NerdWallet (NRDS) Q2 Profit Jumps 135%

Key Points

• NerdWallet (NASDAQ:NRDS) posted GAAP diluted EPS of $0.11 in Q2 2025, beating analyst expectations by 10.0%.

• Revenue (GAAP) was $186.9 million in Q2 2025, missing revenue estimates by 4.3%, but up 24% year-over-year.

• Operational margins expanded sharply, with GAAP operating margin at 5.7% and non-GAAP operating margin at 11%, with adjusted EBITDA up 135% year-over-year.

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NerdWallet (NASDAQ:NRDS), a digital financial guidance platform known for connecting consumers and small businesses with financial products, released its Q2 FY2025 earnings on August 7, 2025. The headline results: GAAP earnings per share (EPS) of $0.11, GAAP EPS was ahead of analyst expectations by $0.01, and GAAP revenue of $186.9 million, which fell short of the $195.25 million GAAP consensus estimate. This quarter displayed significant profit and margin gains, but growth in core revenue streams was mixed, with Insurance and Emerging Verticals offsetting declines in Credit Cards and Small and Medium Business (SMB) segments. Though top-line growth continues to face pressure from changes in online search dynamics and business cycles.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About NerdWallet's Business and Strategic Focus

NerdWallet helps consumers and businesses make informed decisions about financial products, from credit cards and insurance to loans and banking. Its platform matches users with lenders and other financial service providers. The company generates revenue by referring users to financial service partners.

The business places heavy emphasis on consumer trust, using editorial teams to ensure its content is unbiased. Key factors for the platform's success include leveraging technology for personalization, expanding into new categories and geographies, and deepening relationships through vertical integration of services. As it competes in a crowded market, the ability to balance growth with disciplined cost management and regulatory compliance remains central to its strategy.

Quarterly Developments: Financial and Operational Highlights

This quarter, profit metrics showed marked improvement. Adjusted EBITDA, a non-GAAP metric, more than doubled year-over-year. Non-GAAP operating income also swung from a loss to an 11% margin, indicating significant progress on the cost and efficiency front. GAAP net income reached $8.2 million, up from a loss, demonstrating that recent operational priorities are filtering into the bottom line.

Top-line growth, however, was mixed. Revenue (GAAP) was up 24% compared to the prior year period, but lagged analyst expectations by 4.3%. Segment performance drove much of this complexity. Insurance revenue reached $54.7 million, up 86% year-over-year. This growth was fueled by increased budgets from auto insurance carriers, though management cautioned that such rapid expansion is expected to moderate as those comparisons grow tougher. The sequential decline of 26% in Insurance revenue reflected this normalization.

The Credit Cards product family, which connects users with credit card offers, posted a 25% year-over-year decline to $34.8 million in revenue. This decline was the result of lower search traffic, due to continued downward pressure in organic search and the increased presence of AI-enhanced search modules in search results. Small and Medium Business (SMB) products, which guide business owners to loans and services, saw revenue fall 4% year-over-year, also due to continued pressure on organic search visibility.

In contrast, Loans showed renewed strength. Loans, which span personal and mortgage products, benefited from both marketing improvements and the full integration of mortgage broker Next Door Lending. Loans revenue rose 27% year-over-year to $27.5 million, with mortgage loans specifically called out as a growth area. Emerging Verticals, the category that includes banking and other new financial products, reached $44.9 million, up 64% year-over-year, highlighting early success in this newer area for the company.

Overall cost and expenses (GAAP) rose 10% year-over-year, but at a slower rate than revenue, aiding margin expansion. Sales and marketing expenses (GAAP) grew 21% as NerdWallet invested to maintain consumer engagement, particularly via performance marketing and brand campaigns.

The balance sheet remained healthy. Cash and cash equivalents were $105.3 million as of June 30, 2025, up from $66.3 million at December 31, 2024, and adjusted free cash flow for the trailing twelve months ended June 30, 2025, was $70.6 million. The company does not currently pay a dividend.

Product Families and Growth Pillars: Insights and Implications

Insurance, a product family covering auto, home, and life insurance referrals, emerged as the largest single segment contributor. Auto insurance led the segment, with increased marketing budgets at major carriers expanding the company’s reach. Management noted that growth in Insurance is now expected to settle at a lower rate as prior-year results become harder to beat, with year-over-year growth rates expected to normalize in the second half of 2025 as the company laps strong results from the second half of 2024.

Credit Cards, once the growth driver, experienced a 25% year-over-year decline in revenue, tied to search algorithm updates. According to company leadership, “continued headwinds in organic search traffic” are affecting revenue. The SMB product line, focused on business lending options, was similarly affected by weakness in online search and broader market caution.

The Loans product family—which includes both personal loans and mortgages—returned to double-digit year-over-year growth after previous declines. This was attributed to better product matching and process improvements learned from prior insurance growth, as well as successful integration of Next Door Lending. The acquisition enabled new offerings, such as direct connections to mortgage brokers, and higher conversion rates for users seeking mortgages.

Banking, a chief component of the Emerging Verticals segment, sustained high growth—up 64% year-over-year. This reflects NerdWallet’s expansion strategy into new product types and user categories. The company continued to stress its adherence to major financial regulations in the U.S. UK, and Canada.

Outlook and Guidance

For Q3 2025, management expects revenue between $189 million and $197 million, or about 1% year-over-year growth at the midpoint compared to the prior year. GAAP operating income is projected between $17 million and $21 million, and adjusted EBITDA is forecast at $36 million to $40 million. For the full FY2025, guidance for GAAP operating income was raised to a range of $38 million to $48 million, while non-GAAP operating income guidance increased to $71 million to $79 million. Adjusted EBITDA guidance is now $120 million to $128 million.

The increase in the full-year 2025 profit outlook was attributed to ongoing operational improvements and efficiency gains. That said, top-line expectations remain cautious as the company navigates ongoing difficulties in search-driven verticals and faces expected normalization in Insurance segment growth. NRDS does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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