0001819404-26-000051
SEC filingNerdy delivered a materially improved Q1 FY2026, with revenue up 2.4% and gross profit up 16.9%, while operating and net losses narrowed significantly — driven by higher pricing and disciplined cost management, as confirmed by GAAP financials.
Revenue for Q1 FY2026 totaled $48.7 million, an increase of 2.4% compared to $47.6 million in Q1 FY2025. This growth was driven by higher average revenue per member (ARPM), which the business context confirms was primarily attributable to price increases enacted in February 2025. Variations in ARPM are understood to stem from changes in the mix of Learning Memberships sold and pricing actions — both within management’s direct control — rather than volume-driven dynamics.
Gross profit increased 16.9% to $32.3 million, and gross margin expanded to 66.2%. This reflects the operating leverage inherent in Nerdy’s platform model: once infrastructure and content development costs are incurred, incremental revenue contributes disproportionately to gross profit. The improvement is consistent with pricing power translating into margin expansion without requiring commensurate increases in variable delivery costs.
Net income improved to a loss of $4.1 million (versus $10.5 million in Q1 FY2025), and diluted EPS improved to -$0.03 (from -$0.09). This reflects both top-line growth and bottom-line discipline, though the company remains unprofitable on a GAAP basis.
Net cash used in operating activities improved to $1.8 million (from $6.4 million used in Q1 FY2025), indicating stronger cash conversion relative to the prior year. Free cash flow was -$3.0 million, calculated as operating cash flow minus $1.2 million in capital expenditures — which were essentially unchanged year-over-year. The business context notes that liquidity remains sufficient to meet near-term obligations, and management states it believes cash on hand will satisfy future requirements. However, access to the full term loan capacity remains subject to covenant compliance, specifically requiring future trailing-twelve-month Contribution Margin to exceed historical levels — a forward-looking condition not reflected in current GAAP results but central to capital flexibility.