NerdWallet Shares Plummet 22.4% Despite Strong Q1 Earnings Report

Despite reporting strong Q1 2023 earnings, NerdWallet, Inc.’s (Nasdaq: NRDS) stock dropped $9.70, or 22.4%, to $2.80 today, as investors reacted to the company’s financial outlook for Q2 2023. NerdWallet, a leading platform providing financial guidance to consumers and small to mid-sized businesses (SMBs), announced its financial results for the first quarter of 2023, which ended on March 31, 2023.

First Quarter 2023 Results

The company reported a revenue of $169.6 million, marking a 31% increase year-over-year, with GAAP net income of $1.7 million and $0.02 income per diluted share. Adjusted EBITDA for Q1 was $20.9 million.

NerdWallet’s Board of Directors approved a share repurchase plan, authorizing a $20 million buyback with no expiration date. Despite the volatile economic climate, the company has managed to maintain steady growth by focusing on expanding its financial guidance across verticals and acquisition channels, and investing in consumer experiences to drive continued growth in registrations and engagement.

Tim Chen, Co-Founder and CEO of NerdWallet, stated, “We plan to operate with a long-term orientation, investing in areas with both immediate and future payoffs, while applying additional scrutiny to increase our near-term flexibility.”

The company’s first-quarter highlights include:

• Credit cards revenue growth of 36% year-over-year, reaching $61.3 million. This is attributed to increasing brand awareness, consumer intent, and deep alignment with partners.
• Loans revenue decline of 36% year-over-year, totaling $22.0 million. This is primarily due to decreases in mortgages and student loans driven by increasing interest rates and macroeconomic headwinds, partially offset by growth in personal loans.
• Other verticals revenue, such as banking, insurance, and SMB products, saw a significant increase of 74% year-over-year, reaching $86.3 million.
• Monthly Unique Users (MUUs) rose by 7% year-over-year, with 23 million average users, as the company experienced strong engagement in banking and travel products, along with its acquisition of OTB in July 2022. However, the challenging macroeconomic environment resulted in declines in mortgages and investing.

Revenue ($ Millions) Trend

Monthly Unique Users (Millions)

Lauren StClair, CFO of NerdWallet, expressed her satisfaction with the company’s strong start to 2023, saying, “As we anticipate macro pressures ahead, NerdWallet continues to operate with efficiency and relentless improvement. We strive to operate a sustainable and profitable business, and our focus remains on delivering long-term value.”

Financial Outlook for Q2 2023

NerdWallet has provided a financial outlook for the second quarter of 2023, projecting Q2 revenue to be between $134 and $141 million, representing a 10% year-over-year growth at the midpoint. The company also anticipates Q2 Adjusted EBITDA to fall between $17 and $19 million. Despite expecting near-term macro headwinds in areas such as credit cards and insurance, which could pressure revenue growth compared to Q1 2023 levels, NerdWallet remains focused on delivering profitability to ensure investment flexibility and drive sustainable growth across credit cycles. The company acknowledges that there may be variability in its quarterly margins but expects a year-over-year increase in its 2023 annual Adjusted EBITDA margin.