prescriptive project stage model for internal-use software
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development and instead requires capitalization of costs when management has authorized and committed to funding the project and it is probable that the project will be completed and the software will be used as intended. The ASU also incorporates the accounting for website development costs into Subtopic 350-40 and clarifies that property, plant, and equipment disclosure requirements apply to all capitalized internal-use software costs. This ASU is effective for annual periods beginning after December 15, 2027 (i.e., Nerdy’s financial statements for the year ending December 31, 2028), and for interim periods therein. Early adoption is permitted. The amendments may be applied prospectively, retrospectively, or under a modified transition approach. The Company is currently evaluating the impact this ASU will have on its financial statements.
In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the income statement. This ASU is effective for annual periods beginning after December 15, 2026 (i.e., Nerdy’s financial statements for the year ending December 31, 2027), and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company’s adoption of this ASU will result in expanded disclosures related to expense captions reported on the face of the income statement but will not have a material impact on the Company’s financial statements.
NOTE 3 — NONCONTROLLING INTERESTS
As of June 30, 2026, Legacy Nerdy Holders owned 63,730 OpCo Units, equal to 33.4 % of the economic interest in Nerdy LLC, and 63,730 shares of Class B Common Stock. As of December 31, 2025, Legacy Nerdy Holders owned 64,395 OpCo Units equal to 34.3 % of the economic interest in Nerdy LLC, and 64,395 shares of Class B Common Stock.
Nerdy Inc. owned 66.6 % and 65.7 % of the outstanding OpCo Units as of June 30, 2026 and December 31, 2025, respectively. The financial results of Nerdy LLC and its subsidiaries were consolidated with and into Nerdy Inc., and the portions of the consolidated net earnings (loss) of Nerdy LLC, which the Legacy Nerdy Holders were entitled to or required to absorb, was allocated to NCI. At the end of each reporting period, Nerdy LLC equity attributable to Nerdy Inc. and the Legacy Nerdy Holders was rebalanced to reflect Nerdy Inc.’s and the Legacy Nerdy Holders’ ownership in Nerdy LLC.
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The following table summarizes the changes in ownership of OpCo Units in Nerdy LLC for the periods presented.
| As Of and For The Three Months Ended June 30, | As Of and For The Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| OpCo Units | |||||||||||||||||||||||
| Nerdy Inc. | |||||||||||||||||||||||
| Beginning of period | |||||||||||||||||||||||
| Vesting or exercise of equity awards | |||||||||||||||||||||||
| Conversion of Combined Interests into Class A Common Stock | |||||||||||||||||||||||
| End of period | |||||||||||||||||||||||
| Legacy Nerdy Holders | |||||||||||||||||||||||
| Beginning of period | |||||||||||||||||||||||
| Conversion of Combined Interests into Class A Common Stock | ( | ||||||||||||||||||||||
| End of period | |||||||||||||||||||||||
| Total | |||||||||||||||||||||||
| Beginning of period | |||||||||||||||||||||||
| Vesting or exercise of equity awards | |||||||||||||||||||||||
| End of period | |||||||||||||||||||||||
| Ownership Percentage | |||||||||||||||||||||||
| Nerdy Inc. | |||||||||||||||||||||||
| Beginning of period | % | % | % | % | |||||||||||||||||||
| End of period | % | % | % | % | |||||||||||||||||||
| Legacy Nerdy Holders | |||||||||||||||||||||||
| Beginning of period | % | % | % | % | |||||||||||||||||||
| End of period | % | % | % | % | |||||||||||||||||||
NOTE 4 — REVENUE
The following table presents the Company’s revenue by business category for the periods presented.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | % | 2025 | % | 2026 | % | 2025 | % | ||||||||||||||||||||||||||||||||||||||||
| Consumer | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||
| Institutional | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||
Other | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||
Contract liabilities are reported within “Deferred revenue” on the Company’s Condensed Consolidated Balance Sheets. Deferred revenue consists of advanced payments from customers for performance obligations that have not been satisfied. Deferred revenue is recognized when the performance obligations have been completed. The Company expects to recognize substantially all of the deferred revenue balance in the next twelve months. The following table presents the Company’s “Accounts receivable, net” and “Deferred revenue” reported on the Condensed Consolidated Balance Sheets for the periods presented.
| June 30, 2026 | December 31, 2025 | ||||||||||
| Accounts receivable, net | $ | $ | |||||||||
| Deferred revenue | $ | $ | |||||||||
“Accounts receivable, net” is reported net of reserves of $168 and $485 as of June 30, 2026 and December 31, 2025, respectively.
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NOTE 5 — INCOME TAXES
Nerdy Inc. holds an economic interest in Nerdy LLC (see Notes 1 and 3), which is treated as a partnership for U.S. federal income tax purposes. As a partnership, Nerdy LLC is generally not subject to U.S. federal income tax under current U.S. tax laws as its net taxable income (loss) and any related tax credits are passed through to its members and included in their tax returns, even though such net taxable income (loss) or tax credits may not have actually been distributed. Nerdy Inc. is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to its distributive share of the net taxable income (loss) and any related tax credits of Nerdy LLC. The Company continues to maintain a full valuation allowance against the deferred tax assets at Nerdy Inc. as of June 30, 2026.
The effective income tax rate was (0.50 )% and (0.62 )% for the three months ended June 30, 2026 and 2025, respectively. The effective income tax rate was (0.43 )% and (0.36 )% for the six months ended June 30, 2026 and 2025, respectively. The effective income tax rates differed significantly from the statutory rates in both the current and prior year periods, primarily as a result of changes in the valuation allowance and income tax benefit attributable to the NCI. Income tax expense reported in all periods represents amounts owed to state authorities.
