Updated Aug 13 at 4:06pm ET.
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NerdWallet brought in $197.3 million in revenue last quarter, matching what analysts expected and growing 6 percent from last year. However, it earned $0.07 per share, which was lower than the roughly $0.09 analysts were looking for.
The company is at a transition point. Management plans to increase its long-term investments fivefold this year to focus on "owned audiences," which means getting users to register and interact with the brand directly rather than just finding it through search engines. This shift is intended to make the business less dependent on Google's search algorithms, though the higher spending will likely weigh on short-term profits while the company builds these deeper customer ties.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
The average rate on a 30-year fixed mortgage dropped to 6.67 percent this week, down from 6.69 percent last week. This is the first time rates have fallen in over a month. For NerdWallet, lower rates are generally a good sign. The company makes money by referring users to lenders, and when rates fall, more people tend to shop for new home loans or refinancings. While this is a small move, it helps ease the pressure on the housing market that has kept some of NerdWallet's mortgage-related revenue in check.
The company is scheduled to report its latest numbers today. Analysts expect earnings of about $0.09 per share on revenue of roughly $0.20 billion. NerdWallet has a history of performing well against these targets, having topped analyst expectations in seven of the last eight quarters.
Beyond the headline numbers, we are watching how well the company is making money from its registered users. The goal is to see revenue grow even if total web traffic is uneven, which would prove that its "registered Nerds" are more valuable than one-time visitors. We are also looking for growth in categories like insurance and business loans to see if the company is becoming less dependent on the cyclical credit card market.
The company's monthly index, which measures how prepared Americans are for economic shifts, rose to 63.1 out of 100 in July. This is an increase from the 60.4 level seen when the tracking began in May. While this is a piece of marketing content rather than a financial result, it serves as a reminder of NerdWallet's strategy to become a trusted advisor. By producing this kind of data, the company aims to keep users coming back to its site and app, which helps it earn more from each visitor over time.
Source: Business Wire
Analysts recently issued a flurry of rating updates following the company's latest earnings report. Four of the six analysts rate the stock as a buy, and the average target price of $13 suggests a 33% gain from today.
The company has a habit of clearing the bars set by analysts, though it recently missed its earnings target as it chose to reinvest more cash back into the business.
| Expectation | |
|---|---|
| EPS | $0.34 |
| Revenue | $245M |
