Nerdy, Inc. (NRDY): BCG Matrix [Dec-2025 Updated]

You're looking at Nerdy, Inc.'s (NRDY) portfolio right now, and the picture is a classic mix of high-growth potential and reliable cash generation, but with some real uncertainty hanging over key areas. We've mapped their core segments using the Boston Consulting Group Matrix based on late 2025 performance, finding that the new Live + AI™ Platform and high-frequency memberships are the clear Stars, while the established consumer brand acts as the Cash Cow, showing a 62.9% gross margin in Q3 and funding the entire operation, which is guiding toward a $19 million to $21 million EBITDA loss for the year. However, the institutional side is a major Question Mark after seeing a 20% bookings decline, and we'll look at what's being relegated to the Dogs pile as the company streamlines its focus.

Background of Nerdy, Inc. (NRDY)

Nerdy, Inc. (NRDY) is a leading platform for live online learning in the United States, founded in 2007 and headquartered in Saint Louis, Missouri. You know them best for their flagship business, Varsity Tutors, which is one of the nation's largest platforms for live online tutoring and classes. The company's purpose-built proprietary platform uses technology, including AI, to connect learners of all ages to experts, instructors, and other professionals. Nerdy, Inc.'s mission is to empower individuals through innovative technology and education.

Nerdy, Inc. delivers learning experiences across more than 3,000 subjects in multiple formats. These formats include one-on-one instruction, small group tutoring, large format classes, tutor chat, essay review, adaptive assessment, and self-study tools. The company serves learners directly through its consumer offerings and through schools and other institutions via the Varsity Tutors for Schools platform.

The business is generally split into two segments: Consumer Learning Membership and Institutional. For the second quarter of 2025, the Consumer Learning Membership revenue was $37.8 million, marking a 4% year-over-year increase, which was the first such increase since Q2 2024. However, active members stood at 30,600 as of June 30, 2025, a decline of 14% compared to the prior year period. Still, the Average Revenue Per Member Per Month (ARPM) rose to $348, up 24% year-over-year, reflecting a mix shift to higher-frequency plans and price increases.

The Institutional business reported revenue of $7.3 million in Q2 2025, making up 16% of total revenue. Within this area, Varsity Tutors for Schools secured 50 contracts, with bookings increasing 21% year-over-year to $4.9 million. Management is focused on expanding this segment with Live+AI tutoring and high-dosage programs.

Financially, total revenue for Q2 2025 was $45.3 million, which was an 11% decrease year-over-year, partly due to the absence of a non-recurring state-funded program in the prior year. For the full fiscal year 2025, Nerdy, Inc. projects total revenue to be between $191 million and $197 million. The company expects to deliver a non-GAAP adjusted EBITDA loss for the full year in the range of $13 million to $17 million, but management reaffirmed its goal of reaching profitability on a non-GAAP adjusted EBITDA basis in Q4 2025.

As of June 30, 2025, Nerdy, Inc. held $36.7 million in cash and cash equivalents and reported zero debt. The projection for cash on hand at the end of the year is between $30 million and $35 million.

Nerdy, Inc. (NRDY) - BCG Matrix: Stars

The Star quadrant for Nerdy, Inc. is anchored by its core Consumer Learning Membership business, heavily augmented by strategic, high-investment technology initiatives designed to capture market share in a growing segment.

Live + AI™ Platform: Core strategic focus with high investment and expected growth acceleration.

The Live Learning Platform 2.0, launched in the third quarter of 2025, represents this high-investment area. This is described as an AI-native tutoring platform where human tutors are augmented by artificial intelligence. The investment is substantial, as evidenced by the ongoing development and rollout of new features across the tech stack. The goal is to embed real-time intelligence into every stage of the learning journey to drive stronger engagement and retention, positioning this offering for accelerated growth. For context, in the second quarter of 2025, AI-powered tools reduced tutor preparation time by 70%.

High-Frequency Learning Memberships: Driving 24% year-over-year ARPM growth to $374 in Q3 2025.

The Learning Memberships are the clear leader in terms of current revenue contribution, making them the strongest candidate for a Star classification. Revenue recognized from Learning Memberships in the third quarter of 2025 was $33.0 million, which accounted for 89% of the total Company revenue of $37.0 million for the period. This segment's strength is reflected in its pricing power and customer value capture.

Here are the key performance indicators for the Consumer Learning Membership business as of the third quarter of 2025:

The increase in ARPM to $374 in Q3 2025 was driven by a mix shift toward higher frequency memberships and price increases enacted in the first quarter of 2025.

