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What changed in Nerdy Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Nerdy Inc.'s 2024 and 2025 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 2025 report.

+246 added−219 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-27)

Top changes in Nerdy Inc.'s 2025 10-K

246 paragraphs added · 219 removed · 160 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIt is not possible to predict whether or when such legislation may be adopted in additional jurisdictions, and certain proposals, if adopted, could harm our business through a decrease in consumer registrations and revenue, or through a change in marketing strategies; however, a federal data privacy and security standard, which is also a possibility, may provide substantial clarity and benefits for businesses that collect and maintain such data. 9 Table of Contents These regulations are often complex and subject to varying interpretations, in many cases due to their lack of specificity, and as a result, their application in practice may change or develop over time through judicial decisions or as new guidance or interpretations are provided by regulatory and governing bodies, such as federal, state, and local administrative agencies.
Biggest changeIt is not possible to predict whether or when such legislation may be adopted in additional jurisdictions, and certain 9 Table of Contents proposals, if adopted, could harm our business through a decrease in consumer registrations and revenue, or through a change in marketing strategies; however, a federal data privacy and security standard, which is also a possibility, may provide substantial clarity and benefits for businesses that collect and maintain such data.
By providing numerous learning formats to help Learners access top Experts across multiple formats, our platform empowers both Learners and Experts to have more agency, optimize interactions, and enhance their learning and instructing experience. 5 Table of Contents • Demand for Long-Term, Consistent Learning : Learners are expressing interest in supplemental learning solutions that support a more consistent use pattern over extended periods of time and a default to recurring, ‘always on’ relationships. • Learning Loss and Chronic Absenteeism : The National Center for Education Statistics (“NCES”) publishes what is known as the “Nation's Report Card”, and results have shown that students have fallen behind in reading and math.
By providing numerous learning 5 Table of Contents formats to help Learners access top Experts across multiple formats, our platform empowers both Learners and Experts to have more agency, optimize interactions, and enhance their learning and instructing experience. • Demand for Long-Term, Consistent Learning : Learners are expressing interest in supplemental learning solutions that support a more consistent use pattern over extended periods of time and a default to recurring, ‘always on’ relationships. • Learning Loss and Chronic Absenteeism : The National Center for Education Statistics (“NCES”) publishes what is known as the “Nation's Report Card”, and results have shown that students have fallen behind in reading and math.
Our AI-powered Learner-Expert matching engine intelligently matches Learners with Experts who best fit their specific needs in order to deliver effective live learning. Additionally, Learners benefit from our modern technology and learning tools, including adaptive testing capabilities, that support a collaborative interaction and optimize the learning experience. • Convenience : Our platform makes learning engaging and accessible.
Our AI-powered Learner-Expert matching engine intelligently matches Learners with Experts who best fit their specific needs in order to deliver effective live learning. Additionally, Learners benefit from our modern, AI-enabled technology and learning tools, including adaptive testing capabilities, that support a collaborative interaction and optimize the learning experience. • Convenience : Our platform makes learning engaging and accessible.
As a result of our subscription-based business, Experts have the ability to develop deeper relationships that allow for more consistent revenue-generating opportunities. • Flexibility : As the modern workforce mindset shifts toward flexibility and choice, our platform empowers Experts to work where, when, and how they want, giving them convenience and control over their work schedule. • Purpose-Built Technology : Our platform empowers Experts with interactive technology features such as two-way video, collaborative work-spaces, recording and replay capabilities, and adaptive diagnostic testing, as well as integrated personalization features to make delivering online instruction easy. • Frictionless Payment Processing : We ensure the Experts are paid on-time and securely with frequent payments, alleviating administrative burden and hassle and allowing them to focus on helping Learners learn.
As a result of our subscription-based business, Experts have the ability to develop deeper relationships that allow for more consistent revenue-generating opportunities. • Flexibility : As the modern workforce mindset shifts toward flexibility and choice, our platform empowers Experts to work where, when, and how they want, giving them convenience and control over their work schedule. • Purpose-Built Technology : Our platform empowers Experts with interactive technology features such as two-way video, collaborative work-spaces, recording and replay capabilities, and adaptive diagnostic testing, as well as integrated, AI-enabled personalization features to make delivering online instruction easy. • Frictionless Payment Processing : We ensure the Experts are paid on-time and securely with frequent payments, alleviating administrative burden and hassle and allowing them to focus on helping Learners learn.
Our comprehensive learning destination provides learning experiences across numerous subjects and multiple formats, including one-on-one instruction, small group tutoring, large format classes, tutor chat, essay review, adaptive assessments, and self-study tools. Our flagship business, Varsity Tutors LLC (“Varsity Tutors”), is one of the nation’s largest platforms for live online tutoring and classes.
Our comprehensive learning destination provides learning experiences across numerous subjects and multiple formats, including one-on-one instruction, small group tutoring, large format classes, chat, essay review, adaptive assessments, and self-study tools. Our flagship business, Varsity Tutors LLC (“Varsity Tutors”), is one of the nation’s largest platforms for live online tutoring and classes.
We continue to focus on enhancing the Learning Membership experience by modernizing and unifying the student user experience across the entire platform, streamlining the onboarding experience to drive higher levels of engagement earlier in the customer learning journey, making it easier for customers to manage their tutoring relationships, and improving discoverability of the breadth of our learning tools.
We continue to focus on enhancing the Learning Membership experience by modernizing and unifying the new student user experience across the entire platform, streamlining the onboarding experience to drive higher levels of engagement earlier in the customer learning journey, making it easier for customers to manage their tutoring relationships, and improving discoverability of the breadth of our learning tools.
Pello started his career at PricewaterhouseCoopers and holds Bachelor’s and Master’s degree in Accounting from the University of Missouri-Columbia. He is a registered CPA in Missouri (inactive). Chris Swenson , age 53, has served as our Chief Legal Officer and Corporate Secretary since August 2019, having started Nerdy’s legal department in May 2015 as its Vice President and General Counsel.
Pello started his career at PricewaterhouseCoopers and holds Bachelor’s and Master’s degree in Accounting from the University of Missouri-Columbia. He is a registered CPA in Missouri (inactive). Chris Swenson , age 54, has served as our Chief Legal Officer and Corporate Secretary since August 2019, having started Nerdy’s legal department in May 2015 as its Vice President and General Counsel.
We are focused on further penetrating our core audiences and continuing to improve the product and customer experience in order to further expand our appeal among our direct-to-consumer audience. As shown through our development of Learning Memberships, we are constantly exploring new methods of learning that will allow us to broaden our appeal to more Learners.
We are focused on driving consumer awareness, further penetrating our core audiences, and continuing to improve the product and customer experience in order to further expand our appeal among our direct-to-consumer audience. As shown through our development of Learning Memberships, we are constantly exploring new methods of learning that will allow us to broaden our appeal to more Learners.
Nerdy allows people to learn online in thousands of subjects, when they want, from the convenience of home, school, and any other location at the click of a button. Learners We serve a diverse population of audiences across the entire learning life cycle from kindergarten all the way through professional.
Nerdy allows people to learn online in thousands of subjects, when they want, from the convenience of home, school, and any other location at the click of a button. Learners We serve a diverse population of audiences across the entire learning life cycle from pre-kindergarten (“pre-k”) all the way through professional.
We believe increased digital connectivity between Learners, Experts, and other key stakeholders is substantially improving the user experience and enabling personalized learning at scale. • Consumerization of Learning : The transition in parents’ and modern Learners’ preferences towards finding, curating, and managing their own learning is reshaping the learning markets and contributing to the digitization of learning.
We believe increased AI-enabled connectivity between Learners, Experts, and other key stakeholders is substantially improving the user experience and enabling personalized learning at scale. • Consumerization of Learning : The transition in parents’ and modern Learners’ preferences towards finding, curating, and managing their own learning is reshaping the learning markets and contributing to the digitization of learning.
We believe that as our range of subjects offered and audiences served through the platform grows across learning categories, our market presence and brand recognition will expand, driving more Learners and Experts to our platform. Direct-to-Consumer Audience Our comprehensive learning destination provides learning experiences across numerous subjects and multiple formats.
We believe that 7 Table of Contents as our range of subjects offered and audiences served through the platform grows across learning categories, our market presence and brand recognition will expand, driving more Learners and Experts to our platform. Direct-to-Consumer Audience Our comprehensive learning destination provides learning experiences across numerous subjects and multiple formats.
Learning Memberships include access to one-on-one instruction, live and recorded classes, self-study tools, college & career readiness resources, and adaptive assessments. Learning Memberships are for Learners of all ages, ranging from kindergarten to college and professional Learners, and can be used in any subject, at any time.
Learning Memberships include access to one-on-one instruction, live and recorded classes, self-study tools, college & career readiness resources, and adaptive assessments. Learning Memberships are for Learners of all ages, ranging from pre-k to college and professional Learners, and can be used in any subject, at any time.
Upgrades to the digital experience for Learners are in service of that ultimate outcome and are aimed at increasing engagement across each of those vectors. Learning Platform as a Service Our Learning Platform as a Service offers a customizable set of solutions allowing learning to be ‘always on’ and available for Learners.
Upgrades to the digital experience for Learners are in service of that ultimate outcome and are aimed at increasing engagement across each of those vectors. Live+AI™ Our Live+AI™ Platform offers a customizable set of solutions allowing learning to be ‘always on’ and available for Learners.
Our offerings also include Varsity Tutors for Schools , a product suite that leverages our platform capabilities to offer high-dosage tutoring and our online learning solutions to Institutions. We have built a diversified business across multiple audiences, including: K-8, High School, College, Graduate School, and Professional.
Our offerings also include Varsity Tutors for Schools , a product suite that leverages our next-generation live tutoring and intervention platform capabilities to offer high-dosage tutoring and our online learning solutions to Institutions. We have built a diversified business across multiple audiences, including: K-8, High School, College, Graduate School, and Professional.
Our purpose-built proprietary platform leverages technology, including artificial intelligence (“AI”), to connect students, users, parents, guardians, and purchasers (“Learner(s)”) of all ages to tutors, instructors, subject matter experts, educators, and other professionals (“Expert(s)”), delivering superior value on both sides of the network.
Our purpose-built proprietary platform leverages technology, including AI, to connect students, users, parents, guardians, and purchasers (“Learner(s)”) of all ages to tutors, instructors, subject matter experts, educators, and other professionals (“Expert(s)”), delivering superior value on both sides of the network.
Information about our Executive Officers The section below provides information regarding our executive officers as of February 13, 2025: Charles Cohn , age 39, is our Founder, Chairman, President, and Chief Executive Officer. Mr. Cohn founded the Company in 2007. Mr.
Information about our Executive Officers The section below provides information regarding our executive officers as of February 12, 2026: Charles Cohn , age 40, is our Founder, Chairman, President, and Chief Executive Officer. Mr. Cohn founded the Company in 2007. Mr.
We believe that offline solutions are inferior to the online solution we have developed. Specifically, we believe that our platform is more efficient, convenient, effective, and affordable than most offline solutions. We believe this value proposition is a big factor in driving consumer adoption of online solutions like ours.
Specifically, we believe that our platform is more efficient, convenient, effective, and affordable than most offline solutions. We believe this value proposition is a big factor in driving consumer adoption of online solutions like ours.
Our Solution - A Comprehensive Online Learning Destination To address the large market opportunity, we built Nerdy and our flagship business, Varsity Tutors, to be a leading, multi-format, online learning destination.
Our Solution - A Comprehensive Online Learning Destination We built Nerdy and our flagship business, Varsity Tutors, to be a leading, multi-format, online learning destination.
AI is allowing us to rapidly develop transformative experiences involving the real-time generation of content with near zero costs and improving our ability to deliver live human interaction and personalized learning at scale.
Our Next-Generation Live Tutoring and Intervention Platform We believe AI is allowing us to rapidly develop transformative experiences involving the real-time generation of educational content with near zero marginal costs and improving our ability to deliver live human interaction and personalized learning at scale.
Our Learning Platform as a Service offering leverages the technology infrastructure and product capabilities originally developed for our Consumer business, providing a single, unified platform that allows Institutions to roster entire student bases and deploy solutions for different segments of students. The offerings can be deployed across large populations in a scalable manner to meet the needs of specific populations.
Our high-dosage tutoring and Live+AI™ offerings leverage the technology infrastructure and product capabilities originally developed for our Consumer business, providing a single, unified platform that allows Institutions to roster entire student bases and deploy solutions for different segments of students. The offerings can be deployed across large populations in a scalable manner to meet the needs of specific populations.
Prior to joining Nerdy, Mr. Swenson was a partner at the national law firm of Polsinelli PC, and began serving as Nerdy’s outside counsel in 2008, shortly after it was 10 Table of Contents founded. Mr. Swenson received a BSBA with distinction and a BA from Washington University in St.
Prior to joining Nerdy, Mr. Swenson was a partner at the national law firm of Polsinelli PC, and began serving as Nerdy’s outside counsel in 2008, shortly after it was founded. Mr. Swenson received a BSBA with distinction and a BA from Washington University in St. Louis, as well as his law degree from the University of Missouri-Kansas City.
We may also run the risk of retroactive applications of new laws to our business model that could result in liability or losses. The Department of Labor published a final rule on independent contractor classification on January 10, 2024.
We may also run the risk of retroactive applications of new laws to our business model that could result in liability or losses. The Department of Labor published a final rule on independent contractor classification on January 10, 2024. The new rule changed the legal test used for classification of independent contractors under the Fair Labor Standards Act.
