Nerdy Inc. (NRDY) Earnings Call Transcript
May 22, 2024
Earnings Call Speaker Segments
Great. Let's get started. I'm Bryan Smilek, JPMorgan's Internet and Online Education Analyst. We're pleased to have with us today Nerdy's Founder, Chairman and CEO, Chuck Cohn; and CFO, Jason Pello. Nerdy is a leading live online learning platform and provides learning experiences across thousands of subjects across multiple formats. It also generates revenue through its institutional business, Varsity Tutors for Schools, which sells high-dosage and learning solutions to school districts. Chuck founded Nerdy in 2007 and has experience as an investment banker at Wells Fargo and also worked in private equity. And Jason has served as Nerdy's CFO since October 2020 and was previously VP of Finance and Accounting at Nerdy from September 2019 to October 2020. Welcome, Chuck and Jason.
Thanks for having us, Bryan.
Thank you.
So I guess, Chuck, to start, for those of you who may not be familiar with Nerdy, can you just give a brief overview?
Sure. So Nerdy is a live online learning platform. So we have a vertically integrated 2-sided marketplace. We serve both consumers and institutions. On the consumer side, we connect people for one-on-one small group, livestream, and a variety of other forms of learning to create a product that we call learning membership that serves as kind of an all-encompassing, all access solution to supporting students across multiple different academic calendar years, multiple different subjects, multiple different modalities, and being that kind of comprehensive solution where at the center is live, which is our superpower and the most effective way to learn. And on the institutional side, we've taken those capabilities and built a platform that allows for us to extend those solutions into school districts. And that's something that we call Varsity Tutors for Schools.
And maybe just to give some quantitative numbers to the recent performance, so during the first quarter, we had a good quarter, $53.7 million of revenue that was up 9% year-over-year. If I break that down between institutional and consumer, on the consumer side, learning memberships, which were new over the course of the last 18 months, delivered $39.9 million of revenue, that was up 39%. The institutional business delivered $11.9 million of revenue, which was a record, and it was up also 39% during the quarter. So we feel like we're off to a great start. We were adjusted EBITDA and operating cash flow positive on the quarter, and we've committed for the full year to also be adjusted EBITDA and operating cash flow positive. So we're off to a good start.
Yes, definitely. And I guess just kicking off on that transition, can you just discuss the glide path of the transition to memberships overall? And what are the next steps in the product road map here along LTV conversion, retention, et cetera?
Sure. So historically, our original kind of product was hours of tutoring, what we call our package model. And we had different adjacent product capabilities that we built over time, some of those that we sold discretely. And what we found was that when people use multiple different learning formats, that their LTV went up significantly. If you can get them to use 4 different ways to learn, it more than doubled, which, of course, is super high leverage when you already have your sales and marketing costs covered and is a great way to grow. And so one of the things that we started leaning into is kind of weaving them all together into this concept of a learning membership and reorienting the consumer psychology to one that is recurring in nature and spans those different subjects modalities et cetera. And so that path required trading off revenue in the short term. We called it the J Curve where in the short term, you actually recognize less revenue per month under the subscription model, but ultimately benefit from a much higher LTV, trending to be kind of, call it, 2x based on our historical data relative to the package model, but required for kind of going through a period where it decelerated growth, and that's something that we've come through. And we think puts us in a position where we have a higher quality business model, better product, higher LTV, more scalable model, easier to innovate on. And we've undergone a similar journey on the institutional side with moving to access-based products and now kind of converging the actual product experience that learners and customers have.
Awesome. And I guess, just digging a bit deeper in there as well, too, so new customers, up almost 20% year-on-year in 1Q. Can you just talk about the pace of growth through the year? And I mean, what are the 1 to 2 most important initiatives that will help you really scale those memberships over time?
