Nerdwallet Inc.
02/25/2026 | Press release | Distributed by Public on 02/25/2026 15:47
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that reflect our current plans, estimates and beliefs, and involve risks and uncertainties. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including but not limited to those discussed in the sections titled "Special Note Regarding Forward-Looking Statements" and "Risk Factors" in this Annual Report on Form 10-K.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Except as otherwise noted, all references to 2025 refer to the year ended December 31, 2025, references to 2024 refer to the year ended December 31, 2024, and references to 2023 refer to the year ended December 31, 2023.
A discussion and analysis of our financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024 is presented below. For a discussion of our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Overview
NerdWallet, Inc. (NerdWallet, we, our, or us) provides consumers and small and mid-sized businesses (SMBs) with trusted guidance across a broad range of finance topics through a digital platform that integrates independent editorial content, comparison tools, data-driven product marketplaces, and access to regulated financial services offered through our subsidiaries. Our mission is to provide clarity for all of life's financial decisions. Our vision is a world where everyone makes financial decisions with confidence.
Our platform enables users to compare financial products, access educational resources, receive personalized insights, and connect with third-party providers across credit cards, banking, insurance, lending, investing, wealth management, and other financial categories. We generate revenue primarily through referral fees, lead generation, and partner-based monetization, as well as through revenue derived from brokering and advisory services.
Our business model is designed to be partner-neutral and to support transparent consumer and SMB choice by offering side-by-side comparisons and unbiased information supported by editorial standards.
Acquisitions
We have made acquisitions and established subsidiaries to expand into new verticals; to enter new markets; and to grow our platform so that our users have better outcomes. Recent acquisitions include:
•Next Door Lending.In October 2024, we acquired Next Door Lending LLC (NDL), a mortgage broker that offers a selection of loan products for home purchase and refinance, including cash-out refinance and debt consolidation, across a range of maturities and interest rates. Through NDL, we offer consumers access to government-sponsored entity-conforming loans, FHA insured loans, VA guaranteed loans and jumbo loans.
•NerdWallet Insurance Experts. In March 2025, we established NerdWallet Insurance Experts, LLC (NWIE), an insurance agency. Through NWIE, we provide property and casualty brokerage services to assist consumers to compare quotes and connect with licensed carriers or agents to obtain insurance policies.
•NerdWallet Wealth Partners. In June 2025, we acquired an SEC-registered investment adviser and created NerdWallet Wealth Partners, LLC, which provides traditional investment advisory services, such as financial planning and discretionary investment management.
Non-GAAP Financial Measures
We collect, review and analyze operating and financial data of our business to assess our ongoing performance and compare our results to prior period results. In addition to revenue, net income (loss) and other results under generally accepted accounting principles (GAAP), the following sets forth the non-GAAP financial measures we use to evaluate our business.
We use non-GAAP operating income (loss) and adjusted EBITDA in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our Board of Directors concerning our financial performance.
Non-GAAP operating income (loss): We define non-GAAP operating income (loss) as income (loss) from operations adjusted to exclude depreciation and amortization, and further exclude (1) impairment of right-of-use asset, (2) losses (gains) on disposals of assets, (3) acquisition-related costs, and (4) restructuring charges. We also reduce income from operations, or increase loss from operations, for capitalized internally developed software costs.
Adjusted EBITDA: We define adjusted EBITDA as net income (loss) from continuing operations adjusted to exclude depreciation and amortization, interest income (expense), net, other gains (losses), net, and provision (benefit) for income taxes, and further exclude (1) impairment of right-of-use asset, (2) losses (gains) on disposals of assets, (3) stock-based compensation, (4) acquisition-related costs, and (5) restructuring charges.
The above items are excluded from our non-GAAP operating income (loss) and adjusted EBITDA measures because these items are non-cash in nature, or because the amounts are not driven by core operating results and renders comparisons with prior periods less meaningful. We deduct capitalized internally developed software costs in our non-GAAP operating income (loss) measure to reflect the cash impact of personnel costs incurred within the time period.