While we have scaled to millions of users with access to our platform, many Consumers and Institutions in the U.S. are not aware of the online solutions we offer. We will continue to drive consumer awareness of the value and availability of our platform.
While we have scaled to millions of users with access to our platform, many Learners and Institutions in the U.S. are not aware of the online solutions we offer. We will continue to drive consumer awareness of the value and availability of our platform. The offline market for live learning is large and fragmented.
Our solutions are available directly to Learners (“Consumer(s)”), as well as through education systems (“Institution(s)”). Our platform offers Experts the opportunity to generate income from the convenience of home, while also increasing access for Learners by removing barriers to high-quality live online learning.
Our solutions are available to Learners either directly through Learning Memberships (“Consumers”) and through education systems (“Institutions”). Our platform offers Experts the opportunity to generate income from the convenience of home, while also increasing access for Learners by removing barriers to high-quality live online learning.
As of February 13, 2025, we had approximately six hundred full and part-time employees, none of whom are covered under a collective bargaining agreement. Additionally, we have agreements with approximately four hundred 8 Table of Contents globally-sourced, independent contractors, which are primarily used in customer support, tutor operations, and engineering roles.
As of February 12, 2026, we had approximately five hundred full and part-time employees, none of whom are covered under a collective bargaining agreement. Additionally, we have agreements with approximately two hundred globally-sourced, independent contractors, who are primarily used in customer support, tutor operations, and engineering roles.
Consumers have a variety of choices in terms of competitive options, and some of these competitors are well capitalized. We compete against a variety of tutor and class marketplaces and directories and also against companies that offer asynchronous and self-study products. We believe that consumer awareness is one of the primary barriers to the adoption of our online solution.
Consumers have a variety of choices in terms of competitive options, and some of these competitors are well capitalized. We believe that consumer awareness is one of the primary barriers to the adoption of our online solution.
We believe that the vast majority of our competition is from offline competitors. Within this market, there exist thousands of companies and hundreds of thousands of individuals that provide supplemental instruction and learning services. These span academics, test preparation, professional training and skills, adult learning, enrichment, and other categories.
Within this market, there exist thousands of companies and hundreds of thousands of individuals that provide supplemental instruction and learning services. These span academics, test preparation, professional training and skills, adult learning, enrichment, and other categories. We believe that offline solutions are inferior to the online solution we have developed.
And with recent advancements in technology, like the learning solutions we offer, transforming the way people learn has never been more possible. We believe school administrators and educators are rethinking how they can deliver the best outcomes for students, looking for new solutions beyond the traditional approach, which historically solved learning demands only with internal and in-person resources.
We believe school administrators and educators are rethinking how they can deliver the best outcomes for students, looking for new solutions beyond the traditional approach, which historically solved learning demands primarily with internal and in-person resources.
ITEM 1. BUSINESS. Unless otherwise stated or the context otherwise indicates, all references in this Form 10-K to “Nerdy,” “the Company,” “us,” “our,” or “we” mean Nerdy Inc. and its consolidated subsidiaries. Business Overview We operate a platform for live online learning. Our mission is to transform the way people learn through technology.
ITEM 1. BUSINESS. Unless otherwise stated or the context otherwise indicates, all references in this Form 10-K to “Nerdy,” “the Company,” “us,” “our,” or “we” mean Nerdy Inc. and its consolidated subsidiaries.
Cohn has a BSBA in Finance and Entrepreneurship from Washington University in St. Louis. Jason Pello , age 45, has served as our Chief Financial Officer since October 2020. Mr. Pello is responsible for the Company’s financial operations, including leading all aspects of the financial planning and analysis, accounting, treasury management, investor relations, and tax functions. Previously, Mr.
Pello is responsible for the Company’s financial operations, including leading all aspects of the financial planning and analysis, accounting, treasury management, investor relations, and tax functions. Previously, Mr. Pello served as our Vice President, Finance, and Accounting from September 2019 until October 2020. Mr.
As part of our partnerships with Institutions, we provide access to the Varsity Tutors for Schools platform. Our comprehensive unified, platform access includes: 24/7 chat-based tutoring, essay review & coaching, live academic and enrichment classes, SAT and ACT test prep classes, self-study tools, and adaptive assessments.
Our comprehensive, unified platform access includes 24/7 chat-based tutoring, essay review & coaching, live academic and enrichment classes, SAT and ACT test prep classes, self-study tools, and adaptive assessments. Student engagement with our platform has demonstrated the relevance of our offering and the growing need for student support beyond the traditional classroom.
In doing so, we’re able to build solutions that improve quality, decrease cost, improve convenience, and meet the needs of Learners by enabling access to high quality live learning, and other powerful learning resources. Learning Memberships Learning Memberships are an ‘all access’, subscription offering that aims to support Learners across academic calendar years, subjects, and learning formats.
In doing so, we’re able to build solutions that leverage the latest AI-enabled technologies, improve quality, decrease cost, improve convenience, and meet the needs of Learners by enabling access to high quality live learning, and other powerful learning resources.
Our Learning Platform as a Service offering leverages the technology infrastructure and product capabilities originally developed for our Consumer business, providing a single, unified platform that allows Institutions to roster entire student bases and deploy solutions for different segments of students. 6 Table of Contents We have built access and subscription-based products for our Institutional business that are oriented toward providing district-wide solutions that can be deployed across entire student and teacher populations, significantly widening the impact we can have with our school district partners.
We have built access and subscription-based products for our Institutional business that are oriented toward providing district-wide solutions that can be deployed across entire student and teacher populations, significantly widening the impact we can have with our school district partners. As part of our partnerships with Institutions, we provide access to the Varsity Tutors for Schools platform.
We consistently invest in improving our capabilities and technology architecture, as well as in developing new solutions that can be leveraged across new markets and audiences. Importantly, the investments we make to support a learning solution for one audience can be scaled to apply to new audiences, resulting in returns that are multiples of our initial investment.
Importantly, the investments we make to support a learning solution for one audience can be scaled to apply to new audiences, resulting in returns that are multiples of our initial investment. Learning Memberships Learning Memberships are an ‘all access’, subscription offering that aims to support Learners across academic calendar years, subjects, and learning formats.
The offline market for live learning, both one-on-one instruction and small group tutoring, is large and fragmented. We compete for time and attention with many small and local businesses, small proprietorships, and larger national companies, including franchises.
We compete for time and attention with many small and local businesses, small proprietorships, and larger national companies, including franchises.
We are also subject to data privacy and data security laws related to the personal information we collect from Learners and Experts.
We currently do not expect this rule making will impact the classification of our Experts as independent contractors. We are also subject to data privacy and data security laws related to the personal information we collect from Learners and Experts.
While we believe our online technology-driven solution offers significant benefits when compared to these offline options, we compete with them to attract Learners, Institutions, and Experts to our platform. While we believe we are one of the few companies that offers a comprehensive destination for live learning online, we do compete with other direct-to-consumer and institutional solutions.
While we believe our online technology-driven solution offers significant benefits when compared to these offline options, we compete with them to attract Learners, Institutions, and Experts to our platform. 8 Table of Contents Human Capital We are a remote-first company, which means that working remotely is the primary option for most of our employees.
With the use of generative AI for content creation, we have been able to rapidly expand the content depth of our learning resources in our most in-demand subjects. Additionally, we have developed AI Lesson Plan Generator and AI Tutor Chat to enhance the user experience and drive increased engagement on the platform.
With the use of generative AI for content creation, we have been able to rapidly expand the content depth of our learning resources in our most in-demand subjects. Led by our founder and CEO, we recently rethought every aspect of how we build products and software.
We have seen strong demand and increasing engagement as we continue to evolve our services and products toward ‘always on’recurring relationships with Learners that better serve our multiple direct-to-consumer audiences. 7 Table of Contents Institutional Audience The education system in the U.S. is under tremendous stress, creating an environment with immense opportunity for transformation.
We continue to evolve our services and products toward ‘always on’ recurring relationships with Learners that better serve our multiple direct-to-consumer audiences. Institutional Audience With recent advancements in technology, transforming the way people learn has never been more possible.
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In 2024, we saw strong interest in districts signing up for access to our platform, as we have successfully enabled access to the Varsity Tutors for Schools platform at more than 1.1 thousand school districts, encompassing more than five million students.
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Business Overview We operate a next-generation live tutoring and intervention platform that leverages the power of human expertise with advanced artificial intelligence (“AI”) to personalize learning, accelerate student achievement, and empower educators. Our mission is to transform the way people learn through technology.
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Student engagement with our platform has been stronger than expected, demonstrating the relevance of our offering and the growing need for student support beyond the traditional classroom.
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We’ve rebuilt key aspects of our core infrastructure from scratch using AI-assisted software development, preserving essential business logic and data while migrating to modern, decoupled systems.
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Our Technology Platform The convergence of subscription business models and access-based products across Consumer and Institutional has allowed us to unify the Varsity Tutors for Schools and Consumer user experience into one that is modern, intuitive, and personalized to better serve the needs of our customers.
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We now have nearly 100% of our traffic on new codebases written with AI, and in the near future, we anticipate our back-end legacy systems will be fully decoupled, allowing us to integrate AI more deeply across the platform and launch new interactive, context-aware experiences in a fraction of the time and with a fraction of the effort.
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There are specific groupings of core competencies, or layers, of our unified platform that we believe to be particularly differentiated and powerful. We collectively call them AI for HI ® , short for Artificial Intelligence for Human Interaction.
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This reinvention has delivered tangible results to date. Our Live Learning Platform 2.0 combines the limitless powers of AI with expert human instruction to efficiently drive results. It is a leap forward that modernizes the learning experience, and it features a collaborative workspace with 2-way video, subject-specific tools, file uploads, and more.
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Looking ahead, we will continue to deploy new capabilities and products. We expect to see improvements in retention over time as we deliver new products, improve customer and tutor management tools, and drive improved engagement.
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We also rolled out brand new student and tutor experiences, with launches of entirely new and unified experiences that bring all products together into a cohesive interface. Our integrated Practice Hub and 250+ subjects’ worth of content and tools are now integrated into both the Learner experience and our Live Learning Platform 2.0.
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While COVID-19 accelerated and amplified some of the acute challenges that existed before the pandemic, adding incremental headwinds in the process, it also created an environment where new solutions to these challenges are not only welcome, but actively being pursued.
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This enables content and AI tools to enhance the entire customer journey and fully leverage the personalization and enhancements that AI makes possible.
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Human Capital We are a remote-first company, which means that working remotely is the primary option for most of our employees.
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Other AI-driven wins included better site conversion on our new homepage and a significant drop in tutor replacement rate via new AI vetting of tutors with 6 Table of Contents interactive conversational AI interviews that have automated our tutor applicant review, boosting new-tutor quality and the quality of matches which we believe will lead to meaningful retention improvements.
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The new rule, if it survives legal challenges and is implemented, changes the legal test used for classification of independent contractors under the Fair Labor Standards Act. We currently do not expect this rule making will impact the classification of our Experts as independent contractors.
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Looking ahead, we will continue to invest in improving our capabilities and technology architecture, as well as in developing new solutions that can be leveraged across new markets and audiences.
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Pello served as our Vice President, Finance, and Accounting from September 2019 until October 2020. Prior to joining Nerdy, Mr. Pello served as Vice President, Corporate Finance at Save-A-Lot, a grocery chain owned by private equity from December 2017 until September 2019. Mr.
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Our Live+AI™ offering leverages the technology infrastructure and product capabilities originally developed for our Consumer business, providing a single, unified platform that allows Institutions to roster entire student bases and deploy solutions for different segments of students.
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Louis, as well as his law degree from the University of Missouri-Kansas City.
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While we believe we are one of the few companies that offers a comprehensive destination for live learning online, we do compete with other direct-to-consumer and institutional solutions, including those that are developing their own AI products and technologies, as well as other companies whose broad AI offerings may nonetheless significantly impact education and learning.
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These regulations are often complex and subject to varying interpretations, in many cases due to their lack of specificity, and as a result, their application in practice may change or develop over time through judicial decisions or as new guidance or interpretations are provided by regulatory and governing bodies, such as federal, state, and local administrative agencies.
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Cohn has a BSBA in Finance and Entrepreneurship from Washington University in St. Louis. John Paszterko , age 43, has served as our Chief Operating Officer since August 2025, leading Consumer Sales, Marketplace Operations, Member Services, and our Product and Engineering organizations. Mr. Paszterko was most recently Director, Amazon Customer Excellence Systems (ACES), North American Fulfillment, for Amazon.com, Inc. Mr.
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Paszterko joined Amazon in 2016, and worked in a variety of positions of increasing responsibility before being named Director, Outbound and Workflow Systems, ACES, in March 2022 and then to his most recent position in January 2024. Prior to his time at Amazon, Mr. Paszterko served in the U.S. Army for 10 years. Mr.
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Paszterko holds a Masters of Science in Global Business and Finance from Georgetown University, and is a graduate of the United States Military Academy at West Point. 10 Table of Contents Jason Pello , age 46, has served as our Chief Financial Officer since October 2020. Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRegardless of whether claims that we are infringing patents or other intellectual property rights have any merit, these claims are time-consuming and costly to evaluate and defend and could: • hurt our reputation; • adversely affect our relationships with our current or future Learners, Experts, schools, school districts, or other instructors or business relationships; • cause delays or stoppages in providing our offerings; • divert management’s attention and resources; • require technology changes to our platform or other software that could cause us to incur substantial cost; • subject us to significant liabilities; or • require us to cease some or all of our activities.