Yes. I think there's a couple of things going on in the consumer landscape. So we're actively working to improve the onboarding experience, make it much more friction-free for our customers, actively improving the user experience as it relates to discoverability of additional subjects beyond the main subject that a student comes to us for additional learning modalities, as Chuck mentioned, making sure that we can serve their learning needs across a variety of need states. We think that's important, and we'll continue to drive the evolution of the product and the experience that, as Chuck mentioned, drives LTV extension and retention, which we feel really good about. And then as you think about the back half related to the institutional side, we continue to build out the inside sales team. We've got a great product suite of teacher-assigned, district-assigned, and parent-assigned products that have been resonating with school districts. And so we think we're positioning ourselves to have a really strong selling season this back-to-school, which supports the back half.
Awesome. And I guess -- so within memberships, obviously, rolling out the freemium model to select customers over the past few months, can you just talk about the early results of the rollout you've seen there? And could we expect a broader launch later this year? What would be the drivers of seeing a broader launch over time?
Yes. So when we talk about freemium, we kind of use it in 2 different ways. One relates to like the whole concept of registration and trying our zero marginal cost products, which are now access-based and that we can kind of give away for free and then monetize on live. The second is testing very low entry price points where you can then consume more upgrade to additional tiers with the goal of tripling conversion on a given audience segment and having potentially lower LTV on that segment, but like making up for it many times over. And those are the sort of tests that we are running to try to find some, like, product features and pricing that resonated with people in a state that didn't necessitate tutoring or there wasn't the current need. But as people, like, progress through their learning journey and had that tutoring need, we would be the obvious choice given that they're actively using our products. And so I have a very simple example would be somebody that's just undertaking a test [ prep ] journey and isn't quite ready for tutoring yet, but he starts engaging with a variety of self-study tools and then upgrades to a premium live tutoring enhanced version of learning membership. So that's some of the testing we are doing. We saw some pockets where the results were awesome. And there are a couple of areas where there's a little bit more work to do. And so what we're trying to do is get a couple of things right that actually are also the most important things to do to drive acceleration and growth in LTV on our premium membership, which relates to that whole kind of onboarding and friction removal process. So what Jason referenced is part of it, there's also some really large, what I'm going to call just core marketplace infrastructure projects that have been underway since last fall that have been kind of hitting on a progressive basis that have been getting us nice wins in our cohorts related to that kind of like onboarding and happy path to a great customer experience and LTV extension. And those are also the things that then allow for kind of any other model that relates to attracting, like, kind of a net new audience to be like super, super viable and economical from a traffic perspective.
Awesome. And I guess, thinking about demand there, can you just talk about -- I mean, you mentioned some of the formats that are working and some that still have areas of improvement. So can you just discuss more in detail which subject and the formats are resonating well? And I guess, in that same framework, when are you starting to see the conversions from the freemium model really impact learning memberships, if at all right now?
Yes, the conversions are happening. I mean test prep was an area where there's kind of a more natural path from, call it, non-acute need to acute need from starting your journey to having a thing that kind of causes you to think about tutoring and us being the obvious choice because they're already using our products. And so that was one where we knew it would be kind of the quickest path and where we saw the best results and then academics is one where there's some promising results, but we have a little more work to do to make it kind of flip. And in both cases, we are not counting in our forecast on freemium to drive our growth this year, it's more of a kind of net new strategy that we think could unlock adjacent audience segments.
Awesome. And I guess on that framework too, can you just talk about, like, is the customer demographic of a freemium user different? In other words, does it expand the SAM over time to, and I guess, like the incrementality of the funnel overall?
Sure. We think over time, it actually lowers your CAC as you're catching people in earlier states and engaging in them at points in time where they're very efficient to acquire and then the conversion rates of that funnel obviously differ, but we would expect that you ultimately get significantly lower CAC. It also allows for us to converge our consumer and institutional products, so it makes it easier for consumers to refer us into schools or universities over time. And then separately, for those institutions then extend it to their user bases very, very efficiently.