NOTE 6 — LOSS PER SHARE
The following table sets forth the computation of basic and diluted net loss per share of Class A Common Stock.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net loss attributable to Class A Common Stockholders for basic and diluted loss per share | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Weighted-average shares of Class A Common Stock for basic and diluted loss per share | |||||||||||||||||||||||
| Basic and Diluted loss per share of Class A Common Stock | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
The following table details the securities that have been excluded from the calculation of weighted-average shares for diluted loss per share of Class A Common Stock for the periods presented as they were anti-dilutive.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Stock options | |||||||||||||||||||||||
| Stock appreciation rights | |||||||||||||||||||||||
| Restricted stock units | |||||||||||||||||||||||
| Restricted stock units - founder’s award | |||||||||||||||||||||||
Market-based performance restricted stock units | |||||||||||||||||||||||
| Combined Interests that can be converted into shares of Class A Common Stock | |||||||||||||||||||||||
NOTE 7 — FIXED ASSETS, NET
The following table presents fixed assets and accumulated depreciation reported on the Condensed Consolidated Balance Sheets for the periods presented.
| June 30, 2026 | December 31, 2025 | ||||||||||
| Fixed assets | $ | $ | |||||||||
| Accumulated depreciation | ( | ( | |||||||||
| $ | $ | ||||||||||
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The following table presents amortization expense related to capitalized internal use software and depreciation expense reported in the Condensed Consolidated Statements of Operations for the periods presented.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| Statement of Operations Location | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Amortization expense related to capitalized internal-use software | Cost of revenue | $ | $ | $ | $ | ||||||||||||||||||||||||
| Depreciation expense | General and administrative expenses | ||||||||||||||||||||||||||||
NOTE 8 — INTANGIBLE ASSETS, NET
The Company’s intangible assets consist entirely of trade names. The following table presents the carrying amount and accumulated amortization related to trade names reported on the Condensed Consolidated Balance Sheets for the periods presented.
| June 30, 2026 | December 31, 2025 | ||||||||||
| Carrying amount | $ | $ | |||||||||
| Accumulated amortization | ( | ( | |||||||||
| $ | $ | ||||||||||
The following table presents amortization expense related to intangible assets reported in the Condensed Consolidated Statements of Operations for the periods presented.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| Statement of Operations Location | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Amortization expense related to intangible assets | General and administrative expenses | $ | $ | $ | $ | ||||||||||||||||||||||||
NOTE 9 — FAIR VALUE MEASUREMENTS
The Company’s financial assets and liabilities include cash and cash equivalents, receivables, and accounts payable for which the carrying value approximates fair value due to their short maturities (less than 12 months). Certain assets and liabilities, including definite-lived assets and goodwill, are measured at fair value on a non-recurring basis. There were no fair value measurement adjustments recognized related to definite-lived assets or goodwill during the three and six months ended June 30, 2026 or 2025. The fair values of any outstanding borrowings under the Term Loan (as defined in Note 10) as of June 30, 2026 and December 31, 2025 approximated their carrying values.
NOTE 10 — LONG-TERM DEBT
Loan Agreement
On November 3, 2025 (“Closing Date”), the Company and certain of its 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 (the “Term Loan”), subject to certain terms and conditions, with the first tranche of up to $30,000 available for borrowing in multiple draws of at least $2,500 and the second tranche of up to $20,000 available for borrowing in multiple draws of at least $2,500 . The Term Loan matures on November 1, 2029 (the “Maturity Date”) and bears interest equal to the greater of (a) the prime rate as reported in The Wall Street Journal plus 3.50 % and (b) 10.75 %. The Loan Agreement is for 48 months, with interest-only payments for an initial period of 36 months from the Closing Date, which may be extended by an additional 12 months upon achievement of certain milestones and subject to other terms and conditions set out in the Loan Agreement (the “Interest-Only Period”). After the Interest-Only Period, the Company will be required to repay in equal monthly installments of the principal and interest until the Maturity Date. The obligations under the Loan Agreement are secured by a security interest in substantially all of the Company’s assets and the assets of its subsidiaries that are co-borrowers or guarantors. The Loan Agreement provides for an end of term charge equal to 7.50 % of the funded loan amount, due at the earlier of prepayment or maturity. Pro-rata payment of any earned end of term charge will be due upon any partial prepayment. The Company incurred $2,251 of costs (including an accrued end of term charge of $1,500 based upon the amount borrowed on November 3, 2025) in
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connection with entering into the Loan Agreement and the borrowings under the Term Loan, which were deferred and are being amortized to interest expense over the term of the Term Loan.
As of June 30, 2026, the Term Loan had outstanding borrowings of $20,000 and an available borrowing capacity of $10,000 . The remaining $10,000 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. The Company’s ability to access the maximum borrowing capacity under the Term Loan will require its future TTM Contribution Margin (as defined in the Loan Agreement) to exceed historical levels. As of June 30, 2026 and December 31, 2025, the interest rate on the outstanding borrowings under the Term Loan was 10.75
Debt Covenants
The Loan Agreement includes customary representations and warranties and covenants associated with the 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 of Qualified 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, the Company’s outstanding borrowings must not exceed certain multiples of its TTM Contribution Margin. If at any time, the outstanding borrowings exceed the required multiple of the TTM Contribution Margin, the Company will be required to immediately repay principal until the outstanding borrowings are less than the applicable multiple. The Company’s ability to access the maximum borrowing capacity under the Term Loan will require its future TTM Contribution Margin to exceed historical levels. As of June 30, 2026, the Company was in compliance with these covenants.