We believe that non-GAAP operating income (loss) and adjusted EBITDA provide useful information to investors and others in understanding and evaluating our operating results and in comparing operating results across periods. Moreover, non-GAAP operating income (loss) and adjusted EBITDA are key measurements used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting. However, the use of these non-GAAP measures have certain limitations because they do not reflect all items of income and expense that affect our operations. Non-GAAP operating income (loss) and adjusted EBITDA have limitations as financial measures, should be considered as supplemental in nature, and are not meant as substitutes for the related financial information prepared in accordance with GAAP. These limitations include the following:
•Non-GAAP operating income (loss) and adjusted EBITDA exclude certain recurring, non-cash charges, such as amortization of software, depreciation of property and equipment, amortization of intangible assets, impairment of right-of-use asset, and (losses) gains on disposals of assets. Although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and non-GAAP operating income (loss) and adjusted EBITDA do not reflect all cash requirements for such replacements or for new capital expenditure requirements;
•Non-GAAP operating income (loss) and adjusted EBITDA exclude certain acquisition-related costs, including acquisition-related retention compensation under compensatory retention agreements with certain key employees, and acquisition-related transaction expenses;
•Non-GAAP operating income (loss) and adjusted EBITDA exclude restructuring charges primarily consisting of severance payments, stock-based compensation, employee benefits, and related expenses for impacted employees, as well as contract termination costs, associated with our Restructuring Plan;
•Adjusted EBITDA excludes stock-based compensation, including for acquisition-related inducement awards, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy; and
•Adjusted EBITDA does not reflect interest income (expense) and other gains (losses), net, which include unrealized and realized gains and losses on foreign currency exchange, as well as certain nonrecurring gains (losses).
In addition, non-GAAP operating income (loss) and adjusted EBITDA as we define them may not be comparable to similarly titled measures used by other companies. Because of these limitations, you should consider non-GAAP operating income (loss) and adjusted EBITDA alongside other financial performance measures, including income (loss) from operations, net income (loss) and our other GAAP results.
See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Key Components of Our Results of Operations-Non-GAAP Financial Measures" for reconciliations of non-GAAP operating income (loss) to income (loss) from operations, and adjusted EBITDA to net income (loss), the most directly comparable financial measures calculated in accordance with GAAP.
Key Components of Our Results of Operations
Revenue
We generate substantially all of our revenue through fees paid by our financial services partners in the form of either revenue per action, revenue per click, revenue per lead, and revenue per funded loanarrangements. For these revenue arrangements, in which a partner pays only when a consumer or SMB satisfies the criteria set forth within the arrangement, revenue is recognized generally when we match the consumer or SMB with the financial services partner. For some of our arrangements, the transaction price is considered variable and an estimate of the constrained transaction price is recorded when the match occurs. Our revenue generally includes five product categories: Insurance, Credit cards, SMB products, Loans and Emerging verticals. Insurance revenue includes revenue from consumer insurance products, including auto, life and pet insurance. Credit cards revenue includes revenue from consumer credit cards. SMB products revenue includes revenue from loans, credit cards and other financial products and services intended for small and mid-sized businesses. Loans revenue includes revenue from personal loans, mortgages, student loans and auto loans. Emerging verticals revenue includes revenue from other product sources, including banking, investing and international.
Cost of revenue
Cost of revenue consists primarily of amortization expense associated with capitalized software development costs and developed technology intangible assets related to our acquisitions, credit scoring fees, account linking fees, and third-party service and data costs.
We expect our cost of revenue to decrease in absolute dollars in the next few years, as amortization of capitalized software development costs decline following years of decreasing levels of capitalized software development costs, and to then increase in absolute dollars for the foreseeable future to the extent that our business continues to grow. We expect our cost of revenue to vary as a percentage of revenue in the next few years, and it may eventually decrease over time as a percentage of revenue as our business grows and recognizes economies of scale. However, this percentage may fluctuate from year to year depending on the timing and extent of our investments in experiences requiring third-party service and data costs.
Research and development
Research and development activities primarily relate to engineering, product management, data enhancement, and improved functionality related to our platform. Research and development expenses primarily consist of personnel related costs, including stock-based compensation, technology and facility-related expenses and contractor expense for our engineering, product management, data and other personnel engaged in maintaining and enhancing the functionality of our platform.
We expect our research and development expenses to increase in absolute dollars for the foreseeable future, primarily for increased headcount costs to further develop and innovate our platform. Over time, we expect research and development expenses to decrease as a percentage of revenue as our business grows and recognizes economies of scale. However, this percentage may fluctuate from period to period depending on the timing and extent of our research and development expenses.
Sales and marketing
Our marketing strategy leverages multiple channels across brand marketing, performance marketing and organic marketing. Sales and marketing expenses consist of: performance marketing, primarily costs to drive traffic directly to our platform; brand marketing, primarily advertising costs to increase brand awareness; and organic and other marketing, primarily personnel-related costs, including stock-based compensation, for content and other marketing and sales teams. We are able to adjust our marketing spend to reflect changes in external factors and consumer and SMB behavior. Performance marketing spend can be adjusted more quickly than brand marketing, which typically involves pre-committing to spend in future periods.
We expect our sales and marketing expenses to continue to increase in absolute dollars for the foreseeable future, primarily to support the growth of our existing business and expansion into new verticals. Over time, we expect our sales and marketing expenses to increase as a percentage of revenue as our business grows and expands. However, this percentage may fluctuate from period to period depending on the timing and extent of our sales and marketing expenses.
