Shares of online learning platform company Nerdy (NYSE:NRDY) fell hard today after the company reported its fourth-quarter results yesterday. While sales and earnings beat Wall Street's consensus estimates, investors weren't happy with Nerdy's revenue decline and shrinking gross margin.
As a result, Nerdy's stock was down by 10.7% as of 11:11 a.m. ET.
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Top- and bottom-line beats, but slowing growth
Nerdy reported a loss per share of $0.09 in the quarter, which was significantly better than analysts' consensus estimate of a loss of $0.14 per share. Nerdy's sales of $48 million beat the top end of the company's guidance for the quarter as well, which was in the range between $44 million to $47 million, and ahead of Wall Street's estimate of about $45 million.
But it wasn't all rosy for Nerdy in the quarter. Sales were down 13% from the year-ago quarter, and its gross margin fell to 66.6%, down from 71.3% in the fourth quarter of 2023. Nerdy's management said that a decline in average revenue per member (ARPM) in the consumer segment was to blame for the gross margin retreat. The company also said that its net loss widened to $15.7 million, worse than its loss of $9.2 million in the year-ago quarter.
Adding to the lackluster results was the fact that Nerdy finished the year with 37,500 active members, a decline of about 8% from 40,700 in the previous year.
The upcoming quarter may not be much better
Nerdy's management issued guidance for the first quarter, with sales expected to be between $45 million to $47 million. That represents a significant decline of 14% from the year-ago quarter, at the midpoint of guidance.
Additionally, Nerdy's leadership said its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) would be a loss of $7 million at the midpoint, down drastically from positive EBITDA of $24,000 in the first quarter of 2024.
With Nerdy's sales falling, EBITDA dropping, and the company's active users shrinking, it's no surprise to see its share pricing plunging today.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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