NOTE 11 — RELATED PARTIES
Tax Receivable Agreement
Nerdy Inc. has a tax receivable agreement with certain Legacy Nerdy Holders (the “TRA Holder(s)”) (the “Tax Receivable Agreement”). The Tax Receivable Agreement generally provides for the payment by Nerdy Inc. to the TRA Holders of 85 % of the net cash savings, if any, in U.S. federal, state, and local income tax that Nerdy Inc. actually realizes (or is deemed to realize in certain circumstances) as a result of: (i) certain increases in tax basis that occur as a result of (A) the reverse recapitalization (including as a result of cash received in the reverse recapitalization and debt repayment occurring in connection with the reverse recapitalization) or (B) exercises of the redemption or call rights set forth in the Nerdy LLC operating agreement; and (ii) imputed interest deemed to be paid by Nerdy Inc. as a result of, and additional basis arising from, any payments Nerdy Inc. makes under the Tax Receivable Agreement. Nerdy Inc. will retain the benefit of the remaining 15 % of these net cash savings.
As of June 30, 2026, Nerdy Inc. has not recognized a liability of $118,238 under the Tax Receivable Agreement after concluding it was not probable that such Tax Receivable Agreement payments would be paid based on its estimates of Nerdy’s LLC future taxable income. Nerdy Inc. did not make any payments to the TRA Holders under the Tax Receivable Agreement during the three and six months ended June 30, 2026 or 2025. The amounts payable under the Tax Receivable Agreement will vary depending upon a number of factors, including the amount, character, and timing of the taxable income of the Company in the future. If the valuation allowance recorded against the deferred tax assets applicable to the tax attributes referenced above is released in a future period, the Tax Receivable Agreement liability may be considered probable at that time and recorded within the statement of operations.
NOTE 12 — COMMITMENTS AND CONTINGENCIES
Legal Proceedings
Independent Contractor Classification Matters
The Company, through its consolidated subsidiaries, is subject to various legal and regulatory proceedings at the federal, state, and municipal levels challenging the classification of third-party Experts on its platform as independent contractors, and claims that, by the alleged misclassification, it has violated various labor and other laws that would apply to employees. The Company disputes any allegations of wrongdoing and intends to continue to defend itself vigorously in these matters.
Other
The Company is subject to various other legal proceedings and actions in the normal course of business. In the opinion of management, based upon the information presently known, the ultimate liability, if any, arising from such pending legal proceedings, as well as from asserted legal claims and known potential legal claims which are likely to be asserted, taking into
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account established accrual for estimated liabilities (if any), are not expected to be material individually or in the aggregate to the consolidated financial condition, results of operations, or cash flows of the Company.
NOTE 13 — SEGMENT INFORMATION
The Company has one reportable segment: Tutoring. The Tutoring Segment generates revenue by selling services to individual Learners and Institutions for one-on-one instruction and small group tutoring that are fulfilled by Experts, who deliver instruction on its behalf through its proprietary Live Learning Platform. The Company does not have intra-entity sales or transfers.
The Company’s CODM is the Chief Executive Officer of the Company, who evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. The Company’s CODM assesses performance of the Tutoring Segment and decides how to allocate resources based on consolidated net loss that also is reported in the Condensed Consolidated Statements of Operations as “Net Loss.” Consolidated net loss is used to monitor budget versus actual results in order to assess the performance of the Tutoring Segment. The measure of segment assets is reported on the Condensed Consolidated Balance Sheets as “Total Assets.” The segment additions to property are reported in the Condensed Consolidated Statements of Cash Flows as “Capital expenditures.”
Substantially all of the Company’s tangible long-lived assets and revenues are located within the U.S. The Company does not have a customer that accounted for more than 10% of its consolidated net sales. See Note 4 for the Company’s revenue by business.
The following table presents information about the Company’s Tutoring Segment for the periods presented.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
Employee-related expense (excluding product and development expense) | |||||||||||||||||||||||
Marketing expense | |||||||||||||||||||||||
| Product and development expense | |||||||||||||||||||||||
Depreciation and amortization of intangible assets | |||||||||||||||||||||||
| Other segment items (a) | |||||||||||||||||||||||
Interest expense | |||||||||||||||||||||||
Interest income | ( | ( | ( | ( | |||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Segment Net Loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
(a)Other segment items consists of tutor acquisition costs, professional services expense, restructuring expense, rent expense, and other operating costs.
NOTE 14 — SUBSEQUENT EVENT
Wind-Down of Varsity Tutors for Schools
On July 31, 2026, subsequent to the end of the period, the Company committed to a plan to wind down its Varsity Tutors for Schools offering and business line, which leveraged its next-generation live tutoring and intervention platform capabilities to offer high-dosage tutoring and its online learning solutions to education systems (“Institutions”). In connection with the wind-down, the Company estimates it will incur exit-related costs of approximately $2,000 to $4,000 , consisting of employee severance and other employee termination benefits, contract termination costs, asset impairment charges, and other exit-related costs. The Company expects to recognize substantially all of these costs during the third quarter of 2026. No adjustment has been made to the condensed consolidated financial statements as of and for the three and six months ended June 30, 2026. Varsity Tutors for Schools revenue, included within Institutional revenue in Note 4, was $4,311 and $10,339 for the three and six months ended June 30, 2026, respectively.