General and administrative
General and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, for certain of our executives as well as our legal, finance, human resources, and other administrative employees; and professional services fees.
We expect our general and administrative expenses to increase in absolute dollars for the foreseeable future primarily to support the growth of our business. Additional expenses may include increased personnel-related costs, enhanced systems, processes, and controls as well as increased expenses in the areas of insurance, compliance, investor relations, and professional services. For these reasons, we expect general and administrative expenses to vary as a percentage of revenue in the near term, but eventually to decrease as a percentage of revenue as our business grows and recognizes economies of scale. This percentage may fluctuate from period to period depending on the timing and extent of our general and administrative expenses.
Other income (expense), net
Other income (expense), net is comprised of interest income, interest expense, and other gains (losses), net. Interest income consists primarily of interest earned on our cash and cash equivalents. Interest expense consists of interest costs related to our revolving credit facility, including amortization of debt issuance costs. Other gains (losses), net for 2024 includes an $8.1 million impairment on an equity investment. Other gains (losses), net is otherwise primarily related to realized and unrealized gains and losses on foreign currency transactions and balances.
Income tax provision (benefit)
Our income tax provision (benefit) consists of federal and state income taxes. We have federal and state net operating loss carryforwards (NOLs), and California research and development credit carryforwards, certain of which are subject to expiration dates if not utilized. Utilization of our NOLs and tax credit carryforwards, as well as of our other temporary differences, is dependent upon the generation of sufficient future taxable income during the periods in which those temporary differences become deductible. In the fourth quarter of 2024, based on our ongoing assessment of all available evidence, both positive and negative, including a significant improvement in our profitability coupled with anticipated future earnings, we concluded that it is more likely than not that our U.S. federal and majority state deferred tax assets in excess of deferred tax liabilities would be realized and released $27.2 million of our valuation allowance against these net U.S. deferred tax assets as of December 31, 2024. Our judgment regarding the likelihood of realization of these deferred tax assets could change in future periods, which could result in a material impact to our income tax provision in the period of change.
Comparison of Results of Operations
The following tables set forth our results of operations for the periods presented. The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Results of Operations
|
(in millions)
|
||||||||||||||||||||
| Year Ended December 31, | 2025 | 2024 | 2023 | |||||||||||||||||
| Revenue | $ | 836.6 | $ | 687.6 | $ | 599.4 | ||||||||||||||
| Costs and Expenses: | ||||||||||||||||||||
| Cost of revenue | 63.7 | 63.5 | 54.0 | |||||||||||||||||
|
Research and development(1)
|
66.7 | 82.5 | 80.5 | |||||||||||||||||
|
Sales and marketing(1)
|
584.7 | 470.6 | 401.5 | |||||||||||||||||
|
General and administrative(1)
|
56.3 | 61.6 | 59.8 | |||||||||||||||||
| Total costs and expenses | 771.4 | 678.2 | 595.8 | |||||||||||||||||
|
Income from Operations
|
65.2 | 9.4 | 3.6 | |||||||||||||||||
| Other income (expense), net: | ||||||||||||||||||||
| Interest income | 3.2 | 4.8 | 3.6 | |||||||||||||||||
| Interest expense | (0.6) | (0.7) | (0.8) | |||||||||||||||||
|
Other gains (losses), net
|
0.4 | (8.5) | (0.1) | |||||||||||||||||
| Total other income (expense), net | 3.0 | (4.4) | 2.7 | |||||||||||||||||
|
Income before income taxes
|
68.2 | 5.0 | 6.3 | |||||||||||||||||
| Income tax provision (benefit) | 19.5 | (25.4) | 18.1 | |||||||||||||||||
|
Net Income (Loss)
|
$ | 48.7 | $ | 30.4 | $ | (11.8) | ||||||||||||||
______________
(1)Includes stock-based compensation as follows:
|
(in millions)
|
||||||||||||||||||||
| Year Ended December 31, | 2025 | 2024 | 2023 | |||||||||||||||||
| Research and development | $ | 8.5 | $ | 10.1 | $ | 11.2 | ||||||||||||||
| Sales and marketing | 8.6 | 10.0 | 13.8 | |||||||||||||||||
| General and administrative | 11.5 | 16.2 | 13.8 | |||||||||||||||||
| Total | $ | 28.6 | $ | 36.3 | $ | 38.8 | ||||||||||||||
The following table sets forth the components of our consolidated statements of operations as a percentage of revenue:
| Year Ended December 31, | 2025 | 2024 | 2023 | |||||||||||||||||
| Revenue | 100 | % | 100 | % | 100 | % | ||||||||||||||
| Costs and Expenses: | ||||||||||||||||||||
| Cost of revenue | 7 | 9 | 9 | |||||||||||||||||
| Research and development | 8 | 12 | 13 | |||||||||||||||||
| Sales and marketing | 70 | 69 | 67 | |||||||||||||||||
| General and administrative | 7 | 9 | 10 | |||||||||||||||||
| Total costs and expenses | 92 | 99 | 99 | |||||||||||||||||
|
Income from Operations
|
8 | 1 | 1 | |||||||||||||||||
| Other income (expense), net: | ||||||||||||||||||||
| Interest income | - | - | - | |||||||||||||||||
| Interest expense | - | - | - | |||||||||||||||||
|
Other gains (losses), net
|
- | - | - | |||||||||||||||||
| Total other income (expense), net | - | - | - | |||||||||||||||||
|
Income before income taxes
|
8 | 1 | 1 | |||||||||||||||||
| Income tax provision (benefit) | 2 | (3) | 3 | |||||||||||||||||
|
Net Income (Loss)
|
6 | % | 4 | % | (2 | %) | ||||||||||||||
Our income from operations increased $55.8 million, or 590%, for 2025 compared to 2024. The increase was driven by a $149.0 million increase in revenues, partially offset by a $93.2 million increase in costs and operating expenses, primarily due to a $114.1 million increase in sales and marketing expenses partially offset by a $15.8 million decrease in research and development expenses.