New AI-Native Tools: Such as Tutor Copilot, positioned to capture share in the rapidly expanding AI-in-EdTech market.

The development of new AI-native tools is central to maintaining and growing market share. The Live Learning Platform 2.0 rollout included entirely new student and tutor experiences. For institutional clients, management noted that more than 30 new AI tools would be available to educators for the back-to-school season of 2025, aimed at automating tasks and enhancing personalization. These tools are designed to capture share in the EdTech market, which is expanding rapidly with AI integration.

Consumer Revenue Acceleration: Expected to re-accelerate growth in the near-term, leveraging the new platform.

Management has expressed confidence that the consumer business will see growth re-accelerate. The company expects consumer revenues to return to positive year-over-year growth in the third quarter of 2025, building on the momentum from the second quarter, which saw Learning Membership revenue grow 4% year-over-year. This acceleration is directly tied to the platform enhancements and improved customer retention in newer cohorts. The key drivers for this expected acceleration include:

• ARPM Growth: Sustained increases, like the 24% YoY jump to $374 in Q3 2025.
• Platform Adoption: Leveraging the new AI-native platform features for better user experience.
• Retention Improvement: Higher retention in newer cohorts due to better user experience and Expert incentives.
• Price Realization: Benefit from price increases enacted in the first quarter of 2025.

The company reported a non-GAAP Adjusted EBITDA loss of $10.2 million for Q3 2025, which beat guidance, showing that while investment is high, operational efficiencies are improving, a necessary step for Stars to transition into Cash Cows.

Nerdy, Inc. (NRDY) - BCG Matrix: Cash Cows

You're looking at the engine room of Nerdy, Inc. (NRDY), the segment that keeps the lights on while the company chases growth elsewhere. In the Boston Consulting Group framework, these are your Cash Cows: high market share in a mature space, generating more cash than they need for maintenance. For Nerdy, Inc., this is clearly the direct-to-consumer side of the business, anchored by the established Consumer Learning Memberships.

This segment provides the necessary liquidity to absorb the overall corporate loss. For the full year 2025, management is guiding for a consolidated non-GAAP Adjusted EBITDA loss in the range of $19 million to $21 million. The Cash Cow business unit is the primary offset to this loss, as evidenced by its Q3 2025 performance, where the segment generated revenue of $33.0 million, which was 89% of the total Company revenue of $37.0 million for the quarter.

The core Varsity Tutors brand equity translates directly into strong unit economics, even with recent strategic investments. You see this in the Average Revenue Per Member (ARPM), which hit $374 as of September 30, 2025, marking a 24% increase year-over-year. This pricing power and customer stickiness are what define a Cash Cow. Still, you have to watch the margin dynamics; the Q3 2025 gross margin came in at 62.9%, down from 70.5% in Q3 2024, primarily due to investments in Expert pay and incentives designed to improve service quality and retention.

Here's a quick look at how the core revenue driver performed year-over-year for the third quarter:

The focus for Nerdy, Inc. management here is on efficiency and milking the gains passively while maintaining the market position. Investments are geared toward infrastructure that improves cash flow, like the Live Learning Platform 2.0, which is AI-native and designed to enhance the tutor/student experience. The goal is to maintain this reliable revenue stream to fund the riskier Question Marks and Stars in the portfolio.

The segment's contribution to the overall financial picture is clear:

• Learning Membership Revenue for Q3 2025 was $33.0 million, representing 89% of total revenue.
• The Q3 2025 Non-GAAP Adjusted EBITDA loss of $10.2 million was an improvement from the $14.0 million loss in Q3 2024.
• The segment is the primary source of liquidity, helping to narrow the projected full-year 2025 Adjusted EBITDA loss to between $19 million and $21 million.
• Active Members stood at 34.3 thousand as of September 30, 2025.

What this estimate hides, though, is the sequential pressure; while the margin improved from Q2 2025's 61.5% to 62.9% in Q3 2025, it's still below the prior year's 70.5%. Finance: draft 13-week cash view by Friday.

Nerdy, Inc. (NRDY) - BCG Matrix: Dogs

Dogs are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

For Nerdy, Inc. (NRDY), the Dogs quadrant likely captures revenue streams that are either non-recurring, legacy, or represent institutional efforts that are not scaling relative to the core membership business. These areas tie up resources without providing significant, sustainable growth.