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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, historically, 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 have included our legacy Varsity Tutors for Schools, a product suite that leveraged 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.
ABANDONMENT OF FIRST TUTORS
In the second quarter of 2026, we made a strategic decision to abandon the First Tutors business, which is operated by EduNation Limited, a limited company incorporated in England and Wales. We will no longer sell new services under the First Tutors trade name, and we are directing resources toward the growth of our core business. In connection with this abandonment, we recorded write-offs of the First Tutors trade name along with other assets and liabilities.
WIND-DOWN OF VARSITY TUTORS FOR SCHOOLS
On July 31, 2026, subsequent to the end of the period, we committed to a plan to wind down our Varsity Tutors for Schools offering and business line. In connection with the wind-down, the Company estimates it will incur exit-related costs of approximately $2,000 thousand to $4,000 thousand, consisting of employee severance and other employee termination benefits, contract termination costs, asset impairment charges, and other exit-related costs. The Company expects to recognize substantially all of these costs during the third quarter of 2026. No adjustment has been made to the condensed consolidated financial statements as of and for the three and six months ended June 30, 2026. Varsity Tutors for Schools revenue, included within Institutional revenue below, was $4,311 thousand and $10,339 thousand for the three and six months ended June 30, 2026, respectively.
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
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of June 30, 2026 was lower when compared to June 30, 2025, the rate of decline has narrowed sequentially for four consecutive quarters 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 | June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 | March 31, 2025 | |||||||||||||||||||||||||||||
| Active Members | 29.1 | 36.9 | 33.2 | 34.3 | 30.6 | 40.5 | |||||||||||||||||||||||||||||
YoY change | (5)% | (9)% | (11)% | (14)% | (14)% | (12)% | |||||||||||||||||||||||||||||
“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 June 30, 2026 was higher when compared to June 30, 2025, primarily driven by price increases enacted in February 2025.
ARPM in ones | June 30, 2026 | March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 | March 31, 2025 | |||||||||||||||||||||||||||||
ARPM | $ | 366 | $ | 374 | $ | 364 | $ | 374 | $ | 348 | $ | 335 | |||||||||||||||||||||||
YoY change | 5% | 12% | 21% | 24% | 24% | 14% | |||||||||||||||||||||||||||||
“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 and six months ended June 30, 2026 decreased when compared to the prior year periods. This decrease was primarily due to lower Consumer Active Experts, driven by 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 June 30, 2026 is sufficient to meet our near-term growth objectives.
| Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||||||||
Active Experts in thousands | 2026 | 2025 | % | 2026 | 2025 | % | |||||||||||||||||||||||||||||
| Active Experts | 8.4 | 9.7 | (13)% | 9.8 | 12.1 | (19)% | |||||||||||||||||||||||||||||
RESULTS OF OPERATIONS
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| dollars in thousands | 2026 | % | 2025 | % | 2026 | % | 2025 | % | |||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 43,231 | 100 | % | $ | 45,263 | 100 | % | $ | 91,966 | 100 | % | $ | 92,858 | 100 | % | |||||||||||||||||||||||||||||||
| Cost of revenue | 15,247 | 35 | % | 17,421 | 38 | % | 31,708 | 34 | % | 37,405 | 40 | % | |||||||||||||||||||||||||||||||||||
| Gross Profit | 27,984 | 65 | % | 27,842 | 62 | % | 60,258 | 66 | % | 55,453 | 60 | % | |||||||||||||||||||||||||||||||||||
| Sales and marketing expenses | 11,571 | 27 | % | 13,558 | 30 | % | 25,728 | 28 | % | 29,343 | 32 | % | |||||||||||||||||||||||||||||||||||
| General and administrative expenses | 22,889 | 53 | % | 26,572 | 59 | % | 46,804 | 51 | % | 54,983 | 59 | % | |||||||||||||||||||||||||||||||||||
| Operating Loss | (6,476) | (15) | % | (12,288) | (27) | % | (12,274) | (13) | % | (28,873) | (31) | % | |||||||||||||||||||||||||||||||||||
| Interest expense | 672 | 1 | % | — | — | % | 1,332 | 1 | % | — | — | % | |||||||||||||||||||||||||||||||||||
| Interest income | (325) | — | % | (365) | (1) | % | (693) | — | % | (827) | (1) | % | |||||||||||||||||||||||||||||||||||
| Other (income) expense, net | (1) | — | % | 4 | — | % | 15 | — | % | 4 | — | % | |||||||||||||||||||||||||||||||||||
| Loss before Income Taxes | (6,822) | (16) | % | (11,927) | (26) | % | (12,928) | (14) | % | (28,050) | (30) | % | |||||||||||||||||||||||||||||||||||
| Income tax expense | 34 | — | % | 74 | — | % | 56 | — | % | 102 | — | % | |||||||||||||||||||||||||||||||||||
| Net Loss | (6,856) | (16) | % | (12,001) | (26) | % | (12,984) | (14) | % | (28,152) | (30) | % | |||||||||||||||||||||||||||||||||||
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Revenue
Revenue for the three months ended June 30, 2026 decreased when compared to the prior year period due to lower Consumer and Institutional revenue. The decrease in Consumer revenue was primarily driven by a lower Active Member count, partially offset by higher ARPM. As we began to lap the price increases enacted in February 2025, the rate of ARPM growth moderated year-over-year. Revenue for the six months ended June 30, 2026 decreased slightly when compared to the prior year period primarily due to lower Institutional revenue. Consumer revenue was relatively flat year-over-year as a lower Active Member count was offset by higher ARPM, which was primarily a result of price increases enacted in February 2025. Revenue for future periods will be impacted by the previously announced wind-down of Varsity Tutors for Schools.