Our net income increased $18.3 million, or 60%, for 2025 compared to 2024, primarily driven by the $55.8 million increase in income from operations, as well as $3.0 million of other income, net in 2025 as compared to other expense, net of $4.4 million in 2024, partially offset by a $19.5 million income tax provision in 2025 as compared to an income tax benefit of $25.4 million in 2024.
Comparison of the Years Ended December 31, 2025 and 2024
Revenue
|
(in millions)
|
||||||||||||||||||||||||||
| Year Ended December 31, | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||
|
Insurance
|
$ | 280.8 | $ | 191.6 | $ | 89.2 | 47 | % | ||||||||||||||||||
|
Credit cards
|
133.4 | 176.4 | (43.0) | (24 | %) | |||||||||||||||||||||
|
SMB products
|
100.0 | 109.8 | (9.8) | (9 | %) | |||||||||||||||||||||
| Loans | 133.4 | 84.5 | 48.9 | 58 | % | |||||||||||||||||||||
|
Emerging verticals
|
189.0 | 125.3 | 63.7 | 51 | % | |||||||||||||||||||||
| Total revenue | $ | 836.6 | $ | 687.6 | $ | 149.0 | 22 | % | ||||||||||||||||||
Revenue increased $149.0 million, or 22%, for 2025 compared to 2024, driven by strong growth in Insurance, Emerging verticals and Loans revenues, partially offset by lower Credit cards and SMB products.
Insurance revenue increased $89.2 million, or 47%, for 2025 compared to 2024, primarily driven by a strong increase in auto insurance products revenue as carriers expanded budgets.
Credit cards revenue decreased $43.0 million, or 24%, for 2025 compared to 2024, primarily due to continued pressures in organic search traffic.
SMB products revenue decreased $9.8 million, or 9%, for 2025 compared to 2024, primarily due to continued pressures in organic search traffic, partially offset by an increase in business loan originations.
Loans revenue increased $48.9 million, or 58%, for 2025 compared to 2024, primarily driven by an 85% increase in personal loans revenue as well as a 33% increase in mortgage loans revenue reflecting incorporation of our acquisition of NDL in October 2024.
Emerging verticals revenue increased $63.7 million, or 51%, for 2025 compared to 2024, primarily driven by a 60% increase in banking revenue due to higher demand for banking products.
Costs and Expenses
|
(in millions)
|
||||||||||||||||||||||||||
| Year Ended December 31, | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||
| Cost of revenue | $ | 63.7 | $ | 63.5 | $ | 0.2 | 0 | % | ||||||||||||||||||
| Research and development | 66.7 | 82.5 | (15.8) | (19 | %) | |||||||||||||||||||||
| Sales and marketing | 584.7 | 470.6 | 114.1 | 24 | % | |||||||||||||||||||||
| General and administrative | 56.3 | 61.6 | (5.3) | (9 | %) | |||||||||||||||||||||
| Total costs and expenses | $ | 771.4 | $ | 678.2 | $ | 93.2 | 14 | % | ||||||||||||||||||
Cost of revenue
Cost of revenue increased $0.2 million for 2025 compared to 2024. The increase was primarily attributable to a $2.1 million increase related to third-party service and data charges, substantially offset by a $1.6 million decrease in amortization expense related to capitalized software development costs.
Research and development expense
Research and development expenses decreased $15.8 million, or 19%, for 2025 compared to 2024. The decrease was primarily attributable to a $10.1 million decrease in personnel-related costs for our engineering, data, and product management personnel and contractors, as well as a $5.8 million restructuring charge in 2024.