Awesome. And I guess, just thinking about the pricing side of it, Jason, I guess, could you talk a bit more about the impact of ARPM in 2024, just as you lead into the freemium rollout and even into '25 perhaps when you're just thinking about monetization and finding that right relative pricing and product fit?
Sure. So I think what's important is we're always trying to provide more value to our customers. We think that, that drives retention over the fullness of time. As you think about our freemium memberships, we haven't really changed the pricing there. So there's not any price sensitivity that we're seeing in the market. What we were really testing, as Chuck mentioned, was a lower-priced tier that brings people into the ecosystem that have a different need state. So they want help or they need a Q&A bank, so they want to take an adaptive self-assessment, but they don't yet need full high-dosage tutoring in a live base setting. So as Chuck mentioned, we probably leaned in a little bit too far there in the first quarter, it impacted ARPM. We've instilled a higher level of operating discipline and we'll monitor those cohorts over the course of the remainder of the year. That being said, as we move into the back-to-school period, we'll focus on the premium memberships with the 4 and the 8 hour being the most popular that will allow ARPM to mix shift back up above 300 as we enter the back half of the year.
Yes. And I mean, I think we got all the insights that we are hoping for. And there's probably a little more revenue impact in Q2, and that's already been shared. Then we kind of targeted, but like it's not perfect testing with something where you're testing out of big magnitude things, and we've kind of really dialed back some of that testing to be like really honed in on a couple of key things for the back-to-school season.
Yes, definitely. And I guess some -- just shifting gears a bit to the institutional business, revenue up almost 40% year-on-year, very impressive, been a very bright spot for Nerdy overall. So can you just help us understand the shift to platform access approach that you've undergone? Obviously, it includes high-dosage offerings and select [ premium ] or freemium offerings over time. But I guess could you just talk about the pace of contracts and renewals over time with VTS?
Sure. So one of the things we've been building towards for several years was moving to that access-based product, being able to grant access to lower zero marginal cost products. And in schools, that was kind of an obvious extension where you can provide live enrichment classes and SAT and ACT and diagnostic testing in all K-12 subjects aligned to state standards, all these things that we just already had on the platform. From the consumer audience we were then able to extend into school districts that have high perceived value. And so it's been a very efficient way to build trust and credibility and have people want to meet with us because we're giving them something of value and it's something that can solve a variety of different need states, maybe not the -- what might on the platform access-side be the most, like, a pressing need, but it then puts us in a position where we can have a conversation with them about that most pressing need, which tends to be high-dosage tutoring where we believe a multibillion-dollar industry is being formed. And once you're embedded in a school district or eventually a business or university, you're just the obvious choice to use for any sort of live digital need that they have.
Great. And I guess you've talked about overhauling the sales force and the go-to-market strategy just to converge the 2 platforms and drive more synergies. Can you just talk about the early impact that we're seeing? And I guess with that conversions model, the next steps in the VTS, both the sales force and the product side?
Yes. I mean the go-to-market promotion was -- didn't really change except that we have more local sales reps. So that's just a hiring thing, like a time thing as opposed to any sort of change in the go-to-market strategy. But we feel good about that model. And I've generally seen that the people that were local were selling 5x more than those who were kind of covering multistate territories. But that's just, I think, something that kind of maybe changes the shift of bookings for the year, but doesn't -- we think [ there's ] like a way better and faster, more effective motion as we head into, call it, the next year or so.
Awesome. I guess, right -- so VTS currently available to 2.2 million total students, north of almost 500 school districts overall. And I mean, you guys have set the goal to penetrate 10 million students, which is roughly 20% of the K-12 student population in the U.S. So can you just talk about what drives that confidence to achieve that 10 million target by the end of this year? And I guess, thinking about different types of districts with different needs, is it more Title I public? Is it a mix of private schools as well, too? Could you just unpack that dynamic of the students that you're reaching right now?
