Nerdy Inc. (NRDY) DCF Valuation & Fundamental Primer
Nerdy Inc. (NRDY) trades at $3.10 with a market enterprise value of $372.9M and generated $178.1M in TTM revenue and -$17.6M in free cash flow (filed 2026-08-06 (period ended 2026-06-30)). Our 5-year DCF model estimates an implied intrinsic value of -$2.08 per diluted share (Grade: C · 41/100 · Capital Intensive / Low Margin).
SEC 10-K/10-Q DCF teardown of Nerdy Inc. (NRDY): $178.1M TTM revenue (6.2% growth), 61.0% GAAP gross margin, -9.9% FCF margin, 12.6% SBC/revenue, and Rule of 40 score of -3.7%.
Nerdy Inc. (NRDY) earns a "Watch" rating and an institutional Quality Score of 41/100 (Grade C). On $178.1M in baseline revenue (6.2% growth, 61.0% gross margin, -9.9% FCF margin), our 5-year DCF yields an Enterprise Value of -$281.7M (-$2.08/share vs. $3.10 market price). On the R&D Return Benchmark, NRDY ranks #1 of 174 (Harvesters · Grade AAA, 6741755.39× return).
Gross Margin & Unit Economics: Nerdy Inc. operates at a 61.0% gross margin on $178.1M revenue (11.7 pts below the Software - Application median of 72.7%).
R&D Productivity (Harvesters · Grade AAA): Investing 0.0% of revenue in R&D ($0) generates $6741755.39 of incremental gross profit per R&D dollar (Rank #1 of 174).
Rule of 40 & Cash Conversion: Combining 6.2% top-line growth with -9.9% FCF margin yields a -3.7% Rule of 40 score (vs. 47.2% cohort median) and -$281.7M DCF Enterprise Value.
3-Statement Financial Schedule & 5-Year Horizon
Synchronized directly with the 3-Year Operating Statement (61.0% Gross Margin · 6.2% Growth)
| Income Statement Line | Year 1 (2026) | Year 2 (2027) | Year 3 (2028) |
|---|---|---|---|
| Revenue | $178.1M | $189.2M | $200.9M |
| Cost of Revenue (COGS) | ($69.5M) | ($72.9M) | ($76.4M) |
| Gross Profit & Margin | $108.6M (61.0%) | $116.3M (61.5%) | $124.5M (62.0%) |
| Research & Development (R&D) | $0 | $9.1M | $9.2M |
| Sales & Marketing (S&M) | $110.8M | $112.9M | $115.0M |
| General & Administrative (G&A) | $43.1M | $43.9M | $44.7M |
| Operating EBIT | -$45.3M (-25.4%) | -$49.7M (-26.3%) | -$44.4M (-22.1%) |
| Adjusted EBITDA | -$44.1M (-24.8%) | -$47.8M (-25.3%) | -$42.4M (-21.1%) |
3 Key Underwriting Risks
Structural sensitivities monitored in the 3-Statement Financial Engine
Value-Creation Levers · Quantified Statement Impact
Apply any lever below to write its operating assumptions directly into the 3-Statement Model
Automate cloud hosting & support workflows to lift gross margin from 61.0% to 66.0%.
Align R&D intensity and ASC 350-40 capitalization to the R&D Compounders cohort median, recapturing $3.6M in annual EBITDA.
Lift net dollar retention and expansion velocity by +300 bps, compounding Year 3 revenue to $212.4M.
Nerdy Inc. (NRDY) 3-Scenario DCF Valuation Range
Stress-test NRDY's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Simulate how deploying Gemini workflow automation and autonomous engineering expands NRDY's Gross Margin, FCF Margin, DCF share price, and 2x2 R&D Return Quadrant.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $3.10).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $2.65 -15% | $2.80 -10% | $2.97 -4% | $3.18 +3% | $3.43 +11% |
| 9.3% | $2.40 -23% | $2.52 -19% | $2.65 -14% | $2.81 -9% | $3.00 -3% |
| 10.0% | $2.20 -29% | $2.29 -26% | $2.40 -23% | $2.52 -19% | $2.67 -14% |
| 10.8% | $2.03 -35% | $2.10 -32% | $2.19 -29% | $2.29 -26% | $2.40 -22% |
| 11.5% | $1.88 -39% | $1.95 -37% | $2.02 -35% | $2.10 -32% | $2.19 -29% |
Institutional Software Quality Scorecard (41/100 · Grade C)
Weak cash conversion, substantial dilution drag, or constrained financial flexibility.
Negative free cash flow; business consumes cash to sustain operations
Standard software SBC dilution; modest equity transfer to employees
Sub-par gross margins; higher cost of delivery or hardware/services mix
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
Key Operational & Dilution Risks
- Negative free cash flow burn of -$17.6M over trailing twelve months
- Lower software gross margins (61.0%), indicating higher hosting or service delivery drag
Compare Nerdy Inc. (NRDY) against the software universe on the 2x2 R&D Return vs. R&D Intensity matrix.
Reverse-DCF Solver: What Growth is Priced Into NRDY?