Non-Recurring State-Funded Programs:

These one-time contracts, often tied to specific government funding cycles, represent a clear example of low-predictability revenue that is not sustainable. The impact of these lapsing programs is immediately visible in year-over-year comparisons. For instance, the $0.9 million state-funded Consumer revenue program recognized in the third quarter of 2024 did not recur in the third quarter of 2025. Similarly, the second quarter of 2025 saw revenue decline due to the absence of a $3.0 million state-funded Consumer revenue program that was present in Q2 2024. These non-recurrences depress overall revenue growth metrics.

Legacy One-Off Tutoring and Non-Core Institutional Offerings:

The Institutional segment, which is being phased down or de-emphasized in favor of the core membership model, fits the low-growth, low-share profile, especially given current funding headwinds. In the third quarter of 2025, the Institutional segment delivered revenue of $3.7 million, which accounted for only 10% of total Company revenue. This contrasts sharply with the Consumer Learning Memberships revenue of $33.0 million, representing 89% of total revenue for the same period. The low-growth nature is further evidenced by the performance of Varsity Tutors for Schools bookings, which totaled $6.8 million in Q3 2025, marking a 20% decrease year-over-year.

You can see the relative size and decline in the Institutional segment below:

The company is actively managing down or de-prioritizing this area, as seen by the reduction in marketing spend related to the institutional business in Q3 2025.

Outdated Tech Systems:

The existence of technical debt acts as a drag, slowing down product velocity and increasing the cost of maintenance for older systems. Analysts specifically cited technical debt as a reason for the Q3 2025 revenue shortfall. This necessitates significant investment to replace the old infrastructure. For the third quarter of 2025, Product and Development costs totaled $10.3 million. These costs are directly tied to the overhaul, including the launch of the Live Learning Platform 2.0, which is the intended replacement for these outdated systems.

The key indicators for these Dog segments include:

• Lapse of $0.9 million Q3 2024 state program.
• Institutional revenue at $3.7 million (10% of total) in Q3 2025.
• Institutional bookings down 20% year-over-year in Q3 2025.
• Product and Development spend of $10.3 million in Q3 2025 for platform replacement.

Finance: draft a sensitivity analysis on the impact of zeroing out Institutional revenue for the full year 2026 by next Tuesday.

Nerdy, Inc. (NRDY) - BCG Matrix: Question Marks

You're looking at a segment of Nerdy, Inc. that is burning cash but sits in a market with clear potential for rapid expansion, which is the classic profile for a Question Mark. These units require significant investment to capture market share before they stagnate.

The Institutional Strategy, primarily represented by Varsity Tutors for Schools, brought in $3.7 million in revenue for the third quarter of 2025. This figure accounted for exactly 10% of the total Company revenue for the period, which was $37.0 million in Q3 2025. The market here is high-potential, tied to federal and state funding, but the current revenue contribution is small relative to the overall business.

The uncertainty in this segment is visible in the bookings. Varsity Tutors for Schools executed 44 contracts, resulting in quarterly bookings of $6.8 million. That number represents a 20% decrease year-over-year. This decline is directly tied to delays in federal and state funding timelines, which is creating high uncertainty around the timing and size of future institutional revenue streams.

For the overall company, the investment required to push these growth areas is reflected in the bottom line. Nerdy, Inc. is not yet profitable, guiding to a full-year 2025 non-GAAP Adjusted EBITDA loss in the range of $19 million to $21 million. To be fair, the Q3 2025 adjusted EBITDA loss of $10.2 million was an improvement over the prior year's loss of $14 million for the same quarter, beating the company's own guidance range of negative $11.0 million to negative $13.0 million.

Here is a snapshot of the key Q3 2025 metrics that frame this high-growth, low-share position:

The consumer side, which is the larger part of the business, also shows a need for user base expansion. As of September 30, 2025, the count of active members stood at 34.3 thousand. This number was lower year-over-year, signaling a challenge in growing the user base despite strong pricing power. The Average Revenue Per Member (ARPM) grew by 24% year-over-year to reach $374 in the quarter, driven by a mix shift to higher frequency Learning Memberships and price increases enacted earlier in 2025.

These Question Marks are characterized by the following data points:

• Institutional revenue share is only 10% of total Q3 2025 revenue.
• Institutional bookings fell by 20% year-over-year in Q3 2025.
• The business unit is consuming cash, contributing to a full-year 2025 Adjusted EBITDA loss guidance of $19 million to $21 million.
• Active member count was lower year-over-year as of September 30, 2025.
• ARPM increased 24% to $374 in Q3 2025, showing monetization strength on existing users.