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What changed in NERDWALLET, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of NERDWALLET, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+318 added−289 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-23)

Top changes in NERDWALLET, INC.'s 2023 10-K

318 paragraphs added · 289 removed · 244 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

49 edited+7 added−6 removed96 unchanged
Biggest changeThe SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at the following address: https://www.sec.gov . 13 Table of Contents In addition, we routinely post on our investor relations website news releases, announcements and other statements about our business and results of operations, some of which may contain information that may be deemed material to investors.
Biggest changeIn addition, we routinely post on our investor relations website news releases, announcements and other statements about our business and results of operations, some of which may contain information that may be deemed material to investors. Therefore, we encourage investors to monitor the https://investors.nerdwallet.com website and review the information we post on that page.
Even among the newest Gen Z consumers, many of whom may not have much experience with personal finance or even own a credit card, 89% surveyed in a 2021 Tallo study said that it’s a priority for them to learn about personal finance and 75% are interested in taking personal finance classes.
Even among the newest Gen Z consumers, many of whom may not have much experience with personal finance or own a credit card, 89% surveyed in a 2021 Tallo study said that it’s a priority for them to learn about personal finance and 75% are interested in taking personal finance classes.
Consumers can get a holistic view of their finances, and hone in on specific details about their spending and saving patterns across accounts.
Consumers can get a holistic view of their finances, and hone in on specific details about their spending and saving patterns across accounts.
This rigorous three-year route to certification features a data-driven and comprehensive plan to drive and support racial equity at NerdWallet. • We use a third-party platform to analyze our employee salaries for gaps based on race or gender twice a year. • Offering Learning and Activism Days to inspire and encourage Nerds to grow and give back to their communities.
This rigorous three-year route to certification features a data-driven and comprehensive plan to drive and support racial equity at NerdWallet. • We use a third-party platform to analyze our employee salaries for gaps based on race or gender twice a year. • Offering Learning and Activism Days to inspire and encourage Nerds to learn,grow and give back to their communities.
Diversity, Equity and Inclusion At NerdWallet, we aspire to provide people with the confidence they need to live their best lives—however they identify. For our consumers, this means building their financial confidence.
Diversity, Equity, Inclusion and Belonging At NerdWallet, we aspire to provide people with the confidence they need to live their best lives—however they identify. For our consumers, this means building their financial confidence.
As a result, consumers are exposed to our financial services partners’ products at various points in their financial journey, increasing the value of our platform both to consumers and financial services partners. 6 Table of Contents Our Growth Pillars We believe our ability to execute against our strategy and invest in our three pillars of growth- “Land and Expand,” “Vertical Integration,” and “Registrations and Data-Driven Engagement''- helps us advance toward becoming a trusted financial ecosystem.
As a result, consumers are exposed to our financial services partners’ products at various points in their financial journey, increasing the value of our platform both to consumers and financial services partners. 6 Table of Contents Our Growth Pillars We believe our ability to execute against our strategy and invest in our three pillars of growth- “Land and Expand,” “Vertical Integration,” and “Registrations and Data-Driven Engagement”- helps us advance toward becoming a trusted financial ecosystem.
Item 1. Business. Overview NerdWallet provides trustworthy financial guidance to consumers and small and mid-sized businesses (SMBs). Our mission is to provide clarity for all of life’s financial decisions. Our vision is a world where everyone makes financial decisions with confidence. At NerdWallet, we empower consumers—both individual consumers and SMBs—to make smarter financial decisions with confidence via our digital platform.
Item 1. Business. Overview NerdWallet provides trustworthy financial guidance to consumers and small and mid-sized businesses (SMBs). Our mission is to provide clarity for all of life’s financial decisions. Our vision is a world where everyone makes financial decisions with confidence. At NerdWallet, we empower consumers—both individuals and SMBs—to make smarter financial decisions with confidence via our digital platform.
While our expertise and personalized guidance is helpful for consumers at all stages of the financial decision-making process, many of the consumers that use NerdWallet are already poised to make a transaction, using NerdWallet as the final check.
While our expertise and personalized guidance is helpful for consumers at all stages of the financial decision-making process, we believe many of the consumers that use NerdWallet are already poised to make a transaction, using NerdWallet as the final check.
We also believe there is significant potential for us to grow the global reach of our platform. Our success in the United States and our strong brand give us a solid foundation to expand our international footprint in markets like the United Kingdom in 2020, Canada in 2021 and most recently, Australia. • Vertical Integration.
We also believe there is significant potential for us to grow the global reach of our platform. Our success in the United States and our strong brand give us a solid foundation to expand our international footprint in markets like the United Kingdom in 2020, Canada in 2021 and Australia in 2022. • Vertical Integration.
As a result, aspects of our business are potentially subject to a variety of U.S., UK and Canadian laws and regulations, including: • The Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act (FCRA), Fair and Accurate Credit Transactions Act of 2003, the Fair Housing Act, the Real Estate Settlement Procedures Act, and similar state laws, all of which place certain restrictions on the manner in which mortgages and other consumer loans are marketed and originated, and some of which impose restrictions on the amount and nature of fees that may be charged to lenders and real estate professionals for providing or obtaining consumer loan requests; • The Dodd-Frank Wall Street Reform and Consumer Protection Act, which imposes, among other things, a broad prohibition on Unfair, Deceptive and Abusive Acts and Practices (UDAAPs) in connection with consumer financial products and services, limitations on fees charged by mortgage lenders, and requirements related to mortgage disclosures and is enforced by the Consumer Financial Protection Bureau and state regulatory authorities; • The Federal Trade Commission Act (FTC Act), which, among other things, imposes a broad prohibition on Unfair and Deceptive Acts and Practices in or affecting commerce, and is enforced by the Federal Trade Commission and Canada’s Competition Act; • State laws that impose prohibitions on Unfair, Deceptive and Abusive Acts and Practices similar to the Dodd-Frank Act and FTC Act’s prohibitions; • Federal, state and provincial licensing laws; • Federal and state laws, which impose restrictions on activities conducted through telephone, mail, email, mobile device or the Internet, including the Telemarketing Sales Rule, the Telephone Consumer Protection Act, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, and Canada’s Anti-Spam Legislation (CASL); • Federal and state laws relating to offering of credit repair services to consumers, including such laws that impose restrictions on the usage and storage of consumer credit information such as the Credit Repair Organizations Act and the FCRA; • Federal and state laws and regulations relating to data privacy and security, such as the Gramm-Leach-Bliley Act and the California Consumer Privacy Act (CCPA), which impact how we collect, use, store, share and otherwise process personal information of consumers and other individuals; • Recent state laws regulating data privacy and security such as the CCPA; and • Foreign laws and regulations relating to data privacy and security, such as the UK General Data Protection Regulation, the UK Data Protection Act 2018 and the General Data Protection Regulation 2016/679, each of which regulates our collection, processing, disclosure and other use of data relating to identifiable living individuals (personal data).
As a result, aspects of our business are potentially subject to a variety of U.S., UK and Canadian laws and regulations, including: • The Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act (FCRA), Fair and Accurate Credit Transactions Act of 2003, the Fair Housing Act, the Real Estate Settlement Procedures Act, and similar state laws, all of which place certain restrictions on the manner in which mortgages and other consumer loans are marketed and originated, and some of which impose restrictions on the amount and nature of fees that may be charged to lenders and real estate professionals for providing or obtaining consumer loan requests; • The Dodd-Frank Wall Street Reform and Consumer Protection Act, which imposes, among other things, a broad prohibition on Unfair, Deceptive and Abusive Acts and Practices (UDAAPs) in connection with consumer financial products and services, limitations on fees charged by mortgage lenders, and requirements related to mortgage disclosures and is enforced by the Consumer Financial Protection Bureau and state regulatory authorities; • The Federal Trade Commission Act (FTC Act), which, among other things, imposes a broad prohibition on Unfair and Deceptive Acts and Practices in or affecting commerce, and is enforced by the Federal Trade Commission and Canada’s Competition Act; • State laws that impose prohibitions on Unfair, Deceptive and Abusive Acts and Practices similar to the Dodd-Frank Act and FTC Act’s prohibitions; • Federal, state and provincial licensing laws; • Federal and state laws, which impose restrictions on activities conducted through telephone, mail, email, mobile device or the Internet, including the Telemarketing Sales Rule, the Telephone Consumer Protection Act, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, and Canada’s Anti-Spam Legislation (CASL); • Federal and state laws relating to offering of credit repair services to consumers, including such laws that impose restrictions on the usage and storage of consumer credit information such as the Credit Repair Organizations Act and the FCRA; • Federal and state laws and regulations relating to data privacy and security, such as the Gramm-Leach-Bliley Act and the California Consumer Privacy Act (CCPA), which impact how we collect, use, store, share and otherwise process personal information of consumers and other individuals; • Recent state laws regulating data privacy and security such as the CCPA; and • Foreign laws and regulations relating to data privacy and security, such as the UK General Data Protection Regulation, the UK Data Protection Act 2018 and the General Data Protection Regulation 2016/679, each of which regulates our collection, processing, disclosure and other use of data relating to identifiable living individuals (personal data). 13 Table of Contents Available Information We maintain an investor relations website at the following address: https://investors.nerdwallet.com .
We believe we compete favorably due to the breadth and depth of our financial guidance, the trust we’ve built with our consumers, and our brand, organic traffic, convenience and simplicity. Intellectual Property We believe that our intellectual property rights are valuable and important to our business.
We believe we compete favorably due to the breadth and depth of our financial guidance, the trust we’ve built with our consumers, and our brand, organic traffic, convenience and simplicity. 12 Table of Contents Intellectual Property We believe that our intellectual property rights are valuable and important to our business.
Through our platform, our financial services partners can reach a substantial audience—we had 20 million Monthly Unique Users (MUUs) per month on average in 2022. After doing research on our platform, these consumers are better informed about the financial decision they’re about to make and often primed and ready to transact.
Through our platform, our financial services partners can reach a substantial audience—we had 23 million Monthly Unique Users (MUUs) per month on average in 2023. After doing research on our platform, these consumers are better informed about the financial decision they’re about to make and often primed and ready to transact.
For 13 years, NerdWallet has strived to provide consumers with clarity for all of their financial decisions: cutting through jargon, parsing terms and conditions, and simplifying complex ideas so consumers can make informed decisions about their money and pursue lives well-spent. As a mission-driven, consumer-first company, we have long had a company culture oriented towards being responsible and socially conscious.
Since 2009, NerdWallet has strived to provide consumers with clarity for all of their financial decisions: cutting through jargon, parsing terms and conditions, and simplifying complex ideas so consumers can make informed choices about their money and pursue lives well-spent. As a mission-driven, consumer-first company, we have long had a company culture oriented towards being responsible and socially conscious.
We have made significant progress in our efforts, and since 2016, we have started converting unique users into Registered Users that utilize our consumer decisioning tools and increased machine learning functionality. We had Registered Users of 8 million as of December 31, 2020, over 10 million as of December 31, 2021 and 14 million as of December 31, 2022.
We have made significant progress in our efforts, and since 2016, we have started converting unique users into registered users that utilize our consumer decisioning tools and increased machine learning functionality. We had registered users of 10 million as of December 31, 2021, over 14 million as of December 31, 2022 and over 19 million as of December 31, 2023.
Today, we have financial services partners in eight financial verticals: credit cards, mortgages, insurance, SMB products, personal loans, banking, investing and student loans. We partner with over 400 organizations, ranging from the largest financial services providers to the most disruptive startups.
Today, we have financial services partners in eight financial verticals: credit cards, mortgages, insurance, SMB products, personal loans, banking, investing and student loans. We partner with hundreds of organizations, ranging from the largest financial services providers to the most disruptive startups.
Once employees are at NerdWallet we invest in their well-being and development offering competitive compensation and benefits and opportunities for career growth. • Training, Learning and Development - In line with our Relentless Self-Improvement value, we encourage our employees to seek out professional development opportunities and we provide them with a yearly education stipend.
Once employees are at NerdWallet we invest in their well-being and development offering competitive compensation and benefits, opportunities for career growth, and inclusion and belonging programming. • Training, Learning and Development - In line with our Relentless Self-Improvement value, we encourage our employees to seek out professional development opportunities and we provide them with a yearly career enrichment stipend.
Similar to the vertical integration approach utilized with Fundera, we expect that by pairing On the Barrelhead’s loan matching platform with NerdWallet’s trusted brand and massive reach, we can offer our users more personalized and compelling recommendations, leading to better customer experiences and improved monetization. • Registration and Data-Driven Engagement.
Similar to the vertical integration approach utilized with Fundera, we believe that by pairing On the Barrelhead’s loan matching platform with NerdWallet’s trusted brand and massive reach, we can offer our users more personalized and compelling recommendations, leading to better customer experiences and improved monetization.
As of December 31, 2022, we had over 770 full‑time employees, of which approximately 92% are located throughout the United States and 8% are located internationally. None of our employees are represented by a labor union or covered by collective bargaining agreements. We consider our relationship with our employees to be good and have not experienced any work stoppages.
As of December 31, 2023, we had over 730 full‑time employees, of which approximately 95% are located throughout the United States and 5% are located internationally. None of our employees are represented by a labor union or covered by collective bargaining agreements. We consider our relationship with our employees to be good and have not experienced any work stoppages.
Benefits that we provide to our financial services partners include: • Huge Audience and Reach, with an Average of 20 million Consumers Turning to the Nerds This Year. During 2022, we averaged 20 million MUUs, up 4% from 2021.
Benefits that we provide to our financial services partners include: • Huge Audience and Reach, with an Average of 23 million Consumers Turning to the Nerds This Year. During 2023, we averaged 23 million MUUs, up 15% from 2022.
Our commitments are a natural extension of our mission and while ESG considerations have been part of the NerdWallet story since our inception, our 2022 ESG report has allowed us to articulate our vision and priorities clearly, and it will ensure we hold ourselves accountable for progress on critical ESG initiatives.
Our commitments are a natural extension of our mission and while ESG considerations have been part of the NerdWallet story since our inception, this report allows us to articulate our vision and priorities clearly, and it ensures we hold ourselves accountable for progress on critical ESG initiatives.
Our commitments are a natural extension of our mission and while ESG considerations have been part of the NerdWallet story since our inception, our 2022 ESG report has allowed us to articulate our vision and priorities clearly, and it will ensure we hold ourselves accountable for progress on critical ESG initiatives.
Our commitments are a natural extension of our mission and while ESG considerations have been part of the NerdWallet story since our inception, our ESG reports allow us to articulate our vision and priorities clearly, and ensure we hold ourselves accountable for progress on critical ESG initiatives.
We want our employees to feel invested in the future of NerdWallet by offering all full-time employees equity-based compensation upon hire and through annual performance equity grants. 11 Table of Contents • Comprehensive Healthcare and Other Benefits - In order to attract, engage and retain our employees, we offer a wide array of benefits to help achieve life balance: ◦ Comprehensive healthcare including medical, dental, vision, life and disability insurance plans; ◦ Flexible paid time off and flexible work schedules; ◦ Mental health benefits and Company mental health days off in addition to an annual week-long Company shutdown at the end of the calendar year; ◦ Remote-first work environment; ◦ Generous parental leave; ◦ Country-specific retirement or pension plans, with a match for U.S. 401(k) plan contributions; ◦ Employee Stock Purchase Plan (ESPP); ◦ Access to certified financial planners; ◦ Referral bonus program for recruiting new Nerds; ◦ Charitable matching program, matching of up to $1,000 of employee donations per calendar year; and ◦ Access to online and automated legal services.
We want our employees to feel invested in the future of NerdWallet by offering the majority of full-time employees equity-based compensation upon hire and through annual performance equity grants. • Comprehensive Benefits and Perks - In order to attract, engage and retain our employees, we offer a wide array of benefits and perks to promote their health and well-being, including: ◦ Medical, dental, vision, life and disability insurance plans; ◦ Flexible paid vacation and sick time off and flexible work schedules; ◦ Mental health benefits and Company mental health days off in addition to an annual week-long Company shutdown at the end of the calendar year; ◦ Remote-first work environment; ◦ Parental leave; ◦ Country-specific retirement or pension plans, with a match for U.S. 401(k) plan contributions; ◦ Employee Stock Purchase Plan (ESPP); ◦ Access to financial wellness guidance from certified financial planners; ◦ Referral bonus program for recruiting new Nerds; ◦ Charitable matching program and volunteer time off, and; ◦ Access to online and automated legal services.