Sales and marketing expense
Components of sales and marketing expense, including as a percentage of total sales and marketing expense, are as follows:
| (in millions) | 2025 | 2024 | ||||||||||||||||||||||||
| Year Ended December 31, |
$
|
%
|
$ |
%
|
||||||||||||||||||||||
| Performance marketing | $ | 416.9 | 71 | % | $ | 297.4 | 63 | % | ||||||||||||||||||
| Brand marketing | 65.1 | 11 | % | 68.6 | 15 | % | ||||||||||||||||||||
| Organic and other marketing | 102.7 | 18 | % | 104.6 | 22 | % | ||||||||||||||||||||
| Total sales and marketing | $ | 584.7 | 100 | % | $ | 470.6 | 100 | % | ||||||||||||||||||
We are able to adjust our marketing spend to reflect changes in external factors and consumer and SMB behavior.
Sales and marketing expenses increased $114.1 million, or 24%, for 2025 compared to 2024. The increase was attributable to a $119.5 million increase in performance marketing expenses, partially offset by decreases of $3.5 million in brand marketing expenses and $1.9 million in organic and other marketing expenses primarily due to a $2.0 million restructuring charge in 2024.
General and administrative expense
General and administrative expenses decreased $5.3 million, or 9%, for 2025 compared to 2024, primarily attributable to a $5.5 million decrease in personnel-related costs mainly due to stock-based compensation, as well as a $1.2 million restructuring charge in 2024.
Other income (expense), net
| (in millions) | ||||||||||||||||||||||||||
| Year Ended December 31, | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||
| Interest income | $ | 3.2 | $ | 4.8 | $ | (1.6) | (33 | %) | ||||||||||||||||||
| Interest expense | (0.6) | (0.7) | 0.1 | (9 | %) | |||||||||||||||||||||
|
Other (gains) losses, net
|
0.4 | (8.5) | 8.9 | NM | ||||||||||||||||||||||
| Total other income (expense), net | $ | 3.0 | $ | (4.4) | $ | 7.4 | NM | |||||||||||||||||||
The change in other income (expense), net for 2025 compared to 2024 was primarily attributable to an $8.1 million impairment on an equity investment in 2024, partially offset by lower interest income reflecting lower interest rates and average cash balances.
Income tax provision (benefit)
We had an income tax provision of $19.5 million for 2025, as compared to an income tax benefit of $25.4 million in 2024. Our effective tax rate was 28.6% and (505.5%) for 2025 and 2024, respectively, as compared to the U.S. federal statutory income tax rate of 21%. Our effective tax rate for 2025 is higher than the U.S. federal statutory income tax rate of 21% primarily due to permanent impacts related to stock-based compensation and state taxes, partially offset by research and development credits. Our effective tax rate for 2024 differs from the U.S. federal statutory income tax rate of 21% primarily due to the decrease in the valuation allowance maintained against our net U.S. deferred tax assets. In the fourth quarter of 2024, we concluded that it is more likely than not that our net U.S. federal and majority state deferred tax assets are realizable, resulting in a valuation allowance release of $27.2 million.
On July 4, 2025, the United States enacted tax reform legislation through An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, commonly known as the One Big Beautiful Bill Act. Included in this legislation are provisions that allow for the immediate expensing of domestic U.S. research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. We have incorporated the new legislation into our income tax provision, as applicable, and determined that there was no material impact on our tax provision for 2025.
Non-GAAP Financial Measures
Non-GAAP operating income (loss) and adjusted EBITDA as we define them may not be comparable to similarly titled measures used by other companies. Because of these limitations, you should consider non-GAAP operating income (loss) and adjusted EBITDA alongside other financial performance measures, including income (loss) from operations, net income (loss) and our other GAAP results.