Biggest changeRegardless of whether claims that we are infringing patents or other intellectual property rights have any merit, these claims are time-consuming and costly to evaluate and defend and could: • hurt our reputation; • adversely affect our relationships with our current or future Learners, Experts, schools, school districts, or other instructors or business relationships; • cause delays or stoppages in providing our offerings; • divert management’s attention and resources; • require technology changes to our platform or other software that could cause us to incur substantial cost; • subject us to significant liabilities; or • require us to cease some or all of our activities. 26 Table of Contents In addition to liability for monetary damages against us, which may include attorneys’ fees and/or treble damages in the event of a finding of willful infringement, or, in some circumstances, damages against Experts, we may be prohibited from developing, commercializing, or continuing to provide some or all of our bundled technology-enabled solutions unless we obtain licenses from, and pay royalties to, the holders of the patents or other intellectual property rights, which may not be available on commercially favorable terms, or at all.
Risks Related to Our Business Model, Operations, and Growth Strategy Our offerings continue to evolve, which makes it difficult to predict our future financial and operating results, and we may not achieve our expected financial and operating results in the future. Our offerings continue to evolve, and we may not achieve our expected financial and operating results in the future.
Risks Related to Our Business Model, Operations, and Growth Strategy Our offerings continue to evolve, which makes it difficult to predict our future financial and operating results, and we may not achieve our expected financial and operating results in the future.
A determination in, or settlement of, any legal proceeding(s), whether we are party to such legal proceeding or not, that classifies independent contractors with whom we contract as employees, could harm our business, financial condition, and results of operations, including as a result of: • monetary exposure arising from or relating to failure to withhold and remit taxes, unpaid wages and wage and hour laws and requirements (such as those pertaining to failure to pay minimum wage and overtime, or to provide required breaks and wage statements), expense reimbursement, statutory and punitive damages, penalties, including related to attorney general actions by states, and government fines; • injunctions prohibiting continuance of existing business practices; 12 Table of Contents • claims for employee benefits, social security, workers’ compensation, and unemployment; • claims of discrimination, harassment, and retaliation under civil rights laws; • managing the growth of our business, including increasing or unforeseen expenses; • developing and scaling a technology infrastructure to efficiently handle increased utilization by Learners, especially during peak periods; • claims under laws pertaining to unionizing, collective bargaining, and other concerted activity; • other claims, charges, or other proceedings under laws and regulations applicable to employers and employees, including risks relating to allegations of joint employer liability or agency liability; and • harm to our reputation and brand.
A determination in, or settlement of, any legal proceeding(s), whether we are party to such legal proceeding or not, that classifies independent contractors with whom we contract as employees, could harm our business, financial condition, and results of operations, including as a result of: 12 Table of Contents • monetary exposure arising from or relating to failure to withhold and remit taxes, unpaid wages and wage and hour laws and requirements (such as those pertaining to failure to pay minimum wage and overtime, or to provide required breaks and wage statements), expense reimbursement, statutory and punitive damages, penalties, including related to attorney general actions by states, and government fines; • injunctions prohibiting continuance of existing business practices; • claims for employee benefits, social security, workers’ compensation, and unemployment; • claims of discrimination, harassment, and retaliation under civil rights laws; • managing the growth of our business, including increasing or unforeseen expenses; • developing and scaling a technology infrastructure to efficiently handle increased utilization by Learners, especially during peak periods; • claims under laws pertaining to unionizing, collective bargaining, and other concerted activity; • other claims, charges, or other proceedings under laws and regulations applicable to employers and employees, including risks relating to allegations of joint employer liability or agency liability; and • harm to our reputation and brand.
Negative perception of our platform or Company may harm our reputation and brand, and the networks effects, including as a result of: • complaints or negative publicity about us, Experts on our platform, our product offerings, or our policies and guidelines, including our practices and policies, even if factually incorrect or based on isolated incidents; • illegal, negligent, reckless, or otherwise inappropriate behavior by Experts, Learners, or third parties; • a failure to provide Experts with competitive compensation and opportunities to work with Learners; • actual or perceived disruptions or defects in our platform, such as privacy or data security breaches, site outages, payment disruptions, or other incidents that impact the reliability of our offerings; • litigation regarding or investigations by regulators into our platform or our business; • Learners’ lack of awareness of, or compliance with, our policies and terms and conditions; • Experts’ lack of awareness of, or compliance with, our terms and conditions; • changes to our policies that Learners or others perceive as overly restrictive, unclear, or inconsistent with our values or mission, or that are not clearly articulated; • changes to our terms and conditions that Experts perceive as overly restrictive, unclear, or inconsistent with our values, or mission, or that are not clearly articulated; • a failure to enforce our policies or terms and conditions in a manner that Learners, Experts, and other users perceive as effective, fair, and transparent; • inadequate or unsatisfactory Learner support service experiences; • illegal or otherwise inappropriate behavior by Experts, management team members, or other employees or contractors; • negative responses by Experts or Learners or other users to new offerings on our platform; 15 Table of Contents • political or social policies or activities; or • any of the foregoing with respect to our competitors, to the extent such resulting negative perception affects the public’s perception of us or our industry as a whole.
Negative perception of our platform or Company may harm our reputation and brand, and the networks effects, including as a result of: • complaints or negative publicity about us, Experts on our platform, our product offerings, or our policies and guidelines, including our practices and policies, even if factually incorrect or based on isolated incidents; • illegal, negligent, reckless, or otherwise inappropriate behavior by Experts, Learners, or third parties; • a failure to provide Experts with competitive compensation and opportunities to work with Learners; • actual or perceived disruptions or defects in our platform, such as privacy or data security breaches, site outages, payment disruptions, or other incidents that impact the reliability of our offerings; • litigation regarding or investigations by regulators into our platform or our business; • Learners’ lack of awareness of, or compliance with, our policies and terms and conditions; • Experts’ lack of awareness of, or compliance with, our terms and conditions; • changes to our policies that Learners or others perceive as overly restrictive, unclear, or inconsistent with our values or mission, or that are not clearly articulated; 15 Table of Contents • changes to our terms and conditions that Experts perceive as overly restrictive, unclear, or inconsistent with our values, or mission, or that are not clearly articulated; • a failure to enforce our policies or terms and conditions in a manner that Learners, Experts, and other users perceive as effective, fair, and transparent; • inadequate or unsatisfactory Learner support service experiences; • illegal or otherwise inappropriate behavior by Experts, management team members, or other employees or contractors; • negative responses by Experts or Learners or other users to new offerings on our platform; • political or social policies or activities; or • any of the foregoing with respect to our competitors, to the extent such resulting negative perception affects the public’s perception of us or our industry as a whole.
Experts may access the platform and continue to offer one-on-one and group instruction from any location in which they have access to our platform, even if located outside of the U.S., which exposes us to foreign and international risks.
Experts may access the platform and continue to offer one-on-one and group instruction from any location in which they have access to our platform, even if located outside of the U.S., which exposes us to foreign and international risks.
Many jurisdictions have or are considering enacting privacy or data protection laws or regulations relating to the collection, use, storage, transfer, disclosure, and/or other processing of personal data.
Many jurisdictions have or are considering enacting privacy or data protection laws or regulations relating to the collection, use, storage, transfer, disclosure, and/or other processing of personal data.
To the extent the funds of Nerdy LLC are legally available for distribution, and subject to any restrictions contained in any credit agreement to which Nerdy LLC or its subsidiaries is bound, we intend to cause Nerdy LLC (i) to make generally pro rata distributions to its unitholders, including Nerdy Inc., in an amount generally intended to allow the Nerdy LLC unit holders to satisfy their respective income tax liabilities with respect to their allocable share of the income or loss of Nerdy LLC, based on certain assumptions and conventions, and (ii) to reimburse Nerdy Inc. for its corporate and other overhead expenses.
To the extent the funds of Nerdy LLC are legally available for distribution, and subject to any restrictions contained in any credit agreement (including the Loan Agreement) to which Nerdy LLC or its subsidiaries is bound, we intend to cause Nerdy LLC (i) to make generally pro rata distributions to its unitholders, including Nerdy Inc., in an amount generally intended to allow the Nerdy LLC unit holders to satisfy their respective income tax liabilities with respect to their allocable share of the income or loss of Nerdy LLC, based on certain assumptions and conventions, and (ii) to reimburse Nerdy Inc. for its corporate and other overhead expenses.
Additionally, depending on the nature of the information compromised, in the event of a security breach or other privacy or security related incident, we may also have obligations to notify affected individuals and regulators about the incident, and we may need to provide some form of remedy, such as a subscription to credit monitoring services, payment of significant fines, or payment of compensation in connection with a class-action settlement (including under foreign and state privacy laws).
Depending on the nature of the information compromised, in the event of a security breach or other privacy or security related incident, we may also have obligations to notify affected individuals and regulators about the incident, and we may need to provide some form of remedy, such as a subscription to credit monitoring services, payment of significant fines, or payment of compensation in connection with a class-action settlement (including under foreign and state privacy laws).
If we are not successful in quickly and efficiently scaling up offerings with new and existing Learners or Institutions, our reputation and our results of operations will suffer. Our continued growth and profitability depends on our ability to successfully scale up our existing and newly launched offerings. As we continue aggressively growing our business, we may require new employees.
If we are not successful in quickly and efficiently scaling up offerings with new and existing Learners or Institutions, our reputation and our results of operations will suffer. Our continued growth and profitability depends on our ability to successfully scale up our existing and newly launched offerings. As we continue growing our business, we may require new employees.
You should consider our business and prospects in light of the risks, expenses, and difficulties typically encountered by companies in their early stage of development, including, but not limited to, our ability to successfully: • execute on our relatively new, evolving, and unproven business model, including our shift to offering Learning Memberships and our introduction of expanded Varsity Tutors for Schools offerings; • build new products and services, both internally and through third parties; • acquire complementary products and services to expand our offerings and enhance our platform; • attract and retain Learners and Experts and increase their engagement with/through our platform; • manage the growth of our business, including increasing or unforeseen expenses; • develop and scale a technology infrastructure to efficiently handle increased utilization by Learners, especially during peak periods; • maintain and manage relationships with strategic partners; • ensure our platform remains secure and protects the information of Learners, Experts, and other users, including Institutional customers; • build and pursue a profitable business model and pricing strategy; • compete with companies that offer similar services or products; • expand into adjacent markets; • navigate the ongoing evolution and uncertain application of regulatory requirements to our business; and • continue our expansion into new geographic markets, including markets outside the U.S.
You should consider our business and prospects in light of the risks, expenses, and difficulties typically encountered by companies in their early stage of development, including, but not limited to, our ability to successfully: • execute on our relatively new, evolving, and unproven business model, including our shift to offering Learning Memberships and our introduction of expanded Varsity Tutors for Schools offerings; • build new products and services, both internally and through third parties; • acquire complementary products and services to expand our offerings and enhance our platform; • attract and retain Learners and Experts and increase their engagement with/through our platform; • manage the growth of our business, including increasing or unforeseen expenses; • develop and scale a technology infrastructure to efficiently handle increased utilization by Learners, especially during peak periods; • maintain and manage relationships with strategic partners; • ensure our platform remains secure and protects the information of Learners, Experts, and other users, including Institutional customers; • build and pursue a profitable business model and pricing strategy; • compete with companies that offer similar services or products; 11 Table of Contents • expand into adjacent markets; • navigate the ongoing evolution and uncertain application of regulatory requirements to our business; and • continue our expansion into new geographic markets, including markets outside the U.S.
The market price for our Class A Common Stock may be influenced by many factors, including: • actual or anticipated variations in our operating results; • changes in financial estimates by us or by any securities analysts who might cover our stock; • changes in laws and regulations affecting our business; • conditions or trends in our industry; • changes as a result of macroeconomic events; • stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the software and information technology industries; • announcements by us or our competitors of new product or service offerings, significant acquisitions, strategic partnerships, or divestitures; 27 Table of Contents • announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; • the public’s reaction to our press releases, our other public announcements, and our filings with the SEC; • capital commitments; • investors’ general perception of our company and our business; • recruitment or departure of key personnel, including Charles Cohn, our Founder, Chairman, President, and Chief Executive Officer; • sales of Class A Common Stock, including sales by our directors and officers or specific stockholders • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; and • the volume of shares of Class A Common Stock available for public sale.
The market price for our Class A Common Stock may be influenced by many factors, including: • actual or anticipated variations in our operating results; • changes in financial estimates by us or by any securities analysts who might cover our stock; • changes in laws and regulations affecting our business; • conditions or trends in our industry; • changes as a result of macroeconomic events; • stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the software and information technology industries; • announcements by us or our competitors of new product or service offerings, significant acquisitions, strategic partnerships, or divestitures; • announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; • the public’s reaction to our press releases, our other public announcements, and our filings with the SEC; • capital commitments; • investors’ general perception of our company and our business; • recruitment or departure of key personnel, including Charles Cohn, our Founder, Chairman, President, and Chief Executive Officer; • sales of Class A Common Stock, including sales by our directors and officers or specific stockholders • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; and • the volume of shares of Class A Common Stock available for public sale.
If we fail to satisfy the continued listing requirements of the New York Stock Exchange (“NYSE”), such as the corporate governance requirements or the minimum closing bid price requirement, NYSE may take steps to delist our Class A Common Stock.
If we fail to satisfy the continued listing requirements of the New York Stock Exchange (“NYSE”), such as the corporate governance requirements or the minimum closing price requirement, NYSE may take steps to delist our Class A Common Stock.