We generated a net loss of $10.2 million for 2022, which decreased 76% from a net loss of $42.5 million for 2021. 3 Table of Contents Industry Trends in Our Favor Many trends are transforming the way consumers and SMBs manage their finances and several of these trends accelerated during the COVID-19 pandemic, creating tailwinds in our industry.
We generated a net loss of $11.8 million for 2023, which increased 16% from a net loss of $10.2 million for 2022. 3 Table of Contents Industry Trends in Our Favor Many trends are transforming the way consumers and SMBs manage their finances and several of these trends accelerated in 2020 during the COVID-19 pandemic, creating tailwinds in our industry.
Consumers Manage Their Lives Digitally, and Financial Wellness is at the Forefront of This Change Increasingly, consumers use a digital-first approach to managing their lives: they manage appointments, book vacations, plan events and shop using apps and this has been especially true in the wake of the COVID-19 pandemic.
Consumers Manage Their Lives Digitally, and Financial Wellness is at the Forefront of This Change Increasingly, consumers use a digital-first approach to managing their lives: they manage appointments, book vacations, plan events and shop using apps.
In addition, we provide in-house opportunities for career development, including in-depth training as part of our New Manager Lab and our Career Accelerator Program (CAP) and Leadership Empowerment Accelerator Program (LEAP) aimed to increase representation of underrepresented races and ethnicities, women in leadership and women in tech and propel underrepresented women into leadership positions. • Compensation - NerdWallet offers market-competitive compensation to attract employees and a pay-for-performance philosophy to engage and retain our employees.
In addition, we provide in-house opportunities for career development, including a job shadowing program, career conversations, cohort-based learning, on-demand courses, and in-depth training as part of our Career Accelerator Program (CAP) and Leadership Empowerment Accelerator Program (LEAP) aimed to increase representation of underrepresented races and ethnicities, women in leadership and women in tech and propel underrepresented women into leadership positions. 11 Table of Contents • Compensation - NerdWallet offers market-competitive compensation to attract employees and a pay-for-performance philosophy to engage and retain our employees.
We measure employee performance against these company values and measure employee engagement through surveys, and participation at all-hands and town hall style meetings with leadership. We’re consistently recognized as a Fortune “Best Place to Work” due to our competitive employee benefits, commitment to employee growth and empowerment, and our flexible workplace environment.
We measure employee performance against these company values and measure employee engagement through surveys, and participation at all-hands and town hall style meetings with leadership. We have been consistently recognized for our competitive employee benefits, commitment to employee growth and empowerment, and our flexible workplace environment.
We have trademark rights in our name, our logo, and other brand indicia, and have trademark registrations for select marks in the U.S. and many other jurisdictions around the world.
We have trademark rights in our name, our logo, and other brand indicia, and have trademark registrations for select marks in the U.S. and many other jurisdictions around the world. We also have registered domain names for websites that we use in our business.
In 2022, our SMB vertical achieved triple digit year-over-year growth as they successfully directed organic traffic through an efficient funnel. Given this success, we furthered our vertical integration efforts in 2022 through our acquisition of On the Barrelhead, a loan matching platform that provides consumers and SMBs with product recommendations.
In 2023, SMB products revenue grew 11% year-over-year despite a challenging loans macroeconomic environment as they successfully directed organic traffic through an efficient funnel. Given our success in SMB, we furthered our vertical integration efforts in 2022 through our acquisition of On the Barrelhead, a loan matching platform that provides consumers and SMBs with product recommendations.
By codifying insights from our award-winning editorial team, we are able to recommend smart money moves via contextual “nudges” for example, letting consumers know that the improvement in their credit score means that they could qualify for lower auto insurance rates. As a result, NerdWallet has become a one-stop-shop for consumers to track, manage and plan their financial futures.
By codifying insights from our award-winning editorial team, we are able to recommend smart money moves via contextual “nudges” for example, letting consumers know that the improvement in their credit score means that they could qualify for lower auto insurance rates.
We make this information available on our investor relations website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC.
These include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. We make this information available on our investor relations website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC.
Our revenue was $538.9 million and $379.6 million for 2022 and 2021, respectively, representing year-over-year growth of 42%.
Our revenue was $599.4 million and $538.9 million for 2023 and 2022, respectively, representing year-over-year growth of 11%.
Additionally, beyond enabling all elements of our consumer “Learn, Shop, Manage” product experience, our technology is key to keeping our platform secure and compliant.
Additionally, beyond enabling all elements of our consumer “Learn, Shop, Manage” product experience, our technology is key to keeping our platform secure and compliant. The key capabilities and features of our platform include Content Management, Partner Access, Recommendation Engine and Personal Financial Management.
Our Technology We built our scalable technology platform to serve both the growing number of consumers searching for financial products digitally and the increasing number of financial service providers looking to reach consumers with the right characteristics for any given product.
As a result, NerdWallet has become a one-stop-shop for consumers to track, manage and plan their financial futures. 8 Table of Contents Our Technology We built our scalable technology platform to serve both the growing number of consumers searching for financial products digitally and the increasing number of financial service providers looking to reach consumers with the right characteristics for any given product.
Attracting and retaining highly skilled, diverse talent is a key component of our burgeoning diversity, equity and inclusion efforts, and is absolutely critical to our success as a business and to fully realizing NerdWallet’s mission.
Talent Attraction, Recruitment and Retention Our remote-first culture allows us to reach, attract and retain more diverse talent across all levels of our organization. Attracting and retaining highly skilled, diverse talent is a key component of our burgeoning diversity, equity and inclusion efforts, and is absolutely critical to our success as a business and to fully realizing NerdWallet’s mission.
Through the wide range of guidance that we offer, consumers are exposed to relevant products outside of the one they are researching at a given time. For example, a consumer researching credit cards may see a relevant article regarding mortgages, then remember that article when they are in the market for a mortgage at a later date.
For example, a consumer researching credit cards may see a relevant article regarding mortgages, then remember that article when they are in the market for a mortgage at a later date.
More partners and more products serve to further increase the success rates of consumers using our platform, all of which drives our growth. This creates a unique value proposition for all constituents in our ecosystem, making our platform more valuable. Our Market Opportunity We have a substantial market opportunity in the growing global market for financial services.
This creates a unique value proposition for all constituents in our ecosystem, making our platform more valuable. 7 Table of Contents Our Market Opportunity We have a substantial market opportunity in the growing global market for financial services.
This increases user satisfaction, converting more users into Registered Users and improving repeat user rates. As we apply machine learning to match more high-quality consumers with products and services, our platform becomes increasingly valuable to financial services partners, too. This, in turn, attracts new partners and new financial products to the platform.
As we apply machine learning to match more high-quality consumers with products and services, our platform becomes increasingly valuable to financial services partners, too. This, in turn, attracts new partners and new financial products to the platform. More partners and more products serve to further increase the success rates of consumers using our platform, all of which drives our growth.
Our key initiatives include: • Offering learning sessions and resources for Nerds and managers to help build an inclusive workplace. • Supporting 5 employee-led employee resource groups, which provide supportive communities for various employee populations and their allies: NerdOut!, NerdParents, NerdWomen, Nerds of Color and NerdWallet Women in Data & Engineering. • We received Plan Approved status by Black Equity at Work from Management Leadership for Tomorrow (MLT).
Our key initiatives include: • Offering learning sessions and resources for Nerds and managers to help build an inclusive workplace. • Supporting eight employee-led employee resource groups, which provide supportive community and development opportunities for various employee populations and their allies: NerdOut, NerdFamilies, NerdWomen, Allyship, Asian Nerds, Black Nerds, Latino and Hispanic Nerds, and Women in Data and Engineering. • We began 2023 with a new bronze-level certification from Black Equity at Work from Management Leadership for Tomorrow.
Despite our efforts to protect our intellectual property rights, they may not be respected in the future or may be invalidated, circumvented, or challenged.
We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost-effective. Despite our efforts to protect our intellectual property rights, they may not be respected in the future or may be invalidated, circumvented, or challenged.
We make available on or through our investor relations website certain reports and amendments to those reports that we file with or furnish to the SEC in accordance with the Exchange Act. These include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K.
The information on our investor relations website is not incorporated by reference in this report. We make available on or through our investor relations website certain reports and amendments to those reports that we file with or furnish to the SEC in accordance with the Exchange Act.
For our Nerds, this means fostering an inclusive culture that allows all Nerds to be their authentic selves, grow their skills, contribute, and thrive with the confidence of belonging. Our three-year DEI goal involves continually increasing representation among women in leadership and women in tech, and in the U.S. across underrepresented races and ethnicities.
For our Nerds, this means fostering an inclusive culture that allows all Nerds to be their authentic selves, grow their skills, contribute, and thrive with the confidence of belonging.
With better machine learning, we believe our recommendations and contextual nudges will encourage repeat engagement and user registration on our platform. As more consumers use our platform and engage with our extensive financial guidance and tools, our consumer and transaction database grows and our product recommendations yield higher success rates.
As more consumers use our platform and engage with our extensive financial guidance and tools, our consumer and transaction database grows and our product recommendations yield higher success rates. This increases user satisfaction, converting more users into registered users and improving repeat user rates.
As a result, we believe that our financial services partners greatly benefit from placement on our Best-of Awards lists, in our reviews and within other NerdWallet content.
As a result, we believe that our financial services partners greatly benefit from placement on our Best-of Awards lists, in our reviews and within other NerdWallet content. In fact, 66% of the financial services providers who won a 2023 Best-of Award promoted their designation in their own marketing efforts. • Exposure to Consumers Seeking a Broader Range of Financial Products.
Our comprehensive platform serves a broad set of financial verticals, including credit cards, mortgages, insurance, SMB products, personal loans, banking, investing and student loans. 7 Table of Contents Our current and primary addressable market opportunity is U.S. financial services digital advertising spend, which is expected to be more than $32 billion in 2022 and has been growing at double digit rates annually, according to eMarketer.
Our current and primary addressable market opportunity is U.S. financial services digital advertising spend, which is expected to be more than $30 billion in 2023 and has been growing at double digit rates annually, according to eMarketer.
Full-year Registered User revenue increased over 80% from 2021 to 2022. We will continue to invest in building efficient and scalable technical capabilities to deliver personalized guidance and nudge consumers, at the right time, to take action based on our advice.
We will continue to invest in building efficient and scalable technical capabilities to deliver personalized guidance and nudge consumers, at the right time, to take action based on our advice. With better machine learning, we believe our recommendations and contextual nudges will encourage repeat engagement and user registration on our platform.
Throughout 2022, our Content Nerds reinforced trust during another period of macroeconomic volatility, providing guidance across a variety of pressing topics, including the impact of interest rate hikes on credit cards, mortgages, bank accounts and personal loans; how to save at the gas pump; the return to travel and student loan forbearance and repaying student debt. 5 Table of Contents Benefits of Our Platform for Our Partners We bring our financial services partners well-matched and well-informed consumers.
Throughout 2023, our Content Nerds reinforced trust by helping consumers make informed financial decisions across a variety of areas, including budgeting and spending in an inflationary environment; finding insurance coverage in a complex marketplace; and navigating the continued impact of interest rate hikes on credit cards, mortgages, bank accounts and personal loans, as well as volatility in student loan forbearance and repayment. 5 Table of Contents Benefits of Our Platform for Our Partners We bring our financial services partners well-matched and well-informed consumers.
By codifying our editorial team’s house views, we are able to dynamically recommend relevant content using machine learning for consumers seeking guidance and thus increase product matches. Our personalized article recommendations lead to higher click-through rates, ultimately increasing transactions on our platform. Partner Access Our platform manages over 400 f inancial services partners across eight verticals.
Our personalized article recommendations lead to higher click-through rates, ultimately increasing transactions on our platform. Partner Access Our platform manages over 400 f inancial services partners across eight verticals.
In fact, nearly 60% of the financial services providers who won a 2022 Best-of Award promoted their designation in their own marketing efforts. • Exposure to Consumers Seeking a Broader Range of Financial Products. Given the breadth of our expertise, consumers are able to use our platform for multiple facets of their financial well-being beyond their initial transactions.
Given the breadth of our expertise, consumers are able to use our platform for multiple facets of their financial well-being beyond their initial transactions. Through the wide range of guidance that we offer, consumers are exposed to relevant products outside of the one they are researching at a given time.
In 2022, we published our first-ever Environmental, Social and Governance (ESG) report to formalize our commitments and highlight how we achieve our goals with integrity. You can find the report at https://www.nerdwallet.com/environmental-social-governance .
In 2023, we published our second annual Environmental, Social and Governance (ESG) report, outlining our corporate social responsibility programs, diversity, equity, and inclusion efforts, and our first environmental and sustainability strategy, specifically our Scope 1, 2, and 3 emissions. You can find the report at https://www.nerdwallet.com/l/environmental-social-governance .
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In 2022, we published our first-ever Environmental, Social and Governance (ESG) report to formalize our commitments and highlight how we achieve our goals with integrity.
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In 2023, we published our second annual Environmental, Social and Governance (ESG) report, outlining our corporate social responsibility programs, diversity, equity, and inclusion efforts, and our first environmental and sustainability strategy, specifically our Scope 1, 2, and 3 emissions.
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The key capabilities and features of our platform include Content Management, Partner Access, Recommendation Engine and Personal Financial Management. 8 Table of Contents Content Management Our content management platform leverages structured data components to showcase our financial guidance to consumers at scale.
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In fact, we have seen two times the increase in our match rate with personal loans financial providers after integrating OTB technology. • Registration and Data-Driven Engagement.
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In 2022, we launched our First Annual Nerds Pay It Forward Day, a dedicated volunteer day to encourage all NerdWallet employees to give back to their communities. Talent Attraction, Recruitment and Retention Our remote-first culture allows us to reach, attract and retain more diverse talent across all levels of our organization.
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Our comprehensive platform serves a broad set of financial verticals, including credit cards, mortgages, insurance, SMB products, personal loans, banking, investing and student loans.
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We also have registered domain names for websites that we use in our business. 12 Table of Contents We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost-effective.
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Content Management Our content management platform leverages structured data components to showcase our financial guidance to consumers at scale. By codifying our editorial team’s house views, we are able to dynamically recommend relevant content using machine learning for consumers seeking guidance and thus increase product matches.
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Available Information We maintain an investor relations website at the following address: https://investors.nerdwallet.com . The information on our investor relations website is not incorporated by reference in this report.
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Our diversity, equity, inclusion and belonging (DEIB) efforts are centered around ensuring we are building a diverse organization across all business aspects and creating an inclusive culture where everyone is engaged and has access to opportunities.
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Therefore, we encourage investors to monitor the https://investors.nerdwallet.com website and review the information we post on that page.
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This year, we held two Nerds Pay It Forward events, freeing up time in support of employee volunteerism on dedicated volunteer days to encourage all NerdWallet employees to give back to their communities. In all, Nerds donated over 1,800 hours during these events.
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The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at the following address: https://www.sec.gov .

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe do not have redundant network or rapid disaster recovery capabilities in most cases for the services provided by third-party service providers. These service providers may not have adequate security measures and could experience a security incident that compromises the confidentiality, integrity or availability of the systems they operate for us or the information they process on our behalf.
Biggest changeThese providers may support or operate critical business systems for us or store or process the same sensitive, proprietary and confidential information that we handle. We do not have redundant network or rapid disaster recovery capabilities in most cases for the services provided by third-party service providers.