Sure. So we focused our outreach efforts exclusively on public schools thus far. There's certainly an obvious extension into private where you get a very, very obvious, like, halo effect benefit on the consumer side from that, and we'll do that in time. But any school district can go and sign up on the website. So we do have private school signing up, just kind of naturally hearing about it, and we'll surface them and serve them. And so you do have a lot of large kind of urban public school districts or a larger school district, certainly. But it's totally eclectic. It's, like, resonating with everybody because there's something for everybody in that kind of platform access. And the reality is that any school district, regardless of whether it's a big urban or whether it's suburban or whether it's a private school, they have a variety of different academic support, test prep, and enrichment needs, all of which we can service.
Awesome. Then within that framework too, the deadline to commit ESSER III funding expires in September. So can you just talk about how these allocations actually work? I think like there's a big misconception out there, at least in my conversations that once you commit it, you have to spend it right away. So it's not as sticky of a revenue base, which is actually a fallacy. So can you just talk about the actual dynamics of these allocations after they have to be committed by September?
Sure. So the American Rescue plan allocated substantial monies for COVID learning loss and learning acceleration. Those -- we estimate there's about $10 billion to $12 billion left to be spent, which has to be contracted by this September 2024, but it can be contracted for up to 4 years post that date. So, services can be provided from September of 2024, through September of 2028. The Department of Education has specifically highlighted that they believe that any contracts post this September should be utilized for high-dosage tutoring, absenteeism or summer learning programs, 2 of which we provide services for. All of our products, teacher, district, and parent-assigned qualify for the funding. And what we're seeing in the marketplace is school districts leaning into multiyear contracts, so they can lock in services for many years. That also allows us to lock in revenue for multiple years. To your point, it's not a onetime shot. It will support that business continuing to grow for multiple years into the future. And we think it's a great opportunity, which is also one of the reasons we're expanding the size of the sales force and platform access is giving us the ability to have conversations with school districts much earlier in the sales process at higher levels, so chief [indiscernible] officer and superintendent as well. So we feel good about the activity. We think that we'll be able to capture a large portion of the funding that's available.
Not all $15 billion.
Not all -- $10 billion. Relative to our company's size.
School districts pay for this with a variety of funding sources. So that ESSER accounted for a very small portion of our Q1 bookings, for instance, and you see people using Title I and [ normal ] operating budgets and special education and, and, and. And so, like, this is relative to the market potential here existing even size, like it's a small business, right? Like, we didn't have a go-to-market motion within institutional, and so we've had to build that. So we're building from a small base, went from 0 to mid-30-something million bookings over a 2-year period or so, and we feel kind of good about the long-term opportunity there and how it builds to adjacent opportunities like [indiscernible] over time.
And I guess, you kind of touched on it, too, but other funding sources, there's also been very favorable state and federal legislations out there that have been getting passed. Can you just talk about how the regulatory and funding landscape is actually evolving across tutoring right now and where you see that over the next 1 to 3 years, especially obviously with the election upcoming, how do you think about like a bipartisan approach to tutoring legislation and funding going forward?
Well, yes, there are a couple of bills in Congress being considered in the early phases related to tutoring specifically and the President's proposed budget has high-dosage tutoring elevated to specific line item level. And so like this is just something where you're getting effectively a top-down mandate to put a lot of attention on this as a solution to solving learning loss and helping students and while this is, I think, broadly been true for thousands of years with tutoring and people have noted it's now possible to do it at scale to an extent that never was possible previously. And there's an openness to kind of augmenting how learning is delivered outside of the school day in the digital environment. And with a specific focus on tutoring given the exceptional results that just study after study are coming out with from every think tank, every university, it's pretty incredible, the results that tutoring is having. And it's just the most effective way to spend money as a State Department of Education or school district relative to, say, technology or curriculum or something else where, frankly, the results are, like, pretty indiscernible.
Yes. And I guess -- so shifting gears a bit to the strategy overall. I mean, we've kind of touched on that before, converging the models between consumer and VTS to provide a unified experience where you can build once and leverage multiple times. So I guess can you just talk about how this positions Nerdy just as a healthier business and will help you capture perhaps cross-selling activity between VTS to the consumer business longer term as well, just as you get more people in the funnel and they want to consume hours outside of what they get from their institution as well?