Factors that may cause fluctuations in our quarterly operating results include, but are not limited to, the following: • timing of our costs incurred in connection with the launch of new offerings and the delay in receiving revenue from these new offerings, which delay may last for several years; • seasonal variation driven by the seasonal nature of traditional academic calendars; • changes in Learner purchases, utilization, and retention levels in our offerings; • changes in our key metrics or the methods used to calculate our key metrics; • changes in our pricing; • changes in the mix of our product offerings; • timing and amount of our marketing and sales expenses; • costs necessary to improve and maintain our software platform; • write-downs or write-offs, restructuring, and impairment, or other charges; and • changes in the prospects of the economy generally, which could alter current or prospective customers’ spending priorities or could increase the time it takes us to launch new offerings.
Factors that may cause fluctuations in our quarterly operating results include, but are not limited to, the following: • timing of our costs incurred in connection with the launch of new offerings and the delay in receiving revenue from these new offerings, which delay may last for several years; • seasonal variation driven by the seasonal nature of traditional academic calendars; • changes in Learner purchases, utilization, and retention levels in our offerings; • changes in our key metrics or the methods used to calculate our key metrics; • changes in our pricing; • changes in the mix of our product offerings; • timing and amount of our marketing and sales expenses; • costs necessary to improve and maintain our software platform; 27 Table of Contents • write-downs or write-offs, restructuring, and impairment, or other charges; and • changes in the prospects of the economy generally, which could alter current or prospective customers’ spending priorities or could increase the time it takes us to launch new offerings.
We may incur fines and other losses or negative publicity with respect to these problems. Additionally, these claims may give rise to litigation, which could be time-consuming and expensive. New employment and labor laws and regulations may be proposed or adopted that may increase the potential exposure of employers to employment-related claims and litigation by the Experts on our platform.
We may incur fines and other losses or negative publicity with respect to these problems. Additionally, these claims may give rise to litigation, which could be time-consuming and expensive. New employment and labor laws and regulations may be proposed or adopted that may increase our potential exposure to employment-related claims and litigation by the Experts on our platform.
Such laws and regulations may include data residency or data localization requirements (which generally require that certain types of data collected within a certain country be stored and processed within that country), data export restrictions or international transfer laws (which prohibit or impose conditions upon the transfer of such data from one country to another), requirements that companies implement privacy or data protection and security policies or requirements that companies grant individuals certain rights, such as the right to access, correct, and delete personal data stored or maintained by such companies, be informed of security breaches that affect their personal data, or provide consent to use their personal data for other purposes.
Such laws and regulations may include data residency or data localization requirements (which generally require that certain types of data collected within a certain country be stored and processed within that country), data export restrictions or international transfer laws (which prohibit or impose conditions upon the transfer of such data from one country to another), requirements that companies implement privacy or data 21 Table of Contents protection and security policies or requirements that companies grant individuals certain rights, such as the right to access, correct, and delete personal data stored or maintained by such companies, be informed of security breaches that affect their personal data, or provide consent to use their personal data for other purposes.
For example, Charles Cohn, our Founder, Chairman, President, and Chief Executive Officer, beneficially owns a significant portion of our Common Stock. Together with his spouse, he beneficially owns approximately 48.3% of our outstanding Class A Common Stock, assuming conversion of their Class B common stock and all other shares of Class B common stock. So long as Mr.
For example, Charles Cohn, our Founder, Chairman, President, and Chief Executive Officer, beneficially owns a significant portion of our Common Stock. Together with his spouse, he beneficially owns approximately 48.7% of our outstanding Class A Common Stock, assuming conversion of their Class B common stock and all other shares of Class B common stock. So long as Mr.
We have encountered and will continue to encounter these risks and if we do not manage them successfully, our business, financial condition, results of operations, and prospects may be materially and adversely affected. 11 Table of Contents We have incurred significant net losses and generated negative operating cash flows since our formation, and it may be difficult for us to achieve and maintain profitability.
We have encountered and will continue to encounter these risks and if we do not manage them successfully, our business, financial condition, results of operations, and prospects may be materially and adversely affected. We have incurred significant net losses and generated negative operating cash flows since our formation, and it may be difficult for us to achieve and maintain profitability.
It may be difficult to overcome any skepticism, and there can be no assurance that online offerings of the kind we develop will ever achieve mass market acceptance. We rely on our new and existing Learners to drive utilization and to generate revenue, and if we fail to attract and retain Learners our business and operating results will suffer .
It may be difficult to overcome any skepticism, and there can be no assurance that online offerings of the kind we develop will ever achieve mass market acceptance. 13 Table of Contents We rely on our new and existing Learners to drive utilization and to generate revenue, and if we fail to attract and retain Learners our business and operating results will suffer .
At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed, or operating.
Our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed, or operating.
Further, the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations. Several jurisdictions have enacted or are considering measures related to the use of AI and machine learning in products and services.
Further, the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations. Several jurisdictions have 24 Table of Contents enacted or are considering measures related to the use of AI and machine learning in products and services.
If adequate 19 Table of Contents additional funds are not available if and when needed, we may be required to delay, reduce the scope of, or eliminate material parts of our business strategy. Our employees located outside of the U.S. and foreign residents accessing our platform and purchasing our offerings expose us to foreign risks.
If adequate additional funds are not available if and when needed, we may be required to delay, reduce the scope of, or eliminate material parts of our business strategy. Our employees located outside of the U.S. and foreign residents accessing our platform and purchasing our offerings expose us to foreign risks.
Factors that could materially affect our future effective tax rates include, but are not limited to (i) changes in tax laws or the regulatory environment, (ii) changes in accounting and tax standards or practices, (iii) changes in the composition of operating income by tax jurisdiction, and (iv) pre-tax operating results of our business.
Factors that could materially affect our future effective tax rates include, but are not limited to (i) changes in tax laws or the regulatory environment, (ii) changes in 30 Table of Contents accounting and tax standards or practices, (iii) changes in the composition of operating income by tax jurisdiction, and (iv) pre-tax operating results of our business.
Our future success also depends heavily on the retention of personnel from our software engineering, data science, product, design, marketing, sales, and customer service teams that are necessary to continue to attract and retain customers in our offerings, thereby generating revenue for us.
Our future success also depends heavily on the retention of personnel from our software engineering, data science, product, design, marketing, sales, and customer service teams that are necessary to continue to attract and retain customers in our 22 Table of Contents offerings, thereby generating revenue for us.
As a result, members of our senior management, our existing directors, and principal stockholders, would be able to significantly influence all matters requiring stockholder approval, including the election and removal of directors, any merger, consolidation, sale of all or substantially all of our assets or other significant corporate transactions.
As a result, members of our senior management, our existing directors, and principal stockholders, would be able to significantly influence all matters requiring stockholder approval, including the election and removal of directors, any merger, consolidation, sale of all or substantially all of our assets 28 Table of Contents or other significant corporate transactions.
In recent years, there has also been an increase in attention to and regulation of data protection and data privacy across the globe, including in the U.S. with the increasingly active approach of the FTC to enforcing data privacy under the FTC Act Section 5 of the Unfair and Deceptive Acts framework.
In recent years, there has also been an increase in attention to and 25 Table of Contents regulation of data protection and data privacy across the globe, including in the U.S. with the increasingly active approach of the FTC to enforcing data privacy under the FTC Act Section 5 of the Unfair and Deceptive Acts framework.
Any of the foregoing risks could harm our business, financial condition, and results of operations. Many of our Learners are minors, which may subject us to significant and/or heightened litigation risks, regulatory scrutiny, and reputational damage. Because of the nature of our business, many of our Learners are minors under the age of 18.
Any of the foregoing risks could harm our business, financial condition, and results of operations. 14 Table of Contents Many of our Learners are minors, which may subject us to significant and/or heightened litigation risks, regulatory scrutiny, and reputational damage. Because of the nature of our business, many of our Learners are minors under the age of 18.
We have observed increased traffic during the late summer and early fall months of August and September as Learners seek educational enrichment tools to start the school year. We have also historically observed increased traffic on our platform in advance of standardized tests.
We have observed increased traffic during the late summer and early fall months of August and September as Learners seek educational enrichment tools to start the school year. We have also historically observed increased 19 Table of Contents traffic on our platform in advance of standardized tests.
If we pursue litigation to assert our intellectual property or proprietary rights, an adverse decision could limit our 26 Table of Contents ability to assert our intellectual property or proprietary rights, limit the value of our intellectual property or proprietary rights, or otherwise negatively impact our business, financial condition, and results of operations.
If we pursue litigation to assert our intellectual property or proprietary rights, an adverse decision could limit our ability to assert our intellectual property or proprietary rights, limit the value of our intellectual property or proprietary rights, or otherwise negatively impact our business, financial condition, and results of operations.
In the event that our operating business expands domestically or internationally, our effective tax rates may fluctuate widely in the future. Future effective tax rates could be affected by operating losses in jurisdictions where no tax benefit can be 30 Table of Contents recorded under GAAP, changes in deferred tax assets and liabilities, or changes in tax laws.
In the event that our operating business expands domestically or internationally, our effective tax rates may fluctuate widely in the future. Future effective tax rates could be affected by operating losses in jurisdictions where no tax benefit can be recorded under GAAP, changes in deferred tax assets and liabilities, or changes in tax laws.
For example, we may face retention challenges as a result of Learners’ dissatisfaction with the quality of the platform, quality of Experts, level and quality of customer service, platform reliability, or other factors.
For example, we may face retention challenges as a result 17 Table of Contents of Learners’ dissatisfaction with the quality of the platform, quality of Experts, level and quality of customer service, platform reliability, or other factors.
Inability or unwillingness of Experts to meet Learner needs could cause the quality of the instruction and the quality of the customer experience to decline, which could contribute to decreased Learner satisfaction and retention. 17 Table of Contents • Personal factors .
Inability or unwillingness of Experts to meet Learner needs could cause the quality of the instruction and the quality of the customer experience to decline, which could contribute to decreased Learner satisfaction and retention. • Personal factors .
If we identify any material weaknesses in our internal controls over financial reporting or we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting once we are no longer an emerging growth company, investors may lose confidence in the accuracy and completeness of our financial reports.
If we identify any material weaknesses in our internal controls over financial reporting or we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports.
We have experienced attempted security incidents in the past and we may face additional attempted security intrusions in the future. 20 Table of Contents Any such incidents could expose us to claims, litigation, regulatory, or other governmental investigations, administrative fines, and potential liability.
We have experienced attempted security incidents in the past and we may face additional attempted security intrusions in the future. Any such incidents could expose us to claims, litigation, regulatory, or other governmental investigations, administrative fines, and potential liability.
Although our business has experienced significant growth in the recent past, we cannot provide any assurance that our revenue will continue to grow at the same rate in the future.
Although our business experienced significant growth in the recent past, we cannot provide any assurance that our revenue will grow at the same rate in the future.
We may, however, need to raise additional funds to respond to business challenges or opportunities, accelerate our growth, develop new offerings, or enhance our platform. If we seek to raise additional capital, it may not be available on favorable terms or may not be available at all.
We may, however, require additional funds to respond to business challenges or opportunities, accelerate our growth, develop new offerings, or enhance our platform. If we require additional capital, it may not be available on favorable terms or may not be available at all.
Our ability to effectively manage any significant growth of our business will depend on a number of factors, including our ability to: • effectively recruit, onboard, motivate, and retain new employees, including in software engineering, data science, product, design, marketing, sales, and customer service, while retaining existing employees, maintaining the most important aspects of our corporate culture, and effectively executing our business plan; • effectively recruit, vet, contract, and curate new independent contractors, while retaining existing independent contractors, maintaining and improving our platform and its curation in connection with effectively executing our business plan; • continue to improve our operational, financial, and management controls; • effectively manage our cost structure and liquidity; • effectively manage the implementation, onboarding, and servicing of our Institutional customers; and 18 Table of Contents • protect and further develop our strategic assets, including our intellectual property rights.
Our ability to effectively manage any significant growth of our business will depend on a number of factors, including our ability to: 18 Table of Contents • effectively recruit, onboard, motivate, and retain new employees, while retaining existing employees, maintaining the most important aspects of our corporate culture, and effectively executing our business plan; • effectively recruit, vet, contract, and curate new independent contractors, while retaining existing independent contractors, maintaining and improving our platform and its curation in connection with effectively executing our business plan; • continue to improve our operational, financial, and management controls; • effectively manage our cost structure and liquidity; • effectively manage the implementation, onboarding, and servicing of our Institutional customers; and • protect and further develop our strategic assets, including our intellectual property rights.
Our negative operating cash flows for the years ended December 31, 2024, 2023, and 2022 were $15,603 thousand, $7,560 thousand, and $48,002 thousand, respectively. We expect to continue to make investments in the building and expansion of our business and platform and anticipate that our cost of revenue and operating expenses may increase.
Our negative operating cash flows for the years ended December 31, 2025, 2024, and 2023 were $18,846 thousand, $15,603 thousand, and $7,560 thousand, respectively. We expect to continue to make investments in the building and expansion of our business and platform and anticipate that our cost of revenue and operating expenses may increase.
We have experienced significant net losses and generated negative operating cash flows since our formation in October 2007, and we may continue to experience net losses and generate negative operating cash flows in the future. Our net losses for the years ended December 31, 2024, 2023, and 2022 were $67,142 thousand, $67,669 thousand, and $63,908 thousand, respectively.
We have experienced significant net losses and generated negative operating cash flows since our formation in October 2007, and we may continue to experience net losses and generate negative operating cash flows in the future. Our net losses for the years ended December 31, 2025, 2024, and 2023 were $60,948 thousand, $67,142 thousand, and $67,669 thousand, respectively.