There are many factors that could negatively affect our ability to grow our user base and engagement, including if: • we lose users to new market entrants and/or existing competitors; • we do not obtain regulatory approvals necessary for expansion into new verticals, geographies or to launch new products, product features or tools; • we fail to effectively use search engines, social media platforms, digital app stores, content-based online advertising, and other online sources for generating traffic to our platform; • our platform experiences disruptions or outages; • we suffer reputational harm to our brand including from negative publicity, whether accurate or inaccurate; • we fail to expand geographically; • we fail to offer new and competitive products, to provide effective updates to our existing products or to keep pace with technological improvements in our industry; • technical or other problems frustrate the user experience; • we are unable to address user concerns regarding the content, privacy, and security of our digital platform; • we are unable to continue to innovate and improve our platform by generating compelling content and tools; 15 Table of Contents • existing or new financial services providers use incentives to directly cross-sell their products, reducing consumer benefits of using multiple providers; or • we are unable to successfully launch new verticals.
There are many factors that could negatively affect our ability to grow our user base and engagement, including if: • we lose users to new market entrants and/or existing competitors; • we do not obtain regulatory approvals necessary for expansion into new verticals, geographies or to launch new products, product features or tools; 15 Table of Contents • we fail to effectively use search engines, social media platforms, digital app stores, content-based online advertising, and other online sources for generating traffic to our platform; • our platform experiences disruptions or outages; • we suffer reputational harm to our brand including from negative publicity, whether accurate or inaccurate; • we fail to expand geographically; • we fail to offer new and competitive products, to provide effective updates to our existing products or to keep pace with technological improvements in our industry; • technical or other problems frustrate the user experience; • we are unable to address user concerns regarding the content, privacy, and security of our digital platform; • we are unable to continue to innovate and improve our platform by generating compelling content and tools; • existing or new financial services providers use incentives to directly cross-sell their products, reducing consumer benefits of using multiple providers; or • we are unable to successfully launch new verticals.
The success of our entry into new verticals will depend on a number of factors, including: • Implementing in a cost effective manner product features expected by consumers and financial services providers; • Market acceptance of an intermediary by consumers and financial services providers; • Offerings by current and future competitors; • Our ability to innovate and disrupt markets by offering or creating new and compelling products for consumers; • Our ability to attract and retain management and other skilled personnel; • Our ability to collect amounts owed to us from our financial services partners; • Our ability to develop successful and cost-effective marketing campaigns; and • Our ability to timely adjust marketing expenditures in relation to changes in demand for the underlying products and services offered by our financial services partners in these newer verticals.
The success of our entry into new verticals and products will depend on a number of factors, including: • Implementing in a cost effective manner product features expected by consumers and financial services providers; • Market acceptance of an intermediary by consumers and financial services providers; • Offerings by current and future competitors; • Our ability to innovate and disrupt markets by offering or creating new and compelling products for consumers; • Our ability to attract and retain management and other skilled personnel; • Our ability to collect amounts owed to us from our financial services partners; • Our ability to develop successful and cost-effective marketing campaigns; and • Our ability to timely adjust marketing expenditures in relation to changes in demand for the underlying products and services offered by our financial services partners in these newer verticals.
Both of these actions would lead to decreased monetization on our platform and could adversely affect our business, financial condition and results of operations. Changes in the loan markets could harm our business, financial condition and results of operations. The loan market, including student loans, mortgages and personal loans, is an important part of our business.
Both of these actions would lead to decreased monetization on our platform and could adversely affect our business, financial condition and results of operations. Changes in the loan markets could harm our business, financial condition and results of operations. The loan market, including student loans, business loans, mortgages and personal loans, is an important part of our business.
Similarly in 2022, as interest rates began to increase and the mortgage and investing verticals were impacted, the credit card and SMB verticals were strong. We cannot, however, guarantee that this offsetting between our verticals will continue or that our business model will be able to withstand the various macroeconomic developments we may see in the future.
Similarly in 2022, as interest rates began to increase and the mortgage and investing verticals were impacted, the credit card and SMB product verticals were strong. We cannot, however, guarantee that this offsetting between our verticals will continue or that our business model will be able to withstand the various macroeconomic developments we may see in the future.
Furthermore, even if we successfully acquire or invest in additional businesses or technologies, we may not achieve the anticipated benefits or synergies due to a number of factors, including, without limitation: • unanticipated costs or liabilities associated with the acquisition, including claims related to the acquired company, its product offerings, or technology; • incurrence of acquisition-related or investment-related expenses, which would be recognized as a current period expense; • inability to generate sufficient revenue to offset acquisition or investment costs; • inability to maintain relationships with customers and partners of the acquired business; • challenges maintaining quality and security standards consistent with our brand; • inability to identify security vulnerabilities in acquired technology; • inability to achieve anticipated synergies or unanticipated difficulty with integration into our corporate culture; • the need to integrate or implement additional controls, procedures, and policies; • challenges caused by distance and cultural differences; • harm to our existing business relationships with business partners as a result of the acquisition or investment; • potential loss of key employees; • use of resources that are needed in other parts of our business and diversion of management and employee resources; • unanticipated complexity in accounting requirements; • use of substantial portions of our available cash or the incurrence of debt to consummate the acquisition; and • disputes that may arise out of earn-outs, escrows, and other arrangements related to an acquisition of a company.
Furthermore, even if we successfully acquire or invest in additional businesses or technologies, we may not achieve the anticipated benefits or synergies due to a number of factors, including, without limitation: • unanticipated costs or liabilities associated with the acquisition, including claims related to the acquired company, its product offerings, or technology; • incurrence of acquisition-related or investment-related expenses, which would be recognized as a current period expense; 29 Table of Contents • inability to generate sufficient revenue to offset acquisition or investment costs; • inability to maintain relationships with customers and partners of the acquired business; • challenges maintaining quality and security standards consistent with our brand; • inability to identify security vulnerabilities in acquired technology; • inability to achieve anticipated synergies or unanticipated difficulty with integration into our corporate culture; • the need to integrate or implement additional controls, procedures, and policies; • challenges caused by distance and cultural differences; • harm to our existing business relationships with business partners as a result of the acquisition or investment; • potential loss of key employees; • use of resources that are needed in other parts of our business and diversion of management and employee resources; • unanticipated complexity in accounting requirements; • use of substantial portions of our available cash or the incurrence of debt to consummate the acquisition; and • disputes that may arise out of earn-outs, escrows, and other arrangements related to an acquisition of a company.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which requires the market value of our Class A common stock that is held by non-affiliates to exceed $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1 billion in non-convertible debt during the prior three-year period.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which requires the market value of our Class A common stock that is held by non-affiliates to exceed $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1 billion in non-convertible debt during the prior three-year period.
This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions. 37 Table of Contents These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees.
This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions. 38 Table of Contents These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees.
If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline. 35 Table of Contents Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline. 36 Table of Contents Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Based on our ongoing assessment of all available evidence, both positive and negative, including consideration of our historical profitability and the estimated impact of our operating model on future profitability, we concluded that it was more likely than not that our U.S. deferred tax assets in excess of deferred tax liabilities would not be realized, and we recorded a valuation allowance against these net U.S. deferred tax assets as of December 31, 2022.
Based on our ongoing assessment of all available evidence, both positive and negative, including consideration of our historical profitability and the estimated impact of our operating model on future profitability, we concluded that it was more likely than not that our U.S. deferred tax assets in excess of deferred tax liabilities would not be realized, and we recorded a valuation allowance against these net U.S. deferred tax assets as of December 31, 2023.
In doing so, we may incur losses or otherwise fail to enter new markets successfully. Our expansion into new markets may place us in unfamiliar competitive environments and involve various risks, including competition, government regulation, the need to invest significant resources and the possibility that returns on such investments will not be achieved for several years or at all.
In doing so, we may incur losses or otherwise fail to enter new verticals successfully. Our expansion into new verticals may place us in unfamiliar competitive environments and involve various risks, including competition, government regulation, the need to invest significant resources and the possibility that returns on such investments will not be achieved for several years or at all.
We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. 34 Table of Contents If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our Class A common stock may decline.
We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. 35 Table of Contents If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our Class A common stock may decline.
Such limitation of liability does not apply to liabilities arising under federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission. 36 Table of Contents Our amended and restated bylaws provide that we are required to indemnify our directors and officers to the fullest extent permitted by Delaware law and may indemnify our other employees and agents.
Such limitation of liability does not apply to liabilities arising under federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission. 37 Table of Contents Our amended and restated bylaws provide that we are required to indemnify our directors and officers to the fullest extent permitted by Delaware law and may indemnify our other employees and agents.
Because of the ten-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively will continue to control a majority of the combined voting power of our common stock and therefore be able to control all matters submitted to our stockholders for approval so long as the shares of Class B common stock represent at least 12.1% of all outstanding shares of our Class A and Class B common stock.
Because of the ten-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively will continue to control a majority of the combined voting power of our common stock and therefore be able to control all matters submitted to our stockholders for approval so long as the shares of Class B common stock represent at least 9.1% of all outstanding shares of our Class A and Class B common stock.
If we fail to remain competitive on customer experience, editorial articles and product offerings, our ability to grow our business may also be adversely affected. While a key part of our business strategy is to engage users in our existing markets, we also intend to expand our operations into new markets.
If we fail to remain competitive on customer experience, editorial articles and product offerings, our ability to grow our business may also be adversely affected. While a key part of our business strategy is to engage users in our existing verticals, we also intend to expand our operations into new verticals.
Any adverse determination in litigation could also subject us to significant liabilities. 32 Table of Contents Our results of operations may fluctuate on a quarterly and annual basis, which may impact our stock price and make it difficult to predict our future performance.
Any adverse determination in litigation could also subject us to significant liabilities. 33 Table of Contents Our results of operations may fluctuate on a quarterly and annual basis, which may impact our stock price and make it difficult to predict our future performance.
We believe that the growth of our business and revenue depends upon our ability to engage our existing users and to add new users in our current as well as new markets. If we lose users or user engagement diminishes, our business and financial condition will be negatively impacted.
We believe that the growth of our business and revenue depends upon our ability to engage our existing users and to add new users in our current as well as new verticals. If we lose users or user engagement diminishes, our business and financial condition will be negatively impacted.
As a result of disclosure of information in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties.
As a result of disclosure of information in filings required of a public company, our business and financial condition has become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties.
Operating our business and products involves the collection, storage, use and transmission of large volumes of sensitive, proprietary and confidential information, including financial and personal information, pertaining to our current, prospective and past users, as well as our staff, contractors, and business partners.
Operating our business and products involves the collection, storage, use and transmission of large volumes of sensitive, proprietary and confidential information, including financial and personal information, pertaining to our current, prospective and past users, as well as our personnel, contractors, and business partners.
Upon the occurrence of an event of default, SVB and/or our lenders under the credit agreement could elect to declare all amounts outstanding under the credit agreement, if any, to be immediately due and payable and terminate all commitments to extend further credit.
Upon the occurrence of an event of default, JPM and/or our lenders under the credit agreement could elect to declare all amounts outstanding under the credit agreement, if any, to be immediately due and payable and terminate all commitments to extend further credit.
Chen may make long-term strategic investment decisions and take risks that may not be successful and may seriously harm our business. As our Chief Executive Officer, Mr. Chen also has control over our day-to-day management and the implementation of major strategic investments of our company, subject to authorization and oversight by our Board of Directors.
Chen may make long-term strategic investment decisions and take risks that may not be successful and may seriously harm our business. 31 Table of Contents As our Chief Executive Officer, Mr. Chen also has control over our day-to-day management and the implementation of major strategic investments of our company, subject to authorization and oversight by our Board of Directors.
However, these contractual arrangements and the other steps we have taken to protect our intellectual property may not prevent the misappropriation or disclosure of our proprietary 26 Table of Contents information nor deter independent development of similar technologies by others. Failure to protect or maintain our intellectual property could harm our business, financial condition and results of operations.
However, these contractual arrangements and the other steps we have taken to protect our intellectual property may not prevent the misappropriation or disclosure of our proprietary information nor deter independent development of similar technologies by others. Failure to protect or maintain our intellectual property could harm our business, financial condition and results of operations.
As a result, the market price of our Class A common stock could be adversely affected. 31 Table of Contents The price of our stock may be volatile, and you could lose all or part of your investment. The trading price of our Class A common stock could be volatile, and you could lose all or part of your investment.
As a result, the market price of our Class A common stock could be adversely affected. 32 Table of Contents The price of our stock may be volatile, and you could lose all or part of your investment. The trading price of our Class A common stock could be volatile, and you could lose all or part of your investment.
We do not have as much experience with these newer verticals as we do with the other more established verticals on our platform. Accordingly, newer verticals may be subject to greater risks than the more established verticals on our platform.
We do not have as much experience with these newer verticals and products as we do with the other more established verticals on our platform. Accordingly, newer verticals and products may be subject to greater risks than the more established verticals on our platform.
These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated products or services unless and until we can re-engineer such source code to eliminate use of such open 27 Table of Contents source software.
These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated products or services unless and until we can re-engineer such source code to eliminate use of such open source software.
If SVB and our lenders accelerate the repayment of borrowings, if any, we may not have sufficient funds to repay our debt. Our existing debt agreement may not be sufficient for our capital needs and we may require additional capital to support business growth, which might not be available on acceptable terms, if at all.
If JPM and our lenders accelerate the repayment of borrowings, if any, we may not have sufficient funds to repay our debt. Our debt agreement may not be sufficient for our capital needs and we may require additional capital to support business growth, which might not be available on acceptable terms, if at all.
Our brand promotion activities may not generate consumer awareness or yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand. The strength of our brand may be harmed by adverse publicity from many sources.
Our brand promotion activities may not generate consumer awareness or yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand. 16 Table of Contents The strength of our brand may be harmed by adverse publicity from many sources.
Chen retains a significant portion of his holdings of Class B common stock for an extended period of time, he could, in the future, continue to control a majority of the combined voting power of our Class A common stock and Class B common stock. 30 Table of Contents Mr.
Chen retains a significant portion of his holdings of Class B common stock for an extended period of time, he could, in the future, continue to control a majority of the combined voting power of our Class A common stock and Class B common stock. Mr.
Despite reforms made possible by the JOBS Act, compliance with these rules and regulations will nonetheless increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an emerging growth company.
Despite reforms made possible by the JOBS Act, compliance with these rules and regulations have increased our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an emerging growth company.
Furthermore, in the event that any of our agreements with our third-party service providers are terminated, we may experience significant costs or downtime in connection with the transfer to, or the addition of, new hosting providers.
Furthermore, in the event that any of our agreements with our third-party service providers are terminated, we may experience significant costs or downtime in connection with the transfer to, or 17 Table of Contents the addition of, new hosting providers.
We cannot be sure that all of our use of open source software is in a manner that is consistent with our current policies and procedures, or will not subject us to liability.
We cannot be sure that all of our use of open source software is in a manner that is consistent with our current policies and 28 Table of Contents procedures, or will not subject us to liability.
Certain individuals may have more than one device and therefore may be counted more than once in our count of Monthly Unique Users. Limitations or errors with respect to how we measure data or with respect to the data that we measure may affect our understanding of certain details of our business, which could affect our long-term strategies.
Certain individuals may have more than one device and therefore may be counted more than once in our count of MUUs. Limitations or errors with respect to how we measure data or with respect to the data that we measure may affect our understanding of certain details of our business, which could affect our long-term strategies.
The terms of our credit agreement with Silicon Valley Bank and certain other lenders restrict our ability to pay dividends, and we may enter into additional agreements in the future that could also contain restrictions on payments of cash dividends. 33 Table of Contents We are an emerging growth company, and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies may make our Class A common stock less attractive to investors.
The terms of our credit agreement with JPM and certain other lenders restrict our ability to pay dividends, and we may enter into additional agreements in the future that could also contain restrictions on payments of cash dividends. 34 Table of Contents We are an emerging growth company, and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies may make our Class A common stock less attractive to investors.
Tim Chen, our Co-founder, Chief Executive Officer and Chairman of our Board of Directors and his affiliated trusts hold all outstanding shares of Class B common stock, which as of December 31, 2022 constituted approximately 87.9% of the voting power of our outstanding capital stock.
Tim Chen, our Co-founder, Chief Executive Officer and Chairman of our Board of Directors and his affiliated trusts hold all outstanding shares of Class B common stock, which as of December 31, 2023 constituted approximately 87.5% of the voting power of our outstanding capital stock.