We compensate for these limitations by reconciling non-GAAP operating income (loss) to income (loss) from operations, and adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measures, as follows:
| (in millions) | ||||||||||||||||||||
| Year Ended December 31, | 2025 | 2024 | 2023 | |||||||||||||||||
|
Income from Operations
|
$ | 65.2 | $ | 9.4 | $ | 3.6 | ||||||||||||||
| Depreciation and amortization | 46.4 | 48.4 | 48.2 | |||||||||||||||||
| Acquisition-related retention | 1.6 | 4.2 | 5.3 | |||||||||||||||||
| Acquisition-related expenses | 2.3 | 0.6 | 0.1 | |||||||||||||||||
|
Impairment of right-of-use asset
|
- | - | 1.4 | |||||||||||||||||
| Loss on disposal of assets | 0.4 | - | 0.2 | |||||||||||||||||
|
Restructuring
|
0.5 | 9.0 | - | |||||||||||||||||
| Capitalized internally developed software costs | (20.4) | (24.0) | (32.4) | |||||||||||||||||
|
Non-GAAP Operating Income
|
$ | 96.0 | $ | 47.6 | $ | 26.4 | ||||||||||||||
|
Operating income margin
|
8 | % | 1 | % | 1 | % | ||||||||||||||
|
Non-GAAP operating income margin1
|
11 | % | 7 | % | 4 | % | ||||||||||||||
|
Net Income (Loss)
|
$ | 48.7 | $ | 30.4 | $ | (11.8) | ||||||||||||||
| Depreciation and amortization | 46.4 | 48.4 | 48.2 | |||||||||||||||||
| Stock-based compensation | 28.6 | 36.3 | 38.8 | |||||||||||||||||
| Acquisition-related retention | 1.6 | 4.2 | 5.3 | |||||||||||||||||
| Acquisition-related expenses | 2.3 | 0.6 | 0.1 | |||||||||||||||||
| Impairment of right-of-use asset | - | - | 1.4 | |||||||||||||||||
| Loss on disposal of assets | 0.4 | - | 0.2 | |||||||||||||||||
|
Restructuring
|
0.5 | 9.0 | - | |||||||||||||||||
|
Interest income, net
|
(2.6) | (4.1) | (2.8) | |||||||||||||||||
|
Other gains (losses), net
|
(0.4) | 8.5 | 0.1 | |||||||||||||||||
| Income tax provision (benefit) | 19.5 | (25.4) | 18.1 | |||||||||||||||||
| Adjusted EBITDA | $ | 145.0 | $ | 107.9 | $ | 97.6 | ||||||||||||||
| Stock-based compensation | (28.6) | (36.3) | (38.8) | |||||||||||||||||
|
Capitalized internally developed software costs
|
(20.4) | (24.0) | (32.4) | |||||||||||||||||
| Non-GAAP Operating Income | $ | 96.0 | $ | 47.6 | $ | 26.4 | ||||||||||||||
|
Net income (loss) margin
|
6 | % | 4 | % | (2 | %) | ||||||||||||||
|
Adjusted EBITDA margin2
|
17 | % | 16 | % | 16 | % | ||||||||||||||
______________
(1)Represents non-GAAP operating income (loss) as a percentage of revenue.
(2)Represents adjusted EBITDA as a percentage of revenue.
Our non-GAAP operating income increased $48.4 million, or 102%, for 2025 compared to 2024. The increase was driven by a $55.8 million increase in income from operations, partially offset by a $7.4 million decrease in adjustments to reconcile income from operations to non-GAAP operating income, including a $9.0 million restructuring charge in 2024.
Adjusted EBITDA increased $37.1 million, or 35%, for 2025 compared to 2024. The increasewas attributable to increases of $18.3 million in net income and $18.8 million in adjustments to reconcile adjusted EBITDA to net income, primarily including $44.9 million for income taxes partially offset by a $9.0 million restructuring charge and an $8.1 million impairment on an equity investment, both in 2024, as well as a $7.7 million decrease for stock-based compensation.
Liquidity and Capital Resources
Overview
Our principal sources of liquidity to meet our business requirements and plans, both in the short-term (i.e., the next twelve months from December 31, 2025) and long-term (i.e., beyond the next twelve months), have historically been cash generated from operations. Our primary liquidity needs are related to the funding of general business requirements, including working capital requirements, research and development, and capital expenditures, as well as other liquidity requirements including, but not limited to, share repurchases and business combinations.
As of December 31, 2025 and 2024, we had cash and cash equivalents of $98.3 million and $66.3 million, respectively.
Known Contractual and Other Obligations
A description of contractual commitments as of December 31, 2025 is included in Note 8-Commitments and Contingencies in the notes to the consolidated financial statements.
More broadly, we also have purchase obligations under contractual arrangements with vendors and service providers, including for certain web-hosting and cloud computing services and advertising, which do not qualify for recognition on our consolidated balance sheet but which we consider non-cancellable. As of December 31, 2025, amounts to be spent under non-cancellable purchase obligations were $13.5 million over the next twelve months, and approximately $4 million in 2027 and $1 million in 2028.
Trends, Uncertainties and Anticipated Sources of Funds
In order to grow our business, we intend to make significant investments in our business, which may result in increases in our personnel and related expenses. The timing and amount of these investments will vary based on our financial condition, the rate at which we add new personnel and the scale of our development, as well as the macro-economic environment. Many of these investments will occur in advance of our experiencing any direct benefit from them, which could negatively impact our liquidity and cash flows during any particular period and may make it difficult to determine if we are effectively allocating our resources. However, we expect to fund our operations, capital expenditures and other investments principally with cash flows from operations, and to the extent that our liquidity needs exceed our cash from operations, we would look to our cash on hand to satisfy those needs.