Sure. So by being on a unified platform, we can then start extending in different product capabilities and subject availability that the consumer business has. So on the consumer side, there's 3,000 subjects we track, and we have, call it, 20% of the learners are K through 5 and 30% are 6 through 12 and just under 20% are college and graduate and then the remainder is professional adults. So we can kind of service all these different needs and do it well. And by having them on the same platform, you can now then start making different subjects and modalities available in a way that serves different audience segments and makes it way easier to sell in specific solutions. So whether it's like our ACT and SAT district-wide program that we recently launched or whether it's something that isn't an entirely different market. It's -- it just requires a little focus. It doesn't require a lot of work to then be able to have a much larger number of different solutions available on the platform. And also from a product and engineering perspective, will significantly increase the pace at which our teams work. And so while it might be hard to see from the outside world like internally, I think we expect that we're going to just like accelerate the pace of development because you're not working in parallel to any extent.
Awesome. And I guess, within that engineering and product innovation overall, you guys have obviously used AI and machine learning really since your inception to drive the matching algorithm over time. So can you just talk about how generative AI, number one, unlocks new monetization opportunities? I guess, number 2, expands content? And I guess, 3, internally, how do you drive productivity and reduce costs through leveraging that technology?
So starting in, call it, like 2017, 2016, we -- as like we shifted more of -- we built our online platform, we started getting great results, we started realizing like wait a second, there's 1 learner and a 1,000 experts, who do you pair them with? And we got so much leverage out of the, like, matching process and leveraging machine learning and then getting a better match than finding that it ultimately led to happier customers, extended LTV, way faster growth rates, all the good things. We kind of leaned into instrumenting the business across both sides of this vertically integrated marketplace and then using that to inform personalization and then also remove cost. And as generative AI has accelerated over the course of the last 18 months, we've just continued to do that and we're kind of in a position to move quickly. So -- for instance, we're using it to produce content and practice problems and diagnostics. So we produced 60,000 standards aligned practice problems and prep for back-to-school last year. That's something where we kind of built the machine and can run it anytime we need content, we're able to use AI generated lesson plans that then improve the experience and have high levels of personalization for any given student. That's something that this fall we'll be extending into school districts as well and making available. And there's just different elements of personalization and content that were really additive to the experience that would have been cost-prohibitive in a non-generative AI world that enhance it. And so whether it's prompts and real-time feedback for customer service agents in real time, which is something we're doing or AI customer support bots or personalized learning recommendations, we're leaning in here pretty hard and think that with live at the center, which is the thing that motivates, inspires, holds people accountable -- at the end of the day, we're all social creatures by our nature, and all the data suggests that when it's simply kind of just AI, it's an effective way to kind of self-help for periods of time, but that students [indiscernible] motivation very, very quickly. And so we believe that by surrounding it, we have this concept that we wrote about in our first -- in our prospectus actually, called AI for HI, about artificial intelligence for human interaction of giving experts and learners superpowers in a digital environment, we think that with a vertically integrated marketplace model that's heavily instrumented where all the learning occurs on platform recorded and you have that kind of immersive experience that we're well positioned to thread different aspects of generative AI and personalization throughout the experience to kind of compound the wins.
Awesome. And I guess shifting towards the financials, Jason, let's just dig into the '24 guide a bit. So you guided active members ending the year about 56,000 and significant revenue growth reacceleration in the back half around back-to-school. Can you just talk about the puts and takes on how you get there?