Market implies 3.0% annual revenue growth over next 5 years (31.2% dilution-adjusted), in line with company run-rate.
Headline Reverse-DCF ignores Stock-Based Compensation (12.6% of revenue) and annual share dilution (11.1%/yr). Accounting for both requires 31.2% 5-year revenue CAGR to justify $3.10/sh on a true per-share economic cash flow basis.
Nerdy Inc. (NRDY) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $178.1M | $178.1M | $189.2M | $200.9M | $213.4M | $226.6M | $240.7M |
| Gross Profit | $108.6M | $108.6M | $115.3M | $122.5M | $130.1M | $138.2M | $146.8M |
| Operating Income (EBIT) | -$45.3M | -$45.3M | -$48.1M | -$51.1M | -$54.2M | -$57.6M | -$61.2M |
| Stock-Based Compensation (SBC) | $22.5M | $22.5M | $23.9M | $25.4M | $27.0M | $28.6M | $30.4M |
| Unlevered Free Cash Flow (FCF) | -$17.6M | -$17.6M | -$18.7M | -$19.9M | -$21.1M | -$22.4M | -$23.8M |
| SBC-Adjusted True Cash Flow | -$40.1M | -$40.1M | -$42.6M | -$45.3M | -$48.1M | -$51.1M | -$54.3M |
Software - Application Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = 6.8 + 0.05 × (Rule of 40) · R² = 12%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Nerdy Inc. | NRDY | $391.8M | $178.1M | 61.0% | -9.9% | -3.7% | 12.6% | 2.1× |
| Grab Holdings Limited | GRAB | $20.18B | $2.80B | 42.0% | 27.7% | 84.0% | 10.0% | 6.3× |
| Figma, Inc. | FIG | $18.07B | $749.0M | 88.3% | -9.2% | 39.1% | 126.5% | 23.5× |
| Full Truck Alliance Co. Ltd. | YMM | $71.73B | $11.24B | 86.6% | 25.8% | 70.2% | 4.4% | 5.9× |
| ServiceTitan, Inc. | TTAN | $9.97B | $771.9M | 64.9% | 2.0% | 30.5% | 21.2% | 12.5× |
| InterDigital, Inc. | IDCC | $8.65B | $868.5M | 80.5% | 30.6% | 55.3% | 5.3% | 9.9× |
| OPEN TEXT CORP | OTEX | $8.11B | $5.30B | 63.5% | 13.0% | 23.8% | 2.0% | 2.6× |
| Peer Cohort Median Benchmark (N=6) | 72.7% | 19.4% | 47.2% | 7.6% | 8.1× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 2.1× | $372.9M | $391.8M | $3.10 | 0.0% |
| -20% Multiple Compression | 1.7× | $298.4M | $317.2M | $2.51 | -20.0% |
| -35% Multiple Compression | 1.4× | $242.4M | $261.3M | $2.07 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $890.5M | $909.3M | $7.20 | +138.8% |
Frequently Asked Questions: Nerdy Inc. (NRDY) Valuation
What is Nerdy Inc. (NRDY)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Nerdy Inc. (NRDY) has a Base Case implied value of -$2.08 per share (with a Bear Case of -$1.12 and a Bull Case of -$3.17), compared to its current price of $3.10. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Nerdy Inc. (NRDY)'s Rule of 40 score and Free Cash Flow margin?
Nerdy Inc. achieves a Rule of 40 score of -3.7%, combining a 6.2% revenue growth run-rate with a -9.9% TTM free cash flow margin on $178.1M in trailing twelve-month revenue. In the Software - Application peer cohort, the median Rule of 40 benchmark is 47.2%.
What revenue growth rate is priced into NRDY stock according to Reverse-DCF analysis?
At $3.10 per share (Enterprise Value of $372.9M), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 3.0%, compared to Nerdy Inc.'s historical CAGR of 6.2%. Overall market expectations are rated as "Fairly Priced to Fundamentals".
What is Nerdy Inc. (NRDY)'s R&D Return Score and innovation productivity?
Nerdy Inc. (NRDY) recorded N/A in FY R&D expense (tracked from SEC filings) and $103.8M in FY gross profit. It is currently unranked on the letter-grade leaderboard (pending full multi-year XBRL R&D history).
How does Nerdy Inc. compare to Software - Application peers?
Nerdy Inc. (NRDY) earns an institutional Software Quality Score of 41/100 (Grade C — Capital Intensive / Low Margin). Across its Software - Application peer group (GRAB, FIG, YMM, TTAN, IDCC), the cohort trades at a median EV/TTM Revenue multiple of 8.1× and a median gross margin of 72.7%.
How does Stock-Based Compensation (SBC) impact Nerdy Inc. (NRDY)'s valuation?
Nerdy Inc. recorded $22.5M in TTM stock-based compensation (12.6% of revenue). When treating SBC as a cash-equivalent compensation expense, Nerdy Inc.'s SBC-adjusted free cash flow yield is -10.3%, scoring 16/25 on our Shareholder Dilution Friction pillar.