Share Repurchase Program: We announced on May 2, 2023 that our Board of Directors authorized a plan under which we may repurchase up to $20 million of our Class A common stock and, following our utilization of that share repurchase authorization, we announced on October 26, 2023, September 9, 2024, October 29, 2024, September 13, 2025, and December 16, 2025 that our Board of Directors approved additional share repurchase authorizations under which we may repurchase up to an additional $30 million, $50 million, $25 million, $50 million, and $50 million, respectively, of our Class A common stock (collectively, the Repurchase Program). Subject to market conditions and other factors, the Repurchase Program is intended to make opportunistic repurchases of our Class A common stock to reduce our outstanding share count. Under the Repurchase Program, shares of Class A common stock may be repurchased from time to time in the open market through privately negotiated transactions or otherwise, in accordance with applicable securities laws and other restrictions. The Repurchase Program does not have fixed expiration dates, does not obligate us to acquire any specific dollar amount or number of shares, and may be amended, suspended or discontinued at any time. The amount and timing of any repurchases are at management's discretion and depend on a variety of factors, including business, economic and market conditions, regulatory requirements, prevailing stock prices and other considerations. Additionally, we may, from time to time, enter into Rule 10b5-1 trading plans to facilitate repurchases. Shares repurchased under the Repurchase Program are retired. We expect to fund repurchases with existing cash and cash equivalents. During 2025, we repurchased 5.8 million shares of Class A common stock for $70.3 million, including costs associated with the repurchases. Additionally, we paid $0.3 million of excise taxes during 2025 which related to previous share repurchases.
On February 20, 2026, our Board of Directors approved an increase in the share repurchase authorization under which we may repurchase up to an additional $100.0 million of our Class A common stock under the Repurchase Program. Between January 1, 2026 and February 23, 2026, we repurchased 4.5 million shares of Class A common stock for $50.6 million, including costs associated with the repurchases. The remaining share repurchase authorization under the Repurchase Program is $104.7 million as of February 23, 2026.
Credit Facility: On September 26, 2023, we, including three of our wholly-owned subsidiaries, entered into a credit agreement (the Credit Agreement) with JPMorgan Chase Bank, National Association, as Administrative Agent, and a syndicate of lenders. The Credit Agreement provides for a $125.0 million senior secured revolving credit facility (the Credit Facility), with the option to increase up to an additional $75.0 million, and is available to be used by us and certain of our domestic subsidiaries for general corporate purposes, including acquisitions. On October 1, 2024, we entered into an amendment to the Credit Agreement which, among other things, permits us to acquire an unrestricted subsidiary and/or to invest up to an aggregate of $15 million in unrestricted subsidiaries in any fiscal year, subject to standard provisions and limitations for unrestricted subsidiaries. The Credit Facility matures on September 26, 2028. We had no outstanding balance on our credit facility as of December 31, 2025 or 2024. Our credit facility contains certain financial and non-financial covenants. We were in compliance with all covenants as of December 31, 2025 and 2024. See Note 7-Debt in the notes to the consolidated financial statements for further discussion.
Warehouse Line of Credit: NDL, a wholly-owned subsidiary, maintains a $15.0 million warehouse line of credit, which may be increased to $18.75 million for up to 90 days subject to certain requirements, to provide NDL short-term funding for mortgage loans originated for sale. Borrowings under the warehouse line of credit bear interest at the greater of the interest rate of the underlying mortgage loans held for sale, subject to a 5.25% minimum rate, and are secured by the underlying promissory notes of the mortgage loans held for sale, as well as NDL's other assets. The warehouse line of credit matures on February 1, 2027. NDL had $6.9 million and $2.5 million outstanding under the warehouse line of credit with a weighted-average interest rate of 6.27% and 6.77% as of December 31, 2025 and 2024, respectively, which is included in accrued expenses and other current liabilities on our consolidated balance sheet. The warehouse line of credit requires NDL to comply with certain minimum tangible net worth, liquidity and insurance requirements. NDL was in compliance with all covenants as of December 31, 2025 and 2024, respectively. See Note 7-Debt in the notes to the consolidated financial statements for further discussion.
We believe our current cash and cash equivalents and future cash flow from operations, as well as access to our credit facility with JPMorgan Chase Bank and a syndicate of other lenders, subject to customary borrowing conditions, will be sufficient to meet our ongoing working capital, capital expenditure and other liquidity requirements for the next twelve months and beyond.
Our future capital requirements may vary materially from those planned and will depend on certain factors, such as our growth and our operating results. If we require additional capital resources to grow our business or to acquire complementary technologies and businesses in the future, we may seek to sell additional equity or raise funds through debt financing or other sources. We cannot provide assurance that additional financing will be available at all or on terms favorable to us.
