NerdWallet NASDAQ: NRDS reported second-quarter revenue of $197 million, up 6% from a year earlier, as growth in personal loans and deposit accounts helped offset continued organic-search pressure in credit cards and small-business products.
Co-founder and CEO Tim Chen said the company is navigating an artificial-intelligence transition that is changing how consumers seek answers to financial questions. NerdWallet is responding by investing in “owned audiences” through vertical integration, user registration and data-driven engagement, he said.
“We are investing in building owned audiences by vertically integrating in some areas and by improving how we register and re-engage with users,” Chen said. He added that the company believes its trusted brand, large audience, financial position and team provide a foundation for the transition.
Profitability and Cash Flow
Second-quarter GAAP operating income was $7 million, while non-GAAP operating income was $12 million, representing a 6% margin and exceeding the midpoint of the company’s guidance range. Adjusted EBITDA totaled $23 million, within its prior outlook of $19 million to $27 million.
Chief Financial Officer John Lee said trailing 12-month adjusted free cash flow doubled year over year to a record $141 million. The company was not a federal corporate tax payer during that period and received $9 million in tax refunds, he said. NerdWallet does not expect to be a federal corporate taxpayer in 2026, but expects normalized corporate taxes to resume in the second or third quarter of 2027.
The company repurchased $23 million of Class A common stock during the quarter, bringing its repurchases over the past 12 months to $160 million. Its weighted-average diluted share count declined 14% year over year, Lee said.
As of June 30, NerdWallet had $62 million in cash and cash equivalents, compared with $56 million at the end of the first quarter. The company had $67 million remaining under its share-repurchase authorization.
Consumer Growth Offset by Search Headwinds
Consumer revenue increased 8% year over year to $175 million. Lee attributed the growth to personal loans and deposit accounts, citing strong consumer demand and expanded budgets from financial institutions.
Those gains were partly offset by a decline in consumer credit-card revenue, which Lee said was primarily driven by ongoing organic-search headwinds. The company’s largest auto-insurance carrier relationship stabilized during the quarter but remained below levels seen earlier in the year.
NerdWallet said it is seeking ways to grow with that carrier while also scaling relationships with other leading auto-insurance carriers and expanding its in-house insurance agency.
Small- and medium-sized-business revenue fell 11% to $22 million. The decline reflected lower organic-search revenue in SMB products, partly offset by growth in business-loan originations.
Chen described the SMB segment as consisting of two distinct businesses: a loan-brokering operation and a more traditional marketplace that recommends products including credit cards, bank accounts and software. He said the non-loan portion is experiencing the year-over-year pressure, while the loans operation is growing.
According to Chen, the business-loans operation benefits from a recurring customer relationship, as small-business owners return over a number of years. NerdWallet continues to invest in that business’s brokering efficiency, while pursuing broader channels and customer relationship management improvements for the rest of the SMB segment.
Marketing Investment Shifts Toward Longer-Term Returns
NerdWallet plans to increase incremental marketing investments based on internal-rate-of-return targets rather than solely on in-quarter profitability. Chen said the company expects this incremental investment to rise fivefold in 2026 compared with 2025.
Lee said the strategy follows evidence of strong retention and recurring revenue among cohorts reached through the company’s vertical-integration initiatives. The company is assessing investments through lifetime value relative to customer acquisition cost, while using internal rate of return and payback periods as guardrails.
“We’re still keeping a very high bar and tracking cohort performances in detail,” Lee said.
The company expects the initiative to have a $15 million to $20 million impact on full-year non-GAAP operating income, reflecting customer-acquisition spending with payback periods extending beyond the current year.
AI, LLM Traffic and Outlook
Chen said traffic arriving from large language models is currently a small portion of NerdWallet’s business but is converting well, with consumers demonstrating high intent to transact in a marketplace. He said the company views the channel as an area for investment and growth.
Asked about AI-driven changes to online distribution, Chen said trusted brands and reach will be important as major LLM platforms gain widespread adoption. He said NerdWallet’s distribution, consumer trust and vertical-integration strategy could provide customer-acquisition advantages.
For the third quarter, NerdWallet forecast revenue of $244 million to $260 million, which would represent 17% year-over-year growth at the midpoint. It projected non-GAAP operating income of $29 million to $37 million.
Lee said the third-quarter outlook reflects typical seasonality, anticipated tailwinds from regulatory changes in student loans, and the effect of NerdWallet’s February acquisition of College Finance. The company expects a larger share of annual profitability to occur in the third quarter than in previous years.
NerdWallet narrowed its full-year non-GAAP operating income outlook to $90 million to $105 million while retaining the midpoint of its prior forecast.
About NerdWallet (NASDAQ:NRDS)
NerdWallet NASDAQ: NRDS is a personal finance company that offers independent guidance and comparison tools to help consumers make informed financial decisions. Through its website and mobile application, NerdWallet provides a wide range of content, including articles, calculators and reviews covering credit cards, mortgages, personal loans, banking products, investing, insurance and taxes. The platform aggregates partner offers to enable side-by-side comparisons, while editorially maintaining objectivity to support users in identifying the products that best suit their individual needs.
Founded in 2009 by Tim Chen and Jacob Gibson, NerdWallet is headquartered in San Francisco and serves consumers primarily in the United States, with additional localized offerings in Canada and the United Kingdom.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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