These laws, as well as any associated regulations, may increase our operating costs and potential liability (particularly in the event of a data breach), delay or impede the development of new products, and have a material adverse effect on our business, including how we use information about individuals, our financial condition and the results of our operations or prospects.
These laws, as well as any associated regulations, create a patchwork that poses challenges for our business and may increase our operating costs and potential liability (particularly in the event of a data breach), delay or impede the development of new products, and have a material adverse effect on our business, including how we use information about individuals, our financial condition and the results of our operations or prospects.
In 2022 the U.S. Federal Reserve increased the benchmark federal funds rate multiple times in an attempt to rein in inflation. This policy change led to a softening of the housing market and reduced demand for mortgage refinancings and originations on our platform.
In 2022 and 2023 the U.S. Federal Reserve increased the benchmark federal funds rate many times in an attempt to rein in inflation. This policy change has led to a softening of the housing market and reduced consumer demand for mortgage refinancings and originations on our platform.
Our continued success depends on our systems, applications, and software continuing to operate and to meet the changing needs of our customers and users and financial services partners. We rely on our technology and engineering staff and vendors to successfully implement changes to and maintain our systems and services in an efficient and secure manner.
Our continued success depends on our systems, applications, and software continuing to operate and to meet the changing needs of our users and financial services partners. We rely on our technology and engineering staff and third party services providers to successfully implement changes to and maintain our systems and services in an efficient and secure manner.
However, if one or more of these legal matters resulted in an adverse monetary judgment against us, such a judgment could harm our results of operations and financial condition. 29 Table of Contents We may not continue to grow at historical rates or achieve or maintain profitability in the future.
However, if one or more of these legal matters resulted in an adverse monetary judgment against us, such a judgment could harm our results of operations and financial condition. We may not continue to grow at historical rates or achieve or maintain profitability in the future. We may not realize sufficient revenue to achieve or maintain profitability.
We also anticipate that U.S. federal regulators relevant to our business, such as the Federal Trade Commission and the Consumer Financial Protection Bureau, may pursue more enforcement actions under a Democratic administration.
We also anticipate that U.S. federal regulators relevant to our business, such as the Federal Trade Commission and the Consumer Financial Protection Bureau, may pursue more enforcement actions.
However, until our international operations grow significantly, we will continue to be primarily dependent on U.S. consumers and U.S. economic conditions. 19 Table of Contents We have less experience operating in some of the newer market verticals to which we have expanded. We have expanded to new verticals over the last several years, including SMB products and insurance products.
However, until our international operations grow significantly, we will continue to be primarily dependent on U.S. consumers and U.S. economic conditions. We have less experience operating in some of the newer market verticals and products to which we have expanded. We have expanded to new verticals and products over the last several years.
Our existing international operations and further international expansion are subject to a number of difficulties and risks, including: • challenges inherent to efficiently recruiting and retaining talented and capable employees in foreign countries and maintaining our company culture and employee programs across all of our offices, including those resulting from cultural differences and geographic dispersion; • required compliance with existing and changing foreign regulatory requirements and laws that are or may be applicable to our business in the future, such as the European Union’s General Data Protection Regulation (GDPR) and other data privacy requirements; labor and employment regulations; anti-competition regulations; regulatory laws and requirements for licenses and authorizations; and the UK Bribery Act of 2010 and other anti-corruption laws; • required compliance with U.S. laws such as the Foreign Corrupt Practices Act, and other U.S. federal laws and regulations established by the office of Foreign Asset Control and other governmental entities; • difficulties identifying, obtaining, and maintaining the government approvals, authorizations, or licensures required to conduct our business in foreign markets; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, and the impact of local and regional financial crises on demand and payment for our products; • difficulties obtaining intellectual property protection, enforcing our intellectual property rights, and defending against third-party intellectual property infringement claims; • challenges successfully addressing novel sources of competition, including in the context of foreign laws and business practices that may favor local companies; • difficulties managing fluctuations in currency exchange rates and foreign exchange controls; and • potentially adverse tax consequences, including multiple and possibly overlapping tax regimes, the complexities of foreign value-added tax systems, and changes in tax rates.
Our existing international operations and further international expansion are subject to a number of difficulties and risks, including: • challenges inherent to efficiently recruiting and retaining talented and capable employees in foreign countries and maintaining our company culture and employee programs across all of our offices, including those resulting from cultural differences and geographic dispersion; • required compliance with existing and changing foreign regulatory requirements and laws that are or may be applicable to our business in the future, such as the European Union’s General Data Protection Regulation (GDPR) and other data privacy requirements; labor and employment regulations; anti-competition regulations; regulatory laws and requirements for licenses and authorizations; and the UK Bribery Act of 2010 and other anti-corruption laws; • required compliance with U.S. laws such as the Foreign Corrupt Practices Act, and other U.S. federal laws and regulations established by the office of Foreign Asset Control and other governmental entities; • difficulties identifying, obtaining, and maintaining the government approvals, authorizations, or licensures required to conduct our business in foreign markets; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, and the impact of local and regional financial crises on demand and payment for our products; • difficulties obtaining intellectual property protection, enforcing our intellectual property rights, and defending against third-party intellectual property infringement claims; • challenges successfully addressing novel sources of competition, including in the context of foreign laws and business practices that may favor local companies; • difficulties managing fluctuations in currency exchange rates and foreign exchange controls; and • potentially adverse tax consequences, including multiple and possibly overlapping tax regimes, the complexities of foreign value-added tax systems, and changes in tax rates. 18 Table of Contents As we continue to expand our international operations, our success will depend in large part on our ability to anticipate and effectively manage these risks, which in turn will require significant management attention and financial resources.
If we were unable to repay those amounts, SVB and our lenders could proceed against the collateral granted to them to secure such indebtedness, which consists of all of our assets other than our intellectual property. We have, and certain of our subsidiaries have, pledged substantially all of our respective assets as collateral under the loan documents.
If we were unable to repay those amounts, JPM and our lenders could proceed against the collateral granted to them to secure such indebtedness, which consists of all of our assets. We have, and certain of our subsidiaries have, pledged substantially all of our respective assets as collateral under the loan documents.
If search engines’ algorithms, methodologies, and/or policies are modified or enforced in ways we do not anticipate, or if our search results page rankings decline for other reasons, traffic to our platform or user growth or engagement could decline, any of which would harm our business, financial condition and results of operations. • Failure to maintain our reputation and brand recognition and attract and engage users in a cost-effective manner would harm our business, financial condition and results of operations. • Use of social media, influencers, affiliate marketing, email and text messages may adversely impact our brand and reputation or subject us to fines or other penalties. • We may make decisions based on the best interests of our users in order to build long-term trust that may result in us forgoing short-term gains. • We compete in a highly competitive and rapidly evolving market with a number of other companies and we face the possibility of new entrants disrupting our market over time. • Our recent international expansion subjects us to additional costs and risks which could harm our business, revenue and financial results, and our continued international expansion may be unsuccessful. • We are making substantial investments in new product offerings and technologies, and expect to increase such investments in the future.
If search engines’ algorithms, methodologies, and/or policies are modified or enforced in ways we do not anticipate, or if our search results page rankings decline for other reasons, traffic to our platform or user growth or engagement could decline, any of which would harm our business, financial condition and results of operations. • Failure to maintain our reputation and brand recognition and attract and engage users in a cost-effective manner would harm our business, financial condition and results of operations. • Use of social media, influencers, affiliate marketing, email and text messages may adversely impact our brand and reputation or subject us to fines or other penalties. • We may make decisions based on the best interests of our users in order to build long-term trust that may result in us forgoing short-term gains. • We rely on third parties to perform certain key functions, and their failure to perform those functions could adversely affect our business, financial condition and results of operations. • We compete in a highly competitive and rapidly evolving market with a number of other companies and we face the possibility of new entrants disrupting our market over time. • Our recent international expansion subjects us to additional costs and risks which could harm our business, revenue and financial results, and our continued international expansion may be unsuccessful. 14 Table of Contents • We are actively investing in new product offerings, technologies, and minority investments, with plans to further increase these investments in the future.
These new efforts are inherently risky, and we may never realize any expected benefits from them. • Our financial performance is dependent on our ability to successfully refer users to financial services partners, and these partners are not precluded from offering products and services outside of our platform. • Macroeconomic developments such as inflationary conditions in the U.S. have caused macroeconomic uncertainty and may have an adverse impact on our business, results of operations l and our vertical diversification strategy. • Adverse conditions in the consumer finance markets, or poor or uncertain macroeconomic conditions, could harm our business, financial condition and results of operations if our financial services partners reduce their marketing budgets and decrease spending on our platform. • Changes in the loans markets could harm our business, financial condition and results of operations. 14 Table of Contents • Our business is subject to a variety of financial regulations in the U.S., UK, Canada and Australia, many of which are overlapping, ambiguous and still developing, which could subject us to claims or otherwise harm our business. • Security incidents, or real or perceived errors, failures or bugs in our systems and platform could impair our operations, compromise our confidential information or our users’ personal information, damage our reputation and brand, and harm our business and operating results. • The dual class structure of our common stock has the effect of concentrating voting control with our Co-founder, CEO and Chairman of our Board of Directors, Tim Chen, which will limit or preclude your ability to influence corporate matters.
While these endeavors hold significant potential, they also come with inherent risks, and there is no guarantee that we will realize the anticipated benefits. • Our financial performance is dependent on our ability to successfully refer users to financial services partners, and these partners are not precluded from offering products and services outside of our platform. • Macroeconomic developments such as inflationary conditions in the U.S. have caused macroeconomic uncertainty and may have an adverse impact on our business, results of operations and our vertical diversification strategy. • Adverse conditions in the consumer finance markets, or poor or uncertain macroeconomic conditions, could harm our business, financial condition and results of operations if our financial services partners reduce their marketing budgets and decrease spending on our platform. • Changes in the loans markets could harm our business, financial condition and results of operations. • Our business is subject to a variety of financial regulations in the U.S., UK, Canada and Australia, many of which are overlapping, ambiguous and still developing, which could subject us to claims or otherwise harm our business. • Security incidents, or real or perceived errors, failures or bugs in our systems and platform could impair our operations, compromise our confidential information or our users’ personal information, damage our reputation and brand, and harm our business and operating results. • The dual class structure of our common stock has the effect of concentrating voting control with our Co-founder, CEO and Chairman of our Board of Directors, Tim Chen, which will limit or preclude your ability to influence corporate matters.
The terms of our existing credit agreement, as amended, and the related collateral documents with Silicon Valley Bank (SVB) as administrative agent contain, and any future indebtedness may contain, a number of restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability, and the ability of our subsidiaries, to take actions that may be in our best interests, including, among others, disposing of assets, entering into change of control transactions, mergers or acquisitions, incurring additional indebtedness, granting liens on our assets, declaring and paying dividends, repurchasing stock, making investments and agreeing to do any of the foregoing, in each case subject to certain exceptions.
(JPM) as administrative agent contain, and any future indebtedness may contain, a number of restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability, and the ability of our subsidiaries, to take actions that may be in our best interests, including, among others, disposing of assets, entering into change of control transactions, mergers or acquisitions, incurring additional indebtedness, granting liens on our assets, declaring and paying dividends, repurchasing stock, making investments and agreeing to do any of the foregoing, in each case subject to certain exceptions.
If we do not realize the expected benefits of our investments, our business, financial condition and operating results may be harmed. Our financial performance is dependent on our ability to successfully refer users to financial services partners, and these partners are not precluded from offering products and services outside of our platform.
The failure to realize the expected benefits of these investments may adversely impact our business, financial condition, and operating results. Our financial performance is dependent on our ability to successfully refer users to financial services partners, and these partners are not precluded from offering products and services outside of our platform.
We have not experienced a prolonged economic downturn since our founding following the Great Recession, but we would expect a market downturn to lead our financial services partners to tighten underwriting standards making it more difficult for users to be matched with their products and to implement cost-reduction initiatives that reduce or eliminate marketing budgets.
We would expect a prolonged market downturn to lead our financial services partners to tighten underwriting standards making it more difficult for users to be matched with their products and to implement cost-reduction initiatives that reduce or eliminate marketing budgets.
While our content, software and other works may be protected under copyright law, we have chosen not to register any copyrights in these works. In order to bring a copyright infringement lawsuit in the United States, the copyright must be registered. Accordingly, the remedies and damages available to us for unauthorized use of our software may be limited.
While our content, software and other works may be protected under copyright law, we have chosen not to register any copyrights in these works. In order to bring a copyright infringement lawsuit in the United States, the copyright must be registered.
We rely on the data provided to us by users and third parties to operate and improve our product offerings, and if we are unable to maintain and grow the use of such data, we may be unable to provide users with a platform experience that is relevant and effective, which would harm our business, financial condition and results of operations.
Our results of operations may suffer if we fail to successfully anticipate and manage these issues associated with expansion into new verticals. 20 Table of Contents We rely on the data provided to us by users and third parties to operate and improve our product offerings, and if we are unable to maintain and grow the use of such data, we may be unable to provide users with a platform experience that is relevant and effective, which would harm our business, financial condition and results of operations.
Third parties may stop adequately supporting or maintaining their offerings or they or their technology may be acquired by our competitors. If we are unable to obtain licenses to these third-party software and intellectual property on reasonable terms or at all, the functionalities available through our platform may be adversely impacted, which could in turn harm our business.
If we are unable to obtain licenses to these third-party software and intellectual property on reasonable terms or at all, the functionalities available through our platform may be adversely impacted, which could in turn harm our business.
We rely on this data provided to us by users and third parties to offer, improve and innovate our products. If we are unable to maintain and grow such data we may be unable to provide consumers with a platform experience that is relevant, efficient and effective, which could adversely affect our business, financial condition and results of operations.
If we are unable to maintain and grow such data we may be unable to provide consumers with a platform experience that is relevant, efficient and effective, which could adversely affect our business, financial condition and results of operations.
Our ability to attract and engage users depends, in part, on our ability to successfully expand our product offerings and editorial articles. For example, we initially built our content and began matching consumers with financial services providers in the credit card market, we later expanded into loan products and have continued to add other verticals since then.
For example, we initially built our content and began matching consumers with financial services providers in the credit card market, we later expanded into loan products and have continued to add other verticals since then.
Risks Related to Our Technology, Security and Intellectual Property Security incidents, or real or perceived errors, failures or bugs in our systems and platform could impair our operations, compromise our confidential information or our users’ personal information, damage our reputation and brand, and harm our business and operating results.
As a result, our culture, information technology requirements, cybersecurity risk, and business operations could be adversely affected. 25 Table of Contents Risks Related to Our Technology, Security and Intellectual Property Security incidents, or real or perceived errors, failures or bugs in our systems and platform could impair our operations, compromise our confidential information or our users’ personal information, damage our reputation and brand, and harm our business and operating results.
Thus, our business is dependent on the consumer finance markets and the demand for the products offered by our financial services partners.
We earn fees from our financial services partners by matching users with their products. Thus, our business is dependent on the consumer finance markets and the demand for the products offered by our financial services partners.
We expect to continue to make investments in the development and expansion of our business, which may not result in increased or sufficient revenue or growth, as a result of which we may not be able to achieve or maintain sustained profitability.
We expect to continue to make investments in the development and expansion of our business, which may not result in increased or sufficient revenue or growth, as a result of which we may not be able to achieve or maintain sustained profitability. 30 Table of Contents We have made significant estimates and judgments in calculating our income tax provision and other tax assets and liabilities.
Failure to obtain proper business licenses or other documentation, or to otherwise comply with local laws and requirements regarding marketing or matching consumers with financial services providers, may result in civil or criminal penalties and restrictions on our ability to conduct business in that jurisdiction.
Any costs incurred to prevent or mitigate this potential liability could also harm our business, financial condition and operating results. 22 Table of Contents Failure to obtain proper business licenses or other documentation, or to otherwise comply with local laws and requirements regarding marketing or matching consumers with financial services providers, may result in civil or criminal penalties and restrictions on our ability to conduct business in that jurisdiction.