While both current year periods were impacted by a lower Active Member count when compared to the corresponding prior year periods, the rate of decline has narrowed sequentially for four consecutive quarters, and we expect to return to positive Active Member growth by the end of 2026.
The following tables present our revenue by business category for the periods presented.
| Three Months Ended June 30, | Change | ||||||||||||||||||||||||||||||||||
| dollars in thousands | 2026 | % | 2025 | % | $ | % | |||||||||||||||||||||||||||||
| Consumer | $ | 36,452 | 84 | % | $ | 37,824 | 83 | % | $ | (1,372) | (4) | % | |||||||||||||||||||||||
| Institutional | 6,752 | 15 | % | 7,308 | 16 | % | (556) | (8) | % | ||||||||||||||||||||||||||
| Other | 27 | 1 | % | 131 | 1 | % | (104) | (79) | % | ||||||||||||||||||||||||||
| Revenue | $ | 43,231 | 100 | % | $ | 45,263 | 100 | % | $ | (2,032) | (4) | % | |||||||||||||||||||||||
| Six Months Ended June 30, | Change | ||||||||||||||||||||||||||||||||||
| dollars in thousands | 2026 | % | 2025 | % | $ | % | |||||||||||||||||||||||||||||
| Consumer | $ | 75,736 | 82 | % | $ | 75,837 | 81 | % | $ | (101) | — | % | |||||||||||||||||||||||
| Institutional | 16,046 | 17 | % | 16,688 | 18 | % | (642) | (4) | % | ||||||||||||||||||||||||||
| Other | 184 | 1 | % | 333 | 1 | % | (149) | (45) | % | ||||||||||||||||||||||||||
| Revenue | $ | 91,966 | 100 | % | $ | 92,858 | 100 | % | $ | (892) | (1) | % | |||||||||||||||||||||||
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 June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
dollars in thousands | 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | |||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 43,231 | $ | 45,263 | $ | (2,032) | (4)% | $ | 91,966 | $ | 92,858 | $ | (892) | (1)% | |||||||||||||||||||||||||||||||||
| Cost of revenue | 15,247 | 17,421 | 2,174 | 12% | 31,708 | 37,405 | 5,697 | 15% | |||||||||||||||||||||||||||||||||||||||
| Gross Profit | $ | 27,984 | $ | 27,842 | $ | 142 | 1% | $ | 60,258 | $ | 55,453 | $ | 4,805 | 9% | |||||||||||||||||||||||||||||||||
| % Margin | 65 | % | 62 | % | 66 | % | 60 | % | |||||||||||||||||||||||||||||||||||||||
Cost of revenue included amortization expense related to capitalized internal-use software of $584 thousand and $1,706 thousand for the three months ended June 30, 2026 and 2025, respectively, and $1,098 thousand and $3,367 thousand for the six months ended June 30, 2026 and 2025, respectively. Cost of revenue, gross profit, and gross margin improvements for the three and six months ended June 30, 2026 were primarily driven by lower amortization of capitalized internal-use software as a result of a charge for the abandonment of capitalized internal-use software that occurred in the fourth quarter of 2025. Cost of
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revenue, gross profit, and gross margin for three and six months ended June 30, 2026 were also positively impacted by lower Expert costs of $1,052 thousand and $3,428 thousand, respectively, when compared to the corresponding prior year periods.
Operating Expenses
The following table sets forth our operating expenses for the periods presented.
| Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
dollars in thousands | 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | |||||||||||||||||||||||||||||||||||||||
| Sales and marketing expenses | $ | 11,571 | $ | 13,558 | $ | (1,987) | (15)% | $ | 25,728 | $ | 29,343 | $ | (3,615) | (12)% | |||||||||||||||||||||||||||||||||
| General and administrative expenses | 22,889 | 26,572 | (3,683) | (14)% | 46,804 | 54,983 | (8,179) | (15)% | |||||||||||||||||||||||||||||||||||||||
| Total operating expenses | $ | 34,460 | $ | 40,130 | $ | (5,670) | (14)% | $ | 72,532 | $ | 84,326 | $ | (11,794) | (14)% | |||||||||||||||||||||||||||||||||
Sales and Marketing
Sales and marketing expenses for the three months ended June 30, 2026 and 2025 included non-cash stock-based compensation of $257 thousand and $330 thousand, respectively. Excluding these impacts, sales and marketing expenses decreased $1,914 thousand, or 14%. Sales and marketing expenses for the six months ended June 30, 2026 included non-cash stock-based compensation and restructuring costs of $553 thousand. Sales and marketing expenses for the six months ended June 30, 2025 included non-cash stock-based compensation and restructuring costs of $674 thousand and $193 thousand, respectively. Excluding these impacts, sales and marketing expenses decreased $3,301 thousand, or 12%. These decreases were 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 $9,764 thousand and $10,683 thousand for the three months ended June 30, 2026 and 2025, respectively, and $18,939 thousand and $21,417 thousand for the six months ended June 30, 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 June 30, 2026 included non-cash stock based compensation and restructuring costs of $3,596 thousand and $882 thousand, respectively. General and administrative expenses for the three months ended June 30, 2025 included non-cash stock based compensation of $7,208 thousand. Excluding these impacts, general and administrative expenses decreased $953 thousand, or 5%. General and administrative expenses for the six months ended June 30, 2026 included non-cash stock based compensation and restructuring costs of $9,278 thousand and $882 thousand, respectively. General and administrative expenses for the six months ended June 30, 2025 included non-cash stock based compensation and restructuring costs of $14,452 thousand and $455 thousand, respectively. Excluding these impacts, general and administrative expenses decreased $3,432 thousand, or 9%. We are applying AI systematically across the tech stack, helping drive continued cost reductions and improved unit economics.