In 2024, we had approximately 20 thousand Active Experts with independent contractor agreements. We define an Active Expert as having instructed one or more sessions in a given period.
In 2025, we had approximately 16 thousand Active Experts with independent contractor agreements. We define an Active Expert as having instructed one or more sessions in a given period.
In the event that the personally identifiable information is unlawfully accessed or acquired, the majority of states and many jurisdictions have laws that require Institutions to investigate and immediately disclose the data breach to impacted individuals, usually in writing.
Moreover, in the event that personal data is unlawfully accessed or acquired, the majority of states and many jurisdictions have laws that require institutions to investigate and immediately disclose the data breach to impacted individuals, usually in writing.
Additional capital may not be available on favorable terms, or at all, which could compromise our ability to grow our business. We believe that our existing cash balances will be sufficient to meet our minimum anticipated cash requirements for at least the next twelve months.
Additional capital may not be available on favorable terms, or at all, which could compromise our ability to grow our business. We believe that our existing cash balances and current borrowing capacity under our term loan will be sufficient to meet our minimum anticipated cash requirements for at least the next twelve months.
Some jurisdictions have adopted laws that govern payments and other financial activities. These laws could require us to obtain money transmitter licenses, or other licenses or approval for financial transactions, that may cause disruption regarding our ability to accept credit card payments, thereby impacting our sales and revenue.
These laws could require us to obtain money transmitter licenses, or other licenses or approval for financial transactions, that may cause disruption regarding our ability to accept credit card payments, thereby impacting our sales and revenue.
While our revenue has grown in recent periods, this growth may not be sustainable and we cannot assure you that we will be able to achieve profitability. Our operations and performance depend in part on economic conditions, and adverse economic conditions may adversely affect our business, results of operations, and financial condition.
While our revenue has the potential to grow in future periods, this growth may not be achieved or sustainable and we cannot assure you that we will be able to achieve profitability. Our operations and performance depend in part on economic conditions, and adverse economic conditions may adversely affect our business, results of operations, and financial condition.
Our use of open source software may also present additional security risks because the source code for open source software is publicly available, which may make it easier for hackers and other third parties to determine how to breach our website and systems that rely on open source software. Any of these risks could be difficult to eliminate or manage.
Our use of open source software may also present additional security risks because the source code for open source software is publicly available, which may make it easier for hackers and other third parties to determine how to breach our website and systems that rely on open source software.
Accordingly, new competitors may emerge and rapidly acquire significant market share. We may not be able to compete successfully against current and future competitors. Additionally, competition may intensify as our competitors raise additional capital and as established companies in other market segments or geographic markets expand into our market segments or geographic markets.
We may not be able to compete successfully against current and future competitors. Additionally, competition may intensify as our competitors raise additional capital and as established companies in other market segments or geographic markets expand into our market segments or geographic markets.
In addition to risks related to license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as the original developers of open source code generally do not provide warranties (with respect to, for example, non-infringement or functionality) or indemnities or other contractual protections.
In addition, use of certain open source software (including open source software that relies on or incorporates generative AI) can lead to greater risks than use of third-party commercial software, as the original developers of open source code generally do not provide warranties (with respect to, for example, non-infringement or functionality) or indemnities or other contractual protections.
Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an emerging growth company.
Because we are no longer an emerging growth company, our independent registered public accounting firm is required each year to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 .
Attracting new Learners or Institutions for the launch of new offerings is complex and time-consuming. If we pursue unsuccessful offerings, we may forego more profitable offerings and our operating results and growth would be harmed . The process of identifying new products and services that will be a good fit for our platform is complex and time-consuming.
Attracting new Learners or Institutions for the launch of new offerings is complex and time-consuming. If we pursue unsuccessful offerings, we may forego more profitable offerings and our operating results and growth would be harmed .
Further, any significant change to applicable laws, regulations, or industry practices regarding the collection, use, retention, security, or disclosure of personal data, or their interpretation, or any changes regarding the manner in which the consent of users or other data subjects for the collection, use, retention, or disclosure of such data must be obtained, could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be unable to complete, and may limit our ability to store and process user data or develop new services and features. 24 Table of Contents If we were found in violation of any applicable privacy or data protection laws or regulations, our business may be materially and adversely affected, and we would likely have to change our business practices and potentially the services and features available through our platform.
Further, any significant change to applicable laws, regulations, or industry practices regarding the collection, use, retention, security, or disclosure of personal data, or their interpretation, or any changes regarding the manner in which the consent of users or other data subjects for the collection, use, retention, or disclosure of such data must be obtained, could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be unable to complete, and may limit our ability to store and process user data or develop new services and features.
Any of these factors could significantly reduce the revenue that we generate, which would negatively impact our operations and could compromise our ability to grow our business and achieve profitability. We have grown rapidly in recent years and expect to continue to invest in our growth for the foreseeable future.
Any of these factors could significantly reduce the revenue that we generate, which would negatively impact our operations and could compromise our ability to grow our business and achieve profitability. We expect to continue to invest in our growth for the foreseeable future. If we fail to manage this growth effectively, the success of our business model may be compromised.
These updates may contain undetected errors when first introduced or released, which may cause disruptions in our services and may, as a result, cause us to lose market share, and our brand, business, prospects, financial condition, and results of operations could be materially and adversely affected.
These updates may contain undetected errors when first introduced or released, which may cause disruptions in our services and may, as a result, cause us to lose market share, and our brand, business, prospects, financial condition, and results of operations could be materially and adversely affected. 20 Table of Contents If our security measures are breached or fail, we could lose Learners, Experts, Institutions, and employees; fail to attract new Learners, Experts, Institutions, and employees; and could be exposed to protracted and costly litigation.
If material, payment of such additional amounts upon final adjudication of any disputes could have a material impact on our results of operations and financial position. 29 Table of Contents Our bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
Our bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
As a result, we may be unable to attract or retain these key personnel that are critical to our success, resulting in harm to our relationships with customers, loss of expertise or know-how, and unanticipated recruitment and training costs. 22 Table of Contents Increased input costs, including costs for Experts, or limited availability of Experts, could negatively impact our businesses, financial condition, results of operations, and cash flows.
As a result, we may be unable to attract or retain these key personnel that are critical to our success, resulting in harm to our relationships with customers, loss of expertise or know-how, and unanticipated recruitment and training costs.
The negative impacts related to input cost inflation, as well as a potential shortage of Experts, could have a material adverse effect on our businesses, financial condition, results of operations, and cash flows.
Therefore, the prices charged for our products and services may not reflect changes in our input costs at the time they occur or at all. The negative impacts related to input cost inflation, as well as a potential shortage of Experts, could have a material adverse effect on our businesses, financial condition, results of operations, and cash flows.
While we try to manage the impact of increases of certain input costs by increasing the prices of our products and services, we may fail in attempting to effectively execute these price increases. Therefore, the prices charged for our products and services may not reflect changes in our input costs at the time they occur or at all.
Accordingly, changes in input costs may limit our ability to maintain existing margins. While we try to manage the impact of increases of certain input costs by increasing the prices of our products and services, we may fail in attempting to effectively execute these price increases.
Our ability to effectively manage any significant growth of new offerings and increasing purchases and utilization will depend on a number of factors, including our ability to: • satisfy existing Learners and Institutions in, and attract and engage new Learners or Institutions for, our offerings; • attract qualified Experts to support expanding offerings and utilization; • develop and produce new products; • successfully introduce new features and enhancements and maintain a high level of functionality in our platform; and • deliver high-quality technical support and customer service to Experts and Learners using our platform. 16 Table of Contents Establishing new offerings or expanding existing offerings will require us to make investments in management and key staff, increased investments in our technology platform, incur additional marketing expenses, and reallocate other resources.
If we cannot quickly and efficiently scale up our technology to handle growing purchases and utilization and new offerings, the Learners’ or Institutions’ experiences with our platform may suffer, which could damage our reputation among Experts, Learners, and Institutions. 16 Table of Contents Our ability to effectively manage any significant growth of new offerings and increasing purchases and utilization will depend on a number of factors, including our ability to: • satisfy existing Learners and Institutions in, and attract and engage new Learners or Institutions for, our offerings; • attract qualified Experts to support expanding offerings and utilization; • develop and produce new products; • successfully introduce new features and enhancements and maintain a high level of functionality in our platform; and • deliver high-quality technical support and customer service to Experts and Learners using our platform.
We do not maintain key-person insurance on any of our employees, including our senior management team, other than a key-person insurance policy on Mr. Cohn. The loss of the services of any individual on our senior management team could make it more difficult to successfully operate our business and pursue our business goals.
The loss of the services of any individual on our senior management team could make it more difficult to successfully operate our business and pursue our business goals.
Because we generate revenue based on Learners purchasing Learning Memberships for services delivered through our platform, it is critical to our success that we identify prospective Learners in a cost-effective manner and that Learners purchase and remain active in our offerings. 13 Table of Contents The following factors, many of which are largely outside of our control, may prevent us from successfully driving and maintaining purchase and utilization of our online offerings in a cost-effective manner or at all: • Negative perceptions about online learning offerings and other non-traditional online services .
The following factors, many of which are largely outside of our control, may prevent us from successfully driving and maintaining purchase and utilization of our online offerings in a cost-effective manner or at all: • Negative perceptions about online learning offerings and other non-traditional online services .
In order to process credit card payments, we are required to comply with payment rules established by payment card networks, such as the Payment Card Industry and its Data Security Standard, as well as with applicable laws. Our failure to comply with these laws or requirements could result in fines or impact our ability to accept payments in the future.
Any such regulations could require us to change our business practices for compliance, or else be subject to regulatory action and/or fines. In order to process credit card payments, we are required to comply with payment rules established by payment card networks, such as the Payment Card Industry and its Data Security Standard, as well as with applicable laws.
In addition to costs associated with investigating and fully disclosing a data breach in such instances, we could be subject to substantial monetary fines or private claims by affected parties and our reputation would likely be harmed. 25 Table of Contents Risks Related to Intellectual Property We operate in an industry with extensive intellectual property litigation, and we have been, and may be in the future, subject to claims related to a violation of a third-party’s intellectual property rights.
In addition to costs associated with investigating and fully disclosing a data breach in such instances, we could be subject to substantial monetary fines or private claims by affected parties and our reputation would likely be harmed.
While we have implemented various measures intended to enable us to comply with applicable privacy or data protection laws, regulations, and contractual obligations, these measures may not always be effective and do not guarantee compliance. 23 Table of Contents Additionally, privacy or data protection laws and regulations may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another, other requirements, or legal obligations or our practices.
While we have implemented various measures intended to enable us to comply with applicable privacy or data protection laws, regulations, and contractual obligations, these measures may not always be effective and do not guarantee compliance.
Our input costs, including costs for Experts, could increase due to factors such as labor shortages, increased compliance costs associated with new or changing government regulations, pandemics, and general inflationary conditions. Accordingly, changes in input costs may limit our ability to maintain existing margins.
Increased input costs, including costs for Experts, or limited availability of Experts, could negatively impact our businesses, financial condition, results of operations, and cash flows. Our input costs, including costs for Experts, could increase due to factors such as labor shortages, increased compliance costs associated with new or changing government regulations, pandemics, and general inflationary conditions.
Because we have a limited operating history and the market for our services, including newly built products and services, is rapidly evolving, it is difficult for us to predict our operating results, particularly with respect to our most recent offerings.
Our ability to fully integrate these new products and services into our platform or achieve satisfactory financial results from them is unproven. The market for our services, including newly built products and services, is rapidly evolving and it is difficult for us to predict our operating results, particularly with respect to our most recent offerings.
An incident involving a child, and in particular an incident that has the potential to compromise the safety or privacy of a child, could garner negative attention, which could harm our brand or reputation and adversely affect our business. 14 Table of Contents We may be exposed to claims and losses, including class action lawsuits, brought by or on behalf of our Learners, Institutions, or Experts, which could have a material adverse effect on our business.
An incident involving a child, and in particular an incident that has the potential to compromise the safety or privacy of a child, could garner negative attention, which could harm our brand or reputation and adversely affect our business.
Our rapid growth has placed, and may continue to place, a significant strain on our administrative and operational infrastructure and other resources. Our ability to manage our operations and growth may require us to continue to expand our marketing and sales personnel, technology team, finance, accounting, legal, and administration teams, as well as our infrastructure.
Our ability to manage our operations and growth may require us to continue to expand our marketing and sales personnel, technology team, finance, accounting, legal, and administration teams, as well as our infrastructure. We may be required to refine our operational, financial, and management controls and reporting systems and procedures.
These vendors and other third parties could change their rules, cost structure, marketing programs, and/or algorithms from time to time and any such changes could adversely impact our ability to generate revenue or deliver paid products and services. 21 Table of Contents Computer malware, viruses, ransomware, hacking, phishing attacks, spamming, and other cyber-related incidents could harm our business and results of operations.
These tools include third-party AI technologies. These vendors and other third parties could change their rules, cost structure, marketing programs, and/or algorithms from time to time and any such changes or any loss of access or rights to use certain technologies could adversely impact our ability to generate revenue or deliver paid products and services.
If we do not retain our senior management team and key employees, we may not be able to sustain our growth or achieve our business objectives. Our future success is substantially dependent on the continued service of our senior management team.
Further, our use of any AI tools that use or incorporate any open source software may heighten any of the foregoing risks. Any of these risks could be difficult to eliminate or manage. If we do not retain our senior management team and key employees, we may not be able to sustain our growth or achieve our business objectives.