Yes, sure. So if we think about the first quarter, active learner growth was up 40% year-over-year. If you think about that 56,000 number at the end of the year, that would be up about 37%. We think that the improvements we're making in the consumer side to the onboarding experience to drive engagement both in tutoring and non-tutoring modalities will drive LTV extension. And the summer -- the typical seasonality is such that with back-to-school, we'll see a large acceleration during the fall time frame in the active learner base. So we feel good about the consumer side. On the institutional side, I think we're also laying the foundation to have a strong back-to-school. I also mentioned the ESSER funding deadline for contracting that will occur in September. We think the size of the sales team increasing, the significant response we've seen to platform access and how that's allowing us to have conversations towards monetization and paid offerings in the marketplace and the level of activity that's [ bringing more support ], a strong back-to-school period. It's important to remember that the majority of contracts that are booked between now and back-to-school on the institutional side, those will start around late September, early October. Once schools are in session, students are into their routines. And then the school districts typically will start on a 3-week, 4-week deferred basis, they're tutoring programs. So that supports the high ramp that we see in the back half. We feel good about it and continue to believe it's the appropriate guide.
Also -- I mean you've also guided to very healthy adjusted EBITDA margin expansion, positive operating cash flow, free cash flow in 2024. So I guess in the framework of reaccelerating growth in the back half, how do you balance that margin expansion with growth to ensure that you do capture both demand on the institutional and consumer side?
Yes, sure. So it's important that the shift to the consumer learning membership model has really improved the unit level economics of our business over the course of the last, call it, 18 months. In 2023, we improved adjusted EBITDA margins by 2,100 basis points and actually delivered about $30 million of revenue growth with $33 million improvement in adjusted EBITDA, which was about 108% flow-through. As you think about 2024, we've guided towards another 500 basis points of improvement that will occur throughout the P&L across gross margin expansion as well as leverage in sales and marketing and G&A costs. So we feel good about the adjusted EBITDA guide. As I mentioned in Q1, we are adjusted EBITDA positive as well as operating and free cash flow positive. We've committed to that on the full year and believe that, that will absolutely be the case.
Yes. I think it's important to note, like the way that the seasonality works in this business, it's already around a school year, so each school year kind of step up into a new level of revenue. And you -- today, for instance, we're bearing all the costs of our fixed cost infrastructure like product and engineering that actually drive the growth. And [ same for this ] expansion and our Varsity Tutors for Schools sales force, where you're bearing the cost today and you step into the higher revenue levels and naturally get operating leverage on what is higher gross margin revenue than we've had in the past as we continue to shift to these access-based models.
Great. And I guess on -- just talk about that a little further, too, can you just discuss -- I mean, as you do get these economies of scale over time and continue to build the platform overall, what do you think the right level of sales and marketing would be as you really refine the go-to-market and just build awareness overall?
We're going to continue to get operating leverage over time through the LTV extension. And then the way we've been kind of operating internally is targeting the same sort of flattish CAC year-over-year, but then with LTV extension relative to the other model and allowing for us to kind of layer cake those cohorts. And what we would expect to happen over time is between like repeat -- like repeat years and layer caking occurring on the institutional side, you get significant margin expansion. And part of what we saw in Varsity Tutors for Schools, call it as we got into like Q4 of last year was like pretty massive improvements in year-over-year sales and marketing that actually gave us high levels of confidence in the efficacy of that go-to-market motion and wanting to really like double down on it. And heading into the back half of the school year, I think you'd start seeing the benefits of the higher like revenue levels that come with another school year. And then separately, we're trying to really lean into this kind of halo effect in both directions that we think can drive a completely different type of sales and marketing efficiency and reach expansion over time.
Awesome. And I guess, just thinking about the longer term, too, I know, Jason, we've discussed 75% gross margins in the past, [ I mean ] 25% to 30% adjusted EBITDA margins. But obviously, this was before the shift to consumer and VTS. So I guess can you talk about longer term? I mean, we've kind of already touched on, on the sales and marketing side, but other opportunities of leverage in the model going forward?