We rely on third-party service providers to provide critical services that help us deliver our products and operate our business, including hosting our platform. These providers may support or operate critical business systems for us or store or process the same sensitive, proprietary and confidential information that we handle.
We rely on third-party service providers to support our platform and information technology systems. We rely on third-party service providers to provide critical services that help us deliver our products and operate our business, including hosting our platform.
If any such person refuses or fails to comply with these requirements, we may be unable to obtain certain licenses and existing licensing arrangements may be jeopardized.
If any such person refuses or fails to comply with these requirements, we may be unable to obtain certain licenses and existing licensing arrangements may be jeopardized. The inability to obtain, or the loss of, required licenses could harm our business, financial condition and results of operations.
Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our customers may limit the adoption and use of, and reduce the overall demand for, our products and services. 23 Table of Contents We are also subject to and actively taking steps to comply with evolving UK privacy laws on cookies and e-marketing.
Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our customers may limit the adoption and use of, and reduce the overall demand for, our products and services.
Our actual or perceived failure to comply with such obligations could harm our reputation and our business. We collect, store, use and process personal information and other user data, including financial information, credit report information and other sensitive information for our users.
We collect, store use and otherwise process personal information, including financial information and other sensitive data, which subjects us to governmental regulation and other legal obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations could harm our reputation and our business.
Any adverse outcome of such a review or audit could have a negative effect on our operating results and financial condition. In addition, the determination of our provision for income taxes and other tax assets and liabilities requires significant judgment, and there are many transactions and calculations where the ultimate tax determination is uncertain at the present time.
In addition, the determination of our provision for income taxes and other tax assets and liabilities requires significant judgment, and there are many transactions and calculations where the ultimate tax determination is uncertain at the present time.
With substantial uncertainty over the interpretation and application of data transfer, privacy, data protection, and information security in the UK, we may face challenges in addressing their requirements and making necessary changes to our policies and practices, and may incur significant costs and expenses in an effort to do so.
As a result, we may face challenges in addressing and implementing the requirements of the proposed new law in light of uncertainty over its interpretation and application to data transfer, privacy, data protection, and information security in the UK, and may incur significant costs and expenses in an effort to do so.
Continued inflationary conditions, higher interest rates, and a tightening of credit markets would pose challenges to our business and may impact many of our verticals and may not be offset by performance in other verticals. Further, an unexpected or prolonged economic downturn, or rapidly rising or sustained high unemployment, would adversely affect our financial condition and results of operations.
Continued inflationary conditions, higher interest rates, and a tightening of credit markets would pose challenges to our business and may impact many of our verticals and may not be offset by performance in other verticals.
The failure of our business to maintain or enhance its reputation and brand recognition and attract and retain consumers in a cost-effective manner could materially and adversely affect our business, financial condition and results of operations. 16 Table of Contents Use of social media, influencers, affiliate marketing, email, and text messages may adversely impact our brand and reputation or subject us to fines or other penalties.
The failure of our business to maintain or enhance its reputation and brand recognition and attract and retain consumers in a cost-effective manner could materially and adversely affect our business, financial condition and results of operations.
We have made significant estimates and judgments in calculating our income tax provision and other tax assets and liabilities. If these estimates or judgments are incorrect, our operating results and financial condition may be materially affected. We are subject to regular review and audit by both domestic and foreign tax authorities.
If these estimates or judgments are incorrect, our operating results and financial condition may be materially affected. We are subject to regular review and audit by both domestic and foreign tax authorities. Any adverse outcome of such a review or audit could have a negative effect on our operating results and financial condition.
We may make decisions based on the best interests of our users in order to build long-term trust that may result in us forgoing short-term gains.
We may make decisions based on the best interests of our users in order to build long-term trust that may result in us forgoing short-term gains. We are committed to building our business by prioritizing the best interests of our users, a value we consider instrumental in establishing user trust and driving platform growth and engagement.
In the student loan markets, a prolonged loan deferral program has negatively impacted our student loans vertical and a proposed loan forgiveness program by the Biden administration, if implemented, would continue to negatively impact our student loans vertical. 21 Table of Contents Risks Related to Regulation Our business is subject to a variety of financial regulations in the U.S., Canada, Australia, and the UK, many of which are overlapping, ambiguous and still developing, which could subject us to claims or otherwise harm our business.
Risks Related to Regulation Our business is subject to a variety of financial regulations in the U.S., Canada, Australia, and the UK, many of which are overlapping, ambiguous and still developing, which could subject us to claims or otherwise harm our business.
If a significant number of users seek financial products and services directly from our financial services partners or from our online competitors, as opposed to through our platform, our business, financial condition and results of operations could be adversely affected.
If a significant number of users seek financial products and services directly from our financial services partners or from our online competitors, as opposed to through our platform, our business, financial condition and results of operations could be adversely affected. 19 Table of Contents If we are unable to maintain the quality of our products, expand our product offerings or continue technological innovation and improvements, our prospects for future growth may be harmed.
In the past, we have forgone, and we may in the future continue to forgo, certain expansion or short-term revenue opportunities that we do not believe are in the best interests of our platform and our users, even if such decisions adversely affect our results of operations in the short term.
We believe that this approach aligns with the long-term interests of both our company and stockholders. Historically and potentially in the future, we may choose to forego certain expansion or short-term revenue opportunities that do not align with the best interests of our platform and users, even if such decisions adversely impact our short-term results.
We may not be able to continue to obtain licenses to third-party software and intellectual property on reasonable terms or at all, which may disrupt our business and harm our financial results. We license third-party software and other intellectual property for use in connection with our platform, including for various third party product integrations with our platform.
Accordingly, the remedies and damages available to us for unauthorized use of our software may be limited. 27 Table of Contents We may not be able to continue to obtain licenses to third-party software and intellectual property on reasonable terms or at all, which may disrupt our business and harm our financial results.
Security incidents could also damage our IT systems and our ability to make the financial reports and other public disclosures required of public companies.
Security incidents could also damage our IT systems and our ability to make the financial reports and other public disclosures required of public companies. These risks are likely to continue to increase as we continue to grow and process, store and transmit increasingly larger volumes of data.
Significant economic developments in the UK, or the perception that any of them could occur, creates further challenges for operating in this market. If we are unable to successfully manage any of these risks, our existing international operations and any future international expansion could be compromised, which could harm our business, financial condition and results of operations.
If we are unable to successfully manage any of these risks, our existing international operations and any future international expansion could be compromised, which could harm our business, financial condition and results of operations. We are actively engaged in significant investments in new product offerings, technologies, and minority investments, with plans to further increase these investments in the future.
Adverse conditions in the consumer finance markets, or poor or uncertain macroeconomic conditions, could harm our business, financial condition and results of operations if our financial services partners reduce their marketing budgets and decrease spending on our platform. We earn fees from our financial services partners by matching users with their products.
Further, an unexpected or prolonged economic downturn, or rapidly rising or sustained high unemployment, would adversely affect our financial condition and results of operations. 21 Table of Contents Adverse conditions in the consumer finance markets, or poor or uncertain macroeconomic conditions, could harm our business, financial condition and results of operations if our financial services partners reduce their marketing budgets and decrease spending on our platform.
Despite our compliance efforts and activities we cannot assure compliance by our employees or representatives for which we may be held responsible, and any such violation could materially adversely affect our reputation, business, financial condition and results of operations.
Despite our compliance efforts and activities we cannot assure compliance by our employees or representatives for which we may be held responsible, and any such violation could materially adversely affect our reputation, business, financial condition and results of operations. 24 Table of Contents Risks Related to Our Human Capital We depend on our executive team and other key employees to manage the business and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could materially harm our business.
Such occurrences could adversely affect our business to the same degree as if we had experienced these occurrences directly and we may not have recourse to the responsible third-party service providers for the resulting liability we incur.
Our ability to monitor our third-party service providers’ data security is limited and yet such occurrences could adversely affect our business to the same degree as if we had experienced these occurrences directly.
If our operational metrics are not accurate representations of our business, or if investors do not perceive these metrics to be accurate, or if we discover material inaccuracies with respect to these figures, our reputation may be significantly harmed, our stock price could decline, we may be subject to stockholder litigation, and our business, financial results and results of operations could be adversely affected. 20 Table of Contents Risks Related to Our Industry and the Consumer Finance Economy Macroeconomic developments such as inflationary conditions and a rising interest rate environment in the U.S. have caused macroeconomic uncertainty and may have an adverse impact on our business, results of operations and our vertical diversification strategy.
If our operational metrics are not accurate representations of our business, or if investors do not perceive these metrics to be accurate, or if we discover material inaccuracies with respect to these figures, our reputation may be significantly harmed, our stock price could decline, we may be subject to stockholder litigation, and our business, financial results and results of operations could be adversely affected.
We compete in a highly competitive and rapidly evolving market with a number of other companies and we face the possibility of new entrants disrupting our market over time.
Although alternative providers could host our platform on a substantially similar basis, such transition could potentially be disruptive and we could incur significant costs in connection therewith. We compete in a highly competitive and rapidly evolving market with a number of other companies and we face the possibility of new entrants disrupting our market over time.
If any of our competitors are more successful than we are at attracting and engaging users or financial services partners, our business, financial condition and results of operations could be materially and adversely affected. 17 Table of Contents Our recent international expansion subjects us to additional costs and risks which could harm our business, revenue and financial results, and our continued international expansion may be unsuccessful.
We may be forced to expend significant resources to remain competitive with current and potential competitors. If any of our competitors are more successful than we are at attracting and engaging users or financial services partners, our business, financial condition and results of operations could be materially and adversely affected.
Following the result of a referendum in 2016, the UK left the EU on January 31, 2020, in a withdrawal commonly referred to as Brexit. Brexit has created uncertainty with regard to the regulation of data protection in the UK.
In the aftermath of the UK’s withdrawal from the EU in January 2020 (an event commonly referred to as Brexit), there was uncertainty with regard to the regulation of data protection in the UK.
Our third-party licenses typically limit our use of intellectual property to specific uses and include other contractual obligations with which we must comply. These licenses may need to be renegotiated or renewed from time to time, or we may need to obtain new licenses in the future.
We license third-party software and other intellectual property for use in connection with our platform, including for various third party product integrations with our platform. Our third-party licenses typically limit our use of intellectual property to specific uses and include other contractual obligations with which we must comply.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed3 unchanged
Biggest changeSee further discussion under “Litigation and Other Legal Matters” in Note 8–Commitments and Contingencies in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures. Not applicable. 38 Table of Contents Part II
Biggest changeSee further discussion under “Litigation and Other Legal Matters” in Note 8–Commitments and Contingencies in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures. Not applicable. 40 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+5 added−1 removed5 unchanged
Biggest changeThe terms of our credit agreement with Silicon Valley Bank and certain other lenders restrict our ability to pay dividends, and we may enter into additional agreements in the future that could also contain restrictions on payments of cash dividends.
Biggest changeThe terms of our credit agreement with JPM and certain other lenders restrict our ability to pay dividends, and we may enter into additional agreements in the future that could also contain restrictions on payments of cash dividends. Recent Sales of Unregistered Equity Securities There were no sales of unregistered equity securities during the year ended December 31, 2023.
The graph below shows the cumulative total stockholder return on our Class A common stock between November 4, 2021 (the date that our Class A common stock commenced trading on the Nasdaq Global Market) through December 31, 2022 in comparison to the Nasdaq Composite Index and the S&P 500 Index.
The graph below shows the cumulative total stockholder return on our Class A common stock between November 4, 2021 (the date that our Class A common stock commenced trading on the Nasdaq Global Market) through December 31, 2023 in comparison to the Nasdaq Composite Index and the S&P 500 Index.
Data for the Nasdaq Composite Index and S&P 500 Index assume reinvestment of dividends. The comparisons shown in the graph are not intended to forecast or be indicative of the future performance of our common stock. Item 6. [Reserved].
Data for the Nasdaq Composite Index and S&P 500 Index assume reinvestment of dividends. The comparisons shown in the graph are not intended to forecast or be indicative of the future performance of our common stock.
As of February 16, 2023, there were five stockholders of record of our Class B common stock, all of which are trusts affiliated with Tim Chen, our Chief Executive Officer and the Chairman of the Board of Directors. Dividend Policy We have never declared or paid cash dividends on our capital stock.
As of February 16, 2024, there were nine stockholders of record of our Class B common stock, all of which are trusts affiliated with Tim Chen, our Chief Executive Officer and the Chairman of the Board of Directors. Dividend Policy We have never declared or paid cash dividends on our capital stock.
Our Class B common stock is neither listed nor publicly traded. Holders of Our Common Stock As of February 16, 2023, there were 164 stockholders of record of our Class A common stock.
Our Class B common stock is neither listed nor publicly traded. Holders of Our Common Stock As of February 16, 2024, there were 127 stockholders of record of our Class A common stock.
Issuer Purchases of Equity Securities None. 39 Table of Contents Stock Performance Graph This performance graph shall not be deemed “soliciting material” or “filed” with the SEC for purposes of Section 18 of the Exchange Act, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Securities Exchange Act.
(2) Average price paid per share includes costs associated with the repurchases. 41 Table of Contents Stock Performance Graph This performance graph shall not be deemed “soliciting material” or “filed” with the SEC for purposes of Section 18 of the Exchange Act, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Securities Exchange Act.
Removed
Recent Sales of Unregistered Equity Securities There were no sales of unregistered equity securities during the year ended December 31, 2022.
Added
Issuer Purchases of Equity Securities The following table summarizes our share repurchase activity for the three months ended December 31, 2023: Period Total Number of Shares Purchased 1 (in thousands) Average Price Paid per Share 2 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 1 (in thousands) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs 1 (in millions) October 918 $ 8.70 918 $ 30.0 November — $ — — $ 30.0 December — $ — — $ 30.0 Total 918 918 ______________ (1) On May 2, 2023, we announced that our Board of Directors authorized a plan (the Repurchase Plan) under which we may repurchase up to $20 million of our Class A common stock.
Added
Following our utilization of the share repurchase authorization under the Repurchase Plan, we announced on October 26, 2023 that our Board of Directors authorized a new plan (the October 2023 Repurchase Plan) under which we may repurchase up to $30 million of our Class A common stock.
Added
Under the Repurchase Plan and the October 2023 Repurchase Plan, shares of Class A common stock may be repurchased in the open market through privately negotiated transactions or otherwise, in accordance with applicable securities laws and other restrictions.
Added
The Repurchase Plan and the October 2023 Repurchase Plan do not have fixed expiration dates and do not obligate us to acquire any specific number of shares.
Added
The timing and terms of any repurchases under the Repurchase Plan and the October 2023 Repurchase Plan are at management’s discretion and depend on a variety of factors, including business, economic and market conditions, regulatory requirements, prevailing stock prices and other considerations. Additionally, we may, from time to time, enter into Rule 10b5-1 trading plans to facilitate repurchases.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

88 edited+28 added−9 removed71 unchanged
Biggest changeThe following table presents a reconciliation of Adjusted EBITDA for each of the periods presented: (in millions) Year Ended December 31, 2022 2021 2020 Net income (loss) $ (10.2) $ (42.5) $ 5.3 Depreciation and amortization 37.0 27.1 15.1 Stock-based compensation 34.4 17.9 6.4 Acquisition-related retention 2.8 — — Deferred compensation related to earnouts 1.7 2.1 — Loss on disposal of assets — 0.8 0.2 Change in fair value of contingent consideration related to earnouts 6.7 18.1 (0.8) Acquisition-related expenses 3.5 0.1 1.6 Interest expense, net 1.0 1.3 0.9 Other (gains) losses, net — (2.6) 0.1 Income tax provision (benefit) (9.8) 4.8 (4.4) Adjusted EBITDA $ 67.1 $ 27.1 $ 24.4 Net income (loss) margin (2 %) (11 %) 2 % Adjusted EBITDA margin 1 12 % 7 % 10 % ______________ (1) Represents adjusted EBITDA as a percentage of revenue.