Sources and Uses of Capital Resources
The following table summarizes our cash flows:
| (in millions) | ||||||||||||||||||||
| Year Ended December 31, | 2025 | 2024 | 2023 | |||||||||||||||||
| Net cash provided by operating activities | $ | 131.6 | $ | 71.8 | $ | 72.1 | ||||||||||||||
| Net cash used in investing activities | (33.3) | (29.7) | (29.5) | |||||||||||||||||
| Net cash used in financing activities | (66.1) | (76.5) | (26.2) | |||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (0.2) | 0.3 | 0.1 | |||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | $ | 32.0 | $ | (34.1) | $ | 16.5 | ||||||||||||||
A discussion and analysis of our changes in cash flows for 2025 compared to 2024 is presented below. For a discussion of our cash flows for 2024 and 2023, see "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Operating activities
Net cash provided by operating activities increased $59.8 million in 2025 compared to 2024, as increases of $18.3 million in net income and $44.2 million in non-cash charges were partially offset by a $2.7 million increase in net cash outflow from changes in operating assets and liabilities. The increase in non-cash charges was primarily due to a $62.1 million increase in deferred taxes, partially offset by decreases of $9.1 million for stock-based compensation and $6.8 million in other losses, net. The increase in net cash outflow from changes in operating assets and liabilities was primarily due to increases of $10.2 million for accounts payable, $6.6 million for mortgage loans held for sale, and $2.7 million for accrued expenses and other current liabilities, partially offset by a $17.6 million decrease for accounts receivable.
Investing activities
Net cash used in investing activities increased $3.6 million in 2025 compared to 2024, primarily due to $12.8 million of cash paid, net of cash acquired, for acquisitions, partially offset by decreases of $6.1 million in purchases of investments and $3.8 million in capitalized software development costs.
Financing activities
Net cash used in financing activities decreased $10.4 million in 2025, primarily due to decreases of $9.9 million in repurchases of Class A common stock and $6.4 million related to our warehouse line of credit, partially offset by a $5.2 million decrease from exercises of stock options.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting policies as provided within U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable. Actual results may differ from these estimates under different assumptions or conditions.
The accounting policies we believe to be most critical to understanding our financial condition and results of operations are discussed below. For a comprehensive list of all significant accounting policies, see Note 1-The Company and its Significant Accounting Policies in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report on Form 10-K.
Valuation of Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. We have one reporting unit. We test goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable. As a result of the goodwill impairment assessments in 2025, 2024 and 2023, we determined that it was not more likely than not that the fair value of its single reporting unit was less than its carrying amount. As such, goodwill was not impaired during 2025, 2024 or 2023.
We evaluate intangible assets and other long-lived assets for impairment whenever events or circumstances indicate that they may not be recoverable. Recoverability is assessed by comparing the carrying amount of an asset group to future undiscounted net cash flows expected to be generated. If the carrying amount of an asset group is not recoverable, an impairment loss is recognized if the carrying amount exceeds the fair value of the asset group. We group assets for purposes of such review at the lowest level for which identifiable cash flows of the asset group are largely independent of the cash flows of the other groups of assets and liabilities. Unforeseen events, changes in circumstances and market conditions and material differences in estimates of future cash flows could adversely affect the fair value of our assets and could result in future impairment charges.
Deferred Tax Asset Valuation Allowances
As part of fulfilling the requirement to reduce the measurement of deferred tax assets that are not expected to be realized, we consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. In assessing the adequacy of recognized valuation allowances, we consider all available evidence to estimate if sufficient taxable income will be generated in the future to utilize the existing deferred tax assets by jurisdiction. This consideration includes a variety of factors such as historical and projected future taxable income and prudent and feasible tax planning strategies.
Based on our past assessment of all available evidence, both positive and negative, including consideration of our historical profitability and the estimated impact of our operating model on future profitability, we had previously maintained a valuation allowance against our net U.S. deferred tax assets as of December 31, 2023. During the three months ended December 31, 2024, we concluded that it was more likely than not that our net U.S. Federal and majority state deferred tax assets would be realized, with a significant improvement in our profitability, coupled with anticipated future earnings, deemed to provide positive evidence to support sufficient taxable income in future periods, and accordingly we recorded a valuation allowance release of $27.2 million. We continue to maintain a valuation allowance on our California deferred tax assets, which consist primarily of tax credits, as of December 31, 2025. Our judgment regarding the likelihood of realization of these deferred tax assets could change in future periods, which could result in a material impact to our income tax provision in the period of change.
Recently Issued and Adopted Accounting Pronouncements
For information on recent accounting pronouncements, see Note 1-The Company and its Significant Accounting Policies in the notes to the consolidated financial statements.
JOBS Act Accounting Election
We are an emerging growth company, as defined in the JOBS Act, until December 31, 2026. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
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