Interest Expense
Interest expense for the three and six months ended June 30, 2026 was $672 thousand and $1,332 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 June 30, 2026 was $325 thousand, compared to interest income of $365 thousand in the same period in 2025. Interest income for the six months ended June 30, 2026 was $693 thousand, compared to interest income of $827 thousand in the same period in 2025. These decreases were driven by lower interest income on our cash balances during the current period.
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash
As of June 30, 2026 and December 31, 2025, we had cash and cash equivalents totaling $38,424 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
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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 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.
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 contractual obligations and commitments consist primarily of borrowings under our term loan and a lease arrangement. For information on our debt and lease obligations and the amount and timing of future payments, see Notes 12 and 13, respectively, within “Notes to Consolidated Financial Statements” in Part II, Item 8 of our 2025 Annual Report. There have been no material changes to our leasing arrangements previously disclosed in our 2025 Annual Report.
The following table sets forth our cash flows for the periods presented.
| Six Months Ended June 30, | |||||||||||
| dollars in thousands | 2026 | 2025 | |||||||||
| Cash used in: | |||||||||||
| Operating activities | $ | (6,525) | $ | (13,489) | |||||||
| Investing activities | (2,714) | (2,333) | |||||||||
| Financing activities | (250) | — | |||||||||
| Effect of Exchange Rate Change on Cash, Cash equivalents, and Restricted Cash | 18 | 3 | |||||||||
| Net Decrease in Cash, Cash Equivalents, and Restricted Cash | $ | (9,471) | $ | (15,819) | |||||||
Operating Activities
Cash used in operating activities for the six months ended June 30, 2026 decreased $6,964 thousand when compared to the same period in 2025, due to higher gross profit, coupled with lower sales and marketing and general and administrative expenses. These impacts were partially offset by lower Institutional bookings and by interest payments of $1,087 thousand made in connection with our term loan that originated in November 2025. Cash used in operating activities for the six months ended June 30, 2025 was impacted by the payment of a legal settlement of $2,000 thousand.
Investing Activities
Cash used in investing activities was $2,714 thousand and $2,333 thousand for the six months ended June 30, 2026 and 2025, respectively. Cash used in investing activities for both periods related to capital expenditures primarily for the development of internal use software and IT equipment.
Financing Activities
Cash used in financing activities for the six months ended June 30, 2026 was $250 thousand as we paid deferred financing fees previously incurred in connection with our term loan that was originated in November 2025. We did not have any financing activities during the six months ended June 30, 2025.
Debt Covenants
Our 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 we must maintain the greater of (i) $15,000 thousand of Qualified Cash (as defined in the loan agreement) or (ii) Qualified Cash that results in Remaining Months Liquidity (as defined in our loan agreement) of at least 6 months. Additionally, our outstanding borrowings must not exceed certain multiples of our TTM Contribution Margin. If at any time, the outstanding borrowings exceed the required multiple of our TTM Contribution Margin, we will be required to immediately repay principal until the outstanding borrowings are less than the applicable multiple. Our ability to access the maximum borrowing capacity under our term loan will require our future TTM Contribution Margin to exceed historical levels. As of June 30, 2026, we were in compliance with these covenants.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our critical accounting policies and estimates are more fully described in our 2025 Annual Report. There have been no material changes to our critical accounting policies and estimates previously disclosed in our 2025 Annual Report.
RECENTLY ISSUED ACCOUNTING STANDARDS
See Note 2 within “Notes to Condensed Consolidated Financial Statements (Unaudited)” in Part 1, Item 1 of this report for a discussion regarding recently issued accounting standards.
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
Certain statements in this report may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions, or strategies regarding the future, including our expectations with respect to: revenue and active member growth; enhancing the Learning Membership experience; AI-enabled productivity and operating leverage; or the sufficiency of our cash to fund future operations. Any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “approximately,” “believes,” “contemplates,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “outlook,” “plans,” “possible,” “potential,” “predicts,” “projects,” “should,” “seeks,” “will,” “would,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Our financial condition, results of operations, and cash flows may differ materially from those in the forward-looking statements as a result of various factors, including:
•our offerings continue to evolve, which makes it difficult to predict our future financial and operating results;
•our level of indebtedness, which could adversely affect our financial condition;
•our operating activities may be restricted as a result of covenants related to our term loan and failure to comply with these covenants could have a material adverse effect on us;
•our history of net losses and negative operating cash flows, which could require us to need other sources of liquidity;
•risks associated with our ability to acquire and retain customers, operate, and scale up our Consumer business;
•risks associated with the implementation of our plan to wind down Varsity Tutors for Schools, including the timing and amount of expected exit costs, our ability to realize anticipated benefits, and the impact on our business and results of operations;
•risks associated with our intellectual property, including claims that we infringe on a third-party’s intellectual property rights;
•risks associated with our classification of some individuals and entities we contract with as independent contractors;
•risks associated with the liquidity and trading of our securities;
•risks associated with payments that we may be required to make under the tax receivable agreement;
•litigation, regulatory, and reputational risks arising from the fact that many of our Learners are minors;
•changes in applicable law or regulation;
•the possibility of cyber-related incidents and their related impacts on our business and results of operations;
•risks associated with the development and use of artificial intelligence and related regulatory uncertainty;
•the possibility that we may be adversely affected by other economic, business, and/or competitive factors;
•risks associated with managing our growth; and
•other risks and uncertainties included under “Risk Factors” within Part II, Item 1A of this report and in our 2025 Annual Report filed with the SEC on February 26, 2026.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations. The outcome of the events described in
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these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” elsewhere in this report. Readers are urged to carefully review and consider the various disclosures made in this report and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Our exposure to market risk and foreign currency exchange rates are immaterial.