We have written contracts with Learners, Institutions, and Experts (either directly or through related and affiliated entities) that establish the terms and conditions of the relationships memorialized therein.
We may be exposed to claims and losses, including class action lawsuits, brought by or on behalf of our Learners, Institutions, or Experts, which could have a material adverse effect on our business. We have written contracts with Learners, Institutions, and Experts that establish the terms and conditions of the relationships memorialized therein.
Changes to applicable U.S. tax laws and regulations or exposure to additional income tax liabilities could affect our and Nerdy LLC’s business and future profitability. We have no material assets other than our interest in Nerdy LLC, which holds, directly or indirectly, all of our business.
If material, payment of such additional amounts upon final adjudication of any disputes could have a material impact on our results of operations and financial position. 29 Table of Contents We have no material assets other than our interest in Nerdy LLC, which holds, directly or indirectly, all of our business.
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Our ability to fully integrate these new products and services into our platform or achieve satisfactory financial results from them is unproven.
Added
Our offerings continue to evolve (for example, we recently rebuilt certain components and functions of our platform and products on new, AI-native codebases), and we may not achieve our expected financial and operating results in the future.
Removed
If we cannot quickly and efficiently scale up our technology to handle growing purchases and utilization and new offerings, the Learners’ or Institutions’ experiences with our platform may suffer, which could damage our reputation among Experts, Learners, and Institutions.
Added
Because we generate revenue based on Learners purchasing Learning Memberships for services delivered through our platform, it is critical to our success that we identify prospective Learners in a cost-effective manner and that Learners purchase and remain active in our offerings.
Removed
If we fail to manage this growth effectively, the success of our business model may be compromised. In recent years we experienced rapid growth in a relatively short period of time. Our revenue grew from $103,968 thousand in 2020 to $190,231 thousand in 2024.
Added
The process of identifying new products and services (for example, we recently rebuilt certain components and functions of our platform and products on new, AI-native codebases) that will be a good fit for our platform is complex and time-consuming.
Removed
We may be required to refine our operational, financial, and management controls and reporting systems and procedures.
Added
Establishing new offerings or expanding existing offerings will require us to make investments in management and key staff, increased investments in our technology platform, incur additional marketing expenses, and reallocate other resources.
Removed
If our security measures are breached or fail, we could lose Learners, Experts, Institutions, and employees; fail to attract new Learners, Experts, Institutions, and employees; and could be exposed to protracted and costly litigation.
Added
In recent years, we experienced growth in a relatively short period of time. Our growth has placed, and may continue to place, a significant strain on our administrative and operational infrastructure and other resources.
Removed
Computer malware, viruses, ransomware, physical or electronic break-ins, and similar disruptions could lead to interruptions and delays in our service and operations and loss, misuse, or theft of data. Computer malware, viruses, ransomware, computer hacking, and phishing attacks against online networking platforms have become more prevalent and may occur on our systems in the future.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThrough ongoing communication, we monitor the prevention, detection, mitigation, and remediation of cybersecurity threats and incidents in real time, and report such threats and incidents to the Audit Committee when appropriate.
Biggest changeThrough ongoing communication, we monitor the prevention, detection, mitigation, and remediation of cybersecurity threats and incidents in real time, and report such threats and incidents to the Audit Committee when appropriate. The Vice President, Engineering and Security has served in various roles in information technology for over 25 years.
Our CEO, CFO and CLO each hold degrees in their respective fields, and each have experience managing risks, including risks arising from cybersecurity threats. Cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected the Company, including our business strategy, results of operations, or financial condition.
Our CEO, COO, CFO and CLO each hold degrees in their respective fields, and each have experience managing risks, including risks arising from cybersecurity threats. Cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected the Company, including our business strategy, results of operations, or financial condition.
ITEM 1C. CYBERSECURITY. Our Board of Directors, recognizing the importance of maintaining the trust and confidence of our Learners, Experts, Institutional customers, clients, business partners, and employees, has delegated oversight of our cybersecurity risk management to the Audit Committee.
ITEM 1C. CYBERSECURITY. Our Board of Directors, recognizing the importance of maintaining the trust and confidence of our Learners, Experts, Institutional customers, clients, business partners, employees, and contractors, has delegated oversight of our cybersecurity risk management to the Audit Committee.
On an annual basis, the Audit Committee discusses the Company’s approach to cybersecurity risk management with the members of the management team, including the CTO and the Vice President, Engineering and Security.
On an annual basis, the Audit Committee discusses the Company’s approach to cybersecurity risk management with the members of the management team, including the Vice President, Engineering and Security.
Our cybersecurity program focuses on these key areas: • Governance : The Audit Committee has oversight of cybersecurity risk management and regularly interacts with our Chief Technology Officer (“CTO”) and other members of management. • Education and Awareness : We provide regular, mandatory training for personnel regarding cybersecurity threats to equip them with effective tools to address and mitigate cybersecurity threats, and to communicate our information security policies, standards, processes, and practices. • Cross-Functional Approach : We employ a cross-functional approach to identifying, preventing, and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner. • Third-Party Risk Management : We have adopted a risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including vendors, service providers, and other external users of our systems, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems. • Technical Safeguards : We deploy technical safeguards designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality, and access controls, which are evaluated and revised through vulnerability and cybersecurity threat assessments. • Incident Response and Recovery Planning : We maintain incident response and recovery plans addressing our response to a cybersecurity incident, and such plans are tested and evaluated on a regular basis.
Our cybersecurity program focuses on these key areas: • Governance : The Audit Committee has oversight of cybersecurity risk management and regularly interacts with our Vice President, Engineering and Security and other members of management. • Education and Awareness : We provide regular, mandatory training for personnel regarding cybersecurity threats to equip them with effective tools to address and mitigate cybersecurity threats, and to communicate our information security policies, standards, processes, and practices. • Cross-Functional Approach : We employ a cross-functional approach to identifying, preventing, and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner. • Third-Party Risk Management : We have adopted a risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including vendors, service providers, and other external users of our systems, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems. • Technical Safeguards : We deploy technical safeguards designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality, and access controls, which are evaluated and revised through vulnerability and cybersecurity threat assessments. • Incident Response and Recovery Planning : We maintain incident response and recovery plans addressing our response to a cybersecurity incident, and such plans are tested and evaluated on a regular basis.
The CTO and Vice President, Engineering and Security in coordination with our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), and Chief Legal Officer (“CLO”), among others, work collaboratively across functions to implement a program designed to protect our information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents in accordance with our incident response and recovery plans.
Our Vice President, Engineering and Security in coordination with our Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”), Chief Financial Officer (“CFO”), and Chief Legal Officer (“CLO”), among others, work collaboratively across functions to implement a program designed to protect our information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents in accordance with our incident response and recovery plans.
Depending on their nature, cybersecurity threats in the future may materially affect our business strategy, results of operations, or financial condition. See “Risk Factors” in Part I, Item 1A of this report. 35 Table of Contents
Depending on their nature, cybersecurity threats in the future may materially affect our business strategy, results of operations, or financial condition. See “Risk Factors” in Part I, Item 1A of this report.
Removed
Our CTO has served in various roles in information technology and information security for over a decade, and holds a doctorate in mathematics from the London School of Economics and Political Science. The Vice President, Engineering and Security has served in various roles in information technology for over 25 years.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that our facilities are adequate to meet our needs for the immediate future and that we will be able to secure additional space due to the expiration of our current lease or the expansion of our operations, as necessary, and if needed.
Biggest changeWe believe that our facilities are adequate to meet our needs for the 35 Table of Contents immediate future and that we will be able to secure additional space due to the expiration of our current lease or the expansion of our operations, as necessary, and if needed.
Added
For information regarding our leases, refer to Note 13 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS. For information regarding our legal proceedings, refer to “Commitments and Contingencies” in Note 17 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report, which is incorporated herein by reference.
Biggest changeITEM 3. LEGAL PROCEEDINGS. For information regarding our legal proceedings, refer to “Commitments and Contingencies” in Note 15 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report, which is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 36 Table of Contents PART II
Removed
Pursuant to SEC regulations, the Company is required to disclose certain information about environmental proceedings with a governmental entity as a party if the Company reasonably believes such proceedings may result in monetary sanctions, exclusive of interest and costs, above a stated threshold.
Removed
Pursuant to such SEC regulations, the Company has elected to use a threshold of $1,000 thousand for purposes of determining whether disclosure of any such proceedings is required. Applying this threshold, there are no such environmental proceedings pending as of the filing date of this report or that were resolved during the fourth quarter of 2024. ITEM 4.
Removed
MINE SAFETY DISCLOSURES. Not applicable. 36 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur Class B common stock, par value $0.0001 per share (the “Class B Common Stock”) is not traded on any established public trading market. On February 13, 2025, there were approximately 38 stockholders and 21 stockholders of our Class A Common Stock and Class B Common Stock, respectively.
Biggest changeOur Class B common stock, par value $0.0001 per share (the “Class B Common Stock”) is not traded on any established public trading market. On February 12, 2026, there were approximately 37 stockholders and 20 stockholders of our Class A Common Stock and Class B Common Stock, respectively.
We did not pay any cash dividends on our Class A Common Stock during the year ended December 31, 2024, nor do we have plans to pay cash dividends on our common stock in the foreseeable future.
We did not pay any cash dividends on our Class A Common Stock during the year ended December 31, 2025, nor do we have plans to pay cash dividends on our common stock in the foreseeable future.
Issuer Purchases of Equity Securities There were no purchases of equity securities by the issuer or affiliated purchasers, as defined in Rule 10b-18(a)(3) the Securities Exchange Act of 1934, during the fourth quarter of 2024.
Issuer Purchases of Equity Securities There were no purchases of equity securities by the issuer or affiliated purchasers, as defined in Rule 10b-18(a)(3) the Securities Exchange Act of 1934, during the fourth quarter of 2025.

Item 7. Management's Discussion & Analysis

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

40 edited+43 added−22 removed21 unchanged
Biggest changeOur Active Expert count during the year ended December 31, 2024 was primarily driven by higher Institutional active Experts when compared to the prior year period, which reflects the continued scaling of our Institutional business. 38 Table of Contents Year Ended December 31, Change Active Experts in thousands 2024 2023 % Active Experts 20.2 17.2 17% RESULTS OF OPERATIONS Year Ended December 31, dollars in thousands 2024 % 2023 % Revenue $ 190,231 100 % $ 193,399 100 % Cost of revenue 61,837 33 % 56,952 29 % Gross Profit 128,394 67 % 136,447 71 % Sales and marketing expenses 71,623 37 % 68,448 36 % General and administrative expenses 126,879 67 % 125,570 65 % Operating Loss (70,108) (37) % (57,571) (30) % Unrealized loss on derivatives, net — — % 13,385 7 % Interest income (3,104) (2) % (3,377) (2) % Other expense (income), net 23 — % (19) — % Loss before Income Taxes (67,027) (35) % (67,560) (35) % Income tax expense 115 — % 109 — % Net Loss (67,142) (35) % (67,669) (35) % Revenue Revenue for the year ended December 31, 2024 declined primarily due to lower average revenue per member per month (“ARPM”) in our Consumer business, partially offset by higher revenues in our Institutional business.
Biggest changeYear Ended December 31, Change Active Experts in thousands 2025 2024 % Active Experts 15.8 20.2 (22)% RESULTS OF OPERATIONS Year Ended December 31, dollars in thousands 2025 % 2024 % Revenue $ 178,988 100 % $ 190,231 100 % Cost of revenue 75,208 42 % 61,837 33 % Gross Profit 103,780 58 % 128,394 67 % Sales and marketing expenses 60,123 34 % 71,623 37 % General and administrative expenses 105,521 59 % 126,879 67 % Operating Loss (61,864) (35) % (70,108) (37) % Interest income, net (1,073) (1) % (3,104) (2) % Other (income) expense, net (2) — % 23 — % Loss before Income Taxes (60,789) (34) % (67,027) (35) % Income tax expense 159 — % 115 — % Net Loss (60,948) (34) % (67,142) (35) % Revenue Revenue for the year ended December 31, 2025 decreased when compared to the prior year period primarily due to lower Institutional revenue and a specific state-funded program ($7,437 thousand for the year ended December 31, 2024) within Consumer revenue that did not recur in 2025.
Historically, we experience lower than normal revenue during the summer when schools and universities are out of session in the United States (the “U.S.”) and when people travel for vacations and holidays. Due to seasonality, comparisons of our historical quarterly results of operations on a sequential basis may not provide meaningful insight into our overall financial performance.
Historically, we experience lower than normal revenue during the summer when schools and universities are typically out of session in the United States (the “U.S.”) and when people travel for vacations and holidays. Due to seasonality, comparisons of our historical quarterly results of operations on a sequential basis may not provide meaningful insight into our overall financial performance.
Our comprehensive learning destination provides learning experiences across numerous subjects and multiple formats, including Learning Memberships, one-on-one instruction, small group tutoring, large format classes, tutor chat, essay review, adaptive assessments, and self-study tools. Our flagship business, Varsity Tutors LLC (“Varsity Tutors”), is one of the nation’s largest platforms for live online tutoring and classes.
Our comprehensive learning destination provides learning experiences across numerous subjects and multiple formats, including Learning Memberships, one-on-one instruction, small group tutoring, large format classes, chat, essay review, adaptive assessments, and self-study tools. Our flagship business, Varsity Tutors LLC (“Varsity Tutors”), is one of the nation’s largest platforms for live online tutoring and classes.