Biggest changeWe compensate for these limitations by reconciling non-GAAP operating income (loss) to income (loss) from operations, and adjusted EBITDA to net loss, the most comparable GAAP financial measures, as follows: (in millions) Year Ended December 31, 2023 2022 2021 Income (loss) from operations $ 3.6 $ (19.0) $ (39.0) Depreciation and amortization 48.2 37.0 27.1 Acquisition-related retention 5.3 2.8 — Deferred compensation related to earnouts — 1.7 2.1 Impairment of right-of-use asset 1.4 — — Loss on disposal of assets 0.2 — 0.8 Change in fair value of contingent consideration related to earnouts — 6.7 18.1 Acquisition-related expenses 0.1 3.5 0.1 Capitalized internally developed software costs (32.4) (33.7) (24.0) Non-GAAP operating income (loss) $ 26.4 $ (1.0) $ (14.8) Operating income (loss) margin 1 % (4 %) (10 %) Non-GAAP operating income (loss) margin 1 4 % (0 %) (4 %) Net loss $ (11.8) $ (10.2) $ (42.5) Depreciation and amortization 48.2 37.0 27.1 Stock-based compensation 38.8 34.4 17.9 Acquisition-related retention 5.3 2.8 — Deferred compensation related to earnouts — 1.7 2.1 Impairment of right-of-use asset 1.4 — — Loss on disposal of assets 0.2 — 0.8 Change in fair value of contingent consideration related to earnouts — 6.7 18.1 Acquisition-related expenses 0.1 3.5 0.1 Interest (income) expense, net (2.8) 1.0 1.3 Other (gains) losses, net 0.1 — (2.6) Income tax provision (benefit) 18.1 (9.8) 4.8 Adjusted EBITDA $ 97.6 $ 67.1 $ 27.1 Stock-based compensation (38.8) (34.4) (17.9) Capitalized internally developed software costs (32.4) (33.7) (24.0) Non-GAAP operating income (loss) $ 26.4 $ (1.0) $ (14.8) Net loss margin (2 %) (2 %) (11 %) Adjusted EBITDA margin 2 16 % 12 % 7 % ______________ (1) Represents non-GAAP operating income (loss) as a percentage of revenue.
Additionally, we had $70.0 million of proceeds from our line of credit to finance the cash portion of the purchase consideration for our acquisition of OTB, with a $70.0 million repayment in full in December 2022.
Additionally, in 2022, we had $70.0 million of proceeds from our line of credit to finance the cash portion of the purchase consideration for our acquisition of OTB in 2022, with a $70.0 million repayment in full in December 2022.
However, this percentage may fluctuate from period to period depending on the timing and extent of our sales and marketing expenses. General and administrative General and administrative expenses consist of personnel related costs, including stock-based compensation, for certain of our executives as well as our legal, finance, human resources, and other administrative employees; and professional services fees.
However, this percentage may fluctuate from period to period depending on the timing and extent of our sales and marketing expenses. General and administrative General and administrative expenses consist primarily of personnel related costs, including stock-based compensation, for certain of our executives as well as our legal, finance, human resources, and other administrative employees; and professional services fees.
Based on our ongoing assessment of all available evidence, both positive and negative, including consideration of our historical profitability and the estimated impact of our operating model on future profitability, we concluded that it is more likely than not that our U.S. deferred tax assets in excess of deferred tax liabilities would not be realized and recorded a valuation allowance against these net U.S. deferred tax assets as of December 31, 2022.
Based on our ongoing assessment of all available evidence, both positive and negative, including consideration of our historical profitability and the estimated impact of our operating model on future profitability, we concluded that it is more likely than not that our U.S. deferred tax assets in excess of deferred tax liabilities would not be realized and recorded a valuation allowance against these net U.S. deferred tax assets as of December 31, 2023.
Based on our ongoing assessment of all available evidence, both positive and negative, including consideration of our historical profitability and the estimated impact of our operating model on future profitability, we concluded that it was more likely than not that our U.S. deferred tax assets in excess of deferred tax liabilities would not be realized and recorded a valuation allowance against these net U.S. deferred tax assets as of December 31, 2022.
Based on our ongoing assessment of all available evidence, both positive and negative, including consideration of our historical profitability and the estimated impact of our operating model on future profitability, we concluded that it was more likely than not that our U.S. deferred tax assets in excess of deferred tax liabilities would not be realized and recorded a valuation allowance against these net U.S. deferred tax assets as of December 31, 2023.
Services are generally transferred to the customer at a point in time and the performance obligation is a series of distinct actions, leads or clicks. 51 Table of Contents For some of our arrangements, under ASC 606 (Revenue from Contracts with Customers) our contractual right to fees is not contemporaneous with the satisfaction of the performance obligation to match the consumer with the customer.
Services are generally transferred to the customer at a point in time and the performance obligation is a series of distinct actions, leads or clicks. 56 Table of Contents For some of our arrangements, under ASC 606 (Revenue from Contracts with Customers) our contractual right to fees is not contemporaneous with the satisfaction of the performance obligation to match the consumer with the customer.
Liquidity and Capital Resources Overview Our principal sources of liquidity to meet our business requirements and plans, both in the short-term (i.e., the next twelve months from December 31, 2022) and long-term (i.e., beyond the next twelve months), have historically been cash generated from operations and, more recently, sales of our common stock, and borrowings under our credit facilities.
Liquidity and Capital Resources Overview Our principal sources of liquidity to meet our business requirements and plans, both in the short-term (i.e., the next twelve months from December 31, 2023) and long-term (i.e., beyond the next twelve months), have historically been cash generated from operations and, more recently, sales of our common stock, and borrowings under our credit facilities.
We recognize forfeitures as they occur for equity awards with only a service condition, rather than estimate expected forfeitures. 52 Table of Contents The Black-Scholes-Merton option-pricing model considers several variables and assumptions in estimating the grant date fair value of stock-based awards.
We recognize forfeitures as they occur for equity awards with only a service condition, rather than estimate expected forfeitures. 57 Table of Contents The Black-Scholes-Merton option-pricing model considers several variables and assumptions in estimating the grant date fair value of stock-based awards.
We measure this contingent consideration at fair value as of the acquisition date and record it as a liability on our consolidated balance sheet. The fair value of each contingent consideration liability is remeasured at the end of each reporting period, with any changes in fair value recognized as income or expense from operations in our consolidated income statement.
We measured this contingent consideration at fair value as of the acquisition date and record it as a liability on our consolidated balance sheet. The fair value of each contingent consideration liability is remeasured at the end of each reporting period, with any changes in fair value recognized as income or expense from operations in our consolidated income statement.
For these reasons, we expect general and administrative expenses to increase as a percentage of revenue in the near term, but eventually to decrease as a percentage of revenue as our business grows and recognizes economies of scale. This percentage may fluctuate from period to period depending on the timing and extent of our general and administrative expenses.
For these reasons, we expect general and administrative expenses to vary as a percentage of revenue in the near term, but eventually to decrease as a percentage of revenue as our business grows and recognizes economies of scale. This percentage may fluctuate from period to period depending on the timing and extent of our general and administrative expenses.
More broadly, we also have purchase obligations under contractual arrangements with vendors and service providers, including for certain web-hosting and cloud computing services, which do not qualify for recognition on our consolidated balance sheets but which we consider non-cancellable.
More broadly, we also have purchase obligations under contractual arrangements with vendors and service providers, including for certain web-hosting and cloud computing services, which do not qualify for recognition on our consolidated balance sheet but which we consider non-cancellable.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Except as otherwise noted, all references to 2022 refer to the year ended December 31, 2022, references to 2021 refer to the year ended December 31, 2021, and references to 2020 refer to the year ended December 31, 2020.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Except as otherwise noted, all references to 2023 refer to the year ended December 31, 2023, references to 2022 refer to the year ended December 31, 2022, and references to 2021 refer to the year ended December 31, 2021.
For a discussion of our cash flows for 2021 and 2020, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Liquidity and Capital Resources” in our Annual Report on Form 10-K for the year ended December 31, 2021.
For a discussion of our cash flows for 2022 and 2021, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Liquidity and Capital Resources” in our Annual Report on Form 10-K for the year ended December 31, 2022.
We received net proceeds from the IPO of $140.0 million after deducting underwriting discounts and commissions of $10.1 million. 41 Table of Contents Key Factors Affecting Our Performance Ability to Generate High Quality, Engaging Consumer Resources Delivering financial guidance and resources on a broad set of topics is core to our value proposition.
We received net proceeds from the IPO of $140.0 million after deducting underwriting discounts and commissions of $10.1 million. Key Factors Affecting Our Performance Ability to Generate High Quality, Engaging Consumer Resources Delivering financial guidance and resources on a broad set of topics is core to our value proposition.
As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. 53 Table of Contents
As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. 58 Table of Contents
We expect our general and administrative expenses to increase in absolute dollars for the foreseeable future primarily to support the growth of our business and our public company operations. Additional expenses may include increased headcount, enhanced systems, processes, and controls as well as increased expenses in the areas of insurance, compliance, investor relations, and professional services.
We expect our general and administrative expenses to increase in absolute dollars for the foreseeable future primarily to support the growth of our business. Additional expenses may include increased headcount, enhanced systems, processes, and controls as well as increased expenses in the areas of insurance, compliance, investor relations, and professional services.
However, this percentage may fluctuate from period to period depending on the timing and extent of our research and development expenses. Sales and marketing Sales and marketing expenses include advertising and promotion costs, costs related to brand campaign fees, marketing, business operations team, and editorial personnel and related costs, including stock-based compensation.
However, this percentage may fluctuate from period to period depending on the timing and extent of our research and development expenses. 47 Table of Contents Sales and marketing Sales and marketing expenses include advertising and promotion costs, costs related to brand campaign fees, marketing, business operations team, and editorial personnel and related costs, including stock-based compensation.
Known Contractual and Other Obligations A description of contractual commitments as of December 31, 2022 is included in Note 8–Commitments and Contingencies in the notes to the consolidated financial statements.
Known Contractual and Other Obligations A description of contractual commitments as of December 31, 2023 is included in Note 8–Commitments and Contingencies in the notes to the consolidated financial statements.
Our judgment regarding the likelihood of realization of these deferred tax assets could change in future periods, which could result in a material impact to our income tax provision in the period of change. Comparison of Results of Operations The following tables set forth our results of operations for the periods presented.
Our judgment regarding the likelihood of realization of these deferred tax assets could change in future periods, which could result in a material impact to our income tax provision in the period of change. 48 Table of Contents Comparison of Results of Operations The following tables set forth our results of operations for the periods presented.
A discussion and analysis of our financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 is presented below.
A discussion and analysis of our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 is presented below.
The success of our relationships with financial services partners is in large part based on our ability to provide them with interested and qualified consumers. Economic Conditions and the Financial Well-Being of Consumers Our business is reliant on economic conditions in the U.S.
The success of our relationships with financial services partners is in large part based on our ability to provide them with interested and qualified consumers. 44 Table of Contents Economic Conditions and the Financial Well-Being of Consumers Our business is reliant on economic conditions in the U.S.
By operating at the intersection of consumers and financial services providers, NerdWallet drives value for both. Through our platform, our financial services partners can reach a substantial audience, comprised of 20 million Monthly Unique Users (MUUs) on average in 2022 and 19 million on average in 2021.
By operating at the intersection of consumers and financial services providers, NerdWallet drives value for both. Through our platform, our financial services partners can reach a substantial audience, comprised of 23 million Monthly Unique Users (MUUs) on average in 2023 and 20 million on average in 2022.
Change in fair value of contingent consideration related to earnouts Our acquisitions of Fundera and KYM include earn-out provisions which require us to pay additional consideration based on the achievement of certain performance measures for a stated period after the acquisition date.
Change in fair value of contingent consideration related to earnouts Our acquisitions of Fundera and KYM included earn-out provisions which required us to pay additional consideration based on the achievement of certain performance measures for a stated period after the acquisition date.
We cannot provide assurance that additional financing will be available at all or on terms favorable to us. 50 Table of Contents Sources and Uses of Capital Resources The following table summarizes our cash flows: (in millions) Year Ended December 31, 2022 2021 2020 Net cash provided by operating activities $ 25.0 $ 7.2 $ 15.4 Net cash used in investing activities (100.3) (23.0) (55.4) Net cash provided by (used in) financing activities (8.4) 100.2 55.7 Effect of exchange rate changes on cash and cash equivalents (0.2) — 0.1 Net increase (decrease) in cash and cash equivalents $ (83.9) $ 84.4 $ 15.8 A discussion and analysis of our changes in cash flows for 2022 compared to 2021 is presented below.
We cannot provide assurance that additional financing will be available at all or on terms favorable to us. 55 Table of Contents Sources and Uses of Capital Resources The following table summarizes our cash flows: (in millions) Year Ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 72.1 $ 25.0 $ 7.2 Net cash used in investing activities (29.5) (100.3) (23.0) Net cash provided by (used in) financing activities (26.2) (8.4) 100.2 Effect of exchange rate changes on cash and cash equivalents 0.1 (0.2) — Net increase (decrease) in cash and cash equivalents $ 16.5 $ (83.9) $ 84.4 A discussion and analysis of our changes in cash flows for 2023 compared to 2022 is presented below.
As a result of the goodwill impairment assessment in 2022, 2021 and 2020, we determined that it was not more likely than not that the fair value of its single reporting unit was less than its carrying amount. As such, goodwill was not impaired during 2022, 2021 and 2020.
As a result of the goodwill impairment assessments in 2023, 2022 and 2021, we determined that it was not more likely than not that the fair value of its single reporting unit was less than its carrying amount. As such, goodwill was not impaired during 2023, 2022 and 2021.
In addition, Adjusted EBITDA as we define it may not be comparable to similarly titled measures used by other companies. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net income (loss) and our other GAAP results.
In addition, non-GAAP operating income (loss) and adjusted EBITDA as we define them may not be comparable to similarly titled measures used by other companies. Because of these limitations, you should consider non-GAAP operating income (loss) and adjusted EBITDA alongside other financial performance measures, including income (loss) from operations, net loss and our other GAAP results.
Sales and marketing expense For 2022 and 2021, our total sales and marketing expense was comprised of approximately 45% and 36% for performance marketing, respectively, and 28% and 35% for brand marketing, respectively, with the remainder for organic and other marketing expenses. We are able to adjust our marketing spend to reflect changes in external factors and consumer behavior.
Sales and marketing expense For 2023 and 2022, our total sales and marketing expense was comprised of approximately 51% and 45% for performance marketing, respectively, and 21% and 28% for brand marketing, respectively, with the remainder for organic and other marketing expenses. We are able to adjust our marketing spend to reflect changes in external factors and consumer behavior.
Change in fair value of contingent consideration related to earnouts The change in fair value of contingent consideration relates to our acquisitions of Fundera and KYM in the second half of 2020. The fair value of the estimated contingent considerations is subject to remeasurement at each reporting date until the payments are made.
Change in fair value of contingent consideration related to earnouts The change in fair value of contingent consideration relates to our acquisitions of Fundera and KYM in the second half of 2020. The fair value of the contingent considerations was subject to remeasurement at each reporting date until the payments were made.
Other verticals revenue includes revenue from other product sources, including insurance, banking, investing, and SMB products. 44 Table of Contents Cost of revenue Cost of revenue consists primarily of amortization expense associated with capitalized software development costs and developed technology intangible assets related to our acquisitions, credit scoring fees, account linking fees , and third-party data center costs.
Emerging verticals revenue includes revenue from other product sources, including banking, insurance, investing and international. Cost of revenue Cost of revenue consists primarily of amortization expense associated with capitalized software development costs and developed technology intangible assets related to our acquisitions, credit scoring fees, account linking fees , and third-party data center costs.
During 2022, we grew average MUUs to 20 million, which was up 4% compared to 2021, as we saw strong engagement in areas such as banking, travel and SMB products, and also began incorporating our acquisition of OTB in July 2022. Partially offsetting growth were declines from a continued challenging macroeconomic environment in both mortgages and investing.
During 2023, we grew average MUUs to 23 million, which was up 15% compared to 2022, as we saw strong engagement in areas such as travel, banking, and insurance, and also began incorporating our acquisition of OTB in July 2022. Partially offsetting growth were declines from a continued challenging macroeconomic environment in both mortgages and investing.