Interest Rate Risk
As of June 30, 2026 and December 31, 2025, we had outstanding principal value of indebtedness of $20,000 thousand related to outstanding borrowings under our Term Loan that bore interest at a weighted-average variable rate of 10.75%. A hypothetical 100 basis point change in interest rates would have had an immaterial impact on both interest expense and interest paid on variable rate debt during the three and six months ended June 30, 2026. We did not have any outstanding indebtedness during the three and six months ended June 30, 2025. For additional information regarding the Company’s debt, refer to Note 10 within “Notes to Condensed Consolidated Financial Statements” in Part I, Item 1 of this report.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of the Company, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2026. Based on that evaluation, the Company’s CEO and CFO concluded that, as of June 30, 2026, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Limitations on Effectiveness of Controls and Procedures
Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
Changes in Internal Control Over Financial Reporting
There were no significant changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
For information regarding our legal proceedings, refer to Note 12 within “Notes to Condensed Consolidated Financial Statements (Unaudited)” in Part I, Item 1 of this report, which is incorporated herein by reference.
ITEM 1A. RISK FACTORS.
In addition to the information set forth elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”) and the risk factors set forth below, you should carefully consider the risk factors we previously disclosed in our Annual Report on Form 10-K as of and for the year ended December 31, 2025 (the “2025 Annual Report”), filed with the SEC on February 26, 2026. Except as set forth below, there have been no material changes to the risk factors previously disclosed in our 2025 Annual Report. These risks could materially and adversely affect our business, financial condition, results of operations, and cash flows. However, these risks are not the only risks we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business, financial condition, results of operations, and cash flows.
Risks Related to the Ownership of Class A Common Stock, Our Status as a Public Company, and the Tax Receivable Agreement
We cannot assure you that a proposed reverse stock split, if effected, will increase the trading price of our Class A Common Stock. There can be no assurance that the total market capitalization of our Class A Common Stock (the aggregate value of all of our outstanding Class A Common Stock at the then market price after a reverse stock split) will be equal to or greater than the total market capitalization before a reverse stock split, or that the per share market price of our Class A Common Stock following a reverse stock split will either equal or exceed the current per share market price.
On March 5, 2026, we received a letter (the “Letter”) from the New York Stock Exchange (the “NYSE”) notifying us that we were not in compliance with Rule 802.01C of the NYSE’s Listed Company Manual because the minimum average closing price for our Class A Common Stock had been below $1.00 per share for the previous 30 consecutive trading-day period and therefore no longer complied with the minimum bid price requirement for continued listing on the NYSE. The Letter had no immediate effect on our listing on the NYSE or on the trading of our Class A Common Stock. The Letter provided us with a six-month compliance period, or until September 5, 2026, to regain compliance. We can regain compliance at any time within the six-month compliance period if on the last trading day of any calendar month during the compliance period our Class A Common Stock has a closing share price of at least $1.00 per share and an average closing share price of at least $1.00 per share over the 30 trading-day period ending on the last trading day of that month.
On June 30, 2026, the closing sale price of our Class A common stock, par value $0.0001 per share (our “Class A Common Stock”) on the New York Stock Exchange (the“NYSE”) was $0.92 per share. Reducing the number of outstanding shares of our Common Stock through a reverse stock split, if our board decides to proceed with a reverse stock split, is intended to increase the per share trading price of our Class A Common Stock to exceed the minimum bid price requirement for continued listing on the NYSE for at least the required period of time. However, we cannot assure you that the market price per share of our Class A Common Stock after a reverse stock split will rise or remain constant in proportion to the reduction in the number of shares of Class A Common Stock outstanding before a reverse stock split. Even if we implement a reverse stock split, the per share trading price of our Class A Common Stock may decrease due to factors unrelated to a reverse stock split. The effect of a reverse stock split on the per share trading price of our Class A Common Stock cannot be predicted with any certainty, and the history of reverse stock splits for other companies is varied, particularly since some investors may view a reverse stock split negatively. In many cases, the market price of a company’s shares declines after a reverse stock split, or the market price of a company’s shares immediately after a reverse stock split does not reflect a proportionate or mathematical adjustment to the market price based on the ratio of the reverse stock split. Other factors, such as our financial results, market conditions and the market perception of our business, may adversely affect the per share trading price of our Class A Common Stock. Accordingly, the total market capitalization of our Class A Common Stock and the Company after a reverse stock split may be lower than the total market capitalization before a reverse stock split, and it is possible that a reverse stock split may not result in a per share trading price that would attract investors who do not trade in lower priced stocks. As a result, there can be no assurance that a reverse stock split, if completed, will result in the benefits that we anticipate or that the per share trading price of our Common Stock will not decrease in the future.
A proposed reverse stock split may decrease the liquidity of our Class A Common Stock and result in higher transaction costs.