Any forfeitures of stock-based compensation are recorded as they occur. The grant date fair value of the restricted stock units was determined based upon the closing price of our Class A Common Stock on the date of grant. The grant date fair value of the stock appreciation rights, restricted stock awards, and stock options was determined using the Black-Scholes Model.
Any forfeitures of stock-based compensation are recorded as they occur. The grant date fair value of the restricted stock units was determined based upon the closing price of our Class A Common Stock on the date of grant. The grant date fair value of the stock appreciation rights and stock options was determined using the Black-Scholes Model.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included in this report, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Nerdy Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 27, 2024.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 are not included in this report, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Nerdy Inc.’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 27, 2025.
The following discussion should be read in conjunction with the financial statements under Part II, Item 8 of this report, “Cautionary Note On Forward-Looking Statements” on page 1 of this report, and “Risk Factors” in Part I, Item 1A of this report. This section of this report generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
The following discussion should be read in conjunction with the financial statements under Part II, Item 8 of this report, “Cautionary Note On Forward-Looking Statements” on page 1 of this report, and “Risk Factors” in Part I, Item 1A of this report. This section of this report generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
Our purpose-built proprietary platform leverages technology, including artificial intelligence (“AI”), to connect students, users, parents, guardians, and purchasers (“Learner(s)”) of all ages to tutors, instructors, subject matter experts, educators, and other professionals (“Expert(s)”), delivering superior value on both sides of the network.
Our purpose-built proprietary platform leverages technology, including AI, to connect students, users, parents, guardians, and purchasers (“Learner(s)”) of all ages to tutors, instructors, subject matter experts, educators, and other professionals (“Expert(s)”), delivering superior value on both sides of the network.
Our offerings include Varsity Tutors for Schools , a product suite that leverages our platform capabilities to offer high-dosage tutoring and our online learning solutions to Institutions. We have built a diversified business across the following audiences: K-8, High School, College, Graduate School, and Professional.
Our offerings include Varsity Tutors for Schools , a product suite that leverages our next-generation live tutoring and intervention platform capabilities to offer high-dosage tutoring and our online learning solutions to Institutions. We have built a diversified business across the following audiences: K-8, High School, College, Graduate School, and Professional.
Given the customer receives benefit from the completion of each session (as Learners are not obligated to meet with the same Expert for a minimum number of sessions), we concluded each one-on-one or small group tutoring session is a separate performance obligation.
Given the customer receives benefit from the completion of each session (as Learners are not obligated to meet with the same Expert for a minimum number of sessions), we concluded each tutoring session is a separate performance obligation.
Given the Institutions receive benefit from the completion of each session (as Institutions are not obligated to meet with the same Expert for a minimum number of sessions), we concluded each one-on-one or small group tutoring session is a separate performance obligation.
Given the Institutions receive benefit from the completion of each session (as Institutions are not obligated to meet with the same Expert for a minimum number of sessions), we concluded each tutoring session is a separate performance obligation.
Cash Requirements Our cash requirements within the next twelve months include working capital requirements, sales and marketing activities, and capital expenditures. We believe our cash on hand will be sufficient to satisfy these future requirements. Our cash requirements under our contractual obligations and commitments consist primarily of lease arrangements.
Cash Requirements Our cash requirements within the next twelve months include working capital requirements, sales and marketing activities, and capital expenditures. We believe our cash on hand will be sufficient to satisfy these future requirements. Our cash requirements under our contractual obligations and commitments consist primarily of: • Debt, Interest, and Other Debt-Related Obligations .
Contracts with Learners are sold through Learning Memberships, whereby Learners pay a fixed monthly rate over the contract term. Revenue earned through Learning Memberships is recognized from one-on-one instruction and small group tutoring as performance obligations are satisfied.
Contracts with Learners are sold through Learning Memberships, whereby Learners pay a fixed monthly rate over the contract term. Revenue earned through Learning Memberships is recognized from tutoring as performance obligations are satisfied.
We have also sold prepaid high-dosage contracts, 42 Table of Contents which consist of payments for services that can be redeemed following the date of first payment or payments after services are completed. Revenue is recognized from one-on-one instruction and small group tutoring as performance obligations are satisfied.
We have also sold prepaid high-dosage contracts, which consist of payments for services that can be redeemed following the date of first payment or payments after services are completed. Revenue is recognized from tutoring as performance obligations are satisfied.
The grant date fair value of the Founder’s Award was determined using the Monte Carlo Option Pricing Method. For additional discussion on stock-based compensation, see Note 18 in “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report.
The grant date fair value of the Founder’s Award and market-based performance restricted stock units were determined using the Monte Carlo Option Pricing Method. For additional discussion on stock-based compensation, see Note 16 in “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report.
We determined that collectively, these factors reflect that we are the principal in transactions with Learners and Institutions. We do not have any incremental costs to obtain or fulfill a contract that require capitalization.
We are primarily responsible for the services provided and set pricing. We determined that collectively, these factors reflect that we are the principal in transactions with Learners and Institutions. We do not have any incremental costs to obtain or fulfill a contract that requires capitalization.
Our solutions are available directly to Learners (“Consumer(s)”), as well as through education systems (“Institution(s)”). Our platform offers Experts the opportunity to generate income from the convenience of home, while also increasing access for Learners by removing barriers to high-quality live online learning.
Our solutions are available to Learners either directly through Learning Memberships (“Consumers”) and through education systems (“Institutions”). Our platform offers Experts the opportunity to generate income from the convenience of home, while also increasing access for Learners by removing barriers to high-quality live online learning.
Interest Income Interest income was $3,104 thousand for the year ended December 31, 2024, compared to $3,377 thousand for the year ended December 31, 2023.
Interest Income, net Interest income was $1,073 thousand for the year ended December 31, 2025, compared to $3,104 thousand for the year ended December 31, 2024.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of these consolidated financial statements requires us to make judgments, estimates, and assumptions.
We did not have any financing activities during the year ended December 31, 2024. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of these consolidated financial statements requires us to make judgments, estimates, and assumptions.
We have incurred cumulative losses from our operations, and we may incur additional losses in the future. Our operations have historically been financed primarily through cash on hand and capital contributions. To the extent we generate negative operating cash flows, it is possible that we may have to finance future operations primarily or in part from cash on hand.
We have incurred cumulative losses from our operations, and we may incur additional losses in the future. Our operations have historically been financed primarily through cash on hand and capital contributions.
We provide a significant service of integrating instruction services, which are provided by Experts on our behalf through our platform, using our curation and matching technologies and features in order to deliver a combined output to meet our performance obligation to Learners. We are primarily responsible for the services provided and set pricing.
We generate revenue by selling tutoring services to Learners and Institutions that are fulfilled by Experts, who deliver instruction on our behalf through our proprietary Live Learning Platform. 43 Table of Contents We provide a significant service of integrating instruction services, which are provided by Experts on our behalf through our platform, using our curation and matching technologies and features in order to deliver a combined output to meet our performance obligation to Learners.
Product and development costs include compensation for employees on our product, engineering, and design teams who are responsible for developing new and improving existing offerings, maintaining our website, improving efficiencies across our organization, and third-party expenses. General and administrative expenses for the year ended December 31, 2024 included non-cash stock-based compensation, of $38,744 thousand.
Product and development costs include compensation for employees on our product, engineering, and design teams who are responsible for developing new and improving existing offerings, maintaining our website, improving efficiencies across our organization, and third-party expenses.
This decrease was driven by lower interest income on our cash balances during the year ended December 31, 2024. 40 Table of Contents Income Tax Expense Our effective income tax rate was (0.17)% and (0.16)% for the years ended December 31, 2024 and 2023, respectively.
This decrease was driven by lower interest income on our cash balances during the year ended December 31, 2025 and by interest expense related to our outstanding borrowings under our term loan that was originated in November 2025. Income Tax Expense Our effective income tax rate was (0.26)% and (0.17)% for the years ended December 31, 2025 and 2024, respectively.
Active Experts also includes our Institutional business, but excludes First Tutors UK. The following table summarizes Active Experts for the periods presented.
Active Experts also includes our Institutional business, but excludes First Tutors UK. The following table summarizes Active Experts for the periods presented. Our Active Expert count during the year ended December 31, 2025 decreased when compared to the prior year period.
Income tax expense recorded during the years ended December 31, 2024 and 2023 represents amounts owed to state authorities. The following table presents a reconciliation of income tax expense with amounts computed at the federal statutory tax rate for the periods presented.
Income tax expense recorded during the years ended December 31, 2025 and 2024 represents amounts owed to state authorities. The following table presents a reconciliation of income tax expense and the effective income tax rate for the period presented, reported under ASC Topic 740 after the adoption of Accounting Standards Update (“ASU”) 2023-09.
Product and development costs were $43,928 thousand and $40,859 thousand for the years ended December 31, 2024 and 2023, respectively, an increase of $3,069 thousand.
Product and development costs were $41,338 thousand and $43,928 thousand for the years ended December 31, 2025 and 2024, respectively, a decrease of $2,590 thousand.
Operating Expenses The following table sets forth our operating expenses for the periods shown: Year Ended December 31, Change dollars in thousands 2024 2023 $ % Sales and marketing expenses $ 71,623 $ 68,448 $ 3,175 5 % General and administrative expenses 126,879 125,570 1,309 1 % Total operating expenses $ 198,502 $ 194,018 $ 4,484 2 % Sales and Marketing Sales and marketing expenses for the year ended December 31, 2024 and 2023 included non-cash stock-based compensation of $2,345 thousand and $2,795 thousand, respectively.
The following table sets forth our operating expenses for the periods shown: Year Ended December 31, Change dollars in thousands 2025 2024 $ % Sales and marketing expenses $ 60,123 $ 71,623 $ (11,500) (16) % General and administrative expenses 105,521 126,879 (21,358) (17) % Total operating expenses $ 165,644 $ 198,502 $ (32,858) (17) % Sales and Marketing Sales and marketing expenses for the year ended December 31, 2025 included non-cash stock-based compensation and restructuring costs of $1,321 thousand and $193 thousand, respectively.
See Note 15 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report for information on our lease obligations and the amount and timing of future payments. As of December 31, 2024, we had no debt obligations. The following table sets forth our cash flows.
See Note 13 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report for information on our lease obligations and the amount and timing of future payments. Debt Covenants The Loan Agreement includes customary representations and warranties and covenants associated with our Term Loan.
RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS See Note 3 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report for a discussion regarding recently issued and adopted accounting standards. 43 Table of Contents EMERGING GROWTH COMPANY STATUS We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act.
RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS See Note 3 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report for a discussion regarding recently issued and adopted accounting standards. SMALLER REPORTING COMPANY STATUS As of December 31, 2025, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.
Year Ended December 31, dollars in thousands 2024 2023 Computed tax (21%) $ (14,076) $ (14,188) Partnership outside basis adjustments 47 2,266 Income tax benefit attributable to NCI 6,180 6,979 Income tax credit (630) (1,121) Change in valuation allowance charged to expense 11,019 11,907 State income tax benefit, net of effect on federal tax (2,699) (2,888) Other, net 274 (2,846) Income tax expense $ 115 $ 109 LIQUIDITY AND CAPITAL RESOURCES Sources and Uses of Cash As of December 31, 2024 and 2023, we had cash and cash equivalents totaling $52,541 thousand and $74,824 thousand, respectively.
Federal Statutory Tax Rate (21%) $ (12,766) 21.00 % State income taxes, net of federal tax effect 159 (0.26) % Changes in valuation allowances 8,217 (13.52) % Other, net Income tax benefit attributable to the NCI 4,416 (7.26) % Other 133 (0.22) % Income tax expense and effective income tax rate $ 159 (0.26) % 41 Table of Contents The following table presents a reconciliation of income tax expense with amounts computed at the federal statutory tax rate for the period presented, reported under ASC Topic 740 prior to the adoption of ASU 2023-09. dollars in thousands Year Ended December 31, 2024 Computed tax (21%) $ (14,076) Partnership outside basis adjustments 47 Income tax benefit attributable to NCI 6,180 Income tax credit (630) Change in valuation allowance charged to expense 11,019 State income tax benefit, net of effect on federal tax (2,699) Other, net 274 Income tax expense $ 115 LIQUIDITY AND CAPITAL RESOURCES Sources and Uses of Cash As of December 31, 2025 and 2024, we had cash and cash equivalents totaling $47,895 thousand and $52,541 thousand, respectively.
We capitalize certain costs, including stock-based compensation, associated with software developed or obtained for internal use and website and application development. We capitalize development stage internal and external costs. These costs are capitalized when management has authorized and committed project funding and it is probable that the project will be completed, and the software will be used as intended.
We capitalize certain costs, including stock-based compensation, associated with software developed or obtained for internal-use and website and application development. We capitalize development stage internal and external costs.
Variations in the number of Active Members are due to changes in demand for our solutions, seasonality, testing schedules, the extension of Learning Memberships to additional Consumer audiences, and the launch of new membership options. As a result, we believe Active Members is a key indicator of our ability to attract, engage, and retain Learners.
“Active Member(s)” is defined as the number of Learners with an active paid Learning Membership as of the dates presented. Variations in the number of Active Members are due to changes in demand for our solutions, seasonality, testing schedules, and the launch of new membership options.
Active Members in thousands December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 Active Members 37.5 39.7 35.5 46.1 40.7 39.5 YoY change (8)% 1% 15% 40% 101% 250% “Active Experts” is defined as the number of Experts who have instructed one or more sessions in a given period.
ARPM in ones December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 ARPM $ 364 $ 374 $ 348 $ 335 $ 302 $ 302 YoY change 21% 24% 24% 14% (2)% (13)% “Active Experts” is defined as the number of Experts who have instructed one or more sessions in a given period.
