Introducing NerdWallet ($NRDS)

NerdWallet www.nerdwallet.com went public just a few days ago through a direct listing on Nasdaq under the ticker NRDS for a market cap of around $2 billion.

What the company does

In simple terms, NerdWallet is an affiliate of several financial products. They have several experts (nerds) who make your financial choices easier by matching products with your needs.

For example, let’s say you want to learn about investing. And you have no clue how to go about it. You go on NerdWallet, pick the subject (investing) among many others and then you are provided with a plethora of topics, articles, brokers, financial advisors, and tools like calculators.

How they make money

From there, NerdWallet promotes what they think are the best services/products for your needs. Once you register with a product or service, they get a commission. This is what we used to call lead generation. Now it is more of a content business. Nevertheless, you get paid in the same way. By guiding/matching clients with products/services.

Obviously, you might be biased to promote businesses that you get a better deal from. Nevertheless, NerdWallet seems to offer a broad range of products and services, so readers stand a better chance at finding what they truly need.

The numbers

Revenue in $millions


56 90 46 51 56 90 91 98

[It’s obvious the revenue is all over the place. Some quarters they grow and some others they don’t. However, the last couple of quarters seem strong with YoY revenue growth of 97% and 92% respectively.]

Gross margins


90+

[GM is hovering above 90% for every quarter which is excellent.]

Sales & Marketing in $millions


35 68 82 56

[It seems that NerdWallet is pouring dollars into its marketing in order to get the revenue going.]

Income (loss) in $millions


(5.2) (13.2) (22.7) 6.3

[It seems that the losses were getting bigger until last quarter. Maybe they try to make things appear nicer for their IPO?]

Final thoughts

Personally, I’ve worked for several review sites. One tell-tale sign for a growing content business is the number of writers onboarded. Here we can see that there are zero open positions at the moment for content writers. imgur.com/a/dNHqBrr

This alone doesn’t mean that business is not growing but that would be a good sign. Also, I don’t like the non-linear revenue growth. Gross profit margins are excellent though.

Useful links

S-1: sec.report/Document/0001628280-21-020521/
Investor Relations: investors.nerdwallet.com/?trk=nw_gf_5.0
TMF discussion: youtube.com/watch?v=s14eCTf09Fs
CEO letter: investors.nerdwallet.com/static-files/b9f06544-37c5-4066-bae…
Glassdoor rating: glassdoor.com/Reviews/NerdWallet-Reviews-E687336.htm
Trustpilot reviews: trustpilot.com/review/nerdwallet.com

Note: Just because I introduce a company it doesn’t necessarily mean I intend to buy it. I just want us all to be aware of newly listed companies. Also, I might be missing something so crowdsourcing is beneficial to everyone. Thanks :slight_smile:

23 Likes

Thanks, Pavlos!

I’m not familiar with them, beyond having heard the name. But they caught my eye when I saw this Nov. 4 post from Upstart founder/CEO Dave Girouard: https://twitter.com/davegirouard/status/1456375022432374787

After congratulating them on their IPO he describes them as "an amazing company and long-time partner.

I don’t have a position, but that’s an important endorsement for me!

JabbokRiver

3 Likes

They have been around a long time as a “financial advice” and “financial products reviews” website. I’ve always appreciated their content, but been watchful for conflicts of interest between promoting partners’ services and providing unbiased recommendations.

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I know a software engineer who worked there for a couple of years:

  • Their revenue is mostly referrals and ads, though they tried to branch out (didn’t ask “Into what?” and “Did it work or not?” though I got the impression that the answer was “No, it didn’t work.”)
  • This one person said “it sucked to work there.”
  • While the above is only one person’s opinion, her also said that they have had an employee retention problem for a while, which makes it seems like a lot of people could leave as soon as the six-month post-IPO lockup is done.

When I think about Nerdwallet, I think of a slightly more advanced classic Yahoo! homepage-of-links but for financial products. While that can be useful at times, my emotional, non-data, no-research interpretation is that it doesn’t seem like a rocketship business or business model.

6 Likes