The liquidity of our Class A Common Stock may be negatively impacted by a reverse stock split, given the reduced number of shares that would be outstanding after a reverse stock split, particularly if the per share trading price of our Class A Common Stock does not increase proportionately as a result of a reverse stock split. In addition, if a reverse stock split is
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implemented, it will increase the number of our stockholders who own “odd lots” of fewer than 100 shares of Class A Common Stock. Brokerage commission and other costs of transactions in odd lots are generally higher than the costs of transactions of more than 100 shares of Class A Common Stock. Further, although we believe a reverse stock split may enhance the marketability of our Class A Common Stock to certain potential investors, we cannot assure you that, if implemented, our Class A Common Stock will be more attractive to investors. While our board believes that a higher stock price may help generate the interest of new investors, a reverse stock split may not result in a per-share price that will attract certain types of investors, such as institutional investors or investment funds, and such share price may not satisfy the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of our Common Stock may not improve as a result of a reverse stock split and could be adversely affected by a higher per share price. Accordingly, a reverse stock split may not achieve the desired results of increasing marketability of our common stock.
Even if a reverse stock split is effected, we may not be able to satisfy all of the other requirements for continued listing of our Class A Common Stock on the NYSE or any other stock exchange.
Our board is submitting a reverse stock split proposed to our stockholders for approval with the primary intent of increasing the market price and minimum bid price of our Class A Common Stock to regain and maintain compliance with the listing requirements of the NYSE and to make our Class A Common Stock more attractive to a broader range of institutional and other investors. However, continued listing on such exchange requires compliance with a variety of other qualitative and quantitative listing standards. Even if we effect a reverse stock split, we may not be able to satisfy or maintain listing requirements on the NYSE or any other stock exchange. We cannot provide any assurances that we will be able to maintain a listing of the Class A Common Stock on the NYSE or any other stock exchange.
As we would not reduce the number of authorized shares of preferred stock, a reverse stock split could make a change of control more difficult because we will have the right to issue proportionally more shares.
A reverse stock split will not change the number of authorized shares of our preferred stock, as designated by our certificate of incorporation. Our certificate of incorporation authorizes us to issue one or more series of preferred stock, which we are not changing in a reverse stock split. Our board has the authority to determine the rights, preferences, and privileges of, and restrictions on, the shares of preferred stock and to fix the number of shares constituting any series and the designation of such series (but not below the number of shares of such series then outstanding), without any further vote or action by our stockholders. Our Preferred Stock could be issued with voting, liquidation, dividend and other rights superior to the rights of our Common Stock. The potential issuance of preferred stock may delay or prevent a change in control of us, discouraging bids for our Class A Common Stock at a premium to the market price, and materially and adversely affect the market price and the voting and other rights of the holders of our Common Stock.
A reverse stock split would not be recommended by our board as part of an anti-takeover strategy, but rather its principal purpose is for our Company to maintain compliance with the NYSE’s listing standards to maintain the listing of our Class A Common Stock and to make such shares more attractive to a broader group of investors.
ITEM 5. OTHER INFORMATION.
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the three months ended June 30, 2026, no director or “officer,” as defined in Rule 16a-1(f) under the Exchange Act, of the Company adopted, terminated
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ITEM 6. EXHIBITS.
The following exhibits are either provided with this Form 10-Q or are incorporated herein by reference.
Exhibit No. | Description | |||||||
| 3.1 | Certificate of Incorporation of Nerdy Inc. (incorporated by reference to Exhibit 3.1 filed with the Company’s Form 8-K filed on September 24, 2021 (File No. 001-39595)). | |||||||
| 3.2 | Bylaws of Nerdy Inc. (incorporated by reference to Exhibit 3.2 filed with the Company’s Form 8-K filed on September 24, 2021 (File No. 001-39595)). | |||||||
| †10.1 | Executive Services Agreement, dated as of February 23, 2026, by and between Atul Bagga and Nerdy Inc, Nerdy LLC, and Live Learning Technologies Shared Resources LLC (incorporated by reference to Exhibit 10.1 filed with the Company’s Form 8-K filed on April 6, 2026 (File No. 001-39595)). | |||||||
| †10.2 | Consulting Agreement, Departure Agreement, and General Release, dated as of May 21, 2026, by and between Jason Pello and Nerdy Inc., Nerdy LLC, Varsity Tutors LLC, Varsity Tutors for Schools LLC, and Live Learning Technologies Shared Resources LLC (incorporated by reference to Exhibit 10.1 filed with the Company’s Form 8-K filed on May 22, 2026 (File No. 001-39595)). | |||||||
| 31.1 | Certification of Charles Cohn pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 6, 2026. | |||||||
| 31.2 | Certification of Atul Bagga pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 6, 2026. | |||||||
| * 32.1 | Certification of Charles Cohn and Atul Bagga, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated August 6, 2026. | |||||||
| 101 | Interactive Data File (Form 10-Q for the quarterly period ended June 30, 2026 filed in iXBRL (Inline eXtensible Business Reporting Language)). The financial information contained in the iXBRL-related documents is “unaudited” and “unreviewed.” | |||||||
| 104 | The cover page from the Company’s Form 10-Q for the quarterly period ended June 30, 2026, formatted in iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101. | |||||||
† These exhibits constitute management contracts, compensatory plans, and arrangements.
* These certifications are deemed not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Nerdy Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Nerdy Inc. | ||||||||
Date: August 6, 2026 | By: | /s/ Kyle Callaway | ||||||
| Name: Kyle Callaway | ||||||||
| Title: Chief Accounting Officer | ||||||||
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