SMALLER REPORTING COMPANY STATUS As of December 31, 2023, we were no longer a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
These investments were partially offset by Consumer marketing efficiency gains. General and Administrative General and administrative expenses include compensation for certain employees, support services, product and development expenses intended to support continued innovation, and other operating expenses.
This decrease in sales and marketing expenses was driven by Consumer marketing efficiency gains coupled with the moderation of our investment in the Institutional business given school district funding uncertainties in 2025. General and Administrative General and administrative expenses include compensation for certain employees, support services, product and development expenses intended to support continued innovation, and other operating expenses.
Year Ended December 31, dollars in thousands 2024 2023 Cash used in: Operating activities $ (15,603) $ (7,560) Investing activities (6,863) (6,887) Financing activities — (1,940) Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash (1) (20) Net Decrease in Cash, Cash Equivalents, and Restricted Cash $ (22,467) $ (16,407) Operating Activities Cash used in operating activities for the year ended December 31, 2024 increased $8,043 thousand when compared to the same period in 2023 as lower revenue and gross margin coupled with investments in our Institutional sales organization and product development to drive innovation and support our continued growth were partially offset by favorable changes in working capital primarily related to fluctuations in the timing of sales and collections of receivables.
Year Ended December 31, dollars in thousands 2025 2024 Cash used in: Operating activities $ (18,846) $ (15,603) Investing activities (5,370) (6,863) Financing activities 19,499 — Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash (61) (1) Net Decrease in Cash, Cash Equivalents, and Restricted Cash $ (4,778) $ (22,467) Operating Activities Cash used in operating activities for the year ended December 31, 2025 increased $3,243 thousand when compared to the same period in 2024, primarily due to lower revenue and gross margin, the payment of a legal settlement of $2,000 thousand, and changes in working capital.
General and administrative expenses for the year ended December 31, 2023 included non-cash stock-based compensation, costs related to the warrant and earnout transactions, a provision for legal settlement, and restructuring costs of $41,474 thousand, $1,940 thousand , $1,250 thousand, and $841 thousand, respectively. Excluding these impacts in both periods, general and administrative expenses increased $8,070 thousand, or 10%.
General and administrative expenses for the year ended December 31, 2025 included non-cash stock-based compensation and restructuring costs of $26,486 thousand and $455 thousand, respectively. General and administrative expenses for the year ended December 31, 2024 included non-cash stock-based compensation of $38,744 thousand. Excluding these impacts in both periods, general and administrative expenses decreased $9,555 thousand, or 11%.
Cost of Revenue and Gross Profit The following table sets forth our cost of revenue and gross profit for the periods presented.
The following table presents our revenue by category of Learners for the periods presented.
OVERVIEW We operate a platform for live online learning. Our mission is to transform the way people learn through technology.
OVERVIEW We operate a next-generation live tutoring and intervention platform that leverages the power of human expertise with advanced artificial intelligence (“AI”) to personalize learning, accelerate student achievement, and empower educators. Our mission is to transform the way people learn through technology.
Cash used in investing activities related to capital expenditures primarily for the development of internal use software and information technology (“IT”) equipment. 41 Table of Contents Financing Activities Cash used in financing activities for the year ended December 31, 2023 was $1,940 thousand, which related to transaction costs paid in connection with the warrant and earnout transactions.
These impacts were partially offset by lower sales and marketing and general and administrative expenses. Investing Activities Cash used in investing activities was $5,370 thousand and $6,863 thousand for the years ended December 31, 2025 and 2024, respectively. Cash used in investing activities related to capital expenditures primarily for the development of internal-use software and information technology (“IT”) equipment.
We did not have any financing activities during the year ended December 31, 2024. For additional information on the warrant and earnout transactions, refer to Notes 1, 4, and 13 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report.
For additional information on the abandonment charge, see Note 8 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report. KEY FINANCIAL AND OPERATING METRICS We monitor the following key operating metrics, among others, to evaluate the performance of our business.
Removed
KEY FINANCIAL AND OPERATING METRICS We monitor the following key operating metrics, among others, to evaluate the performance of our business. “Active Member(s)” is defined as the number of Learners with an active paid Learning Membership as of the date presented.
Added
Abandonment of Capitalized Internal-Use Software In the fourth quarter of 2025, management made a strategic decision to abandon certain components of our previously capitalized internal-use software including our legacy Live Learning Platform, our legacy Learner user experience, our legacy Expert user experience, and our legacy landing pages.
Removed
Active Members exclude EduNation Limited, a company incorporated in England and Wales (“First Tutors UK”), as well as our Institutional business. Our Active Member count as of December 31, 2024 was lower when compared to December 31, 2023 due to a higher mix of lower frequency Learning Memberships during 2024.
Added
These components and functions were rebuilt on entirely new, AI-native codebases, preserving essential business logic and data while migrating to modern, decoupled systems.
Removed
Revenue for the year ended December 31, 2023 included legacy Package revenue of $15,850 thousand that did not recur in the current year period due to the completion of the transition to Learning Memberships in our Consumer business. The following table presents the Company’s revenue by business category for the periods presented.
Added
We believe this modernization of our software platform onto entirely new, AI-native codebases will allow for not only the immediate improvement of the experiences we can offer to Learners, but also allow for more efficient product innovation in the future.
Removed
Year Ended December 31, Change dollars in thousands 2024 % 2023 % $ % Consumer $ 154,230 81 % $ 158,654 82 % (4,424) (3) % Institutional 35,277 18 % 33,815 17 % 1,462 4 % Other (a) 724 1 % 930 1 % (206) (22) % Revenue $ 190,231 100 % $ 193,399 100 % $ (3,168) (2) % (a) Other consists of EduNation Limited, a company incorporated in England and Wales (“First Tutors UK”) and other services.
Added
In connection with this abandonment, we recorded a write-off of a portion of our previously capitalized internal-use software, which was included in “Cost of revenue” in the Consolidated Statement of Operations for the year ended December 31, 2025.
Removed
Year Ended December 31, Change dollars in thousands 2024 2023 $ % Revenue $ 190,231 $ 193,399 $ (3,168) (2) % Cost of revenue 61,837 56,952 4,885 9 % Gross Profit $ 128,394 $ 136,447 $ (8,053) (6) % % Margin 67 % 71 % Cost of revenue for the year ended December 31, 2024 increased due to higher Expert costs of $4,096 thousand, primarily related to higher utilization of tutoring sessions across Learning Memberships in our Consumer business and the continued scaling of our Institutional business. 39 Table of Contents Gross margin for the year ended December 31, 2024 decreased primarily due to lower ARPM coupled with higher utilization of tutoring sessions across Learning Memberships in our Consumer business and higher substitution costs during the first half of the year in our Institutional business.
Added
As a result, we believe Active Members is a key indicator of our ability to attract, engage, and retain Learners. Active Members exclude our Institutional business.
Removed
We have introduced improvements to our marketplace infrastructure systems, including session scheduling enhancements, invoice automation improvements, and changes to the tutor placement and substitution program logic. We believe these enhancements will improve the customer experience due to the higher reliability level of our marketplace infrastructure systems and improve gross margins by lowering costs.
Added
Our Active Member count as of December 31, 2025 was lower when compared to December 31, 2024 primarily due to operational challenges that we are actively addressing through the appointment of a new Chief Operating Officer in 2025 to drive enhanced operational execution 38 Table of Contents and systematic process improvements.
Removed
Excluding these impacts in both periods, sales and marketing expenses increased $3,625 thousand, or 5%.
Added
We also rolled out new Learner and Expert platform user experiences in the fourth quarter that we believe will re-accelerate growth.
Removed
Sales and marketing increases were driven by investments in our Institutional sales organization which were made to drive customer acquisition, brand awareness, and reach, including through signing up school districts with access to the Varsity Tutors platform, which is a strategy to introduce school districts to the platform and ultimately convert them to our fee-based offerings.
Added
Active Members in thousands December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 Active Members 33.2 34.3 30.6 40.5 37.5 39.7 YoY change (11)% (14)% (14)% (12)% (8)% 1% “Average Revenue per Member per Month” (“ARPM”) is defined as the average Consumer Learning Membership subscription revenue per member per month as of the dates presented.
Removed
We believe our investments in product development and our platform-oriented approach to growth have allowed us to launch and continuously improve our suite of ‘always on’ subscription products, including Learning Memberships for Consumers, and our high-dosage tutoring offerings for Institutional customers.
Added
Variations in ARPM are primarily due to changes in the mix of Learning Memberships sold and pricing changes. We believe ARPM is a key indicator of the value we provide to our customers. ARPM excludes our Institutional business.
Removed
We believe these subscription and access-based offerings simplify our operating model needed to support the organization, which allows us to maximize our investment in our unified platform.
Added
ARPM as of December 31, 2025 was higher when compared to December 31, 2024 due to the mix shift to higher frequency Learning Memberships coupled with price increases for new Consumer customers enacted during the first quarter of 2025.
Removed
Unrealized Loss on Derivatives, Net During the year ended December 31, 2023, we recognized a net loss of $13,385 thousand related to non-cash mark-to-market adjustments on our warrants and earnouts contracts prior to the settlement in 2023 of all of our warrants and earnouts.
Added
The impact of these changes was further bolstered by higher retention in newer cohorts due primarily to improvements in the user experience and new Expert incentives.
Removed
We did not have any mark-to-market adjustments on our warrants and earnouts contracts during the year ended December 31, 2024 as we did not have any warrants or earnouts outstanding. For additional information on the warrant and earnout transactions, refer to Notes 1, 4, and 13 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report.
Added
This decrease was primarily due to lower Consumer Active Experts as a result of our Expert incentives, which has promoted utilization of the highest quality Experts by encouraging them to work with more Learners and develop deeper relationships that allow for increased revenue-generating opportunities, coupled with lower utilization of tutoring sessions in our Institutional business as a result of lower bookings.
Removed
Investing Activities Cash used in investing activities was $6,863 thousand and $6,887 thousand for the years ended December 31, 2024 and 2023, respectively.
Added
We believe our Active Expert count at December 31, 2025 is sufficient to meet our near-term growth objectives.
Removed
We generate revenue by selling tutoring services to Learners and Institutions that are fulfilled by Experts, who deliver instruction on our behalf through our proprietary Live Learning Platform.
Added
Also within Consumer Revenue, Learning Membership revenue increased 2% year-over-year.
Removed
As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Added
The current year period was positively impacted by higher ARPM in our Consumer business as a result of a mix 39 Table of Contents shift to higher frequency Learning Memberships and price increases for new Consumer customers enacted during the first quarter of 2025, coupled with higher retention in newer cohorts due primarily to improvements in the user experience and investments in Expert pay and incentives.
Removed
Additionally, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
Added
Year Ended December 31, Change dollars in thousands 2025 % 2024 % $ % Consumer $ 150,736 84 % $ 154,230 81 % (3,494) (2) % Institutional 27,607 15 % 35,277 18 % (7,670) (22) % Other 645 1 % 724 1 % (79) (11) % Revenue $ 178,988 100 % $ 190,231 100 % $ (11,243) (6) % Cost of Revenue and Gross Profit The following table sets forth our cost of revenue and gross profit for the periods presented.
Removed
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
Added
Year Ended December 31, Change dollars in thousands 2025 2024 $ % Revenue $ 178,988 $ 190,231 $ (11,243) (6) % Cost of revenue 75,208 61,837 13,371 22 % Gross Profit $ 103,780 $ 128,394 $ (24,614) (19) % % Margin 58 % 67 % Cost of revenue for the year ended December 31, 2025 was impacted by a charge for the abandonment of capitalized internal-use software, net of accumulated amortization, of $7,757 thousand related to our replacement of certain components of our platform with AI-native codebases, as discussed above.
Removed
We expect to remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the closing date of the TPG Pace’s initial public offering (such anniversary date is October 6th, 2025), (b) in which we have total annual gross revenue of at least $1,235,000 thousand or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares of common stock that are held by non-affiliates equals or exceeds $700,000 thousand as of the prior June 30th, or (2) the date on which we have issued more than $1,000,000 thousand in non-convertible debt securities during the prior three-year period.
Added
Excluding this impact, cost of revenue increased $5,614 thousand due to higher Expert costs of $5,243 thousand, primarily driven by investments in Expert pay and incentives. We believe these investments drive Expert satisfaction and engagement with our platform (and Learners) by allowing certain Experts to receive additional income for each sequential recurring session with the same student.
Removed
Based upon the facts and circumstances that existed as of December 31, 2024, we remained an emerging growth company for our Annual Report on Form 10-K for the year ended December 31, 2024 and will continue to be for our quarterly reports in the 2025 interim periods.
Added
Following the adoption of the new incentives, we continue to see faster time to the first session, more sessions in the first 30 days, lower tutor replacement rates, and higher retention. Gross margin for the year ended December 31, 2025 was negatively impacted by the previously discussed charge related to the abandonment of capitalized internal-use software.
Removed
However, due to the fifth anniversary of the closing date of the TPG Pace’s initial public offering occurring in 2025, we will no longer be an emerging growth company starting with our Annual Report on Form 10-K for the year ended December 31, 2025, and as a result, will no longer be able to take advantage of the exemptions listed above.
Added
Excluding this impact, gross margin decreased primarily due to investments in Expert pay and incentives. For the third consecutive quarter, gross margin improved sequentially quarter-over-quarter as gross margin, excluding the impact of the abandonment charge, of 67% for the fourth quarter of 2025 increased approximately 380 basis points when compared to the third quarter of 2025.

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