We received net proceeds from our IPO of $140.0 million after deducting underwriting discounts and commissions of $10.1 million. As of December 31, 2022 and 2021, we had cash and cash equivalents of $83.9 million and $167.8 million, respectively.
We received net proceeds from our IPO of $140.0 million after deducting underwriting discounts and commissions of $10.1 million. As of December 31, 2023 and 2022, we had cash and cash equivalents of $100.4 million and $83.9 million, respectively.
We increased sales and marketing expense in 2021 by 88% compared to 2020, and in 2022 by 38% compared to 2021. 42 Table of Contents In 2022, over 70% of all traffic to NerdWallet came organically through direct or unpaid channels, reflecting the strength of our brand and organic marketing efforts.
We increased sales and marketing expense in 2022 by 38% compared to 2021, and in 2023 by 7% compared to 2022. In 2023, over 70% of all traffic to NerdWallet came organically through direct or unpaid channels, reflecting the strength of our brand and organic marketing efforts.
As such, we plan to continue investing in content, technology and marketing in order to attract and engage consumers. Ability to Deepen Our Relationships with Our Financial Services Partners We worked wit h over 400 financial services partners as of December 31, 2022. These companies are essential to helping us serve consumers and grow our business .
As such, we plan to continue investing in content, technology and marketing in order to attract and engage consumers. Ability to Deepen Our Relationships with Our Financial Services Partners We worked wit h hundreds of financial services partners during 2023. These companies are essential to helping us serve consumers and grow our business .
Other gains (losses), net is primarily related to changes in the fair value of the embedded derivative in our previously outstanding long-term debt, as well as realized and unrealized gains and losses on foreign currency transactions and balances.
Other gains (losses), net is primarily related to changes in the fair value of the embedded derivative in our previously outstanding long-term debt, as well as realized and unrealized gains and losses on foreign currency transactions and balances. Other gains (losses), net for 2021 includes a gain on extinguishment of debt as well as a nonrecurring gain.
Consumers who visit NerdWallet tend to share a few other characteristics that make them attractive customers to our financial services partners: we have received feedback from our financial services partners that our users’ approval rates can be significantly higher than those applying through other channels and they are more eager to explore additional opportunities and products, driving demand for NerdWallet’s financial services partners.
Consumers who visit NerdWallet tend to share a few other characteristics that make them attractive customers to our financial services partners: we have received feedback from our financial services partners that our users’ approval rates can be significantly higher than those applying through other channels and they are more eager to explore additional opportunities and products, driving demand for NerdWallet’s financial services partners. 43 Table of Contents Our Financial Model We built our business to provide unbiased and trusted guidance to consumers.
Other income (expense), net Other income (expense), net is comprised of interest income, interest expense, and other gains (losses), net. Interest income consists primarily of interest earned on our cash and cash equivalents. Interest expense consists of interest costs related to our revolving credit facility and long-term debt, including amortization of the debt premium on our long-term debt.
Interest income consists primarily of interest earned on our cash and cash equivalents. Interest expense consists of interest costs related to our revolving credit facility and long-term debt, including amortization of the debt premium on our long-term debt.
ESPP The fair value of purchase rights granted under its ESPP is estimated using the component measurement approach with valuations of the components based on the Company’s stock price on the date of the grant and/or the Black-Scholes-Merton option-pricing model, as appropriate for the applicable components. The fair value of the purchase rights is recognized over the requisite service period.
ESPP The fair value of purchase rights granted under our employee stock purchase plan (ESPP) is estimated using the component measurement approach with valuations of the components based on the Company’s stock price on the date of the grant and/or the Black-Scholes-Merton option-pricing model, as appropriate for the applicable components.
Results of Operations (in millions) Year Ended December 31, 2022 2021 2020 Revenue $ 538.9 $ 379.6 $ 245.3 Costs and expenses: Cost of revenue 39.8 28.5 21.3 Research and development (1) 77.6 62.2 50.9 Sales and marketing (1) 375.6 271.3 144.0 General and administrative (1) 58.2 38.5 28.0 Change in fair value of contingent consideration related to earnouts 6.7 18.1 (0.8) Total costs and expenses 557.9 418.6 243.4 Income (loss) from operations (19.0) (39.0) 1.9 Other income (expense), net: Interest income 1.5 — 0.2 Interest expense (2.5) (1.3) (1.1) Other gains (losses), net — 2.6 (0.1) Total other income (expense), net (1.0) 1.3 (1.0) Income (loss) before income taxes (20.0) (37.7) 0.9 Income tax provision (benefit) (9.8) 4.8 (4.4) Net income (loss) $ (10.2) $ (42.5) $ 5.3 ______________ (1) Includes stock-based compensation as follows: (in millions) Year Ended December 31, 2022 2021 2020 Research and development $ 12.0 $ 6.8 $ 3.1 Sales and marketing 12.4 5.8 1.9 General and administrative 10.0 5.3 1.4 Total $ 34.4 $ 17.9 $ 6.4 46 Table of Contents The following table sets forth the components of our consolidated statements of operations as a percentage of revenue: Year Ended December 31, 2022 2021 2020 Revenue 100 % 100 % 100 % Costs and expenses: Cost of revenue 7 8 9 Research and development 15 16 21 Sales and marketing 70 71 58 General and administrative 11 10 11 Change in fair value of contingent consideration related to earnouts 1 5 — Total costs and expenses 104 110 99 Income (loss) from operations (4) (10) 1 Other income (expense), net: Interest income — — — Interest expense — — (1) Other gains (losses), net — — — Total other income (expense), net — — (1) Income (loss) before income taxes (4) (10) — Income tax provision (benefit) (2) 1 (2) Net income (loss) (2 %) (11 %) 2 % Comparison of the Years Ended December 31, 2022 and 2021 Revenue (in millions) Year Ended December 31, 2022 2021 $ Change % Change Credit cards $ 210.3 $ 123.8 $ 86.5 70 % Loans 109.1 126.4 (17.3) (14 %) Other verticals 219.5 129.4 90.1 70 % Total revenue $ 538.9 $ 379.6 $ 159.3 42 % Revenue increased $159.3 million, or 42%, for 2022 compared to 2021, driven by strong growth in credit cards and other verticals revenues, partially offset by lower loans revenue.
Results of Operations (in millions) Year Ended December 31, 2023 2022 2021 Revenue $ 599.4 $ 538.9 $ 379.6 Costs and expenses: Cost of revenue 54.0 39.8 28.5 Research and development (1) 80.5 77.6 62.2 Sales and marketing (1) 401.5 375.6 271.3 General and administrative (1) 59.8 58.2 38.5 Change in fair value of contingent consideration related to earnouts — 6.7 18.1 Total costs and expenses 595.8 557.9 418.6 Income (loss) from operations 3.6 (19.0) (39.0) Other income (expense), net: Interest income 3.6 1.5 — Interest expense (0.8) (2.5) (1.3) Other gains (losses), net (0.1) — 2.6 Total other income (expense), net 2.7 (1.0) 1.3 Income (loss) before income taxes 6.3 (20.0) (37.7) Income tax provision (benefit) 18.1 (9.8) 4.8 Net loss $ (11.8) $ (10.2) $ (42.5) ______________ (1) Includes stock-based compensation as follows: (in millions) Year Ended December 31, 2023 2022 2021 Research and development $ 11.2 $ 12.0 $ 6.8 Sales and marketing 13.8 12.4 5.8 General and administrative 13.8 10.0 5.3 Total $ 38.8 $ 34.4 $ 17.9 49 Table of Contents The following table sets forth the components of our consolidated statements of operations as a percentage of revenue: Year Ended December 31, 2023 2022 2021 Revenue 100 % 100 % 100 % Costs and expenses: Cost of revenue 9 7 8 Research and development 13 15 16 Sales and marketing 67 70 71 General and administrative 10 11 10 Change in fair value of contingent consideration related to earnouts — 1 5 Total costs and expenses 99 104 110 Income (loss) from operations 1 (4) (10) Other income (expense), net: Interest income — — — Interest expense — — — Other gains (losses), net — — — Total other income (expense), net — — — Income (loss) before income taxes 1 (4) (10) Income tax provision (benefit) 3 (2) 1 Net loss (2 %) (2 %) (11 %) Comparison of the Years Ended December 31, 2023 and 2022 Revenue (in millions) Year Ended December 31, 2023 2022 $ Change % Change Credit cards $ 209.7 $ 210.3 $ (0.6) (0 %) Loans 101.6 109.1 (7.5) (7 %) SMB products 101.2 91.4 9.8 11 % Emerging verticals 186.9 128.1 58.8 46 % Total revenue $ 599.4 $ 538.9 $ 60.5 11 % Revenue increased $60.5 million, or 11%, for 2023 compared to 2022, driven by strong growth in Emerging verticals and SMB products revenues, partially offset by lower Loans revenue.
The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount is not driven by core operating results and renders comparisons with prior periods less meaningful.
The above items are excluded from our non-GAAP operating income (loss) and adjusted EBITDA measures because these items are non-cash in nature, or because the amounts are not driven by core operating results and renders comparisons with prior periods less meaningful.
We were in compliance with all covenants as of December 31, 2022 and 2021. For additional information on these covenants, see Note 7–Debt in the notes to the consolidated financial statements. Our future capital requirements may vary materially from those planned and will depend on certain factors, such as our growth and our operating results.
For additional information on these covenants, see Note 7–Debt in the notes to the consolidated financial statements. Our future capital requirements may vary materially from those planned and will depend on certain factors, such as our growth and our operating results.
Our effective tax rate was 49.2% and (12.8%) for 2022 and 2021, respectively, as compared to the U.S. federal statutory income tax rate of 21%.
Our effective tax rate was 286.7% and 49.2% for 2023 and 2022, respectively, as compared to the U.S. federal statutory income tax rate of 21%.
We have federal and state net operating loss carryforwards (NOLs), and federal and California research and development credit carryforwards, certain of which are subject to expiration dates if not utilized.
Income tax provision (benefit) Our income tax provision (benefit) consists of federal and state income taxes. We have federal and state net operating loss carryforwards (NOLs), and federal and California research and development credit carryforwards, certain of which are subject to expiration dates if not utilized.
In 2022, approximately 28% of our total marketing expense was attributable to brand marketing, 45% to performance marketing, and the remainder to organic and other marketing expenses. In 2021, approximately 35% of our total marketing expense was attributable to brand marketing, 36% to performance marketing, and the remainder to organic and other marketing expenses.
In 2023, approximately 21% of our total marketing expense was attributable to brand marketing, 51% to performance marketing, and the remainder to organic and other marketing expenses. In 2022, approximately 28% of our total marketing expense was attributable to brand marketing, 45% to performance marketing, and the remainder to organic and other marketing expenses.
We define Adjusted EBITDA as net income (loss) from continuing operations adjusted to exclude depreciation and amortization, interest expense, net, provision (benefit) for income taxes, and further exclude (1) losses (gains) on disposals of assets, (2) remeasurement of the embedded derivative in our previously outstanding long-term debt, (3) change in fair value of contingent consideration related to earnouts, (4) deferred compensation related to earnouts, (5) stock-based compensation, and (6) acquisition-related costs.
Adjusted EBITDA: We define adjusted EBITDA as net income (loss) from continuing operations adjusted to exclude depreciation and amortization, interest income (expense), net, provision (benefit) for income taxes, and further exclude (1) impairment of right-of-use asset, (2) losses (gains) on disposals of assets, (3) change in fair value of contingent consideration related to earnouts, (4) deferred compensation related to earnouts, (5) stock-based compensation, and (6) acquisition-related costs.
(doing business as Know Your Money), an online provider of financial guidance and tools geared towards consumers and SMBs in the UK. KYM’s UK expertise and NerdWallet’s existing brand recognition have provided us a strong foothold in the UK region. We believe the acquisition will allow us to accelerate our international growth.
(doing business as Know Your Money), an online provider of financial guidance and tools geared towards consumers and SMBs in the UK. KYM’s UK expertise and NerdWallet’s existing brand recognition have provided us a strong foothold in the UK region.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Components of Our Results of Operations—Non-GAAP Financial Measure” for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated in accordance with GAAP.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Components of Our Results of Operations—Non-GAAP Financial Measures” for reconciliations of non-GAAP operating income (loss) to income (loss) from operations, and adjusted EBITDA to net loss, the most directly comparable financial measures calculated in accordance with GAAP.
Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.
JOBS Act Accounting Election We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.
Although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect all cash requirements for such replacements or for new capital expenditure requirements; • Adjusted EBITDA excludes stock-based compensation, including for acquisition-related inducement awards, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy; and • Adjusted EBITDA excludes acquisition-related costs, including acquisition-related retention compensation under compensatory retention agreements with certain key employees, acquisition-related transaction expenses, contingent consideration fair value adjustments related to earnouts, and deferred compensation related to earnouts.
Although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and non-GAAP operating income (loss) and adjusted EBITDA do not reflect all cash requirements for such replacements or for new capital expenditure requirements; 46 Table of Contents • Non-GAAP operating income (loss) and adjusted EBITDA exclude acquisition-related costs, including acquisition-related retention compensation under compensatory retention agreements with certain key employees, acquisition-related transaction expenses, contingent consideration fair value adjustments related to earnouts, and deferred compensation related to earnouts; • Adjusted EBITDA excludes stock-based compensation, including for acquisition-related inducement awards, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy; and • Adjusted EBITDA does not reflect interest income (expense) and other gains (losses), net, which include unrealized and realized gains and losses on foreign currency exchange, as well as certain nonrecurring gains (losses).
See Note 1–The Company and its Significant Accounting Policies in the notes to our consolidated financial statements for further discussion regarding how we estimated the fair value of these contingent considerations.
See Note 1–The Company and its Significant Accounting Policies and Note 3–Fair Value Measurements in the notes to our consolidated financial statements for further discussion on these contingent considerations.
Acquisitions We have made acquisitions to expand into new verticals; to enter new markets and geographies; and to grow our platform so that our users have better outcomes. Our recent acquisitions include: • On the Barrelhead. In July 2022, we acquired On the Barrelhead, Inc.
Acquisitions We have made acquisitions to expand into new verticals; to enter new markets and geographies; and to grow our platform so that our users have better outcomes. Our recent acquisitions include: • On the Barrelhead. In July 2022, we acquired On the Barrelhead, Inc. (OTB), a data-driven platform that provides consumers and SMBs with credit-driven product recommendations.
Operating activities Net cash provided by operating activities increased $17.8 million in 2022 compared to 2021 driven by a $32.3 million decrease in net loss, partially offset by an $10.6 million increase in net cash outflow from changes in operating assets and liabilities and a $3.9 million decrease in non-cash charges.
Operating activities Net cash provided by operating activities increased $47.1 million in 2023 compared to 2022 driven by a $25.9 million decrease in net cash outflow from changes in operating assets and liabilities and a $22.8 million increase in non-cash charges, partially offset by a $1.6 million increase in net loss.
For a discussion of our financial condition and results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021. 40 Table of Contents Overview Our mission is to provide clarity for all of life’s financial decisions.
For a discussion of our financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.
However, the use of this non-GAAP measure has certain limitations because it does not reflect all items of income and expense that affect our operations. Adjusted EBITDA has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for the related financial information prepared in accordance with GAAP.
However, the use of these non-GAAP measures have certain limitations because they do not reflect all items of income and expense that affect our operations. Non-GAAP operating income (loss) and adjusted EBITDA have limitations as financial measures, should be considered as supplemental in nature, and are not meant as substitutes for the related financial information prepared in accordance with GAAP.
Loans revenue decreased $17.3 million, or 14%, for 2022 compared to 2021, primarily due to a 44% decrease in mortgages revenue primarily attributable to higher interest rates and continuing macroeconomic headwinds, partially offset by a 72% increase in personal loans revenue driven by both organic growth as well as incorporating our acquisition of OTB in July 2022.