Yes, sure. So -- we've got really strong gross margins today, they're about 70%. Chuck mentioned some of the invoicing work that we're doing today. We're also doing substitute tutoring pool work on the institutional side. Once those projects hit and we have greater levels of automation. You'll see continued gross margin expansion. And then as you work down the P&L, Chuck talked about sales and marketing leverage. But if you think about G&A, we've grown into our cost structure. You saw that last year where we were nearly adjusted EBITDA breakeven. We've made the investments in sales and marketing, but we'll hold the G&A side of the house pretty flat on a go-forward basis. And so as we continue to scale, you'll see pretty significant leverage flow-through from that perspective.
Yes. That's kind of the not glamorous, but incredibly important part of kind of core marketplace infrastructure we've been overhauling since last fall that is hitting on a sequential basis where we're then seeing either cost out-wins or flow-through to kind of a happy past LTV tension, right out of the gate.
Awesome. So I guess you would say that, that 25% to 30% still holds longer term?
Yes.
And I guess -- so we've touched on it a bit today, but definitely wanted to hit on macro and competitive dynamics. I guess is there -- I mean historically, I don't think we've seen any correlation of macro headwinds or tailwinds to the business. So can you just provide, one, updated thoughts on the macro? And 2, I guess, with the competition continuing to evolve, you've seen it at multiple product showcases lately. Can you just discuss how macro and competitive [ yield ] position the company in the next 5, 10 years going forward?
Sure. So we've really never been able to notice any impact to the economy, either positive or negative over time and we've always felt like we were kind of in our control of our own destiny as it related to building products that resonate with customers and doing things that would cause them to reward us with more business. And so we feel like the macro environment has not changed noticeably in our business in the last couple of years. And then separately, on the competitive side, we want to continue to kind of define what great looks like as it relates to live and online and surrounding it with tools and content and generative AI capabilities that we think are highly differentiated. And so there have been some really cool demos recently, particularly related to Gen AI that we're excited about and we'll integrate in and around our products. But at the core of that is live, which is the one part you can't kind of commoditize and that we see persistent demand in and kind of no substitution. And so from our perspective, it's going to allow for us to produce hyper-personalized content, make for way more interactive experiences, allow for us to build experiences that, frankly, like as you think about the kind of idea of our registration and freemium offering could become way more compelling over time with kind of live as the monetization engine at the center and something that can't be commoditized. So we feel good about how that ultimately builds and frankly, how it also allows for us to just provide more and more value to institutions as well.
Awesome. And I guess, time for one more question. So I guess I'll leave it with this one. So obviously, you've been public for some time now, and the financials are meaningfully improving '23, '24. So what do you think investors are missing about Nerdy right now? And what is -- I mean, the one liner to take away from today?
I think what's important is that the long-term strategy is well intact on both the consumer and the institutional side. We've made the evolution towards the learning memberships on the consumer side as well as the -- all-access teacher district and parent-assigned approach on the institutional side. The platform-access offering is resonating with school districts. It's providing them with immense value. It's positioning us to be the preferred provider over the fullness of time. And then as Chuck mentioned, some of the non-glamorous work that's being done in the platform, you don't see pull through to the P&L yet, but those benefits, whether it's cost reductions or improvements to the user experience will absolutely present themselves as we move into the back-to-school period and scale the number of learners that we service.
Yes, I mean it's definitely impacting things. We just have -- in the aggregate number, you're not -- it's not popping out yet like it will at some point. But I think part of potentially what's missed in some conversations that's very specific is you're not understanding the operating leverage of the business that comes as you just step function change into a new school year with higher revenue and holding costs constant as simple as that is. And then separately, yes, there's a lot of leverage that we'll get from things like scheduling and invoicing and countering and all these boring things that our customers really, really care about. But then separately, I think we're going to be able to move so much faster now that we're on one converged platform. So it feels like we're running at 2x the speed that we ever have. And that's something that you'll see pull through to, I think, pretty significant improvements in our customer experience and our products and how compelling they are over the course of the next, call it, 6 months.
Great. Thanks for being with us today.
Sure. Thanks, Bryan. Thank you.
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