Loans revenue decreased $7.5 million, or 7%, for 2023 compared to 2022, primarily due to decreases of 41% in mortgages revenue and 23% in student loans revenue, mainly attributable to higher interest rates driving lower demand for refinancing and continuing macroeconomic headwinds, partially offset by a 29% increase in personal loans revenue driven by both organic growth as well as incorporating our acquisition of OTB in July 2022.
We believe our current cash and cash equivalents and future cash flow from operations, as well as access to our credit facility, will be sufficient to meet our ongoing working capital, capital expenditure and other liquidity requirements for at least twelve months from the date of this filing.
We believe our current cash and cash equivalents and future cash flow from operations, as well as access to our credit facility with JPMorgan Chase Bank and a syndicate of other lenders, subject to customary borrowing conditions, will be sufficient to meet our ongoing working capital, capital expenditure and other liquidity requirements for the next twelve months and beyond.
We generate revenue by successfully matching those consumers with our financial services partners, from whom we generate fees. These fees from which we recognize revenue include revenue per action, revenue per click, revenue per lead, and revenue per funded loan.
We seek to increase the number of consumers who come to NerdWallet pursuing our financial content, guidance, and tech-driven recommendations. We generate revenue by successfully matching those consumers with our financial services partners, from whom we generate fees. These fees from which we recognize revenue include revenue per action, revenue per click, revenue per lead, and revenue per funded loan.
We recognize forfeitures as they occur, rather than estimate expected forfeitures. Recently Issued and Adopted Accounting Pronouncements For information on recent accounting pronouncements, see Note 1–The Company and its Significant Accounting Policies in the notes to the consolidated financial statements. JOBS Act Accounting Election We are an emerging growth company, as defined in the JOBS Act.
The fair value of the purchase rights is recognized over the requisite service period. We recognize forfeitures as they occur, rather than estimate expected forfeitures. Recently Issued and Adopted Accounting Pronouncements For information on recent accounting pronouncements, see Note 1–The Company and its Significant Accounting Policies in the notes to the consolidated financial statements.
During 2022, we recognized a tax benefit of $12.1 million related to the change in our existing full valuation allowance on deferred tax assets resulting from our acquisition of OTB, which was partially offset by higher capitalization of research and development expenses under new tax regulations effective in 2022.
During 2022, we recognized a nonrecurring tax benefit of $12.1 million related to the change in our existing full valuation allowance on deferred tax assets resulting from our acquisition of OTB in July 2022, which was partially offset by higher capitalization of research and development expenses under new tax regulations effective in 2022. 52 Table of Contents Non-GAAP Financial Measures Non-GAAP operating income (loss) and adjusted EBITDA as we define them may not be comparable to similarly titled measures used by other companies.
The increase in net cash outflow from changes in operating assets and liabilities was primarily due to an $11.5 million payment of contingent consideration and a $10.8 million decrease in accrued expenses and other current liabilities, partially offset by an $8.9 million decrease in prepaid expenses and other assets.
The decrease in net cash outflow from changes in operating assets and liabilities was primarily due to decreases of $29.4 million for accounts receivable, and $7.8 million for other liabilities, partially offset by an $8.2 million increase for accrued expenses and other current liabilities.
Key Operating Metric and Non-GAAP Financial Measure We collect, review and analyze operating and financial data of our business to assess our ongoing performance and compare our results to prior period results.
We believe the acquisition will allow us to accelerate our international growth. 45 Table of Contents Key Operating Metric and Non-GAAP Financial Measures We collect, review and analyze operating and financial data of our business to assess our ongoing performance and compare our results to prior period results.
General and administrative expense General and administrative expenses increased $19.7 million, or 51%, for 2022 compared to 2021, primarily attributable to increases of $9.5 million in personnel-related costs mainly due to higher stock-based compensation and increased headcount, $3.2 million in director and officer liability insurance costs, and $3.4 million in acquisition-related costs primarily due to costs related to our acquisition of OTB.
General and administrative expense General and administrative expenses increased $1.6 million, or 3%, for 2023 compared to 2022, primarily attributable to a $5.7 million increase in personnel-related costs mainly due to higher stock-based compensation, and a $1.4 million impairment of right-of-use asset, partially offset by decreases of $3.4 million in acquisition-related costs primarily related to our acquisition of OTB in July 2022, and $1.8 million primarily related to director and officer liability insurance costs.
The decrease in non-cash charges was primarily due to decreases of $17.0 million in deferred taxes, $11.4 million in change in fair value of contingent consideration related to earnouts, and $5.3 million in non-cash lease costs, substantially offset by increases of $16.5 million in stock-based compensation, $9.9 million in depreciation and amortization, and $3.4 million in other, net.
The increase in non-cash charges was primarily due to increases of $12.1 million in deferred taxes, $11.2 million in depreciation and amortization, and $4.4 million in stock-based compensation, partially offset by a $6.7 million decrease in change in fair value of contingent consideration related to earnouts.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net income (loss) and our other GAAP results. We compensate for these limitations by reconciling Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure.
Because of these limitations, you should consider non-GAAP operating income (loss) and adjusted EBITDA alongside other financial performance measures, including income (loss) from operations, net loss and our other GAAP results.
In addition, we do not always look to maximize the number of our financial services partners on our platform; we instead aim to have products for consumers available on our platform that enable the best match. We seek to increase the number of consumers who come to NerdWallet pursuing our financial content, guidance, and tech-driven recommendations.
We believe that taking a long-term view will increase our revenue and grow our business. In addition, we do not always look to maximize the number of our financial services partners on our platform; we instead aim to have products for consumers available on our platform that enable the best match.
Other income (expense), net (in millions) Year Ended December 31, 2022 2021 $ Change % Change Interest income $ 1.5 $ — $ 1.5 NM Interest expense (2.5) (1.3) (1.2) 91 % Other gains, net — 2.6 (2.6) NM Total other income (expense), net $ (1.0) $ 1.3 $ (2.3) NM The change in other income (expense), net for 2022 compared to 2021 was primarily attributable to a $1.5 million gain on extinguishment of debt and a $1.3 million nonrecurring gain, both in 2021. 48 Table of Contents Income tax provision (benefit) We had an income tax benefit of $9.8 million for 2022, as compared to an income tax provision of $4.8 million in 2021.
Other income (expense), net (in millions) Year Ended December 31, 2023 2022 $ Change % Change Interest income $ 3.6 $ 1.5 $ 2.1 135 % Interest expense (0.8) (2.5) 1.7 (69 %) Other losses, net (0.1) — (0.1) 85 % Total other income (expense), net $ 2.7 $ (1.0) $ 3.7 NM The change in other income (expense), net for 2023 compared to 2022 was primarily attributable to higher interest income reflecting higher interest rates and average cash balances, and lower interest expense related to debt activity. 51 Table of Contents Income tax provision (benefit) We had an income tax provision of $18.1 million for 2023, as compared to an income tax benefit of $9.8 million in 2022.
Our revenue generally includes three product categories: credit cards, loans and other verticals. Credit cards revenue includes revenue from consumer credit cards. Loans revenue includes revenue from personal loans, home mortgages, student loans and auto loans.
Our revenue generally includes four product categories: Credit cards, Loans, SMB products and Emerging verticals. Credit cards revenue includes revenue from consumer credit cards. Loans revenue includes revenue from personal loans, home mortgages, student loans and auto loans. SMB products revenue includes revenue from loans, credit cards and other financial products and services intended for small and mid-sized businesses.
While we expect MUUs to grow over time, the metric may fluctuate from period to period based on economic conditions and our strategic marketing decisions. 43 Table of Contents Adjusted EBITDA We use Adjusted EBITDA in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our Board of Directors concerning our financial performance.
Non-GAAP Financial Measures We use non-GAAP operating income (loss) and adjusted EBITDA in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our Board of Directors concerning our financial performance.
Sales and marketing expenses increased $104.3 million, or 38%, for 2022 compared to 2021. The increase was primarily attributable to increases of $70.3 million in performance marketing expenses, $23.3 million in organic and other marketing expenses primarily due to higher personnel-related costs due to our efforts to grow and increase our user base, and $10.7 million in brand marketing expenses.
The increase was primarily attributable to increases of $38.1 million in performance marketing expenses and $9.7 million in organic and other marketing expenses primarily due to higher personnel-related costs due to our efforts to grow and increase our user base, partially offset by a $21.9 million decrease in brand marketing expenses.
Our primary liquidity needs are related to the funding of general business requirements, including working capital requirements, research and development, and capital expenditures, as well as other liquidity requirements including, but not limited to, business combinations. 49 Table of Contents On November 8, 2021, we completed our IPO, in which we sold 8.3 million shares of our Class A common stock, which includes the exercise in full of the underwriters’ option to purchase 1.1 million shares of Class A common stock, at a public offering price of $18.00 per share.
On November 8, 2021, we completed our IPO, in which we sold 8.3 million shares of our Class A common stock, which includes the exercise in full of the underwriters’ option to purchase 1.1 million shares of Class A common stock, at a public offering price of $18.00 per share.
Our vision is a world where everyone makes financial decisions with confidence. At NerdWallet, we empower consumers—both individual consumers and small and mid-sized businesses (SMBs)—to make smarter financial decisions with confidence.
Overview Our mission is to provide clarity for all of life’s financial decisions. Our vision is a world where everyone makes financial decisions with confidence. At NerdWallet, we empower consumers—both individuals and SMBs—to make smarter financial decisions with confidence via our digital platform.
Other verticals revenue increased $90.1 million, or 70%, for 2022 compared to 2021, primarily driven by increases of 130% in SMB products revenue following our acquisition of Fundera and 179% in banking revenue primarily due to the rising interest rate environment. 47 Table of Contents Costs and Expenses (in millions) Year Ended December 31, 2022 2021 $ Change % Change Cost of revenue $ 39.8 $ 28.5 $ 11.3 39 % Research and development 77.6 62.2 15.4 25 % Sales and marketing 375.6 271.3 104.3 38 % General and administrative 58.2 38.5 19.7 51 % Change in fair value of contingent consideration related to earnouts 6.7 18.1 (11.4) (63 %) Total costs and expenses $ 557.9 $ 418.6 $ 139.3 33 % Cost of revenue Cost of revenue increased $11.3 million, or 39%, for 2022 compared to 2021.
Emerging verticals revenue increased $58.8 million, or 46%, for 2023 compared to 2022, primarily driven by increases of 74% in banking revenue mainly due to the higher interest rate environment and 30% in insurance products mainly driven by auto insurance. 50 Table of Contents Costs and Expenses (in millions) Year Ended December 31, 2023 2022 $ Change % Change Cost of revenue $ 54.0 $ 39.8 $ 14.2 36 % Research and development 80.5 77.6 2.9 4 % Sales and marketing 401.5 375.6 25.9 7 % General and administrative 59.8 58.2 1.6 3 % Change in fair value of contingent consideration related to earnouts — 6.7 (6.7) (100 %) Total costs and expenses $ 595.8 $ 557.9 $ 37.9 7 % Cost of revenue Cost of revenue increased $14.2 million, or 36%, for 2023 compared to 2022.
Investing activities Net cash used in investing activities increased $77.3 million in 2022 compared to 2021, primarily due to $68.1 million of cash paid, net of cash acquired, for our acquisition of OTB, and a $6.9 million increase in capitalized software development costs.
Investing activities Net cash used in investing activities decreased $70.8 million in 2023 compared to 2022, primarily due to $68.1 million of cash paid, net of cash acquired, for our acquisition of OTB in 2022, as well as a $3.9 million decrease in purchases of property and equipment.
During 2021, we grew average MUUs to 19 million, which was up 23% compared to 2020, as we increased our sales and marketing expenditures in light of the continued economic recovery we experienced.
During 2022, we grew average MUUs to 20 million, which was up 4% compared to 2021, as we increased our sales and marketing expenditures in light of the continued economic recovery we experienced. While we expect MUUs to grow over time, the metric may fluctuate from period to period based on economic conditions and our strategic marketing decisions.
(OTB), a data-driven platform that provides consumers and small and mid-sized businesses (SMBs) with credit-driven product recommendations. Given the success of our Fundera acquisition within our SMB vertical, we are leveraging our vertical integration playbook to fully integrate OTB’s technology and expertise within our Loans portfolio.
Given the success of our Fundera acquisition within our SMB products verticals, we are leveraging our vertical integration playbook to fully integrate OTB’s technology and expertise within our Loans portfolio.
The increase was attributable to a $32.3 million decrease in net loss and increases in adjustments to reconcile Adjusted EBITDA to net loss, including $16.5 million for stock-based compensation and $9.9 million for depreciation and amortization, offset by decreases of $14.6 million for income taxes.
The increase was primarily attributable to increases in adjustments to reconcile adjusted EBITDA to net loss, including$27.9 million for income taxes, $11.2 million for depreciation and amortization, and $4.4 million for stock-based compensation, partially offset by decreases of $6.7 million for the change in fair value of contingent consideration related to earnouts, $3.4 million for acquisition-related expenses, and $3.8 million for interest income (expense), net.
If necessary, we may borrow up to $100 million under our credit facility with Silicon Valley Bank and certain other lenders, subject to borrowing conditions, which terminates on December 2, 2023. We had no outstanding balance on our credit facility as of December 31, 2022 or 2021. Our credit facility contains certain financial and non-financial covenants.
Under the terms of our Prior Credit Agreement, we could have borrowed up to $100.0 million, subject to borrowing conditions. We had no outstanding balance on our credit facility as of December 31, 2023 or 2022. Our credit facility contains certain financial and non-financial covenants. We were in compliance with all covenants as of December 31, 2023 and 2022.
Moreover, we have included Adjusted EBITDA in this Annual Report on Form 10-K because it is a key measurement used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting.
Moreover, non-GAAP operating income (loss) and adjusted EBITDA are key measurements used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting.
We expect our cost of revenue to increase in absolute dollars for the foreseeable future to the extent that our business continues to grow. We expect our cost of revenue to decrease over time as a percentage of revenue as we recognize economies of scale. However, this percentage may fluctuate from year to year in the short term.
We expect our cost of revenue to increase in absolute dollars for the foreseeable future to the extent that our business continues to grow.
The increase was primarily attributable to a $10.2 million increase in amortization expense related to capitalized software development costs and intangible assets. Amortization of intangible assets increased $4.9 million related to our acquisition of OTB in the second half of 2022. Research and development expense Research and development expenses increased $15.4 million, or 25%, for 2022 compared to 2021.
The increase was primarily attributable to an $11.0 million increase in amortization expense related to capitalized software development costs and intangible assets from our acquisition of OTB in July 2022, as well as a $2.2 million increase primarily related to third-party service charges.
Our Financial Model We built our business to provide unbiased and trusted guidance to consumers. Through this guidance, we attract users to our platform and use data science models to match them with relevant products from our financial services partners.
Through this guidance, we attract users to our platform and use data science models to match them with relevant products from our financial services partners. Given our mission is to provide clarity for all of life’s financial decisions, we take actions that aim to prioritize user experience over revenue per user.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed7 unchanged
Biggest changeInterest Rate Risk Our cash and cash equivalents primarily consist of cash on hand and highly liquid investments in money market instruments and U.S. government securities. We had cash and cash equivalents of $83.9 million and $167.8 million as of December 31, 2022 and 2021, respectively. We do not enter into investments for trading or speculative purposes.
Biggest changeInterest Rate Risk Our cash and cash equivalents primarily consist of cash on hand and highly liquid investments in money market instruments and U.S. government securities. We had cash and cash equivalents of $100.4 million and $83.9 million as of December 31, 2023 and 2022, respectively. We do not enter into investments for trading or speculative purposes.
The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our historical consolidated financial statements for the years ended December 31, 2022, 2021 and 2020.
The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our historical consolidated financial statements for the years ended December 31, 2023, 2022 and 2021.
For additional information, see the sections titled “Risk Factors—Risks Related to Our Industry and the Consumer Finance Economy.” In addition, future borrowings on our line of credit would be subject to changes in interest rate. 54 Table of Contents
For additional information, see the sections titled “Risk Factors—Risks Related to Our Industry and the Consumer Finance Economy.” In addition, future borrowings on our line of credit would be subject to changes in interest rate. 59 Table of Contents

Other NRDS 10-K year-over-year comparisons